April Newsletter – 05.04.18
At Mines and Money Asia, April 3-6, in Hong Kong, please look for Lachlan Broadfoot (our new CEO), John McIntyre (from Sydney) and Tom Bispham (from Hong Kong). For meetings, please contact Enquiries@Dolbear.com
Behre Dolbear is sponsoring Geometallurgy conference in London, please come meet us at our booth. Tanya Matveeva, P.Geo, will be presenting on Friday, April 20th: Importance of Geology for Mineral Processing – Examples from Projects in Russia and Kazakhstan.
Duterte’s Mining Crackdown Is Keeping the Metals World in Suspense
⦁ Mining companies ordered shut by Lopez seen still operating
⦁ Country is top nickel ore supplier to China in past four years
The global nickel market will be kept in suspense even longer over the outlook for ore supplies from the Philippines after the country’s mining council again pushed back the deadline for completion of a review of 26 mines ordered shut or suspended last year.
Former Environment Secretary Gina Lopez ordered the closures as part of a mining crackdown led by President Rodrigo Duterte. The new delay could mean the review won’t be ready before August, after an initial pledge to finish it by the end of last year. The miners have appealed the shutdowns and are still operational, Environment Undersecretary Jonas Leones said Tuesday.
“All administrative and judicial remedies have to be exhausted for the orders to be final and executory,” Leones said in a phone interview. The appeals are being reviewed separately by the environment department and Duterte’s office.
METALS-London copper hits one-week top on solid China manufacturing
MELBOURNE, April 3 (Reuters) – London copper climbed to the highest level in more than a week on Tuesday, supported by stronger-than-expected manufacturing growth in top metals user China.
China’s large state-owned manufacturers returned a solid report card for March as authorities lifted winter pollution restrictions and steel mills cranked up output as construction activity swings back into high gear, based on China’s official Purchasing Managers’ Index released over the weekend.
The picture was not quite as rosy among smaller to mid-size Chinese firms, where manufacturing activity expanded at its weakest pace in four months as export demand faltered.
The London Metal Exchange was closed on Friday and Monday for the Easter holiday. Investor worries over a tit-for-tat trade spat between the United States and China were likely to fade out, INTL FCStone said in a monthly report. “Over the course of April, we think investors will come to the conclusion that the trade issue is going to be a protracted and complicated affair and will likely be “defanged,” it said.
Metals traded on the London Metal Exchange will likely strengthen in the second quarter when seasonal demand is strongest, the brokerage said.
INTL FCStone sees copper trading between $1,960 and $2,100 this month.
Commentary: Two risks threaten commodities, one bullish, one bearish
LAUNCESTON, Australia (Reuters) – It’s not quite time to run up the red flags, but some recent developments in commodity markets suggest it may be time to start looking for them in the locker.
The are two main factors that appear to be emerging that may threaten an end to the current quite rosy picture surrounding demand for commodities such as iron ore, steel and the metals most exposed to the battery boom, cobalt, lithium and nickel.
On the supply side, there is a renewed rush of optimism that may set off another round of mining companies over-paying for assets or sinking way too much capital into projects approved on the back of too bullish forecasts.
On the demand side, the drums of a U.S.-China trade war are starting to beat a little louder, with Beijing announcing duties on up to $3 billion of U.S. imports on March 23.
That came after the Trump administration announced plans for tariffs on $60 billion of Chinese goods, in addition to import taxes on steel and aluminium.
Copper price: 120% premium for Brazil junior another bullish sign
It’s not a big deal; only around $350m, but the Oz Minerals bid for Avanco Resources is another sign that quality assets can command a premium in a copper market hungry for new supply.
Glencore owns 8% which sets up the tantalizing, albeit slim, prospect of a counter offer from the world’s number three copper producer
Oz Minerals’ cash and shares offer on Tuesday was made at a 121% premium to the ruling share price of its fellow Perth-based firm. With the board and just over 30% of the company’s shareholders in favour of the deal Avanco’s stock duly doubled on the ASX. Punters seem to believe the price is probably fair – Oz Minerals also gained despite its generous off-market offer, upping its market valuation to over $2 billion.
Avanco’s top shelf shareholder registry buttresses the idea that smart money has been scouring for copper assets long before the metal’s recovery from six-year lows struck early 2016.
Never Mind the Mines. In Congo, There’s Cobalt Under the House
The man was digging a toilet in his backyard when his shovel struck a shimmering blue vein of cobalt.
At least that’s the legend in Kolwezi. Once a few locals discovered the metal underfoot five years ago, everyone grabbed hand shovels and pickaxes; they tunneled beneath homes, schools and churches. And that’s how a working-class neighborhood, located on the edges of a densely populated city of half a million, became a hive of pits and tunnels.
“My neighbors started to dig in 2013 and I followed their lead,” said Edmond Kalenga, who went as deep as 20 meters (65 feet) under his home. “The minerals are like a snake moving through the village. You just followed the snake.”
All told, he made $12,000 selling the metal to local middlemen—a fortune in Congo where most people live on less than $1.90 a day. He built a five-room house in a new part of town. Others weren’t so lucky. Dozens were dying in the mines each week until officials banned the digging last April, according to local government estimates.
The Democratic Republic of Congo is by far the world’s biggest supplier of cobalt, the key ingredient in the rechargeable batteries needed to power everything from Apple Inc. gadgets to Tesla Inc. cars. For many in Lualaba province, where the richest deposits are found, digging for cobalt by hand isn’t a choice: it’s the surest way to earn a living.
Their entrepreneurial efforts, also called artisanal mining, accounted about 15 percent of Congo’s cobalt output in 2017, according to Darton Commodities Ltd. That’s roughly $1 billion at spot prices and it’s sure to grow as global demand surges. Even now, mining officials in Congo say the true figure is much higher.
Platinum Mines in the World’s Top Producer Are Shrinking
⦁ Miners including Implats and Lonmin cutting output, jobs
⦁ Stronger rand hurts mining companies’ profit margins
“Ramaphoria” boosted the rand and revived investor sentiment on South Africa. But deep underground in the country’s platinum mines, there’s very little cause for optimism.
Producers in South Africa, which accounts for about 70 percent of the world’s mined platinum, are closing shafts and cutting thousands of jobs as a stronger rand combines with stagnating prices for the metal in squeezing profit margins.
The future looks equally bleak, as reduced demand for diesel engines and the rise of electric cars threatens to erode the need for the metal used to cut pollution.
“The industry is going to shrink in size until there is a new source of demand,” said Natixis SA senior commodities analyst Bernard Dahdah. “We are likely to see more operations close.”
Where Platinum Goes
The car industry is the biggest consumer of platinum
LEGAL AND REGULATORY
Global gold investment seen rising for fifth year in 2018: CPM
Renita D. Young
NEW YORK (Reuters) – Bullion investors, miners and makers of coins will help drive the fifth straight annual increase in total global gold investment in 2018, CPM Group said in its Gold Yearbook 2018 on Tuesday, citing geopolitical tensions and fears that the bubbling U.S. economic expansion will end in a 2019 recession.
“The changing global monetary policy landscape coupled with long in the tooth growth cycle in the United States, and little fresh ammunition to bolster the U.S. markets further, means that the U.S. economy looks most at risk of recession,” CPM said.
CPM forecast net gold investment at 20.3 million ounces during 2018, a 6.6 percent rise from its 19.1 million ounces in 2017, and the highest increase since 2016 when it rose 23.9 percent to 26.1 million ounces.
The independent commodities research company said gold coin demand for bullion produced by private mints would be at 6 million ounces in 2018, up from 5.7 million ounces in 2017 and the highest since 2016.
INNOVATION AND TECHNOLOGY
Dormant Swedish Mine Comes Alive in Rush to Make Car Batteries
⦁ Central Woxna installation contains key ingredient graphite
⦁ Canadian mining company plans to gradually restart operations
The global race to develop batteries for electric cars is reaching deep into the pine forests of central Sweden, where a dormant graphite mine is getting a new lease on life.
Woxna, situated about 160 miles (259 kilometers) north of Stockholm, was mothballed in 2001 amid a slump in prices. Now, a Canadian company called Leading Edge Materials Corp. is preparing to revive operations.
Though graphite has grabbed fewer headlines than other battery components like lithium and cobalt, whose prices have surged in recent months, the carbon material makes up a large part of the raw material costs.
SolGold on a roll, confirms major copper-gold target at Ecuador project
Shares in Ecuador-focused miner SolGold (LON:SOLG) (TSX:SOLG) received a fresh boost on Monday, after it said it had found “strongly mineralized” extensions at its 85%-owned Cascabel copper-gold project, 180 km north of the country’s capital Quito.
The discoveries, the Australian miner said, are predicted to significantly increase Cascabel’s high-grade resource tonnage. The project, located on the northern section of the prolific Andean Copper belt, has been compared to Rio Tinto’s world class Oyu Tolgoi copper mine in Mongolia and the results from 11 of the 12 drilling rigs currently engaged at the Alpala cluster, SolGold said, suggest there is much more intense mineralization in the property than evident in previous drilling results.
SoldGold believes the cluster is currently working on, has the potential to deliver a step-change to the magnitude and value of its 85%-owned Cascabel copper-gold project.
“The current focus on drilling for extensions to the high-grade resource at Alpala is proceeding at pace and the mineralization we are encountering supports this approach,” chief executive Nick Mather said in a statement. “A collateral outcome will of course be a likely increase in the overall resource size.”