April Newsletter – 16.04.18
Behre Dolbear would like to thank the attendees of the New York Mining Club event on Thursday, April 12, 2018.
Behre Dolbear CEO Lachlan Broadfoot spoke at the lunch regarding opportunities for price segregation in minerals markets following Rio Tinto Aluminum’s announcement of certification by the Aluminium Stewardship Initiative (ASI).
SoftBank to buy up to 9.9 percent stake in Canada’s Nemaska Lithium
(Reuters) – Japan’s SoftBank Group Corp (9984.T) will buy up to 9.9 percent stake in Canada-based Nemaska Lithium Inc (NMX.TO) and invest up to C$99.1 million ($77.7 million) through a private placement as part of the agreement, the lithium miner said on Thursday.
The investment, which SoftBank said was its first in the lithium industry, will be made through a private placement of share subscription receipts at C$1.12 ($0.8784) each.
The investment will be used to fund the construction and commissioning of Nemaska’s Whabouchi Mine in Quebec and its Shawinigan plant, Nemaska Lithium said in a statement.
SoftBank will have the right to nominate a member on Nemaska Lithium’s board and will also have the option to buy up to 20 percent of the miner’s lithium output over the long term, the company added.
The investment comes at a time when lithium batteries reut.rs/2Iy73KO are increasingly being installed in electric cars, including Tesla’s (TSLA.O) top-of-the-line Model X and General Motors Co’s (GM.N) modestly-priced Chevy Bolt.
“We are extremely pleased to be further accelerating the Mobile Revolution, an era of IoT (Internet of Things) and electric vehicles enabled by the fusion of technology and energy storage”, SoftBank Chief Executive Masayoshi Son said in a separate statement.
SoftBank has been investing aggressively in technology companies worldwide – mostly through its London-based Vision Fund – and has stakes in companies including U.S. ride hailing firm Uber Technologies Inc [UBER.UL]
Rio Tinto first to receive Aluminium Stewardship Initiative certification
Rio Tinto is the first company in the world to receive certification under the Aluminium Stewardship Initiative (ASI), the highest internationally recognized standard for robust environmental, social and governance practices across the aluminium lifecycle of production, use and recycling.
By using ASI certified aluminium, manufacturers and end users will now be able to demonstrate their commitment to a sustainable supply chain.
Rio Tinto Aluminium Chief Executive Alf Barrios said “We expect responsible aluminium production will become increasingly important for our customers and the consumers who buy their products.
“Rio Tinto is proud to take this pioneering step as the first company to achieve ASI certification, which continues our industry leadership on sustainability and responsible production as we work closely with customers to meet their needs. We launched the first certified low carbon aluminium, RenewAl, in 2016 and produce some of the best quality, lowest carbon footprint aluminium in the world at our Canadian smelters.
Behre Dolbear congratulated Rio Tinto noting that it is a strong advocate for a de-commoditizing of the mineral and metals market based on the sustainability measures.
Lachlan Broadfoot, Behre Dolbear CEO, noted at yesterday’s New York Mining Club lunch that “Creating opportunities that enable miners, refiners and buyers to achieve a differentiated price for sustainably extracted minerals would benefit those mines who have delivered strong environmental results, conscientious companies who rely on the mineral supply chain and an increasingly concerned society.”
Goldman Sachs Says You Must Own Commodities in These Tense Times
- Bank reiterates its overweight recommendation on raw materials
- Geopolitical conflicts seen raising risk of supply disruptions
The case for owning commodities has rarely been stronger, according to Goldman Sachs Group Inc.
With raw materials rallying on escalating political tensions across the globe and economic growth remaining strong, the bank’s analysts including Jeffrey Currie doubled down on their “overweight” recommendation. They reiterated a view that commodities will yield returns of 10 percent over the next 12 months, according to an April 12 note.
The Bloomberg Commodity Index is up more than 2.5 percent this week, the most in two months. Another raw materials gauge, the S&P GSCI Index, has rallied over 5 percent this week to levels last seen in 2014.
The gains are being driven by crude, which is set for its best weekly jump since July, and aluminum, poised for its strongest rally since 1987. Oil investors are rattled by the potential for Middle East supply disruptions in the wake of the U.S. threatening to bomb Russian ally Syria, Saudi Arabia shooting down missiles fired by rebels in Yemen, and rising concern that America would reimpose sanctions on Iran and curb its exports.
In the aluminum market, U.S. sanctions on Russian producer United Co. Rusal, the biggest maker of the metal outside China, have sent buyers scrambling to find supplies.
“With low cross-asset correlations, increasing inflationary risks, a positive carry and the potential for oil supply disruptions in the Middle East, the strategic case for owning commodities has rarely been stronger,” the Goldman analysts wrote in their report.
Aluminum Surges Through Wildest Week After Rusal Sanctions Shock
- Spreads blow out, premiums rise as customers rush for supply
- ‘Short-term inventory will get drawn down,’ says Natixis
It’s been an unprecedented week for aluminum.
The U.S.’s decision to blacklist United Co. Rusal, the world’s second-biggest aluminum maker, set off a rush to secure supply. Prices rose by a record this week, with ripple effects felt by car-parts makers in Atlanta, Swiss commodity traders and processing plants in the Irish countryside.
“There’s a scramble to replace Russian material with non-Russian material, which in some cases should be doable, but in others not so much,” Robin Bhar, an analyst at Societe Generale SA, said from London.
Global tin mine production growth to slow – BMI
JOHANNESBURG (miningweekly.com) – Global tin mine production growth will decelerate between 2018 and 2026, compared with 2009 to 2017, owing to stricter environment regulations and declining ore grades in major producers, such as China, Indonesia and Myanmar.
However, the market researcher BMI expects that absolute production will increase over the coming years, owing to positive growth in Myanmar, Bolivia, Peru and Australia.
n its outlook for tin production report, BMI forecasts global tin mine production to grow by a yearly average of about 1.8% over the 2018 to 2026 period, which is a 2% decrease from the previous nine years.
This slowdown will be caused by lower growth rates in Asian markets, such as Myanmar, where grades are decreasing, and Indonesia, where environment regulations are tightened.
Nemaska firms financing with US$150m Orion streaming
Emerging developer Nemaska Lithium (TSX:NMX) has named Orion Mine Finance II as holding the US$150 million streaming agreement which forms part of the company’s “solid progress” to finance its Whabouchi mine and Shawinigan plant in Quebec.
The company had flagged the streaming deal to an “international financial institution of good standing” last month as its works to shore up financing of $775-$825 million, to get the mine and plant underway and for general working capital.
It will add almost C$100 million (US$79 million) to the kitty through a placement announced earlier this month to technology company SoftBank Group for up to a 9.9% stake in the lithium company.
Nemaska said it expected to provide further details “in the short-term” on discussions for additional equity financing, and debt financing of $300-$350 million.
President and CEO Guy Bourassa said the streaming agreement limited shareholder dilution, lowered the company’s cost of capital and was under competitive and flexible terms.
For its part, Orion Resource Partners (UK) portfolio manager Michael Barton said Orion was delighted to become a major investor “in one of the most exciting lithium projects globally”.
The deal covers 14.5% of lithium hydroxide and lithium carbonate produced and the first tranche of $75 million was expected to be paid once project financing was in place.
A January feasibility study for the project outlined a capex of C$801 million (US$616 million), an after-tax payback of 2.9 years and an internal rate of return of 30.5%.
INNOVATION AND TECHNOLOGY
Russia’s Hevel Group to build solar plant for Polymetal mine in Far East
Paul Moore, International Mining
Russian solar modules manufacturer and PV project developer Hevel Group and Russia’s leading precious metals mining group Polymetal signed a contract on building a 1 MW solar power plant at one of its mines located in Khabarovsk region (Russia’s Far East).
The 1 MW solar power project is designed to supply electricity to mining facility in order to enable reduction of diesel power generation which is the main source in off-grid areas.“Our mine is located in remote area, which is why decrease in fuel consumption by the camp and m ining infrastructure is of high importance,” said a representative of the mine. “Once the PV power plant is put into operation annual economy can achieve 250 t of diesel fuel.”
“The Khabarovsk region boasts high solar irradiance conditions and according to our forecast 1 MW solar power plant will generate 1.2 GWh annually,” said Igor Shakhray, CEO of Hevel Group – many mines are located at remote off-grid areas, and solar electricity is economically viable for mining production.”
In 2017, Hevel Group began producing of heterojunction solar modules and cells with an efficiency rating over 22%.
Annual output currently stands at 160 MW and this production capacity is set to grow as the group pursues its development’s strategy.
Australian miner sells nickel tenements for $1.55 million
Valentina Ruiz Leotaud
Norwood-based Minotaur Exploration (ASX: MEP) announced today that it has signed a binding agreement with a company interested in buying its nickel tenements E36/899, E37/909 and E36/936 located south-east of Leinster in Western Australia.
A corporate a press release reveals that, under the terms of the Tenement Sale Agreement, the exploration company should receive A$50,000 in cash and paid upfront, shares in the new nickel vehicle to the value of A$1 million, and A$500,000 in cash payable upon mining within the Leinster tenements. In other words, Minotaur will retain its exposure to discovery potential through equity in the to-be-listed acquisition entity.
According to the miner’s website, the Leinster Nickel Project is located in granites and greenstones of the Achaean Kalgoorlie Terrane and its tenements host known deposits of nickel sulphides and gold mineralisation.
Minotaur says that the sale will allow management to focus its regional attention on the Saints nickel resource, 65 kilometres northwest of Kalgoorlie, where an in-fill EM survey has just concluded.