April Newsletter – 20.04.2020
- COVID-19 to slow mining industry development project momentum in Q2 2020
- Zambian official says Glencore reverses plan to shutter copper mines
- Newmont to reopen some Canadian, South American mines in ‘days or weeks’
- China to inspect tailings dams after spill at molybdenum mine
- Rio cuts capex and copper expectations
- Mantashe on Coronavirus COVID-19 amended regulations
- Rio lowers copper target at Oyu Tolgoi
- Consol to temporarily idle mine in Washington County
COVID-19 to slow mining industry development project momentum in Q2 2020
The share of global mining projects that progressed to their next stage of development has decreased from 3.8% in Q4 2019 to 2.8% in Q1 2020, and is expected to slow further in Q2 2020 due to the coronavirus outbreak, according to GlobalData, a leading data and analytics company.
Vinneth Bajaj, Mining Analyst at GlobalData, comments: “With several countries entering complete lockdown, mining companies have minimized their workforce to temporarily suspend operations and development activities. As of April 13, the progress of 35 mines currently under construction globally was disrupted due to such lockdowns. These projects account for around 9% of total mines under construction and around 10.5% of total capacity as measured by run-of-mine (ROM).”
Anglo American slowed the development of its US$5.3bn Quellaveco copper mine in Peru, withdrawing employees and contractors amid the country’s lockdown. The company also temporarily put Woodsmith, its newly acquired potash project in the UK, on hold from March 27. In Canada, Vale initially placed its Voisey’s Bay mine on care and maintenance for four weeks, but has since extended this for up to three months – delaying the development of its mine expansion project and transition from open pit to underground mining.
Similarly, in Chile, Teck Resources has suspended construction works at its Quebrada Blanca Phase 2 in the wake of the country’s lockdown measures. On the other hand, the updated feasibility study work of the Prieska copper-zinc project in South Africa is undergoing remotely, with the site being shut-down temporarily.
Bajaj continued: “Around 76 mineral projects advanced in Q1 2020, down from the 101 projects in Q4 2019. Assets moving forward into construction include the El Pilar copper project in Mexico, the Zaldivar copper-molybdenum in Chile, and North star iron ore in Australia.”
Zambian official says Glencore reverses plan to shutter copper mines
Glencore told the Zambian government this week that it wants to keep operating its Zambian copper mining subsidiary Mopani Copper Mines (MCM), not shutter the operations, mines ministry permanent secretary Barnaby Mulenga said on Sunday.
Glencore’s decision to put MCM under “care and maintenance” sparked a backlash from Zambia’s government, which threatened to revoke the firm’s mining licences because it said Glencore did not give enough notice before suspending the mines.
Mopani Copper Mines is 73.1% owned by Glencore, 16.9% by First Quantum Minerals and 10% by ZCCM-IH
ZAMBIA’S MINISTERS OF MINES, FINANCE, HOME AFFAIRS, AND LABOUR, WILL HOLD A VIDEO CONFERENCE WITH GLENCORE ON MONDAY TO DISCUSS THE ISSUE
“The government wants to see a win-win situation and respects investors but we need to protect the interests of Zambians,” Mulenga told Reuters in a telephone interview.
Zambia’s ministers of mines, finance, home affairs, and labour, will hold a video conference with Glencore on Monday to discuss the issue, Mulenga said. “We expect to make a lot of progress in this meeting,” he added.
A Glencore spokesman declined to comment on whether the company wanted to keep MCM open, and referred Reuters to an earlier statement.
“Following Mopani’s recent announcement regarding the transition of its mining operations to care and maintenance, Glencore is currently in discussions on the way forward with the Government of Zambia,” Glencore said in Tuesday’s statement.
MCM, which produced 119,000 tonnes of copper in 2018, is 73.1% owned by Glencore, 16.9% by First Quantum Minerals and 10% by Zambia’s mining investment arm ZCCM-IH.
Newmont to reopen some Canadian, South American mines in ‘days or weeks’
Newmont is looking to restart in as soon as days some of the four Canadian and South American gold mines that it shut last month to curb the spread of the new coronavirus, Chief Executive Tom Palmer said on Friday.
The world’s biggest gold miner wound down operations at its Yanacocha mine in Peru in mid-March and a week later placed two more mines in Canada and one in Argentina on care and maintenance as it sought to safe-guard the health of its workers and comply with government regulations.
The move, which impacted its Musselwhite operations in northern Ontario, and Eléonore mine in Quebec as well as Cerro Negro in Argentina, came as it withdrew its full-year guidance and said some production could be deferred into 2021.
On April 4 the company said it would scale back operations at its Penasquito gold mine in Mexico.
AUTHORITIES IN BUENOS AIRES AND QUEBEC CITY HAVE LIFTED RESTRICTIONS AROUND MINING WHICH THEY HAVE DEEMED AS AN “ESSENTIAL SERVICE”
But as the coronavirus shows signs of peaking, and authorities in Buenos Aires and Quebec City have lifted restrictions around mining which they have deemed as an “essential service”, Newmont is looking to a phased restart, Palmer said.
“I would expect we would be able to bring operations that have been on care and maintenance back into some level of production,” Palmer told Reuters by phone from Perth.
“In those countries where restrictions have been lifted… it is days or weeks,” he said, without specifying how long other mines may take to restart.
The novel coronavirus has impacted miners globally as governments have shut down borders and transport and mandated people stay at home to curb the spread of the virus that has infected more than 2 million and killed over 143,000, according to a Reuters tally.
Palmer also said that discussions were continuing with all levels of government as well as local communities in countries “to ensure we can demonstrate that we can maintain through our protocols the health and safety of everyone involved”.
China to inspect tailings dams after spill at molybdenum mine
China has launched a one-month probe into the country’s tailings dams after a spill at a molybdenum mine last month contaminated water supplies to the northeastern province of Heilongjiang.
Mining waste flowed out of a Yichun Luming’s tailings storage facility in March, polluting water up to 110 km downstream and forcing the company to halt production.
China’s Ministry of Emergency Management and the Ministry of Ecology and Environment pledged on Friday to conduct centralized investigations of hidden risks at tailings dams.
The inspections, they said in a jointly held videoconference, will focus on facilities close to residential areas, out of service for an extended time, or likely to cause major environmental pollution along the Yangtze and Yellow Rivers.
The announcement comes more than a year after a major tailings accident at Vale’s (NYSE: VALE) Brazil Córrego do Feijão iron ore mine, which killed 270 people and contaminated nearby streams.
IN THE PAST YEAR, ORGANIZATIONS AND MINERS ACROSS THE GLOBE HAVE STEPPED UP EFFORTS TO SET GLOBAL STANDARDS FOR TAILINGS DAMNS
Until then, there were no set of universal rules defining exactly what a tailings dam is, how to build one and how to care for it after it is decommissioned.
Previous effort to improve processes included the World Mine Tailings Failures, an online database aimed at exposing the cause of tailing dams disasters, giving direction on how to prevent them.
Only in the past year, however, have organizations and miners across the globe stepped up efforts to set global standards.
The International Council on Mining and Metals (ICMM), a London-based industry group representing 27 major mining companies, formed an independent panel of experts in charge of developing global standards for tailings facilities.
The Church of England, which invests in mining companies through its pensions for retired clergy, along with its partners, launched in April 2019 a global inquiry into mining waste storage systems of more than 700 resources companies.
It now asks companies to disclose data on tailings dams on a regular basis.
Rio cuts capex and copper expectations
PERTH (miningweekly.com) – Diversified major Rio Tinto on Friday announced that it would cut its capital expenditure (capex) by some $2-billion in the wake of the Covid-19 pandemic, while also lowering its copper production guidance for the full year.
The miner told shareholders that capex for the full year would be between $5-billion and $6-billion, down from the previous guidance of $7-billion, partly owing to Covid-19 constraints, and partly owing to the favourable currency impact from the strong US dollar.
Rio Tinto CEO Jean-Sebastian Jacques
The miner said that the capex originally planned for 2020 could subsequently flow into 2021 and 2022.
Rio reported that all major projects being undertaken by the company progressed well in the first quarter ended March, but were now being affected by the Covid-19 restrictions.
“The team is investigating ways to mitigate Covid-19 impacts, including those associated with roster changes, travel restrictions and the design and fabrication of long-lead items in China and Europe. While it is too early to estimate, the restrictions are likely to have some impact on our progress,” the company said.
“In these uncertain and unprecedented times, we continue to deliver products to our customers with our first priority to protect the health and safety of all our employees and communities,” said CEO Jean-Sebastian Jacques
Mantashe on Coronavirus COVID-19 amended regulations
The Department of Mineral Resources and Energy has been in continuous engagements with key stakeholders in the Mining and Energy Industries to give effect to the direction by President Ramaphosa that government should -among others – “evaluate how we will embark on risk-adjusted measures that can enable a phased recovery of the economy…”.
In this regard we are proactively managing issues directly affecting mining and energy, in the interests of ensuring employee health and safety, as well as ensuring that these sectors we regulate are able to meet their obligations during this period, and are better positioned to ramp up production systematically once the lockdown has been lifted.
The following are the amendments to the National Disaster Management Act, specific to mining and energy:
Energy and petroleum products
To ensure the continuous supply of energy and petroleum products to society: (a) collieries that supply Eskom shall continue to operate at full capacity; and (b) refineries shall operate at full capacity to avoid shortage of fuel, and such operations shall include refineries, smelters, plants and furnaces
Mining operations, excluding collieries that supply Eskom, shall be conducted at a reduced capacity of 50% during the period of the lockdown, and thereafter at increasing capacity as determined by the Cabinet member responsible for mineral resources and energy. We must maintain a risk-based approach.
The following conditions apply to the starting and increasing of capacity:
- A rigorous screening and testing program must be implemented as employees return to work;
- the mining industry must provide quarantine facilities for employees who have tested positive for the COVID-19;
- data collected during the screening and testing programme must be submitted to the relevant authority;
- mining companies must make arrangements to transport their South African employees from their homes to their respective areas of operations;
- in accordance with these Regulations and other regulations applicable in neighbouring SADC countries, workers from these neighbouring countries will be recalled at the end of lockdown in their respective countries.
Rio lowers copper target at Oyu Tolgoi
Rio Tinto (ASX, LON, NYSE: RIO) signalled on Friday a recovery in China’s economy as it reported improved shipments of iron ore to the country, but cut its forecast for annual copper output citing coronavirus-related disruptions.
The company, the world’s top iron ore miner, posted higher-than-expected output of the steelmaking ingredient for the first three months of the year. Production stood at 77.8 million tonnes, up 2.4% from the same period last year, despite a cyclone tearing through Rio Tinto’s Western Australian operations in February.
The miner, which makes most of its profits from China, shipped 72.9 million tonnes of iron ore in the three months to March, up 5.5% from a year ago, yet lower than some analysts had expected.
“Demand in China continues to recover,” chief executive, Jean-Sébastien Jacques, said in a statement. He added that the group’s customer order books “remained healthy.”
Just as most global miners, Rio Tinto has been hit by the coronavirus crisis. In March, it suspended operations at its mines in South Africa, and slowed activity at its Canada and Mongolia units to comply with government measures to contain the outbreak.
Rio Tinto revealed that production of copper, one of its key commodities, would not reach a previous production target of between 530,000 and 570,000 tonnes.
It now expects to churn out between 475,000 and 520,000 tonnes, due to repair works at its Kennecott mine in the US, which was affected by an earthquake in March.
Fears that its 30%-owned Escondida mine in Chile, the world’s biggest copper operation, could soon take a hit, also weighed on the guidance downgrade.
Rio Tinto also flagged copper and gold output drops at its already troubled 1ou Tolgoi mine in Mongolia, where it is carrying out an underground expansion expected to lift production from 125,000–150,000 tonnes in 2019 to 560,000 tonnes at peak output, targeted for 2025.
The company confirmed last year that the project was running between 16 months and 30 months late and roughly $1.2 billion to $1.9 billion over budget.
RIO TINTO NOW EXPECTS TO CHURN OUT BETWEEN 475,000 AND 520,000 TONNES OF COPPER
There were fresh signs of delays on Friday, after it said that it would have to bring experts on site to rectify industrial ropes in the largest and most important access shaft to the underground mine, Shaft 2.
Those ropes service a giant elevator that allows workers, equipment and ore to move between the bottom of the mine, 1.3 km underground, and the surface.
Rio Tinto’s subsidiary and 1ou Tolgoi operator, Turquoise Hill Resources (TSX, NYSE:TRQ), said the covid-19 pandemic was making it hard to get experts to the remote Mongolian mine to conduct “rectification work” on the ropes.
Consol to temporarily idle mine in Washington County
Consol Energy Inc. is temporarily idling one of its mines in southwestern Pennsylvania.
Enlow Fork, part of the vast underground mining complex Consol (NYSE: CEIX) owns in Greene and Washington counties, is being shut due to weakness in the coal markets due to COVID-19. It wasn’t clear how many employees would be impacted by the idling; there are 1,500 employers and contractors at the entire mining complex that includes Bailey and Harvey mines.
“We will assess and monitor the ever-changing situation in the global marketplace and will evaluate options continuously, as we navigate through this pandemic,” Consol said in a statement Tuesday. “As always, we intend to run our operations safely and compliantly, with our production based on market conditions and customer inventories.”
The 29-year-old Enlow Fork had two longwall units and six continuous mining units in operation producing about 10 million tons of coal in 2018.
Consol had just gotten back one of its other mines, Bailey, on Monday after a two-week shutdown sparked by two employees testing positive for COVID-19. The mine reopened after it was deep cleaned and shifts staggered.
The coal industry, even before the global pandemic, had been challenged. One of the largest mining companies, Murray Energy Corp., is in Chapter 11 bankruptcy. Another major Greene County employer, Contura Energy (NYSE: CTRA), announced April 3 that it was temporarily idling most of its mines due to market conditions. That did not include Cumberland Mine, which is in Greene County.