April Newsletter – 27.04.2020



  • UN tribunal rules against Canada’s Edgewater in legal battle with Spain
  • China’s Yunnan launches 800,000 T metals stockpiling drive
  • China’s recent tailings leak the worst in 20 years
  • Glencore’s Congo unit Katanga Mining to go private, warns of possible COVID-19 impact
  • Zambia mining firms seek government relief amid coronavirus
  • Glencore says it will re-start Zambia copper mines if it reaches agreement with government
  • US judge dismisses action brought by Pebble mine opponents
  • Eskom notifies coal suppliers of potential force majeure on contracts
  • City vows to stop working with thermal coal mining companies

UN tribunal rules against Canada’s Edgewater in legal battle with Spain

pic1 Behre Dolbear newsletter 27.04.2020

Corcoesto gold project. (Image courtesy of Edgewater Exploration).

The United Nations Commission on International Trade Law (UNCITRAL) ruled against Canadian company Edgewater Exploration (TSX-V: EDW) in its long-standing legal battle with Spain related to the Corcoesto gold project in the northwestern region of Galicia.

This week, UNCITRAL dismissed Edgewater’s pretensions to recover the $35 million it had invested in Corcoesto prior to the project being denied permission by the Galicia Regional Government, known as Xunta.

“The company’s wholly-owned subsidiary, Corcoesto S.A. had commenced arbitration in 2016 under the Spain-Panama bilateral investment treaty and the UNCITRAL Arbitration Rules (1976). Following a hearing in Paris, France during April 2018, the Tribunal rejected, unanimously, four jurisdictional objections by Spain but upheld, by majority in a 2 to 1 decision, one jurisdictional objection by Spain and dismissed the claim on that basis. The dissenting arbitrator opined that the majority’s decision erred in both law and fact and that the Tribunal did have jurisdiction and should have decided the merits of the claim,” the Vancouver-based miner said in a media statement.

Edgewater added that the recent dismissal of the entire claim is a disappointment and that the company and its subsidiary are “considering avenues for legal redress, including an annulment proceeding in the French courts.”

This is how it all started

After purchasing the Corcoesto project in 2010 and having its environmental impact declaration approved by the Xunta in 2012, Edgewater completed a series of drilling programs, and technical studies designed to advance the project, upgrade and expand the mineral resources, and evaluate the economics.


The plan forecasted a 9.9-year mine life and a total output of a little over 1 million ounces of gold. The heap-leach, open-pit operation would use cyanide to extract the yellow metal, something that caused alarm among environmentalist groups.

According to the EID, the operation’s annual waste production would be 2.1 million tonnes, of which 2 million tonnes would be floatation waste and 100,000 tonnes would be leaching. The estimated total of waste production was to be 17,080,751 tonnes during the mine’s working life.

Following the approval of the proposal, the Xunta went back on its decision and said it would not green-light the mining project unless the Canadian company fulfilled a number of environmental, technical and financial requirements not contemplated in its plan.


China’s Yunnan launches 800,000 T metals stockpiling drive

China’s Yunnan province said on Sunday it would set aside 1 billion yuan ($141.22 million) to help businesses stockpile 800,000 tonnes of nonferrous metal as part of efforts to boost its real economy following the novel coronavirus outbreak.

The funds will be used to cover interests on bank loans taken out for the one-year stockpiling drive, which will include copper, aluminium, lead, zinc, tin, as well as minor metals germanium and indium and other nonferrous metals, the provincial government said on its website.

pic2 Behre Dolbear newsletter 27.04.2020

Kunming, Yunnan Province, where companies such as Yunnan Copper are located.

Stockpiling has been suggested by the China Nonferrous Metals Industry Association as a way to ease pressure on smelters hit by a slump in demand and plunging metals prices.


Yunnan, in southwest China, is home to major metal producers Yunnan Copper, Yunnan Aluminium and Yunnan Chihong Zinc & Germanium, all of which are under state-owned group Chinalco, as well as Yunnan Tin , the world’s biggest refined tin producer.

The money pledged will cover 80% of the interest on loans taken out to stockpile tin, germanium and indium, and 60% of the interest on loans to buy copper, aluminium, lead and zinc, the statement said.

Among other economic support measures outlined by the Yunnan government was a reduction in the cost of electricity and gas for some sectors – except high power-consuming industries – from Feb. 1 until the end of the year.

Hydropower-rich Yunnan has become a popular destination for Chinese aluminium smelters looking to use a cleaner source of electricity for the energy-intensive smelting process.


China’s recent tailings leak the worst in 20 years

China’s environment ministry said on Monday that a tailings breach last month at the country’s largest molybdenum mine was the worse environmental disaster in almost 20 years.

The spillage on March 28 at Yichun Luming’s tailings storage in the northeastern province of Heilongjiang sent 2.53 million cubic metres of mining waste into the local river system, reviving fears over the safety of ponds used for tailings.

The waste reached as far as 110 km (68.35 miles) southwest of the mining site, where the chemical oxygen demand reading (DOC) — a measure of water quality — was 5.7 times higher than standard levels, Reuters reported.


While there were no casualties, 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 joint video conference, 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.

A 2018 assessment of the site by the Chinese Ministry of Emergency Management concluded that the company and its tailings storage “had serious potential safety risks.” The mine had already been fined at least twice for concerns related to tailings management.

Tailings dams have been under close scrutiny globally since last year’s tailings dam collapse at Vale’s (NYSE: VALE) Brazil Córrego do Feijão iron ore mine, which killed 270 people and contaminated nearby streams.

Until then, there was no set of universal rules defining exactly what a tailings dam is, how to build one or how to care for it after it is decommissioned.

Previous efforts 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.


Glencore’s Congo unit Katanga Mining to go private, warns of possible COVID-19 impact

JOHANNESBURG/LONDON (Reuters) – Glencore is taking its Toronto-listed Congo business Katanga Mining private, the subsidiary said on Wednesday, citing limited trading liquidity and the costs of a stock exchange listing as reasons for the move.

Katanga Mining, which produces copper and cobalt from mines in the southern copper belt of Democratic Republic of Congo, was first listed in August 1997 and Glencore owns 99.46% of its shares.

Its de-listing comes as depressed copper and cobalt prices due to the COVID-19 pandemic put added pressure on miners also struggling with disruption to logistics chains linking remote mines to end-users of the metals in Asia.

Katanga shareholders other than Glencore, including Blackrock and nine other minority holders, will receive 0.16 Canadian dollars in cash per share – a 100% premium to the closing price on Tuesday, and a special committee of Katanga’s board recommended they approve the deal, the statement said.

Shares in Katanga surged 113.3% to hit the offer price by 1518 GMT after the agreement between Glencore and Katanga was announced. The stock listed at 0.265 Canadian dollars in August 1997 and peaked at 28 Canadian dollars in July 2007.

Among the reasons for going private, Katanga cited the “attractive” premium being given to shareholders, commodity price risks, operational risks, financial risks, and the lack of sources of financing without support from Glencore.

Katanga separately said its copper cathode production increased to 67,298 tonnes in the first quarter of 2020, from 65,402 tonnes in the last quarter of 2019.

Production of cobalt decreased to 5,296 tonnes in Q1 of 2020, from 6,173 tonnes in Q4 of 2019.


Zambia mining firms seek government relief amid coronavirus

LUSAKA (Reuters) – The Zambia Chamber of Mines has urged the government to urgently engage with the sector and agree relief measures to address the issues facing mining companies in the midst of COVID-19.

The chamber said in a statement it had submitted a broad three-phase economic plan to the government, to urgently manage the economic impact arising from the coronavirus pandemic.

“Since then all mining industry stakeholders have been hoping that some significant stimulus measures would be instituted, as is being seen across the world,” it said.

This proposal included immediate relief measures that could be followed by an emergency support package whose financing could be sought from the IMF and World Bank, the chamber said.

“This was with a view to providing some guidance to government on the critical areas to be urgently addressed,” the statement said.

The proposal also included the implementation of a “fight back” fiscal regime once the COVID-19 pandemic had abated and investment was needed to rebuild the economy, it said.

The IMF last week forecast Zambia’s economy will contract by 3.5% in 2020, from growth of 1.5% in 2019, as coronavirus hits economies across the world. Zambia’s economic activity has also been hampered by widespread power shortages.


Glencore says it will re-start Zambia copper mines if it reaches agreement with government

JOHANNESBURG, April 20 (Reuters) – Glencore on Monday said its Zambia subsidiary Mopani Copper Mines would re-start “if an agreement is reached” with Zambia’s government, and it would then give the government notice to go on care and maintenance after 90 days.

“Mopani has submitted a proposal to the government of Zambia,” Glencore said in a written statement after Zambia’s mines ministry said the company had rescinded its earlier decision to shutter the mines.

“Mopani will continue to engage with the government on potential solutions to its current challenges,” it added.


US judge dismisses action brought by Pebble mine opponents

Northern Dynasty Minerals (TSX: NDM) announced on Monday that a US federal district court judge has granted the US Environmental Protection Agency’s (EPA) motion to dismiss a case brought by a collection of activist groups who are against the company’s proposed Pebble copper-gold mine in Alaska’s Bristol Bay region.

The litigation challenged the EPA’s decision in July 2019 to withdraw its prior regulatory action under Section 404(c) of the Clean Water Act, initiated in 2014 by the Obama Administration, which sought to pre-emptively veto the Pebble project before permit applications had been filed or an Environmental Impact Statement (EIS) permitting process was undertaken.

In granting the motion to dismiss, the judge determined that the decision on whether or not to take action under the Clean Water Act — the regulation which the EPA based its 2014 pre-emptive veto on — is at “the agency’s discretion.”

The Pebble project can now continue to be vetted under the National Environmental Policy Act’s permitting process. Currently, the mine’s federal permit application is pending with the US Army Corps of Engineers, and the EPA retains the right to veto the permit, a power that was reaffirmed by the federal judge’s ruling.


Shares of Northern Dynasty opened 11% higher on Monday on the favorable court decision. The Vancouver-based miner has a market capitalization of C$345 million.

The latest court decision removes another obstacle to receiving a final EIS and record of decision on the Pebble project, said Tom Collier, chief executive of Northern Dynasty’s Alaska-based subsidiary.

The permitting process is still on track for completion by mid-2020, despite the ongoing situation with covid-19, Northern Dynasty said last month.

“We have long held that the preemptive veto against Pebble was poor public policy and that decisions about the merits of developing a mine at the Pebble prospect should be made through the traditional permitting process,” Collier added.

The Pebble project proposal has been the subject of controversy in the southwest Alaska region for the past few years, in particular with regards to its potential risk to the watershed, salmon and other fisheries. However, a leaked draft of the EIS suggests that the nearby water resources could co-exist with the mine.

In the past, Northern Dynasty and Alaska’s congressional delegation have complained of government overreach, claiming the EPA tried to veto the project before seeing an application. The company eventually applied for a Clean Water Act permit following the Obama Administration in late 2017.

If permitted, Pebble would become North America’s largest mine, with an estimated measured and indicated resource of 6.5 billion tonnes containing 57 billion lb copper, 71 million oz gold, 3.4 billion lb molybdenum and 345 million oz silver.


Eskom notifies coal suppliers of potential force majeure on contracts

South Africa’s struggling state-owned utility Eskom said on Monday it had sent letters to its coal suppliers warning that it could declare force majeure if demand continued to drop during the nationwide lockdown.

The government has imposed a nationwide lockdown, which started on March 27 and has been extended until the end of April, as it battles to curb the spread of the virus in Africa’s most industrialised economy.

“We have put some of our generation units out of service during this period of the lockdown because of the drop in demand. We anticipate that the demand will pickup soon after the lockdown has been lifted,” said Eskom spokesman Sikonathi Mantshantsha adding that it was currently still taking coal.

Exxaro Resources said its subsidiary Exxaro Coal, had received letters calling force majeure on the coal supply agreements for the supply of coal to Eskom’s Medupi and Matimba power stations for the period starting on April 16 until one month after national lockdown has been completely lifted.

“The effect of the letters received by Exxaro, is that Eskom will not be taking the full contractually agreed tons of coal for the aforesaid period,” Exxaro said in a statement.

However Exxaro, which is one of Eskom’s main coal suppliers, said it was of the view that this did not constitute force majeure as stipulated in the coal supply agreements, as the power stations were still capable of supplying power and it planned to “vigorously defend” its position in the matter. South Africa, one of the world’s top coal exporters, relies on coal for majority of its power.


City vows to stop working with thermal coal mining companies

Citigroup Inc. will stop providing financial services to thermal coal-mining companies over the next 10 years to help accelerate the economy’s shift away from fossil fuels.

By 2025, the bank won’t provide underwriting and advisory services to the industry and will cut its credit exposure in half, Citigroup said Monday in a statement. It plans to eliminate its exposure entirely by 2030.

“Citi recognizes that emissions from fossil-fuel sectors in particular must be drastically reduced in the coming decade,” the company said in the statement. “The shift away from fossil fuels in pursuit of renewable and other sources of low-carbon energy will have a significant effect on clients in coal-fired power generation, coal mining and certain segments of the energy sector.”

The lender has been vocal about its efforts to mitigate the effects of climate change. Last year, it reached a goal four years ahead of schedule to finance $100 billion of activities that address the problem. It also promoted Val Smith to be the New York-based firm’s first-ever chief sustainability officer.

Citigroup updated its environmental and social policy framework on Friday to include the new targets, as well as a commitment to reject financing for oil and gas exploration and production in the Arctic. The company said it hasn’t provided such financing in the past.

“For years, we have been speaking out about the need to keep drill rigs out of our sacred lands in the Arctic Refuge, and it’s amazing that a growing number of major banks are listening,” said Bernadette Demientieff, executive director of the Gwich’in Steering Committee, a group formed to combat oil-drilling proposals in the region.

Citigroup said it would also stop providing project-related financial services for coal mines and coal-fired power plants. The firm had previously made exceptions for projects in energy-impoverished countries.



comm1 Behre Dolbear newsletter 27.04.2020comm2 Behre Dolbear newsletter 27.04.2020uxa_com (4) Behre Dolbear newsletter 27.04.2020