August Newsletter – 08.08.2022
- Chilean authorities suspend Alcaparrosa’s operations due to giant sinkhole
- China’s role in supplying critical minerals for the global energy transition: What could the future hold?
- Globally more is being spent on coal than copper mining
- Canada sends mining equipment, personnel to the Dominican Republic to help rescue trapped miners
- Hundreds of new mines required to meet 2030 battery metals demand — IEA report
- Boris Johnson’s half-brother to sue Mongolia for $50mn in a mining investment dispute
- Turquoise Hill flags $200 million cost increase at Oyu Tolgoi
- Mining projects may attract bank financing as Great Barrier Reef recovers
Chilean authorities suspend Alcaparrosa’s operations due to giant sinkhole
Coal mining is back in the black
New data from Industrial Info Resources show 4,790 metals and minerals capital projects (including mining, processing and refining) with a combined investment value of $443 billion are currently under construction around the world. A further 10,586 projects are under active planning and engineering – for a combined total of $1.11 trillion.
Joe Govreau, VP of Research at Industrial Info Resources, says that is an 8% increase from the preceding period as projects delayed by the pandemic are being restarted. Mining projects – from early exploration through to construction – make up half the global total.
The top seven miners have now upped capital outlays by more than 50% from the depths of the industry downturn in 2017. Govreau sees “no reason why expenditures won’t continue to be elevated for the next several years or more as companies look to increase production to meet expected demand growth from the energy transition.”
Red metal goes green
The decarbonisation revolution is not off to a great start though, not if you compare investments in the worst of the fossil fuels in terms of emissions – coal – with that of copper, without which there simply is no green energy transition.
Copper’s metal intensity – kilograms required per MW produced – of renewable energy sources like solar and wind is nowhere near that of coal or gas. To generate 1MW of offshore wind energy around 8.2 tonnes of copper have to be installed. The same figure for coal is 882kg.
Canada sends mining equipment, personnel to the Dominican Republic to help rescue trapped miners
Cerro de Maimón operation.
Canadian personnel and equipment have been sent to the Dominican Republic to help rescue two men who have been trapped for a week in an underground mine at the Cerro de Maimón operation located in the central part of the island.
Cerro de Maimón produces copper and zinc and is owned by the Dominican Mining Corporation (Cormidom), a Dominican company controlled by foreign capital and shareholders.
On July 31, 2022, a landslide blocked gallery 265 trapping two of the 70 workers that were on site. The men ended up in a 375-square-meter space located about 31 metres below the surface.
Given that each worker wears a tracking device, mine personnel and local authorities were able to locate the trapped men within a few hours of the accident. They were also able to drill a section of the blocked shaft and introduce a pipe to provide the miners with food, water, and medication, as well as to communicate with them.
Due to the lack of expertise in the Dominican Republic on underground mining, President Luis Abinader reached out for help to the Canadian ministries of Foreign Affairs and Defense, as well as to the Armed Forces.
After internal coordination, the Canadian government decided to send a Boeing C-17 Globemaster military aircraft carrying mining excavation equipment weighing over 52,000 lbs.
Global battery and minerals supply chains need to expand ten-fold to meet projected critical minerals needs by 2030, a report published by the International Energy Agency (IEA) has found.
The report concludes the industry needs to build 50 more lithium mines, 60 more nickel mines and 17 more cobalt mines by 2030 to meet global net carbon emissions goals.
Pressure on the supply of critical materials will continue to mount as road transport electrification expands to meet net-zero ambitions. According to the IEA, demand for electric vehicle (EV) batteries will increase from around 340 GWh today to over 3500 GWh by 2030.
“Additional investments are needed in the short-term, particularly in mining, where lead times are much longer than for other parts of the supply chain. In some cases requiring more than a decade from initial feasibility studies to production, and then several more years to reach nominal production capacity,” the report reads.
The projected mineral supply until the end of the 2020s is in line with the demand for EV batteries in the ‘stated policies scenario’ of the IEA’s world energy model. But the supply of some minerals, such as lithium, would need to rise by up to one-third by 2030 to satisfy the pledges and announcements for EV batteries in the ‘announced pledges scenario (APS) of the same energy model.
“For example, demand for lithium – the commodity with the largest projected demand-supply gap – is projected to increase sixfold to 500 kilotonnes by 2030 in the APS, requiring the equivalent of 50 new average-sized mines,” according to the report.
Boris Johnson’s half-brother to sue Mongolia for $50mn in a mining investment dispute
The half-brother of ousted UK Prime Minister Boris Johnson says he will bring a $50mn lawsuit against Mongolia to try to recover an investment into a mining project that went horribly wrong.
As followed by bne IntelliNews, Maximilian Johnson, who works for the Hong Kong-based fund GRF2, invested $19mn along with several other big investors into the Zasag Chandmani multi-metal mine, but claim the mine’s owner, Buyantogtokh Dashdeleg, and two other senior managers at the mine, the CEO, Erdenebatkhaan, and the CFO, Tsend-Ayush of the project company Zasag Chandmani Mines, ran off with most of the money.
Initially Johnson and GRF2 took the case to the local authorities and arrest warrants were issued for the men and their passports were confiscated. However, in 2019 Dashdeleg appealed to a regional court that overturned the arrest warrant and he immediately skipped town and is now believed to be in the US.
The investigation has lain fallow since then, spurring Johnson to action. Johnson sent a notice of dispute to the Mongolian authorities on July 27 under the terms of the country’s bilateral investment treaty signed between the UK and Malaysia. The case is being brought by the Malaysia-based GRF Paragon, part of the fund’s group of holdings, Global Arbitration Review reports. The investors are represented by Signature Litigation in London.
Johnson has had a colourful career and came to Mongolia by way of Hong Kong. Born in Brussels where his father was working for the European Commission, he studied Russian at Oxford and ended up as a metals trader in Hong Kong for five years. He also did a stint at Goldman Sachs, where he got to know Simon Murray, the former head of investment company Hutchison Whampoa and commodity trader Glencore. Murray hired Johnson to work on mining investment projects in Mongolia due to his Russian skills and experience in the metals business.
Turquoise Hill flags $200 million cost increase at Oyu Tolgoi
haft 2 and above ground infrastructure to support underground development.
Canada’s Turquoise Hill Resources (TSX, NYSE: TRQ) flagged after markets closed on Thursday a $200 million cost increase for the ongoing expansion of the massive Oyu Tolgoi copper-gold mine in Mongolia.
The Montreal-based company currently estimates its base case incremental funding requirement at $3.6 billion, up from the $3.4 billion forecast at the end March.
Turquoise Hill said the updated cost and schedule for the ongoing underground expansion of Oyu Tolgoi incorporates the known, incremental covid-19 cost impacts, associated taxes and an estimate of further pandemic-related management costs over the remaining development schedule.
It means that the project total cost has climbed to $7.06 billion, almost $1.8 billion higher than the original estimate in 2015.
As of the end of the second quarter, the firm had invested a total of $5.3 billion in the Mongolian asset, leaving the $1.8 billion remaining.
Mining giant Rio Tinto (ASX, LON, NYSE: RIO), which controls and operates Oyu Tolgoi through its 51% stake in Turquoise Hill, is currently trying to buy all the shares it doesn’t already own in the Canadian miner.
Mining projects may attract bank financing as Great Barrier Reef recovers
Environmentalists had cited these events to lobby against the coal mining projects in Australia and foreign banks had stopped financing these projects
Bank financing for mining projects such as Adani Australia and Tatas in Indonesia is expected to revive with almost two-thirds of the Great Barrier Reef in Australia making a sharp recovery and recording the highest amount of coral cover in nearly four decades. Foreign banks were earlier hesitant to lend to the coal mining projects citing potential damage to the Great Barrier Reef – a UNESCO-protected area.
As per a report by the Australian Institute of Marine Science, a government agency, over the past 36 years of monitoring by it, the coral reefs in the region have shown an ability to begin recovery after disturbances. In the past, the Great Barrier Reef has suffered from widespread and severe bleaching because of rising ocean temperatures. Environmentalists had cited these events to lobby against the coal mining projects in Australia and foreign banks had stopped financing these projects.
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