August Newsletter – 10.08.2020
NEWSLETTER
Canadian miner’s multi-million dollar suit against Kazakhstan dismissed
The forgotten mine that built the atomic bomb
China steelmaker HBIS lines up investment in Peru iron ore mine
The Pentagon wants to end its reliance on China for rare earth minerals. But can it be done?
China’s appetite for iron ore prompts Brazilian miner Vale to explore new deep water port
Nevada Democrats shift tactics, revisit mining tax battle
Diversifying the tungsten supply chain
Japan’s steel woes set to be laid bare as top mills give updates
China’s Rare Earth Threat Sparks An International Backlash
Canadian miner’s multi-million dollar suit against Kazakhstan dismissed
Almaty Lake in Kazakhstan.
An international tribunal has dismissed a nearly $1 billion claim against Kazakhstan brought by a Canadian junior miner over a botched deal to operate gold mines in the country.
Gold Pool JV Ltd. was charged in 1996 with managing a company called Kazakhaltyn JSC, which held rights to operate gold mines in Kazakhstan. The following year, the government of the Central Asian country revoked the contract.
Almost 20 years later, in 2016, Gold Pool initiated a United Nations Commission on International Trade Law (UNCITRAL) arbitration proceedings against Kazakhstan based on the Canadian-Soviet bilateral investment treaty.
The pact was signed two years before Kazakhstan claimed its independence, which theoretically made it the legal successor to the treaty. The country, however, refused to assume any obligations based on available related documents.
KAZAKH MINISTER OF JUSTICE MARAT BEKETAYEV SAID GOLD POOL FAILED TO COMPLY WITH ITS CONTRACTUAL OBLIGATIONS
Gold Pool was hoping to obtain a $917 million compensation for alleged losses. The tribunal, however, ruled that Kazakhstan had lawfully cancelled the contract.
“Gold Pool received management of Kazakhaltyn in March 1996 to pay off the company’s debts, restore and modernize production, create a favorable financial environment and an effective market strategy,” Kazakh Minister of Justice Marat Beketayev said in a statement.
He added that the Canadian company failed to comply with its contractual obligations.
Beketayev noted that Gold Pool stopped paying employee wages and the gold mines assigned to it were mismanaged. Some mines were idled, while others were abandoned and flooded, and the company’s production facilities were not upgraded, according to the minister’s statement.
The ruling differs from one reached in October last year by another tribunal. That court awarded more than $40 million in damages to another Canadian miner, World Wide Minerals.
https://www.mining.com/kazakhstan-wins-multi-million-suit-against-canadian-miner/
The forgotten mine that built the atomic bomb
The Congo’s role in creating the bombs dropped on Hiroshima and Nagasaki was kept secret for decades, but the legacy of its involvement is still being felt today.
“The word Shinkolobwe fills me with grief and sorrow,” says Susan Williams, a historian at the UK Institute of Commonwealth Studies. “It’s not a happy word, it’s one I associate with terrible grief and suffering.”
Few people know what, or even where, Shinkolobwe is. But this small mine in the southern province of Katanga, in the Democratic Republic of the Congo (DRC), played a part in one of the most violent and devastating events in history.
More than 7,500 miles away, on 6 August, bells will toll across Hiroshima, Japan, to mark 75 years since the atomic bomb fell on the city. Dignitaries and survivors will gather to remember those who died in the blast and resulting radioactive fallout. Thousands of lanterns carrying messages of peace will be set afloat on the Motoyasu River. Three days later, similar commemorations will be held in Nagasaki.
No such ceremony will take place in the DRC. Yet both nations are inextricably linked by the atomic bomb, the effects of which are still being felt to this day.
“When we talk about the Hiroshima and Nagasaki bombing, we never talk about Shinkolobwe,” says Isaiah Mombilo, chair of the Congolese Civil Society of South Africa (CCSSA). “Part of the second world war has been forgotten and lost.”
Uranium from Shinkolobwe was stockpiled by the US so that it could build the atomic bombs that were dropped on Japan in 1945
The Shinkolobwe mine – named after a kind of boiled apple that would leave a burn if squeezed – was the source for nearly all of the uranium used in the Manhattan Project, culminating with the construction of the atomic bombs dropped on Japan in 1945.
But the story of the mine didn’t end with the bombs. Its contribution to the Little Boy and Fat Man has shaped the DRC’s ruinous political history and civil wars over the decades that followed. Even today the mine’s legacy can still be seen in the health of the communities who live near it.
“It’s an ongoing tragedy,” says Williams, who has examined the role of Shinkolobwe in her book Spies in the Congo. She believes there needs to be greater recognition of how the exploitation and desire to control the mine’s contents by Western powers played a role in the country’s troubles.
https://www.bbc.com/future/article/20200803-the-forgotten-mine-that-built-the-atomic-bomb
China steelmaker HBIS lines up investment in Peru iron ore mine
BEIJING (Reuters) – HBIS Resources Co Ltd, a unit of China’s second-biggest steelmaker HBIS Group, said on Monday it had signed an initial deal to develop the Pampa de Pongo iron ore mine in Peru alongside current licence-holder Zhongrong Xinda.
The two Chinese companies plan to set up a joint venture to work on the first stage of the mine, which also contains copper, cobalt and gold reserves, an HBIS Resources filing to the Shenzhen Stock Exchange showed.
The scope of cooperation includes mine and port construction and operation, it added. No value was put on the framework agreement, which was signed on July 31 and will serve as a basis for negotiations between the two firms.
Investing in Peru, the world’s second-biggest copper producer after neighbouring Chile, would be HBIS’ first foray into South America. It coincides with steady demand from Chinese steel mills as prices of iron ore, the main steel-making ingredient, top $100 a tonne.
Qingdao-based Zhongrong Xinda acquired the rights to Pampa de Pongo in 2016 and its subsidiary Jinzhao Mining Peru is the project’s operator.
A portfolio published by Peru’s Ministry of Energy and Mines in October 2018 said Pampa de Pongo, in the Arequipa region, could produce 28.1 million tonnes of iron per year and was expected to start operations in 2023.
It put the investment required at $2.2 billion.
Peru in mid-March imposed a mining lockdown to curb the spread of the new coronavirus, but has since eased restrictions. The country has reported more than 400,000 confirmed coronavirus cases and more than 18,000 deaths from COVID-19, the respiratory disease the virus causes.
The Pentagon wants to end its reliance on China for rare earth minerals. But can it be done?
The Pentagon is funding projects at two U.S. mines and one magnet manufacturing company that could offer a fix to America’s dependence on rare earth minerals from China. But uncertainty hangs over whether the mines can deliver enough material, and how soon.
The U.S. does not have a full, domestic supply chain to produce and process rare earth minerals — used to make armored vehicles, precision-guided weapons, batteries and night-vision goggles — yet dozens of mines have recently begun to design processing facilities and new methods of rare earth production, such as recycling.
Washington’s quest for a solution on how to end China’s reign over the market is not new, but in the last couple of years, rare earth mineral dependence has been lumped in with the Trump administration’s broader push to revitalize U.S. industries and “decouple” from China amid escalating tensions. China is the largest global processor of rare earths, accounting for around 80 percent of U.S. rare earths supply.
What’s new? The Pentagon this week signed a contract with Australia’s Lynas Corp., owner of the Mount Weld mine in Western Australia, to begin design work and research on a rare earth separation facility in Texas. Reuters reported that the Pentagon has also resumed funding to MP Materials, owner of Mountain Pass mine in California, to create a facility there. A Chinese investor owns almost a tenth of MP Materials, prompting concern and a brief pause in funding.
The department also announced late last week it’s giving $28.8 million under the Defense Production Act Title III to Urban Mining in Texas. That company aims to provide an alternative, cleaner way of providing critical rare earth magnet components to reduce dependency on China through recovering rare earths from various types of electronic waste. Only a small fraction of rare earth elements within end products come from recycled materials so far, as it’s a newer type of manufacturing.
Up in the air: Rare earth industry analysts say it’s an open question as to whether the mines selected by the Pentagon will be able to succeed in their designs, as building a processing facility could take significant investment and many years to fully operate. A debate among mineral economists and experts focuses on whether the mines produce enough of both heavy and light rare earth minerals to be commercially viable.
https://www.politico.com/news/2020/08/03/pentagon-rare-earth-minerals-china-390939
China’s appetite for iron ore prompts Brazilian miner Vale to explore new deep water port
- Vale eyes a deep-berth port in Brazil to use more of its massive Valemax ships after China last month approved four new ports to host them
- China wants to diversify its iron ore sources to ensure supply and keep prices down as domestic demand surges for steel amid economic recovery
Brazilian iron ore mining giant Vale is in talks with the Alcantara Port Terminal on Brazil’s northern coast to increase iron ore shipments to China – a move that aligns with China’s recent attempts to diversify its sources of the critical steelmaking ingredient amid a surge in domestic demand.
Alcantara offers a deep water port that could host so-called Chinamax or Valemax iron ore carriers – ships as big as some skyscrapers that can carry much more cargo than normal iron ore transport vessels. Vale is considering an increase in the use of the ships after China last month approved four additional ports on its coast to host them.
In June, China imported record amounts of iron ore to satisfy a sharp increase in demand for steel products to supply the country’s infrastructure and property building boom. About 60 per cent of that supply came from Australia, pushing up the price of ore to US$110 per tonne in July – a level not seen since August 2019.
Alcantara terminal’s private operator, Grao Para Multimodal (GPM), which already has a 25-year concession contract to build and operate the port and the new Maranhao Railway linked to the port, has been in discussions with the miner since late last year over a potential take-or-pay deal – a contract that guarantees a certain amount of throughput of iron ore – and a certain level of capital investments. However, such a deal has not yet been reached.
Nevada Democrats shift tactics, revisit mining tax battle
CARSON CITY, Nev. (AP) — Nevada lawmakers passed three resolutions on Sunday that propose changing provisions of the state Constitution that cap the amount of taxes that can be levied on the mining industry and require two-thirds majorities in the Legislature to raise taxes.
Battles over how to tax mining in Nevada have raged since prospectors first struck silver in the 19th century. The state Constitution requires mining businesses be taxed at less than 5% of what are called net proceeds — profit minus deductions for certain costs.
The resolutions passed through both the state Senate and Assembly and constitute a first step to increasing taxes on mining businesses. To amend Nevada’s Constitution, lawmakers must approve proposed amendments in two legislative sessions and then seek approval from the majority of voters in a subsequent election.
Democrats have long argued that mining businesses don’t pay a fair share of taxes. Increasing taxes on minerals like silver, gold and gypsum, they say, will provide needed funding for health care, education and other state programs.
The budget crunch sparked by the pandemic has amplified calls to cap deductions or create a tax structure based on gross proceeds, like Arizona and Colorado, which would allow for less deductions than taxing net proceeds.
In early July, the Democratic-controlled Legislature proposed a bill to limit the tax deductions mining businesses could claim. The bill died after they failed to sway any Republicans and fell short of the two-thirds majority that Nevada law requires to increase taxes.
Republicans accused the Legislature’s Democratic leaders of rushing through the proposals and bypassing constitutional safeguards that purposefully make tax increases difficult. But Democrats said moving three different proposals along in the process allowed the Legislature to keep its options open and gather more information and perspectives on the potential effects of changing the tax structure for mining businesses.
https://news3lv.com/news/local/nevada-democrats-shift-tactics-revisit-mining-tax-battle
Diversifying the tungsten supply chain
The global tungsten industry has yet to achieve success in expanding a supply chain outside China’s dominant resource base, but new raw material sources could change the picture.
Tungsten is on the US government’s list of minerals considered critical to its economic and national security.
The mineral is primarily used to make wear-resistant metals and the aerospace and automotive industries rely on tungsten alloys. The Tungsten market worldwide is projected to reach over 78.4 thousand metric tons by the year 2025.
Most of the world’s tungsten is extracted from mines throughout Asia, and China has long held dominance over the global tungsten supply.
Almonty Industries (TSE: AII) is a niche player in Tungsten, servicing mainly heavy industries, with operating mines in Spain, Portugal and South Korea.
“TUNGSTEN IS A RARE COMMODITY TO FIND – IT DOESN’T EXIST IN MANY PLACES AND IS EXTREMELY DIFFICULT TO EXTRACT. IT’S PART ART AND PART SCIENCE, TO PRESERVE A DECENT RECOVERY”
Lewis Black, CEO, Almonty Industries
Almonty processes and ships tungsten concentrate from its Los Santos mine in western Spain and Panasqueira mine in Portugal, and is working on developing its Sangdong mine in Gangwon Province, South Korea.
In Korea, Almonty is starting construction on Sangdong, which CEO Lewis Black said was formerly the world’s largest tungsten mine, after closing a €3.2 million ($3.6m) private placement in July.
“[Tungsten] is top of US strategic mineral list… with the highest risk of depletion,” Black told MINING.COM. “It’s a rare commodity to find – it doesn’t exist in many places [and is] extremely difficult to extract. It’s part art and part science, to preserve a decent recovery.”
Black pointed out that when the US-China trade dispute emerged, it reminded the industry why supply chain diversification is important.
Nearly 40% of Chinese tungsten production comes from artisanal mines in Rwanda and the DRC, and with environmental and social governance (ESG) issues topping corporate agendas – buyers want supply chain transparency.
Almonty’s mines supply the North American market via two plants – one in upstate NY and one in Pennsylvania, and supply re-exported into either Japan or the EU, then re-imported back into the US to be used in automotive, aerospace and DOD industries.
https://www.mining.com/diversifying-the-tungsten-supply-chain/
Japan’s steel woes set to be laid bare as top mills give updates
Steel producers in Japan, mired in one of their biggest postwar crises, are likely to reveal that troubles have crept into the new fiscal year when they start reporting earnings this week.
Nippon Steel Corp., the country’s top producer and third-biggest in the world, and JFE Holdings Inc. have been pummeled this year as the coronavirus pandemic hurt already weak Japanese demand and the domestic industry faces intensifying rivalry from other Asian steel-makers. Analysts expect the companies to report losses in the first quarter after both Nippon and JFE posted record annual losses in the year ended March 31 amid multi-billion dollar impairments.
Nippon Steel reports earnings Tuesday and JFE is expected to release its quarterly figures Aug. 12.
“There’s little good news,” said Takeshi Irisawa, an analyst at Tachibana Securities Co. in Tokyo. “The key focus at their quarterly earnings is whether there are any visible signs that demand will bottom out at some point and head for a recovery.”
Steel-makers outside China have struggled as COVID-19 lockdowns curbed production and demand, with a recent resurgence of virus cases further clouding the outlook for the global economy. ArcelorMittal said last week it remained cautious about a nascent recovery in its core steel markets, and was considering “structural changes” in light of the pandemic.
In Japan, output has slumped after operations were halted at one-third of the country’s 25 blast furnaces, and the crisis has even spurred talk of industry consolidation. Nippon Steel’s president and steel federation chief Eiji Hashimo has previously warned crude steel output could fall below 80 million tons this fiscal year, less than what China makes in a month.
China’s Rare Earth Threat Sparks An International Backlash
China fired a verbal rocket at U.S. arms maker Lockheed Martin last month only to unleash a response which threatens its most strategically important industry, rare earths.
Because rare-earth elements have essential uses in a range of civil and military technologies, such as weapons guidance systems, China’s control of supply is a powerful commercial and diplomatic bargaining chip.
Earlier threats to cut-off supplies of the elements, especially the two most important heavy rare earths, neodymium and praseodymium, have caused short-term disturbances in the market with China eventually backing off in case it pushed too hard and international customers developed their own supplies.
A decade ago a dispute with Japan led to a Chinese rare earth embargo, but it sparked a response in the form of Japanese financial backing for a new rare earth mine in Australia and an associated processing facility in Malaysia.
This time around China is using threats of a rare earth embargo on Lockheed Martin following the U.S. company winning a contract to upgrade batteries of Patriot air defence missiles in Taiwan.
Whether China intends to proceed with an embargo is unclear but the threat itself has sparked a reaction which involves the U.S. Government and several allies in pushing ahead with plans to develop non-Chinese supplies of rare earths.
There has also been a significant reaction by investors who have boosted the share prices of companies in production or planning to develop rare earth mines.
The most important development after the threat to Lockheed Martin was a deal between the U.S. Defense Department and an Australian rare earth miner to push ahead, with a private U.S. partner, in planning the construction of a rare earth separation facility in Texas.
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