August Newsletter – 12.08.19
ANNOUNCEMENTS
Sandvik CEO heads to ABB
Iron ore prices soar on scarcity
Huge Pakistan mine shows the power of coal
Peruvian government suspends Southern’s construction licence for Tía María project
Armenia to announce decision on Lydian’s gold project next week
Lender’s remorse? China finds Africa projects require a growing wave of debt forgiveness
World’s No. 1 copper miner gets $300m from Canada
China Molybdenum seeks opportunities to beef up battery metals business
Arizona copper project advances
TOP NEWS
Sandvik CEO heads to ABB
Mining Journal
Sandvik chief executive officer Bjorn Rosengren is leaving the company to lead industrial giant ABB.
Rosengren has run Sandvik since November 2015, overseeing implementation of a decentralised structure to help make it more efficient and flexible. He will become ABB CEO in February next year, replacing Peter Voser.
Prior to his Sandvik time Rosengren ran Wartsila Corporation, which makes power systems for the marine and power generation markets.
Voser, also ABB chairman, said Rosengren would bring the managerial skills ABB needed for the next stage of its transformation.
“He understands how to establish successful decentralised organisations, empower people and demonstrates the culture of cooperation and high performance,” Voser said.
Rosengren said he looked forward to the job ahead at ABB.
https://www.mining-journal.com/leadership/news/1369250/sandvik-ceo-heads-to-abb
COMMODITIES
Iron ore prices soar on scarcity
By: Maximilian Court, Senior Research Analyst of S&P Global Market Intelligence | July 24, 2019
According to S&P Global Market Intelligence Iron Ore Commodity Briefing Service (July issue), prices for 62% Fe iron ores have remained at approximately US$90/t to US$100/t since the beginning of April and have been above US$100/t in their latest run since June 10. We have increased our price expectations on increased supply disruptions, though we hold our estimates for steel demand broadly constant given policy uncertainty and a long-held assumption of capacity curbs for the December half of 2019. We expect a greater seaborne iron ore deficit of 54 million tonnes, which is increased from 36 Mt due to larger-than-expected disruption at Rio Tinto’s Pilbara mines in Australia and a slower resumption of idled Chinese concentrate capacity.
Key takeaways:
- Iron ore prices increased 6.7% to US$121.90/t on July 19 from US$114.30/t on June 19. Prices peaked at US$126.40/t on July 3 but declined on reticent buying activity.
- Global iron ore production is expected to grow by 1.2% year over year in 2019, to 2.2 billion tonnes
- We expect prices for 62% Fe iron ore to increase to average US$95.50/t in 2020 but to decline to an average of US$86/t in 2021, as the seaborne iron ore market deficit decreases.
https://pages.marketintelligence.spglobal.com/how-high-can-iron-ore-prices-go-MJAd-content.html
Huge Pakistan mine shows the power of coal
BY ADAM MAJENDIE AND FASEEH MANGI
BLOOMBERG
SINGAPORE/KARACHI – In the flat scrubland of Pakistan’s scorching Thar Desert, hundreds of workers have been toiling for two years in the vast open pit of the Sindh Engro Coal Mining Co. Taking three-hour breaks during the hottest part of the day and living in a makeshift village of shipping containers, they are digging for fuel to sustain a $3.5 billion power project. So far they have scraped away about 500 feet (150 meters) of Aeolian sand, dirt and coal to create a hole a mile (1.6 km) wide.
Far to the north, in the Cholistan Desert, lie the skeletal beginnings of a solar farm that is supposed to expand to eight times the size of New York’s Central Park. It is the largest solar project in Pakistan, where the government has recently announced an ambitious plan to generate 60 percent of its power from renewable sources in about a decade.
If these grand developments in the desert suggest that coal and solar are in a close-run contest, they are not. Before 2016, Pakistan had a single coal-fired plant. It now has nine, supplying 15 percent of the nation’s electricity, with another four under construction. Solar power provides about 1 percent of energy needs and is getting a tiny sliver of investment compared with what is going into coal. Solar and other renewables may someday eliminate Pakistan’s dependence on coal, but that day is probably decades away.
And that is fine as far as Akhtar Mohammad is concerned. “Coal is good. It’s cheap,” he said at his roadside kiosk in Port Qasim on the outskirts of Karachi, where air pollution is “among the most severe in the world,” according to the nongovernmental Pakistan Air Quality Initiative. “There is a lot of smoke and bad air already. We need electricity — any fuel, it doesn’t matter.”
LEGAL AND REGULATORY
Peruvian government suspends Southern’s construction licence for Tía María project
The Peruvian Ministry of Energy and Mines temporarily suspended a construction licence given to Southern Copper (NYSE:SCCO) for its $1.4-billion Tía María copper project, located in the southern Islay province of the Arequipa region.
In an official communiqué, the ministry’s Mining Council explained that the decision is based on a request made on July 19, 2019, by the regional government of Arequipa, the Association of Workers of the Chucarapi Pampa Blanca Sugar Processing Plant, and the Board of the Valle del Tambo residents, to review Southern’s project. Such a review has to be carried out within the next four months.
Armenia to announce decision on Lydian’s gold project next week
Lydian International (TSX:LYD) will know next week whether the Armenian government will allow the company to continue building its Amulsar gold mine, located in the mountainous south of the country.
The project has been illegally blocked since June last year by locals and environmental activists who claim the operation would threaten several endangered animal species. These include the world’s rarest big cat, the Caucasian Leopard, of which there are only thought to be 10 left in Armenia.
Despite court rulings in Lydian’s favour, police has not been able to restore uninterrupted access to the mine site.
BASED ON COMPANY’S ESTIMATES, THE BLOCKADE HAS COST LYDIAN ABOUT $100,000 A DAY AND THE LOSS OF SEVERAL KEY PROFESSIONALS.
The scope of the work included a review of the firm’s Environmental and Social Impact Assessment (ESIA) and Environmental Impact Assessment (EIA), even though the later had been previously approved by the Armenian authorities before the firm began construction.
Ongoing opposition prompted the government in September to order a three-stage assessment. The objective was to study the possible impact of the project on the wildlife present in the mountain ranges of the Southern Caucasus and, particularly, in water resources such as Lake Sevan, which holds almost 25% of Armenia’s fresh water supply.
Based on company’s estimates, the blockade has cost Lydian about $100,000 a day and the loss of several key professionals.
https://www.mining.com/armenia-to-announce-decision-on-lydians-gold-project-next-week/
FINANCIAL
Lender’s remorse? China finds Africa projects require a growing wave of debt forgiveness
- From Kenya to Ethiopia, Botswana to Cameroon, belt and road developments have seen write-offs of hundreds of millions of dollars
- African nations have problems making repayments, which report says raises ‘legitimate concerns about the sustainability of China’s outbound lending’
Perhaps yielding to growing criticism over its lending practices in Africa, China is writing off or restructuring debt for an increasing number of African countries in financial distress.
China’s embassy in Kenya said that Beijing was ready to help heavily indebted African countries ease their debt burdens.
“If some African countries encounter difficulties to repay Chinese loans, we will have bilateral consultations with them and take flexible measures according to international practice and market principles,” the embassy said.
Critics warn that Beijing may be ensnaring nations with unsustainable debts through its signature trillion-dollar infrastructure and development programme, the Belt and Road Initiative.
World’s No. 1 copper miner gets $300m from Canada
Chile’s Codelco, the world’s largest copper producer, has signed a 10-year loan agreement with Export Development Canada, the country’s export credit agency, which will allow the state-owned miner to access $300 million to finance an ambitious overhaul of its aging mines.
The copper giant, which produces nearly one-tenth of the world’s supply, is in the midst of a $39 billion,10-year plan to expand and upgrade its mines.
Last year, the company began a $5.6 billion conversion of its century-old Chuquicamata open pit mine into an underground operation.
After expanding the century-old Chuquicamata underground, the next major overhaul is a new level at El Teniente, Codelco’s largest mine.
The next major overhaul is a new level at El Teniente underground mine, the company’s largest.
https://www.mining.com/worlds-no-1-copper-miner-gets-300m-from-canada/
INNOVATION AND TECHNOLOGY
China Molybdenum seeks opportunities to beef up battery metals business
Reuters
Fresh from closing a $518 million acquisition, metals firm China Molybdenum Co (CMOC) remains open to deals that would boost business in the booming electric vehicle (EV) battery sector, the company’s chief executive said on Friday.
Cobalt, copper, nickel and lithium are expected to see increasing demand from the EV trade in the years ahead, even though once-rocketing prices for cobalt and lithium have crumpled this year on the back of a supply surge.
“I’m a believer,” Li ‘Steele’ Chaochun, Chief Executive Officer of CMOC, told a mining club luncheon in Melbourne. “We are talking about (demand trends for) 20, 30, 40 years. That’s a structural change and in a structural change we think there is a long-term opportunity.”
Li didn’t say how much CMOC might be interested in investing in new, unspecified opportunities.
AMONG THE BATTERY RAW MATERIALS, CMOC WOULD BE INTERESTED IN TAKING A DEEPER LOOK AT NICKEL
Hong-Kong listed CMOC is majority owner of a huge copper-cobalt mine in the Democratic Republic of Congo (DRC). In January it agreed to boost its stake in the Tenke Fungurume mine, one of the world’s largest copper and cobalt deposits, to 80%.
https://www.mining.com/web/china-molybdenum-seeks-opportunities-to-beef-up-battery-metals-business/
PROJECTS
Arizona copper project advances
Mining Journal
Rio Tinto and BHP’s Resolution copper project in Arizona has reached a milestone with the release of an independently prepared draft environmental impact statement (DEIS).
The six-year review was conducted by the US States Forest Service.
The publication of the DEIS triggers a further public consultation process over a 90-day period, which will inform the final environmental impact statement (EIS) and the next steps in the permitting process for the project.
“This is an important milestone for Resolution, with the future development of the project being shaped by years of engagement with the local community and extensive independent study by the US Forest Service,” Rio Tinto chief executive Copper & Diamonds Arnaud Soirat said.
“Achieving this significant milestone in the rigorous US permitting process allows us to continue progressing one of the world’s most significant untapped copper deposits towards development.”
https://www.mining-journal.com/copper-news/news/1369245/arizona-copper-project-advances
COMMODITY PRICES
