December Newsletter – 03.12.18



BHP pulls ahead of rival Rio Tinto with a major copper find near Olympic Dam

The copper race is on between long-time rivals BHP (ASX: BHP) and Rio Tinto (ASX: RIO), with BHP announcing it had pulled out of the ground what some experts call the thickest high-grade copper intersection seen in many years near its Olympic Dam mine in South Australia.

The mining giant reported a whopping mineralised intersection of 425.7m comprising copper, gold, uranium and silver from recent drilling within the state’s Olympic iron-oxide, copper, gold (IOCG) province.

Ending in mineralisation, the huge intersection graded 3.04% copper, 0.59 grams per tonne gold, 346 parts per million uranium and 6.03g/t silver.

Within that 425.7m was a higher-grade 180m interval comprising 6.07% copper, 0.92g/t gold and 401ppm and 12.77g/t silver.

Other notable results were 406m at 0.66% copper, 0.35g/t gold, 266ppm uranium and 2.09g/t silver, and 124.5m at 0.52% copper, 0.48g/t gold, 85ppm uranium and 3.37g/t silver.

BHP is now firming up a drilling program for early next year to unlock this massive discovery.

Anglo CEO Says Investor Confidence Returns to South Africa


  • Cutifani says $6 billion investment plan was under threat
  • Country is ‘a long way down the track’ toward investment

Anglo American Plc, the company that grew to be South Africa’s biggest during apartheid, says it’s ready to invest in the country again.

After years of legislative uncertainty, relations had soured to the point where Anglo’s chief executive officer wasn’t on speaking terms with the former mining minister after he made a critical speech.

Things have improved since Cyril Ramaphosa, who co-founded the country’s biggest mining labor union, became president in February and appointed Gwede Mantashe, another former unionist, as mines minister. Mantashe has resolved a dispute over black-ownership rules, giving mining companies more certainty on their investments.

“Whilst we don’t have all the things that we would like to see, that will in our view provide the foundation for significant investment going forward, we’re a long way down the track,” Anglo CEO Mark Cutifani told journalists late Wednesday. “Confidence has been returned in terms of the conversation and, from our point of view, the confidence to invest in the future, certainly in terms of our assets — that’s been very important.”

Rio Tinto green lights $2.6B Koodaideri iron ore mine investment

Rio Tinto, (ASX, LON, NYSE:RIO) the world’s second largest miner, is set to develop its most technologically advanced mine following the full approval of a $2.6 billion investment in the Koodaideri iron ore mine in Western Australia.

The company stated Koodaideri will deliver a new production hub for Rio Tinto’s world-class iron ore business in the Pilbara, incorporating a processing plant and infrastructure including a 166-kilometre rail line connecting the mine to the existing network.

Construction will start next year with first production expected in late 2021. Once complete, the mine will have an annual capacity of 43 million tonnes, underpinning production of the Pilbara Blend, Rio Tinto’s flagship iron ore product. “Koodaideri is a game-changer for Rio Tinto. It will be the most technologically advanced mine we have ever built and sets a new benchmark for the industry”—CEO

“Koodaideri is a game-changer for Rio Tinto. It will be the most technologically advanced mine we have ever built and sets a new benchmark for the industry in terms of the adoption of automation and the use of data to enhance safety and productivity,” Rio Tinto chief executive J-S Jacques said in a media release.“This further investment in our iron ore business is also a multi-billion dollar vote of confidence in Western Australia,” Jacques said.”

Phase 1 will help sustain Rio Tinto’s existing production capacity by replacing depletion elsewhere in the system, and the project is expected to increase the higher-value lump component of the Pilbara Blend, subject to market conditions, from the current average of about 35% to approximately 38%.

Orocobre, Toyota approve $400m Olaroz lithium expansion

Brisbane-based Orocobre and joint venture partner Toyota Tsusho have agreed to a $US295 million ($404 million) stage two expansion of the Salar de Olaroz lithium brine project in Argentina.

Already one of the largest lithium mines in Argentina with measured and indicated JORC resources of 6.4 million tonnes of lithium carbonate equivalent (LCE), the stage two expansion is intended to boost the mine’s annual capacity from 17,500 tonnes to 42,500 tonnes.

This includes 17,500 tonnes of battery-grade lithium carbonate; 15,500 tonnes of technical-grade lithium carbonate; and 9500 tonnes of feedstock lithium carbonate for shipping to the developing Naraha lithium hydroxide plant in Fukushima, Japan.

Naraha operator Toyota and contract company Veolia are currently undergoing engineering, procurement and construction (EPC) contract negotiations over the 10,000 tonnes a year Naraha plant, which are expected to be finalised this quarter.

BMW joins project to improve conditions for cobalt mining in Congo

FRANKFURT (Reuters) – German carmaker BMW is exploring ways to improve working conditions for mining cobalt in Congo through a pilot project also supported by chemicals giant BASF, battery maker Samsung SDI and a development agency.

Carmakers seeking to boost sales of electric cars are struggling to get their hands on cobalt, a scarce but vital component in the production of batteries. The world’s largest known reserves of this raw material are found in the Democratic Republic of the Congo.

BMW said the companies were working together with German development agency Deutsche Gesellschaft für Internationale Zusammenarbeit (GIZ) GmbH to explore ways to improve working and living conditions in areas where cobalt is extracted using manual labor.

“It seeks to contribute to identifying workable solutions that lead to better working conditions at the mine site,” BMW said. “If proven effective, these measures could then be scaled up to other legal artisanal mine sites and enhance systemic challenges in the longer run.”

The lithium price bulls were right

Diminishing fears of a flood of new supply from South America halts lithium price slide, but industry is shifting rapidly to hard rock mining.

One of the most read articles on in 2018 is headlined: This is the only chart lithium price bears need see.

Altura’s first concentrate shipment to China marked the third new Australian spodumene operation to enter the market this year.

The piece highlights a slide from an Orocobre deck showing just how large the gap is between expectations of new supply and the reality of bringing lithium projects into production.

It could not have been Orocobre’s intention, but the Brisbane-based company’s Argentina venture became the poster child for the challenges faced by new brine projects. Salar de Olaroz eventually took seven years to hit its stride.

The delays, run-ins with courts and regulators, not to mention mutual accusations of licence violations, Chile giants SQM and Albemarle are dealing with in the Atacama only reinforce this point.

After a dramatic retreat since the first quarter, lithium carbonate and hydroxide prices have now at least stabilized.

That’s mostly because the shake-out among Chinese converters and processors (responsible for over 80% of the global industry) seem to have run its course, but also because the South America brine problems diminished fears about a flood of new supply.

It’s a hard rock life

But brine production is only half the story. Or more accurately, less than half the story with the vast majority of new lithium capacity coming from hard rock mines.

Altura Mining’s first concentrate shipment to China marked the third new Australian spodumene operation to enter the market this year. Altura’s Pilgangoora mine took just 18 months to construct and follows new supply from Pilbara Minerals and Tawana Resources.

Galaxy’s Mt Cattlin is ramping up as is Mineral Resources’ Mt Marion. Another sign of the shift in the industry is Albemarle’s investment in Mineral Resources’ Wodgina project for $1.1B which follows SQM’s own Australian diversification with the acquisition Kidman Resources’ feasibility stage project.

If the message wasn’t clear enough, Albemarle announced last month it won’t expand in Chile at all beyond 2021. In stead the Charlotte, North Carolina firm will pour resources into the grand-dad of hard rock lithium mining in Australia, Greenbushes, where capacity is doubling and a $1B hydroxide plant was greenlighted this month.

By 2025 Australia could account for 51% of global output. Currently China holds that position while Chile and Argentina together account for 43% of world production. Outside Australia Canada’s Nemaska Lithium and Brazil’s AMG also entered production this year.

Sought after spodumene

While generally higher on the cost curve than brine operations (with Greenbushes a notable exception) spodumene concentrate is converted into battery-grade lithium hydroxide.

Pumping and evaporating brine solution produces lithium carbonate which requires further refining or conversion to feed into the battery supply chain.

UK-based consultants Roskill predicts annual growth of nearly 39% through 2031 for hydroxide compared to 13% CAGR for lithium carbonate.

Next year’s challenge for Canada’s oil patch comes from the sea

Bloomberg News

Just when relief was in sight for Canada’s beleaguered heavy oil producers, a new threat is emerging.

A new rule taking effect in 2020 aimed at reducing pollution by cutting the sulfur content of maritime fuel will make sulfur-heavy oil sands crude less desirable. That may dampen the impact of an Enbridge Inc. pipeline expansion and additional rail capacity that oil producers are counting on to ease a transportation glut from Alberta.

Heavy oil prices sank to less than $15 a barrel, as rising production swamped existing pipelines and rail routes, forcing some producers to shut in output. Some companies have called for Alberta’s provincial government to mandate supply cuts across the industry. Alberta Premier Rachel Notley said she is studying the concept and announced that the province will buy rail cars to help ship more crude.

“We’ve got challenges with respect to pipelines, we’ve got challenges with respect to rail and now we’ve got challenges with respect to our demand market,” Allan Fogwill, chief executive officer of the Canadian Energy Research Institute said at a presentation in Calgary Wednesday.

Next year, rail exports could almost double from a record 270,000 barrels a day in September, according to company announcements. In the second half of 2019, Enbridge’s Line 3 will add 375,000 barrels a day of extra pipeline capacity. That’s around the time the International Maritime Organization 2020 rule starts to impact local crude prices, according to analysts including CERI’s Fogwill, IHS Markit’s Kurt Barrow and Wood Mackenzie’s Mark Oberstoetter.

The producers most exposed to these steep discounts include oil companies with limited or no refining operations such as Cenovus Energy Inc. and MEG Energy Corp. and Athabasca Oil Corp., Royal Bank of Canada Analyst Greg Pardy said last month.

Western Canadian Select, the main oil sands grade, may average about $20 a barrel below West Texas Intermediate for most of next year, about equal to the cost of rail transport, said Wood Mackenzie’s Oberstoetter, lead analyst for Canadian upstream research. Gains from Line 3 will almost be canceled out by losses from the IMO ship fuel rules.

During the first year, the ship-fuel standard will make WCS crude about $7 or $8 a barrel cheaper relative to West Texas Intermediate futures than it would normally be, IHS Markit’s Barrow, vice president of the oil markets for midstream and downstream energy, said by phone from Houston. WCS traded at $29 a barrel less than futures on Friday, data compiled by Bloomberg show.


SEC Harmonizes its Mining Disclosure Requirements with Global Industry Practice

After a long wait, the SEC has updated mining disclosure requirements for reporting companies and securities issuers to reflect global industry and regulatory practice.

In seeking to modernize disclosure requirements for US public companies, the US Securities and Exchange Commission (the “SEC”) has focused in particular on requirements for mining registrants set forth in Item 102 of Regulation S-K under the US. Securities Act of 1933 (the “Securities Act”) and the US Securities Exchange Act of 1934, as well as in the 30-year old Industry Guide 7. On October 31, 2018, the SEC adopted final rules (the “New Rules”), introducing significant changes to the mining disclosure framework that better align it with

international industry and regulatory practice. In doing so, the SEC hopes to encourage the offering of securities by mining companies in the US companies that historically looked to other markets with more pragmatic disclosure requirements. In the same way, the New Rules could also help to harmonize disclosure in unregistered securities offerings, including under Regulation S and Rule 144A under the Securities Act.

Congo State Miner Blames Foreign Investors for Underdevelopment


  • Carter Center says Gecamine’s failed to account for proceeds
  • Copper-producing Congo is world’s largest source of cobalt

Democratic Republic of Congo’s state mining company blamed international investors and anti-corruption activists for the country’s lack of progress despite its vast mineral wealth.

Non-governmental organizations including the Atlanta-based Carter Center and London-based Global Witness have accused Gecamines of failing to account for hundreds of millions of dollars paid to the state miner by the companies exporting copper and cobalt from the central African nation.


Gold, silver and iron slowly created during the Big Bang

Researchers with the University of Western Australia ran some calculations and determined that, although violent, the Big Bang slowly created base and precious metals.

According to professors Snezhana Abarzhi and Annie Naveh from UWA’s School of Mathematical Sciences, although the supernova explosion was violent it wasn’t as turbulent and quick as previously thought.

“It is traditionally considered that turbulence was the mechanism for energy transfer and accumulation which resulted in chemicals being formed in the supernova,” Abarzhi said in a press release. “However our research has revealed it wasn’t turbulent but actually a slow process where hot spots of energy were localised and trapped, resulting in the formation of, for example iron, gold and silver from atoms produced by the Big Bang.”

The researchers reached this conclusion after conducting a mathematical analysis of the conditions that were created from a supernova.

As it is widely known, the Big Bang theory suggests that through a process of expansion and explosion hydrogen gas was created which led to the formation of stars, and their death (supernova) led to the creation of minerals and, of course, life.

The UWA researchers believe their findings challenge previous concepts of the overall results of the Big Bang and bring them one step closer to understanding how life and other elements came to exist.


Goldcorp pours first doré from Pyrite Leach at Penasquito

Vancouver-based Goldcorp has poured the first gold at its Penasquito’s Pyrite Leach project (PLP) in Zacatecas. Commissioning of the plant began in Q3 2018, and it is now treating existing tailings around the clock.

“PLP was a major investment decision for Goldcorp and one of the first that went through our Goldcorp investment framework.” said David Garofalo, president and CEO of Goldcorp. “We are very pleased with the results in completing the project both ahead of budget and schedule.”

The new leach plant is expected to recover about 35% of the gold and 42% of the silver that makes its way into the tails. The PLP treats the tailings and then feeds into a flotation and leach circuit followed by a Merrill Crowe circuit. Eventually, 1 million oz. of gold and 45 million oz. of silver could be recovered this way.

Goldcorp said the carbon pre-flotation circuit (CPP) reached commercial rates on Oct. 1, 2018, and it has exceeded initial performance expectations. The CPP circuit treats 6 million tonnes of high carbon ore. It de-risks the tailings and gives the company the flexibility to sequence various ore types. It currently consists of three stages of floatation to remove organic carbon from the cyclone overflow be the lead flotation circuit.