December Newsletter – 07.12.2020
- Iron ore prices are going ballistic
- Explainer: What’s behind a feud at Rio Tinto’s copper mine in Mongolia
- China Inc. extends cobalt grip with bigger Glencore deal
- Pretium selling Snowfield gold project in Canada to Seabridge for $100M
- Brazil’s Vale to build 766-MWp solar plant in Minas Gerais
- Chinese Junk Could Sink The Profits Of Big Iron Ore Miners
- How America got outmaneuvered in a critical mining race
- Ivanhoe Mines: Kamoa-Kakula Copper Project Secures US$420 Million in Project-Level Credit Facilities, Including a EUR 176 million (US$211 million) Covered Equipment Financing Facility with a US$9 million Down-Payment Facility
Iron ore prices are going ballistic
Iron ore prices went ballistic on Friday as unprecedented demand from China, constrained supply from Brazil and strained relations between Canberra and Beijing convulse the seaborne market.
According to Fastmarkets MB, benchmark 62% Fe fines imported into Northern China (CFR Qingdao) were changing hands for $145.01 a tonne on Friday, up 5.8% from Thursday’s peg.
That was the highest level for the steelmaking raw material since March 2013 and brings gains for 2020 to over 57%.
Prices for 65% fines imported from Brazil are also in high demand, jumping to $157.00 per tonne on Friday, with both grades up more than 20% just over the last month.
The frenzy for ore was also evident on domestic futures markets after the contract hit a record high of 974 yuan ($149 a tonne), forcing China’s Dalian Commodity Exchange to issue a warning to its members to trade “in a rational and compliant manner”.
It has been a busy week for iron ore markets, with top producer Vale saying it expects to miss earlier production targets for this year and 2021, an escalating political row between China and its top supplier Australia, and data from China – where more than half the world’s steel is forged – showing manufacturing and construction expanding at a blistering pace not seen in a decade.
Explainer: What’s behind a feud at Rio Tinto’s copper mine in Mongolia
TORONTO (Reuters) – Canadian mining company Turquoise Hill Resources Ltd is locked in a feud with its largest shareholder, Rio Tinto Plc, over the underground expansion of its massive Oyu Tolgoi copper mine in Mongolia.
Tensions between mine operator Rio and Turquoise Hill’s management and minority shareholders have spilled into the open in recent months. Rio owns 51% of Turquoise Hill, which in turn owns 66% of the mine.
Here is an explanation of the dispute.
WHAT IS OYU TOLGOI?
Oyu Tolgoi is one of the world’s largest-known copper and gold deposits, located in the South Gobi region of Mongolia. The Mongolian government holds a 34% stake in the project with Rio’s majority-owned Turquoise Hill owning the rest.
Open-pit mining began in 2011. First production from the underground expansion is slated for 2022, climbing to 500,000 tonnes of copper per year at full capacity in what would make it the world’s third-largest copper mine.
WHAT WILL THE EXPANSION COST?
Rio in 2019 announced a 30-month delay and a cost overrun of up to $1.9 billion due to difficult geology, putting total expenditures in a range of $6.5 billion to $7.2 billion.
China Inc. extends cobalt grip with bigger Glencore deal
Glencore Plc, the world’s biggest supplier of cobalt, has extended its supply agreement with battery maker GEM Co., allowing the Chinese company to secure supply of the crucial metal until the end of the decade.
Mutanda copper mine
The deal ensures GEM will have a steady supply of the battery-making ingredient until at least 2029, and further strengthens China’s growing dominance of the industry. Glencore said Thursday that it will sell 150,000 tonnes of cobalt between 2020 and 2029. It replaces a previous agreement to sell about 60,000 tonnes through 2024.
The deal comes as cobalt starts to recover following a collapse in 2019 as too much new supply was brought into production. Glencore took steps to support prices by reducing supply. Last year it shuttered its Mutanda copper and cobalt project in the Democratic Republic of Congo, helping to put a floor under the market.
While there’s enough cobalt supply for now, demand is expected to surge in the coming years and automakers have grown increasingly concerned about getting access to enough of the material. Almost three-quarters of the world’s cobalt comes from Congo.
“Despite the covid-19 pandemic in 2020, the adoption of new energy vehicles is accelerating, and there is no doubt that they are revolutionizing the world’s automobile industry,” GEM Chairman Xu Kaihua said in a statement. “As a result, cobalt, as one of the key raw materials for EV batteries, will become a global strategic resource of extreme importance.”
Pretium selling Snowfield gold project in Canada to Seabridge for $100M
Pretium Resources Inc. agreed to sell its reserves development-stage Snowfield gold property to Seabridge Gold Inc. for $100 million, with closing expected in the fourth quarter.
Snowfield is adjacent to one of Seabridge Gold’s primary assets, the KSM gold-copper property in northwestern British Columbia.
Consideration includes a 1.5% net smelter royalty and a $20 million contingent cash payment payable within six months after the completion of a bankable feasibility study or the start of commercial production, whichever is earlier. Pretium said Dec. 4 that $15 million of the deferred payment represents an advance NSR payment and will offset amounts payable under the royalty.
Pretium said the sale will result in a noncash impairment loss in the fourth quarter. The company noted that Snowfield had a book value of $232.1 million as of Sept. 30.
Brazil’s Vale to build 766-MWp solar plant in Minas Gerais
December 2 (Renewables Now) – Brazilian mining company Vale SA (BVMF:VALE3) announced today it will built a 766-MWp solar photovoltaic (PV) plant in the municipality of Jaiba, Minas Gerais state.
Solar PV plant in Brazil
Vale will invest around USD 500 million (EUR 414.1m) in the development of the Sol do Cerrado Solar Project to provide clean power to the firm and its affiliates’ operations.
In addition to the construction of 17 sub-parks, Vale will also build an elevator substation and a transmission line and implement a connection bay at the 230-kV Jaiba substation.
With operation scheduled to begin by the fourth quarter of 2022, Sol do Cerrado will generate about 193 average megawatts (MWa) per year, enough to meet 13% of Vale’s estimated demand in 2025.
Overall, the mining giant is targeting 100% renewable energy self-production in Brazil by 2025 and 100% renewables consumption globally by 2030.
The project is now subject to customary closing conditions, including approval by the power sector regulator Aneel.
Chinese Junk Could Sink The Profits Of Big Iron Ore Miners
Scrap steel in China is emerging as a significant threat to the future profits of the world’s biggest mining companies.
BHP, Rio Tinto, Anglo American, Vale and Fortescue Metals rely heavily on Chinese demand for steel made mainly from iron ore shipped from mines in Australia, Brazil and South Africa.
Locally mined material is also an important source of iron ore in China but another source, scrap steel, has played a lesser role than in other countries with big steel industries, such as Japan.
One estimate, from Morgan Stanley, an investment bank, is that scrap steel currently represents just 20% of the feedstock consumed by Chinese steel mills compared with 32% in Japan with its more developed economy.
How America got outmaneuvered in a critical mining race
POLITICO’s Global Translation’s podcast explores China’s decades-long strategy to secure vital materials such as cobalt, and U.S. efforts to catch up.
China’s drive to secure its own access to cobalt has been driven by an approach that put long-term goals over short-term profits
As U.S. policymakers grapple with China’s dominance in producing the materials needed for so-called clean energy and other cutting-edge technology, the case of cobalt serves as a warning.
China’s state-directed industrial policy has outmaneuvered America’s laissez-faire approach to securing access around the world to a metal that’s taking on growing economic and strategic importance. Its success is sparking a debate over whether Washington needs to intervene to encourage more mining at home.
Used for millennia to make rich blue pigment for ceramics, cobalt now plays an important role in lithium-ion batteries — conducting heat to prevent them from catching fire in smart phones and electric vehicles. Cobalt’s other commercial, industrial and military applications, from jet engines to magnets, spurred the U.S. government in 2018 to deem it a commodity of “strategic and critical” importance to U.S. security.
Ivanhoe Mines: Kamoa-Kakula Copper Project Secures US$420 Million in Project-Level Credit Facilities, Including a EUR 176 million (US$211 million) Covered Equipment Financing Facility with a US$9 million Down-Payment Facility
The credit facilities will be used to accelerate Kamoa-Kakula’s Phase 2 expansion to 7.6 million tonnes per annum to Q3 2022, significantly ahead of schedule
Kamoa-Kakula’s outstanding economics are combined with first-class sustainability and social initiatives in keeping with the project’s goal of producing the world’s “greenest copper”
Kolwezi, Democratic Republic of Congo–(Newsfile Corp. – December 1, 2020) – Ivanhoe Mines (TSX: IVN) (OTCQX: IVPAF) Co-Chairs Robert Friedland and Yufeng “Miles” Sun announced today that Kamoa Holding Limited, the joint-venture holding company of the Kamoa-Kakula Copper Project in the Democratic Republic of Congo (DRC), has secured an equipment financing facility of up to EUR 176 million (approximately US$211 million), together with a US$9 million down-payment facility. The two facilities will be used by the project to purchase underground mobile mining equipment and services from leading Swedish manufacturers Sandvik AB and Epiroc AB, and Finnish manufacturer Normet Oy.
In addition, Gold Mountains (H.K.) International Mining Company, a subsidiary of Zijin Mining Group, has provided Kamoa Holding Limited with a limited recourse line of credit of US$200 million secured by the project’s pre-production ore stockpiles to fund the Phase 2 concentrator expansion. US$200 million is sufficient to cover the cost of the second, 3.8 million-tonne-per-annum (Mtpa) concentrator module at the Kakula Mine – doubling the mine’s processing capacity from 3.8 Mtpa to 7.6 Mtpa.
Link for more detailed information