February Newsletter – 01.02.2021
HEADLINES
- Kyrgyzstan bans foreign companies from future mining projects
- Anglo American hires banks to prepare S.Africa coal spin-off
- European tungsten producer Almonty advances Korean Sangdong project
- China is feeling insecure about its global rare earths dominance
- Turquoise Hill seeks interim order against Rio over Mongolia mine funding
- Shanxi recaptures raw coal output crown in 2020
- BI-WEEKLY: China mines’ iron ore concs stocks a new low
- Pensana Rare Earths (ASX:PM8) to build $162M Yorkshire RE facility
- Snapshot: key lithium mining projects around the world
- Sumitomo to book additional 30bn yen impairment on Madagascar nickel project
Kyrgyzstan bans foreign companies from future mining projects
MOSCOW, Jan 29 (Reuters) – Kyrgyzstan on Friday banned foreign companies from future large mining projects, although existing licences are unaffected, in the first major order by its new president.
The economy of the Central Asian nation relies heavily on gold mining, particularly after two other sources of wealth – trade with neighbouring China and remittances from migrant labourers working in Russia – were hit by the COVID-19 pandemic.
Kyrgyz President Sadyr Japarov, who was inaugurated on Thursday, signed the order which only allows the development of “subsoil areas of national importance” by a state-owned company.
Firms currently holding rights to develop deposits in the country are excluded from the order. Canada’s Centerra Gold Inc is the largest foreign investor in Kyrgyzstan. It mines gold at Kumtor, Kyrgyz largest gold deposit.
Anglo American hires banks to prepare S.Africa coal spin-off
Anglo, listed in London and Johannesburg, is expecting to list its coal within two years, one of the sources said.
LONDON/JOHANNESBURG: Anglo American has hired RMB, Morgan Stanley and Rothschild & Co to advise on the separation and listing of its South African thermal coal assets, as it aims to cut exposure to the polluting fuel, two sources with direct knowledge said.
Anglo, listed in London and Johannesburg, is expecting to list its coal within two years, one of the sources said.
“Anglo Coal right now is following what’s been announced in terms of the de-merger, but it’s not like they’ve completely shut the door to a sale. It would just need to be at a price that is compelling enough for them to want to divert their attention,” the second source said.
An outright sale of the assets would require the kind of large buyer that is hard to find for thermal coal, the sources said.
Anglo’s overall market capitalisation is around $47 billion. The value of its coal assets is unclear, the sources said, as coal prices have surged in recent months and the COVID-19 pandemic has impacted previous estimates.
The company declined to comment on its advisers.
In an emailed statement it said it was working on the process and would “provide a further update in due course when we have clarity on timing and the exit mechanism”.
European tungsten producer Almonty advances Korean Sangdong project
Almonty Industries (TSX: AII; US-OTC: ALMTF) has two mines in Europe producing tungsten concentrate – the Los Santos mine in western Spain and the Panasqueira mine in Portugal – but it’s the Sangdong tungsten project in South Korea that has become the junior’s main focus in recent years.
Sangdong – once one of the world’s largest tungsten mines in production and still one of the few high grade tungsten deposits outside of China — came into its portfolio in September 2015 when Almonty acquired its former owners, a Canadian company called Woulfe Mining, after a persistent courtship.
In December, after four years of forensic due diligence, the junior finally closed a US$75 million project financing for Sangdong from Germany state-owned KfW-IPEX Bank GmbH (the Credit Institute for Reconstruction), which will cover about 70% of the US$105 million construction costs. The financing is at Libor plus 2.3%.
The bank headquartered in Frankfurt specializes in export and project financing and is better known for financing large infrastructure projects spanning shipping and ports, airports, manufacturing plants, telecommunications and energy.
“KfW has a track record for being among the most conservative financiers,” Lewis Black, the company’s chairman, president and CEO, says in a telephone interview from Spain. “They have called me and admired our tenacity for getting through to the finish line because only 4% of applicants get there – such is the ferocity of their due diligence.”
China is feeling insecure about its global rare earths dominance
Earlier this month, China published seven pages of draft legislation aimed at stepping up regulation of the country’s rare earths industry.
It includes a more stringent approval process for mining and processing projects, as well as the import and export of rare earths. What’s most interesting, however, isn’t the content of the proposed measures, but what the development of such legislation says about China’s outlook on its future as the dominant player in the critical minerals space.
Rare earths are a group of 17 metals that are crucial in the manufacturing of a range of important items including electronic products, electric vehicles, military weapons systems, and wind turbines. Over the past several decades, China has built up and cemented its dominance in global rare earths, and at its peak the country accounted for almost 98% of the world’s raw rare earths production.
China Daily, the state-owned English-language propaganda newspaper, was unequivocal about the goals of the draft rules: “China will reinforce the protection of its rare earth resources, strengthen full industrial chain regulation,” and centralize major policy decisions under the state council, China’s cabinet.
The phrase “full industrial chain” is telling here. It refers to the complex rare earths global supply chain, which starts from mining ores out of the ground, to separating and processing those raw minerals, and finally to using those processed products to manufacture high-tech items like batteries and motors.
https://qz.com/1962580/china-is-insecure-about-its-global-rare-earths-dominance/
Turquoise Hill seeks interim order against Rio over Mongolia mine funding
Canada’s Turquoise Hill Resources (TSX, NYSE: TRQ) is seeking an interim order in its arbitration against Rio Tinto (ASX, LON, NYSE: RIO) as some of the top miner’s actions could limit Turquoise Hill’s funding options for the vast Oyu Tolgoi copper-gold-silver mine in Mongolia.
Rio Tinto has said the underground expansion of Oyu Tolgoi is its most important growth project
Tensions between Rio Tinto and Turquoise Hill’s management and minority shareholders have grabbed headlines in recent months. The two companies are at odds over roles and obligations in securing the remaining funding for the underground expansion of the mine.
The Vancouver-based miner says Rio is using “certain procedures under contractual arrangements” that could grant it the right to pursue re-profiling negotiations with existing lenders.
Turquoise Hill added that Rio would do so in a manner the company considers will render Erdenes Oyu Tolgoi LLC, the Mongolian state-owned company that owns a third of the mine, unable to execute an offering of bonds in 2021.
Shanxi recaptures raw coal output crown in 2020
After four years relegated to being runner-up, North China’s Shanxi province last year pipped Inner Mongolia to become the country’s largest raw coal mining base, new data from China’s National Bureau of Statistics shows, a feat made all the more remarkable because Shanxi has also led all provinces nationwide in the volume of excess coal-mining capacity it has eliminated in total over the past five years.
In 2020, Shanxi produced 1.06 billion tonnes of raw coal for all uses, representing a healthy 8.2% increase from 2019, while that for Inner Mongolia – also in North China – decreased 7.8% on year to around 1 billion tonnes, according to the NBS statistics.
During last year alone, Shanxi also removed 41 million tonnes/year of raw coal capacity from production, according to a report by Shanxi Daily. Over 2016-2020, the province eliminated 156.9 million t/y of excess capacity, more than meeting the target set by the central government for Shanxi to eliminate 113.8 million t/y of coal capacity over the five-year period.
As of last year, all coal mines in the province whose capacity was lower than 600,000 t/y or those whose operations had been suspended for a long time were removed, while some new and ‘advanced’ coal capacity was commissioned in the meantime, according to the report.
https://www.mysteel.net/article/5021233-0501/Shanxi-recaptures-raw-coal-output-crown-in-2020.html
BI-WEEKLY: China mines’ iron ore concs stocks a new low
Iron ore concentrates stocks among the 186 Chinese mining companies fell to a new low since Mysteel started the larger-scale survey in January 2019, hitting 1.7 million tonnes as of January 17, as steel mills’ consumption had remained largely robust while the daily output of iron ore concentrates from the Chinese miners had limited room for ramp-up in winter months, Mysteel Global noted.
OverJanuary 8-21, concentrates inventories at the surveyed miners slipped for the third survey period, down 62,200 tonnes or 3.5% on a fortnight, according to the latest data Mysteel released on January 22. Over the survey period, these mining companies’ daily output of iron ore concentrates stayed largely unchanged, up merely 400…
https://www.mysteel.net/article/5021139/BI-WEEKLY–China-mines-iron-ore-concs-stocks-a-new-low.html
Pensana Rare Earths (ASX:PM8) to build $162M Yorkshire RE facility
- Pensana Rare Earths (PM8) has spiked on the ASX this morning after revealing plans to build a rare earths processing facility in the United Kingdom
- The facility will cost around US$125 million (roughly A$162 million) to build and form part of the Saltend Chemicals Park in Yorkshire
- Pensana says once the facility is built it will be one of the largest rare earth oxide producers on the globe
- Importantly, its location in Saltend Chemicals Park gives Pensana ready access to the U.K.’s busiest port complex and a range of utilities and logistics services and workers with experience in the chemicals industry
- Today’s news comes ahead of Pensana’s planned delisting from the ASX, slated for February 24
- Shares in PM8 are up 4 per cent this morning to $1.68 per share
Pensana Rare Earths (PM8) has spiked on the ASX this morning after revealing plans to build a rare earths processing facility in the United Kingdom
The magnet metal specialist told shareholders this morning it has already submitted a planning application for the proposed rare earth oxide separation facility, which will be located at the Saltend Chemicals Park in Yorkshire.
All up, the facility is expected to cost around US$125 million (roughly A$162 million) to build and will create around 100 jobs once it is up-and-running.
Importantly, the finished product is designed to be one of the largest rare earth oxide producers on the globe.
Nevertheless, the application will take roughly three months to review before the facility can be given the green light — meaning ASX investors won’t be able to reap the rewards of a positive result.
Snapshot: key lithium mining projects around the world
Positive project progressions in UK and EU lithium development will bode well for their respective battery supply chains and mission to reduce dependence on Chinese critical raw materials, market analyst Fitch Solutions asserts in its latest industry report.
The race to secure strategic materials for the green and digital economy remains a key theme for mining and metals in 2021, Fitch emphasizes.
This month, a team of Penn State engineers developed a thermally-modulated, fast-charging lithium iron phosphate (LFP) battery. The LFP battery will offer upside to mass-market EV adoption by relieving concerns surrounding range per charge, emphasizing Fitch’s expectations for increasing lithium demand.
https://www.mining.com/lithium-projects-key-to-the-race-to-secure-strategic-materials-report/
Sumitomo to book additional 30bn yen impairment on Madagascar nickel project
Sumitomo Corp said on Monday it will book an additional impairment loss of about 30 billion yen ($289 million) on its Ambatovy nickel project in Madagascar for the October-December quarter to reflect the revised output plan.
The Japanese trading house, which owns a 54.17% stake in the project, posted an impairment loss of 55 billion yen for the April-June quarter last year because of the suspension of the mine’s operation amid the COVID-19 pandemic and its downward revision of nickel price outlook.
Sumitomo’s annual net loss of 150 billion yen for the year to March 31, 2021, will remain unchanged, it said.
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