February Newsletter – 02.02.2020
ANNOUNCEMENTS
NEWSLETTER
- Fallout from coronavirus expected to have a ripple effect on coal, iron-ore
- The left’s opposition to mining threatens its green dream
- Mining Our Way to a Low Carbon Future | Lucy Crane | TEDxTruro
- Uzbekistan to export uranium worth $1.14bn to Japan
- Congo moves to monopolise about 25% of all cobalt exports
- The battle for stronger conflict minerals legislation in Europe
- Mining veteran’s $2.2bn palladium bet to pay dividends
- China’s top lithium miner struggles to pay $6 billion debt
- Russia’s Potanin buys partner’s stake in copper and gold mine near China
TOP NEWS
Fallout from coronavirus expected to have a ripple effect on coal, iron-ore
CAPE TOWN (miningweekly.com) – The fallout from the coronavirus in China is expected to have a ripple effect on many sectors in the Chinese economy, slow down its economic growth and impact on its coal industry and imports.
Coal trader Noble Resources research head Rodrigo Echeverri says the impact has been severely disruptive. So far, more than 7 700 people have been infected by the virus, which has resulted in more than 170 deaths. Millions of people have been placed under quarantine and are unable to travel.
“It’s very disruptive in the places where supply chains and commodities are located.” Echeverri told delegates at the fifteenth annual Southern African Coal Conference this week. He said this had impacted heavily on steel mills in coastal China, as well as on manufacturers, many of which had been forced to slow down. Many employees have also been unable to get back to their workplaces in these highly industrialised areas.
“The bad news is that the first quarter of 2020 is going to be pretty bad in terms of business activity in China,” said Echeverri.
The left’s opposition to mining threatens its green dream
Existing restrictions on recovering critical minerals force U.S. firms to purchase these resources overseas
Environmental activists who oppose mining minerals in the United States are threatening the same green agenda they claim to embrace. Among those leading the attack is Sen. Elizabeth Warren, Massachusetts Democrat, who proposes banning mining on public lands.
Though environmentalists may not realize it, increased domestic production of “critical” minerals would benefit the environment. But existing restrictions on recovering these elements are forcing U.S. firms to purchase these resources overseas.
This can be problematic if our trading partners are unstable, unreliable or unfriendly, as was the case before the fracking revolution when the Organization of the Petroleum Exporting Countries (OPEC) dominated the global market for crude oil. Now the United States is a net exporter of oil and natural gas. But we continue to be dependent on imported minerals, not because domestic supplies don’t exist, but because restrictive regulatory policies prevent their recovery.
https://www.washingtontimes.com/news/2020/jan/21/the-lefts-opposition-to-mining-threatens-its-green/
COMMODITIES
Mining Our Way to a Low Carbon Future | Lucy Crane | TEDxTruro
As the world transitions to a decarbonised economy, we need to mine more materials than we have ever done before to support those low carbon technologies. From wind turbines to batteries for electric cars, to the two thirds of the periodic table that are in your mobile phone, we have to find a way to sustainably extract materials. We have to find a way to source these materials responsibly, because without them we don’t have a chance. A graduate of Camborne School of Mines, Lucy Crane is a geologist working in Cornwall, exploring for lithium within geothermal waters.
https://www.youtube.com/watch?v=aWTkiQ64u_U
Uzbekistan to export uranium worth $1.14bn to Japan
Uzbekistan’s President Shavkat Mirziyoyev has signed a decree on the export of uranium worth over $1.14 billion to Japan in the period of 2023-2030, Uzbek media has reported.
Navoi Mining and Metallurgical Combine (NGMK) will oversee the export of the uranium to Japan.
The head of the Department of Foreign Economic Relations and Sales of the Navoi Mining and Metallurgical Combine, Khasan Safarov , said that NGMK is the only producer of natural uranium in the country and accounts for the bulk of the plant’s exports (over 90 percent). In particular, NGMK will supply uranium to Itochu in the amount of $510.1 million and Marubeni – $636.4 million.
Uranium is one of the export-oriented products in Uzbekistan.
The geography of uranium exports includes Japan, the U.S., India, China and South Korea. Today, Japanese companies such as Itochu and Marubeni are the main buyers of uranium mined by the plant.
https://www.azernews.az/region/160484.html
LEGAL AND REGULATORY
Congo moves to monopolise about 25% of all cobalt exports
ABUJA – The Democratic Republic of Congo, the world’s biggest producer of cobalt, created a State monopoly that will buy all output not extracted by industrial operators in a bid to exert more control over the price of the key ingredient in rechargeable batteries.
The central African nation dominates output of the metal, accounting for more than 70% of the global market in 2018. While most Congolese cobalt comes from large, mechanised mines operated by companies including Glencore, artisanal miners can account for as much as a quarter of the nation’s output.
The move to control “the whole value chain of the artisanal sector” arises from the country having “insufficient control” over the metal’s price despite its “strategic position” in the market, states a decree signed by Prime Minister Sylvestre Ilunga and Mines Minister Willy Kitobo Samsoni on November 5.
The purchases will be made by a company controlled by State-owned miner Gecamines, and it will be responsible for processing cobalt ores bought from authorised artisanal miners, according to the decree. The unit will retain the monopoly for five years and has the option of renewing the arrangement.
INNOVATION AND TECHNOLOGY
The battle for stronger conflict minerals legislation in Europe
The European Union’s new conflict minerals regulation is due to come into force on 1 January 2021, almost four years after the text of the legislation was published in May 2017.
Ostensibly, the new Regulation aims to boost corporate transparency and encourage companies to embrace a more sustainable approach to sourcing four key metals – tin, tantalum, tungsten and gold (also known as 3TG) – and avoid supporting conflicts in areas where these minerals are produced.
With less than a year to go until the Regulation’s implementation deadline, scrutiny of the legislation is increasing and its shortcomings are being laid bare.
Catching up
Responsible mineral supply chain principles are not new.
The EU, so often a leader in environmental and social governance (ESG) legislation, is only just starting to catch up in the area of conflict minerals.
A number of mining industry initiatives have already been developed in response to OECD Guidance for Conflict Affected and High Risk Areas.
Standards introduced by the mining industry include:
- The International Tin Supply Chain Initiative (ITSCI);
- The Responsible Gold Mining Principles developed by the World Gold Council; and
- The responsible sourcing protocols launched by the London Metal Exchange.
End users of minerals, such as manufacturers, electronics and technology companies, also have the Responsible Minerals Initiative, which is followed by 380 members around the world.
Many companies that will be required to comply with the EU Regulation will have already adopted one of these voluntary initiatives or, if they are publicly listed in the US, may be subject to Section 1502 of the US Dodd-Frank Act, relating to minerals from in and around the Democratic Republic of the Congo (DRC).
They will therefore have existing systems and procedures, as well as the right corporate ethos, in place to enable them to implement the requirements of the EU Regulation.
However, as outlined below, at present it is unclear to what extent there will be meaningful consequences for non-compliance.
https://www.mining.com/web/the-battle-for-stronger-conflict-minerals-legislation-in-europe/
FINANCIAL
Mining veteran’s $2.2bn palladium bet to pay dividends
Bloomberg News
When dealmaker Neal Froneman acquired Stillwater Mining Co. three years ago, critics lined up to say he had overpaid for the palladium producer. Now, his $2.2 billion bet on the metal is set to pay off for Sibanye Gold Ltd. investors.
Sibanye may declare its first dividend in three years in August, Chief Executive Officer Froneman said. It will be a sweet moment for the veteran dubbed “Mr. Fix-It” for his turnaround successes in the 1990s. Froneman’s latest renaissance comes after the indebted company lost more than half its value as it was pummeled by strikes and soaring fatalities at its gold mines.
“I don’t want to be so bold as to say I told you so,” Froneman said in an interview at Sibanye’s modest Roodepoort office in western Johannesburg. “We get people apologizing for comments they made a few years ago.”
FOR THE FULL YEAR, SIBANYE WILL CONSIDER A PAYOUT EQUIVALENT TO A MINIMUM OF 35% OF NORMALIZED EARNINGS
Froneman concedes the rally in palladium has exceeded his expectations. It’s helped Sibanye more than triple in value over the past 12 months, trailing only rival Impala Platinum Holdings Ltd. among the best performers on the Johannesburg Stock Exchange. By the end of June, Sibanye will have trimmed enough debt to be in a position to reward shareholders, the CEO said.
“We have de-risked the company — it’s almost done,” said Froneman, who will join other executives at the African Mining Indaba in Cape Town next week. “The next opportunity to declare or consider a dividend will be in August.”
For the full year, Sibanye will consider a payout equivalent to a minimum of 35% of normalized earnings, he said. The company suspended dividends after piling on debt to pay for Montana-based Stillwater.
The South African platinum miners attending the conference will have an upbeat story to tell after the benefits from higher metal prices were compounded by a weaker rand that lowers costs. Anglo American Platinum Ltd., which resumed paying dividends in 2017, expects to report that profit more than doubled last year.
Sibanye’s debt is now less of a concern to most investors, said Rory Kutisker-Jacobson, a portfolio manager at Cape Town-based Allan Gray Ltd., which holds shares in many of the biggest platinum miners.
https://www.mining.com/web/mining-veterans-2-2bn-palladium-bet-to-pay-dividends/
China’s top lithium miner struggles to pay $6 billion debt
China’s Tianqi Lithium Corp., the country’s top producer of the battery metal, is facing mounting pressure to repay over $6 billion in debt that helped it finance an ambitious expansion overseas in the past two years.
A collapse in prices for lithium, used in the batteries that power electric vehicles (EVs) and high tech electronics, is mainly to blame, and it has taken an unexpected toll on the miner and its rivals.
TIANQI IS DUE TO REPAY IN NOVEMBER A TOTAL OF $2.2 BILLION TO CITIC BANK.
Albemarle (NYSE: ALB), the world’s No. 1 lithium producer, postponed in August plans to add about 125,000 tonnes of processing capacity. It also revised a deal to buy into Australia’s Mineral Resources’ (ASX: MIN) Wodgina lithium mine and said it would delay building 75,000 tonnes of processing capacity at Kemerton, also in Australia.
Chile’s Chemical and Mining Society (SQM), the world’s second largest producer of the metal, has also shown signs of distress, pushing back a key expansion at its Atacama salt flat operations from the end of 2020 to late 2021.
Canadian lithium miner Nemaska Lithium (TSX: NMX), which was backed by Japan’s SoftBank, filed for bankruptcy protection in December.
The main factor behind the price slump has been the avalanche of new supply that has hit the sector over the past year, triggered mainly by mine expansions and a cut in government subsidies for purchasers of EVs in China, the world’s largest market.
https://www.mining.com/chinas-top-lithium-miner-struggles-to-pay-6-billion-debt/
PROJECTS
Russia’s Potanin buys partner’s stake in copper and gold mine near China
MOSCOW (Reuters) – Russian billionaire Vladimir Potanin has bought his partner Grigory Berezkin’s stake in the Bystrinsky mine in Russia’s Far East, representatives for the two businessmen said on Tuesday.
Russian mining giant Norilsk Nickel, known as Nornickel and which is co-owned by Potanin and holds a 50% stake in the remote copper and gold mine, has been looking for a partner in the ambitious project for several years.
A further 36.7% stake in the mine, which was completed in 2017 and has an operational capacity of 10 million tonnes of ore, has been held since 2017 by CIS Natural Resources, a fund shared by Berezkin and Potanin.
Berezkin’s stake in this fund has been bought by one of the firms in Potanin’s investment vehicle Interros.
COMMODITY PRICES
