February Newsletter – 08.02.2021
- Ok Tedi back in action following fire
- Metals & mining: what to look out for in 2021
- $140m debt financing completed for Brazil copper/gold project
- Rising copper price forces higher Kaz Minerals bid
- The Dragon roams the Arctic
- China Opens Its Doors to Foreign Junk
- Turquoise Hill scores win in funding dispute with Rio Tinto over Mongolia mine
- Could the world’s deep seas become China’s mining frontier?
Ok Tedi back in action following fire
Six weeks after a fire incident impacted production at Ok Tedi Mining’s Papua New Guinean copper-gold-silver mine, the company has confirmed the resumption of normal operations.
Ok Tedi said on 2 February that it has now restored the second of two processing circuits that were damaged in the blaze on 20 December.
The newest work completed follows the early January restart of the SAG-2 circuit at the facility.
Managing director and CEO Musje Werror said all of the work was completed safely and without incident. Returning both to production is a “key milestone” for the mine, as production could recommence and January shipments could also be satisfied.
Metals & mining: what to look out for in 2021
We enter 2021 with many mined commodity prices riding high after recovering from a dramatic pandemic-induced slump in H1 2020. But far from marking a new atmosphere of positivity, the new year brings new questions. How will Chinese policy affect supply and demand in 2021? Will the growing rhetoric around decarbonisation be followed up with concerted global action? And could fiscal stimulus tied to metals-intensive green investment herald the dawn of a new global supercycle, or is it too early to celebrate?
Our new report provides expert commentary on these and other key questions affecting metals and mining in 2021. Complete the form for a complimentary copy, or read on for a preview of some of our key talking points.
Aluminium – the rise of green metal?
The pandemic-driven collapse in demand left the aluminium market with a sizable surplus in 2020. This could be another year of rising stocks and the dominance of Chinese ‘green’ aluminium. But how far will US policy decisions impact both domestic and international industry?
$140m debt financing completed for Brazil copper/gold project
The Serrote copper/gold project, in Brazil, is fully funded through to production, following the completion of $140-million in debt financing, Mineração Vale Verde (MVV) and Appian Capital Advisory reported on Thursday.
The debt finance facility with ING Capital, Natixis, New York Branch, and Societe Generale, is the largest greenfield mining project finance transaction to have been announced since the beginning of 2020 and the onset of Covid-19, MVV said.
“I am pleased that we have been able to secure this financing for Serrote, which finalises the overall funding package and will support completion of project development and delivery of first production. It is an important development which recognises the continued progress and key milestones achieved to date and highlights the attractiveness of this high-quality copper/gold deposit,” said MVV and Appian Brazil CEO Paulo Castellari.
As part of the overall project funding package, Appian Natural Resources Fund II would acquire a royalty over a portion of the project’s gold by-product production.
Rising copper price forces higher Kaz Minerals bid
The two biggest shareholders in Kaz Minerals have raised their offer to take the company private to £3.7 billion.
The Kazakhstan-focused copper producer said that an independent committee of its board had recommended the “significantly increased” offer of 780p a share from Oleg Novachuk, its chairman and former chief executive, and Vladimir Kim, a director and former chairman. It had recommended a 640p-a-share, £3 billion offer in October, but that was opposed by leading shareholders, including RWC Partners.
The Dragon roams the Arctic
A view of the Esmarkbreen glacier on Spitsbergen island, part of the Svalbard archipelago in northern Norway, in this 24 September 2020
The Arctic region is home to almost four million inhabitants, of which approximately one-tenth are indigenous people. The United States Geological Survey estimates that up to 25-30% of the world’s remaining oil and natural gas resources might be held within the Arctic Region. The five littoral states, Canada, Russia, USA (Alaska), Denmark (Greenland) and Norway, have competing claims over the Arctic. Together with the five Arctic littoral states, three regional states, Finland, Iceland and Sweden, constitute the eight-member Arctic Council. The Arctic is considered the final frontier for the human to conquer. Resource competition and human migration will become facts of life in the Arctic region as the snow melts. Economic and mercantile competition among nation states for natural resources is bound to result in strife and conflict at some point in time. Every nation must secure its strategic interests.
China has steadily increased its footprint in the Arctic for the last decade. China’s lust for the Arctic mineral and live-stock resources has been universally noted. China was approaching the Arctic region surreptitiously in a deceitful manner while trying to obtain a physical toehold. China obtained observer status in the Arctic Council in 2013 along with India, Singapore, South Korea and Japan. China’s original application was denied in 2012 owing to objections from Norway. China touts itself as a “near-Arctic state”. The northernmost point in China is 5,000 kilometers away from the centre of the Arctic Circle. If Chinese rationale for “Near-Arctic State” is accepted; several others will also qualify this distinction. China released a so-called white paper on its Arctic policy in 2018, startling not only the Arctic littoral states but also rest of the world. China’s so-called white paper is highly verbose and dense with redundancies and focuses primarily on geo-political issues, while advocating China’s right to exploiting the mineral and hydrocarbon reserves and fisheries. In characteristic Chinese arrogance, it has linked its involvement with the Arctic region to the “Belt and Road Initiative” and its subsidiary “Polar Silk Road”. Chinese posturing has led to renewed interest of the US in the Arctic region. Former US President Donald Trump had offered to purchase Greenland from Denmark. The US policy establishment is now in the process of defining Chinese strategic threats in the Arctic. Almost all branches of the US armed forces have released their Arctic Strategy documents. US Army has been training to develop appropriate capabilities to compete and deter conflict in the Arctic region while emphasizing creation of an “Arctic ready” force.
China Opens Its Doors to Foreign Junk
A resumption in recycling imports may not sound like much. But foreign mining companies should be worried.
Australia’s iron-ore miners could be excused for casting a nervous eye north on Friday. With little fanfare, China, the world’s biggest consumer of iron ore, opened its doors to 3,000 tons of Japanese scrap metal. It was the country’s first such import since it imposed a near-total ban on “foreign garbage” in 2019. It won’t be the last.
In the short-term, that load of scrap (and others due to arrive in coming months, including from the U.S.) is more symbol than market-mover. But it’s a symbol worth paying attention to. Longer-term, such imports spell trouble for exporters who have long assumed that China will simply continue buying whatever they dig up. China’s government is newly determined to reduce its reliance on Australia — or any other country — for raw materials.
China began importing scrap metal in the early 1980s. It was cheap (compared to virgin metals that need to be mined) and in high demand among the small manufacturers that would power China’s economic surge over the next few decades. The port cities of Ningbo and Taizhou built huge car- and motorcycle-part manufacturers largely on aluminum and copper scrap imports. As of the mid-2010s, more than 50% of the paper manufactured in China was produced from imported recycled material.
Turquoise Hill scores win in funding dispute with Rio Tinto over Mongolia mine
Rio Tinto has said Oyu Tolgoi’s underground expansion is its most important growth project.
Canada’s Turquoise Hill Resources (TSX, NYSE: TRQ) has scored a temporary, but key win in its ongoing dispute with Rio Tinto (ASX, LON, NYSE: RIO) over funding of the vast Oyu Tolgoi copper-gold-silver mine in Mongolia.
The interim relief granted to the Vancouver-based miner in the arbitration proceedings against Rio Tinto, prevents the mining giant from restricting Turquoise Hill’s talks on funding and other matters with its fellow stakeholders in Oyu Tolgoi.
Until further notice, Rio Tinto won’t be able to authorize re-profiling negotiations with project lenders in a manner that would render Oyu Tolgoi LLC unable to execute an offering of bonds in 2021, Turquoise noted.
Tensions between the companies have grabbed headlines in recent months. They are at odds over roles and obligations in securing the remaining funding for the underground expansion of the mine.
Could the world’s deep seas become China’s mining frontier?
Chinese researchers have spent the last decade mapping the globe’s ocean floors looking for potential mineral deposits
The results offer insight into what kind of reserves are out there, scientists say
The sea floor could become a focus of mining for rare earths.
Chinese researchers say they have identified a number of “strategically important” deep sea mineral deposits as part of a decade-long survey of the world’s sea floors.
The researchers conducted a series of government-funded surveys from 2011 to 2020 and located potentially high-yield deposits of various essential industrial minerals from nickel to rare earths, according to a paper published in the Chinese-language Bulletin of Mineralogy, Petrology and Geochemistry last week.
A few of the deposits were in the South China Sea, but most were in the Indian, Atlantic and Pacific oceans, far from China.
Nevertheless, the intensity of Chinese prospecting activities in these distant areas “has surpassed that of other countries”, said the researchers led by Shi Xuefa from the First Institute of Oceanography at the Ministry of Natural Resources.
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