February Newsletter – 20.02.19



Trust in tailings? Vale dam disaster spurs investors into action

LONDON (Reuters) – Seeking assurances from Brazilian miner Vale by phone after a second deadly dam disaster in three years is not enough for Sasja Beslik. He plans to fly there himself to get answers.

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Beslik, head of sustainable finance at Swedish bank Nordea, blocked the bank’s investment managers from buying any more Vale shares on Jan. 26, the day after a dam filled with mining waste burst its banks, killing hundreds.

He is the latest investor to step back from an industry that is trying to clean up its act.

Vale needs to address the risks associated with tailings dams and deal with its waste material safely if it is to prevent an exodus of global funds and stem the recent share price slide.

“We have a quite comprehensive plan of what we want to get done,” Beslik said. “Right now, I have two analysts doing a collection of everything from satellite images to legal requirements, best practices, all of it.”

“They have tailings dams all over the world so what are the potential implications for them?”


China Won’t Come to the Rescue in Global Iron Ore Supply Crisis


  • Environmental crackdown means falling domestic output: Hanking
  • Disaster in Brazil triggers search for alternative supplies

China’s strict environmental regime means domestic iron ore mines won’t boost output to meet any supply shortfall after Vale SA’s dam disaster, according to the head of a major Chinese mining group.

The global iron ore market is in the grip of a supply shock after the deadly dam burst last month in Brazil put as much as 70 million tons of annual supply at risk. As a wave of analysts boosted price forecasts, Goldman Sachs Group Inc. suggested higher prices could spur extra output from Chinese mines.

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“I really feel this is questionable,” Pan Guocheng, chief executive officer of Hanking Group Co., said in a phone interview. “If China’s mines could produce more they would already be doing so because, to be honest, prices have been pretty good in recent years. It’s not because of prices that mines have been closing, it’s because of environmental and other reasons.”


M&A, streaming and cannabis trends to impact ASX miners

Prominent Perth mining and investment figures have tipped more M&A activity in 2019 and growing international attention on Australia’s resources sector

Speaking at the first WA Mining Club lunch this year, panel member and PCF Capital Group managing director Liam Twigger also said two North American trends that could impact miners were the buzz surrounding cannabis stocks and the growing prominence of streaming companies providing project financing.

The panel, including Deloitte partner Nicki Ivory, Hartleys chairman Ian Parker and Doray Minerals managing director Leigh Junk, agreed there were positive signs emerging after global headwinds such as the US-China trade war and Brexit had put the brakes on markets in the second half of last year.

Twigger said he had expected 2018 to “shoot the lights out” but despite the recent market malaise, valuations on ASX resource companies were among the best in the world and continuing to attract overseas interest.

“I believe some of the TSX majors are looking at listing on the ASX, and some of the 940 TSXV-listed companies,” Twigger said.

“It’s like an exodus of fleas to a fluffy dog, hopefully we can pick the eyes out of it.”

Ivory said while the dark clouds or headwinds were still looming, the big beneficiary was gold and there were “a lot of cashed-up Australian gold producers hungry for growth that I think will benefit out of this”.

Parker said bigger could be better, particularly in the gold sector, as there was a “frustrating” level of duplication that went on the small cap world.


Copper Miner’s $10 Billion Bet Comes to Life in Panama Jungle


  • First Quantum processes first ore half century after discovery
  • Production beginning as global copper market tips into deficit

The world’s largest new copper mine rumbled to a start this week in the Panamanian jungle, poised to supply a global market that’s tipping into deficit and gives First Quantum Minerals Ltd. a chance to prove its $10 billion investment was worth all the trouble.

Cobre Panama, a vast mining and processing complex near Panama’s Atlantic coast, processed its first ore on Monday, a half century after the deposit was discovered. At full production in 2021, it will turn Vancouver-based First Quantum into a top copper producer alongside giants like Freeport-McMoRan Inc. and BHP Group.

For Panama, it’s the biggest investment ever outside the canal and makes the Central American country a key supplier to a copper market facing labor unrest and governments grasping for greater takes. The $6.3 billion project will be able to ship its concentrate, thanks to the Panama Canal, to just about any smelter in the world.

“This establishes a new jurisdiction for mining,” Tristan Pascall, the project’s general manager, said in an interview at the facility shortly before the first ore passed through its mills. “There aren’t many projects coming on.”



Tin use in batteries may rise to 60,000 T by 2030-industry group

LONDON, Feb 14 (Reuters) – Tin could see a surge of new demand from lithium-ion batteries for electric vehicles and energy storage of up to 60,000 tonnes a year by 2030, the International Tin Association (ITA) said on Thursday.

Investors have been excited about the prospects for increased consumption of other metals, such as nickel, due to an expected ramp up of electric vehicles, but there has been less mention of tin, currently mainly used to make solder for the electronics industry.

The industry group did not give a forecast of overall tin consumption in 2030, but it has forecast demand of 357,000 tonnes for this year.

The ITA tracks global research and patents for tin markets and it has seen rising interest in the metal for energy materials and technologies, according to a report by the group.

New uses are mainly in high-capacity anode electrode materials, but also in solid-state and cathodes, it added.

“Three anode materials technologies are highlighted that could each reach 10-20,000 tonnes per year by 2030 if they gain market share in a highly competitive market. This could at least double by 2050,” a statement said.

Last November, the ITA said it expected the global tin market to move into a surplus of 500 tonnes this year from a 7,500-tonne deficit in 2018, mainly due to weaker demand in top market China.


Barrick Gold Faces Challenges to Develop Latin America Mines


  • Gold giant wants to bring down expenses after Randgold merger
  • The Veladero mine in Argentina is the company’s highest-cost

Just seven weeks into the job, Barrick Gold Corp.’s new boss has already discovered, first hand, the challenges of developing and mining giant deposits in Latin America.

Barrick’s main project, the Veladero joint venture with Shandong Gold in Argentina, isn’t performing like a tier one asset, Mark Bristow said on Wednesday. In 2019, Veladero is expected to have the highest cost per ounce in Barrick’s portfolio. He also cited projects in the El Indio belt straddling the Argentina-Chile border, and Alturas in Chile, as high-cost efforts.

“Every one of those projects, if you bring them to account, they are very high capital,” Bristow said of the Latin America ventures during an interview from the sidelines of Barrick’s fourth-quarter analyst meeting in Toronto.

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Bristow’s comments follow a recent trip to the region, and come a month after Barrick completed its acquisition of Randgold Resources Ltd. Bristow and executive chairman John Thornton have promised the world’s top gold producer will focus on high-quality assets with the aim of generating cash to boost shareholder value, although Bristow said earlier his approach will be a little different.

Barrick shares fell 3.9 percent in Toronto on Wednesday following the company’s release of quarterly results. Shares are down 7.7 percent since the beginning of the year.

Shandong purchased its half of the Veladero mine for $960 million in 2017 after doing “particularly detailed” due diligence, Bristow said. The day the deal was announced, though, authorities in Argentina threatened to rescind the license after the third cyanide solution leak in two years. The mine was subsequently hit by a worker strike, and lower than expected production.

“Why would you sell half of it if it didn’t have challenges?” Bristow said, adding that Shandong was attracted to the deal because it offered them “a free option to look at Pascua-Lama.”



Brazilian Government Sets Sights on Vale in ‘Reprivatization’ Push


  • Govt secretary says timing for share sale to be determined
  • Bolsonaro administration pledging to sell off state cos.

Brazil’s government intends to make the mining giant Vale “private again” by selling its shares and pushing out quasi-state pension funds, a senior official said. Shares rose.

“Vale is a state company. Pension funds controlled by the government control Vale,” Privatization Secretary Salim Mattar said on Wednesday at an event in Brasilia. “We’re here to reprivatize Vale.”

State-development bank BNDES intends to sell shares in the miner, but has yet to find a good moment to do so, Mattar said. “It’s natural that, after a certain period of time, those shares could be sold without causing losses for taxpayers.”

Brazil President Jair Bolsonaro’s administration expects to raise $20 billion this year alone through the sale of state-controlled companies. Privatizations of public assets are central to the government’s pro-business economic agenda which is aimed at slashing debt, boosting fiscal accounts and accelerating growth.

Vale’s shares, which had lost around 28 percent in the aftermath of last month’s dam break near Brumadinho, accelerated gains following Mattar’s remarks and were 3.5 percent higher in early afternoon trading.

The January dam accident killed over a hundred people and put the miner’s operations under stricter government scrutiny. The company’s license to operate a separate dam at one of its largest mines was revoked by a Brazilian state regulator on Feb. 5.

Pension funds Previ, Funcef and Petros didn’t immediately respond to request for comment when contacted by Bloomberg.



Imerys Talc America to file for Chapter 11 bankruptcy – statement

Feb 13 (Reuters) – Imerys Talc America Inc, a supplier to healthcare conglomerate Johnson and Johnson Inc , said in a statement on Wednesday it was filing for Chapter 11 bankruptcy protection along with two subsidiaries.

“After carefully evaluating all possible options, we determined that pursuing Chapter 11 protection is the best course of action to address our historic talc-related liabilities and position the filing companies for continued growth,” Imerys said.



Thirty-year-old inactive mine to host Australia’s first clean energy storage facility of its kind

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The Angas zinc mine, just outside Adelaide and currently under care and maintenance, is about to become the site of 5 MW advanced compressed air energy storage or A-CAES project which will provide synchronous inertia, load shifting and frequency regulation to the area’s electrical grid.

The developer is Toronto-based Hydrostor, a firm that was awarded $9 million in grants to build the facility, which would allow for variable renewable energy resources such as solar and wind to be integrated into Australia’s National Electricity Market.

According to Hydrostor, the project will repurpose Angas’ existing underground mining infrastructure as the A-CAES system’s sub-surface air storage cavern.

In a media brief, company experts explained that the way the technology works is that it uses electricity from the grid to run a compressor, which produces heated compressed air. Heat is then extracted from the air stream and saved inside a thermal store preserving the energy for use later in the cycle.

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Technology to redesign 77% of Australian mining jobs over next five years — report

The future holds a changing landscape for miners’ skillsets in Australia. A vast 77% of mining jobs will be enhanced or redesigned due to technology within the next five years, an EY report for the Minerals Council of Australia on the Future of Work in Mining released today reveals.

The report is built on EY’s Digital Mining Report on the minerals industry, and tales a closer look at the influence and impact of technology across the mining value chain.

Key findings include productivity increases of up to 23% can be achieved with the rollout of new technologies, costing A$35 billion (about $24.8 billion), according to analysts.

Australian education and training systems need to be modernised to deliver higher certification and fit-for-purpose degrees, the report finds, and an injection of A$5 billion to A$13 billion in workforce capability will be needed over the next decade to unlock the future of productivity gains in the mining sector.


Barrick working with Sandvik on autonomous and manned equipment interaction

Barrick Gold says it is advancing autonomous production systems and projects as it looks to become the global leader in mining efficiency.

President and CEO Mark Bristow said in the company’s 2018 financial results that to achieve its goal of being the world’s most valued gold company, in a rapidly evolving environment where the industry’s shift to developing countries will continue, Barrick will have to be at the leading edge of automation.

“Kibali, in the Democratic Republic of Congo, is currently at the forefront, with its mission control system which manages the underground ore handling logistics without human intervention from the surface, but across Barrick there are many automated operations and developments which are now being unified in a group strategy,” he said.

These include, Barrick said, underground drills that can be run from surface during shift changes; automated underground and open-pit haulage trucks; fully-autonomous backfill systems; remote-controlled open-pit drills; and autonomous drilling of development and production blastholes by multiple units controlled by a single remote operator.

Glenn Heard, Senior Vice President Mining, said ongoing projects currently cover five main areas: underground development and production drilling, production and haulage, and open-pit haulage and production.

“At present, all our systems have barriers which prevent human access to the autonomous operating zones. Our next big step will be to create a situation where autonomous and manned units can work together seamlessly within the same active areas, and we’re working with Sandvik and other providers to achieve this,” he said.



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