February Newsletter – 25.02.19
ANNOUNCEMENTS
TOP NEWS
Fourteen NGOs oppose London Metal Exchange plans to ban tainted cobalt
LONDON (Reuters) – Fourteen non-governmental organizations (NGOs) including Amnesty and Global Witness have opposed plans by the London Metal Exchange to ban cobalt tainted by human rights abuses, a letter seen by Reuters showed.
Cobalt is a key ingredient in the batteries that power electric vehicles, a fast-growing sector of the auto industry, and in metal alloys used to make jet engines.
It was singled out in LME proposals to embed responsible sourcing principles into metal brands deliverable against its contracts, which include copper and zinc.
Most of the world’s supply comes from the Democratic Republic of Congo, often from artisanal mines where several organizations have cited human rights abuses.
The LME plan outlined last October involves suspending cobalt brands trading at a significant discount to its contract on the grounds that they may be seen as tainted.
Now, objections by NGOs to a consultation on its plans could leave the exchange at risk of legal challenges from banned cobalt producers, metal industry sources say.
Barrick Gold Has Studied Offer for Newmont Mining
Bloomberg
- Company looked at feasibility of Newmont deal in recent months
- Newmont Mining shares climb while Barrick, Goldcorp slip
Barrick Gold Corp., the world’s second-largest gold producer, has considered a bid for Newmont Mining Corp. in what could be the biggest-ever industry merger and propel the Canadian miner to the No.1 spot globally.
Shares of Newmont rose 3 percent to settle at $36.48 in New York, valuing the company at more than $19 billion. Barrick slipped 2.4 percent in Toronto, while Goldcorp Inc., which Newmont agreed to acquire in January, fell 4 percent.
Australia Denies China Coal Ban in Bid to Ease Investor Fears
Bloomberg
- ‘No basis to believe’ Australia singled out, minister says
- Local dollar, coal stock hit amid concerns of souring ties
Australia denied that a major port in northern China has banned its coal imports and sought to calm investor nerves that strained political ties are undermining its most important trading relationship.
Key government ministers took to the airwaves Friday to dismiss a report that Dalian Port Group has imposed an indefinite ban on Australian coal. While quotas and testing has slowed down shipments in some areas, there’s no indication Australia has been singled out, Trade Minister Simon Birmingham said.
COMMODITIES
China Rushes to Dominate Global Supply of Lithium
Beijing’s race to control supplies of lithium, used in powering electric cars, is leaving its rivals far behind.
China is increasingly dominating the supply of what’s been described as “white petroleum,” the soft, silvery metal lithium, seen as key to the momentum-gathering electric vehicle (EV) revolution.
Discoveries of lithium in North America and Europe may loosen China’s tightening hold on the market in time, but the race to find and exploit new deposits is also throwing up other concerns, namely the risk of oversupply or even a glut and political risks that may affect countries with some of the biggest reserves and production.
Lithium is one of the main components of rechargeable lithium-ion batteries used in smartphones, laptops, and EVs, with demand for the latter anticipated to surge over the next decade or so as manufacturing costs fall and environmental concerns rise. China, eager to reduce oil imports and address chronic air pollution, is driving production of EVs, accounting for 37 percent of passenger EVs sold globally since 2011, according to Bloomberg. The agency forecast in 2017 that by 2040 more than half of all new car sales will be electric vehicles.
Beijing government subsidies and quotas for EV sales appear to have incentivized efforts to corner the electric vehicle supply chain. Reuters reports that Chinese entities now control nearly half of global lithium production and 60 percent of the electric battery production capacity. By 2030, Goldman Sachs predicts China could supply 60 percent of the world’s EVs.
https://thediplomat.com/2019/02/china-rushes-to-dominate-global-supply-of-lithium/
De Beers FY18 revenue up 4% y/y
Anglo American subsidiary De Beers achieved a 4% year-on-year increase in revenue to $6.1-billion in 2018, compared with $5.8-billion in 2017, which was supported by improved high-end jewellery sales at De Beers Jewellers.
Its earnings before interest, taxes, depreciation and amortisation, however, decreased by 13% to $1.2-billion, compared with $1.4-billion in 2017.
“While unit costs and upstream profit margins were maintained, De Beers undertook incremental expenditure on a number of new initiatives, including the launch of Lightbox Jewellery, Tracr and Gemfair, as well as increasing expenditure in marketing, exploration and evaluation in Canada and increasing provisions in respect of closure obligations,” Anglo stated
http://www.miningweekly.com/article/de-beers-fy18-revenue-up-4-yy-2019-02-21
LEGAL AND REGULATORY
Brazil’s Deadly Dam Collapse Could Force the Mining Industry to Change
The list of catastrophic failures will continue to grow so long as cost ranks ahead of safety.
The mining dam collapse that killed at least 169 in Brazil last month, with 141 still missing, was by no means an isolated incident. There’ve been at least 50 dam failures globally in just the last decade, according to one tally, with 10 considered major.
For years the industry has depended on these dams to contain the sometimes toxic, often dangerous, waste from mining. But the latest failure, which could end up as the deadliest in more than half a century, has the industry struggling to contain the consequences.
FINANCIAL
Citigroup Says Venezuela Deal Covered $1.6 Billion in Gold
Bloomberg
- ‘Citi believes it is protected against market and credit risk’
- Bank is said to be conferring with Treasury on resolving deal
Citigroup Inc. said it entered into a financing deal with Venezuela’s central bank in 2015 essentially using $1.6 billion of gold held at the Bank of England as collateral.
A subsidiary bought the precious metal up front, taking full legal ownership under a contract that requires Venezuela’s central bank to periodically buy back portions at predetermined dates, Citigroup said in a filing on Friday. The agreement became the subject of a Bloomberg report this week on the firm’s efforts to resolve the deal now that stiffer sanctions are in place.
INNOVATION AND TECHNOLOGY
Europe’s push for EVs a boon to Savannah’s Portugal lithium project
Lithium miners have set their eyes on Portugal, a country that doesn’t scream “mining” like other jurisdictions, but which already is Europe’s biggest producer of the commodity, thanks to the surge in popularity of electric vehicles (EVs).
One of those companies is Savannah Resources, currently advancing its Mina do Barroso project in the north of the country, arguably one of the most advanced lithium mining concessions in Europe.
According to company officials, the mine is on track be the continent’s first significant producer of spodumene, a hard-rock form of lithium.
“We’re in a unique position in Europe,” chief executive David Archer tells MINING.com. “Mina do Barroso contains the largest spodumene lithium mineral Resource in Europe at 20.1Mt at 1.04% Li₂O and is akin to the successful Australian spodumene mine developments.”
Archer notes that the project is well served with local infrastructure including the nearby Leixoes port, Portugal’s second largest.
http://www.mining.com/europes-push-evs-boon-savannahs-portugal-lithium-project/
PROJECTS
Northern Dynasty jumps on draft Pebble EIS report
The US Army Corps of Engineers has released the highly anticipated draft environmental impact statement (DEIS) for Northern Dynasty Minerals’ controversial Pebble project in south-eastern Alaska.
“Our preliminary review of the DEIS shows no major data gaps or substantive impacts associated with a mine at the Pebble site,” subsidiary Pebble Limited Partnership (PLP) CEO Tom Collier said.
“We see no significant environmental challenges that would preclude the project from getting a permit and believe this shows Alaska stakeholders that there is a clear path forward for this project.”
The Corps’ 1,400-page DEIS includes a scoping report and chapters on mitigation and alternatives to the proposed Pebble project plan. The final document will inform federal agencies as they decide whether or not to permit the mine near Bristol Bay.
The Corps will use the document to facilitate a formal consultation and public comment process as part of the Pebble permitting procedure this spring. The DEIS will be published in the federal register by March 1, which will trigger a 90-day comment period. The Corps is targeting publication of the final EIS either by late 2019 or the first quarter of 2020.
COMMODITY PRICES
