February Newsletter – 28.02.2022


  • Australian mining billionaire to invest $2.2bn in renewable energy project
  • Biden bets on US battery independence
  • Morocco seeks to boost cobalt output, official says
  • Coal shortage a worry as power demand rises
  • Bank of Russia resumes gold buying after two-year pause
  • Ships shelled in Black Sea as invasion sparks maritime chaos
  • Australian miners ramp up search for lithium to meet EV demand
  • US miners irked that Pentagon mineral stockpile plan bypasses them

Australian mining billionaire to invest $2.2bn in renewable energy project

Australian iron ore magnate Andrew Forrest, who’s been betting big on a global green revolution, said on Sunday he was investing A$3 billion ($2.2 billion) in renewable energy in central Queensland.

Forrest, Australia’s richest man, said his company Squadron Energy has acquired the two-stage Clarke Creek project – a wind, solar and battery farm development – with contracts already issued for the immediate start of construction.

“We are investing in Clarke Creek not only to harness the renewable power of the wind and sun to energise our homes, our factories and our cities, but as a critical step towards breaking our reliance on fossil fuels,” Forrest said in a statement.


Biden bets on US battery independence

President Biden wanted to spend this week talking about his climate agenda and reducing dependence on China, but Vladimir Putin got in the way.

Even as Biden was outlining sanctions against Russia as punishment for the invasion of Ukraine, his administration pushed forward: on Thursday, it published a slew of reports on supply-chain vulnerabilities laid bare by the pandemic, and how it plans to address them.

The reports cover everything from vaccine-making materials to semiconductors, but among the key focus areas is cultivating domestic battery manufacturing. Biden’s solution is government funding — billions of dollars — to jumpstart innovation along the EV supply chain, from lithium extraction to battery recycling. The money will come from the bipartisan infrastructure bill, which I wrote about in October.

With surging prices of battery minerals like nickel, lithium and cobalt adding to his inflation woes, Biden focused his presidential powers further up the supply chain this week. On Tuesday, he held an event with California Governor Gavin Newsom to tout federal backing for two companies – MP Materials, which processes rare earth elements used to make magnets for EV motors, and Berkshire Hathaway Energy, one of three companies testing methods for sustainable lithium extraction in California’s Salton Sea.


Morocco seeks to boost cobalt output, official says

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Bou Azzer cobalt mine.

Morocco aims to exploit its cobalt reserves as part of the supply chain for rechargeable batteries, a senior official at the state hydrocarbons and mining agency told Reuters.

Cobalt demand has surged in recent years because of the increased use of rechargeable batteries for electric cars, phones and other goods.

Abdellah Mouttaqui, secretary general of the ONHYM agency said Morocco was pushing to increase its cobalt output, currently ninth globally at 1,900 tonnes last year, with the 11th-largest reserves.

The agency, which is responsible for all upstream prospecting before production concessions are offered to private investors, is exploring for more cobalt reserves in the Siroua region with Moroccan mining firm Managem, he said.

Managem said last month it had agreed a deal with Glencore for a proposed refining project at the Bou Azzer mine near Marrakech.

Most cobalt is extracted as a byproduct of copper or nickel production, except in Morocco where the mineral enjoys a high purity in the Bou Azzer mine, said Mouttaqui.


Coal shortage a worry as power demand rises

Rising power demand has triggered coal shortage concerns in the power industry that say coal stocks at stations are not adding up at the required rate. Unprecedented prices of imported coal at $200 per tonne continue to burden domestic coal as dependent power stations are barely operating.

The maximum discovered price of power in the day-ahead market of Indian Energy Exchange for today touched the highest permitted limit of Rs 20 per unit, while the average stood at Rs 5 a unit. Sources said Gujarat and Maharashtra put together are buying 100 MUs power from the power exchanges.


Bank of Russia resumes gold buying after two-year pause

The Bank of Russia said it will start purchasing gold again, just under two years after it ended a long-running buying spree that helped prop up bullion prices last decade.

The central bank will begin buying gold again on the domestic precious metals market, it said in a statement. The move comes after the monetary authority and several of the country’s commercial banks were sanctioned in response to Russia’s invasion of Ukraine.

The Bank of Russia spent six years rapidly accumulating gold, doubling its holdings and becoming the biggest sovereign buyer. It stopped in March 2020 as prices spiked at the onset of the pandemic, and has largely kept its stockpile steady since. The Russian purchases provided a key pillar of support for the market at a time when demand from investors was muted.


Ships shelled in Black Sea as invasion sparks maritime chaos

Russia’s invasion of Ukraine has brought turmoil to commodities markets as the conflict ensnares merchant shipping.

At least three merchant ships have been reportedly hit since Russian forces began the attack on its neighbor this week. Insurers are either not offering to cover vessels sailing into the Black Sea, or they’re demanding huge premiums to do so.

That has compounded oil trading and shipping markets that were already — with a few exceptions — leery of doing Russian deals while people figure out the sanctions risk of buying the nation’s crude. Trade lawyers said that commodities from Russia should ultimately keep flowing, but that caution is likely in the near term and the situation is fast-changing.


Australian miners ramp up search for lithium to meet EV demand

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The Pilgangoora lithium-tantalum project.

Exploration spending by Australian-listed miners hit an eight-year high in the fourth quarter of 2021, driven by the search for new lithium resources to meet surging demand from battery and electric vehicle makers.

Miners invested A$973 million ($700 million) in the three months ended Dec. 31, according to a report by consultancy BDO, up 11% on the prior quarter. The spending lift was supported by a record A$3.75 billion worth of financing flowing into the sector through equity and debt raisings.

“It’s not just a continuation of the trend we’ve seen in the last three or four quarters, it’s a substantial increase,” Sherif Andrawes, BDO’s Global Head of Natural Resources, said in a phone interview. Miners were spending more on investment and exploration, while steady access to capital meant they had been able to replenish their funds, he added.

Prices for a wide range of raw materials, from copper and nickel to iron ore, have surged on the back of government stimulus spending to boost the economic recovery from the pandemic. The mining industry is stepping up its efforts to find new resources to meet strong demand and cash in on the strong price environment, but is playing catch up after years of under-investment.


US miners irked that Pentagon mineral stockpile plan bypasses them

U.S. miners are clamoring for Washington to approve new domestic sources of minerals used to make weaponry, electric vehicles and other high-tech gadgets, frustrated that the Pentagon is working with non-American companies to stockpile the materials.

Reuters reported last week that the U.S. Defense Department plans to boost its reserves of lithium, cobalt and other minerals to reduce its dependence on China. President Joe Biden confirmed the plan at a White House ceremony this week.

Several companies working to open U.S. mines have sought to supply the Pentagon, hoping military deals will help secure other customers and financing. But even the most advanced of these projects are several years away from opening.

This presents a chicken-or-egg scenario for the military. The Pentagon has taken an “all-of-the-above” approach, noting Congress has deemed supplies from allies acceptable if no domestic supply exists. A White House official said government policy is to source products domestically first, if able.



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