January Newsletter – 14.01.19


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Behre Dolbear is proud to be a Sponsor of the Asia Mining Club, which is holding an Analysts Panel Luncheon 23 January, 2019, 12:00pm – 2:00pm, Watermark Seafood Bar and Grill, Level P. Central Pier 7, Star Ferry, Central, Hong Kong. For details please click on this link.


Barrick CEO to forge ahead in Latin America despite past strains


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“If you want to find elephants, go to elephant country,” Chief Executive Officer Mark Bristow, a South African geologist and big-game hunter, said in a phone interview. The Toronto-based company “absolutely” intends to invest more money in the El Indio copper-and gold belt, he said, adding that its partnerships with Chinese and Chilean miners remain key to its strategy in the region.

“Everything’s been clouded by Pascua-Lama,” Mark Bristow said. “At the end of the day, that’s something we’re going to get our heads around, and we are going to engage with our host countries.”

The world’s largest gold miner, which completed its merger with Randgold Resources Ltd. at the beginning of the year, had been revamping its South American strategy since John Thornton became chairman in 2014. Barrick formed a joint venture at its Veladero mine in Argentina in 2017 with Shandong Gold Mining Co., and formalized an agreement with the Chinese miner to work on other projects. Barrick also sold a 50 percent stake in its Zaldivar mine in Chile to form a venture with Antofagasta Plc in 2015.

“Zaldivar is an important asset for us, in partnership with Antofagasta, and my interest is how do we build that partnership further,” Bristow said. “First of all to Latin America, but also along the whole of that copper-gold porphyry geological belt, which runs all the way up the west coast of the Americas.”


Acacia Mining fined over alleged environmental breach in Tanzania

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Acacia Mining (LON:ACA), the Tanzanian gold producer dealing with an ongoing dispute with the country’s administration, received a fresh blow on Thursday from the government, which fined the miner 300 million Tanzanian shillings (about $129,144) over allegations of breaching environmental rules by its North Mara operation.

The company noted it has not yet received any supporting reports, findings or testing data in relation to alleged discharges of a hazardous substance at the mine site, adding that it is currently assessing the technical basis of such claims.

Acacia said it has not yet received any supporting reports, findings or testing data in relation to the alleged discharge of a hazardous substance at its North Mara mine.

Tanzania’s No.1 gold producer also said the alleged environmental violations could relate to a long-standing seepage at the base of the tailings storage facility at North Mara, an issue apparently “well-known” by both the National Environment Management Council (NEMC) and the Tanzanian government.

“This seepage remains managed by pumps which return the water to the tailings storage facility and it is, therefore, contained on the mine site, does not flow into the surrounding environment or present a risk of contamination to any public water source,” the company said in a media statement.



Global association aims to build sustainable future for zinc

Global association the International Zinc Association (IZA) was created in 1991 by a group of leading zinc producers who are guided by the principle of undertaking actions that positively influence the market and the image of zinc.

IZA Africa regional director Hazvinei Munjoma spoke to Mining Weekly to discuss the initiatives of the association to build zinc demand in the region, with the aim of building a sustainable future for zinc.

With 45 full members and over 200 affiliate and associate members globally, IZA promotes the sustainable use of zinc, including the use of zinc in fertilisers.

“This health and fertiliser initiative was launched to address zinc deficiency in crops by adding zinc-fortified fertilisers to soils,” explains Munjoma. Zinc deficiency causes reduced crop yields and human nutrition challenges in some regions, particularly in South Asia, Latin America, and sub-Saharan Africa.



The rising cost of socially responsible investing: Mark Gilbert

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Both companies and the fund managers that invest in them are under pressure to pay more attention to environmental, social and governance issues. For the former group, that requires delivering increased transparency on an ever-expanding range of metrics. For the investment crowd, tailoring strategies to address the new demands means increased spending on data – at a time when fees are slowly but steadily being eroded.

A study published this week by capital markets consultants Opimas predicts that the cost of buying ESG data will rise to about $750 million next year, an increase of almost 50 percent from last year and up by almost 300 percent since 2014. It remains to be seen who will bear the burden of the increased costs associated with harvesting the observations needed to power ESG investing.

The surge in spending reflects an explosion in investment products that are marketed as being more socially responsible in their objectives. The number of investment managers signing up to the United Nations Principles for Responsible Investment increased by 18 percent last year to 1,111. In July, the sovereign wealth funds of Kuwait, New Zealand, Norway, Qatar, Saudi Arabia and United Arab Emirates met in Paris and agreed an aligned strategy to press the companies they invest in to publish assessments of climate-change risk and carbon-reduction strategies.


Too early to bet on mining policy change: Congo vote reaction


In a surprise twist, Democratic Republic of Congo opposition leader Felix Tshisekedi was declared the winner of last month’s presidential election, although his victory is being marred by claims by a rival that the poll was rigged.

The African country is the world’s main supplier of battery ingredient cobalt and a key source of minerals from copper to tantalum. That means miners, analysts and users of the metals — which range from carmakers to mobile-phone companies — will be keeping a close watch on what happens next.

The prospective change of administration may spur optimism among mining investors including Glencore Plc and Barrick Gold Corp. that they can reverse elements of a fiercely disputed new industry code that raised royalties and added taxes.


China to step up crackdown on rare earth sector: ministry

SHANGHAI (Reuters) – China will step up efforts to eliminate illegal mining, production and smuggling of rare earth materials, while at the same time, encourage more high-end processing, the industry ministry said in new guidelines published on Friday.

China is responsible for more than 90 percent of the global supply of rare earth elements, a group of 17 metals used in high-tech and strategic sectors such as renewable energy and defense.

However, the country has spent the last decade trying to bring “order” to the sector by closing down illegal mines, restricting exports and domestic production. Small private firms have been shut down and control over the industry has been put in the hands of six state-owned mining groups.

Regulation and supervision in the industry had improved, but illegal mining and production continued to disrupt “market order” and damage the interests of legitimate enterprises, the Ministry of Industry and Information Technology (MIIT) said in a notice.



Mongolian state coal miner chooses Hong Kong for $3bn IPO – E-TT

ULAANBAATAR — The Mongolian state company controlling one of the world’s largest coal mines plans to raise up to $3 billion in a public stock offering in Hong Kong this year.

The listing of 30% of Erdenes Tavan Tolgoi, announced Thursday by Chief Executive Gankhuyag Battulga, will be good news for Hong Kong, which analysts have forecast will see a much lower volume of initial public offerings this year after beating all world markets in 2018.

It will also cheer members of the Mongolian public who received 15% of the company’s shares for free in 2012 when the IPO was initially planned. They have received no dividends since nor been able to sell their stock after the listing plans were sidetracked by an upsurge in domestic resource nationalism and the collapse in global coal prices.

Their shares will soon become tradable on the Mongolian Stock Exchange, before or at the same time as the Hong Kong listing, with the first dividends to go out this year as well, Battulga said at a press conference in Ulaanbaatar.

“I think there is a rush and realization to get the IPO done before the economic cycle downturn that could unfold in late 2019 or 2020,” said Rainer Michael Preiss, portfolio strategist at Taurus Wealth Advisors in Singapore and the founder of a Mongolian investment fund.

The Hong Kong Stock Exchange last year played host to 286.5 billion Hong Kong dollars ($36.55 billion) in IPOs, according to consultancy PwC. It and rival KPMG both project that proceeds this year will fall to around HK$200 billion, in part due to fewer big listings.

The Mongolian government last year won parliamentary approval for listing Erdenes amid rebounding coal prices. Battulga told the Nikkei Asian Review that a secondary listing in New York might follow the one in Hong Kong. London was earlier considered as a possible listing venue.

The Tavan Tolgoi deposit, in the south of Mongolia about 240 km from the Chinese border, holds estimated reserves of 7.5 billion tons of coking coal. Erdenes last year turned a net profit of 720 billion tugrik ($272.78 million) on revenue of 1.86 trillion tugrik. That compares with earnings of 461 billion tugrik on 1.2 trillion tugrik in sales in 2017.

Battulga said proceeds from the Hong Kong offering would be used to finance a nearby coal-fired power plant and a railway to the Chinese border. Coal is now taken to China, Erdenes’ main market, by truck. The new rail line is to be completed by 2021.

Under an agreement reached last month, the power plant’s output will be used by Oyu Tolgoi, a huge copper mine co-owned by the Mongolian government and Australian miner Rio Tinto. That mine currently imports power from China. The new power plant is scheduled to come into operation in 2023.

Aluminum Corp. of China, which had originally provided $350 million in financing for Tavan Tolgoi’s development in exchange for a pledged supply of coal, came into conflict with Erdenes when coal prices fell. Ulaanbaatar in 2015 blocked a $4 billion deal for a consortium led by China Shenhua Energy and Japan’s Sumitomo Corp. to take over management of the mine.

Mongolian Mining Corp., a private company operating a coking coal mine within the Tavan Tolgoi formation, listed in Hong Kong in 2010.

Nikkei Asian Review deputy editor Zach Coleman in Hong Kong contributed to this report.



China’s coal hub Shanxi establishes no-coal zones to curb pollution

A total of 11 prefecture-level cities in China’s coal hub Shanxi Province have established no-coal zones in its urban districts to tackle air pollution, local authorities said.

The storage, sales and use of coal are all banned in the no-coal zones, according to the Shanxi Provincial Department of Ecology and Environment.

The exceptions are made for coal-fired electricity generators, large-scale heat providers and industries that use coal as a raw material.

The authorities said the area covered by the no-coal zones will be gradually expanded. Meanwhile, the sale or burning of low-grade coal among residents has been banned in the whole province.

For those who violate the rules, market regulators above the county level will order them to make rectifications and will confiscate raw materials, coal products and illegal gains. A fine up to three times the value of the goods will be imposed.

Shanxi is under big pressure to curb air pollution. In the first three quarters of last year, 7 out of 20 cities with the worst air quality were in Shanxi.

With a quarter of China’s proven coal reserves, Shanxi shut down 36 coal mines in 2018, cutting 23.3 million tonnes of production capacity.

According to a plan regarding the reduction and reconstruction of the coal mining industry in the province, coal mines with an annual output below 600,000 tonnes will be closed by 2020.

Source: Xinhua



Canada’s first geothermal power facility announced

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Canada’s Prime Minister, Justin Trudeau, today announced support for a new geothermal power facility near Estevan in Southeastern Saskatchewan. The energy project, led by DEEP Earth Energy Production Corporation, is the first of its kind in Canada and taps into a new renewable energy resource.

Geothermal energy harnesses heat from the earth’s crust and transforms it into electricity to power homes and businesses year round. DEEP’s geothermal facility will build on Saskatchewan’s leadership in the energy sector, using familiar drilling technologies from the oil, gas, and mining industries to tap into this energy source.

The Government of Canada will provide $25.6 million in funding for the five Megawatt (MWe) facility, which will produce enough energy to power approximately 5,000 homes all while taking the equivalent of the yearly emissions of 7,400 cars out of the atmosphere.

The project will create 100 jobs during construction, provide the provincial power grid with clean, renewable energy, and create new business opportunities for local communities.



Murchison Minerals triples land holdings in Saskatchewan

Murchison Minerals (TSXV: MUR) announced Thursday that it has doubled the size of the previously announced VTEM airborne survey and tripled its mineral land holdings at its 100% owned zinc/copper/silver Brabant VMS project in central Saskatchewan.

With the recent staking of 14,807 hectares of mineral claims contiguous to its current land holdings, Murchison now controls 221.8 km2 of mineral rights over a strike length of approximately 29 kilometres.

Preliminary interpretation of the ongoing VTEM airborne geophysical survey shows multiple conductors that range in strike length from 200 metres to in excess of six kilometres. They are located within a favourable Archaean greenstone belt geological environment that has the potential to host a prolific VMS camp, Murchison stated in a media release.



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