January Newsletter – 27.01.2020
“Behre Dolbear wishes everyone a wonderful Year of the Rat, good health, good luck and much happiness throughout the year.
Behre Dolbear are Gold sponsors of 121 Mining Investment Conference 3rd and 4th February 2020, Cape Town, and will also be attending Mining Indaba 2020 in Cape Town from 3rd to 6th Feb 2020.
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- Freeport Looks Poised to Turn Corner After Five-Year Bumpy Road
- Barrick cements partnership with Tanzania
- ‘Battery Passport,’ guiding principles on value chain data launched at World Economic Forum
- Changing climate creates risks, opportunities for mining companies
- The left’s opposition to mining threatens its green dream
- Global tailings database launched
- CERA certification will ensure a consistent standard of environmental, social and economic impact throughout the entire raw materials value chain
- Congo opens Chinese-owned Deziwa copper and cobalt mine
- Russia’s Potanin buys partner’s stake in copper and gold mine near China
Freeport Looks Poised to Turn Corner After Five-Year Bumpy Road
- Copper giant’s third-quarter revenue was weakest in a decade
- The shares have regained roughly half their losses since 2015
It’s been a rough haul for Freeport-McMoRan Inc., but the future may be looking up.
In the past five years, the world’s largest publicly traded copper miner was forced to sell assets and shares to manage debt as it weathered fall-out from the collapse of the commodity super cycle. It emerged from multiyear talks over its Indonesian mine to secure long-term rights, and hung on as production at the flagship operation tumbled during the switch from open pit to underground mining.
And in the past year, it has been buffeted by global trade winds and hit by crossfire from demonstrations against a competitor in Peru.
When the Phoenix-based company releases fourth-quarter results on Thursday, the market will be more than ready for some good news.
Morgan Stanley’s “bull case” for the stock predicts a 40% rally to $18 a share. While the ramp-up of underground mining at Grasberg, Freeport’s massive Indonesian copper-and-gold asset, remains challenging, the bank believes the miner “is well positioned to deliver on execution,” analyst Carlos De Alba said in a note this week.
Barrick cements partnership with Tanzania
Canadian miner Barrick Gold has made progress in reshaping its Tanzania operations, acquired through the takeover of Acacia Mining in September last year, by formally establishing a joint venture (VJ) with the government.
At a signing ceremony on Friday, CEO Mark Bristow and Tanzanian President Dr John Magufuli formalised the JV, which would give the government full visibility of, and participation in, decisions made for the North Mara, Bulyanhulu and Buzwagi mines.
The company, in a statement on Friday, said it was a “pioneering move” that would take Barrick’s policy of partnership with its host countries to a new level.
The agreement also ratified the creation of Twiga Minerals Corporation – a management company that was jointly formed by government and Barrick to oversee the management of Barrick’s local operations.
‘Battery Passport,’ guiding principles on value chain data launched at World Economic Forum
At the World Economic Forum in Geneva, the Global Battery Alliance (GBA) on Thursday launched 10 key principles that have been signed by 42 global organizations – along with the ‘Battery Passport’ concept, a type of ‘quality seal’ on a global digital platform for sharing value chain data of batteries.
The first of its kind, the Battery Passport is expected to address areas including compliance with human rights and environmental footprints, the World Economic Forum said in a press release.
The principles are intended as the first step in a responsible, sustainable battery value chain as set out in the Global Battery Alliance’s “A Vision for a Sustainable Battery Value Chain in 2030.” Implementing commitments will be based on existing standards such as the Organisation for Economic Co-operation and Development (OECD)’s Due Diligence Guidance and economically viable considerations for a circular and low carbon economy.
At the Annual Meeting 2020, running Jan 20-24, 42 organizations, including businesses from mining, chemicals, battery, automotive and energy industries, representing annual revenue of close to a trillion dollars, along with international organizations and global NGOs, have agreed on the 10 guiding principles.
They include maximizing the productivity of batteries, enabling a productive and safe second life use, circular recovery of battery materials, ensuring transparency of greenhouse gas emissions and their progressive reduction, prioritizing energy efficiency measures and increasing the use of renewable energy, fostering battery-enabled renewable energy integration, high quality job creation and skills development, eliminating child and forced labour, protecting public health and the environment and supporting responsible trade and anti-corruption practices, local value creation and economic diversification.
“We all need batteries to power the clean revolution. However, we must ensure violations of human rights do not occur anywhere in the value chain, that local communities benefit and that battery production is sustainable. These guiding principles are an important first step to build a value chain that can deliver on this promise while supporting societies and economies at the same time,” said Dominic Waughray, Managing Director, World Economic Forum.
Organizations supporting the realization of a battery value chain that meets these principles include AB Volvo, African Development Bank, Amara Raja Batteries, Analog Devices, Audi, BASF, and BMW, the World Bank and UNICEF.
This alignment among key players in the battery market establishes the basis for a transparent accountability system. It will guide the development of a global digital battery information disclosure system referred to as the “Battery Passport”, which is designed to enable a transparent value chain, for example, with respect to human rights and the environmental footprint.
LEGAL AND REGULATORY
Changing climate creates risks, opportunities for mining companies
Risks posed by anthropogenic climate change have become real. As an industry generating a high level of greenhouse-gas (GHG) emissions, mining has come under increasing investor and regulatory pressure to quantify and disclose contributions to global warming and their efforts to mitigate emissions. Forward-thinking miners are analysing the implications of human-induced climate change for their future, and crafting smart responses.
In ‘Building uncertainty advantage in a climate of change’, our colleagues cited examples of mining companies that are strengthening their position on human-induced climate change and gaining benefits including higher valuation multiples. In this article we introduce a framework developed by BCG that helps mining companies think holistically about risks and changes presented by changes in climate.
Formulating your response
A holistic response to anthropogenic climate change encompasses three main components: a 2C-resilient low-carbon business strategy; decarbonised and ‘climate-proofed’ operations; and an honest, effective climate narrative and stakeholder-engagement strategy
The left’s opposition to mining threatens its green dream
Existing restrictions on recovering critical minerals force U.S. firms to purchase these resources overseas
Environmental activists who oppose mining minerals in the United States are threatening the same green agenda they claim to embrace. Among those leading the attack is Sen. Elizabeth Warren, Massachusetts Democrat, who proposes banning mining on public lands.
Though environmentalists may not realize it, increased domestic production of “critical” minerals would benefit the environment. But existing restrictions on recovering these elements are forcing U.S. firms to purchase these resources overseas.
This can be problematic if our trading partners are unstable, unreliable or unfriendly, as was the case before the fracking revolution when the Organization of the Petroleum Exporting Countries (OPEC) dominated the global market for crude oil. Now the United States is a net exporter of oil and natural gas. But we continue to be dependent on imported minerals, not because domestic supplies don’t exist, but because restrictive regulatory policies prevent their recovery.
Global tailings database launched
Environmental organisation GRID-Arendal has launched the world’s first publicly-accessible global database of mine tailings storage facilities.
The database, called the Global Tailings Portal (GTP), was built by Norway-based GRID-Arendal with support from the United Nations Environment Programme. It allows users to view detailed information on more than 1900 tailings dams, categorised by location, company, dam type, height, volume and risk, among other factors.
The database forms part of the Investor Mining and Tailings Safety Initiative, which is backed by a $13-trillion fund and led by the Church of England Pensions Board and the Swedish National Pension Funds’ Council on Ethics.
GRID-Arendal director Professor Elaine Baker says the portal could save lives, considering that tailing dams are getting bigger, owing to mines mining increasingly lower grade ore – creating more waste.
INNOVATION AND TECHNOLOGY
CERA certification will ensure a consistent standard of environmental, social and economic impact throughout the entire raw materials value chain
Currently, at least 40 different certification schemes exist for mining activity alone, increasingly exponentially when considering the entire value chain, with some certificates specific to a single geography, process or humanitarian concern, and others to a single mineral. Existing certification processes are complex, expensive and inconsistent, resulting in a porous and diffuse approach to how sustainability and ethics are defined from country to country, mineral to mineral, and company to company. The CERA certification programme has solved this global industry-wide issue with the development of a new universal standard, providing an affordable and consistent evaluation of environmental, social and economic sustainability along the entire raw materials value chain.
CERA has also created the first definition of sustainability valid for all materials and manufacturing processes, meaning the CERA standard will be applicable at every stage of the value chain from mineral exploration to the final product, and covering every raw material, across every country, under a single scheme, following a formal launch in 2020.
Congo opens Chinese-owned Deziwa copper and cobalt mine
DEZIWA MINE, Democratic Republic of Congo (Reuters) – The Democratic Republic of Congo’s state mining company Gécamines on Wednesday opened the Deziwa copper and cobalt mine and processing plant, part of a joint venture majority-owned by China Nonferrous Metal Mining Company (CNMC).
The Deziwa deposit, around 35 kilometres east of Kolwezi, is estimated to hold 4.6 million tonnes of copper and 420,000 tonnes of cobalt.
Somidez, the joint venture controlling it, is held 51% by CNMC and 49% by Gécamines.
An $880 million project which started construction in May 2018, the Deziwa mine aims to produce 80,000 tonnes of copper and 8,000 tonnes of cobalt per year, according to Somidez.
In written comments prepared for the launch, Gécamines chairman Albert Yuma described it as an “innovative” partnership for Congo, with a greater government stake than other projects in the country.
Russia’s Potanin buys partner’s stake in copper and gold mine near China
MOSCOW (Reuters) – Russian billionaire Vladimir Potanin has bought his partner Grigory Berezkin’s stake in the Bystrinsky mine in Russia’s Far East, representatives for the two businessmen said on Tuesday.
Russian mining giant Norilsk Nickel, known as Nornickel and which is co-owned by Potanin and holds a 50% stake in the remote copper and gold mine, has been looking for a partner in the ambitious project for several years.
A further 36.7% stake in the mine, which was completed in 2017 and has an operational capacity of 10 million tonnes of ore, has been held since 2017 by CIS Natural Resources, a fund shared by Berezkin and Potanin.
Berezkin’s stake in this fund has been bought by one of the firms in Potanin’s investment vehicle Interros.
The sale was first reported by the Kommersant daily and confirmed by representatives for Interros, Berezkin’s ESN Group and Nornickel on Tuesday.
Nornickel, the world’s second-largest nickel and top palladium producer, had been looking to attract investment partners for the $1.3 billion project, and a 13.33% stake was bought by the Chinese-owned Highland Fund in 2015.
The mine is located some 400 km (250 miles) by rail from the Chinese border in the Siberian region of Chita. Nornickel, has previously said it plans to focus exports from Bystrinsky to China, the world’s top iron ore consumer.
Potanin said last November that Nornickel could decide on a possible initial public offering (IPO) of the firm running the Bystrinsky mine in the third quarter of 2020.