July Newsletter – 03.07.18



Anglo American wins permits to explore for copper in north Brazil

RIO DE JANEIRO (Reuters) – Miner Anglo American Plc (AAL.L) clinched hundreds of permits this month to explore for copper in a remote part of northern Brazil, Brazilian authorities said, as the growing electric vehicle market and a scarcity of shovel-ready mining projects fuels demand for the metal.

A major copper find, if confirmed, would cheer the mining industry which is eying a looming shortfall for the red metal, prized as an electricity conductor, after years of shrunken exploration budgets meant little in the way of promising new discoveries.

In a statement to Reuters on Thursday, Anglo said it was too soon to make claims about the viability of the project. But the company confirmed it had received permission to explore for copper in Brazil’s Mato Grosso and Para states where it had not yet begun studies.


The deposit was discovered in 1961 by the Bodaybo expedition and extensively explored by Soviet geologists in the 1970 to the 1990s.

In total over 320,000m of drilling have been carried out, including by a team from Canada’s Placer Dome (now Barrick Gold) in the late 1990s.

Polyus said it sees strong correlation of the results of verification drilling and the historical exploration data.

Polyus estimates resources at Sukhoi Log (which translates to “dry gully” in English) of 58m ounces of contained gold grading 2.0 g/t gold.


Rio Tinto ready to splash out on copper

The global miner would be willing to fork out a large premium over market value to secure a prime asset as it tries to reduce its reliance on iron ore, company and banking sources told Reuters.

If it can’t land a big copper project, it is weighing the cumulative power of a series of more modest acquisitions to increase its exposure to a metal expected to be in high demand from the electric vehicle and renewable energy industries, the sources said.

The approach under CEO Jean-Sebastien Jacques marks a shift for Rio Tinto (RIO.L) (RIO.AX), known for its cautious strategy since it was badly burnt in the commodity price crash earlier this decade after a series of damaging acquisitions.

“Growth is back on the agenda,” Jacques told a mining dinner in London late on Thursday, but he said Rio would be selective.

Kevin Fox, managing director of Rio Tinto Ventures, a division set up to hunt for established mining projects to acquire, told Reuters it was tough to find quality assets.

“The exploration space is not full of wonderful opportunities,” he said. “What are we looking at? It’s trite to say the battery minerals sector is attracting a lot of interest and we are obviously looking at that. We include in that copper.”

He declined to say how much Rio would pay or to specify any projects.


Why Russia and Turkey Are Such Gold Bugs


Their moves out of U.S. debt and into the precious metal could be precursors of a bigger global shift.

Since December 2017, Russia has cut its holdings of U.S. foreign debt by more than half. Instead, it’s been increasing the share of gold in its international reserves. That’s understandable behavior for a country that has to deal with an unpredictable U.S. sanctions policy, but it’s also part of a trend. Foreign governments and international organizations account for a decreasing share of outstanding U.S. debt, and some economies have in recent years aggressively upped the share of gold in their reserves instead.

U.S. debt, of course, is growing faster than global international reserves, and that partly explains the declining role of foreign countries in keeping the U.S. government solvent.

On the other hand, there’s plenty of U.S. debt to buy, but countries aren’t keen to increase its share in their reserves. Instead, the share of U.S. Treasury securities has gone down to 25.4 percent currently from 28.1 percent in 2008, while the share of gold has held steady at about 11 percent over the same period, according to the World Gold Council. That’s in part thanks to the efforts of a few eccentric gold bug authoritarians. Apart from Russia, they include Belarus, Kazakhstan and, recently, Turkey, where President Recep Tayyip Erdogan believes the West is out to punish Turkey for his sovereignty-enhancing policies.

Russia, Kazakhstan and Turkey account for 50 percent of net gold purchases by central banks in the last five years. But large European economies, which have long kept most of their international reserves in gold, have mostly held their share steady rather than invest more in dollar-denominated assets. The euro area, including the European Central Bank, holds 55 percent of its total international reserves in gold, just like in 2008.



Commodities Face a Twin Threat, Morgan Stanley Says

Bloomberg News


⦁ ‘Risks to demand are building,’ bank says in report on metals
⦁ Trade tensions, potential China slowdown seen in second half

Commodities face a twin threat in the coming months, according to Morgan Stanley, which flagged burgeoning risks to consumption from a potential escalation in global trade tensions, especially for metals, as well as any slowdown in China.

“Escalating global trade tensions bring a risk of demand destruction across commodity markets as costs rise for end-users and access to materials is restricted,” the bank said in a quarterly report. “China’s buoyant mood is giving way to concerns around tightening credit and a slowing manufacturing sector.”



Inventory draws highlight nickel shortages, buttress prices

LONDON, June 28 (Reuters) – Two years ago the chances of a nickel price recovery seemed remote, but that mindset has changed as shrinking stocks and falling supplies have created a bullish backdrop for the stainless steel ingredient.

Benchmark nickel on the London Metal Exchange recently hit $16,690 a tonne, the highest since December 2014, after falling to 13-year lows below $8,000 a tonne in February 2016.

A retreat to around $15,000 a tonne was triggered by fears of a trade war between the United States and China, the world’s two largest economies. However, prices are still up about 70 percent since June 2017 when expectations of deficits began.

Higher prices have not, as some expected, led to rising output and deficits are likely to be a feature for some years.

“There is not enough supply, which means stocks have to be drawn,” said Jim Lennon, Managing Director at Red Door Research. “The environmental clampdown in China has taken out about 35,000 tonnes of nickel pig iron capacity since May.”




Demonstrators block access to Amulsar mine, Armenia – Lydian

Mining Weekly

Demonstrations and road blockages in response to last month’s change of government in Armenia have impacted on the construction of the Amulsar gold project, TSX-listed Lydian International confirmed on Thursday.

The company said that the protests, which mainly targeted the mining sector, had restricted access to Amulsar for a total of 14 days in the past five weeks.

Lydian did not indicate if the demonstrations will impact on the expected starting date of the 225 000 oz/y mine. The company is working towards entering production at Amulsar in the fourth quarter, ramping up to full output in 2019.

The government has made a public appeal, instructing protestors to discontinue road blockages, recognising that they are intended to discredit the government and not directed at the company.




The diesel-addicted mining industry is finally embracing renewable energy, but it’s not just because of the environment

With diesel prices rising in tandem with oil prices, the quest for sustainability has pushed many companies to look closely at their energy usage

About a 10-hour drive northwest of Toronto, in an area with no history of mining and little exploration, Goldcorp Inc. is tunneling a hole, currently at least 120 meters below the pine tree forests and lakes that dot the surface, for what it hopes will be one of its most sustainable mines yet.

Borden, as the mine is to be called when it starts producing in 2019, will be modest in size at about 250,000 ounces of gold per year under current estimates.

But Goldcorp harbours big ambitions to make it the first all-electric underground mine in Canada where everything from the trucks that haul ore, to the ventilation system that provides oxygen to its subterranean workers, run off energy taken from the electrical grid.




US junior secures $1M for superalloy project in southeast Nebraska

US miner NioCorp Developments (OTCMKTS:NIOBF)(TSX:NB) revealed Thursday is about to receive a $1 million-shot in the arm from an entity managed by The Lind Partners, a New York-based asset management firm.

The Colorado-based company, which expects to receive the funding on or around July 9, is in the midst of developing its huge Elk Creek superalloy project in southeast Nebraska, which some politicians believe it could produce American-made “super steels” for existing infrastructure projects across all 50 states.

All the metals NioCorp plans to mine at its Elk Creek project — niobium, scandium, and titanium — were included last month on the US government’s register of critical minerals.