July Newsletter – 13.07.2020
ANNOUNCEMENTS
NEWSLETTER
- Up to 25% of South Africa’s mining output could be impacted as COVID-19 spreads
- Japan to strengthen control over rare metal reserves
- Canada’s Triple Flag, China’s CMOC agree to streaming deal for Australian mine
- Ghanaian environmentalists sue their government over China-backed mine
- Digging in on rare earth, the next front in the US supply chain war with China
- Ivanhoe keeps Kakula copper project ahead of schedule
- Global Zinc Mining Outlook – Fitch Solutions
- Mitsui Mining resumes operation of two zinc mines in Peru
Up to 25% of South Africa’s mining output could be impacted as COVID-19 spreads
The Minerals Council South Africa is now forecasting a bigger impact on the country’s mining output than first feared from COVID-19.
The warning emerged on Friday, before South Africa’s president Cyril Ramaphosa yesterday announced a night-time curfew to begin today as the number of cases in the country balloon at the “equivalent of 500 new infections every hour”.
“The COVID-19 lockdown and its broader impact on economic activity appears likely to reduce mining output by 15-25% in 2020,” minerals council CEO Roger Baxter said on Friday.
He had earlier estimated an impact of up to 10% on production this year, during a virtual panel of industry leaders in May.
His gloomier outlook was revealed as the minerals council welcomed an accelerated economic recovery strategy, published by Business for SA (B4SA), an independent coalition of volunteer resources from the business community which formed in March to assist with the country’s response to the pandemic.
“It is B4SA’s view that the nation has arrived at a fork in the road,” the group said, saying leaders must make difficult choices focused on appropriate policies to enable investment and inclusive growth to improve the economy and social trajectory.
The minerals council had contributed to the development of B4SA’s strategy, which outlined priorities including improving the ease of doing business, infrastructure investment, tackling crime and corruption, plus urgent steps to improve business and investor confidence.
“Collectively, the minerals council believes that if these actions are taken as rapidly as possible, it will mean that by 2024 the industry could be generating an additional US$3.6 billion (R61 billion) in mineral sales a year and will be contributing R300 million in additional tax revenues,” Baxter said.
“It will result in some 70,000 jobs being saved, and an additional 26,000 mining jobs and 47,000 indirect jobs being created.
“These steps require a co-operative and united approach by all industry stakeholders.”
He said South Africa’s economy was in crisis before COVID-19 struck, with the pandemic pushing the country “further into the precipice, with at least 1 million jobs already lost, an estimated 8% decline in GDP likely in 2020, a fiscal deficit that has bourgeoned to nearly 15% of GDP and public debt that is likely to exceed 100% of GDP in a couple of years.”
Japan to strengthen control over rare metal reserves
In the wake of supply disruptions of certain metals caused by the covid-19 pandemic, Japan has decided to launch a series of measures to address potential supply risks from geopolitical instability or future pandemics.
Back in 2019, Japan increased its hold on Lynas’ rare earths output. Pictured here is a rare earth production line at the company’s plant in Malaysia.
A report by market consultancy firm Argos states that one of such measures implies ramping up government control over strategic reserves of 34 rare metals and increasing inventories of some strategically important metals such as cobalt.
According to Argos, the Ministry of Economy, Trade and Industry presented a proposal to the central government where it asks for the State to take full control of strategic rare metals reserves by setting target levels for stocks, as well as plans for procurement and the release of supplies from the reserve.
THE MINISTRY OF ECONOMY URGED MORE FLEXIBILITY IN DETERMINING INVENTORY LEVELS FOR EACH RARE METAL, AFTER TAKING INTO ACCOUNT THEIR STRATEGIC IMPORTANCE, GEOPOLITICAL RISKS AND DOMESTIC DEMAND
The ministry also urged more flexibility in determining inventory levels for each rare metal, after taking into account their strategic importance, geopolitical risks and domestic demand.
For national security considerations, the department asked the Shinzo Abe cabinet to keep inventory targets and actual stockpile levels secret.
“Japan has designated 34 ‘rare metals’ – including rare earths – as having the potential for stockpiling and currently holds reserves of seven — nickel, chrome, tungsten, cobalt, molybdenum, manganese and vanadium,” Argus report states. “The stocks can cover 60 days of the country’s consumption, after including non-obligatory privately-held stocks equivalent to 18 days of consumption. The strategic reserves are defined as being the property of state-owned agency Jogmec and are managed by the agency in its storage bases.”
Besides managing its internal reserves, the Asian superpower has also been securing its external supply of rare earths. Back in June 2019, Japan Australia Rare Earths BV (JARE), a joint venture between state-owned Japan Oil, Gas and Metals National Corp (JOGMEC) and Sojitz Corp., approved a generous financing package for Australia’s Lynas Corp (ASX: LYC), expanding the country’s control over the company’s rare earths output.
https://www.mining.com/japan-to-strengthen-control-over-rare-metal-reserves/
Canada’s Triple Flag, China’s CMOC agree to streaming deal for Australian mine
(Reuters) – Mine financing company Triple Flag Precious Metals Corp said on Sunday it has agreed to pay $550 million upfront as part of a streaming financing deal with China Molybdenum Co Ltd (603993.SS) (CMOC) for future production of precious metals at CMOC’s Northparkes mine in Australia.
Streaming transactions are a type of alternative financing in the mining industry where funds are provided upfront to a miner in exchange for the sale of a fixed amount of future production of metals at a discounted price.
The deal, between units of the two companies, gives Triple Flag rights to a majority of gold and silver to be produced at the mine in New South Wales until the Toronto-based company receives 630,000 ounces of gold and 9 million ounces of silver.
Thereafter, Elliott Management-backed Triple Flag would continue to receive less than half of the gold and silver produced at the mine.
On top of the $550 million upfront payment, Triple Flag would also pay CMOC 10% of the spot gold and spot silver price for each ounce at the time of each delivery.
Ghanaian environmentalists sue their government over China-backed mine
The proposed mine is in a protected national forest some 90 km from the capital. China is financing the US$ 2 billion, project building roads and bridges in exchange for access to bauxite.
Environmental groups warn that rare species and water supply for millions of people are at risk. Increasingly, activists are turning to the courts to stop polluting activities in Africa.
Accra (AsiaNews/Agencies) – Ghanaian environmental activists are taking their government to court in order stop a China-backed project to mine for bauxite in a protected national forest.
Activists warn that the new mine would endanger the forest’s delicate ecosystem, harming the health and well-being of local communities.
In 2018, China pledged to build US$ 2 billion worth of roads and bridges in Ghana in exchange for access to the bauxite from a proposed mine in the Atewa Range Forest. Bauxite is used in making aluminum.
China’s policy towards Africa, considered by many to be a form of neocolonialism, is based on buying raw materials in exchange for investments and loans for infrastructural projects (largely with Chinese labour and materials) in target countries.
According to the China Global Investment Tracker, China has invested US$ 211 billion in Africa over the past 15 years.
Johns Hopkins University’s China Africa Research Initiative estimates that China lent US$ 143 billion to 49 African states between 2000 and 2017.
Ghanaian President Nana Akufo-Addo has promised that mining activities will be environmentally sustainable. Ghanaian authorities say that the project will create 35,000 new jobs.
Conversely, environmental groups note that the forest is home to very rare animal and plant species. It is also the source of three important rivers that supply water to millions of people, including the residents of the capital, Accra, which is only 90 km away.
Digging in on rare earth, the next front in the US supply chain war with China
US scrambling to close the gap with China, which dominates the mining and refining of these essential materials for hi-tech military and consumer products
The drive to develop in US taps Donald Trump’s themes of reviving extractive industries and ‘reshoring’ American jobs
As US-China relations hit new lows, Washington is redoubling efforts to address a major Achilles’ heel: its dependence on Beijing for rare earth elements – essential materials in various hi-tech products from smartphones and electric car batteries to Javelin missiles and F-35 fighter aircraft.
China hawk Ted Cruz, a Republican senator from Texas, recently introduced a bill to spur US production of critical minerals, among the latest of several before Congress amid rising concern that China could leverage its dominance in economic and political negotiations.
“It’s making people in Washington wake up and say this is not sustainable,” said Martijn Rasser, a fellow at the Centre for a New American Security. “If China really is willing to restrict exports, we’re in for a rough ride over the next few years.”
But China’s strategic-metals grip is so strong and the challenges in competing against its state-led model so great that some estimate it could take over a decade to create a relatively secure US supply chain. The US has also made some significant missteps that haven’t helped, critics say.
https://www.scmp.com/tech/article/3092565/digging-rare-earth-next-front-us-supply-chain-war-china
Ivanhoe keeps Kakula copper project ahead of schedule
Canada’s Ivanhoe Mines (TSX:IVN) said on Monday that progress at its Kakula copper project, the first of multiple planned mining areas at Kamoa-Kakula in the Democratic Republic of the Congo (DRC) continues ahead of schedule.
The company, together with its joint venture (JV) partner China’s Zijin Mining Group, has now completed more than 17 km of underground development, of which 5.1 kms is ahead of schedule.
Ivanhoe also said that Kakula’s 2,000-tonne-per-hour ore conveyor system began operations in June, which will further increase the mine’s pace of underground development.
As work on extending the mine below the surface progresses over the next few months, the majority of the headings are expected to transition into the high-grade ore zones, Ivanhoe said.
The Vancouver-based miner noted that early implementation of covid-19 prevention measures has allowed the development of Kakula to continue uninterrupted. As a result, initial production is expected in the third quarter of 2021.
In November, the Kamoa-Kakula team completed basic design and costing for Kakula’s initial mine and infrastructure, the first concentrator module and associated infrastructure.
The report pushed initial capital costs up to about $1.3 billion — an 18% increase over planned costs.
https://www.mining.com/ivanhoe-keeps-kakula-copper-project-in-drc-ahead-of-schedule/
Global Zinc Mining Outlook – Fitch Solutions
Fitch Solutions said that mined zinc production Globally will continue to ramp up over the coming years as elevated prices encourage miners to restart idled capacity and begin production at key new mines. Elevated zinc prices relative to historical levels will incentivise investment in new projects, expansions and restarts as the economics of the projects maintain their attractiveness. Fitch said “We also see scope for some idled capacity to be restarted. We forecast global zinc mine production to increase by an average of 1.7% y-o-y over our forecast period to 2029, reaching 14.8 million tonne of mineral production.”
Fitch expects China’s zinc mine production will stagnate over the coming years due to declining ore grades and increasingly stringent environmental regulations. The conservation of minerals and increasing consolidation of mining industries outlined in China’s 13th Five-Year Plan will weigh on zinc output, analysts assert. Fitch Predicts China’s Position Will Erode From 31% Of Global Mine Production In 2020 To 26% By 2029
Jiangtong Copper Group began construction on the Yinzhushan underground lead-zinc- silver mine in the Jiangxi Province in July 2019. The reports suggest the project has a mine capacity of 1.0mnt per annum, of which it is expected to produce 29.6kt of lead concentrate and 44.5kt of zinc concentrate. As such, the project represents a slight upside risk to Fitch’s forecast over 2021-2023, depending on when the mine commences operations and how quickly production ramps up.
Fitch forecasts the country’s zinc production to edge higher, from 3.8mnt in 2020 to 3.9mnt by 2029. Despite this muted growth rate, China will remain the largest global producer of zinc by a wide margin. Fitch predicts China’s position will erode from 31% of global mine production in 2020 to 26% by 2029.
Peru – Fitch forecasts Peru to remain a top zinc concentrate producer over the coming years. The country is home to approximately 57 mining firms according to the Ministry of Energy & Mines, which consist of both international firms such as Teck Resources and Glencore and as well as domestic miners. Despite a large number of players, Peru’s zinc sector is dominated by the Antamina operation, which produced 409kt in 2018 and Nexa Resources’ Cerro Lindo and El Porvenir operations. Over the short-medium term, Fitch analysts expect Antamina to continue driving production higher as the mine transitions to more copper-zinc ore and less copper-only ore between 2020-2022. Production is expected to ranged from 440-490kt per annum. Alongside Antamina, Korea Zinc’s expansion at Pachapaqui and Nexa Resources beginning production at the Shalipayco mine will also support growth, says Fitch.
Australia – Following 2019’s year of robust growth, Fitch expects Australia to maintain it’s positive trajectory over the coming decade. Over 2019, the ramp up of MMG’s Dugald River mine and the restart of Glencore’s Lady Lorreta mine at Mount Isa led the increase in Australia’s zinc mine output by an estimated 14% y-o-y. The Ramp Up Of Mmg’s Dugald River Mine And The Restart Of Glencore’s Lady Lorreta Mine At Mount Isa Led The Increase In Australia’s Zinc Mine Output. Given the country’s healthy pipeline of projects, Fitch expects the country to average the second-fastest growth rate globally to 2029.
India – India will increasingly drive global zinc mine production growth, Fitch asserts, as the country’s key miner Hindustan Zinc Limited implements a large-scale expansion plan aimed at increasing the firm’s mined production output to 1.2mnt per annum by 2020 from 950kt previously. Fitch estimates zinc mine production accounts for approximately 75-80% of the firm’s mined production output each quarter, the remaining proportion consisting of lead and silver. Various expansion projects were commissioned over 2019 and are expected to be completed by 2020, allowing for zinc mine production gains to feed through over 2020 and 2021.
https://steelguru.com/metal/global-zinc-mining-outlook-fitch-solutions/560913
Mitsui Mining resumes operation of two zinc mines in Peru
Japan-based Mitsui Mining and Smelting has restarted operations at its Huanzala and Palka zinc mines in Peru following a closure.
The two mines had been suspended since March after the local government issued a state of emergency order to limit the spread of the novel coronavirus.
Mitsui owns a 70% stake in Compania Minera Santa Luisa, which is the operator of the two mines.
Reuters cited a Mitsui Mining spokesperson as saying that the mines resumed operations after the country restarted some economic activities and Mitsui secured approval from the local government.
The company has resumed operations with measures in place to prevent infection among workers.
The news agency quoted the Mitsui Mining spokesperson as saying: “The mines’ operations have returned to the levels before the quarantine was put in place in March as they have been preparing for the restart since late June.”
According to Reuters, metals production is important for the recovery of Peru’s economy, which has been destroyed as a result of the impact of the coronavirus outbreak.
https://www.mining-technology.com/news/mitsui-resumes-two-zinc-mines-peru/
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