July Newsletter – 18.07.2022

  • CMOC’s Congo mine suspends copper and cobalt exports
  • Hundreds of hectares of pristine rainforest destroyed by illegal mining in Venezuela
  • Copper price rebounds despite weak economic activity in China
  • Vedanta to bring into operation 2 coal blocks in FY23
  • China’s property, banking pain has iron ore in a bear squeeze
  • China-Backed Illegal Rare Earth Mining Surging in Northern Myanmar
  • The view from England: Time called on mining graduates
  • Ex-Anglo CEO talks to private equity on where to next pump money

CMOC’s Congo mine suspends copper and cobalt exports

CMOC’s Tenke Fungurume copper and cobalt mine has suspended all exports, logistics companies were told in a notice seen by Reuters late on Saturday, complying with demands by a court-appointed administrator.

A CMOC spokesman did not immediately reply to a request for comment but had said on Friday that the mine, which accounted for more than 10% of worldwide cobalt output in 2021, had not issued any instructions to stop exports.

CMOC has been locked in dispute with the administrator appointed in February to run the mine for six months in response to a lawsuit by Congo state miner Gecamines, a minority stakeholder in Tenke Fungurume.

The administrator, Sage Ngoie Mbayo, this month demanded that CMOC suspend marketing and export of its production because CMOC and Gecamines had not reached agreement this year on how to sell the mine’s output.

CMOC, meanwhile, has denied the administrator access to the mine site.

In the notice to companies that transport the mine’s output, a CMOC unit announced immediate suspension of access to the mine for all copper and cobalt trucks until July 24, adding that companies would be informed if exports could resume on July 25.


Hundreds of hectares of pristine rainforest destroyed by illegal mining in Venezuela

Illegal mining operation in Venezuela’s Bolívar state.

Over 1,200 hectares of pristine rainforest in Venezuela’s southern Bolívar state have been destroyed by unregulated mining operations and other illegal activities taking place within the so-called Orinoco Mining Arc.

In a recent report, local NGO FundaRedes denounced the disorderly exploitation of the Arc and blamed the Nicolás Maduro administration for the environmental disaster, which is said to be promoted from the top down “to cover the income deficit caused by the oil crisis, the dismantling of basic industries and failed economic policies.”

The Mining Arc of the Orinoco River National Development Strategic Zone was created by decree on February 24, 2016, and is a 111,843-square-kilometre concession area for mining gold, diamond, iron ore, copper, bauxite, and coltan, among other resources. The Arc is larger than the whole territory of Portugal and represents 12.2% of Venezuela’s landmass.

“FundaRedes has repeatedly denounced the massive clear-cutting of trees, which is carried out in the OMA in order to prepare the ground for the construction of illegal runways, used for the takeoff and landing of aircraft involved in drug trafficking and mineral smuggling operations,” the report reads.


Copper price rebounds despite weak economic activity in China

The copper price rose on Friday despite growing concerns that the world economy is headed for recession.

Central banks rushed to get on top of galloping inflation, with steep interest rate rises seen this week in Canada, New Zealand, Chile, South Korea, and the Philippines.

Fears of an economic downturn were fanned further by Chinese data showing annualized 0.4% growth in the second quarter, the worst since at least 1992, excluding early 2020 when the covid pandemic erupted.

Copper, however, rebounded at the end of the week, with the metal price up 1.9% at $3.27 ($7,210) a tonne on the Comex market in New York.

“The macro environment has definitely taken a turn for the worse,” Bank of America Corp. strategist Michael Widmer said by phone. “Every region has slightly different dynamics, but none look particularly bullish at the moment.”

Rio Tinto added to warnings on the global economy, calling headwinds in China “considerable” and saying that pressure on global supply chains needs to ease significantly before inflationary pressures soften.

Goldman Sachs Group Inc. this week forecast copper to trade at $6,700 in the next three months, a 22% downgrade from its previous outlook. The bank said a surging dollar will remain a headwind until macroeconomic risks subside.


Vedanta to bring into operation 2 coal blocks in FY23

Vedanta focusing on the long-term security of coal amid supply shortages

Billionaire Anil Agarwal-led Vedanta expects to bring into operation two coal blocks in Odisha in this fiscal and is working out a plan to fast-track the operationalisation of another coal mine in the eastern state.

Vedanta is focusing on the long-term security of coal especially when thermal power plants and the non-regulated sector have witnessed supply shortages in the current and the last year.

“We intend to operationalise Jamkhani and Radhikapur (West) (coal blocks….,”  Vedanta said in its integrated report and annual accounts 2021-22.

Vedanta Limited is one of the world’s leading oil & gas and metals company with significant operations in oil & gas, zinc, lead, silver, copper, iron ore, steel, and aluminium & power across India, South Africa and Namibia.

The company bagged the Jamkhani coal block in 2019 and the Radhikapur West coal block in 2020 in auctions.

Jamkhani coal block is in proximity to the company’s Jharsuguda aluminium smelter. It is one of the most attractive coal blocks for the company’s Jharsuguda plant in terms of location, annual capacity, reserves and readiness to produce.

The approved per annum capacity of the mine is 2.6 million tonnes and has an extractable reserve of 114 million tonnes. Once operational, it will provide fuel security, improve power availability and further strengthen the company’s aluminium operations and performance.


China’s property, banking pain has iron ore in a bear squeeze

COVID-19 is slowing China’s economy and sparking crises in its property sector, weighing on iron ore prices just as the big miners see costs rise.

The COVID-19 crisis has slowed China’s economy and sparked an ugly series of crises in its property and banking sectors that is set to squeeze the profits of Australia’s big miners, sending iron ore stocks into a bear market and raising questions for government finances.

After the price of iron ore slumped 8.4 per cent to $US100.25 ($149) a tonne on Thursday night, trading in Shanghai on Friday brought no relief, with the steelmaking commodity down another 4 per cent.


China-Backed Illegal Rare Earth Mining Surging in Northern Myanmar

A rare earth mineral mine in Pangwa in Kachin State

Illegal rare earth mining has surged in northern Kachin State since last year’s coup in areas along the border with China controlled by a militia sponsored by the Myanmar military.

Reports in The Irrawaddy and on several social media platforms indicate that mining has increased by at least five times in Pangwa in Kachin’s Chipwi Township, while there has been a rapid influx of Chinese workers.

The unregulated mining of rare earth minerals for export to China is irreparably damaging the environment. Significantly, Myanmar is China’s largest source of rare earth minerals, accounting for over half of its supplies. The long-term consequences of such mining will certainly be felt in Myanmar, while China walks away with the profits.

In 2016, Chinese mining companies entered Pangwa looking for rare earth minerals after the ruling Communist Party of China (CPC) cracked down on illegal mining in China.

Consequently, China became heavily dependent on medium and heavy rare earth minerals from Myanmar. By 2018, Myanmar was the largest exporter of the minerals to China. In the first week of December 2021, the CPC-run newspaper Global Times reported that, in 2020, imports of rare earth minerals from Myanmar rose by 23 per cent year on year to around 35,500 tons, accounting for 74 per cent of all imports.


The view from England: Time called on mining graduates

The U.K. is facing a crisis. No, not our mounting supply issues, soaring cost inflation or the sudden change in political leadership; rather, the plummeting numbers of drinking establishments and graduate mining engineers. 

A survey in 1577 found that there were over 16,000 alehouses, taverns (generally larger than alehouses and also served wine) and inns in England and Wales. With a combined population 450 years ago of only 4 million, this equated to one drinking establishment for every 250 people. On that basis, there would now be almost 240,000 such establishments in England and Wales to cater for the current population of 59.6 million people. 

Taverns can be traced to Roman Britain, and Anglo-Saxon alehouses to the 5th century, but the term ‘public house’ only appeared in the late 17th century, and diarist Samuel Pepys (1633-1703) described them as “the heart of England.” 

Pubs have no strict definition, but the Campaign for Real Ale (CAMRA) states that they have four characteristics: a pub is open to the public without membership or residency; serves draught beer or cider without requiring food to be consumed; has at least one indoor area not laid out for meals; and allows drinks to be bought at a bar (i.e. not only table service). 

The real estate consultancy Altus Group reported recently that the number of pubs in England and Wales has fallen to only 39,970, down by more than 7,000 since 2012. Altus blames the sector’s recent decline on covid-19 and soaring costs, especially for energy, but notes that the longer-term difficulties stem from younger people drinking less, cheaper alcohol in supermarkets and high taxation. 

The chief executive of the British Beer and Pub Association, Emma McClarkin, said: “When pubs are forced to close it’s a huge loss to the local community, and these numbers paint a devastating picture of how pubs are being lost in villages, towns and cities across the country.” 

Although the decline in pubs is shocking, another report published recently is much more serious. The U.K. Mining Education Forum (UKMEF) notes that no one has enrolled in mining engineering or mineral processing undergraduate courses in the country for the past two years. This is since Exeter University ‘paused’ these courses at the U.K.’s last mining colleges, Camborne School of Mines (CSM), in September 2020. As recently as 1990, there were over 300 mining graduates every year from five U.K. mining schools. 

UKMEF, which represents senior industry and professional organizations, notes that a modern, high-tech mining industry is essential as British industry shortens its supply chains and moves to a low-carbon economy. The Forum calls for education schemes to equip sufficient numbers of recruits to the industry with the skills to support a wide range of mining activities both in the U.K. and abroad. 

Figures from the U.K.’s Engineering Council highlight the difficulty. Of its 1,237 registered mining and mineral processing engineers, 80% are over the age of 50, and 39% are over the age of 66. 


Ex-Anglo CEO talks to private equity on where to next pump money

Former Anglo American Plc boss Mark Cutifani is talking to a number of private equity firms about new ways to invest in the mining sector as the energy transition gathers pace.

The mining industry is a big emitter, but also plays a key role in the green revolution by supplying metals like copper, lithium and cobalt that are used in batteries and power links. While the sector has been relatively ignored by private equity, the speed of the green push and outlook for tight metal supplies are attracting new investors.

Minerals will be central to many future investments, said Cutifani, who toward the end of his Anglo tenure focused on new technologies and innovative mining methods, like hydrogen-fueled trucks.

“I have a had discussions with a small number of private equity participants around the minerals sector,” he said by email. And also on “how people should be thinking about large-scale innovation and technical disruptions that will likely occur and connect to minerals in different ways.”

Cutifani, who left Anglo at the end of last month, led the mining giant through one of the most tumultuous periods in its more than 100-year history. It was on the cusp of collapse in 2015, hit by unsustainable debts amid a collapse in commodities prices.

The former chief executive officer oversaw a dramatic recovery — fueled by a rebound for many of the commodities it mines to record prices — and positioned Anglo for growth. The company reported its highest-ever earnings in his last year in charge.

Cutifani currently sits on TotalEnergies SE’s board and will take a role at Laing O’Rourke. He said he’s not currently looking to start a fund, but isn’t ruling it out, and “all options remain on the table.”

He’s not the only former mining CEO looking at new ways to draw investment into the sector.

Mick Davis, who built Xstrata Plc into a $50 billion commodities powerhouse before its merger with Glencore Plc, started Vision Blue Resources to buy stakes in battery metals companies. It has already bought into vanadium and graphite projects.



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