June Newsletter – 01.06.2020
- Startups look to reduce dependence on lithium from China
- Guinea set to supply iron ore from 2026
- Mexican mining industry to fully reopen
- New Century in talks with Brazil’s Vale over nickel-cobalt mine sale
- Coal mine in Serbia gives up new Roman treasure
- Brazil’s Vale ordered to set aside $1.48 billion for Brumadinho dam damages
- Coronavirus to exacerbate copper surplus this year and next -IWCC
- Mining giants Petropavlovsk and UGC explore merger
Startups look to reduce dependence on lithium from China
China manufactures nearly two-thirds of the world’s lithium-ion batteries, having invested heavily in mining rare earth minerals. Electric vehicles are expensive as 40% of the cost is attributed to its battery. (Photo: Bloomberg)
As for alternatives to lithium, startups are experimenting with materials that are more readily available. An Indian startup, backed by Mumbai Angels, is experimenting with a composite material using derivatives of abundantly available carbon
The coronavirus pandemic has brought into stark focus the over-dependence of global supply chains on China. Nations around the world are now more desperate than ever for alternatives, but it’s a tough ask to replace Chinese supplies.
One of the areas where China dominates the world is in the production of lithium-ion batteries which power our smartphones, laptops and electric vehicles. It has invested heavily in mining lithium and rare earth minerals that go into these batteries—both within its own country as well as mines in Latin America, Africa and Australia. It manufactures nearly two-thirds of the world’s lithium-ion batteries, according to Benchmark Mineral Intelligence.
The dependence on China for lithium affects the electric vehicle ecosystem even more than other sector. That’s because 40% of the cost of an electric vehicle is attributed to its battery.
There are two ways out of this conundrum. One is to find sources of lithium, cobalt, nickel and manganese elsewhere, then invest in mining them, which is an expensive proposition. China has drawn on its vast state resources to gain the lion’s share of both raw materials and manufacturing, which is hard for other nations or companies to match. US electric car maker Tesla is investing billions of dollars in lithium ion battery factories, but that will barely make a dent in China’s market share.
The second option is to find alternatives to lithium for batteries that go into electronic products and EVs. But breakthroughs in battery innovation that scale commercially have been few and far between. The lead acid batteries in internal combustion engines of vehicles that run on fossil fuels are from the 19th century. The lithium ion breakthrough came from academic research in the West, which Sony in Japan first commercialized for use in electronic products three decades ago.
Guinea set to supply iron ore from 2026
Development of the Simandou blocks in Guinea will not only increase the country’s iron ore exports but will also prompt Chinese importers to shift some iron ore imports away from Australia to Guinea, which will add to dry bulk shipping demand.
Guinea has already become the world’s largest supplier of bauxite and is now striving to register its presence in the global iron ore market. In 2019, a consortium of SMB and Winning International won the tender to develop block 1 and block 2 of the Simandou project, one of the world’s biggest untapped deposits of iron ore based in Guinea. The first phase of operations is likely to start in 2026, enabling Guinea to export 60 mtpa of iron ore. The second phase of the project could add a further 50 mtpa to the annual iron ore production capacity.
As part of the tender, the company will invest in associated infrastructure, including building a deep water port and railway system to connect the mining region to the port. In turn, this is expected to prompt other iron pre producers to explore mining options in the region, with the most viable candidates thought to be block 3 and block 4. Currently, Rio Tinto, Chinalco and the Guinean government own these blocks which are believed to hold a similar quantity of reserve as block 1 and block 2. If block 3 and 4 are developed along with block 1and 2, then Guinea’s annual iron ore production capacity will surge to 220 mtpa, equivalent to approximately 14.5% of global seaborne iron ore trade in 2019.
Mexican mining industry to fully reopen
Mexico’s mining industry—which includes the world’s largest gold mine—is expected to fully reopen today after the government ordered mines to close on April 2 to combat the COVID-19 pandemic.
Since the May 18 government announcement for the reopening, 80% of mines have restarted operations. Subject to safety protocols being adhered to (such as compulsory virus-testing and social distancing measures), the mine will still be allowed to operate even if someone tests positive for COVID-19 on-site.
Restarting the mining industry is unlikely to arrest a predicted 6-8% contraction in economic growth this year—a recession second only to that of Venezuela. Given 50% of the workforce is in the informal sector without any social security support or employment protections, layoffs are expected to force 22 million Mexicans into poverty.
At this stage, the economic downturn is unlikely to be alleviated by further government stimulus. President Andres Manuel Lopez Obrador is reluctant to run up debt. The modest economic stimulus—0.5% of GDP and second-lowest in Latin America—is aimed mainly at low-income individuals; moreover, the $10 billion assistance for small and medium-sized businesses is also minimal. Instead, Lopez Obrador is relying on China’s weakening economy to attract foreign investment to Mexico.
New Century in talks with Brazil’s Vale over nickel-cobalt mine sale
Australia’s New Century Resources is in exclusive talks with Brazilian mining giant Vale to take over its troubled nickel and cobalt mine in New Caledonia under a proposed deal that contains a financial contribution from Vale and possible support from the French government.
New Century chief executive Patrick Walta said the company had entered into a 60-day exclusivity period to negotiate the acquisition of a 95 per cent ownership stake in Vale’s Goro mine in the south-west Pacific nation, which has been plagued by problems, delays and cost blow-outs for Vale since mining operations began there in 2011.
Under the proposed deal, Melbourne-based New Century would be effectively paid to take ownership of the Goro mine, with the value of financial contributions from Vale and the potential forgiveness of debts from the French state estimated to be in the vicinity of $1 billion.
Mr Walta would not discuss the terms of the confidential deal but told The Age and The Sydney Morning Herald he was confident in the prospects of the mine, especially once the asset was simplified following the removal of the on-site nickel oxide refinery, the cause of some of the mine’s troubles.
Coal mine in Serbia gives up new Roman treasure
BELGRADE (Reuters) – As the sun sank over a vast opencast coal mine in eastern Serbia earlier this month, a small crane eased the front half of a Roman ship from the steep sides of the pit.
An excavator cutting through the coal rich soil had pulled out some muddy timber weeks before, but coronavirus restrictions had meant the retrieval had to wait.
The ship was part of Viminacium, a sprawling Roman city of 45,000 people with a hippodrome, fortifications, a forum, palace, temples, amphitheatre, aqueducts, baths and workshops.
Lead archaeologist Miomir Korac said the vessel dated from the 3rd century AD when Viminacium was the capital of the Roman province of Moesia Superior and near a tributary of the Danube river.
“A Roman (river) fleet was based here to defend this region from barbarian invasions,” he told Reuters. “Such findings of Roman ships are really rare, especially in such a good condition where one could see how the boat was built.”
The ship originally measured 19 meters. It had a flat bottom, six pairs of oars and fittings for a triangular sail. The nine-metre front section had thick wooden sides and was discovered along with the remains of two smaller boats.
Brazil’s Vale ordered to set aside $1.48 billion for Brumadinho dam damages
SAO PAULO (Reuters) – A judge in Brazil’s Minas Gerais state partially granted an injunction sought by prosecutors ordering iron ore miner Vale SA to deposit 7.9 billion reais ($1.48 billion) for payment of potential fines related to a dam disaster last year.
Vale faces multiple legal battles after a tailings dam it owned and operated in the town of Brumadinho burst, killing more than 270 people.
Coronavirus to exacerbate copper surplus this year and next -IWCC
LONDON, May 27 (Reuters) – The global copper market is expected to be in surplus by 285,000 tonnes this year as a result of the coronavirus pandemic, with the overhang rising to 675,000 tonnes in 2021, an industry body said in a report.
The forecast from the International Wrought Copper Council (IWCC) against the backdrop of coronavirus-related demand destruction that is expected to dwarf the impact of supply disruptions for industrial metals.
“These are unprecedented times and the copper industry is not immune from the impact of the COVID-19 pandemic,” the IWCC said in the report posted on its website on Wednesday.
“The economic disruption and its impact on the copper industry has resulted in greater uncertainty in the factors affecting supply and demand for copper.”
Copper is widely used in the power and construction industries.
The IWCC, which represents copper and copper alloy fabricators, said the pandemic will reduce cooper demand by 5.4% in 2020 but it could rebound by 4.4% in 2021.
Refined copper production this year is forecast to be 22.91 million tonnes against demand of 22.625 million tonnes. In 2021 output is expected to rise to 24.3 million tonnes, with demand at 23.625 million tonnes.
In China, which accounts for roughly half of global copper consumption, refined copper demand is seen falling by 2.8% to 11.87 million tonnes this year but rising 2.6% to 12.175 million tonnes in 2021.
In Europe, refined copper consumption will slide 6.4% in 2020 before climbing 5.4% to 2.927 million tonnes next year.
In North America, including the United States, Canada and Mexico, refined copper demand this year is expected to slip 6.9% to 2.223 million tonnes before registering a 5.3% upturn in 2021.
Mining giants Petropavlovsk and UGC explore merger
Any deal would make the combined company Russia’s largest gold miner and one of the most powerful producers of refractory gold in the world
Petropavlovsk, London’s best performing listed gold miner last year, is studying a potential merger with UGC in a deal that would catapult the pair into the upper echelons of the gold mining industry.
Discussions between the two mining giants are currently at an early stage, but the deal could “definitely happen”, Petropavlovsk chief Pavel Maslovskiy told The Telegraph.
Earlier this year, the privately-owned Russian gold miner UGC took a large stake in Petropavlovsk, which owns and operates four mines in Russia’s far east region. When asked if his company was looking at any potential acquisitions, Mr Maslovskiy said: “Recently, a 22pc stake moved to other hands, to UGC, which produces roughly what we produce….