June Newsletter – 08.06.2020
- Chinese battery breakthrough needn’t worry cobalt price bulls
- Guinea approves SMB-Winning deal for Simandou iron mine blocks, minister says
- Barrick Granted Court Review to Plead Case on PNG Mine, CEO Says
- Papua New Guinea accuses Barrick of plan to illegally export gold
- Bidding war for Guyana Goldfields heats up
- US offers help with Nornickel’s Arctic fuel spill, Russia thankful
- Ice Favorability Index promises to increase prospectors’ chances of striking gold on the moon
- Gold price drops on stronger US jobs data
Chinese battery breakthrough needn’t worry cobalt price bulls
High energy density, longer-range NCM (nickel-cobalt-manganese) cathodes, together with Tesla’s NCA (nickel-cobalt-aluminum) technology account for over 90% of batteries in passenger EVs.
Automakers continue to thrift the use of cobalt – by far the priciest raw material – in cathodes. While NCM111 (equal parts nickel, cobalt, magnesium) are found in fewer and fewer models, cobalt is proving a sticky component of cathodes and NCM811 still commands a market share in the single digits.
Cobalt in cathodes makes batteries last longer, and crucially provides thermal stability.
Last month, Chinese battery maker Svolt revealed two battery technologies that forego cobalt altogether. Called NMx, the new battery uses nickel-manganese cathode chemistry.
COMING A COUPLE OF MONTHS AFTER TESLA BROKE RANK AND OPTED FOR LITHIUM IRON PHOSPHATE (LFP) BATTERIES FOR ITS ENTRY-LEVEL MODEL 3 IN CHINA, SVOLT’S BREAKTHROUGH SEEMED TO BE ANOTHER HARBINGER OF COBALT’S DEMISE
The company, spun out of Great Wall Motors in 2018, claims the technology achieves the energy density – and therefore longer range of NCM despite the absence of cobalt.
Coming a couple of months after Tesla broke rank and opted for lithium iron phosphate (LFP) batteries for its entry-level Model 3 in China, Svolt’s breakthrough seemed to be another harbinger of cobalt’s demise.
Apart from the eye-popping claims of range for NMx batteries (880km for those destined for GWM’s high-end models) Svolt says it can commercialize the technology as soon as July of next year.
That’s a highly ambitious target, says Benchmark Mineral Intelligence, a battery supply chain and price discovery firm:
As the market looked to reduce cobalt in EV cathode technology and move to NCM 811 the path has been anything but smooth.
The route to commercialisation follows a lengthy qualification process with each automaker. This can be a multiyear process, even for a different blend of existing technology as is the case with NCM 811.
For SVOLT a lengthier qualification process can be expected as the technology remains commercially unproven. As a new supplier, with an entirely new product, the Tier 2 cell producer will also face a longer qualification process, although this process would likely be shorter for the domestic Chinese market.
Moreover, says Benchmark, western automakers’ attention and capital has largely been, and continues to be, focused on NCM technology.
Benchmark’s cobalt price assessment published Tuesday shows cobalt hydroxide (crystalline form produced at mines containing 20–40% cobalt) prices gaining slightly in May on the back of disruption of material exported from South Africa.
The uptrend is not likely to last, however. As shipments of hydroxide reach China in early-mid June, Benchmark believes oversupply concerns will ease and prices to subside accordingly.
Guinea approves SMB-Winning deal for Simandou iron mine blocks, minister says
CONAKRY, June 4 (Reuters) – Guinea’s government approved on Thursday a basic agreement for the development of its giant Simandou iron ore project by a consortium of its Societe Miniere de Boke (SMB) and Singapore’s Winning, Mines Minister Abdoulaye Magassouba told Reuters.
“It was approved. We will proceed to sign it in the coming days,” Magassouba said.
Barrick Granted Court Review to Plead Case on PNG Mine, CEO Says
(Bloomberg) — Barrick Gold Corp. says a Papua New Guinea court has granted it the right to challenge a government decision denying its long-term mining rights in the South Pacific nation.
A judicial review to determine whether the government followed due process in refusing to renew the mining license will take place on July 20, Barrick Chief Executive Officer Mark Bristow said Friday in a phone interview.
The Toronto-based miner’s joint venture arm is prepared to keep negotiating with the government for a “win-win” agreement that “will provide materially enhanced benefits for all Papua New Guinea stakeholders,” he said.
In April, the PNG government said it would not renew Barrick’s right to operate the Porgera gold mine, a decision Bristow said at the time was “tantamount to nationalization without due process.” The world’s second-largest gold producer had said its local joint-venture unit, Barrick Niugini, would pursue all legal options to defend its interests and recover damages.
Regarding a news report on Friday that the country’s mining regulator is considering criminal proceedings over allegations of illegal exports, Bristow said the joint venture “categorically rejects any claim that it, or its representatives, have violated the law in any way.” The dispute involves gold that was produced by processing the remaining ore in its milling circuit after the mine was put on care and maintenance, he said.
Separately, an application for “stay and interlocutory relief” will be heard on June 12, Bristow said. A favorable decision will allow the miner to continue to manage the mine while it’s on care and maintenance, he said.
Barrick co-owns the mine with joint venture partner Zijin Mining Group Co. In an April filing with the Hong Kong exchange, Zijin also said if negotiations fail, the JV would pursue all legal avenues to protect its investment.
Barrick’s share of the gold from Porgera accounted for about 5% of its global production of the metal in 2019. The miner has previously said that with proper investment Porgera has the potential to become a top global asset. In May, Barrick was forced to cut its 2020 production guidance by 200,000 ounces as a result of the stand-off.
The decision to deny Barrick’s mining rights appears to be part of a broader move by Prime Minister James Marape to secure better deals from foreign companies involved in the country’s resource extraction. Despite multiple meetings with Marape, and an offer of more than half the mine’s economic benefits to PNG stakeholders for 20 years, Barrick was unable to secure an agreement, Bristow said in April.
Papua New Guinea accuses Barrick of plan to illegally export gold
SINGAPORE, June 5 (Reuters) – Papua New Guinea’s mining regulator said on Friday it is planning to bring criminal proceedings against a Barrick Gold Corp joint venture over what it says was an attempt to illegally export $13 million in silver and gold to Australia. PNG’s Mineral Resources Authority (MRA) said it had received paperwork from the Barrick Niugini joint venture on Monday seeking clearance to export silver and gold worth a total of 46.7 million kina ($13.1 million) to the Perth Mint.
However the MRA said Barrick Niugini was prohibited from processing or exporting gold following the government’s refusal to extend its mining lease in April. Barrick is challenging the decision not to extend the lease in court.
Barrick Niugini said it “entirely repudiates the claim that it has sought to export any gold unlawfully”.
The joint venture between Barrick and China’s Zijin Mining Group said it had always complied with its legal obligations regarding gold exports.
Barrick and Zijin had no immediate response when contacted by email, nor did lawyer Derek Wood who has represented the joint venture in its dispute over the lease to the Porgera mine.
Canada’s Barrick, the world’s second-biggest gold miner, is locked in a dispute over the future of its operations in Papua New Guinea following the government’s refusal to extend the Porgera lease. The latest move could signal a further breakdown in relations.
Bidding war for Guyana Goldfields heats up
Takeover target Guyana Goldfields (TSX:GUY) said it has received a proposal from a “foreign-based multinational miner” valuing the company at C$323 million ($240m), which is 35% higher than Silvercorp Metals’ offer.
The Canadian firm was first approached by Silvercorp (TSX, NYSE: SVM) in April, which put forward a C$105 million (C$75m) cash and stock deal. The transaction would create a diversified precious metals producer with two silver mines in China and a gold operation in Guyana.
NEW BID WOULD BE 35% HIGHER THAN A REVISED OFFER AGREED WITH SILVERCORP METALS LAST MONTH
A couple of weeks later, the company received a separate, rival bid from Gran Colombia Gold (TSX: GCM), which prompted Silvercorp to sweeten its offer.
Guyana says the unnamed mining company has agreed to provide a $30 million secured-loan facility to finance ongoing operations at its flagship Aurora gold mine and for other liquidity needs. Otherwise, it said the fresh offer was “substantially similar” to the agreement with Silvercorp.
Guyana said Silvercorp has five business days to match or improve the $1.85 cash-per-share new bid.
“At this time, there can be no assurance that the new offer will lead to a termination of the Silvercorp arrangement agreement and the execution of a definitive agreement with the new offeror and, accordingly, the board has not changed its recommendation regarding the offer under the Silvercorp arrangement agreement,” Guyana said.
Guyana has been under investor pressure due to the poor performance of its only operating mine, Aurora, following a resources review.
The mid-tier gold producer shocked the market in March last year by announcing the amount of gold in proven and probable reserves at Aurora had declined by almost 1.7 million ounces, compared to estimates published in 2018.
The news triggered a bitter battle for control of the company led by founder and former chairman Patrick Sheridan, which was settled in April 2019. The deal included the appointment of an interim director and chief executive, who was replaced in January by Alan Pangbourne, Guyana’s current president and CEO.
US offers help with Nornickel’s Arctic fuel spill, Russia thankful
Russia’s Vice-minister for Emergencies, Alexandr Chupriyan, expressed gratitude to the countries that have offered to help with the fuel spill in Siberia in which 20,000 tons of diesel leaked from a reservoir owned by MMC Norilsk Nickel PJSC.
The breach at the Heat and Power Plant № 3 (HPP-3) took place on May 29, 2020. The plant is operated by Norilsk Nickel’s subsidiary Norilsk-Taymyr Energy Company and it is located in the remote Kayerkan neighborhood in the city of Norilsk.
GREENPEACE SAID THE ACCIDENT WAS THE LARGEST EVER IN THE ARCTIC REGION AND LIKENED IT TO THE EXXON VALDEZ SPILL OFF ALASKA IN 1989
According to Nornickel, the accident was caused by a sudden sinking of supporting posts in the basement of the storage tank. The company has suggested this could be the result of damage from melting permafrost due to the speedy rate at which the Arctic has been warming in recent years.
Talking to state-owned news agency Sputnik, Minister Chupriyan said that, despite the seriousness of the situation, things are under control. Thus, even though his government is thankful to those that have reached out offering help, it may not be necessary at this point.
“At present, we have enough strength and resources to use them in an efficient and expeditious manner,” the official is quoted as saying.
Chupriyan’s words followed an offer to help from the US Secretary of State Mike Pompeo, who on Saturday tweeted that despite his country’s disagreements with Russia, the Trump administration was ready to provide support.
Ice Favorability Index promises to increase prospectors’ chances of striking gold on the moon
Researchers at the University of Central Florida created a geological model to give prospectors looking to mine the moon better odds of striking gold.
Since finding the yellow metal on the moon is linked to the existence of rich deposits of water ice that can be turned into resources, like fuel, for space missions, the scientists created an Ice Favorability Index.
In a paper published in the journal Icarus, the experts say that the geological model explains the process for ice formation at the poles of the moon, and maps the terrain, which includes craters that may hold ice deposits.
The model also accounts for what asteroid impacts on the surface of the moon may do to deposits of ice found meters beneath the surface.
GEOLOGISTS, AS WELL AS EMERGING COMPANIES SUCH AS US-BASED PLANETARY RESOURCES, BELIEVE ASTEROIDS ARE PACKED WITH IRON ORE, NICKEL AND PRECIOUS METALS AT MUCH HIGHER CONCENTRATIONS THAN THOSE FOUND ON EARTH, MAKING UP A MARKET IN THE TRILLIONS
“Despite being our closest neighbor, we still don’t know a lot about water on the moon, especially how much there is beneath the surface,” lead author Kevin Cannon said in a media statement. “It’s important for us to consider the geologic processes that have gone on to better understand where we may find ice deposits and how to best get to them with the least amount of risk.”
According to Cannon, the way mining companies operate on Earth served as inspiration for this project.
“Mining companies conduct field mappings, take core samples from the potential site and try to understand the geological reasons behind the formation of the particular mineral they are looking for in an area of interest,” the researcher said. “In essence, they create a model for what a mining zone might look like before deciding to plunk down money to drill.”
Following this approach, his team used data collected about the moon over the years, including data from satellite observations and from the first trip to the moon, and ran simulations in the lab.
Besides the possibility of finding critical minerals and metals for earthly endeavors, mining the moon could allow humans to explore the solar system and beyond.
Gold price drops on stronger US jobs data
Gold prices dropped more than 1.5% on Friday — on track for a third straight weekly decline — as investors grew more hopeful of a near-term economic rebound following stronger-than-expected US non-farm payroll data reported for the month of May.
An increase of 2.5 million jobs versus an anticipated decline of 7.5 million incited expectations of recovery in the world’s no.1 economy, eroding the investment appeal of safe-haven assets such as gold.
Spot gold fell 1.9% to $1,680.52 per ounce by 12:30 pm ET. Gold futures also took a hit on the Comex in New York, down 2.4% to $1,679.80.
Bullion has declined 1.2% so far this week, on pace for its biggest weekly loss since the week ending May 1.
“THE EUROPEAN CENTRAL BANK’S MOVE YESTERDAY IS SUPPORTING RISK-TAKING … IT SEEMS MORE INVESTORS HOLDING GOLD ARE SWITCHING OUT TO THE EQUITY MARKET”
Giovanni Staunovo, UBS analyst
Pressure was already on gold Thursday when the European Central Bank approved a larger-than-expected expansion of its stimulus package, boosting investor confidence in riskier assets. Meanwhile, stock indices worldwide kept close to their three-month highs.
“The European Central Bank’s move yesterday is supporting risk-taking …. It seems more investors holding gold are switching out to the equity market,” UBS analyst Giovanni Staunovo told Reuters.
Bullion was also being pressured by stronger yields and a slightly firmer dollar, which meant the “opportunity cost to hold gold in the portfolio has gone up,” Bart Melek, head of commodity strategies at TD Securities, said in an interview with CNBC.
“Gold prices have levelled off in the past few weeks … We see $1,670 per ounce as the key support and $1,750 as key resistance, (a) break on either side will provide a clear guidance,” said ANZ commodity strategist Soni Kumari.
Elsewhere, palladium rose 2.6% to $1,989 an ounce, while platinum fell 3.1% to $814 an ounce.
Silver was down 2.0% to $17.36 per ounce, on track for its first weekly decline over a five-week period.