June Newsletter – 20.06.2022

  • Congo miner threatens to seize cobalt project from Chinese partner
  • China’s Sinomine invests $200 mln in Zimbabwe lithium project
  • Tianqi Lithium wins nod for $1 billion Hong Kong listing
  • Russian coal miners turn to India as war upends commodity flows
  • China to set up centralised iron ore buyer to counter Australia’s dominance – FT
  • BHP to shut Mount Arthur coal mine as buyers walk
  • Rich nations may fork out billions to wean Indonesia off coal
  • UN experts want better gold data as trade fuels Congo violence

Congo miner threatens to seize cobalt project from Chinese partner

A shareholder dispute over one of the world’s biggest copper and cobalt mines is heating up in the Democratic Republic of Congo, after state miner Gecamines threatened to block exports or even take the mine away from its partner, China Molybdenum Co.

Congo’s Gecamines, which owns 20% of the Tenke Fungurume mine’s holding company, has accused CMOC of manipulating the project’s finances and says it owes as much as $5 billion in payments.

The disagreement has extended to who is actually running the mine: a Congolese court appointed a temporary administrator to manage the holding company while the shareholders sort out their differences, but CMOC insisted nothing has changed. The administrator, Sage Ngoie Mbayo, says he now controls the company’s bank accounts but was blocked from entering the mine site last week by Congolese soldiers.

Things were set to come to a head Thursday at the first meeting between the shareholders and Ngoie at Tenke Fungurume Mining SA’s offices in the Congolese mining hub of Lubumbashi. But while Gecamines’ top two executives were there, CMOC representatives didn’t attend.

Gecamines Chief Executive Officer Bester-Hilaire Ntambwe Ngoy Kabongo and his deputy, Leon Mwine Kabiena, said they are prepared to take more drastic action, including effectively revoking CMOC’s ownership of the project by dissolving the partnership.


China’s Sinomine invests $200 mln in Zimbabwe lithium project

HARARE, June 17 (Reuters) – China’s Sinomine Resource Group on Friday launched a $200 million project to build a plant and expand existing mining operations at its recently acquired Bikita lithium mine in Zimbabwe.

The southern African country holds some of the world’s largest deposits of lithium, a key battery mineral, and hopes for an economic boost from a global drive towards clean energy.

Zimbabwe’s President Emmerson Mnangagwa, who officiated at Sinomine’s launch event at Bikita Minerals, 325 kilometres south of the capital Harare, said the investment positions the country as a major player in the global battery minerals supply chain.

“The launch of this project follows an investment of about $200 million by Sinomine Resource Group, which will see the building of a new plant and expansion of existing operations,” Mnangagwa said.

Shenzhen-listed Sinomine acquired Bikita Minerals in a $180 million transaction in January. The mine has been in operation since 1950 and predominantly produces petalite, a lithium mineral used in the glass and ceramic industries, but Sinomine now plans to produce spodumene – a key battery mineral.

On May 23, Sinomine announced plans to raise 3 billion yuan

($450 million) in a private placement to fund its lithium plans, including the Zimbabwe project. Sinomine has also set up a joint venture with the Chengxin Lithium Group’s Zimbabwe unit to drive lithium projects in the country.


Tianqi Lithium wins nod for $1 billion Hong Kong listing

Greenbushes, the world’s biggest hard-rock lithium mine, pictured.

Tianqi Lithium Corp., a Chinese supplier of the key material used in batteries, has won the Hong Kong stock exchange’s approval for its planned listing in the city, people with knowledge of the matter said.

The Shenzhen-listed company received the green light following a hearing Thursday with the Hong Kong bourse’s listing committee, according to the people, who asked not to be identified because the information is private. It’s considering raising $1 billion to $1.2 billion in the share sale, one of the people said.

Tianqi Lithium plans to start gauging investor demand for the offering as soon as next week, the people said. At $1 billion, Tianqi’s offering would be Hong Kong’s biggest listing so far this year, according to data compiled by Bloomberg.


Russian coal miners turn to India as war upends commodity flows

The invasion of Ukraine has upended commodity flows, with one of the greatest dislocations being the re-routing of Russian coal from lucrative European markets to bargain-hunting buyers in India.

Sales of thermal coal to Europe, a market that traditionally offers price premiums, dropped to about 10% to 15% of total exports from 30% before the invasion, according to two executives at Russian coal miners. While Germany is still buying Russian coal, Poland stopped purchases in April, the executives said, asking not to be named because the matter isn’t public.

Exports to the region will grind to a halt in August when a European ban on Russian coal shipments takes effect. While Europe looks to South Africa and Australia for alternative supplies, Russia has boosted sales to India, previously a low-volume, low-price market, the executives said. Turkey remains a big buyer.

Russia is one of the world’s top three coal exporters, but that’s not been enough to shield its miners from sanctions. Russian steelmakers have also been buffeted by the fallout from the war. By contrast, Russia’s dominance of palladium mining means that shipments have been less impacted, while Moscow is tightening its squeeze on gas flows to underline the dependence of European economies.


China to set up centralised iron ore buyer to counter Australia’s dominance – FT

Financial Times (FT) came out with a story signaling more disputes between Australia and China as Beijing searches for a centralized iron ore producer.

“China is moving to consolidate the country’s iron ore imports through a new centrally controlled group by the end of this year, as Xi Jinping’s administration seeks to increase Beijing’s pricing power over the industry,” said the FT.

Key quotes

The initiative, led by the China Iron and Steel Association and the planning ministry, involves large state-owned mining and steel groups such as Baowu, China Minmetals Corp and Aluminium Corporation of China, according to people familiar with the effort.

China is the world’s biggest consumer of iron ore with its 1bn tonne a year steel industry absorbing about 70 percent of global production, most of it supplied by Australia. Any move to gain control over prices will probably alarm Canberra given iron ore’s status as the country’s top export.

Government officials and policy advisers told the Financial Times that Xi’s administration had grown frustrated by large price swings over recent years in an industry dominated by Australian producers such as Fortescue Metals Group and BHP, which are likely to be highly concerned by the move.

China could in theory reduce its dependency on Australian iron ore by increasing purchases from big Brazilian producers, such as Vale.

Some analysts, however, are skeptical that Beijing can impose discipline on the hundreds of smaller mills scattered across the country.


BHP to shut Mount Arthur coal mine as buyers walk

The Mt Arthur coal mine is an operation of New South Wales Energy Coal (NSWEC) division.

BHP’s planned exit from thermal coal has been modified as the company has decided to keep its Mount Arthur mine, New South Wales’ largest coal operation, after failing to find a buyer for it.

For the past two years, the world’s largest miner has offloaded coal assets as it seeks to reduce emissions and streamline its portfolio.

It succeeded in selling its stake in the Cerrejón coal mine in Colombia, acquired by Glencore (LON: GLEN), and divesting its majority stake in BHP Mitsui Coal – a metallurgical coal joint venture in Queensland, Australia.

It also kicked off a merger of its oil and gas assets with Australia’s Woodside Petroleum (ASX: WPL), which was completed in May 2022.

Mt Arthur proved to be a more difficult asset to sell, even though the company slashed last year the mine value by about $1.25 billion.


Rich nations may fork out billions to wean Indonesia off coal

Ever since Indonesia accelerated plans last year to achieve carbon neutrality, a parade of climate envoys from developed nations has headed to the archipelago, offering assistance and financial aid in exchange for a commitment by the world’s biggest exporter of coal by weight to phase out coal power.

Officials from the U.S. and Europe hope to secure a deal by the time Indonesia hosts G-20 leaders in Bali in November, establishing a major milestone in the global effort to cut emissions and providing an impetus for the United Nations’ COP27 climate summit in Egypt the same month.

It’s an ambitious goal. Coal generates about 60% of Indonesia’s electricity and the fossil fuel has made fortunes for some of the nation’s most powerful business elites. The war in Ukraine has lifted global demand, boosting the stocks and profits of coal-mining companies, making them even more attractive for investors. Meanwhile, the nation’s monopoly power distributor gets coal for its power plants at a discount, giving it little incentive to hook up renewable-energy suppliers.

Rich nations are betting that agreements known as Just Energy Transition Partnerships will help break the deadlock and provide fossil fuel-dependent nations such as South Africa and Indonesia with the financing and support to speed up the transition. Donors must “break the status quo,” said U.S. climate envoy John Kerry in April.


UN experts want better gold data as trade fuels Congo violence

Governments need to improve and make public their gold trade data to help stem smuggling and violence around mines in eastern Democratic Republic of Congo, the United Nations independent group of experts on Congo said in their annual report Friday.

The report documented inter-ethnic fighting over gold deposits and widespread mineral trafficking involving armed groups and security forces across Congo’s border with Uganda, Rwanda, Burundi and Tanzania. The experts also traced gold to Dubai and India, with Chinese nationals involved in the trade as well.

The report recommended that UN member states “publish, on a yearly basis, complete production statistics, and complete and disaggregated statistics, on the import and export of natural resources, including gold, coltan and tourmaline.” Coltan is used in mobile-phone batteries, and tourmaline is a gemstone.

Congo’s natural resource trade has fueled conflict in its mineral-rich east for more than two decades, but high gold prices since 2020 have led to a surge in informal gold mining.

The violence has been particularly acute around the massive Mongbwalu gold deposits in Congo’s Ituri province, where rebels from the Cooperative for the Development of Congo, or CODECO, which says it represents the interests of the Lendu community, have fought with a rebel group called Zaire, which says it represents the Hema community.



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