June Newsletter – 22.06.2020
ANNOUNCEMENTS
NEWSLETTER
- Codelco says to suspend northern construction projects due to pandemic
- Matthew Kandrach: U.S. reliance on China for essential minerals not in national interest
- China’s Shandong Gold to buy Ghana-focused Cardinal Resources for $221 million
- Republicans prepare for energy ‘cold war’ with China
- Breakingviews – Tesla kills three birds with one Congolese stone
- Mine approval laws allow ‘systematic erasure’ of Indigenous culture
- Tesla strikes deal to buy cobalt from Glencore ahead of future supply squeeze
- Barrick Gold sells majority stake in China’s Shandong for $210 million
- Australia’s Black Rock, Korea’s POSCO team up on Tanzanian graphite mine
- Altura Mining signs multi-year lithium offtake deal with Chinese major shareholder
Codelco says to suspend northern construction projects due to pandemic
Chile’s state-controlled Codelco copper miner said on Saturday it will suspend construction projects in the northern part of the country and try to maintain production at its Chuquicamata mine while staffing the operation with local personnel.
The company issued a statement saying its was taking the measures to guard against the spread of the coronavirus after the government reported an increase in virus-related deaths earlier on Saturday.
The company wants to maintain production at its Chuquicamata mine, pictured here, while staffing the operation with local personnel.
Amid an effort to reorganize its much-criticized reporting of virus-related deaths, the government increased its estimated number of fatal cases to more than 7,000 from a previously confirmed 4,265.
THE COMPANY WANTS TO TRY TO MAINTAIN PRODUCTION AT ITS CHUQUICAMATA MINE WHILE STAFFING THE OPERATION WITH LOCAL PERSONNEL
The Codelco announcement came hours after the second coronavirus-related death of a Codelco worker was confirmed.
The company said its Chuquicamata mine, where the first coronavirus death occurred early this month, will only operate with personnel from the neighboring town of Calama to slow the spread of the pandemic.
“From now on staffing will come only from Calama,” the statement said, adding that “efforts will be made to maintain production levels at the mine.”
Construction work aimed at completing the Chuquicamata Subterranea project in northern Chile will be suspended as the company tightens its anti-virus measures, the statement said.
Matthew Kandrach: U.S. reliance on China for essential minerals not in national interest
After the Arab oil embargo in 1973, the United States responded by sharply reducing its reliance on imported oil. Today our nation faces another challenge from abroad, but we can’t wait until things get worse before taking action.
The unfortunate reality is that our national security and economic wellbeing are at risk due to a heavy dependence on imported minerals and metals, ranging from commodity metals such as platinum and zinc to rare earth minerals. These materials are needed for strategic weapons systems and clean-energy technologies as well as laser-guided missiles and electric vehicles.
Although we have vast mineral and metal resources here in the United States, many domestic mines have closed in the face of competition from cheaper imports. Never mind that some mining is being done in countries with less responsible governments, including those that ignore inconvenient international standards on practices like child labor. The amount of minerals and metals that the United States imports has doubled in the past 20 years, and it’s continuing to grow.
Today the United States depends entirely on imports for 18 key minerals and metals and is at least 50 percent reliant on imports for another 32 minerals that the Defense and Interior departments consider essential for the U.S. economy and national security.
China is the world’s leading exporter of minerals and metals, and the primary supplier of rare earth minerals that the United States needs for laser-guided missiles, satellites, advanced aircraft, tanks, and ships. And on the commercial side, the United States is beholden to China for supplies of lithium, graphite and cobalt—three minerals used in the production of batteries for electric vehicles and electric grid storage. Half of the minerals in greatest demand come from China.
But U.S.-China relations are strained and Beijing has threatened to embargo some critically important minerals as leverage to achieve geopolitical gains. Our government has every reason to be concerned. Embargoes are deadly for an economy and intolerable for national security.
Import dependence and a lack of domestic mining capacity is symptomatic of growing problems in the global supply chain. This became evident when the COVID-19 crisis yielded shortages in one country after another.
The upshot is that the United States can no longer take mineral access for granted. In 2010, China imposed an embargo on the export of rare earths to Japan during a dispute over shipping rights in the China Sea. And during trade negotiations in 2019, China threatened to halt the sale of rare earth minerals to the U.S. We have no time to waste in reducing our reliance on China for imported minerals.
There are a number of actions Congress can take to promote the security of mineral supplies. U.S. manufacturers are right to call attention to the higher cost of minerals produced in domestic mines compared to minerals imported from other countries. But legislation has been introduced to compensate manufacturers for the difference. A measure is also pending to expedite the permitting process for new mines, reducing the time it takes to obtain mining approval from seven years or more down to three years.In the 1970s, there were those who questioned whether energy independence was an achievable goal. Today, America is the world leader in oil and natural gas production.
China’s Shandong Gold to buy Ghana-focused Cardinal Resources for $221 million
BEIJING (Reuters) – Shandong Gold Mining Co (600547.SS) (1787.HK), one of China’s biggest gold producers, said on Thursday it would buy Ghana-focused miner Cardinal Resources Ltd (CDV.AX) for around A$321 million ($221 million) in cash.
The deal continues a recent M&A flurry by Chinese gold firms after spot prices for the precious metal XAU= hit their highest in more than 7-1/2 years at $1,764.55 an ounce last month, propelled by recession fears and Sino-U.S. tensions amid the novel coronavirus outbreak.
Shandong Gold, which in April agreed to splash out C$230 million ($170 million) on Canada’s TMAC Resources (TMR.TO), said in a filing to the Shanghai Stock Exchange it had signed an agreement with Australia-listed Cardinal to pay A$0.60 per share and would acquire all the target’s equity for AS$309 million.
The Chinese miner will also subscribe for 26 million new shares to be issued by Cardinal at a price of A$0.46 per share for a total A$12 million.
Republicans prepare for energy ‘cold war’ with China
Republicans are sharpening a new prong in their anti-China policies: They want to break U.S. reliance on the country for critical minerals, used in everything from military equipment to renewable power to cellphone batteries.
The United States has been losing ground for years, while other countries, and especially China, have rapidly scaled up mining for lithium, cobalt, graphite, rare earth elements, and other critical minerals. Once home to the world’s largest critical minerals mine, the U.S. is now wholly reliant on foreign imports for 14 of the 35 minerals the Interior Department listed as critical in 2018, including graphite and rare earths.
That foreign reliance is not just a risk now, analysts and Republicans say, but an emerging threat in a future where the U.S. could find itself powered increasingly by renewables with energy storage and with millions more electric cars on the roads. If the U.S. doesn’t expand production of critical minerals, essential for those advanced energy technologies, it could find itself at the mercy of China.
That threat could be even more acute if the U.S., under a new administration, were to scale up renewable energy, electric cars, and other advanced energy technologies without securing a more stable supply chain for these minerals.
https://www.washingtonexaminer.com/policy/energy/republicans-prepare-for-energy-cold-war-with-china
Breakingviews – Tesla kills three birds with one Congolese stone
LONDON (Reuters Breakingviews) – Elon Musk is giving his rivals the heavy metal blues. By securing 6,000 tonnes a year of cobalt directly from mining giant Glencore’s Democratic Republic of Congo operations, the Tesla boss is guaranteeing plentiful supplies of the battery ingredient while minimising headaches over its provenance. With China hoovering up more and more of the blue metal, he’s also putting the squeeze on electric vehicle competitors like General Motors and Volkswagen.
DRC should wield more power over the cobalt market than Saudi Arabia does over the oil one. Its south-eastern Katanga region is home to two-thirds of the metal’s available reserves. But DRC’s reputation for conflict and strife makes it risky and expensive to get at. Hence why Musk has always expressed a preference for engineering cobalt out of Tesla car batteries.
Securing a quarter of Glencore’s Katanga Copper Company’s cobalt, around 4% of world output, suggests that preference is still some way from reality. It’s nearly four times what Tesla used in 2019, according to consultancy Benchmark Mineral Intelligence. By focusing on the only non-Chinese cobalt miner in DRC, Musk is also minimising the risk of labour abuse exposés, especially when Covid-19 is hampering normal on-the-ground supply-chain auditing. Glencore’s more mechanised operations make it unlikely that cobalt from rocks dug out by DRC’s legions of pick-wielding informal miners, some of them children, finds its way into Tesla batteries. That’s less verifiable with smaller-scale Chinese producers.
Musk’s Western rivals will find it harder to find similar peace of mind, especially as Volkswagen, BMW and General Motors’ vehicle batteries all use more cobalt. This year, Glencore’s DRC mines will produce 26,000 tonnes of cobalt ore, about 18% of global supply. Chinese operators like China Molybdenum, will produce another 37%. Yet off-take agreements with miners like Glencore, which sends half its DRC cobalt ore to Chinese processors like Gem Jiangsu Cobalt Industries, mean that Chinese refineries control almost 70% of the world’s refined cobalt, according to BMI.
With Tesla and China tying up almost three-quarters of the world’s available supplies, there will be less for everybody else. The metal is currently fetching just $30,000 a tonne, a third of its 2018 peak, due largely to a glut of supply from DRC’s informal miners. As and when prices recover, Musk will be insulated.
Mine approval laws allow ‘systematic erasure’ of Indigenous culture
Environmental lawyers say frameworks designed to preserve Aboriginal artefacts from destruction in mining developments are inadequate, amid renewed attempts by NSW lawmakers to thwart the China Shenhua Energy coal mine in Gunnedah.
Research by pro-bono law firm Environmental Defenders Office found only one of the 704 applications for permits in NSW that enabled companies to construct on land that was culturally significant to traditional owners was rejected between 2012 and 2017. “This says that if you want to destroy cultural heritage in this country, you’re almost certainly going to be allowed to,” EDO chief executive David Morris said.
The site at Juukan Gorge that was reduced to rubble to extend one of Rio Tinto’s iron ore mines.
Senior litigator for the specialist environmental law firm Rana Koroglu said there were few checks and balances in the current legal framework for development approvals. “Developers are required to do minimal consultation, and minimal due diligence,” Ms Koroglu said.
“As long as they do those minimal requirements, they get away scot-free.”
The comments come amid rising concerns over the destruction of ancient Indigenous artefacts by mining giants. Earlier this month Rio Tinto was criticised for destroying 46,000-year-old rock shelters in Western Australia against the wishes of traditional owners, while there is growing discontent about a Chinese conglomerate China Shenhua Energy’s plans to mine a site in northern NSW that has upset Indigenous groups and farmers.
Currently the legal protection for Aboriginal artefacts and culturally significant land comes under a broad range of state and federal acts. In NSW, projects that are considered state significant – such as the China Shenhua mine – have a much lower bar for approval.
The National Parks and Wildlife Act allows the NSW government to force companies to develop strategies to protect Aboriginal artefacts but there is no avenue for traditional landowners to challenge these plans if they are not satisfied.
NSW shadow minister for Aboriginal affairs David Harris has been working to create a new bill to raise the bar for companies seeking mine approval by mandating thorough consultation with local Indigenous groups.
Tesla strikes deal to buy cobalt from Glencore ahead of future supply squeeze
The deal could involve Glencore supplying as much as 6,000 tons of the metal a year for lithium-ion batteries used in electric cars, source said
Tesla Inc. will buy cobalt from from Glencore Plc, the world’s biggest miner of the metal, as the carmaker looks to avoid a future supply squeeze on the key battery metal, a person familiar with the matter said.
Tesla’s factory in China
The contract will help Tesla shore up its cobalt supply for new plants in China and Germany, said the person, who asked not to be identified as the details are private. The opening of Tesla’s so-called gigafactory in China this year has helped propel its shares to a record, as investors turn bullish on Elon Musk’s ambition to transform the company into a global mass-market automaker.
While there’s enough cobalt supply for now, demand is expected to surge in the coming years as Tesla expands in China and Europe and Volkswagen AG to BMW AG roll out fleets of electric vehicles. Warnings about long-term shortages caused cobalt prices to spike in 2017 and 2018, prompting Musk to work on reducing Tesla’s reliance on the metal. Even so, the accord signals that the metal will remain key to the company’s expansion over the next few years.
https://business.financialpost.com/commodities/mining/tesla-buys-glencore-cobalt/
Barrick Gold sells majority stake in China’s Shandong for $210 million
(Reuters) – Canadian gold producer Barrick Gold said on Tuesday it sold a partial stake in Shandong Gold Mining Co for $210 million, profiting off a rise in share price of the Chinese gold miner.
Gold stocks have been steadily rising since the coronavirus outbreak battered equity markets across the globe and sent investors scurrying for safe-haven assets.
Barrick said it sold the majority stake, 79.3 million shares of Shandong to institutional shareholders, at HK$20.50 ($2.65) per share. It now holds a stake of about 2%.
Both companies have been partners in the Veladero mine in Argentina. Barrick sold a 50% interest in the mine to Shandong for $960 million in 2017.
https://finance.yahoo.com/news/barrick-gold-sells-majority-stake-161413661.html
Australia’s Black Rock, Korea’s POSCO team up on Tanzanian graphite mine
Miner aims to deliver concentrate into POSCO’s China-based supply chain
AUSTRALIAN Stock Exchange (ASX)-listed Black Rock Mining has signed a memorandum of understanding with the POSCO Group of South Korea to develop the Mahenge Graphite Project in Tanzania.
Black Rock Mining has a 100% interest in the project, which is spread across 324 square kilometres of exploration ground in Tanzania’s Ulanga district, approximately 250 kilometres north of the border with Mozambique, and 300 kilometres southwest of Tanzania’s largest city, Dar es Salaam.
POSCO is a diversified Korean industrial company, and the world’s fourth-largest steel producer. Through its speciality chemicals unit, POSCO Chemical, the company is a global participant in the lithium ion battery supply chain.
Black Rock believes that an alignment with a strong global player like POSCO will significantly strengthen its position when negotiating with banks on project debt financing, since the project would be able to deliver concentrate into POSCO’s existing China-based supply chain.
The parties to the non-binding memorandum will have 90 days to complete due diligence. The agreement anticipates an initial investment of up to US$10 million by way of a subscription for shares and/or convertible notes in Black Rock. This initial investment from POSCO will be used to fund a programme of engineering works, including design, completion of contracts, and early site access, that aims to establish a construction-ready site by the end of 2020.
Altura Mining signs multi-year lithium offtake deal with Chinese major shareholder
Pilbara lithium player Altura Mining (ASX: AJM) has signed a five-year offtake agreement with a subsidiary of the company’s second largest shareholder, battery industry supplier Ningbo Shanshan, covering production from its Pilgangoora project.
Shanshan owns 15.1% of Altura and is described as a global leader in the production and sales of anode and cathode material to the lithium battery market.
Altura says it will be a key supplier to Shanshan’s new lithium chemical plant which will have a planned phase one production capacity of 25,000 tonnes per annum of lithium carbonate equivalent (LCE).
Construction of the plant, located in Hunan’s province capital of Changsha, began in April this year. Shanshan’s plan includes a phase two expansion to take overall output to 45,000tpa of LCE.
The agreement comprises a separate one-year contract plus a five-year offtake agreement.
The separate contract for 2020 is to provide 44,000 dry metric tonnes of 6% grade spodumene contract.
The five-year contract will, from 2022, have a confirmed mineral annual quantity of 60,000dmt.
The binding offtake agreement also allows for the option to sell any other phase one production that becomes available up to a maximum of 30,000dmt in 2021 and 60,000dmt in successive years.
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