June Newsletter – 15.06.18
- Automakers spending $255B on EVs a ‘pile-up of epic proportions’
- The world’s biggest mining companies in 2018
- Copper and cars: Boom goes beyond electric vehicles
- Cuba courts new mining investment, but can it compete?
- Blockchain: A Diamond in the Rough for Mining Companies?
Automakers spending $255B on EVs a ‘pile-up of epic proportions’
Mining – and not just juniors – needs to tell a good story to attract investors into what is a notoriously tricky and volatile industry.
With China’s infrastructure build-out peaking, the global auto industry’s transition to electric vehicles now provides that narrative. And perhaps start the next commodity supercycle.
The next few decades will be a rocky road for the mining industry and its backers (but it’s always been thus).
For automakers however, electric vehicles are beginning to look more like a highway to hell.
A new report by global consulting firm AlixPartners predicts a “pile-up of epic proportions” as automakers adapt to the biggest change to hit the industry “in a hundred years”:
The automotive industry faces the possibility of a monumental capital drain in the near term as hundreds of players, including non-traditional ones, are all pouring unprecedented sums into electric and autonomous vehicles years before those technologies are fully cost-competitive in the market, when consumers are questioning the cost and safety of some of the technologies, and just as the market itself is set to continue a cyclical downturn.
The world’s biggest mining companies in 2018
Industry goliaths such as Glencore, Rio Tinto and BHP emerged as top performing companies, thanks to recovery in global commodities market. Mining-technology.com lists the ten biggest mining companies based on 2017 revenues.
Glencore – $80.46bn
Rio Tinto – $40bn
BHP – $34.11bn
Vale S.A. – $33.96bn
Jiangxi Copper Corporation Limited (JCCL) – $31.35bn
China Shenhua Energy Company (CSEC) – $30bn
Anglo American – $26.24bn
Freeport-McMoRan – $16.4bn
Corporacion Nacional del Cobre de Chile (CODELCO) – $14.64bn
Zijin Mining Group Company Limited – $14.5bn
Copper and cars: Boom goes beyond electric vehicles
Copper prices retreated again on Monday to $3.09 a pound or $6,830 a tonne, bringing losses for the bellwether metal over the past week to nearly 6%. Two weeks ago copper touched the highest levels since January 2014.
Worries about the impact of a trade war between the US and China, which is responsible for nearly half the world’s industrial metal demand, are behind the pullback, but longer term the outlook for copper remains rosy.
While all the talk has been around booming demand for electric vehicles, a recent widely-read report by BMO Capital Markets argues that renewable energy infrastructure is the biggest single driver of global demand growth over the coming years.
The Canadian investment bank says the global push towards green energy necessitates “significant numbers” of small-scale electricity generation units to be connected to the grid.
The additional copper required from the electrification of vehicles will catapult copper demand from the auto sector over the 3 million tonne level
Solar will add 2.5 million tonnes per year to global copper demand by 2025 and wind 1.85 million tonnes says BMO adding that offshore wind installations are particularly copper intensive, averaging over 9 tonnes of copper per megawatt.
Battery electric vehicles and plug-in hybrids require on average 3.6 times the amount of copper than an internal combustion engine (ICE).
Copper usage increases quickly as battery size expands – the copper in a full-electric SUV tops 100kg and in an e-bus it reaches 300kg.
BMO points out that despite the rapid transition to EVs, the traditional vehicle market is also still growing at a fast clip.
LEGAL AND REGULATORY
Cuba courts new mining investment, but can it compete?
Cash-strapped Cuba wants to reboot its flagging mining sector by luring foreign investors with attractive untapped reserves such as nickel. While there’s been some interest, could frosty relations with the US and years of underinvestment mean Cuba will struggle to capitalise on its potential? Heidi Vella investigates.
INNOVATION AND TECHNOLOGY
Blockchain: A Diamond in the Rough for Mining Companies?
Bloomberg Commodities Edge
Lucara’s 100 percent owned Karowe diamond Mine, located in Botswana, has been in production since 2012 and is one of worlds’ foremost producers of large, Type IIA diamonds in excess of 10.8 carats, including the 1,109-carat Lesedi La Rona, the biggest gem found in more than a century that was sold for $53 million in 2017. Bloomberg’s Alix Steel takes a closer look at the company as its CEO Eira Thomas talks with Bloomberg’s Danielle Bochove about diamonds, blockchain technology and boardroom diversity.