March Newsletter – 09.03.2020
Monday March 2nd Behre Dolbear Group Inc. hosted its annual PDAC conference kick off breakfast meeting at the InterContinental Toronto Centre. The event was attended by over 70 clients, friends and Senior Associates of Behre Dolbear. Attendees indicated increased activity in the minerals sector with an optimistic business outlook for 2020-21 despite uncertainty regarding the impact of the Coronavirus outbreak. Behre Dolbear hopes that everyone had a productive and pleasant PDAC conference as well as wishing everyone good luck on your future endeavors.
(As a note total PDAC Conference attendance was reportedly over 23,000)
- Gold hits fresh seven-year high as risk-off mood sweeps markets
- Zambia buys artisanal gold to formalize unregulated mining
- Nornickel part of Finnish battery recycling initiative
- All the World’s Metals and Minerals in One Visualization
- Japan’s Sumitomo Metal Mining aims to boost FY copper output to 300,000 T by 2030
- China-backed JV set to start work at Simandou
- Lithium no quiet place for AVZ
- Copper to Rally Once Virus Passes, Chile Minister Says
- China’s Western Mining has force majeure application accepted
- SQM warns of further lithium price drop, coronavirus impact
- Dinosaur-age Cockroaches Found Preserved in Amber
Gold hits fresh seven-year high as risk-off mood sweeps markets
Gold jumped to a fresh seven-year high as investors tried to assess an expanding global health crisis.
Bullion is headed for the biggest weekly gain since 2009, driven by a collapse in bond yields and concerns about the scale of the coronavirus outbreak. Gold rose as much as 1.1% to $1,690 an ounce, the highest since January 2013.
Separately, platinum and palladium surged on Friday after Anglo American Platinum declared force majeure and cut its production forecasts. Platinum jumped as much as 4.3%, the most since August.
Gold is one of the standout winners from the outbreak, with Goldman Sachs Group saying the commodity “has immunity to the virus.” Money manager Jeffrey Gundlach told CNBC that gold is the best thing to own now and is headed to new highs.
“There is definitely scope for gold to test $1 700, although maybe it is a bridge too far this week, unless we get a shocking non-farm payrolls,” said Jeffrey Halley, senior market analyst at Oanda, referring to the US jobs data that are due later Friday. “Coronavirus turmoil next week will likely see gold get the momentum it needs.”
The global advance of the coronavirus has shaken confidence across major economies, prompting central bankers to proffer stimulus measures, including lower interest rates. In addition to the Federal Reserve’s emergency cut this week, Canada and Australia also eased.
The number of coronavirus cases globally is approaching 100,000 as more infections were reported in the US, Germany and South Korea. Singapore warned of a global pandemic and Britain’s chief scientific adviser said a vaccine could take as long as 18 months to develop.
Gold’s ascent has come as investors plowed more funds into bullion-backed exchange-traded funds. Global holdings stand at a record, headed for an eighth weekly expansion.
Zambia buys artisanal gold to formalize unregulated mining
Zambia’s mining investment arm ZCCM-IH has started buying gold from artisanal and small-scale miners in a bid to formalize the unregulated sector whose ranks have swelled worldwide as gold prices soar, it said on Friday.
Governments across Africa are scrambling to tackle informal mining of gold, which has significant health and environmental risks and contributes to illicit flows of money, depriving states of revenue when the metal is smuggled across borders.
GOVERNMENTS ACROSS AFRICA ARE SCRAMBLING TO TACKLE INFORMAL MINING OF GOLD, WHICH HAS SIGNIFICANT HEALTH AND ENVIRONMENTAL RISKS AND CONTRIBUTES TO ILLICIT FLOWS OF MONEY
Ethiopia, for example, runs artisanal gold buying centres which offer a higher price than the going market rate to attract miners away from the black market. “ZCCM-IH is providing an open market and competitive prices for gold,” an advertisement by the company read, adding that gold sellers could bring the gold to its Lusaka offices.
“Looking forward to doing business with you!” the advertisement, circulated on WhatsApp, read. “It is cash on delivery, spread the word!”
ZCCM-IH did not immediately reply to Reuters’ query about the price the buying centres would be offering miners.
Nornickel part of Finnish battery recycling initiative
Russian mining company Norilsk Nickel (Nornickel) will team up with Finnish energy company Fortum and German chemical group BASF to establish a battery recycling cluster to service the electric vehicle market.
The cluster, to be located in Harjavalta, Finland, will enable a “closed loop” cycle to re-use the critical metals present in used batteries.
“This setup is ideal for sustainable processing of two of the main metals used in lithium-ion batteries,” commented Nornickel MD Joni Hautojärvi.
BASF intends to use recycled materials from the processes developed by the companies within this cooperation in its planned battery materials precursor plant in Harjavalta.
Through the previous acquisition of Finnish company Crisolteq – an expert in low carbon-dioxide (CO2) hydrometallurgical processing – Fortum will now be able to increase the recovery rate of materials in lithium-ion batteries from 50% to more than 80%.
All the World’s Metals and Minerals in One Visualization
We live in a material world, in that we rely on materials to make our lives better. Without even realizing it, humans consume enormous amounts of metals and minerals with every convenient food package, impressive building, and technological innovation.
Every year, the United States Geological Service (USGS) publishes commodity summaries outlining global mining statistics for over 90 individual minerals and materials. Today’s infographic visualizes the data to reveal the dramatic scale of 2019 non-fuel mineral production.
Read all the way to the bottom; the data will surprise you.
Non-Fuel Minerals: USGS Methodology
A wide variety of minerals can be classified as “non-fuel”, including precious metals, base metals, industrial minerals, and materials used for construction.
Non-fuel minerals are those not used for fuel, such as oil, natural gas and coal. Once non-fuel minerals are used up, there is no replacing them. However, many can be recycled continuously.
The USGS tracked both refinery and mine production of these various minerals. This means that some minerals are the essential ingredients for others on the list. For example, iron ore is critical for steel production, and bauxite ore gets refined into aluminum.
Japan’s Sumitomo Metal Mining aims to boost FY copper output to 300,000 T by 2030
Japanese miner Sumitomo Metal Mining said on Wednesday it aims to boost its annual copper output through its shareholding to 300,000 tonnes by 2030 under its new long-term vision. The target compares with 250,000 tonnes projected last November for the current financial year to March 31.
Unveiling a strategy through to 2030, the Japanese company said it wanted to increase use of low-grade nickel ore and start operating its third high-pressure acid leaching (HPAL) plant in the mid-2020s, without giving any further details. HPAL is a process used to extract nickel from laterite ore.
Sumitomo Metal, which also makes cathode materials used in automotive batteries, aims to get involved in the business to recover lithium from salt lake brine with high levels of impurities by 2030 while it also wants to commercialize battery recycling that recovers cobalt.
In an effort to tackle climate change, the company aims to cut greenhouse gas emissions by 2030 by more than 26% of its 2013/14 financial year levels and aims to create a plan to reduce its emissions to zero in the second half of the century.
China-backed JV set to start work at Simandou
China is close to granting approval to some of its biggest state-owned companies to start developing the northern area of Simandou in Guinea, one of the world’s largest untapped iron ore deposits, sources familiar with the process said on Thursday.
A joint venture between Guinea’s Société Miniere de Boke (SMB) and Singapore’s Winning International Group, whose investors include Chinese aluminium producer Shandong Weiqiao and the Yantaï Port Group, secured in November rights to an area of the massive iron deposit, under Guinea’s mountainous jungle.
But the partners have been unable to proceed as they need the official go-ahead from China’s State-owned Assets Supervision and Administration Commission (SASAC), which oversees the largest government-owned enterprises.
THE PROSPECT OF SEEING SIMANDOU COMING ONLINE WITHIN FIVE YEARS IS SEEN AS A THREAT BY THE WORLD’S TOP IRON ORE PRODUCERS
For over a decade, it seemed that Guinea’s crown jewel deposit would never be mined, as it was caught up in wrangles between companies that held rights to it and authorities in the West African nation.
In 2008, one of Guinea’s former dictators stripped Rio Tinto’s rights over two of the four blocks the deposit had been divided on and handed them to Israeli billionaire Benny Steinmetz’s BSG Resources (BSGR).
The world’s No. 2 miner was able keep the two southern blocks, but only after paying $700 million to the government in 2011. That guaranteed Rio tenure for the lifetime of the Simandou mine.
That deal came under scrutiny in 2016, forcing the company to fire two senior managers over a questionable $10.5 million payment made to a consultant who helped the company secure the two blocks and alerted authorities, including the US Department of Justice and the UK’s Serious Fraud Office.
Several investigations over bribery and corruption followed, until a settlement between Steinmetz and Guinea was reached early last year, ending the bitter and long-dragged out dispute involving Rio Tinto, Vale SA and BSGR.
Lithium no quiet place for AVZ
A quiet time in the global lithium equity space? Try telling that to AVZ Minerals managing director Nigel Ferguson who, with the well-regarded management team he’s assembled at the circa-A$100 million market-cap junior, laid a strong platform in 2019 for what shapes as a compelling next 12 months for one of the world’s best emerging battery minerals projects. And possibly for a country with the mineral endowment to be Africa’s 21st century new-energy hub.
The Democratic Republic of Congo already supplies two-thirds of the world’s cobalt and is a major source of high-grade copper.
Interest among financiers and prospective offtakers in a potential lithium “behemoth” is said to be building ahead of the imminent release of AVZ’s definitive feasibility study on Manono in the country’s south-east, a document that seems set to confirm the economic bona fides of a staged development of the world’s largest unmined hard-rock lithium deposit.
Ferguson logged a lot of miles in 2019 as he kept investors informed about rapid progress at the former Congo tin-tantalum mine now shown to host extensive high-grade pegmatite-hosted lithium resources (estimated JORC measured, indicated and inferred 400 million tonnes at an average 1.65% Li2O in the well-drilled Roche Dure deposit alone).
But the extensive series of meetings and presentations across Europe, Asia, Africa and North America also revealed plenty of signs of a fast-changing financing and consumption landscape for the mineral at the heart of strategies aimed at leading the world’s electric vehicle and energy storage revolution.
Sentiment that remained apparent on the day of our call with Ferguson. “The Chinese are the ones who have been pushing hard into the new-energy minerals arena, but I’ve just had three telephone calls this morning with European and US-based funds who are looking to get involved,” he told RESOURCEStocks. “Europeans and Americans are starting to realise if they don’t get off their backsides and do something they’re going to be left behind and all of the [raw materials] are going to be going to China as has happened with strategic minerals such as rare earths.
Copper to Rally Once Virus Passes, Chile Minister Says
(Bloomberg) — The deadly coronavirus that’s rattled markets since January won’t stop copper prices from surging to $3 a pound this year, according to Chilean Mining Minister Baldo Prokurica.
The price of copper, often used as a barometer for the global economy, has dropped about 7% so far in 2020, signaling demand for the metal used in everything from electronics to automobiles has cooled as investors retreat from riskier assets.
Copper supplies at warehouses tracked by the Shanghai Futures Exchange expanded to the highest ever for this time of year as logistical constraints inside China are stopping output from reaching end-users, further pressuring down price for the metal.
Copper prices “should stabilize once the coronavirus passes,” Prokurica said in an interview at the PDAC conference in Toronto. “Nobody has information to say that the coronavirus will last one or two or three months, but SARS and the like lasted between two and three months, so we think that is what will happen with the coronavirus.”
On Monday, copper climbed 2.2% in New York to settle at $2.595 a pound, buoyed by the gradual reopening of factories across China and signs of imminent support from central banks to tackle economic fallout from the outbreak.
“I have the impression that the price should be between $3 and something more,” Prokurica said, citing the demand and supply situation and wage negotiations due at mines in Chile as potential factors.
Cochilco, the Chilean copper commission, lowered its price projection to $2.85 a pound from an earlier estimate of $2.90 in January.
China’s Western Mining has force majeure application accepted
BEIJING, March 3 (Reuters) – A copper smelting arm of China’s Western Mining has had its application for a force majeure certificate accepted after operations were affected by the coronavirus outbreak, an official from a regional trade body said on Tuesday.
Qinghai Copper, a wholly owned subsidiary of Western Mining in northwest China’s Qinghai province, is one of three Qinghai firms so far to have a force majeure application approved by the China Council for the Promotion of International Trade (CCPIT), an official from council’s Qinghai branch said.
The CCPIT had issued over 4,000 certificates to Chinese companies affected by the virus who are seeking to invoke force majeure – a clause which allows companies to suspend their obligation to fulfil contracts after unexpected events such as strikes and natural disasters.
SQM warns of further lithium price drop, coronavirus impact
Chile’s Chemical and Mining Society (SQM), the world’s second largest lithium producer, continues to suffer from sustained weak prices for the metal used in batteries that power electric vehicles (EVs) and high tech electronics, with profit falling almost 38% in the in the last quarter of 2019.
The Santiago-based company posted fourth-quarter net income of $66.9 million, compared to $108.6 million in the same period in 2018. Gross profits dropped more than 30% to $137.8 million.
SALES TO CHINA, THE TOP CONSUMER OF BATTERY METALS, COULD BE HIT BY IMPACT OF THE CORONAVIRUS IN THE FIRST MONTHS OF THE YEAR
The lithium giant said that sales to China, the top consumer of battery metals, could be hit by the impact of the coronavirus.
Chief executive Ricardo Ramos said the company was already seeing signs indicating shipments were “getting back to normal.”
“At this point, we believe sales volumes related to the lithium business line in China could be lower during the first quarter of 2020 when compared to our original expectations,” Ramos said.
“Depending on the evolution of the coronavirus outbreak, we may be able to recover some of those sales volumes and reach 55-60k metric tonnes in 2020,” he added.
Dinosaur-age Cockroaches Found Preserved in Amber
An international team of researchers has identified two new ancient species of cockroach found in a cave in Myanmar. In their paper published in the journal Gondwana Research, the group describes their analyses of the two specimens, which were preserved in amber.
The two specimens were given the names Crenocticola svadba and Mulleriblattina bowangi and were placed in the Nocticolidae family—and both have been dated back to approximately 99 million years ago. The time frame puts them in the Cretaceous period—a time when dinosaurs were still alive.
They were discovered among amber deposits that had been removed from a mine in the Hukawng Valley, in Myanmar. The mine and its amber have been the subject of numerous studies. In this new effort, the researchers were provided with 110 tons of amber to study. Prior researchers had already dated the amber by dating volcanic rocks in the same location.
They have small eyes, for example, and small wings attached to small bodies They also have abnormally long antenna and shorter leg spines—all features that would make living in a dark cave easier.
The researchers were not able to explain how the cockroaches came to be embedded in amber, considering they were dug from a cave. They suggest it is possible that tree roots extended into the cave and dripped resin that trapped the cockroaches, preserving them for millions of years.
They also suggest that the cockroaches may have fed on dinosaur guano in much the same way many modern cockroaches feed on droppings left by birds and bats. If that was the case, it may have helped the cockroaches migrate between caves. They note that more work is required to determine if the two new species they found survived the mass extinction that killed off the dinosaurs, and if so, whether they have modern relatives.