March Newsletter – 24.03.2020
ANNOUNCEMENTS
NEWSLETTER
- Bingham Canyon Temporarily Idled After Utah Earthquake
- Freeport-McMoRan issues statement on government declaration of national emergency in Peru
- New York’s Last Coal-Fired Power Plant Is Closing
- Copper price surges over 10% after touching 2009 lows
- Companies Join Forces To Open U.S. Rare Earth Mining And Processing Facilities
- Miners Suspend or Slow Operations as Coronavirus Panic Spreads
- Bacchus Capital Leads Recent Consolidation in Global Gold Sector
- Energy Ministry may lower coal production target as Chinese demand falls
- Swiss gold exports plunge as shipments to China collapse
- Nevada Copper continues Pumpkin Hollow ramp-up
- From using drones to stockpiling cyanide, miners keep digging amid pandemic
Bingham Canyon Temporarily Idled After Utah Earthquake
Rio Tinto’s Kennecott Utah Copper operations were impacted by a 5.7-magnitude earthquake near Magna, Utah, on Wednesday, March 18. The company said all employees have been safely accounted for and evacuated from the potential risk areas. At this point, it said limited damage to the operation has been identified with little risk to the surrounding community, including a hydrochloric acid release from the refinery. A detailed inspection of the complex is currently being conducted, in conjunction with the local emergency services and Utah Department of Transportation.
As a precaution, the company said all operations have been temporarily idled and, in line with standard procedures pre-agreed with the Utah Department of Transportation, State Road 201 has been temporarily closed while the inactive South (Magna) tailings storage facility is inspected. This is an inactive historic tailings storage facility that is stable and being actively monitored and managed, under a plan reviewed and endorsed by a panel of independent geotechnical experts and Utah’s dam regulatory authorities.
Rio Tinto Copper and Diamonds CEO Arnaud Soirat said, “The safety of our employees and wider community is our first priority and having ensured that all our employees are safe and the operations are shut, we are now working with the local emergency services and regulators to ensure the asset is safe before resuming any operations.”
https://www.e-mj.com/breaking-news/bingham-canyon-temporarily-idled-after-utah-earthquake/
Freeport-McMoRan issues statement on government declaration of national emergency in Peru
Freeport-McMoRan Inc. has recently announced that the Peruvian government has issued a Supreme Decree and declaration of a National Emergency in its efforts to contain the outbreak of COVID-19.
To comply with the government’s requirement, Cerro Verde has temporarily transitioned to a care and maintenance status for a 15 day period, commencing on 16 March 2020. During this period, onsite personnel will be limited to critical activities necessary to maintain the facilities pending a return to normal operations.
Freeport-McMoRan owns 53.56% of Cerro Verde, which operates one of the world’s largest concentrating facilities near Arequipa. Peru. In 2019, Cerro Verde produced 1 billion lbs of copper.
Cerro Verde will work closely with government authorities to be prepared to restart operations as soon as possible.
New York’s Last Coal-Fired Power Plant Is Closing
BARKER, N.Y. — It is the last coal-fired power plant in New York State. White steam trails from its smokestack like a banner flying in the wind, visible for miles across flat farm fields near Lake Ontario. But not for long.
Sometime this month, the 44 remaining workers at the Somerset Operating Company will power it down for the last time. They have long planned to gather ceremonially in a cavernous hall, beside the plant’s roaring turbine, as it goes quiet, but now coronavirus restrictions may deny them that moment of closure.
“This plant is my life,” Darlene Lutz, 60, said, then burst into tears. She started out shoveling coal, then rose to become the plant’s first and only female operating-room engineer. She had even persuaded her husband to take a job there.
Across the country, coal plants are going offline, priced out by natural gas and squeezed by regulations and incentives aimed at reducing greenhouse gas emissions and moving to clean, renewable energy sources. The closures bring common challenges: lost tax revenues and jobs, efforts to retrain workers and clean up sites.
And this one, of course, comes as the state battles the economic headwinds of the nation’s largest coronavirus outbreak.
But every plant has a specific place in a community, and each community has its own story of costs and resilience.
Here in the northwest corner of New York, about an hour’s drive from Buffalo, the story is of the plant’s unusually close-knit workplace gradually dissolving over the past decade; of a school district banking for survival on the plant owner’s experimental new business model; and of nearby residents debating whether solar-panel farms and wind turbines should be the landmarks of the future.
The plant’s closure is also an early test of the state’s new climate law, one of the most ambitious in the nation, and whether it can get buy-in from some of the most affected New Yorkers.
https://www.nytimes.com/2020/03/20/myregion/coal-energy-ny.html?referringSource=articleShare
Copper price surges over 10% after touching 2009 lows
Copper dropped sharply again in overnight trade on Thursday, coming close to levels last seen during the global financial crisis amid mounting uncertainty about the extent the global pandemic could hit demand and supply of the bellwether metal.
Copper trading in New York fell by more than 8% to $1.9725 a pound ($4,350 a tonne), the weakest level since early January 2016, when it traded below $2.00 for only a week. The last time it traded for a sustained period below this level was in 2008 and 2009.
In New York trade the metal fought back, rallying by 11.6% with May delivery contracts exchanging hands for $2.1990 in the mid-afternoon session. Year to date copper is still in bear territory with a 21% decline.
“In terms of understanding the short-term supply-demand dynamics, uncertainty is the highest I can recall,” Mark Hansen, chief executive officer of metals trading house Concord Resources, told Bloomberg from London.
“China responded more forcefully to the economic downturn in 2015-16 than it has now, which is both curious but also should give hope to resource demand possibly returning strongly, at some point.”
Global recession
Thanks to its widespread use in industry, transportation, construction and power grids, copper is vulnerable to slowdown in the broader economy.
https://www.mining.com/copper-price-in-rally-for-the-ages/
Companies Join Forces To Open U.S. Rare Earth Mining And Processing Facilities
Texas Mineral Resources and USA Rare Earth are joining forces to open a rare earth mining operation in Texas and a minerals processing plant in Colorado.
In a move intended to lessen the stranglehold China has on rare-earth production and processing, Texas Mineral Resources and USA Rare Earth are joining forces to open a mining operation in Texas and a minerals processing plant in Colorado.
The companies have partnered in a pilot plant processing facility in Wheat Ridge, Colorado, which purifies rare earth minerals, lithium, and other critical minerals mined at the Round Top rare earth and critical minerals project in Texas.
This is about securing domestic supplies of key ingredients for green energy technologies, electronics, and military weapons, said USA Rare Earth CEO Pini Althaus in a press release.
“Taken together, Round Top and our pilot plant constitute essential links in restoring a domestic U.S. rare earth supply chain, extracting rare earths and processing them …without the material ever leaving the United States, thereby alleviating the current dependence on China for the both raw materials and mineral processing,” Althaus said.
Miners Suspend or Slow Operations as Coronavirus Panic Spreads
Metal producers worldwide are suspending production, slowing project construction or curbing their operations to critical activities as governments are imposing restrictions to contain the spread of coronavirus. These companies are also cutting non-essential travel of office employees to protect them against getting infected.
Coronavirus cases across the globe have escalated to 191,127, while the death toll stands at 7,807. To limit the spread, many countries have put in place travel or border restrictions and other measures such as constrained movement and quarantines. The Peruvian Government for instance, has closed its borders, declaring a state of national emergency requiring a 15-day quarantine. Peru is a global mining powerhouse — ranking third in global copper production, second for silver and sixth for gold and also boasts significant reserves of zinc, lead, iron ore and tin. The country’s mining ministry has allowed the mining sector to carry out critical operations during this period while maintaining safety, health and environmental conditions.
In the wake of this, Newmont Goldcorp Corporation NEM announced that it is ramping down mining operations at Yanacocha in Peru. However, gold production from leach pads, and management of critical safety and environmental activities will continue as usual. Yanacocha represents approximately 3% of the company’s 2020 attributable gold production outlook. Pan American Silver Corporation also announced that four of its mines (Shahuindo, La Arena, Huaron and Morococha) in Peru are being temporarily suspended.
Freeport-McMoRan Inc. FCX announced that Cerro Verde mine in Peru has been transitioned provisionally to a care and maintenance status for a 15-day period starting Mar 16. During this period, onsite workers will be limited to critical activities. Freeport has 53.56% stake at Cerro Verde. The mine produced 1 billion pounds of copper and 29 million pounds of molybdenum in 2019.
Anglo American plc is slowing construction work at its Quellaveco copper project in the country and only critical areas of the project are anticipated to continue as usual. However, Teck Resources Limited announced that it continues to operate the Antamina mine under an exemption from the announced Peruvian Government restrictions. Critical operations will be maintained by a reduced workforce throughout the 15-day national emergency quarantine period.
Meanwhile, neighboring country Chile declared a 90-day state of catastrophe, restricting freedom of movement. Teck Resources announced the suspension for an initial two-week period of construction activities at its Quebrada Blanca Phase 2 (QB2) project. The QB2 Project is one of the world’s largest undeveloped copper resources. Teck holds 60% of the project. Chilean copper miner Codelco stated it would reduce operations to comply with the imposed restrictions.
https://finance.yahoo.com/news/miners-suspend-slow-operations-coronavirus-141402751.html
Bacchus Capital Leads Recent Consolidation in Global Gold Sector
LONDON, March 16, 2020 /PRNewswire/ — Bacchus Capital Advisers, the independent investment and merchant bank specializing in cross border public market M&A, is advising Nordgold, a one million ounce internationally diversified gold miner, on the acquisition of a 19.9% stake of, and potential offer for, ASX-listed gold developer Conclave Resources.
Conclave Resources is a West African gold-focused exploration and development company that holds interests in tenements within Ghana where it is concentrating on the development of the Namdini Gold Project.
Nordgold is a privately owned, internationally diversified gold producer, with a proven track record of operational excellence and mine development, and a significant international development pipeline. Nordgold operates ten mines, with four of these in West Africa (three in Burkina Faso and one in Guinea).
This is the second cross border gold mining transaction lead by Bacchus Capital so far in 2020, and follows the successful public takeover of Canadian listed Core Gold by Australian Bacchus Capital client Titan Minerals, which, despite being contested, received overwhelming shareholder backing.
https://finance.yahoo.com/news/bacchus-capital-leads-recent-consolidation-100100073.html
Energy Ministry may lower coal production target as Chinese demand falls
The Energy and Mineral Resources (ESDM) Ministry is considering lowering the coal production target this year as demand from China has shown a significant decline since the start of the outbreak of the novel coronavirus in the country late last year, a senior ministry official has said.
An excavator digs at a coal mine owned by PT Berau Coal in Binungan, East Kalimantan, on April 4, 2019.
The ministry’s coal and mineral director general Bambang Gatot Ariyono said in Jakarta on March 12 that the decline in the demand had also caused a sharp drop in coal prices on the world market, which could cause the country’s miners to reduce their production.
The 2020 minerals and coal mining program and budget (RKAB) has set a current production goal of 550 million tons of coal, a 10 percent increase from last year’s target. As of March 6, 94.7 million tons of coal had been mined in the country in the year.
“With the existing demand, revision to this year’s production is almost certain,” he said, adding that the drop in demand had also caused a decline in coal prices.
Swiss gold exports plunge as shipments to China collapse
Swiss exports of gold fell to the lowest since at least 2012 in February as shipments to top consumer China all but halted, customs data showed on Thursday. The plunge in trade came as China fought to contain an outbreak of coronavirus by shutting down the movement of people and goods. The virus has since spread worldwide.
Switzerland — a major trading, vaulting and refining centre for precious metals shipped 2 tonnes of gold to China in February, down from 17 tonnes in January. The shipments were the lowest since May 2014.
Shipments to Hong Kong fell to just 10kg, the lowest since monthly data became available in 2012, from 23.6 tonnes in January.
In total, Switzerland exported 42.7 tonnes of gold in February, less than half the 87.4 tonnes shipped the previous month.
Exports to India, the second biggest gold consumer after China, held up better at 9.6 tonnes in February, up from 8.5 tonnes in January. India has so far been less affected by coronavirus.
https://af.reuters.com/article/metalsNews/idAFL8N2BC3XI
Nevada Copper continues Pumpkin Hollow ramp-up
Nevada Copper (TSX: NCU) is continuing production ramp-up from its Pumpkin Hollow underground mine in Yerington, Nevada, despite the significant macro headwinds, the company said in its latest corporate update.
Against the backdrop of the recent decline in copper prices and global pandemic fears, the company has entered into non-binding arrangements for a proposed substantial balance sheet strengthening package to assist with the continued ramp-up during this period of market uncertainty.
The package comprises a combination of measures that are expected to significantly improve the company’s liquidity profile under lower copper price scenarios and provide enhanced operating flexibility during the ramp-up of the Pumpkin Hollow mine, the miner said.
THE COMPANY IS WORKING WITH ITS FINANCING PARTNERS IN AN EFFORT TO REACH BINDING AGREEMENTS WITHIN THE NEXT TWO WEEKS
The proposed arrangements include a $35 million royalty and stream financing plan with Triple Flag, $30 million in credit facility refinancing provided by Pala Investments and other investors, debt re-sculpting with KfW IPEX-Bank, and an expected $20 million capital backstop commitment provided by Pala and other shareholders.
While these arrangements are non-binding, the company is working with its financing partners in an effort to reach binding agreements within the next two weeks.
The company expects concentrate production and sales volumes from Pumpkin Hollow to ramp up during H1 2020.
https://www.mining.com/nevada-copper-continues-pumpkin-hollow-ramp-up-despite-uncertainities/
From using drones to stockpiling cyanide, miners keep digging amid pandemic
MOSCOW/LONDON/MELBOURNE (Reuters) – From using drones for field inspections to stockpiling cyanide, miners are scrambling to maintain output amid the coronavirus pandemic, a task made trickier in underground mines where social distancing is nearly impossible.
The virus has claimed 8,700 lives and infected over 200,000 globally. While miners have faced some outages, due to government shutdowns in places like Peru and Mongolia, most production continues.
In a defensive step, miners have begun stockpiling fuel, hydrofluoric acid, lime and other industry staples, including cyanide, which is used to extract gold from rock.
“I’m sure every mine is trying to do the same thing,” Clive Johnson, chief executive of Africa-focused B2Gold Corp, told Reuters.
Chilean miner Antofagasta Plc has start using drones to inspect tailings dams, which store industry waste rock. Manual inspections can take days and put engineers in close contact with each other.
The coronavirus “is actually providing us a very significant opportunity to be able to step forward on our use of technology,” Antofagasta CEO Iván Arriagada said.
Bankers are also using drone footage from mine sites as they pitch deals to prospective buyers. While such footage might not help clinch a deal, it helps keep deal momentum alive, one London-based banker told Reuters.
The outbreak has begun to surface across the mining industry.
Kinross Gold Corp has quarantined nearly 900 workers at its Kupol mine in Russia’s Far East after two workers were hospitalized with suspected coronavirus. Test results are pending and the mine is still running. BHP Group Ltd, the world’s largest miner, said a vendor who recently visited one of its Australian coal mines has tested positive for the virus. The company quarantined staff who interacted with the vendor. None have developed symptoms so far.
A handful of staff at mines in Chile, Ghana and Burkina Faso have tested positive for the virus, though they were quarantined before exposing others, the companies involved said.
COMMODITY PRICES
