May Newsletter – 10.05.2021


  • After Default, Zambia’s Outsized Bet on Copper could play into China’s Hands
  • Japan’s Sumitomo targets 2040 exit from coal business
  • Kyrgyzstan court fines Centerra Gold mining venture $3.1 billion
  • China’s Ganfeng agrees takeover of Bacanora Lithium in $264.5 mln deal
  • Iron ore is saving Australia’s trade with China. How long can it last?
  • Tennessee Valley Authority plans to shut coal plants by 2035
  • A Sustainable Way To Mine Rare Earth Elements From Old Tech Devices: Agromining Explained
  • Critical mineral issues not merely ‘sideshow’ in energy transition, IEA warns
  • Deep-sea mining tests resume as lost robot rescued

After Default, Zambia’s Outsized Bet on Copper could play into China’s Hands

Zambia takes on $1.5 billion debt to acquire loss-making mine, raising fears it could ultimately hand strategic asset to top creditor, China

Zambia, which defaulted on payments to bondholders in November, is doubling down on debt with a high-stakes bet that nationalizing one of its biggest copper mines will help rescue its flailing economy.

Once seen as among the most investment-friendly countries in the region, the landlocked nation in south central Africa is the most extreme example of a wave of populist governments in mining-dependent countries that are struggling to pay the bills after borrowing for infrastructure in recent years. Zambia was the first country on the continent to register a pandemic-era default on a sovereign debt payment late last year when it missed a $42.5 million interest payment on some of its $3 billion of dollar-denominated bonds.

The country has some $12 billion in external debt, including $3 billion in international bonds and large loans from Chinese state-owned lenders. The government hasn’t said exactly how much it owes to Chinese lenders as a whole. Johns Hopkins University’s China-Africa Research Initiative estimates that Zambia has signed some $9.9 billion in loans from China, although not all of that money has been drawn.

Japan’s Sumitomo targets 2040 exit from coal business

Japanese trading house Sumitomo is targeting to exit the coal-fired power plant business by the latter half of 2040, including withdrawing from both domestic and overseas project developments and thermal coal mining, to achieve its goal of reaching carbon neutrality by 2050.

Sumitomo plans to stop investing in new coal-fired power generation projects with the sole exception being the possible expansion of Bangladesh’s Matabari coal-fired power plant. The firm is aiming to abandon its thermal coal mine assets by 2030 and complete all ongoing coal-fired power projects by the latter half of 2040.

Sumitomo has joined fellow trading firms Marubeni and Sojitz in toughening its stance on environmental issues. It previously decided to withdraw from new coal-fired power projects with some exceptions and to stop investing in new thermal coal mines, while holding on to its current assets.

Kyrgyzstan court fines Centerra Gold mining venture $3.1 billion

A court in Kyrgyzstan on Saturday imposed a $3.1 billion fine on Kumtor Gold Company, which operates the nation’s biggest gold mine, after ruling that the Canadian-owned firm had violated environmental laws.

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Centerra Gold’s Kumtor mine, Kyrgyzstan’s largest gold operation.

The district court decision came just a day after Kyrgyzstan’s parliament passed a law allowing the state to temporarily take over a company if its activities pose a danger to human lives or the environment.

Kumtor, which is owned by Canada’s Centerra Gold, was found by the court to have breached environmental laws by placing waste rock on glaciers.

The company, which has called the charges “entirely meritless”, was fined 261.7 billion som, equivalent to $3.1 billion.

China’s Ganfeng agrees takeover of Bacanora Lithium in $264.5 mln deal

China’s Ganfeng Lithium 002460.SZ, one of the world’s top lithium producers, on Thursday said it had offered to buy the shares it does not already own in Mexico-focused Bacanora Lithium BCNB.L for up to 190 million pounds ($264.5 million).

The deal, which values Bacanora at up to around 267 million pounds, follows the announcement of merger between lithium producers Galaxy Resources GXY.AX and Orocobre Ltd ORE.AX last month as demand for the key ingredient in electric vehicle batteries surges after a three-year downturn.

Bacanora’s current market capitalisation is 148.67 million pounds, according to Refinitiv Eikon data.

Ganfeng, which in February announced a plan to raise its stake in Bacanora from 17.41% to 28.88%, will acquire the remaining shares in the company for 67.5 pence per share, a joint statement said. The increase in Ganfeng’s stake to 28.88% is expected to complete shortly, it added.

Iron ore is saving Australia’s trade with China. How long can it last?

Hong Kong (CNN Business)Wine and wheat. Lobsters and logs. Beef and barley. If Australia exports it, China has likely put up barriers to entry over the past year, as diplomatic relations between the two countries rapidly deteriorated.

Now, one commodity is almost single-handedly keeping the trade relationship afloat: iron ore.

Australia is the world’s largest producer of iron ore, mining more than 910 million metric tonnes in the 2019-2020 financial year, according to the Australian government, almost twice as much as its nearest competitor Brazil.

Iron ore is a vital component in the production of steel, and with China embarking on a $500 billion infrastructure spending spree to help the economy recover from the pandemic, Beijing’s need for it has never been greater.

Diplomatic relations between Australia and China fell into a deep chill one year ago, after Prime Minister Scott Morrison called for an independent investigation into the origins of the Covid-19 pandemic which threatened to challenge Beijing’s narrative of the viral outbreak.

Tennessee Valley Authority plans to shut coal plants by 2035

The Tennessee Valley Authority, a U.S.-owned utility, confirmed on Monday it plans to shut four remaining coal plants by 2035, the year by when President Joe Biden wants the nation’s power grid to be decarbonized to fight climate change.

TVA first started using coal-fired plants in the 1950s, but has begun to retire older, less efficient units in keeping with its commitment to generate cleaner energy. In 2005 it generated 57% of its power with coal. By 2020 that had shrunk to 14% as it increased generation from nuclear, natural gas, and wind and solar.

Jeff Lyash, TVA’s president & CEO, had said at an Atlantic Council event last week it planned to continue to retire coal plants over the next 15 years, but did not say which ones.

A TVA official confirmed on Monday that it plans to shut by 2035 the remaining four coal plants: the Shawnee plant, in Kentucky, and the Cumberland, Gallatin, and Kingston plants in Tennessee.

A Sustainable Way To Mine Rare Earth Elements From Old Tech Devices: Agromining Explained

President Biden signed an executive order (EO 14017) in February 2021 to review U.S. supply chains’ reliance on foreign suppliers to set the U.S. on the path of rare earth elements (REEs) independence. REEs have become essential components to healthcare, clean energy, and communication technologies like electric vehicles, wind turbines, microchips, and batteries due to their unique physical and chemical properties. The process of mining REEs from natural deposits is costly and harmful to the environment. Luckily, scientific advances in the field of agromining are offering a more sustainable alternative.

What are REEs?

REEs are known as ‘rare’ not because they are exceptionally uncommon, but because they are not found in pure form and require several extracting steps. Across the globe, there is a growing demand for advancing technologies made from REEs like consumer electronics (mobile phones and tablets), which is predicted to reach $2.5 trillion by 2030. In 2020, U.S. imported over 80% of REEs from China due to the lack of domestic capability for REEs production from finite ore sources, or extraction from municipal landfills like electronic wastes (e-wastes). Recent published studies confirm REEs extraction from urban wastes can be a promising alternative to replenish REEs required to meet future technological needs, mitigate environmental impacts, and subsequently address national priorities like President Biden’s order to “identifying risks in the supply chain for critical minerals and other identified strategic materials, including rare earth elements (as determined by the Secretary of Defense), and policy recommendations to address these risks.”

Critical mineral issues not merely ‘sideshow’ in energy transition, IEA warns

A transition to energy resources with lower emissions will lead to skyrocketing demand for critical minerals, and current production plans are expected to fall short, the International Energy Agency reported May 5.

Government action is needed to ensure adequate supplies of minerals such as nickel, cobalt and rare earth elements that are vital to the world’s electric vehicles, power grids, wind turbines and other technologies, the Paris-based organization said. Otherwise, a lack of raw materials could stymie the world’s transition to cleaner energy, the organization concluded.

“Today, the data shows a looming mismatch between the world’s strengthened climate ambitions and the availability of critical minerals that are essential to realizing those ambitions,” IEA Executive Director Fatih Birol said in a news release. “The challenges are not insurmountable, but governments must give clear signals about how they plan to turn their climate pledges into action.”

The agency called on international governments to promote innovation along the supply chain, boost recycling efforts and take other measures to guarantee critical mineral supplies.

Deep-sea mining tests resume as lost robot rescued

Belgium’s Global Sea Mineral Resources (GSR) resume tests on Friday that could lead to the mining of battery minerals from the Pacific Ocean floor after it managed to recover a robot stranded at a depth of thousands of metres.

The company reported Wednesday that its Patania II, a 25-tonne mining robot prototype, had uncoupled from a 5km-long (3.1 miles) cable connecting it to the surface.

The unit of Belgium’s DEME Group is with a group of European scientists to determine the environmental impacts of deep-sea mining. They are working on GSR’s concession in the Clarion Clipperton Zone.

“It’s ironic that an industry that wants to extract metals from the seabed ends up dropping it down there instead,” Sandra Schoettner, deep-sea biologist from Greenpeace Germany, said in a statement. “This glaring operational failure must act as a stark warning that deep sea mining is too big a risk.”

Sandra Schoettner, deep-sea biologist from Greenpeace Germany

“We are taking a cautious, step-by-step approach to project development. We conduct these trials to better understand the challenges involved so we can continuously refine our technology,” Kris Van Nijen, managing director of GSR, said in its media statement.


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