May Newsletter – 12.05.2020
- Demand for battery metals to jump 500% by 2050
- Metals markets to move into surplus — report
- Great Bear hits high grades at Dixie, shares up
- China stainless steel hits nine-month high as domestic demand recovers
- US Takes Steps to Answer China’s Rare Earth Elements Monopoly
- RPT-COLUMN-Iron ore, coking coal divorce over China’s coronavirus recovery: Russell
- Rio Tinto dodges climate reporting fire, but issue unlikely to go away
- China’s Shandong Gold to buy Canadian miner TMAC Resources for almost $165 million#
Demand for battery metals to jump 500% by 2050
Production of battery metals such as graphite, lithium and cobalt will have to increase by nearly 500% by 2050 to meet the growing demand for clean energy technologies, the World Bank reported Monday.
According to the global lender, over 3 billion tonnes of minerals and metals will be needed to deploy wind, solar and geothermal power, as well as the energy storage required to transition to a low-carbon economy.
Many of the critical minerals used to make batteries for electric vehicles are found in developing nations. The World Bank’s goal is to help those nations to mine those commodities in a sustainable manner to avert major ecological damage.
MINING THE OVER 3 BILLION TONNES OF MINERALS AND METALS THE WORLD WILL NEED BY 2050 IS SEEN AS THE ONLY PATH TO LIMITING GLOBAL WARMING TO 2°C OR LESS
Mining the vast amount of key commodities the world will need is seen as the only path to achieving the goals of the Paris Agreement. The accord seeks to limit global warming to 2°C or less.
The Minerals for Climate Action report says the world will require global carbon emissions of greenhouse gases to be reduced by 50% by 2030 and to net-zero by 2050.
The finds confirm the premise of a first report, published in 2017, which warned that the more ambitious climate targets become, the more minerals and metals will be needed.
While renewables and energy storage technologies require more minerals, the carbon footprint of their production — from extraction to end-use — will account for only 6% of the greenhouse gas emissions generated by fossil fuels.
The report also calls for more recycling and reuse of minerals and notes that even if recycling rates were scaled up for minerals like copper and aluminum by 100%, recycling and reuse would still not be enough to meet the demand for renewable energy technologies and energy storage.
Metals markets to move into surplus — report
Most metals markets will move into surplus in 2020 due to the covid-19 pandemic, according to Fitch Solutions latest market report.
The research agency has revised down its forecasts for both consumption and production of metals for a number of countries over recent weeks.
“Operational hurdles as a result of covid-19, especially for smelters located in countries where governments ordered lockdowns, and voluntary production curtailments as a result of the collapse in metal prices will result in lower 2020 metal production compared to our previous forecasts,” Fitch analysts say.
The firm expects that global recession in 2020 will hamper metals demand as end-use sectors, including autos, construction and home appliances enter a lull.
Select Metals – Global Consumption Growth (% change y-o-y) – Source: USGS, WSA, Fitch Solutions
Fitch expects global copper production to grow by 0.6% y-o-y in 2020, a steep drop from the previous forecast of 1.9% y-o-y growth.
China copper production declined by 2.5% year-on-year in March to 771,000 tonnes, according to the National Bureau of Statistics, due to coronavirus disruptions.
While the country’s lockdowns have been lifted, Fitch expects supply chain disruptions affecting copper concentrate imports, as lockdowns in Latin America tighten the seaborne market, to hamper Chinese refined copper production further in Q2 2020, before a slight recovery in H2 2020.
Great Bear hits high grades at Dixie, shares up
Great Bear Resources (TSX: GBR) announced on Monday that it has intersected the deepest and highest-grade interval to date on its flagship Dixie gold Project in the Red Lake district of Ontario.
The company said that drilling intersected deep extensions of the Dixie Limb around 740 metres below surface and new Hinge zone-style veins around 840 metres below surface, which doubles the known depth of gold mineralization.
The hole intersected the widest high-grade gold interval in the Dixie Limb zone to date, Great Bear said.
Results included 10.2 grams per ton (g/t) gold over 19 metres, including 68.6 g/t over 2.7 metres, which itself included 133.5 g/t over 1 metre.
DRILLING INTERSECTED THE WIDEST HIGH-GRADE GOLD INTERVAL IN THE DIXIE LIMB ZONE TO DATE
“With our first deep drill hole, we have doubled the known vertical extent of the Dixie Limb and intersected new Hinge zone style veins that may represent extensions to the Hinge zone,” Chris Taylor, President and CEO of Great Bear said in the media release.
“These results define a new, high-priority exploration target that has the potential to combine the predictable geometry of the Dixie Limb zone with the higher gold grades of the Hinge zone.”
Great Bear initially acquired the Dixie project in 2015 and consolidated its interest to 100% in 2017.
Midday Monday, Great Bear’s stock was up 11.3% on the TSXV. The company has a C$587 million market capitalization.
China stainless steel hits nine-month high as domestic demand recovers
BEIJING (Reuters) – Chinese stainless steel futures surged on Monday, hitting their highest level in over nine months as domestic demand continued to pick up after coronavirus-related shutdowns.
The most-traded stainless steel futures contract on the Shanghai Futures Exchange, for June delivery, rose as much as 4.4% before ending the session 4.0% higher at 13,675 yuan ($1,931.55) a tonne, the highest since August 1.
“The purchasing demand at downstream sectors (for stainless steel) has been good,” said Fu Zhiwen, an analyst with Huatai Futures.
“There had been worries of an export impact on consumption, but not obviously affected so far.”
Apart from a revival in demand, prices also rose on concerns about the supply of raw materials such as nickel and chrome, according to a contact at a stainless steelmaker who requested not to be named.
The top two nickel miners in the Philippines have gradually resumed mining and shipping operations since May after coronavirus-led disruptions. But the trader said output was still lower compared with a year earlier.
Other steel futures on the Shanghai exchange were range-bound, with the October contract of construction rebar dipping 0.1% to 3,452 yuan a tonne while hot-rolled coil edged up 0.03% to 3,329 yuan for a sixth straight session of gains.
China’s monthly vehicle sales rose for the first time in almost two years in April as more customers visited showrooms after the economy began to open up and authorities loosened restrictions.
US Takes Steps to Answer China’s Rare Earth Elements Monopoly
There are 17 rare earth elements that America depends on for our military and civilian use. But we do not have the capability to mine and produce them; for that, we must rely on China.
Rare earth elements are not that rare; it is the extraction of the elements from the ore they are naturally found in that limits our ability to produce them ourselves.
Rare earth elements are vital components in our nation’s next generation weapons and are already a key component for some of our current military equipment. For most Americans, we find them in hybrid cars, reefing crude oil, special glass for welders, computer and television screens, and X-ray and MRI scanning systems. Modern cell phones use nine of the 17 rare earth elements.
From 1952 until the 1990s, the Mountain Pass mine in California was one of the world’s only suppliers of rare earth elements.
As Rick Mills explained in Mining.com in 1980, Nuclear Regulatory Commission (NRC) and International Atomic Energy Agency (IAEA) misclassified rare earth elements and placed the mining of them under the same regulation of thorium, a radioactive element that is removed when processing heavy rare earth elements. This error made the processing of rare earth elements an increasingly dangerous and costly business.
“New, onerous regulations on thorium made the mining and refining of thorium-bearing rare earth elements risky. Over the next two decades, the US rare earth mining industry collapsed,” Mills explained.
Mills noted that “rare earths are great multipliers they are used in making everything from computer monitors and permanent magnets to lasers, guidance control systems and jet engines. There is no substitute and no other supply source is available other than China.
Other countries also stopped processing these minerals due to the change in regulations and the companies strained to be profitable. China, an International Regulatory Agency observer, is not a signatory to its agreements and soon became the sole producer of rare earth elements.
In 2002, the only rare earth mine in the United States, Molycorp’s Mountain Pass closed. Over the next decade the status of the mine and its ownership changed several times. In 2014, it declared bankruptcy.
RPT-COLUMN-Iron ore, coking coal divorce over China’s coronavirus recovery: Russell
LAUNCESTON, Australia, May 11 (Reuters) – There is an increasing disconnect between the two key ingredients for making steel, with iron ore safely within China’s economic bubble and coking coal more exposed to the rest of the coronavirus-riddled world.
The main difference is that while China imports the bulk of the iron ore with which it feeds its 1 billion-tonne-a-year steel industry, it has a large domestic coking coal industry and imports only about 10% of its needs.
Benchmark spot 62% iron ore for delivery to China MT-IO-QIN62=ARG, as assessed by commodity price reporting agency Argus, ended last week at $88.30 a tonne.
While this was down 8% from its peak so far this year at $96 a tonne on Jan. 17, iron ore’s decline looks modest compared to the massive losses for other commodities, with both crude oil and liquefied natural gas at one point down more than 70% from their early 2020 peaks.
Iron ore is also outperforming coking coal futures on the Singapore Exchange, where valuations for the Australian free-on-board price, ending at $115 a tonne on May 8.
This was up from the low so far this year of $107.97 a tonne on May 1, but also down 29% from the year’s peak at $161.95 on Feb. 3.
Normally, iron ore and coking coal prices track each other fairly closely, but the weaker performance of coking coal shows the different dynamics of their underlying markets.
Rio Tinto dodges climate reporting fire, but issue unlikely to go away
MELBOURNE (Reuters) – Rio Tinto shareholders in Australia voted on Thursday against forcing the miner to set targets for the emissions of its steel-making customers, but the issue is unlikely to go away as more than a third supported the motion.
Investors have been pushing for corporate giants to cut back their emissions as part of a wider drive to combat global warming outlined in the Paris climate accord.
Rio Tinto, which makes around 85% of its profits from sales of iron ore, has come under increasing pressure given its huge exposure to the steel industry, one of the world’s heaviest polluters.
About 63% of shareholders in Australia voted against the resolution calling on Rio Tinto to set targets for its customers, called scope three emissions, while the other 37% voted in favour. The resolution was proposed by Friends of the Earth unit Market Forces and other investors.
“It is extremely problematic for the mining industry to set targets for the steel industry,” Rio Chairman Simon Thompson said.
“What Market Forces is asking us to do is set measures for a process we do not control and where we cannot even measure the starting point, nevermind any improvement.”
A similar climate change-related resolution failed at BHP Group, the world’s largest listed miner.
Rio late last year set targets to reach zero emissions by 2050, to cut emissions intensity by 30% and absolute emissions by 15% by 2030.
China’s Shandong Gold to buy Canadian miner TMAC Resources for almost $165 million
BEIJING (Reuters) – Shandong Gold Mining (600547.SS) (1787.HK), one of China’s biggest gold producers, said on Friday it had entered into an agreement to acquire Toronto-listed TMAC Resources (TMR.TO) for around C$230 million ($164.89 million).
TMAC operates the Hope Bay gold project in Canada’s far-north territory of Nunavut, which started commercial production in 2017 and had proven and probable mineral reserves totalling around 3.54 million ounces of gold at the end of 2019, according to the company’s website.
Shandong Gold will pay roughly US$149 million in cash to acquire all of TMAC’s shares at a price of C$1.75 per share, TMAC said in a separate statement, and will also purchase another 12 million shares at the same price in a private placement for around $15 million.
The key shareholders in TMAC, Resource Capital Funds and gold miner Newmont Corp (NEM.N), which together hold a combined 58.6% in the company, “have entered into voting support agreements to support the transaction,” the TMAC statement said.
The deal marks the latest acquisition of a Canadian resources company by a Chinese gold firm after Shandong Gold rival Zijin Mining (601899.SS) (2899.HK) in March completed its purchase of Continental Gold for C$1.3 billion.
It also comes after the coronavirus outbreak caused panicked investors drive prices for safe-haven gold XAU= to a more than seven-year high last month.