May Newsletter – 17.05.2022

  • Anglo American to return to Zambia with Arc Minerals copper deal
  • Canadian board recommends rejection of Baffinland bid to mine more iron ore
  • Chinese miners and battery makers team up in rush for lithium
  • Once-Forsaken Copper Country Is Back in the Spotlight
  • Copper price recovers as China covid cases ease
  • Pentagon asks Congress to fund mining projects in Australia, Britain
  • Hudbay suffers major Rosemont copper project setback in Arizona
  • Sinosteel signs $690 million deal for Cameroon iron ore mine

Anglo American to return to Zambia with Arc Minerals copper deal

CAPE TOWN, May 12 (Reuters) – Arc Minerals (ARCMA.L)shares jumped 6.7% on Thursday after it announced an agreement under which Anglo American (AAL.L) would take majority control of the junior exploration firm’s Zambia copper-cobalt licences.

Under the deal, which was first reported by Reuters, Anglo will take 70% of a joint venture with Arc that will own licenses to explore Zambia’s copper-rich North-Western province, an area Anglo previously explored in the late 1990s. It would mark the first new investment by Anglo in Zambia in 20 years.

Major mining firms are searching for new sources of the battery metals copper and cobalt, especially following the war in Ukraine and sanctions on Russia which have sent metal prices soaring.

Anglo American will pay $3.5 million into Arc upon signing. It will be able to retain its stake by spending $74 million on exploration within seven years of signing and making cash payments of $11 million to Arc, according to terms of the deal.

Canadian board recommends rejection of Baffinland bid to mine more iron ore

Mary River project location

A Canadian review board on Friday cited environmental concerns as it recommended the government reject Baffinland Iron Mine Corp’s request to double production at its Mary River iron ore mine on Nunavut’s Baffin Island, a C$1.3 billion project that has divided the Inuit community.

The Nunavut Impact Review Board’s decision is expected to heavily influence the federal Ministry of Northern Affairs, which will make a final ruling later this year.

Board chairperson Kaviq Kaluraq said in a letter that the proposal had “the potential to result in significant adverse ecosystemic effects on marine mammals and fish … and these effects could lead to associated significant adverse socio-economic effects on Inuit harvesting, culture, land use and food security.”

Baffinland CEO Brian Penney said: “We will be asking the federal government to consider all of the evidence and input and to approve the Phase 2 application with fair and reasonable conditions.”

Canada’s federal budget outlines more than C$3 billion for critical minerals, including digging new mines, signaling the importance of mining to the country’s future.

Chinese miners and battery makers team up in rush for lithium

Chinese miners and battery makers are forging closer ties as the accelerating shift to electric vehicles highlights the shortage of a metal that’s key to the clean-energy revolution.

Lithium jumped more than 400% in China over the past year, unnerving Beijing and sparking a flurry of deals from Argentina to Zimbabwe. Battery manufacturers are rushing to secure supplies of lithium — a silvery-white material used in power packs — as EV demand pushes prices higher.

Chinese battery maker Gotion High-tech is looking at cooperating with Argentina’s State-owned miner Jujuy Energía y Minería Sociedad del Estado, while weighing the construction of a lithium carbonate refinery in the region. In Zimbabwe, Chengxin Lithium Group Co. and Sinomine Resource Group Co. are setting up a joint venture to explore for the metal.

“Much of the new developments involve smaller players in China looking to secure resource supply overseas, a strategy that China has employed to gain control of the supply chain,” said Allan Ray Restauro, analyst at BloombergNEF. Nationalization in some countries may pose a risk to that strategy, he said.

Once-Forsaken Copper Country Is Back in the Spotlight

For years, western mining companies have largely avoided the central African copperbelt.

Workers load batches of copper sheets ready for shipping inside a warehouse facility in Mufulira

Mining investors are stampeding back into a region many had seemed determined to leave.

Straddling the border of Zambia and the Democratic Republic of Congo, a vast forested area roughly the size of Portugal contains one of the world’s richest caches of minerals: copper for wires and cables, and cobalt for rechargeable batteries. At the intersection of the two African nations, trucks queue for about 53 kilometers (33 miles) along a cratered road snaking past giant mounds of mining residue and villagers selling stacks of watermelons — most of them carrying metals vital to the global energy transition.

But despite the lucrative resources, western mining companies have for years put more effort into trying to get out of, than into, the central African copperbelt, increasingly frustrated by a litany of policy u-turns and cash grabs.

Suddenly that’s no longer the case.

Existing investors are doubling down, and others — like giant BHP Group — are sniffing around the region for the first time in years. First Quantum Minerals Ltd. finally approved a billion-dollar expansion in Zambia, while Barrick Gold Corp., which considered selling its Zambian mine and is an outspoken critic of the Congolese government, is hunting for new projects in both countries. Anglo American Plc announced a new joint venture in Zambia on Thursday.

Copper price recovers as China covid cases ease

Copper price rebounded on Wednesday as slowing covid-19 infections in top metals consumer China eased near-term demand concerns, even as enduring pandemic-related lockdowns weighed on sentiment.

Copper for delivery in July rose 2.3% from Tuesday’s settlement price, touching $4.25 per pound ($9,350 per tonne) midday Wednesday on the Comex market in New York.

The most-active June copper contract on the Shanghai Futures Exchange was up 0.3% at 71,641 yuan ($10,666.42).

Shanghai said half the city had achieved “zero-COVID” status, but uncompromising restrictions had to remain in place under a national policy.

Lockdowns in China and worries over aggressive US interest rate hikes this year have weighed on base metals, with copper hitting its lowest in almost eight months on Monday.

“Hedge funds are turning increasingly bearish on the copper market amid mounting evidence that global manufacturing activity is starting to stall,” wrote Reuters columnist Andy Home.

Pentagon asks Congress to fund mining projects in Australia, Britain

The Ashton coal mine in Australia. Washington is trying to reduce its dependence on China to make a range of technologies.

WASHINGTON (REUTERS) – The US Department of Defense has asked Congress to let it fund facilities in the United Kingdom and Australia that process strategic minerals used to make electric vehicles and weapons, calling the proposal crucial to national defence.

The request to alter the Cold War-era Defense Production Act (DPA) came as part of the Pentagon’s recommendations to Congress for how to write the upcoming US military funding bill, known as the National Defense Authorization Act.

Congress may reject or accept the proposed changes when it finalises the bill later this year.

Washington is trying harder to reduce America’s dependence on China for lithium, rare earths and other minerals used to make a range of technologies. Existing law bars DPA funds from being used to dig new mines, but they can be used for processing equipment, feasibility studies and upgrades to existing facilities. Currently, only facilities in the United States and Canada are eligible for DPA funding.

Adding Australia and the United Kingdom, the Pentagon said in the request to Congress, would “allow the US government to leverage the resources of its closest allies to enrich US manufacturing and industrial base capabilities and increase the nation’s advantage in an environment of great competition.”

Relying only on domestic or Canadian sources, the Pentagon said, “unnecessarily constrains” the DPA program’s ability to “ensure a robust industrial base”.

Hudbay suffers major Rosemont copper project setback in Arizona

Hudbay has already revegetated an area disturbed while working on the utility corridor at the Rosemont project.

Canada’s Hudbay Minerals (TSX: HBM; NYSE: HBM) has suffered a fresh setback in its bid to build the Rosemont open pit copper project in Arizona following a decision by the US Court of Appeals for the Ninth Circuit declining to overturn a 2019 decision that blocked the project.

In a split decision, the court agreed with the District Court of Arizona’s 2019 ruling that the US Forest Service relied on incorrect assumptions regarding its legal authority and the validity of Rosemont’s unpatented mining claims in issuing the final environmental impact statement.

Circuit Judge William Fletcher said on behalf of the majority panel that no one disputed that Rosemont had valid mining rights on the land where it planned to dig the 3,000-feet deep by 6,500-feet wide open pit mine. But, the 1.9 waste rock that the company planned to dump on 2,447 acres of Coronado National Forest land was the crux of the issue.

Rosemont proposes to dump 1.9 billion tonnes of waste rock near its pit on 2,447 acres of National Forest land. The pit itself will occupy just over 950 acres.

“When operations cease after 20 to 25 years, waste rock on the 2,447 acres would be 700 feet deep and would occupy the land in perpetuity,” Justice Fletcher said in a written decision.

Sinosteel signs $690 million deal for Cameroon iron ore mine

China’s Sinosteel Corp. has signed a $690 million contract to exploit an iron ore mine in southern Cameroon amid a push to cut Chinese reliance on Australian and Brazilian ore.

Sinosteel will produce 10 million tons of ore annually containing 33% iron from the Lobe mine, Zheng Zhengao, who heads the Cameroonian subsidiary told reporters in the capital, Yaounde. It will then enrich the output to produce 4 million tons of high-grade ore with more than 60% iron content, he said.

The Chinese company signed a 50-year contract with the central African government to exploit the Lobe deposit, which contains an estimated 632.8 million tons of iron ore.

The signing comes nearly a decade after Sinosteel first expressed interest in the mine.


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