May Newsletter – 28.05.2021


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Super Cycle 2.0? A discussion with Jeffrey Currie, Global Head of Commodities Research – Goldman Sachs

Date – 02 Jun 2021 (Wednesday)

Time – 4:00pm HK time / 9:00am UK time

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  • U.S. senators introduce nuclear power credit to help curb emissions
  • Mining a Path to Rare-Earth Supply Chains
  • Coal Hits A Three-Year High Despite China Trying To Control Prices
  • AVZ Minerals boosts confidence in Manono lithium project with resource upgrade
  • Biggest copper mining project in decades begins production
  • Poland to take over coal assets from its utilities in 2022
  • Biden looks abroad for electric vehicle metals, in blow to U.S. miners
  • Congo to review cobalt mining deals, China jeopardized

U.S. senators introduce nuclear power credit to help curb emissions

Three Democratic U.S. senators introduced a measure on Wednesday to boost existing nuclear plants to a wide energy tax reform bill, after the Biden administration pushed for such a change to help curb carbon emissions.

Senator Ben Cardin introduced the amendment on the tax production credit with fellow Democrats, Senators Sheldon Whitehouse and Bob Casey.

“We’re in danger of seeing the premature closing of the nuclear reactors in this country,” Cardin said before introducing the amendment at a hearing considering the wider bill, the Clean Energy for America Act. Cardin did not ask for a vote on the measure, a move to allow time to refine it as legislation advances.

The bill, Democratic Senator Ron Wyden’s package of long term incentives for clean energy and clean vehicles that removes some tax breaks for fossil fuels, passed the Senate Finance Committee later in the day on a party line vote.

Mining a Path to Rare-Earth Supply Chains

U.S. officials must show that safe mining for rare earth materials is essential to build reliable supply chains for critical materials.

Prompted by a worldwide chip shortage already impacting automobile production, President Joe Biden in February signed an executive order directing a 100-day broad review of supply chains for critical materials, including for semiconductors, large-capacity batteries, and rare-earth elements.

The stark truth that this review should highlight is that the United States and its Western allies have been left behind at the starting gate in a race only China seems to have realized was on.

The Chinese began building their now-dominant supply chain decades ago. The U.S. has been 100% net import reliant on rare-earth elements, with 80% of those imports sourced from China.

Coal Hits A Three-Year High Despite China Trying To Control Prices

Commodity prices buffeted by the Chinese government’s crackdown on speculative trading are reversing losses made earlier this week with coal leading the way up.

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Australian coal miners get an unexpected boost from rising prices.

Thermal coal used to produce electricity rose above $100 a ton on Monday and was last trading at $106/t, the highest in three years.

Strong demand for power in China coupled with a slowdown in local coal production has combined with a ban on Australian coal imports to create perfect conditions for the price to continue rising.

The unexpected coal-price revival has sparked a recovery in the share prices of Australian coal mining companies which have been able to find markets to replace China.

Whitehaven Coal which had seen its share price on the Australian stock market weaken for much of the past 12-months has enjoyed a 25% share price rise over the past two weeks.

AVZ Minerals boosts confidence in Manono lithium project with resource upgrade

As it rapidly advances its Manono hard rock lithium project in the Democratic Republic of Congo, AVZ Minerals (ASX: AVZ) has revealed an updated resource with more mineralisation now in the indicated category.

AVZ noted pit floor drilling of the “wedge” beneath the proposed Roche Dure pit floor, which was previously regarded as waste, has bumped more resources into the indicated category.

Indicated resources for Roche Dure have increased by 12 million tonnes, with measured and indicated combined totalling 274Mt at 1.66% lithium, 830 parts per million tin, and 35ppm tantalum for 4.53Mt of contained lithium.

All up, including inferred, indicated and measured, the resource stands at 401Mt at 1.65% lithium, 752ppm tin, and 34ppm tantalum for 6.64Mt of lithium.

To update the resource, AVZ dewatered the Roche Dure pit and drilled nine diamond holes, with all holes collared in pegmatite. Fresh spodumene-bearing pegmatite was also encountered within the first 10m in all holes bar one, which hit this material from 16m.

“These additional tonnes, located at shallow depth in the existing pit, are expected to result in fundamental improvements to the mine design and schedule as the optimised mine model will treat the wedge material as ore, rather than waste,” AVZ managing director Nigel Ferguson explained.

Biggest copper mining project in decades begins production

Canada’s Ivanhoe Mines (TSX: IVN) has begun producing copper concentrate at its Kamoa-Kakula project in the Democratic Republic of Congo (DRC) months ahead of schedule as the metal continues to trade close to all-time highs.

Kakula, the first mine planned at the concession, is initially forecast to generate 3.8 million tonnes of ore a year at an average feed grade “well in excess of 6% copper” over the first five years of operation, the company said.

Ivanhoe and partner Zijin Mining said first ore was introduced into the concentrator plant on May 20 to perform initial hot commissioning tests on the ball mills and other processing equipment.

As of May 25, 5% to 6% of copper ore was being conveyed directly from Kakula’s underground mining operations to the run-of-mine stockpile and the concentrator.

Poland to take over coal assets from its utilities in 2022

WARSAW, – The Polish government will complete its takeover of coal assets from state-run utilities – PGE, Enea and Tauron in the second or third quarter of 2022, a draft document published by the state assets ministry said.

Poland generates most of its electricity from polluting coal, but under rising pressure from the European Union and with carbon emission costs surging, it has encouraged more investment in low emission sources.

The government plans to take over the coal assets owned by its utilities, except from hard coal mines, and then transfer them to a new state-owned company.

The coal assets are associated with high levels of debt and their continued use has weighed on the financial results of the state-run energy groups.

Officials have said the industry needs a new model to help it fund green projects as banks have shied away from backing coal-dependant companies.

Environmentalists have slammed the proposal, saying it does not solve the coal problem in Poland.

Biden looks abroad for electric vehicle metals, in blow to U.S. miners

U.S. President Joe Biden will rely on ally countries to supply the bulk of the metals needed to build electric vehicles and focus on processing them domestically into battery parts, part of a strategy designed to placate environmentalists, two administration officials with direct knowledge told Reuters.

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U.S. President Joe Biden delivers remarks after touring Ford Rouge Electric Vehicle Center in Dearborn, Michigan, U.S.

The plans will be a blow to U.S. miners who had hoped Biden would rely primarily on domestically sourced metals, as his campaign had signalled last autumn, to help fulfill his ambitions for a less carbon-intensive economy.

Rather than focus on permitting more U.S. mines, Biden’s team is more focused on creating jobs that process minerals domestically into electric vehicle (EV) battery parts, according to the people.

Such a plan would help cut U.S. reliance on industry leader China for EV materials while also enticing unions with manufacturing work and, in theory, reduce pandemic-fueled unemployment.

Congo to review cobalt mining deals, China jeopardized

Beijing [China], May 25 (ANI): President of the Democratic Republic of Congo (DRC), Felix Tshisekedi said that he wants to review a number of deals struck with foreign mining companies in a move that could have an impact on China’s ambitions to become the world’s leading manufacturer of electric cars.

“I have really had enough. I am very severe with these investors who come to enrich themselves. They come with empty pockets and leave billionaires,” he said, reported South China Morning Post (SCMP).

“It is time for the country to readjust its contracts with miners to seal win-win partnerships,” Tshisekedi said.

The deals had been “badly negotiated [by corrupt officials]”, he said, adding, “Worse, the little which returns to the state, they put in their own pockets.”The Central African nation is the world’s biggest producer of cobalt, which is an essential component in the batteries used to power electric vehicles and appliances like smartphones, tablets and laptops.


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