November Newsletter – 05.11.19



  • Massive mining waste dams could pose deadly risks, say investors
  • BHP puts $44m towards Samarco restart
  • Hindustan Zinc lines up $2bn investment to ramp up production
  • LME Week: Zinc fundamentals and forecast
  • Electric vehicles, other new technologies bode well for tin demand
  • Europe assesses five new critical minerals in low carbon quest
  • China cites ‘early harvest’ benefits in Guadalcanal deal
  • Australian Govt unveils training plan for new miners


Massive mining waste dams could pose deadly risks, say investors

LONDON (Reuters) – A global inquiry into how mining companies store billions of tonnes of waste in huge dams, launched after a collapse in Brazil killed hundreds, shows about a tenth of the structures have had stability issues, investors said on Thursday.

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The research was led by the Church of England (CoE) and fund managers after the collapse of a Vale (VALE3.SA) dam in January unleashed an avalanche of mining waste on the Brazilian town of Brumadinho, killing an estimated 300 people.

The investor review, which found at least 166 dams have had stability issues in the past, relied on companies’ disclosures about their dams holding mining waste, known as tailings.

However less than half of the 726 companies contacted have responded, with most Chinese and Indian miners not providing information, leaving a significant hole in efforts to create a global picture of safety risks posed by these dams and avoid another disaster.

“Tailings dams are amongst some of the largest engineered structures in the world and we have seen the catastrophic consequences earlier this year in Brazil when they collapse,” said Adam Matthews, ethics director at the CoE Pensions Board, a global investor with assets worth more than $3 billion.

BHP puts $44m towards Samarco restart

PERTH ( – Mining major BHP has approved $44-million in funding to restart one of the Samarco concentrators, in Brazil.

The announcement comes just days after the Samarco joint venture (JV), with iron-ore major Vale, was granted all the necessary environmental licences to restart operations in the state of Minas Gerais, following the 2015 collapse of a tailings dam, which claimed the lives of 19 people and displaced numerous others.

The restart of operations has been targeted for the end of 2020.

The Samarco JV earlier this week said that the restarted operations would be using new technologies for dry tailings stacking, and for this reason, the operational restart of iron-ore extraction and beneficiation plants in Germano, and the pelletising plant in the Ubu complex, located in Anchieta, state of Espírito Santo, will only occur after the implementation of a filtration system.

BHP on Friday said that the $44-million in funding would enable the construction of a filtration plant over the next 12 months and the commencement of operation readiness activities.

Hindustan Zinc lines up $2bn investment to ramp up production

KOLKATA ( – India’s largest zinc miner, Hindustan Zinc Limited (HZL), part of Vedanta Group, has lined up an estimated $2-billion for capital investments over the next five years to ramp up metal production to 1.5-million tons a year, up from 800 000 t/y currently.

“We have already started working on increasing zinc production to 1.3-million tons a year and it will take two to three years to reach this level. Thereafter, we will aim for production of 1.5-million tons a year, which would take another two years,” HZL CEO Sunil Duggal said in a statement.


LME Week: Zinc fundamentals and forecast

The long-expected supply response in the zinc sector is well under way and continues to gather pace.

An estimated 1.24 million tonnes per year of mine capacity came onstream in 2018-19; this process will accelerate in 2020.

Projects such as Gamsberg in South Africa and Century in Australia are due to ramp up to full capacity and will be boosted by additional capacity. Glencore’s Zhairem mine in Kazakhstan is due to start operations. Mining is set to resume at Penoles’ Capela mine (formerly the Rey Del Plata mine) in Mexico, which closed in 2001.

And expansions at Lundin’s Neves Corvo mine in Portugal and Southern Copper’s Buenavista mine on the US-Mexico border will provide an additional 160,000 tpy.

But strict environmental controls in China and disruptions at smelters elsewhere have prevented any rise in output of refined metal. This has delayed a rebalancing of the fundamentals of the refined zinc market, which will remain structurally tight for the rest of 2019, making it another consecutive year of structural deficit and putting additional pressure on low metal stocks.

Still, following summer maintenance work, the bottleneck in the supply chain that was evident in the first half of 2019 has started to loosen. As a result, we believe that the refined zinc market will be essentially balanced in 2020 before returning to surplus in 2021.

At the same time, the outlook for zinc demand appears increasingly gloomy. While stimulus measures will support infrastructure-related consumption in China, demand from the automotive sector faces significant headwinds. Light-vehicle sales globally are set for their first annual contraction in a decade – since the height of the financial crisis.

Even construction activity, which until recently had been robust, appears to be slowing. Falling prices and margins among steelmakers are increasing the downside risks for demand in the year ahead.

We forecast a base-case for the London Metal Exchange cash zinc price of $2,381 per tonne in 2020; this would be a fall of 7.1% from an average of $2,564 per tonne that we currently forecast for 2019.

LME zinc cash price, $/t

2019 forecast average price


2020 forecast average price


Electric vehicles, other new technologies bode well for tin demand

The global tin market has entered what has been described as an interesting phase with the diversification of applications in existing and new technologies, amid market dynamics that are shaking stability in the short term.

It has been predicted that tin, which has long been prized for its application in solders and traditional lead-acid batteries, will be most impacted on by the development of future technologies.

“Tin’s extensive use in solders (which are heavily used in the consumer electronics industry) makes it the metal that glues the technology revolution together, and new applications, such as in emerging lithium-ion batteries, tend to grow as technology advances and diversifies,” says research and consultancy firm Roskill.

This means there will be significant opportunities for the tin market’s growth, which could exacerbate an already present demand-supply gap.


Europe assesses five new critical minerals in low carbon quest

LONDON (Reuters) – The European Commission is assessing five new minerals for possible inclusion in a revised list of critical raw materials to be published next year, as it seeks to bolster supply chains for a low emissions economy, a senior Commission official said.

The European Union, the United States and Japan are among Western powers to have compiled lists of the most strategic minerals in response to China’s dominance of minerals used in electric vehicles and other high-tech applications.

Minerals are judged critical or strategic because of their scarcity, their use in high-tech economies and the risk of supply disruption.

The EU has had a list since 2011, which it has revised every three years.

An update is expected in the first part of 2020, as the EU executive seeks to define the minerals most relevant to today’s economy and how the import-reliant bloc can guarantee supplies.

Peter Handley, head of the Commission’s resource efficiency unit, told Reuters the Commission was assessing arsenic, cadmium, hydrogen, strontium and zirconium ahead of the publication of the new list.

Cadmium is valued in Europe because of its use in some battery technology and hydrogen is “crucial for decarbonization of EU industry”, Handley said.

Zirconium is used in the nuclear industry, while strontium has applications in magnets. Arsenic is used in semi-conductors.

For now, the EU has a list of 27 critical raw materials compared with the United States’ list of 35, published in 2018. Japan designated 30 minerals as strategic in 2012.

All three governments will take part in trilateral discussions on critical resources in Brussels in November.

The talks have been held annually after China’s decision to put quotas on overseas shipments of rare earths in 2010, which drove up prices and focused world powers on efforts to cooperate to protect their own supply chains and cut reliance on China.

Japan and the EU are heavily dependent on imports of many minerals and all three powers have yet to challenge China’s dominance of production of rare earth metals, used in advanced electronics.

Some analysts question what the trilateral talks can achieve in a context of global trade tension and national self interest.

Commission Vice President Maros Sefcovic, who has led EU efforts to accelerate electric battery production, told Reuters the EU sought short, clean supply chains.

“The recipe for success is to be very strategic and to cover the whole stage of the production cycle,” Sefcovic said.

“We have a clear ambition. The best and cleanest cars on the planet will be manufactured in Europe. Only battery vehicles respecting these extremely high standards will be driven on the roads in Europe.”


China cites ‘early harvest’ benefits in Guadalcanal deal

SYDNEY (Reuters) – Chinese companies will build and control power and port facilities, roads, rail and bridges on Guadalcanal, in the Solomon Islands, as part of an $825 million deal to revive an abandoned gold mine, according to new contract details.

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FILE PHOTO: The national flags of Solomon Islands and China flutter at Tiananmen Square in Beijing, China October 7, 2019. REUTERS/Stringer/File Photo

The gold project agreement, described by Chinese ambassador Xue Bing as an “early harvest” of the new diplomatic tie-up between Beijing and Honiara, gives Chinese interests an increased foothold in the Pacific, long under the influence of the United States and its allies.

While locals initially expressed fears the Gold Ridge mine deal would saddle the island nation with debt, those attending a weekend ceremony at the mine site were told the Solomons will not pay for the project infrastructure, according to a recording of proceedings reviewed by Reuters.

The Solomons will, however, not own the infrastructure.

A company majority-owned by Hong Kong-listed Wanguo International Mining (3939.HK), which has the project rights, will retain ownership of any project related-infrastructure, according to the project terms presented to attendees.

Wanguo has contracted state-owned China State Railway Group $825 million to complete the works over several phases.

Those attending the ceremony at the mine site, located about 30km (20 miles) south of the Solomons capital of Honiara, were told the large contract would involve a significant infrastructure component beyond the immediate mine site.

“Only China, proceeding from the friendship and wellbeing of the local people, is ready to overcome all obstacles to undertake this project by planning to build roads, bridges mining facilities and a hydropower station,” said Xue, according to the recording.

A separate announcement from China Rail in September also said the contract included port work.

The infrastructure will be built in and around Honiara on the island of Guadalcanal, a strategic Pacific location that saw fierce fighting in World War Two.

While the Solomons government, China Rail and the project operators have denied any political involvement in the mining deal, it was presented at the project ceremony as an example of what the new relationship between China and Solomons can deliver.

The agreement was announced in mid-September, coinciding with a decision by the Solomons government to switch diplomatic ties from Taiwan to Beijing, angering the United States in the process.

“This is not only a new beginning of the Gold Ridge mine; but also a very important early harvest of the friendly cooperation between China and Solomon Islands which established diplomatic relations just 35 days ago,” said Xue, who is the Chinese ambassador to the nearby Papua New Guinea.

Solomons landowners and politicians, Chinese officials, and representatives of China Rail and Wanguo were at the ceremony, said a source who attended.

Solomon representatives were repeatedly reassured the Pacific nation would not be subjected to a “debt-trap”, an allegation used against China by the United States. [nL2N26901D]

Wanguo did not immediately respond to questions. The Solomons government, which did not immediately respond to questions on Wednesday, has previously said it was a private sector deal and was not privy to the commercial arrangements.

Solomons opposition lawmaker Peter Kenilorea told Reuters the Gold Ridge agreement was opaque and its terms needed to be better explained.


Australian Govt unveils training plan for new miners

PERTH ( – The Australian government on Friday announced a Skills Organisation Pilot aimed at giving trainees and apprentices skills to better match the needs of the mining industry.

The pilot programme forms part of a A$525-million reform of the vocational education and training (VET) system.

Prime Minister Scott Morrison says the pilot will ensure more Australians are able to get a highly-skilled job.

“This is about making sure more Australians are able to find a job, particularly kids in remote areas. I want these kids to come out of training college with the skills they need to go land a job in the mining industry.”

“We need to make sure we are teaching the skills employers are demanding whether they be heavy diesel fitters, automotive electricians, communication technicians or mine engineers,” Morrison said.

“I know that mining is a high-skill, high-wage industry and this is a further statement of confidence in the industry’s future. It recognises mining’s critical role as a creator of job opportunities in regional and remote Australia, including for Aboriginal and Torres Strait Islander Australians.

“A stronger mining sector means a stronger Australian economy.”

Minister for Employment, Skills, Small and Family Business Michaelia Cash said the Australian government is committed to a strong VET system that is able to deliver a strong and adaptable workforce, and provide employers with access to the skilled workforce needed to grow their businesses.

“Australia’s mining services sector creates jobs, builds skills, and attracts investment supporting more Australian jobs. Strengthening this sector is just one more step we are taking toward strengthening our economy and generating more jobs for more Australians.”


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