November Newsletter – 09.11.2020


  • Copper price jumps as China turns away Australian concentrate
  • BHP partners with Chinese to combat climate change
  • ‘You will pay’: China issues remarkable threat to Australia as Beijing warns of ‘tremendous’ economic damage if we continues to ‘side with the US’ – as they prepare for another round of crippling trade sanctions
  • Four dead, four missing in coal mine accident in China’s Shaanxi Province
  • Why Are All Swedish Cottages Painted Red?
  • Australian mining firms play down China’s import curbs
  • INTERVIEW: Pandemic rekindling interest in UK mining sector: Cornish Lithium
  • Not forever: World’s biggest pink diamond mine closes

Copper price jumps as China turns away Australian concentrate

The copper price on Friday attempted a fresh two-and-half year high, as Chinese smelters scramble to pick up concentrate on the spot market amid a political row between Beijing and Canberra.

On the Comex market, copper for delivery in December made gains for the fifth straight session, jumping more than 2% to $3.1740 a pound ($6,997 a tonne) in brisk trade. More than $5.5 billion worth of metal had traded by early afternoon in New York.

Friday’s trading brings the bellwether metal’s recovery since the height of the covid-19 induced sell-off, which sent the copper price crashing to below $2.00 a pound, to more than 63%.

Reports that China has unofficially banned Australian copper concentrate imports have forced refiners in the country, responsible for more than half the world’s copper consumption, to drastically lower treatment and refining charges (TC/RCs).

Australia only accounts for 5% of Chinese concentrate imports, but comes at the same time as covid-related disruptions and labour action in top producer South America.

In an indication of just how scarce copper for prompt delivery has become in China, spot treatment charges plunged to an eight-year low of just over $50 a tonne this week, a 30% decline from the 2020 high hit in March.

That is also well below the annual benchmark of $62 a tonne, and Reuters quotes a Singapore-based trader as saying spot rates could go lower still.

BHP partners with Chinese to combat climate change

BHP has launched a five-year partnership with steel producer China Baowu to focus on reducing the greenhouse gas emissions in the global steel industry.

The two companies have signed a memorandum of understanding with the intention to invest up to $US35 million ($48.1 million) into developing low carbon technologies and pathways to reduce the intensity of emissions in integrated steelmaking.

Together, BHP and China Baowu will share technical knowledge and deploy carbon, capture, utilisation and storage in the steel sector and investigate this at one of China Baowu’s production bases.

BHP’s investment will be funded under the $US400 million climate investment program the mining giant set up last year to prioritise projects, partnerships, research and development and joint ventures to reduce emissions, offsets and support technology to create change.

Chief executive officer Mike Henry said together the companies will collaborate on solutions to use low carbon fuel sources like hydrogen injection in blast furnaces, as well as exploring other low-emission options to support the transition of the steel sector into a low-carbon industry.

“This memorandum of understanding strengthens our longstanding relationship with China Baowu and reflects our joint determination and commitment to help reduce emissions in line with the Paris Agreement goals,” Henry said.

“BHP will invest in supporting the development of low emissions technologies, promote product stewardship and partner with others to enhance the global policy and market response to climate change.

“Our investments are focussed on actions that can create real change in emissions.”

Together, BHP and China Baowu will work to create a China Baowu-BHP low carbon metallurgy knowledge sharing centre to share green development knowledge with international industry stakeholders.

Last October, China Baowu announced it was establishing a low carbon metallurgy innovation centre and it has plans to develop a global low carbon metallurgy innovation alliance.

Chairman Chen Derong said the agreement with BHP will further enhance and broaden its existing strategic partnerships between the companies and establish a model of joint industrial efforts to promote transitions to a low-carbon world.

‘You will pay’: China issues remarkable threat to Australia as Beijing warns of ‘tremendous’ economic damage if we continues to ‘side with the US’ – as they prepare for another round of crippling trade sanctions

China has warned that Australia will suffer further economic pain if it continues to be part of the US administration’s ‘roughneck gang’.

A strongly worded editorial in the Communist Party mouthpiece, China Daily, blasted the Morrison government for ‘aggressively sending warships to China’s doorsteps’ as part of Exercise Malabar.

Australia’s decision to take part in the war games this week alongside Beijing’s Indo-Pacific rivals – the US, Japan and India – has outraged the authoritarian regime as tensions between the two countries rapidly deteriorate.

To punish Australia for pushing back against the totalitarian nation in the wake of the COVID-19 pandemic, which originated in the Chinese city of Wuhan, Beijing has threatened to ban an unprecedented number of Australia exports.

Several reports suggested all Chinese companies have been instructed by the Communist Party to stop buying Australian products, but there has been no official sanction.

This includes barley, sugar, red wine, timber, coal, lobster and copper as Beijing looks to turn the screws on Australia’s largest export market, worth more than $150billion.

Four dead, four missing in coal mine accident in China’s Shaanxi Province

A total of 42 miners were working in the mine operated by Qiaoziliang Coal Industry Co. Ltd. in Tongchuan City when the accident took place around 1 p.m.

Xian: A suspected gas outburst in a coal mine in northwest China’s Shaanxi Province on Wednesday left four dead while the search is on for four others who are believed to be missing.

A total of 42 miners were working in the mine operated by Qiaoziliang Coal Industry Co. Ltd. in Tongchuan City when the accident took place around 1 p.m. Among them, 34 workers have been lifted out safely.

Meanwhile, rescuers have retrieved the bodies of the four miners killed in the accident.

Experts have worked out gas discharge systems and restored ventilation, power supply and transportation under the mine to enable rescuers to carry out search and rescue operations.

Why Are All Swedish Cottages Painted Red?

For the last 53 years, Christer Anderberg has been happily painting his country cottage and the adjacent barns the same exact color—a bright crimson red with white trimmings on the windows. Down the street, the neighbors’ homes are the same color scheme, and up and along the Swedish countryside, the red continues, as if it were mandated. Nearly all countryside houses and barns in Sweden are voluntarily red, albeit in different shades.

The color, known specifically as Falu red, has been a consistent symbol of pastoral life in Sweden for the last century, an influence that thanks to the Swedish diaspora has seeped into bordering countries, like Norway and Finland, and even America, in the form of the big red barn. Today, the red paint can be bought in hardware stores across Sweden, though Anderberg (who is my father-in-law) recalls that when he was a kid, he saw people putting red pigment in buckets with water and flour to make the paint themselves. “They mixed it and boiled it,” he says.

For five decades, Anderberg’s country cottage property has been his pride and joy. While his primary residence is two hours south in the city of Malmö, the country cottage is a vacation home that he commutes to for holidays, weekends, and now whenever he wants because he’s retired. He bought it when he was in his 20s—a dilapidated centuries old property with a rotting foundation, and rebuilt it from the ground up. While there were a lot of decisions to make in the last 50 years, the color of the house was never up for debate. “The right color is always bright red,” he insists.

The source of the color is its namesake. Falu red comes from the Falun copper mine in central Sweden, which dates back to the 9th century. Today the mine is a museum and UNESCO World Heritage site, but at one point in history, it was the largest copper mine in Europe and the economic anchor of the Swedish kingdom. “In the 17th century, two-thirds of the Western world’s copper production came from Falun,” says Johanna Nybelius, an archeologist and museum educator at the mine. “At this time, Sweden was one of the great powers of Europe and everything was paid for with copper from Falun.” Of course, every mine has an expiration date and sure enough, copper resources started dwindling at the end of the 17th century; in 1687, the mine collapsed. “That was the end of the heyday,” says Nybelius. “From the 18th century, they started thinking about what they could do if there wasn’t that much copper. That’s when they really started turning up the production of the red paint. The idea is that it’s something to do when there’s nothing going on.”

Without any precious metals left, making red paint was a clever way to continue monetizing the mine. Falu red is a waste byproduct, made from leftover rocks and ores containing iron. Over time, the iron weathers to form iron oxide, which is the base for the unique pigment. That’s then washed, dried and burned. The heat transforms it from an earthy yellow to a brilliant red color. “In the drying oven, all the water disappears from the sludge and it changes color and begins to draw from yellow to red,” explains Martin Jansson, the CEO of Falu Rödfärg, the official Falu red paint company affiliated with the mine. The dry pigment is then ground, and mixed with water, flour and linseed oil to produce the paint. “For the first 200 years, it was a bright color because ovens weren’t that hot,” says Jansson. But today, thanks to precise temperature controls, multiple shades of Falu red exist, including a dark red and a black. The hotter the temperature, the darker the paint gets.

Australian mining firms play down China’s import curbs

Australian mining firms are playing down concerns about trade tensions with China, even as Canberra warns that trade risks are rising because of increased uncertainty over Chinese policy.

Many Australian producers are expecting exports of coal and other minerals to China to rebound ahead of the start of 2021, when a new quota system takes effect. But trade disruption appears to be increasing in the short term, with delays to customs clearances of Australian rock lobsters making it the latest item to be affected.

Coal exports to China have been subject to an unofficial ban since last month, while other products including barley, sugar, red wine, timber and potentially copper are being caught up in the disputes. Sandfire Resources, Australia’s fifth-largest copper producer, today noted “speculation” about a ban on Australian copper concentrate and ore imports into China but said its marketing was unaffected.

Trade tensions between Australia and China have been rising for several months, after Canberra backed calls for an international investigation into the spread of the Covid-19 pandemic from China.

Australian trade minister Simon Birmingham acknowledged that risk factors associated with trading with China have increased because of some unpredictable administrative decisions in Beijing. Concerns are rising that more commodities, including potentially LNG, could be added to the list, but Canberra is becoming increasingly conciliatory.

“Australia values our trading relationship with China,” Birmingham said yesterday. “It is mutually beneficial to both nations” as well as the broader region, he said. Birmingham called for issues to be resolved through dialogue to maintain the relationship “in a respectful way that is predictable and lowers the risk for businesses, rather than enhance those risks.”

Coal producers expect that Australian exports to China will rebound in December, ahead of new annual quotas in January. They interpret Beijing’s verbal instructions to stop importing Australian coal as reflecting higher-than-normal inflows in June and July, when many other importing nations were in lockdown and low seaborne prices encouraged Chinese traders to increase imports.

INTERVIEW: Pandemic rekindling interest in UK mining sector: Cornish Lithium

New York — The coronavirus pandemic had prompted more interest in local UK mining supply chains, helping the domestic industry refocus after it losing its “mojo” somewhat by relying too much on China, Cornish Lithium CEO Jeremy Wrathall told S&P Global Platts.

During a Newsmaker interview, part of an ongoing Platts series, Wrathall said the world was waking up to the fact that local supply chains were a must and no country should be too reliant on another.

Local supply chains have been thrust into the spotlight in the wake of the pandemic, especially in the electric vehicle battery industry for which lithium is a key component. Continental Europe and the UK have a clutch of lithium developers all looking to reduce the industry’s carbon footprint and protect local business.

Cornish is aiming to be a near-carbon-neutral lithium producer, utilizing geothermal power to mine the element.

Wrathall said there was a huge need for battery gigafactories in the UK, adding that having raw material “on your doorstep” would attract investment.

“Lithium is a vital energy transition metal, [without it how do you] store renewables? No lithium, no energy transition,” he said.

The world is at a “tipping point” he said, as humanity progressed toward a renewable and sustainable energy transition. As such environmental, social and governance metrics were more important than ever.

ESG metric essential

He noted that if companies hadn’t got environmental, social and corporate governance credentials, they were in “big trouble,” adding that he and his board ran Cornish as if already publicly listed, offering full disclosure and transparency.

Not forever: World’s biggest pink diamond mine closes

SYDNEY – The world’s largest pink diamond mine has shut its doors after exhausting its reserves of the expensive gems, global mining giant Rio Tinto said.

The Argyle mine, in the remote Kimberley region of Western Australia, churned out more than 90 percent of the world’s pink diamonds — sought after for their incredible rarity.

The seam was discovered in 1979 and the Anglo-Australian firm began mining operations there four years later.

It has since produced more than 865 million carats of rough diamonds, including a small but steady stream of prized pink stones, according to Rio Tinto.

Argyle employees and indigenous landowners attended a ceremony at the shuttered mine to mark the end of operations.

A handout photo received from Rio Tinto on October 14, 2013 shows the Argyle Phoenix, a 1.56 carat gem, one of three Fancy Red diamonds on offer which sold for more than USD 2 million to a Singapore-based jeweller.

The company expects efforts to decommission and dismantle the 37-year-old site will take around five years.

“A new chapter will now begin as we start the process of respectfully closing the Argyle mine and rehabilitating the land, to be handed back to its traditional custodians,” mine manager Andrew Wilson said.

Over the past two decades, the value of pink diamonds has risen by 500 percent, Rio Tinto’s Sinead Kaufman told public broadcaster ABC.

The end of operations at Argyle is likely to push the price of the diamonds even higher, jewellers say. At current rates, the gems can fetch up to $3-million per carat.

Diamonds are typically clear, but jewels such as those mined at Argyle become pink through extreme heat and pressure during their creation. Those conditions warp their crystal lattices and alter the reflection of light as it passes through the body of the diamond.


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