November Newsletter – 20.11.18
ANNOUNCEMENTS
Behre Dolbear is a Sponsor of the Asia Mining Club, which will hold its pre-Christmas Cocktail, December 13th, in Hong Kong.
TOP NEWS
China plumbs ocean depths to extend its cobalt lead
- Unclear how big reserves are or when they can be mined
- Glencore holds small stake in ocean explorer DeepGreen
- Anglo American sold stake in Nautilus
- Environmentalists seek strict rules
LONDON, Nov 14 (Reuters) – China, the leading holder of international deep sea exploration licences, has increased its lead in the race for alternative sources of battery minerals by taking samples from cobalt-bearing mountains deep in the Pacific.
The cobalt-rich crusts could one day curb the world’s dependence on cobalt from Democratic Republic of Congo, but most companies say deep sea mining is a distant prospect.
Maersk Supply Service, part of shipping company Maersk , is working with Canada’s DeepGreen to harvest metallic rocks from the ocean floor.
“It is a promising business area with the potential for significant future growth,” Maersk Supply Service said in an email. “Production is a few years away.”
Miner-trader Glencore has a stake in DeepGreen which would eventually give Glencore 50 percent of any copper and nickel output.
Glencore declined to comment and DeepGreen had no immediate comment.
Rio Tinto, Nespresso join forces to make coffee pods greener Reuters
LONDON (Reuters) – Nespresso, part of food giant Nestle, aims to use sustainable aluminum in all of its coffee capsules by 2020 under a deal with mining major Rio Tinto announced on Monday.
Both companies have faced criticism for adding to pressure on the planet, with campaigners saying Nespresso coffee machines are wasteful and many of the used capsules end up in landfill.
Under the deal, Anglo-Australian Rio Tinto will supply aluminum produced with renewable power and respect for biodiversity to Nespresso, the world leader in the coffee pod market.
The companies are seeking to position themselves as sustainable to boost their investor and customer appeal, and Nespresso has committed to 100 percent sustainable aluminum for its capsules by 2020, Rio Tinto said in a statement released on Monday Australia time.
Rio Tinto Chief Executive Jean-Sebastien Jacques said last month that miners needed new partnerships as the sector competes for talent and seeks to improve its image.
Its aluminum assets use hydropower – for economic as well as environmental reasons – and in April the miner became the world’s first producer of aluminum to be certified by the Aluminium Stewardship Initiative (ASI).
ASI standards are based on protecting biodiversity, respecting indigenous peoples’ rights and traceability throughout the supply chain, as well as lower emissions and renewable energy.
So far, only part of Rio’s aluminum production is ASI-certified.
Rio Tinto Vice President Sales and Marketing Tolga Egrilmezer said in an interview that the deal with Nespresso was “a significant milestone for the industry” towards wider use of responsibly-sourced aluminum.
While the mining sector has recovered from the commodity crash of 2015-16, it is struggling to win investment because of concerns about governance in difficult regions where mines are often located and because of its exposure to coal, the most carbon-intensive fuel.
Rio Tinto has sold its coal mines, but still uses coal power in some operations.
In May, Rio Tinto announced a venture with aluminum maker Alcoa and Apple on technology to eliminate direct greenhouse gas emissions from the aluminum smelting process.
Rio has already supplied aluminum to Nespresso, but is not its exclusive supplier.
Nespresso said in an email it would take time for all capsules to be ASI-certified but it was working with its manufacturers to achieve this and on making recycling as easy as possible.
Holder of nearly a third of the coffee pod market, Nespresso faces competition from other companies marketing themselves as sustainable.
British coffee brand Halo said on Friday it had created “the world’s first fully home compostable paper-based coffee capsule and packaging,” which can break down in about a month.
COMMODITIES
Antimony: will China continue to control supply?
Antimony is a little-known metalloid commonly used in lead-acid batteries and fire retardants, and while deposits are found worldwide, China’s large resource, low cost of production and significant processing capacity has seen the country dominate market supply. However, a new plant opening in Oman aims to take significant market share, but can it compete?
Most people have never heard of antimony. It may have a lustrous silver colour that eye-catchingly sparkles and glistens, but it is, nevertheless, far from a headline-grabbing commodity.
Antimony does, however, have two important uses: in flame retardants and lead-acid batteries. Because the former is driven by life-saving fire regulations, the commodity is considered strategic by several countries.
In fact, the European Union and the US have classified it as a critical raw material in recent years.
In light of this, it is hoped a new antimony roaster being built in Oman could help diversify supply of the metal away from China, which dominates mining and refining, especially as the ongoing trade war between the US and the Asian nation intensifies.
China currently accounts for over 90% of antimony supply. However, this has been declining in recent years, due to older mines reaching the end of their life and a national movement to mitigate pollution in the country, which has caused plant closures.
Far from affecting the market, reduced supply has actually coincided with a plateau in demand and price.
Nils Backeberg, senior analyst in metals and technology materials at Roskill Information Services, explains that in 2011, the price of antimony spiked, but due to an overall decline in consumption, the price decayed slightly before experiencing an uptick in 2016 when hit around $8,000 per ton. It has since remained around this price.
“In both the two main markets for antimony there has been a decline in consumption, which has gone hand-in-hand with a not very exciting price,” says Backeberg.
https://www.mining-technology.com/features/antimony-will-china-continue-control-supply/
Chinese winter is coming for Australian resources exports
The Australian Financial Review
The notion that China might halt imports of thermal coal for the first six weeks of the northern winter would have been unthinkable just two years ago.
But unconfirmed reports on Friday that the Chinese government will not allow any further coal imports in 2018 are just another sign of the changes Australian commodity exporters are experiencing in the wake of China’s determined effort to reduce air pollution during its colder months.
Thursday marked the effective start of winter in China, when state heating started pumping into people’s homes, particularly in Beijing and the nation’s north.
Australians living in Beijing, who were starting to become accustomed to blue skies, complained this week about the poor air quality in the capital, with some of them posting images on Twitter of a thick grey haze enveloping the city’s skyscrapers.
Winter has taken on a special significance for Australian companies exporting energy commodities (principally liquefied natural gas and thermal coal with energy content of 5500 kilocalories per kilogram) into China, since the middle kingdom put tough operating limits on factories and heavy industry in 26 cities last winter.
LEGAL AND REGULATORY
New seabed minerals laws on way
The Cook Islands government intends to table new legislation relating to seabed minerals activities in December.
The announcement was greeted with surprise at a recent meeting, the first of three public consultations planned for Rarotonga regarding the forthcoming invitation for tenders from companies interested in exploring the Cook Islands’ sea floor.
The government hopes to sell five-year licences to explore the seafloor before entering into the next phase of the process, which deputy prime minister and finance minister Mark Brown referred to as “exploitation”.
However, the proposed amendments were not explained and those who asked to see the legislation at the consultation were told they could peruse it, “when it gets tabled”.
They’re just tweaks,” Seabed Minerals Commissioner Paul Lynch said.
Held at Sinai Hall, the meeting was attended by about 20 people, including staff of the Cook Islands Seabed Minerals Authority. CINews CINews listened to audio which was uploaded to social media.
Brown delivered a presentation about the benefits and minimal risks of seabed mining. He said tourism could have a “significant impact on our environment” and seabed minerals represented an opportunity for “our people moving into other sectors in order to earn the income that our country requires”.
http://www.cookislandsnews.com/national/environment/item/71258-new-seabed-minerals-laws-on-way
Montana has effective mining regulations and the environmental protections in place – say the voters
On the ballot I-186, which requires the “Department of Environmental Quality to deny a permit for any new hard-rock mines in Montana unless the reclamation plan provides” evidence the “mine will not require perpetual treatment of water polluted by acid mine drainage or other contaminants.”
‘No’ votes on I-186 led with 57 percent of the vote with over 456,000 ballots accounted for.
Those opposed said Montana has effective mining regulations and the environmental protections in place.
Spurred by rising mineral prices, governments are demanding Western mine operators pay higher royalties and taxes
From Congolese jungles to Indonesian highlands, a struggle is raging between governments and major mining companies over control of commodities vital to the production of everything from steel to electric cars to smartphones.
Developing-world leaders, spurred by rising mineral prices, are making their toughest demands on Western mining companies in years, squeezing them to pay higher royalties and taxes, process commodities locally and cede control of mines.
In Indonesia, Rio Tinto RIO 1.76% PLC and Freeport-McMoRan Inc. were pressed to sell majority control of the world’s second-largest copper mine, Grasberg, to a government that aims to transform its state-owned resources companies into industry behemoths.
Tanzania last year slapped a subsidiary of Canada’s Barrick Gold Corp. with a $190 billion tax bill—four times the country’s gross domestic product. In March, Zambia handed Canada’s First Quantum Minerals Ltd. FM -3.16% a tab for import duties and penalties totaling roughly $8 billion. The Democratic Republic of Congo signed into law a new mining code in June that will take a bigger slice of miners’ profits. Papua New Guinea, Mali, Sierra Leone and others have also put mining contracts and legislation under review.
“I will not hesitate to close down all the mines if companies don’t pay what they owe us,” Tanzanian President John Magufuli told a cheering crowd last year. “I have launched an economic war.”
Freeport CEO Richard Adkerson, right, with officials from state-owned Indonesia Asahan Aluminium and the government at a ceremony in September to sign a deal for a stake in the Grasberg mine. Photo: Aditya Irawan/NurPhoto/Zuma Press
Governments say the countries deserve more of the profits from the extraction of their resources. Demands for bigger stakes in resource wealth have risen before—often when prices go up—but people in the industry say fiscal and political pressures now are hardening governments’ resolve to extract more wealth from mining conglomerates.
A wave of new, populist governments are struggling to pay the bills after their countries borrowed heavily for infrastructure in recent years. Governments see miners—often the biggest companies in the country, who have little flexibility to leave after years of investments—as potential sources of revenue. Prices of many commodities have recovered, even though they aren’t close to record levels seen roughly eight years ago, and profits of the world’s top 40 miners more than doubled last year.
“We are very profitable and therefore everybody—communities, governments—wants to have a bigger share of the cake,” Rio Tinto Chief Executive Jean-Sébastien Jacques said in an interview.
FINANCIAL
Yanzhou Coal Mining hires banks for US$ bond
HONG KONG, Nov 19 (IFR) – Yanzhou Coal Mining, rated Ba3/BB (Moody’s/S&P), has hired banks for a proposed offering of US dollar senior bonds.
Deutsche Bank, CMB International and Standard Chartered Bank are the joint global coordinators as well as joint bookrunners and joint lead managers with Haitong International and CEB International.
The Chinese coal miner will meet investors in Hong Kong and Singapore, starting tomorrow.
The bonds, if issued, are expected to be rated BB by S&P.
https://www.nasdaq.com/article/yanzhou-coal-mining-hires-banks-for-us-bond-20181118-00031
INNOVATION AND TECHNOLOGY
PROJECTS
Polymetal receives construction approval for $249mn Nezhda gold project
A leading precious metals mining group operating in Russia, Kazakhstan and Armenia, has received construction approval for a significant gold project within its portfolio.
Polymetal International announced this week the completion of a Feasibility Study (FS) for its Nezhda project, which has also received approval for construction from the company’s board.
“Nezhda is a long-life, high-grade asset with robust economics”, said Vitaly Nesis, Group CEO of Polymetal. “The project is capital light and will rely heavily on our successful experience at Kyzyl. Nezhda will contribute to dividends per share already in 2022.”
Nezdha is Russia’s fourth largest gold project and the FS highlights a Mineral Resources (inclusive of Ore Reserves) of 12.4 Moz of gold equivalent (“GE”) with an average GE grade of 4.5 g/t, a 1.6 Moz increase compared with the previous estimate.
US$288 million Shanghai hotel is the world’s deepest – just two of its 18 floors are above ground
- InterContinental Shanghai Wonderland Hotel rises 88 metres from an abandoned quarry on outskirts of city
- Its 336 guest rooms cost from 3,400 yuan (US$490) a night
Rising 88 metres (290 feet) from the floor of an abandoned quarry, the 18-storey InterContinental Shanghai Wonderland Hotel in the city’s Songjiang district has been in development for 12 years and cost 2 billion yuan (US$287.9 million) to complete.
Of its 18 floors, just two are aboveground while its two lowest are completely submerged by a lake that occupies the remainder of the vast quarry pit.
Xu Shitan, deputy chairman of the project’s developer Shimao Group, was among the speakers at the building’s official launch on Thursday.
“It used to be an abandoned quarry, and now we have turned it into a treasure,” he said.
Located in Sheshan, about 30km (19 miles) from Hongqiao International Airport, the new hotel has 336 guest rooms and suites priced from 3,400 yuan to 3,800 yuan per night. They will be available to book from Tuesday, according to IHG’s website, which manages the property.
Shimao Group chairman Xu Rongmao said he first came across the abandoned quarry in 2006. He described what he saw at the time as a “wound of nature that was inconsistent with the green hills and blue water of Sheshan” and came up with the idea to build the unusual property.
While construction got under way in August 2009, such were the technical challenges faced by the design and construction teams that the project initially made slow progress and was reported to have been aborted on several occasions. The pilings for the foundations alone took two years to complete.
Despite the difficulties, Chen Shaowei, assistant president of the group’s Jiangsu and Shanghai branch, is delighted with the result.
“It is something that defies our existing knowledge about construction,” he said. “We solved over 60 technical problems.”
In terms of safety precautions, the hotel’s owners claim it is able to withstand a magnitude 9 earthquake, and said the design incorporates two fireman’s lifts if needed for fighting fires, and six pumping machines should the huge pit flood during Shanghai’s notoriously wet rainy season.
Martin Jochman, the project’s chief architect, who also designed the Burj Al Arab, a luxury hotel in Dubai, said the new property was designed to blend in with its natural surroundings.
Not everything in the area is natural, however. Alongside the hotel, at ground level, is a garish amusement park, while the lake below will be used for watersports and other adventure activities.
Xu Shitan said the company was also planning to build a shopping centre on the site next year.
Shanghai claimed the “home to the world’s second-tallest building” title in 2016 with the opening of Shanghai Tower, a 632-metre, 128-storey skyscraper in the city’s financial district.
This article appeared in the South China Morning Post print edition as: Shanghai takes plunge with world’s deepest hotel
COMMODITY PRICES
