November Newsletter – 25.11.19
ANNOUNCEMENTS
NEWSLETTER
- A $60 billion mine propels Bougainville’s independence vote
- FMG’s Gaines makes her mark on world stage
- Global platinum market balanced, surplus forecast for 2020
- China coal-fired power capacity still rising, bucking global trend: study
- Miners not taking cybersecurity risks seriously, report finds
- Teck hires Barclays to sell Peru mine stake
- Autonomous drones to lead the way in mining surveillance technology — report
- Third new CEO appointed to Katanga this year
TOP NEWS
A $60 billion mine propels Bougainville’s independence vote
Born out of bloodshed, colonial politics, civil war and the pursuit of mining riches, the independence referendum on the island of Bougainville starting on Saturday has been a long time coming for Barbara Tanne.
Tanne, one of the 300,000 or so people who live on the small group of islands in the South Pacific, has spent the past months criss-crossing remote villages to tell people about the vote, which could result in separation from Papua New Guinea.
“Everybody is saying ‘now is the time’,” said Tanne, 56, from her home town of Buka. “People are positive and they want to see the result, but I’m telling them that we have to be patient, because the next step could take a long while.”
As many as three quarters of voters may choose independence, according to one estimate, but even that wouldn’t guarantee the advent of a new nation. Any split would need to be approved by an act of parliament in Papua New Guinea, and the government in Port Moresby has indicated it wants Bougainville to remain a province.
With fewer people than Pittsburgh, an estimated per-capita GDP of about $1,100 and an economy reliant on money from the central government, Bougainville seems an unlikely candidate for independence. But it has one resource that could change its fortune, potentially giving it real and not just nominal autonomy — a massive copper deposit.
It is the country’s blessing and curse. The Panguna mine was the focal point of a 10-year civil war and has been shut since 1989, shortly after the conflict started, tainted by its bloody past and fettered by a tangle of environmental and ownership issues. But it remains central to what will happen to the islands after the vote is counted in mid-December.
Chinese developers
PNG Prime Minister James Marape told local newspaper the Post Courier in September that negotiators may be able to give Bougainvilleans greater economic independence while maintaining the country’s unity, hinting that such an option would be linked to Panguna, as “we owe it to them to help rebuild that place.”
https://www.mining.com/web/a-60-billion-mine-propels-bougainvilles-independence-vote/
FMG’s Gaines makes her mark on world stage
Fortescue Metals Group CEO Elizabeth Gaines has been named second in Fortune magazine’s Businessperson of the Year.
She was behind Microsoft boss Satya Nadella.
Gaines was praised for managing the company through a period of volatility.
She was the only Australian and only mining company boss to make the list of 20 global company leaders.
Since being appointed CEO of the iron ore miner in February 2018, FMG has delivered a total return of 90% versus only 5% for the broader ASX 200.
Fortune acknowledged some of FMG’s success was attributed to high iron ore prices, but also pointed to the introduction of a higher grade iron product, West Pilbara Fines, and the company’s continued investment in technology.
The magazine noted since Gaines’ arrival at FMG (first as chief financial officer in 2013), the company’s net debt has fallen from $10.5 billion to just $500 million.
Gaines was runner-up in the MiningNews Awards CEO of the Year earlier this year.
Gaines also topped the list of best-performing CEOs in the Australian Financial Review’s annual CEO pay survey, released on Monday.
https://www.mining-journal.com/leadership/news/1376247/fmgs-gaines-makes-her-mark-on-world-stage
COMMODITIES
Global platinum market balanced, surplus forecast for 2020
JOHANNESBURG (miningweekly.com) – The platinum sector is likely to end 2020 with a 670 000 oz surplus, the World Platinum Investment Council (WPIC) estimates.
The WPIC on Thursday published its Platinum Quarterly for the third quarter of 2019, which includes a revision to the full-year 2019 forecast, as well as an initial forecast for 2020.
Research director Trevor Raymond told Mining Weekly Online that the 2020 forecast did not include any platinum demand from higher diesel sales in Europe or from a platinum-to-palladium substitution.
About 1.2-million ounces of investment demand, including about one-million ounces in exchange-traded fund (ETF) purchasing already in 2019 marks “pretty chunky buying”, he said, noting that this equalled about $800-million.
While platinum demand growth potential was still prominent, Raymond did, however, indicate that this was being underpinned by a strong gold price, which is up by 15% in 2019.
Platinum investment demand for 2020 is expected to remain strong but is well below the record levels of this year and, despite a fall in mining supply, will result in a sizeable surplus in 2020.
Next year’s forecast includes about 500 000 oz in investment demand, which is “significantly above” the average of about 300 000 oz a year since ETFs started in 2007.
The initial forecast for 2020 projects a market surplus of 670 000 oz, reflecting a 1% decrease in supply and a 10% decrease in demand, predominantly owing to lower investment demand that, although forecast to be well above the five-year average, is not expected to include a repeat of this year’s record ETF buying.
Mining supply in 2020 is expected to be 2% lower than in 2019.
China coal-fired power capacity still rising, bucking global trend: study
SHANGHAI (Reuters) – China raised its coal-fired power capacity by 42.9 gigawatts (GW), or about 4.5%, in the 18 months to June, connecting new projects to the grid at a time when capacity in the rest of the world shrank, according to a study published on Wednesday.
China also has another 121.3 GW of coal-fired power plants under construction, U.S.-based research network Global Energy Monitor said in its report, nearly enough to power the whole of France.
The increase followed a 2014-2016 “permitting surge” by local governments aiming to boost growth while formerly suspended projects have also been restarted, Global Energy Monitor said. In the rest of the world, coal-fired power capacity fell 8.1 GW over the same period.
To cut pollution and greenhouse gas emissions, China has promised an “energy revolution” aimed at dramatically reducing its reliance on coal. It cut coal’s share of the country’s total energy from 68% in 2012 to 59% last year, and researchers predict it will fall to 55.3% by 2020.
Absolute coal consumption, however, has continued to increase in line with a rise in overall Chinese energy demand.
LEGAL AND REGULATORY
Miners not taking cybersecurity risks seriously, report finds
While cybersecurity is today considered a major threat to all industrial companies, a recent report out of Australia has concluded it will take a catastrophic event for it to be taken seriously in the mining industry.
Through interviews, survey and analysis of Australia’s largest mining and service companies, including BHP, Rio Tinto, South32, and Anglo American, the ‘State of Play: Cyber Security Report’, from researchers at State of Play, has uncovered that 98% of top-level executives think a catastrophic event is required to drive an industry response to cybersecurity in mining.
This is despite State of Play Chairman and Co-founder, Graeme Stanway, saying the risk of cybersecurity failures in mining could be severe.
“In an increasingly automated and interconnected world, the risk of rogue systems and equipment is growing rapidly,” he says.
“If someone hacks into a mining system, they can potentially take remote control of operational equipment. That’s the level of risk that we are facing.”
Global Head of Cybersecurity at BHP, Thomas Leen, agreed and said the mining industry is up against archaic processes when it comes to evolving on the cybersecurity front.
https://im.mining.com/2019/11/19/miners-not-taking-cybersecurity-risks-seriously-report-finds/
FINANCIAL
Teck hires Barclays to sell Peru mine stake
Reuters
Canada’s Teck Resources Ltd has hired Barclays to sell all of its 80% stake in its Zafranal copper asset in Peru, as the diversified miner accelerates efforts to exit advanced projects and focus on its massive Chilean expansion, two banking sources told Reuters on Wednesday.
Teck is likely to sell or seek a partner for Zafranal, Chief Executive Officer Don Lindsay has said.
TECK LAST YEAR SAID IT WOULD MOVE FORWARD WITH ITS $4.7 BILLION QUEBRADA BLANCA PHASE TWO COPPER PROJECT IN CHILE
The company and its advisors are sounding out interest from mining firms already operating in Peru for the copper-gold project that could fetch up to $500 million, one of the sources said.
However, the project would need a further injection of more than $1 billion before it can start production, the source said.
https://www.mining.com/web/teck-hires-barclays-to-sell-peru-mine-stake/
INNOVATION AND TECHNOLOGY
Autonomous drones to lead the way in mining surveillance technology — report
Miners are expected to continue using autonomous drone technology as a complement to new IOT solutions to improve mine operation efficiency and worker safety, a new industry trend analysis by Fitch Solutions finds.
Drones with autonomous capabilities and extended flight time will be preferred as both offer further efficiency gains to other available options, while a country’s regulatory environment will be a notable drawback on the pace of autonomous drone advancement and adoption, Fitch forecasts.
The low industrial metal price environment will further incentivise miners to adopt technology enhancements to improve margins, analysts say.
DRONES CAN ALSO CAPTURE DATA AND PICTURES OF HAUL ROADS AND STOCKPILED ORE MORE FREQUENTLY, ALLOWING MINE OPERATORS TO ASSESS IF CURRENT OPERATIONS ARE IN LINE WITH THE DESIGNED PLAN AND ASSESS IF MAINTENANCE IS NEEDED
Drone technology is a fairly recent addition to mining operations — BHP only began implementing drone technology in 2017 at its coal mines in Queensland and the Olympic Dam mine in South Australia. BHP then announced that overhead surveying usually done by aircraft could now be done by drones, saving the company about $3.4 million a year.
The technology is impactful, as it has the ability to quickly survey various areas of a mining operation, which has led to improved worker safety and productivity gains, the report finds. Drones can more easily inspect and monitor cranes, towers, slopes and blasting areas, reducing worker involvement in more dangerous sites.
Drones can also capture data and pictures of haul roads and stockpiled ore more frequently, allowing mine operators to assess if current operations are in line with the designed plan and assess if maintenance is needed, Fitch reports.
https://www.mining.com/autonomous-drones-to-lead-the-way-in-mining-surveillance-technology-report/
PROJECTS
Third new CEO appointed to Katanga this year
Katanga Mining (TSX: KAT) said yesterday Glencore-designated Mark Davis had been appointed its CEO, effective from November 19.
It marks the third change at the top of the Glencore subsidiary within 12 months, after Johnny Blizzard agreed to resign in December 2018 as part Katanga’s C$30 million (US$22.4 million) settlement with the Ontario Securities Commission over misstatements and disclosure failures about its operations in the Democratic Republic of Congo.
Danny Callow became CEO in mid-January but was replaced by Glencore’s Jeff Gerard on May 2.
All three CEO appointments were designated by Glencore International AG under a management service agreement between Katanga and GIAG entered in January.
Davis, who gained his mining engineering degree from Melbourne’s RMIT University, was previously MMG’s executive general manager operations for Africa, Australia and Asia before joining Katanga.
He had earlier been general manager of BHP’s aluminium operations in South Africa, spent seven years with Worsley Alumina and almost six years at BHP’s Pilbara iron ore operations.
“We are pleased to welcome Mark as CEO and look forward to working with him to continue driving Katanga’s business and operations,” non-executive chairman Hugh Stoyell said.
“We thank Jeff for his contributions to Katanga, and wish him the best in his future endeavours.”
Katanga firms up C$7.7B debt-for-equity rights issue
Earlier this week, Katanga said it had received receipt for a final short form prospectus for a circa C$7.7 billion rights offering, backstopped by Glencore, as part of a debt-for-equity swap to repay US$5.8 billion owed to Glencore.
The commodities trader and mining major’s share in Katanga, currently 86.3%, would increase and Glencore would still be owed $1.5 billion.
Glencore is holding an investor update on December 3, where CEO Ivan Glasenberg is expected to reveal more about the turnaround plan for the company’s loss-making Africa copper operations.
https://www.mining-journal.com/leadership/news/1376243/third-new-ceo-appointed-to-katanga-this-year
COMMODITY PRICES
