November Newsletter – 30.11.2020


  • China solves Freeport’s $3 billion problem in Indonesia
  • Cobalt demand from battery industry expected to grow in the next five years – report
  • Guinea topples China to become world’s second-biggest producer of bauxite
  • AGMK receives an audit report from the “Big Four” Company
  • Teck increases steelmaking coal sales to China
  • Elk Creek mine project wins U.S. infrastructure award
  • Cardinal Resources (ASX:CDV) caught in bidding war stalemate
  • China’s CCTDA signs $1.46bn deal with Indonesian Coal Mining Association

China solves Freeport’s $3 billion problem in Indonesia

JAKARTA – The long drawn-out saga of mining giant Freeport Indonesia’s (PTFI) proposed new copper smelter has taken a new turn with China’s Tsingshan Steel agreeing to build the US$1.8 billion facility at its Weda Bay nickel processing complex in Halmahera, eastern Indonesia.

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Aerial view of Indonesia’s Grasberg mine in West Papua, which the Indonesia government recently took control of from US mining giant Freeport McMoRan

Maritime Affairs and Investment Coordinating Minister Luhut Panjaitan disclosed in an interview with Asia Times that the deal is expected to be signed before next March. “We are happy with the agreement,” he said, “but the two sides are still in detailed discussions.”

Up to now, the choices have been to either expand Mitsubishi’s existing copper smelter at Gresik, East Java, build a new and much more costly smelter at a nearby industrial estate or shift the whole project to Halmahera as part of an integrated smelting hub.

Panjaitan and other sources familiar with the deal say Tsingshan has agreed to complete the smelter within 18 months, leaving Freeport to build a $250 million extension to the Mitsubishi plant in what could be seen as a token gesture of its commitment to the in-country processing of all of its ore.

Mitsubishi and Freeport signed an agreement on November 13 to add 300,000 tons to the current facility’s one million ton capacity, but the sources say Freeport is still ready, however reluctantly, to build a new smelter if the Tsingshan deal falls through.

Cobalt demand from battery industry expected to grow in the next five years – report

A recent report by Benchmark Mineral Intelligence forecasts that the battery industry will require a further 100,000 tonnes of cobalt by 2025.

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The firm’s numbers show that 57% of the world’s cobalt demand will come from the battery sector by the end of the year, a proportion that is expected to increase to 72% in the next five years.

According to the London-based market intelligence publisher, positive sentiment around battery demand for cobalt chemicals is outweighing the bearish sentiment around metal demand from traditional markets in the near term.

Benchmark points out that the EV market’s H2 2020 recovery has been strong, with China having its best quarter in over 12 months and Europe posting surging EV sales numbers, up over 101% Jan-Feb 2020 over the same period a year earlier. This situation, coupled with better than expected demand for portable electronics applications – linked to home working – and mobility products such as eBikes, has seen the sentiment for the outlook for cobalt demand from the battery supply chain improve considerably from where it stood at the start of the pandemic in early 2020.

Guinea topples China to become world’s second-biggest producer of bauxite

Guinea is one of the poorest countries in the world but it has a booming mining industry that brings in millions of revenue each year. Since 2015, the West African nation has transformed into a top global producer of bauxite.

According to the World Bank, Guinea’s bauxite production increased from 59.6 million tonnes in 2018 to 70.2 million tonnes in 2019 to beat China as the world’s second-largest producer of bauxite, and competing with Australia, which is the world biggest producer of the mineral with over 105 million tonnes in 2019.

Also, it has replaced Australia to become the world’s largest supplier of bauxite to China. The country contributed 19.83% to the 353,772,000 tonnes of world production of aluminium ore in 2019.

The bauxite industry provides Guinea with the much-needed tax revenue for the government, thousands of jobs, and profits to mining companies and their shareholders.

In 2019, the government of President Alpha Condé initiated moves to boost the country’s energy capacity, after exerting pressure on mining companies to build bauxite refineries so as to mine bauxites into high-value alumina.

“Mines are, quite simply, development. And the mines can’t develop without energy,” Guinea’s energy minister, Cheick Taliby Sylla, said in April 2019, according to Reuters. “By 2025, we will have around 2,600 megawatts in terms of total production,” he said. “We can dedicate a quantity to (the mining companies) … We will guarantee that supply of energy.”

He said the 450-megawatt Souapiti hydro-electric dam is the first large-scale project expected to enter production. The dam is being constructed by China Water Electric with $1.3 billion in financing from China Exim Bank.

AGMK receives an audit report from the “Big Four” Company

For the first time in the history of Almalyk Mining and Metallurgy Combine (AGMK) received an audit report from the Big Four Company, from the international auditing organization Ernst & Young (EY) on the preliminary consolidated financial statements of the plant, prepared in accordance with international financial reporting standards (IFRS).

In order to fulfill the Decree of the President of the Republic of Uzbekistan “On measures to further improve the activities of enterprises in the mining and metallurgical industry” and the implementation of preparatory and basic measures for the primary (IPO) and secondary (SPO) placement of the plant’s shares in international stock exchanges in 2023, in AGMK, an independent external audit was carried out with the involvement of the international auditing company Ernst & Young (EY).

As part of the audit, the plant prepared preliminary financial statements in accordance with International Financial Reporting Standards (IFRS) as of 1 January 2020. An appraisal of the plant’s fixed assets was also carried out to determine the fair value of AGMK’s long-term assets and the actual value of long-term social obligations.

With the help of this auditor’s report, the plant aims to obtain an international credit rating and attract international financial institutions for effective financing of investment projects at the Yoshlik 1 field.

In pursuance of the Resolutions of the President of the Republic of Uzbekistan, the necessary work is currently being carried out for the timely transition of the plant to accounting and financial reporting in accordance with IFRS. A new department has been created in the structure of the executive office, whose employees have extensive experience in international companies of the Big Four.

The plant also attracted the international consulting company KPMG to assess the readiness of AGMK for the initial public offering, the operational efficiency of business processes and assess the level of development of management systems in areas. In the above areas, reports and roadmaps have been prepared for the implementation of the recommendations of the international consulting company KPMG.

Currently, the plant is negotiating with the State Development Corporation VEB.RF (Russian Federation) on the issue of attracting a direct loan to finance an investment project; as of today, a loan agreement has been signed in the amount of 1.8 billion rubles (equivalent to 20.0 million euro) to finance supplies of Russian-made equipment.

Also, the issue of attracting 59.0 million US dollars to finance the supply of mining dump trucks manufactured by OJSC BELAZ (Republic of Belarus) has been worked out, at the stage of signing a loan agreement. Loans are attracted on concessional terms, subject to subsidies from the Government of the Russian Federation and the Republic of Belarus, without collateral or additional guarantees.

Teck increases steelmaking coal sales to China

Canada’s Teck Resources (TSX: TECK.A TECK.B) (NYSE: TECK) announced that it has increased its steelmaking coal sales to China for Q4 2020 in response to increased demand.

Teck said sales have been at higher pricing levels compared to markets outside China. Estimated total fourth-quarter sales remain within the company’s existing guidance of 5.8-6.2 million tonnes, with approximately 20% of these sales now to Chinese customers.

Pricing in China for Teck’s steelmaking coal started to increase around the middle of the current quarter when a large portion of overall sales was already concluded, the company said. Additional spot sales to China were concluded gradually as the price was rising and achieved an average premium in excess of $35 per tonne above Australian FOB spot pricing at the time each sale was concluded.

Teck, the world’s second-largest seaborne coking coal miner, is seeing stronger-than-expected met coal demand in China, after authorities reportedly warned buyers to avoid Australian coal.

In October, China suspended purchases of Australian coal as Beijing continued to tightly control imports of the fuel amid soured political relations with Canberra, after the capital called for an international inquiry into the origins of the coronavirus pandemic.

Elk Creek mine project wins U.S. infrastructure award

CENTENNIAL, COLO. — Colorado-based NioCorp Developments Ltd. has announced that its Elk Creek Superalloy Materials Project in Nebraska has been selected as an Infrastructure Project of the Year by CG/LA Infrastructure.

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The award was announced during the CG/LA Infrastructure’s 12th North American Infrastructure Leadership Virtual Forum on Oct. 28, 2020, stated a release.

The project was originally named as one of the Top 100 infrastructure projects in the U.S. by CG/LA Infrastructure. The Elk Creek Project received the most votes from infrastructure and industry leaders, and from the public, to earn the top position in its category.

The project is North America’s only niobium/scandium/titanium advanced materials manufacturing facility co-located with an underground mine. NioCorp stated that the mine will be the highest grade niobium project in North America, as well as one of the largest prospective producers of scandium in the world.

The project will recycle a significant portion of its planned waste streams into usable materials.

Cardinal Resources (ASX:CDV) caught in bidding war stalemate

The longstanding bidding war for Cardinal Resource (CDV) and its West African gold assets has reached a standstill

Competing bids between Russian miner Nordgold and China’s state-owned Shandong Gold have been stalled since both companies made a “best and final offer” of $1 per Cardinal share in late October

Despite Cardinal hoping to break the standstill and allow Shandong to make a higher bid, the Federal Government’s Takeovers Panel has decided not to overturn the “best and final” status of the offers

As a result, both companies are unable to make further bids, unless a third-party presents a higher offer

According to Cardinal, Shandong is likely to raise its bid again, if it can be freed of its “final offer” obligations

Meanwhile, Nordgold has extended its bidding period to December 7 and hopes the takeover can now be “successfully concluded”

Cardinal Resources closed 0.49 per cent down for $1.02 per share

The protracted takeover battle for Cardinal Resources (CDV) has hit a standstill, with competing bidders Shandong Gold and Nordgold unable to budge.

The bidding war has been ongoing since March, with Russian miner Nordgold and China’s state-owned Shandong trading multiple offers, each hoping to get their hands on Cardinal’s West African gold assets.

Late last month, Shandong put up its “best and final offer” of $1 per Cardinal share, which was contingent on “the absence of a higher competing offer.”

In a surprise move, Nordgold subsequently matched the $1 final offer, which has stalled Shandong from making any further bids, as there is no “higher competing offer” on the table.

Following the standstill, Cardinal disputed the finality of the “best and final” bids and asserted that Shandong should be free to once again increase its offer.

In response, Nordgold’s took the issue to the Federal Government’s Takeovers Panel, which has ultimately chosen to stand by the “final offer” status on Shandong’s latest bid.

With the Government’s decision now handed down, Cardinal has told shareholders it’s “disappointed with the outcome” but is continuing to review its options.

China’s CCTDA signs $1.46bn deal with Indonesian Coal Mining Association

The Indonesian Coal Mining Association (APBI-ICMA) has inked a memorandum of understanding (MoU) with China Coal Transportation and Distribution Association (CCTDA) to facilitate the export of coal from Indonesia to China.

Under the agreement, China will buy thermal coal worth IDR20.6tn ($1.46bn) from Indonesia next year.

The trade deal was signed virtually between APBI chairman Pandu Patria Sjahrir and CCTDA’s Liang Jia Kun during the China-Indonesia Coal Procurement Matchmaking Meeting.

In a press statement, APBI-ICMA stated: “The initiative from APBI aims to agree on a long-term supply policy for coal export. In addition, it is also to facilitate coal producers in Indonesia with buyers in China in terms of increasing the bilateral trade between the two countries.

“The principal of this cooperation in regards to the quantity of coal export’s target from Indonesia will be reviewed annually. In this cooperation, it is also necessary to establish a price index that can be negotiated regularly as a reference price for coal imports to China from Indonesia.”


Link for more detailed information

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