October Newsletter – 06.10.2020


  • UK’s first new deep coal mine in 30 years approved
  • US awakens to rare earth mineral gap
  • EMR Capital seeks concessions to develop $1 bln Zambia copper mine
  • Companies operating in developing countries find new way to counteract corruption
  • Piedmont Lithium stock soars on confirmed Tesla deal
  • ‘Tumultuous time’: Australia’s coal miners face $17b export collapse
  • China is Sending the World’s First Mining Robot to Space in November
  • RANKED: Top 10 mining property deals in the last five years

UK’s first new deep coal mine in 30 years approved

pic1 Behre Dolbear newsletter 06.10.2020

The mine will create 500 jobs and end the country’s dependence on the US for imports of steelmaking coal.

Plans to build the U.K.’s first new deep coal mine in three decades were approved on Friday, in a move that threatens to undermine the government’s pledge to net zero greenhouse gas emissions by mid-century.

West Cumbria Mining’s Woodhouse Colliery project, in north-west England, has faced steep opposition from environment groups urging the government to intervene and block it. They claim the new coal mine would emit 8 million tonnes of carbon annually.

The planned mine is expected to produce as much as 3.1 million tonnes of metallurgical coal a year, mainly from under the seabed. Processed coal would then be transferred by underground conveyor to trains using a new loading facility and sidings.

Woodhouse Colliery is scheduled to begin production in the second half of 2021, creating 500 jobs. It had originally been slated to run for 70 years, but West Cumbria Mining had to resubmit plans following a judicial review last year.

Under the approved plans, it will close in 2049, one year before the country must have net zero emissions.

“Net-zero” goal questioned

Most in the UK are skeptical about achieving the net zero target, according to a survey by the centre-right think tank Bright Blue published Friday.

The report found that 58% of the public believe that it is unlikely that the target will be achieved even by 2050.

The UK is set to host the COP26 round of UN global climate talks in Glasgow, Scotland, in November 2021. The event is considered the most important climate negotiations since the Paris agreement in 2015.

England’s last operating deep coal mine, Kellingley, closed in 2015 and the country’s last coal mine stopped operating this year.


US awakens to rare earth mineral gap

President Donald Trump signs executive order declaring a national emergency in the mining industry

The Trump administration has finally awakened to the frightening fact, that China controls 80% of America’s rare earth mineral supply — a disturbing reality that the Pentagon wants to end once and for all.

Rare earth elements are a group of 17 minerals critical to the defense industry’s manufacturing of missiles and munitions, hypersonic weapons and radiation-hardened electronics — as well as consumer electronics like cellphones.

A day prior to being airlifted to Walter Reed hospital, US President Donald Trump signed an executive order declaring a national emergency in the mining industry — an action aimed at boosting domestic production, Defense News online reported.

Trump also ordered his Cabinet secretaries to study the matter, with an eye toward government grants for production equipment, as well as tariffs, quotas or other import restrictions against China.

The order states that the county’s “undue reliance on critical minerals, in processed or unprocessed form, from foreign adversaries constitutes an unusual and extraordinary threat, which has its source in substantial part outside the United States, to the national security, foreign policy, and economy of the United States.”

The Trump administration previously identified 35 minerals as both essential and whose supplies are vulnerable to disruption, the report said.

The US imports 80 percent of these elements directly from China, with portions of the remainder indirectly sourced from China through other countries.


EMR Capital seeks concessions to develop $1 bln Zambia copper mine

LUSAKA, Oct 2 (Reuters) – Lubambe Copper Mine, majority-owned by Australia’s EMR Capital IPO-EMR.AX, is talking to the Zambian government to seek concessions, including a tax break, to develop a new $1 billion copper mine, the company said on Friday.

Lubambe has completed a concept study on the extension project that would produce up to 160,000 tonnes of copper annually with a mine life of more than 30 years, it said in a statement.

The Zambia Chamber of Mines said on Monday Zambia should treat mineral royalty payments as a deductible expense to avoid double taxation and attract investment.

The chamber cited the $1 billion Lubambe Mine expansion and another $1 billion expansion by First Qauntum Minerals as projects that had been delayed by an unfavorable tax regime.

Lubambe has actively engaged with all relevant levels of the Zambian government, the company said, and noted a number of approvals were required for a project of this scale to progress, including on tax-related matters.

“The concessions needed are not material compared to the benefits to Zambia. Importantly the concessions are not different to what is available in other copper mining countries,” it said.


Companies operating in developing countries find new way to counteract corruption

New research published in the Strategic Management Journal shows that companies working in countries where corruption is rampant are able to operate better when they make deeper, long-term commitments.

According to the lead author of the study, Charles E. Stevens, associate professor of management at Lehigh University’s College of Business, this approach means leaving behind the two dominant strategies when dealing with corruption in developing countries: “Play the game,” meaning pay bribes or engage in corrupt activities, or “leave the table” by avoiding investing in places where corruption is widespread.

To reach this conclusion, Stevens and his colleague Aloysius Newenham-Kahindi, associate professor at the University of Victoria, surveyed people that are or have been faced with corruption directly, among them 445 individuals representing industries such as mining, construction, manufacturing, energy, and telecommunications in both developed and developing country firms. They also polled 126 host country government officials and employees; 34 local private-sector employees; 44 local institutional researchers; and 142 members of the general public.


The researchers found that within the last decade, a number of developing country firms, many of them from China, were taking an unexpected engagement strategy that tended to involve greater commitment and greater investment to countries where there was more corruption.

“Many of these firms were following rather interesting and complex strategies – many that involved multiple actors – that were designed at minimizing the ability of host-country actors to request bribes by maximizing their bargaining power or by minimizing the motivation of host-country actors to request bribes by increasing their legitimacy,” Stevens said in a media statement.


Piedmont Lithium stock soars on confirmed Tesla deal

Shares in Australian junior Piedmont Lithium (ASX: PLL) surged almost 84% on Monday in Sydney after it confirmed it had signed a sales agreement with Tesla to supply the electric vehicle maker with high-purity lithium ore mineral for up to ten years.

Piedmont accidentally released the announcement last week, following the hyped “Tesla Battery Days,” but the Australian Stock Exchange said it would not publish it then.


The initial five-year agreement will see Piedmont supplying about a third of its planned 160,000-tonnes-per-year spodumene concentrate from its deposits in North Carolina. Both companies can then extend the contract for another five years.

Piedmont president and chief executive officer, Keith Phillips, said the deal represented the start of the first domestic lithium supply chain in the United States.

“We will now accelerate our mine/concentrator development to support Tesla’s plans, work to further expand our mineral resources, and potentially increase our planned annual spodumene concentrate production capacity,” Phillips said in the statement.

The deal is conditional upon both companies agreeing to start deliveries between July 2022 and July 2023, Piedmont Lithium said.

The company, which aims to develop a fully integrated spodumene-to-hydroxide business in North Carolina, is also looking to move those plans forward.

US-based lithium supply chain

Piedmont’s ultimate goal is to become the world’s only integrated spodumene miner and lithium hydroxide producer outside China.

The company is looking at two chemical plants to produce over 45,000tpa of battery-grade lithium hydroxide.

It already owns one site in Kings Mountain, North Carolina and is actively pursuing a site for a second facility, which is expected to be secured by year end.

Tesla chief executive Elon Musk shared last week his vision of novel, proprietary Tesla batteries. He also said it had secured rights to 10,000 acres in Nevada where it aims to produce lithium from clay deposits using a process developed internally.

Tesla stock lost more than $30 billion in market value following the announcements.

The EV maker has also revealed plans to build a lithium hydroxide chemical plant in Austin, Texas. The facility will be adjacent to its Terafactory/Gigafactory 5, under construction since July.

The factory, also known as Giga Texas and Giga Austin, will convert the spodumene Tesla acquires from Piedmont Lithium and other sources.

The company aims to have it up and running by the end of 2021 and it would mark the first move by an automaker into chemical lithium production.


‘Tumultuous time’: Australia’s coal miners face $17b export collapse

Australia’s coal miners are headed for a $17 billion collapse in export earnings this year as the shock of the coronavirus crisis persists and more Asian power utilities switch from coal to gas.

The projected declines across 2020-21, contained in a federal government report to be released on Monday, come after a succession of coal companies reported sharp full-year profit contractions including New Hope Corporation, which took a 69 per cent hit, and Whitehaven Coal which fell 95 per cent.

pic2 Behre Dolbear newsletter 06.10.2020

The COVID-19 economic downturn has weighed heavily on export prices for Australia’s thermal coal.

Swiss giant Glencore last week suspended operations at most of its coal mines in the Hunter Valley in New South Wales for at least a fortnight in a bid to curtail output in the face of falling demand.

Exports of metallurgical coal – the coal used in steelmaking – are projected to shrink 34 per cent from $35 billion to $23 billion as prices hover around four-year lows, according to the federal Industry Department, while thermal coal – used in power generation – is set to fall 25 per cent from $20 billion to $15 billion.

Describing the thermal coal market as “tumultuous”, the report notes a combination of factors had driven thermal coal prices to levels not seen in 14 years. These included the virus-driven industrial downturn weighing on energy consumption, a hardening of China’s import restrictions to support its local suppliers, and the ongoing transition away from coal-fired electricity to reduce emissions, the report said.

“At current prices, a significant proportion of Australian thermal coal production is loss-making,” it said.

The benchmark price for top-quality NSW thermal coal has fallen from $US68 a tonne to less than $US55 this year, well below the average of almost $US100 a tonne over the 2019 financial year. At a price of $US50 a tonne, one-third of exports were cash-negative, the report said.

Analysts say although power demand in Asia’s key coal centres had returned to year-ago levels after collapsing by as much as 30 per cent during the depths of the lockdowns, the thermal coal market still remained deeply challenged.


China is Sending the World’s First Mining Robot to Space in November

China is all set to send out the world’s first mining robot into space by November this year. A private Beijing company, Origin Space, will be launching this ambitious project. Despite being called an ‘asteroid mining robot’, it’s not going to do any actual mining. The mission is a preliminary assessment, to field-test technologies aimed at the eventual mining of asteroids.

The NEO-1 will most probably be launched as a secondary payload on a Chinese Long March rocket. The spacecraft is quite light by spacecraft standards at 30 kg. It will enter at an orbit around the earth at 500 km altitude. “The goal is to verify and demonstrate multiple functions such as spacecraft orbital manoeuvre, simulated small celestial body capture, intelligent spacecraft identification and control,” said Yu Tianhong, Origin Space co-founder in an interview with IEEE Spectrum.

The actual progress that can be made by the NEO-1 mission is subject to speculations, as it has never been attempted before. The company mphasizes that this mission is only a prospector and not a miner. The project, if successful, can open up a trillion-dollar industry.

The mission may sound like an episode from a science-fiction show with intergalactic power struggles. Space is mostly an uncharted territory but things are heating up. With Elon Musk’s constant messaging to “colonize Mars” to Russia laying claim on Venus as its research territory, the space activity can get really exciting in the years ahead.

Even NASA announced that it would be buying ‘moon rocks’ from private companies in the future. For scientists and even common people, space is a subject of wonder, an awe of the universe’s grandness. For billionaires, it’s a business opportunity. The ethics of taking something from space and selling it on Earth is being widely debated by scientists who are not in favour of Space privatization. But with the launch of this mining mission, those debates won’t matter once it becomes a reality.


RANKED: Top 10 mining property deals in the last five years

Large scale property acquisitions peaked in 2016–2017 led by China Molybdenum’s purchase of the Tenke Fungurume mine in the Democratic Republic of the Congo.

China Molybdenum bought Freeport-McMoRan’s 56% stake in the copper-cobalt mine in November 2016 and picked up Lundin Mining’s 24% interest in April 2017 for a total consideration of $3.8 billion, based on data from Miningintelligence.

The second-largest transaction since 2015 was Yancoal Australia’s Warkworth purchase, while another large coal buy – Glencore’s Hunter Valley purchase from Rio Tinto – falls just outside the top 10.

Targets in the top 10 are all producing mines with the majority being copper operations. Battery metals make an appearance at no. 9, with US lithium giant Albemarle closing on the Wodgina spodumene transaction in late 2019, only to put the Pilbara site on care and maintenance shortly after.

Newmont’s acquisition of Anglogold Ashanti’s Cripple Creek and Victor complex in Colorado is the single gold mine transaction in the top 10, although with gold prices rallying to record highs the industry could well see a great number of large precious metals deals in the future.

pic3 Behre Dolbear newsletter 06.10.2020



comm1 Behre Dolbear newsletter 06.10.2020comm2 Behre Dolbear newsletter 06.10.2020comm3 Behre Dolbear newsletter 06.10.2020