October Newsletter – 12.10.2020


  • China’s Carbon Neutrality Bill Could Top $5 Trillion
  • Big Utah Potash Project Collapses For Lack Of Investors
  • Sumitomo to sell stake in Sierra Gorda copper mine
  • Looming changes for FIFO employees in Western Australia
  • Indonesian state miner completes 20 percent stake buy in Vale unit for $375m
  • Court Ruling Denies Chinese Miner’s Rights to Keep Running Papua New Guinea Gold Mine
  • Whitby: Hundreds of jobs created at Woodsmith Mine
  • Panthera aims for significant project development over next 12 months
  • China’s Monopoly On Rare Earth Elements And Why We Should Care – Analysis

China’s Carbon Neutrality Bill Could Top $5 Trillion
New analysis from global energy consultancy Wood Mackenzie (WoodMac) shows more than US$5 trillion of investments would be needed for China to reach its pathway for carbon-neutrality by 2060. The hefty bill is the total sum required for “additional power generation capacity to accommodate the growth in electrification by 2050,” WoodMac analysts said.

Wood Mackenzie Asia Pacific Head of Markets and Transitions, Prakash Sharma, explains, “It is definitely a colossal task for a country using 90% hydrocarbons in its energy mix and annually producing more than 10 billion tonnes of CO2-e, and in addition, accounting for 28% of global total emissions.

“In our Accelerated Energy Transition (AET-2) scenario, China’s emissions peak immediately and enter a period of rapid decline, reaching net-zero slightly after 2050. This is achieved by widescale electrification of transport, heating, and the industry as well as the deployment of carbon capture use and storage (CCUS).”

WoodMac estimates solar, wind, and storage capacities will have to increase 11 times to 5,040 gigawatts (GW) by 2050 compared to 2020 levels for China to meet the goal. Coal-fired power capacity halves while gas ends at the same level as in 2019. Total power output expands nearly 2.5 times to 18,835 terawatt-hours (TWh) by 2050 compared to current levels.

“The most challenging part of the shift is not the investment or magnitude of renewable capacity additions but the social transition that comes with it,” said Sharma. He notes that halving coal capacity will result in the loss of coal mining jobs, affecting provinces that depend on its revenues and employment generation. “We expect the government to retrofit coal-fired power plants with CCS to retain coal mining activity in key provinces. This approach aligns with China’s strategy to optimize domestic coal resources to improve energy security.”


Big Utah Potash Project Collapses For Lack Of Investors

A few years ago, Crystal Peak Minerals boasted of plans to become a top producer of potash, a valuable mineral used in fertilizers, once it got its operation running on the bed of Utah’s Sevier Lake.

With great fanfare last year, the Trump administration’s Interior Department announced it was approving Crystal Peak’s plans for a network of canals and evaporation ponds on the 124,000 acres comprising the mostly dry Sevier lakebed in Millard County.

“It’s also exciting to see more potash being produced domestically, especially in Millard County,” the Utah Republican said. “I am pleased to have Crystal Peak Minerals operating in my district.”

The company appears to have not yet communicated its latest intentions to the the BLM, which oversees most of the lakebed.
“The BLM is waiting to hear from Crystal Peak Minerals before working on the notice to proceed, which would allow Crystal Peak Minerals to begin work on the playa,” spokeswoman Hannah Lenkowski said Friday. “The BLM will also install compliance inspectors when Crystal Peak Minerals is ready to begin work.”

While the potash-mining jobs are not likely to materialize for Millard County, environmental activists were relieved the Sevier Playa will remain intact for no Bloch also praised the preservation of dark night skies.

Crystal Peak previously had qualified for a generous tax credit the Utah Legislature tailor-made for the project in 2015. SB216 provided the credit to such projects to cover up to half of what they invest in utility infrastructure.

EMR officials could not be reached for comment.

Woods Silleroy, Crystal Peak’s corporate secretary and designated public contact, did not respond to an email.
Under the project proposal, the Sevier Playa would have produced the more valuable sulfate of potash, used to fertilize high-value nut and fruit crops, which are sensitive to the chlorine in other, cheaper forms of potash.

Over the 30-year life of the project, production could be as high as 372,000 tons a year, worth $232 million at last year’s spot prices, which have declined in recent months. The mine also expected to extract salt and magnesium chloride.
The plan was to drill up to 2,264 wells and cut up to 306 miles of trenches into the lakebed to collect brines that would be moved through a system of ponds, covering up to 18,000 acres, according to the project’s environmental impact statement. As the water evaporated, the brines would get more concentrated.

Recent news releases suggest the pandemic thwarted the company’s fundraising efforts, but Crystal Peak had its permits in hand months before the coronavirus blew a hole in the global economy.


Sumitomo to sell stake in Sierra Gorda copper mine

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Sierra Gorda is located in the richest copper basin in Chile – the Atacama desert in the Antofagasta region

Japanese miner Sumitomo Metal (TYO: 5713) said on Thursday it was reviewing its strategic options regarding its minority stake in Sierra Gorda copper mine in northern Chile, majority-owned by Polish miner KGHM (WSE: KGH).

The Asian giant said that selling its 45% holding in the mine was one of the routes to be explored with its financial and legal advisors, RBC Capital Markets and Sullivan & Cromwell LLP.

KGHM, Europe’s second-largest producer of the red metal, said instead that Sumitomo had already begun the process of leaving the venture. The miner, which is also one the world’s largest silver producers, added it was not interested in increasing its stake in the money-losing operation.

The state-controlled company noted that it would continue “all optimization efforts” aimed at increasing the value of the asset.


KGHM has been criticized for the steep investment allocated to developing the Chilean mine ($5.2 billion and counting). Sierra Gorda, which began production in 2014, has constantly failed to meet expectations due to challenging metallurgy and difficulties in using seawater for processing.

BMO Capital Markets analyst Edward Sterck estimates the present value of Sumitomo stake is around $513 million, assuming the mine achieves design cost and production rates.

“It is worth noting that the JV shareholders have been forced to provide external funding every year since inception due to disappointing performance and this may drive a discount,” he said in a note to investors.

Jakub Szkopek, analyst at BM mBank, noted Sumitomo’s exit may pose further challenges to KGHM.


Looming changes for FIFO employees in Western Australia

There could be interesting changes (challenges?) ahead for Australian mining’s fly-in-fly-out (FIFO) workers, at least for the foreseeable future.

Whilst the sector has certainly seen some changes since the pandemic that is covid-19 hit the world, they could well pale by comparison to those in the pipeline. Australia, and one state in particular, leads the world when it comes to the use of FIFO mine employees. The state currently has between 6000 and 7000 interstate FIFO workers employed in its massive mining sector. They fly in and out from other states, many from Queensland. Or at least they did until covid struck the country.

The Australian mining sector in general is to be commended for its handling of the pandemic. The Australian government recognised very early on that mining was one of the ‘essential’ industries that had to remain operational to help keep the country afloat.

Traditionally it has been responsible for around 8% of the nation’s GDP each year, and earns over half its export income. There’s also no doubt Australia has benefited greatly from the current mining woes in other countries. The forced closure of major competitors in Brazil and South Africa for instance has given Australia an opportunity to ‘fill the gap’, which it has done with alacrity.


During the pandemic Australia’s mining companies in general have worked with state and national governments to come up with solutions for ensuring employees do not contract and transmit the virus whilst travelling to and from a site. As a result, no employees have ‘yet’ contracted covid whilst on site in Australia, allowing the industry to remain free of infections where it matters most – on operational sites. This is in stark contrast to many other countries where infections have forced the closure of sites and, in some cases, the entire sector.


Indonesian state miner completes 20 percent stake buy in Vale unit for $375m

Indonesia’s state miner Mining Industry Indonesia (MIND ID), formerly known as PT Inalum, completed its purchase of a 20 percent stake in nickel miner PT Vale Indonesia, the country’s state- owned enterprises ministry said on Thursday.

MIND ID bought the 20 percent stake at Rp 2,780 per share, totaling to Rp 5.52 trillion (US$375.77 million), the ministry said in a statement.

Brazil’s Vale Group controls 44.34 percent of PT Vale Indonesia, while Japan’s Sumimoto Metal Mining Co. Ltd holds 15.93 percent of shares, the ministry said.

MIND ID bought 14.9 percent stake from Vale Canada Ltd, the Canadian subsidiary of Vale Group, and 5.1 percent from Sumimoto, according to the statement.

“With this transaction, we add more state ownership in the mining sector,” State-Owned Enterprises Minister Erick Thohir said. “This is also a great step to strengthen the value chain in Indonesian and the development of the battery industry for electric cars.”

The Indonesian government is keen to build a holistic onshore electric vehicle (EV) industry, covering everything from the production of nickel chemicals needed for batteries, through to producing those batteries and eventually building vehicles domestically.

Mining Industry Indonesia changed its name from PT Inalum in August to distinguish its holding company function from its smelting operational business.


Court Ruling Denies Chinese Miner’s Rights to Keep Running Papua New Guinea Gold Mine

A court in Papua New Guinea has dismissed the third application by Barrick Niugini Ltd. (BNL), to review the government’s previous decision not to extend the lease of the Porgera gold mine to the joint venture between Chinese Zijin Mining Group Co. Ltd. and Canadian Barrick Gold Corp., according to a statement issued Wednesday by BNL.

Earlier this month, BNL publicly challenged the a rumor that the Porgera mining lease would be given to local state-owned miner Kumul Mineral Holdings Ltd. pointing out that the mine covers certain parts of land that BNL still has a lease for.

What’s the context: The Porgera mine, located in the country’s northern highlands, is one of the world’s 10 largest gold mines. In April, the Papua New Guinea government denied an application from BNL to extend its lease of the Porgera gold mine. After a lengthy dispute, a local court ruled on the legality of the government’s actions with the consequence of BNL’s mining lease ending on Sept. 1.

The mine has a remaining life of 20 years, with high-grade gold reserves of 11.6 million ounces, according to the government. If the mine produces 500,000 ounces of gold a year at a price of $2,000 per ounce, the annual cash flow will be $1 billion, Papua New Guinea Prime Minister James Marape estimated. After taking out operating costs of $360 million, the prime minister projected a net profit of $640 million a year from the mine.


Whitby: Hundreds of jobs created at Woodsmith Mine

Two hundred jobs are being created by a company developing a huge potash mine in North Yorkshire.

Anglo American Crop Nutrients is sinking two major mineshafts to access deposits of polyhalite ore a mile deep at its Woodsmith mine near Whitby.

Once processed it will be sold globally to farmers as a natural fertiliser.

The roles include specialist engineers to non-specialist construction workers and the firm said it hoped as many jobs as possible would go to local people.

Sirius Minerals, the firm who who previously ran the mine, was taken over by Anglo America in March 2020.

The firm said the roles would become available in stages over the coming months and would include jobs working directly for Anglo American and construction contractors.

Anglo American is sinking two shafts to access the polyhalite ore that lies over a mile beneath the surface using large boring machines.

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When the mine is complete, the mineral will be brought up the production shaft and transferred to the mineral transport tunnel, which will carry the ore on a 23 mile long underground conveyor belt to a processing plant on Teesside.


Panthera aims for significant project development over next 12 months

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Exploration work underway at Panthera Resources’ Bido (formerly Naton) gold project in Burkina Faso

UK-headquartered gold explorer and developer Panthera Resources reports that significant activity will soon start across its nine projects in West Africa, India and Germany, to help the junior miner gain more traction in the sector, says MD Mark Bolton.

The company has an interest in two projects in Mali (Bassala and Kalaka), two in Burkina Faso (Labola and Bido [formerly Naton]), two in Nigeria (Paimasa and Dagma), two in India (Bhukia and Taregaon) and the Anglo Saxony project in Germany.

Starting in the fourth quarter, Panthera expects its special purpose vehicle Moydow to commence drilling at the Paimasa and Dagma projects, while it also continues to review the resource estimates at Labola.

In the fourth quarter, Panthera is undertaking a quality assessment and quality control for its Joint Ore Reserves Committee (Jorc) deposit analysis and resource estimation of the Labola project, following which it will also conduct a metallurgical review and undertake more drilling on the project to further expand the resource estimate.

In terms of project financing and management, Panthera completed a transaction with Moydow – which resulted from a partnership with an experienced West African team.

“The Moydow team have a strong record in West Africa, operating there since 1985. They have made a number of gold discoveries and also have other operations, particularly in the drilling sector in West Africa,” Bolton says.

The Moydow partnership is important because Panthera can only manage “so many projects on our own”, he notes, adding that the relationship with Moydow enables Panthera to essentially partition the business into silos, with Moydow financing and operating four of Panthera’s projects.

“This enables us to focus on two [projects] in West Africa and two in India.”


Although the Bhukia project, in India, is Panthera’s flagship project – with a resource estimate of 6.7-million ounces of gold and 159 000 t of copper – the company’s focus and volume of activity will also now be focused on its West African projects.

In particular, the Labola project will be the company’s main focus as this is an advanced project with 65 000 m of drilling having been undertaken to date.

“We have already processed all of the drilling results, resulting in us reporting a Jorc exploration target of a 500 000-oz to 1.5-million-ounce deposit based on these drill results,” he says, adding that, as such, Panthera is due to announce a “substantial” resource in the coming months.


China’s Monopoly On Rare Earth Elements And Why We Should Care – Analysis

“A U.S. rare earth mineral strategy should . . . consist of national stockpiles of certain rare earth elements, reestablishing rare earth mineral processing in the U.S. by implementing new incentives and removing disincentives, and [research and development] around new forms of clean rare earth mineral processing and substitutes. We will need your help.” – Ellen Lord, Undersecretary of Defense for Acquisition and Sustainment, Testimony to Senate Armed Services Subcommittee on Readiness and Management Support, October 1, 2020.

(FPRI) — One day before Ms. Lord’s testimony, President Donald Trump had signed an executive order “declaring a national emergency in the mining industry,” aimed at “incentivizing the domestic production of rare earth minerals critical for military technologies while reducing American dependence on China.” The sudden sense of urgency in a heretofore little discussed topic must have come as a surprise to many.

According to geologists, rare earths are not rare, but they are precious. The answer to what appears to be a riddle lies in accessibility. Comprising 17 elements that are used extensively in both consumer electronics and national defense equipment, rare earth elements (REEs) were first discovered and put into use in the United States. However, production gradually shifted to China, where lower labor costs, less concern for environmental impacts, and generous state subsidies enabled the People’s Republic of China (PRC) to account for 97 percent of global production. In 1997, Magniquench, then-America’s leading rare earths company, was sold to an investment consortium headed by Archibald Cox, Jr., son of the same-named Watergate prosecutor, with two Chinese state-owned metals firms, San Huan New Materials and China National Nonferrous Metals Import and Export Company. The chairman of San Huan, son-in-law of paramount leader Deng Xiaoping, became chairman of the company. Magniquench was shut down in the United States, moved to China, and reopened in 2003, where it fit in well with Deng’s Super 863 Program to acquire cutting-edge technologies for military applications, including “exotic materials.” This left Molycorp as the last remaining major rare earths producer in the United States until its collapse in 2015.



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