October Newsletter – 17.10.2022

  • Lending to Saudi Arabia’s mining sector rises 60%
  • Quebec is a top gold, silver mining district, but it can’t rest on its laurels
  • Scotland declares formal opposition to coal mining
  • China won’t rush its clean energy transformation, Xi says
  • India: After shortage of coal, now a problem of plenty
  • Germany looks to Mongolia in push for critical raw materials
  • GM to take equity stake in Australian mining company
  • Cameco, Brookfield Renewable Partners to buy Westinghouse in $7.9 billion deal
  • Chinese investors dogged by human rights violations controversy in Zimbabwe

Lending to Saudi Arabia’s mining sector rises 60%

RIYADH: Finance companies’ loans to the Saudi mining and quarrying sector surged 60 percent to SR237.1 million ($63 million) in the second quarter from SR148.2 million during the same period last year, revealed the data released by Saudi Central Bank, also known as SAMA.

Credit to the sector, which constitutes 1.4 percent of the overall loan disbursals from finance companies, increased 45 percent from SR163.6 million in the first quarter.

“Mining and quarrying is a capital-intensive activity. These companies would typically take bigger ticket facilities from the banks or even through capital markets,” Jarmo Kotilaine, an economist and strategist focusing on the Gulf region, told Arab News.

The increase in lending could be attributed to the heightened interest among finance companies to diversify lending but also by businesses to explore new sources of funding as credit conditions tighten, pointed out Kotilaine.

Credit to the transportation and communications sector increased 10.9 percent to SR1.9 billion in the second quarter from SR1.7 billion in the quarter ending March.


Quebec is a top gold, silver mining district, but it can’t rest on its laurels

Quebec remains a major player in the global mining sector; however, if it wants to remain a world leader, it needs continued government support, according to Eric Lemieux, an independent mining analyst with EBL Consultants.

On the sidelines of the Xplor mining conference in Montreal, Quebec, Lemieux said that if Quebec is to realize its full potential, it needs the continued government support. He added that he hopes the government has learned important mistakes from the past. Nearly ten years ago, the Quebec government at the time suspended uranium exploration throughout the province. Lemieux noted that decision has proven to be shortsighted as demand for the energy metal has grown over the last few years.

Lemieux said that he sees a similar scenario brewing as Quebec looks to develop its critical minerals sector. He said that governments should put in place parameters mining companies must follow but ultimately let them develop the province’s vast resources.


Scotland declares formal opposition to coal mining

Scotland has in effect banned coal mining by confirming no support will be given to future extraction.

While there are no mines in Scotland, a conditional licence has been granted for a site in Cumbria which extends into Dumfries and Galloway.

Powers over coal exploitation are reserved to Westminster, but Holyrood’s planning role means it can block developments.

The UK government is due to rule on the Cumbria proposal next month.

If allowed, the mine near Whitehaven would be the UK’s first deep coal mine in more than 30 years, extracting coking coal for steel production from beneath the Irish Sea.

The UK’s steel-making industry currently use large quantities of Russian coal, but former prime minister Boris Johnson previously said he wanted to move away from Russian resources following the invasion of Ukraine.

The Coal Authority, which granted a conditional licence, currently has a statutory duty to secure an economically viable coal mining industry, although UK ministers are reviewing that in the light of climate change goals.

The UK government has pledged to end the use of coal for electricity production by October 2024.

Coal mining was once a major industry in Scotland, but the last deep mine at Longannet in Fife closed in 2002. The nearby Longannet power station ceased generation in 2016, and it was demolished last year.


China won’t rush its clean energy transformation, Xi says

President Xi Jinping has promised a slow and steady end to the growth of planet-warming emissions in China, with energy security taking top priority as the country contends with a flagging economy and tumult on global fuel markets.

In a two-hour speech to kick off the weeklong Communist Party Congress, Xi said that prudence would govern China’s efforts to peak and eventually zero-out carbon emissions. The cautious wording comes after a spate of high-profile power shortages in recent years, and as global energy costs have soared after Russia’s invasion of Ukraine upended trade flows.

The speech made China’s path to decarbonization clear: It won’t stop burning fossil fuels until it’s confident that clean energy can reliably replace them.

“We will work actively and prudently toward the goals of reaching peak carbon emissions and carbon neutrality,” Xi said in his address. “Based on China’s energy and resource endowments, we will advance initiatives to reach peak carbon emissions in a well-planned and phased way, in line with the principle of getting the new before discarding the old.”

China is the world’s largest emitter of greenhouse gases, and Xi electrified climate activists two years ago when he vowed to reach carbon neutrality by 2060 after peaking emissions before 2030. The announcement sparked a massive surge in investment in clean energy by local governments and state-owned firms.

But last year, focus began to return to China’s mainstay fuel of coal after a shortage triggered widespread power curtailments to factories, slowing economic growth. The country vowed to increase mining capacity, and production has risen to record levels this year, keeping storage sites well stocked and reducing imports.


India: After shortage of coal, now a problem of plenty

After expedited efforts to import coal amid a fuel crisis earlier this year, Coal India Ltd, the country’s biggest coal miner, is now finding it tough to get buyers for its imported coal lying at the ports.

Coal India has so far imported 300,000 tonnes of coal out of a total tendered quantity of 6 million tonnes, said two officials.

“Contracts were done as per the indication of demand Coal India had received. Around 300,000 tonnes of the contracted amount has come, and even that is not being lifted (by power generation companies or gencos). Several of the gencos who showed interest in importing coal with Coal India have taken back their requests,” said one of the two officials.

The other official said the fall in demand for imported coal has come on the back of increased domestic fuel supplies and low operations of imported coal-based plants.

“Domestic supplies have increased. The imported coal-based plants, which produced 9 billion units (of power) maximum, are now producing 1.3-3.2 billion units. And even in this scenario, there were no blackouts. It has been managed because the power plants which were low in the merit-order despatch are now producing power by taking additional domestic coal from us,” said the official.


Germany looks to Mongolia in push for critical raw materials

Germany wants to expand investment in Mongolia to help secure strategically important raw materials including copper and rare earths, according to Chancellor Olaf Scholz.

Western Mongolia.

The East Asian nation sandwiched between Russia and China can be a reliable partner for Germany as it seeks to diversify suppliers and guarantee access to the materials it needs in areas like battery and chip production, Scholz said Friday after talks with Mongolian Prime Minister Oyun-Erdene Luvsannamsrai in Berlin.

“What is important now is that very concrete projects are identified where cooperation can be taken forward,” Scholz told reporters at a joint news conference. Germany wants “many good partners around the world” as it looks to avoid “placing all of its eggs in one basket,” he added.

Major economies like Germany are competing fiercely for increasingly scarce resources and access to metals and rare earths is crucial for their climate and digital transitions.

Vladimir Putin’s invasion of Ukraine has also been a wake-up call for Germany, which built up a heavy reliance on imports of Russian fossil fuels in recent decades and is now seeking to diversify suppliers of the materials it needs to keep its economy running.

European Commission President Ursula von der Leyen said last month that commodities like lithium and rare earths will soon be more important than oil and gas.


GM to take equity stake in Australian mining company

General Motors Co said on Tuesday it will invest up to $69 million and take an equity stake in Queensland Pacific Metals to secure a new source of nickel and cobalt for battery cells for use in the US automaker’s vehicles.

GM said the investment will help support electric-vehicle eligibility for consumer incentives under new, clean energy US tax credits. GM said the nickel laterite ore is expected to be processed using a new, proprietary process that helps reduce waste.

Under a law passed in August, automakers must source battery minerals from countries with free trade agreements in order to qualify for the US consumer EV tax credits.

The GM investment is to assist in the development of its proposed Townsville Energy Chemicals Hub (TECH) project in Northern Australia. High-grade nickel laterite ore will be imported from nearby New Caledonia, GM said.

GM already has binding agreements securing all battery raw material supporting its goal of 1 million units of annual capacity in North America by the end of 2025.

GM said the “new collaboration builds on those commitments as we look to secure supply through the end of the decade, while also helping continue to expand the EV market.”

Queensland Pacific Metals CEO Stephen Grocott said “GM’s investment in our company and the associated offtake brings us one step closer towards construction of the TECH project.”


Cameco, Brookfield Renewable Partners to buy Westinghouse in $7.9 billion deal

Cameco Corp and Brookfield Renewable Partners said on Tuesday they would acquire nuclear power plant equipment maker Westinghouse Electric in a $7.9 billion deal including debt, amid renewed interest in nuclear energy.

Cigar Lake uranium mine

The deal for one of the most storied names in the American power industry at an equity value of $4.5 billion comes at a time when nuclear power is seeing an uptick in interest amid an energy crisis in Europe and soaring crude oil and natural gas prices.

Nuclear power is also key for countries to meet global net-zero carbon emission goals and could be on the cusp of a boom seen after the 1970s oil crisis.

“We’re witnessing some of the best market fundamentals we’ve ever seen in the nuclear energy sector,” Uranium fuel supplier Cameco’s chief executive, Tim Gitzel, said.

Cameco will own 49% of Westinghouse, while Brookfield Renewable and its institutional partners will own the rest.

Westinghouse was acquired from Toshiba Corp by Brookfield Business Partners, an affiliate of Canadian asset manager Brookfield, out of bankruptcy in 2018, for $4.6 billion, including debt.

Brookfield Business said in a separate statement it expects to generate about $1.8 billion in proceeds from the sale of its 44% stake in Westinghouse, with the balance distributed among institutional partners. The deal is expected to close in the second half of 2023.


Chinese investors dogged by human rights violations controversy in Zimbabwe

Chinese-run companies in Zimbabwe have been dogged by controversy with gross human rights violations and safety norms for mining workers.

The recent incident of ill-treating by the Chinese mine owner has once again exposed the exploitation of locals and unethical practices adopted by Chinese employers in the African nation, reported Africa Daily.

It is not only ill-treatment but the Chinese investors usually accuse local workers of stealing and verbally and physically abusing them and blatantly violating laws.

The Centre for Research and Development (CRD), a Manicaland-based natural resources governance organisation stated that Chinese mining operations in Odzi were blatantly violating laws that regulate health and safety issues.

Recently a Chinese-run gold mining company operating in the Odzi peri-urban area of Mutare district, Zimbabwe has been accused of ill-treating workers and flouting the country’s labour laws and regulations, reported Africa Daily.

Notably, the Chinese company registered as Odzi Resources Zimbabwe Private Limited runs a number of gold mines across the country, including in Mashava, Mbalabala, Bulawayo, Kwekwe and Mazowe.

In another incident, the Zimbabwe Diamond and Allied Minerals Workers Union (ZDAMWU) appealed (September 19) to the Chinese embassy in Zimbabwe to intervene and ensure Chinese investors comply with the laws of the country.

China has funded and provided loans for many infrastructure projects across Africa in recent years, including the new parliament in Zimbabwe.



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