October Newsletter – 19.10.2020


  • Pacific Battle Over Gold Mine Ends With Barrick Stake Deal
  • Hopes of an improvement in Australia-China relations dashed as Beijing ups the ante
  • Mexico deploys special police unit to protect Fresnillo gold mine
  • Indonesia sees China firms lead ‘commitment’ for $35 billion nickel investments
  • Japan’s JERA to shut inefficient coal-fired power plants by 2030
  • Atlantic coking coal: Prices flat amid China jitters
  • Japan joins U.S.-led pact for space exploration and moon mining
  • Chile’s Collahuasi copper mine union agree on new contract

Pacific Battle Over Gold Mine Ends With Barrick Stake Deal

(Bloomberg) — Papua New Guinea’s push for greater sway over its own mineral wealth scored a win, with Barrick Gold Corp. agreeing to a deal that will see the South Pacific nation get a big stake in a key gold mine.

Barrick will give Papua New Guinea a “major share” of the Porgera mine, the country’s Prime Minister James Marape said Thursday in a joint statement with the Toronto-based miner. In exchange, Barrick can re-open and keep operating the facility, which had been suspended after the government didn’t extend its mining lease in April, and there would be a “fair sharing” of the economic benefits.

The in-principle agreement follows a months-long showdown that escalated to legal challenges and tested Marape’s pledge to obtain a greater share of Papua New Guinea’s resources wealth. It echoes similar drives by other commodities-rich nations, including Indonesia, to direct more revenues to state coffers.

“I look forward to hearing of the outcomes of further discussions on the economic principles to guide future mining operations,” Marape said after talks in Port Moresby with Barrick’s Chief Executive Officer Mark Bristow.

Marape swept to power last year with a pledge to increase the state’s share of wealth from the production and export of materials. He also criticized previous deals, and is pursuing energy giant Exxon Mobil Corp. for better terms on a gas investment.

Barrick’s Bristow said in a separate email Thursday that there had been “progress to an amicable set of agreements, but there is still some way to go until a binding agreement on a way forward is reached.”


Hopes of an improvement in Australia-China relations dashed as Beijing ups the ante

Speculation China may be seeking to lower the temperature in its fractious dealings with Australia appears to be premature.

This follows confirmation that Chinese customers have been advised to defer orders of Australian thermal and metallurgical coal.

On top of this, Australian cotton exporters have been advised exports will be cut next year, a blow to a business worth about $2 billion annually.

Australian mining giant BHP has received “deferment requests” for its coal shipments, according to the company’s chairman, Ken MacKenzie.

On the face of it, this is the most damaging trade reprisal by Beijing against what it perceives to be Australia’s hostile attitudes to it in tandem with its security partner, the United States.

It seems more than coincidental that just days after Australia took part in a meeting in Tokyo of the Quad (previously known as the Quadrilateral Strategic Dialogue and involving Japan, Australia, India and the US), China took such action.

To put this in perspective, China has targeted Australia’s third-largest export commodity to the Chinese market behind natural gas and iron ore.


Mexico deploys special police unit to protect Fresnillo gold mine

MEXICO CITY, Oct 18 (Reuters) – Mexican authorities on Sunday deployed more than a hundred specially trained police agents in the north of the country to safeguard the gold mine of a top mining company amid growing insecurity about organized crime.

The agents are the first to be deployed as part of a newly created police unit and have been tasked with safeguarding the facilities of Fresnillo FRES.L at the La Herradura gold mine in the northern border state Sonora as well as its workers.

“Organized crime has become a threat to the mining sector,” Manuel Espino, head of the federal protection service that trained the agents, said at an event at the La Herradura mine.

In 2019, the La Herradura mine produced more gold than any other in the country, data from the mining chamber shows.


Indonesia sees China firms lead ‘commitment’ for $35 billion nickel investments

Indonesia expects to see investment in nickel processing, as well as petrochemicals, double to $35 billion by 2033, led by investors from China seeking to expand their businesses in Southeast’s biggest economy.

Chinese steel and battery companies operating in Indonesia met with the country’s Coordinating Minister for Maritime and Investment Affairs Luhut Pandjaitan during his recent visit to Yunnan province, the minister’s spokesman Jodi Mahardi said.

Among the projects discussed was a plan by China’s Contemporary Amperex Technology Co Ltd (CATL) 300750.SZ and Ningbo Lygend Mining Co to create an integrated lithium battery production facility, according to Jodi, who said it would be their largest such facility in the world.

The companies, along with others including Tsingshan Holding Group and Delong Holdings, currently have around $16 billion invested in Indonesia and “made a commitment” to the minister to increase their collective investment to around $20.9 billion by 2024 and to around $35 billion by 2033, said Jodi.

“They will collaborate with investors from France, Japan, South Korea, Australia and other countries,” Jodi said.

The companies are planning to expand their nickel processing capacity in Indonesia, as well as investing in petrochemicals and stainless steel, he added.

CATL, Ningbo Lygend and a Tsingshan representative declined to comment, while Delong Holdings could not immediately be reached.

Indonesia, a major nickel ore producer, is keen to expand as a nickel processing hub, starting from steel, to extracting battery grade chemicals from the ore, and eventually producing batteries for electric vehicles (EVs) and building EVs.

A group of Indonesian state-owned companies are planning to form a venture to make batteries for EVs, the chief executive of Mining Industry Indonesia said this week, and the new company would partner with Chinese and Korean firms on projects valued at $12 billion.


Japan’s JERA to shut inefficient coal-fired power plants by 2030

Closing inefficient coal power stations is in line with government policy but this was the first time a power company declared an intention to match that policy.

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TOKYO: Japan’s biggest power generator JERA said on Tuesday it will shut down all inefficient coal-fired power plants in Japan by 2030 and it aims to achieve net zero emissions of carbon dioxide by 2050 to tackle climate change.

Closing inefficient coal power stations is in line with government policy but this was the first time a power company declared an intention to match that policy.

A government panel is deliberating on how to define an inefficient coal-fired plant but JERA said, provisionally, it saw inefficient plants as ones that use “supercritical or less” technology.

JERA, a thermal power and fuel joint venture between Tokyo Electric Power Company Holdings and Chubu Electric Power, set the ambitious 2050 target as companies worldwide are accelerating action to help create a decarbonised society.

“As a company operating globally and as a utility generating about one-third of domestic electricity, setting these goals is an essential qualification for remaining to be an energy company and an entry ticket for doing business in the global market,” Hisahide Okuda, managing executive officer at JERA, told a news conference.

The company declined to say how many coal power plants will be closed by 2030, citing competitive reasons.

To achieve the 2050 target, JERA aims to boost renewable energy centered on offshore wind-power farms while using greener fuels such as ammonia and hydrogen at its thermal plants.

It plans to start a pilot programme to use ammonia as a fuel with coal in mixed combustion at its Hekinan thermal power station in central Japan by 2030 and hopes to achieve 20 per cent use of ammonia at its coal-fired power plants by 2035.


Atlantic coking coal: Prices flat amid China jitters

US coking coal prices held largely steady today, with mixed views among Atlantic suppliers towards China’s clampdown on Australian imports. The initial response of most US mining firms was upbeat, as they looked forward to the prospect of Chinese enquiries for US material. But alarm bells were later sounded by Chinese mills seeking to resell cargoes booked earlier.

The Argus daily fob Hampton Roads assessment for low-volatility coking coal edged down by 75¢/t to $116.50/t as spot interest softened, with some buyers holding back to assess the market. The high-volatile A price was unchanged at $125/t fob Hampton Roads, supported by supply limitations. The high-volatile B assessment was unchanged at $110/t fob Hampton Roads, as offers continued to exceed that level for the first quarter.

The first firm indications of an immediate ban on Australian coal were communicated to Chinese state-owned mills late last week, fuelling hopes among US producers as enquiries emerged for coking coal. But Chinese mills are also looking at Russian material, traders said. “The Russian miners and suppliers are trying to push up prices as availability is limited in the fourth quarter,” a European trader said. “And while there might be enquiries for US coals, most of them still do not offer the quality that comes from Australia.”

Strong Mongolian exports to China since the lifting of Covid-19 border restrictions has also meant that Chinese mills might not be that short, according to some market participants, who say the ban on Australian imports was a convenient political statement by Beijing — while Mongolian availability was strong — and likely to be short term. At least three steel producers in north and south China have reached out to coking coal traders and steel mills in Asia with requests to take cargoes they booked earlier, but are now blocked from importing. Chinese mills are holding as much as 800,000t, or 10 cargoes, that they are seeking to divert, market participants said.


Japan joins U.S.-led pact for space exploration and moon mining

Japan joined a U.S.-led international agreement Wednesday that outlines the exploration and utilization of resources in space, the government said.

The Artemis Accords proposed by NASA seeks to establish a set of principles for space exploration including lunar resource extraction. China and Russia are not members of the framework.

The agreement also covers issues regarding space debris and stipulates that its members will not interfere with their counterparts’ endeavors on the moon.

“I hope it will become a guide to implementing future international regulations,” said science and technology minister Shinji Inoue in a video message for an online signing ceremony.

The treaty paves the way for its founding members — Australia, Canada, Italy, Japan, Luxembourg, United Arab Emirates, the U.K. and the United States — to participate in NASA’s Artemis program, which aims to return humans to Earth’s nearest neighbor by 2024.


Chile’s Collahuasi copper mine union agree on new contract

Chile’s Collahuasi copper mine workers union and management have reportedly reached an agreement on a new labour contract.

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FCAB ore train crossing the Ascotán salt flat at the Collahuasi mine.

The new deal has helped avert the threat of a strike at the deposit, Reuters reported, citing an undisclosed source with knowledge of the discussions.

The legal deadline for the negotiations is on 30 October. The new contract would be effective from 1 November, Reuters said.

Glencore and Anglo American each hold 44% in Collahuasi while the remaining 12% is held by Japan Collahuasi Resources.

The Japanese consortium is led by Mitsui & Co and includes Nippon Mining & Metals Co and Mitsui Mining & Smelting Co.

According to the news agency, the negotiations were the “most sensitive of 2020” in the nation due to the union size and importance of the mine with respect to its contribution to the total output in the country.

Reuters quoted its source as stating: “There is a good atmosphere… the issue has been settled.”

The Collahuasi copper mine is situated in northern Chile, about 180km southeast of the port of Iquique. It is considered as one of the largest mines in Chile.



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