April Newsletter – 24.04.2023

  • China’s Influence in Central Asia Spreads as US Lags
  • The fine art of exploring mineral deposits
  • Mining M&A spree to keep Australia dealmaking humming after US$37 billion in Q1
  • Chinese company seeking to invest US$10 billion in Afghanistan’s lithium mining sector
  • Saudi’s CMA approves capital increase for two listed mining companies
  • Europe’s most powerful nuclear reactor kicks off in Finland
  • US ready to lend Poland $4 billion for nuclear energy plan
  • The Swedish government wants to speed up mining process to compete with China

China’s Influence in Central Asia Spreads as US Lags

As China strengthens its relations with Central Asian countries, U.S. influence has fallen behind, according to some observers.

U.S. foreign policy in Central Asia has been shaped by strong Russian influence in the region, but China’s growing presence in Central Asia has caused Washington to refocus its strategy through a lens of competition with Beijing. Experts speaking at a recent webinar sponsored by the Caspian Policy Center said the U.S. should not make competing with China the sole focus of its Central Asia strategy.

China and five Central Asian countries recently agreed to sign additional cooperation agreements at a gathering expected to take place in May called the China+Central Asia Summit, Chinese state media reported.

Beijing’s Belt and Road Initiative — which aims to link China to the world through land and sea routes, infrastructure and technology — has exacerbated U.S. concerns about economic dependence and unsustainable infrastructure projects around the world, including in countries like Uzbekistan and Kazakhstan.

“China has a relatively easy task in the region by virtue of its geography, the attraction of its markets, its status as the number one trade partner in the region, and its offering of connectivity,” said Wilson Center analyst Robert Dale.


The fine art of exploring mineral deposits

The accelerating transition to green energy is driving huge demand for many minerals, including the strategically essential minerals facing high risks of supply shortages.

In the meantime, as the world electrifies, it needs vast amounts of lithium, graphite, cobalt, copper, fluorspar and other rare earth minerals for batteries, solar panels, and wind turbines to provide the necessary green infrastructure and help meet the net-zero goals.

According to the World Bank, demand for these minerals could increase by nearly 500 percent by 2050. It is no exaggeration to say that this is shaping to be the biggest minerals bonanza in history. The transition to cleaner energy will likely require an overall investment in mining of around $1.7 trillion.

The industry is focused on prospecting new sources of these minerals to meet the demand, often in countries in the developing world that have yet to attract much investment in mining. These countries enjoy or potentially enjoy mineral endowments, the income from which could improve their economic prospects radically.

However, any country wishing to capitalize on its mineral endowment must put the basic conditions in place to attract investment. Given the sums involved in finding and commissioning mineral deposits, mining houses meticulously analyze the conditions in the potential host countries before committing their resources.


Mining M&A spree to keep Australia dealmaking humming after US$37 billion in Q1

AS AUTOMAKERS and chemicals suppliers scramble to secure raw materials, resource-rich Australia has become a rare global bright spot with US$37 billion worth of mergers and acquisitions (M&A) deals in the first quarter, with the trend expected to continue in the near term.

The increased dealmaking activity is forecast to be mainly supported by cash-rich miners looking to expand quickly via acquisitions to tap into the rising resource demand and others looking to divest their fossil fuel portfolios, bankers and analysts said.

Newmont’s US$18 billion bid for Australia’s top gold producer Newcrest Mining last week has helped drive a 192 per cent surge in inbound M&A into Australia so far this year.

During the first quarter, there were US$36.6 billion worth of announced M&A deals in Australia, as per Refinitiv data, but volatile markets and US and European banking crises curtailed dealmaking elsewhere.

Australia’s deal volume in the first quarter was 3.5 per cent higher than the same period last year. In comparison, the US fell 44 per cent, while global dealmaking was down 48 per cent, according to separate Dealogic data.

“A perfect storm is brewing in resources M&A,” said Kam Jamshidi, a partner at law firm Herbert Smith Freehills in Melbourne. “Most powerfully, portfolio redesign for the energy transition is in full swing.”


Chinese company seeking to invest US$10 billion in Afghanistan’s lithium mining sector

According to the Afghanistan Ministry of Mines and Petroleum, China-based Gochin Company seeks to invest US$10 billion in Afghanistan’s lithium mining sector.

According to the Ministry’s press release, the Chinese company suggested that if it is awarded the lithium mining contract, the company will invest in several significant Afghan infrastructure projects, including tunnels, a power dam, and highways.

Acting minister for Mine and Petroleum, Shahabuddin Delawar, said that the investment would create 120,000 direct and a million indirect jobs in the country.

Geologists have long thought that Afghanistan could have massive, untapped stores of critical minerals—ranging from trillions of dollars.

Before the takeover of Afghanistan by the Taliban in August 2021, the USGS and the Department of Defense spent years and hundred of millions of dollars working to identify and confirm mineral resources in 24 areas of interest (AOIs) in the country.

Location of the Daykundi tin, tungsten, and lithium area of interest in central Afghanistan as one example.


Saudi’s CMA approves capital increase for two listed mining companies

Riyadh – Saudi Arabia’s Capital Market Authority (CMA) passed the requests of Saudi Arabian Mining Company (Ma’aden) and Almasane Alkobra Mining Company (Amak) to raise their capital by issuing bonus shares.

Ma’aden aims to increase its capital to SAR 36.91 billion from SAR 24.61 billion by granting one bonus share for every two owned shares to the eligible stakeholders. Therefore, the outstanding shares will increase by 1.23 billion to 3.69 billion shares from 2.46 billion shares.

The capital hike transaction will be carried out by transferring SAR 2.50 billion from the statutory reserve account and SAR 9.79 billion from the retained earnings account, according to a bourse disclosure.

It is worth noting that the board members of Ma’aden recommended the 50% capital increase on 12 February 2023.

As for Amak, the CMA agreed on increasing the capital from SAR 660 million to SAR 900 million through the issuance of 24 million shares, equivalent to one bonus share for every 2.75 existing shares owned by the eligible shareholders.

The transaction will be executed by transferring SAR 240 million from the share premium account. Therefore, Amak’s outstanding shares will stand at 90 million following the increase, instead of 66 million shares.

Noteworthy to mention that the CMA greenlighted the two capital raise requests on 13 April 2023.

In 2022, Ma’aden achieved higher annual net profits after Zakat and tax of SAR 9.31 billion, while Amak posted lower net profits worth SAR 126.33 million.


Europe’s most powerful nuclear reactor kicks off in Finland

HELSINKI (AP) — Finland’s much-delayed and costly new nuclear reactor, Europe’s most powerful by production capacity, has completed a test phase lasting more than a year and started regular output, boosting the Nordic country’s electricity self-sufficiency significantly.

The Olkiluoto 3 reactor, which has 1,600-megawatt capacity, was connected into the Finnish national power grid in March 2022 and kicked off regular production on Sunday. Operator Teollisuuden Voima, or TVO, tweeted that “Olkiluoto 3 is now ready” after a delay of 14 years from the original plan.

It will help Finland to achieve its carbon neutrality targets and increase energy security at a time when European countries have cut oil, gas and other power supplies from Russia, Finland’s neighbor.

“The production of Olkiluoto 3 stabilizes the price of electricity and plays an important role in the Finnish green transition,” TVO President and CEO Jarmo Tanhua said in a statement. The company added that “the electricity production volume of Europe’s largest nuclear power plant unit is a significant addition to clean, domestic production.”


US ready to lend Poland $4 billion for nuclear energy plan

It comes after Germany shut down its last three nuclear power plants this past weekend as it transitions to renewable energy like wind and solar, which has drawn skepticism at home and abroad.

Steam and smoke rise from a power plant located by the Turow lignite coal mine near the town of Bogatynia, Poland, on Jan. 15, 2022

WARSAW, Poland (AP) — A project to develop small nuclear power reactors in Poland is moving forward, with Polish energy company Orlen and two U.S. government financial institutions signing an agreement Monday.

Poland is turning toward energy that is renewable or does not use climate-changing fossil fuels as it tries to break its reliance on coal. Moscow’s invasion of Ukraine also has accelerated Poland’s drive to cut its dependence on Russian oil and natural gas.

In a ceremony at the U.S. ambassador’s residence in Warsaw, the U.S. Export-Import Bank and U.S. International Development Finance Corporation signed letters of interest to lend up to $3 billion and up to $1 billion, respectively, to the Orlen Synthos Green Energy project. It’s aims is to develop around 20 small BWRX-300 modular reactors designed by GE Hitachi Nuclear Energy.


The Swedish government wants to speed up mining process to compete with China

The Swedish government hopes to speed up the permit-process for mining in Sweden.

In the spring budget, Sweden’s geological survey receives SEK 34 million. A part of that goes to shorten processing times, which worries the Green Party.

“What we are concerned about is that the government would use this to weaken protection for the local population and the environment,” says Elin Söderberg (MP).

According to Energy and Nutrition Minister, Ebba Busch, the processes must be shortened in order for Sweden to compete with China.

“There are extremely long lead times and long permit processes for mining in Sweden. A great deal of lithium, cobalt and other things we need for the green transition, goes via China,” she says.