January Newsletter – 30.01.2023

Behre Dolbear are Gold sponsors of 121 Mining Investment Conference 6th and 7th February 2023, Cape Town, and will also be attending Mining Indaba 2023 in Cape Town from 6th to 9th Feb 2023.

Please feel free to come and see us and if you need to arrange a meeting contact Rob Hansen, rob.hansen@dolbear.com or +44 (0) 7971 256248.

HEADLINES
  • Europe’s big rare earth discovery seen as ‘game changer’ in bid to address China’s dominance
  • Germany falls behind in the global race for lithium
  • Eramet targets 10,000 tonnes of lithium per year from French project
  • Column: North Asia cranks coal imports to fuel industrial reboot
  • South Africa’s RBCT coal exports hit 29-year low in 2022
  • China’s mining ambitions in Afghanistan haunted by militants
  • The Future Battlefields: Rare Earth Elements
  • Biden protects Boundary Waters in blow to copper mine
  • Eurasian Resources Group enters the Kingdom of Saudi Arabia, plans long-term investment

Europe’s big rare earth discovery seen as ‘game changer’ in bid to address China’s dominance

A massive deposit of rare earth oxides has been discovered near this iron mine owned by Swedish company LKAB

The discovery this month of Europe’s largest-known deposit of rare earth oxides – estimated at more than 1 million tonnes – in Sweden’s far north has raised hopes of reducing reliance on China for critical raw materials.

China accounts for 60 per cent of the world’s mined rare earths, and its market dominance is “most importantly” about refinery, according to Alicia Garcia-Herrero, chief economist for Asia-Pacific at Natixis. For example, China holds 90 per cent of the mineral-processing capacity for cobalt, lithium and nickel.

“So, the [European Union] needs to either lower the environmental standards for refinery or find other places to refine,” she added.

Speaking at the World Economic Forum this month, Ursula von der Leyen, president of the European Commission, called for a levelling of the playing field by “de-risking, rather than decoupling” from the world’s second-largest economy.

Acknowledging that Europe is “98 per cent” dependent on China for critical minerals in the process of clean-energy transitioning, she also underscored the European Union’s divergence from the US’s approach on trade with China.

https://www.scmp.com/economy/china-economy/article/3208245/europes-big-rare-earth-discovery-seen-game-changer-bid-address-chinas-dominance

Germany falls behind in the global race for lithium

Berlin trails global powers like China and the US in acquiring lithium, a key component in electric vehicle batteries. German Chancellor Scholz will address the issue on his trip to South America this weekend.

Roughly 57% of the world’s lithium deposits are found in Argentina, Bolivia and Chile. Because it’s used in electric vehicle battery production, the natural resource is highly sought-after. Globally, the Chinese have invested billions to ensure their place at the front of the line. The US, too, is in a better position than its European partners.

Despite its economic dependence on the auto industry, however, Germany lags far behind. German Chancellor Olaf Scholz plans to address the issue during his trip to Argentina, Chile and Brazil this weekend.

“Compared with China, but also other countries, Germany doesn’t have much of a presence in South America’s lithium triangle,” as Buenos Aires-based economist and consultant Carl Moses told DW. “Nevertheless, there are efforts underway to change that.”

Beijing rather than Berlin

Although German companies have managed to position themselves relatively well in Argentina and Chile, they have yet to make a real breakthrough. “I’m not seeing the guiding, or at least coordinating hand that only the state can provide on this strategically important issue,” says Moses, suggesting there should be a coordinated industrial and political effort. “We need German consortiums in which important players from all levels of the value chain work together.”

https://www.dw.com/en/germany-falls-behind-in-the-global-race-for-lithium/a-64542125

Eramet targets 10,000 tonnes of lithium per year from French project

Mining group Eramet said on Thursday it could produce 10,000 tonnes of lithium carbonate per year in France in a geothermal project with power company Electricite de Strasbourg (ES).

Eramet and ES in a statement announced an agreement to study potential production, which could start by the end of the decade, after obtaining lithium from geothermal waters in eastern France from exploration in recent years.

Eramet has added lithium to its activities as part of a shift towards minerals needed for electric vehicle batteries.

It plans to start producing lithium next year in Argentina in a joint venture with Chinese steel group Tsingshan, with an initial annual output objective of 24,000 tonnes of lithium carbonate equivalent.

Eramet is among companies testing geothermal extraction of lithium in the Rhine basin near the French-German border.

A final investment decision by Eramet and ES on production is expected within four years, they said, adding their targetted lithium output would meet demand for around 250,000 electric vehicle batteries per year.

The project could bolster French supply of lithium after mineral group Imerys last year announced plans to produce 34,000 tonnes of lithium hydroxide annually from 2028 in central France.

Eramet is also planning to develop recycling of electric vehicle batteries in France with Suez.

https://www.mining.com/web/eramet-targets-10000-tonnes-of-lithium-per-year-in-french-project/

Column: North Asia cranks coal imports to fuel industrial reboot

LITTLETON, Colo. Jan 24 (Reuters) – Thermal coal imports into China, Japan and South Korea – three of the world’s largest coal users – hit their highest combined total in 16 months in December as the North Asian manufacturing powerhouses primed their economies for growth in 2023.

Economic momentum in these countries – which collectively accounted for nearly half of all thermal coal imports in 2021 – was subdued in 2022 as China’s strict zero-COVID measures stifled industrial activity across the world’s largest manufacturing base.

Japan and South Korea have extensive supply chain ties with China which meant that each country suffered slowdowns in both productivity and demand growth in 2022 as China’s COVID-19 curbs stifled movement of goods and people over much of the year.

But thanks to a slew of stimulus and easing measures passed by Beijing that are designed to kickstart a revival in China’s economy this year, factories and industries throughout North Asia are now also primed for a pick up.

https://www.reuters.com/markets/commodities/north-asia-cranks-coal-imports-fuel-industrial-reboot-maguire-2023-01-25/

South Africa’s RBCT coal exports hit 29-year low in 2022

JOHANNESBURG, Jan 26 (Reuters) – Coal exports from South Africa’s Richards Bay Coal Terminal (RBCT) hit their lowest level since 1993 last year, at 50.35 million tonnes, reflecting a lack of trains to carry coal from mines to port.

However, exports to Europe from Africa’s largest coal export facility showed a more than six-fold increase to 14.3 million tonnes from 2.3 million tonnes in 2021, RBCT said on Thursday, as European countries scrambled to secure alternatives to Russian supply.

RBCT, owned by 13 coal mining companies including Thungela (TGAJ.J), Exxaro Resources (EXXJ.J), Seriti Resources, and Glencore’s (GLEN.L) South African subsidiary, has been operating far below its annual export capacity of 91 million tonnes of coal.

RBCT chief executive Alan Waller told a media briefing that a 12-day strike at Transnet (CGETR.UL) in October and a derailment of 97 wagons of a train that blocked the coal line for 10 days in November had stopped the export of an estimated 5 million tonnes from the terminal.

The terminal has a target to export 60 million tonnes in 2023, Waller added.

Poor maintenance, a lack of spare parts for locomotives, and massive copper cable theft have disrupted state logistics firm Transnet’s freight rail services, causing coal and iron ore exports to fall in recent years.

https://www.reuters.com/world/africa/south-africas-rbct-coal-exports-hit-29-year-low-2022-2023-01-26/

China’s mining ambitions in Afghanistan haunted by militants

ISIS-K steps up threats and attacks as Beijing eyes oil and copper

KARACHI — Escalating threats from Islamist militants are casting doubt on the future of big-money Chinese mining projects in Afghanistan.

Earlier this month, Xinjiang Central Asia Petroleum and Gas (CAPEIC) signed a 25-year oil extraction deal with the Afghan Taliban authorities for the Amu River oil field in northwestern Afghanistan. The company is expected to invest $150 million in the first year of the contract and $540 million over three years.

This is the Taliban’s first known international investment deal since it swept to power in August 2021, promising the globally isolated regime desperately needed cash. China is also reportedly in talks with the Taliban to exploit massive copper reserves in Mes Aynak, 40 kilometers southeast of Kabul.

However, China’s growing economic footprint in Afghanistan is attracting unwanted attention from militants. ISIS-K, the regional affiliate of the Islamic State group in Afghanistan, has stepped up hostile rhetoric against Beijing.

Last September, ISIS-K published an in-depth editorial titled “China’s Daydream of Imperialism” in its Voice of Khorasan magazine. The article warned that China’s pursuit of resources in Muslim lands and its treatment of its own Muslim Uyghur population in the Xinjiang autonomous region could lead to conflict with the group, according to Lucas Webber, editor of Militant Wire, a website analyzing militancy.

After the U.S. withdrawal from Afghanistan a year and a half ago, it appears that ISIS-K is finding space to operate freely in the country, and it has begun to make good on its threats against Chinese interests.

https://asia.nikkei.com/Politics/Terrorism/China-s-mining-ambitions-in-Afghanistan-haunted-by-militants


The Future Battlefields: Rare Earth Elements

Sweden’s state-owned mining enterprise LKAB may have given the West hope in its quest for energy independence and containing China. Two weeks ago, LKAB announced it had discovered nearly one million metric tons of rare earth elements (REE).

REEs include 17 elements that are vital for advanced batteries, lasers, electronics, and all emerging technology of the 21st century, including the energy transition.

After the end of the Cold War, a series of US and EU policy failures resulted in China nearly monopolizing REE production and refinement, with the EU importing 98% of its REE from China. The US is not much better, with 78% of its imports coming from China.

https://www.forbes.com/sites/arielcohen/2023/01/26/the-future-battlefields-rare-earth-elements/?sh=5f34caf11c63

Biden protects Boundary Waters in blow to copper mine

The Biden administration took final actions Thursday to protect waterways in pristine northeastern Minnesota, likely halting a proposed copper mine there, a move that inflamed Republican lawmakers who want to see domestic development of minerals critical for electric vehicle batteries and clean tech.

Interior Secretary Deb Haaland signed an order withdrawing more than 225,000 acres in the state’s Superior National Forest from mining and geothermal leasing for an additional two decades, a decision she said would protect the Rainy River watershed, including the Boundary Waters Canoe Area Wilderness and ceded tribal land, from the adverse effects of new mines, exploration and development tied to geothermal projects.

“The Department of the Interior takes seriously our obligations to steward public lands and waters on behalf of all Americans,” Haaland said in a statement. “Protecting a place like Boundary Waters is key to supporting the health of the watershed and its surrounding wildlife, upholding our Tribal trust and treaty responsibilities, and boosting the local recreation economy.”

The administration’s decision arrives as the U.S. and its allies hunt for minerals needed for renewable energy technologies and EVs. That search — which has been a key priority of the Biden administration — dovetails with efforts to secure the supply chains for these materials both here and abroad, from mining to processing and recycling (Greenwire, Jan. 23).

https://www.eenews.net/articles/biden-protects-boundary-waters-in-blow-to-copper-mine

Eurasian Resources Group enters the Kingdom of Saudi Arabia, plans long-term investment

Riyadh – Following the World Economic Forum (WEF) held in Davos last week and the agreements achieved at the Future Minerals Forum in Saudi Arabia, Eurasian Resources Group (“ERG” or “The Group”) discloses its intention to invest in the Kingdom for the long term. A leading diversified natural resources group headquartered in Luxembourg, ERG plans to invest $50 million in the market, with the potential to grow this figure year-on-year.

ERG’s market entry to the Kingdom is a natural move to expand its existing global footprint, now spanning more than 16 countries. ERG states that its two offices, in Riyadh and Jeddah, will be central to the Group’s regional development strategy focused on its growth in the Middle East and North Africa regions.

ERG will prioritise large scale, tech-enabled early-stage exploration for battery transition minerals in the Ad Dawidimi region of the Kingdom, where it has already secured licenses and is actively pursuing further exploration ground.

Benedikt Sobotka, CEO of ERG, said, “The World Bank estimates 75% of global exploration spend goes to only 10 countries. This is not sustainable if we want to meet the exponential demand for minerals needed to power the global energy transition. ERG is seasoned in entering new frontier markets, those previously overlooked, untapped or underexplored, and is looking forward to embarking on this journey with the Kingdom. Saudi Arabia provides exceptional conditions to help us to continue producing essential materials for the production of batteries and renewable energy systems in the long term: large-scale maiden exploration ground with sound prospectivity, a young, ambitious and highly-skilled workforce, established infrastructure, stable and affordable power, a supportive legal framework for investment and the political will to capitalise on its mineral wealth.”

https://www.zawya.com/en/press-release/companies-news/eurasian-resources-group-enters-the-kingdom-of-saudi-arabia-plans-long-term-investment-tdt5s83a

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