January Newsletter – 03.01.2023

Behre Dolbear will be attending the Future Minerals Forum in Riyadh, 10-12 January 2023.
Please come and visit us at our booth.

  • Could Africa replace China as the world’s source of rare earth elements?
  • Britain opens nuclear fuel fund with goal of cutting its dependence on Russia
  • Saudi Arabia sees 81% increase in mining licenses awarded: Official data
  • China: 18 miners trapped after gold mine collapse
  • Africa’s Growing Graphite Mining Potential
  • The global factors that will push down copper’s price in 2023
  • Congo to formalize gold trade, change tax

Could Africa replace China as the world’s source of rare earth elements?

Rare earth elements—a group of 17 metals—are critical for both human and national security. They are used in electronics (computers, televisions and smart phones), in renewable energy technology (wind turbines, solar panels, and electric vehicle batteries), and in national defense (jet engines, missile guidance and defense systems, satellites, GPS equipment, and more). In 2021, global demand for rare earths reached 125,000 metric tons. By 2030, it is forecast to reach 315,000 tons.

Concerningly, production of these rare earth minerals has remained concentrated. China has a dominant hold on the market—with 60% of global production and 85% of processing capacity. In light of growing geopolitical tensions around China and Taiwan, the U.S, Australia, Canada, and other countries are seeking to reduce their reliance on China as a source of rare earths production and processing.

This opens up a window of opportunity for African countries. With their rich endowment of key commodities, African countries can leverage this search for new sources of rare earth elements to bring in much-needed revenue to finance core socioeconomic objectives and reduce poverty, utilize the African Continental Free Trade Area (AfCFTA) to improve value addition, and strengthen global trade partnerships.


Britain opens nuclear fuel fund with goal of cutting its dependence on Russia

Britain said on Monday its 75-million-pound ($90.5 million) fund aimed at helping boost domestic production of nuclear fuel for power plants and cutting reliance on Russian uranium supplies is open for applications.

The fund, announced in July, will award grants to businesses involved in uranium conversion, a key stage in the process of creating nuclear fuel from the metal. It will remain open for applications from Monday until Feb. 20.

Russia currently owns around 20% of global uranium conversion capacity.

“Record high global gas prices, caused by Putin’s illegal invasion of Ukraine, have highlighted the need for more home-grown renewable energy, but also UK generated nuclear power — building more plants, and developing domestic fuel capability,” Minister for Energy and Climate Graham Stuart said.

Up to 13 million pounds from the fund has already been awarded to the Springfields nuclear fuel manufacturing site in northwest England, the government said.

Energy supply has become a key focus since Russia’s invasion of Ukraine drove costs sharply higher. Planned additions to nuclear electricity generation capacity will reduce Britain’s reliance on natural gas, which fueled around 45% of generation in 2021.


Saudi Arabia sees 81% increase in mining licenses awarded: Official data

RIYADH: Saudi Arabia issued 38 new mining licenses in November, up from the 21 it awarded the previous month as the sector continues to grow in line with the Vision 2030 economic diversification plan, according to official data.

The total mining exploration licenses in the Kingdom now stand at 2,201, up from 2,164 in October.

Of those handed out in November, 24 were for mineral exploration, 13 for the building materials industry and one for raw material production, Saudi Press Agency reported, citing data from the Ministry of Industry and Mineral Resources.

According to the data, there are currently 1,371 building materials quarry licenses in the Kingdom, followed by 589 exploration licenses, 172 mine and mine exploitation licenses, 36 reconnaissance licenses, and one mineral license in surplus with 33 licenses.

As Saudi Arabia expands its mining sector, the Kingdom is all set to host the 2023 edition of the Future Minerals Forum from Jan. 10 to 12 in Riyadh.

Ministers, industry experts and thought leaders, along with 7,500 delegates, will attend the forum, where they will share the future outlook, opportunities and challenges faced by the mining industry.


China: 18 miners trapped after gold mine collapse

Twenty two of the 40 workers were rescued immediately after a gold mine collapsed. The cause of the accident remains unknown.

Eighteen people remain trapped in a gold mine after it caved in China’s northwestern province of Xinjiang.

A total of 40 workers were inside the mine when it collapsed. Twenty two miners were immediately brought to safety.

Xinhua news agency reported, “A rescue operation is underway to retrieve the remaining miners,” late Sunday.

The cause of the accident remains unknown.

China has one of the world’s largest mining industries and is the world’s biggest coal producer.

However, Chinese mines are considered extremely dangerous. Miners die frequently due to poor safety precautions and a lack of supervision.

Despite increased miner safety and media coverage of major incidents, many of which were once overlooked, fatal incidents continue to occur.


Africa’s Growing Graphite Mining Potential

Electric Vehicle (EV) sales have seen considerable growth in recent years, reaching 9.4% of global passenger vehicle penetration in 2021, and expected to triple by 2026. S&P Global Commodities Insights estimate EV sales to grow by a compounded growth rate of over 28% over this period. A consequence of this, battery materials have quickly become critical to the automotive supply chain with major companies establishing partnerships with both battery cell manufacturers and miners of the raw material. Examples of this include Tesla, the world’s largest Electric Vehicle manufacturer reporting partnerships with: BHP for nickel sulphate; Albermarle for lithium hydroxide; Glencore for Cobalt; and Syrah Resources for graphite flake.

Cathode building metals (Cobalt, Lithium & Nickel) have been the priority for car manufactures in 2022 as all three markets struggle with supply challenges. Cathode chemistry utilized in long range EVs have seen a shift to higher nickel composition cathodes at the expense of cobalt and manganese to achieve the longest range possible with current technology. NMC811 cathode chemistry (meaning 8 Nickel to 1 Manganese and 1 Cobalt) is forecast to capture significant battery market share in the coming years. LFP Cathodes (Lithium-Iron-Phosphate) will continue their dominance of the battery sector but have lower energy density making them more suitable for city-vehicles and energy storage.


The global factors that will push down copper’s price in 2023

The economic slowdown in China, tight monetary policy in the US to control inflation, and potential recessions in European countries will be key factors for the expected drop in the copper price in 2023.

The price will range between US$3.95/lb and US$3.2/lb, reaching an average of US$3.7/lb compared to an estimated US$3.98/lb at the end of this year, Chile’s state copper commission Cochilco said in its latest market trends report.

“The risks and external scenario in 2023 will put downward pressure on the price of copper. Low growth in China and protests against the ‘zero COVID policy’ have been generating a higher supply for the price of the red metal,” Nataly Venegas, senior analyst and business developer for Latin America at consultancy FXGlobe, told BNamericas.

“Chile exports 32% of its copper to China, so everything that happens in the Asian country directly impacts the price.”

The price was volatile this year with an average of US$4.53/lb in Q1 and a high of US$4.87/lb in March, then it fell to an average US$3.5/lb in Q3 and reached its lowest level in July at US$3.18/lb in July, Cochilco said.

Next year the price will be impacted by imbalances in supply and demand.


Congo to formalize gold trade, change tax

Democratic Republic of Congo will implement several initiatives to increase revenue and improve financial transparency in the new year, including a plan to formalize the artisanal gold trade and amend an agriculture law to encourage foreign investment, government officials said.

The copper and cobalt producer is looking to diversify its sources of income after a bumper year in mining that will result in nearly 7% economic growth. The government also plans to expand income taxes and offer tax exemptions in special economic zones, the officials said.

“The goal is to become a processing country, not just a production country,” Finance Minister Nicolas Kazadi said last week on the sidelines of a US-Africa Summit.

Congo is one of the world’s richest countries in terms of natural resources but has long been seen as a difficult place to do business due to corruption, conflict and limited infrastructure. Millions are currently displaced in the east of the country due to fighting fueled in part by the illicit trade in minerals like tantalum and gold.

The government is hoping to break that link after signing a deal with the United Arab Emirates “that will allow us to buy all the gold produced by the artisanal sector,” Kazadi said.

Most of Congo’s smuggled gold transits through Rwanda and Uganda and ends up in Dubai, he said. The UAE and Congo are putting infrastructure in place to formalize the market, he said, without giving more details.

Congo will launch its first gold refinery in the city of Bukavu sometime in 2023, Minister of Industry Julien Paluku said in an interview in Washington. The country is also creating special economic zones that benefit from 10 to 20 years of tax exemptions, Paluku said.