September Newsletter – 21.09.2020
- With gold rallying, mining CEOs say ESG scrutiny is intensifying
- Vale’s mining dams are still a risk, company must do more, Brazil prosecutor says
- India suggests partnership with Japan in Russian Far-East
- BNEF: China dominates the Li-ion battery supply chain, but Europe is on the rise
- Iron ore price rally turns into rout
- State Bank of India plans coal-loan policy before key auctions
- Colombian coal mine Cerrejon’s largest union votes to strike
- Ganfeng Lithium to raise HK$1.4b in share placements
- Historic structure near collapse
With gold rallying, mining CEOs say ESG scrutiny is intensifying
Skyrocketing gold is providing a welcome windfall to the mining industry, but it’s also attracting a broader base of investors who are demanding greater attention to environmental, social and governance topics.
Interest in ESG issues has moved to the forefront in conversations with stakeholders in the past year, top executives said in the run-up to the Denver Gold Group’s Americas conference, a key annual event in the precious-metals world. Such talks come as investors snap up billions of dollars in stock offerings from once-shunned gold miners.
Generalists are looking at bullion because of the high prices and “the strong argument that the gold price can go higher,” according to Sean Boyd, chief executive officer of Agnico Eagle Mines Ltd., a top-10 gold producer. And those investors tend to judge mining companies through an ESG lens.
NEW INVESTORS ARE DEMANDING GREATER ATTENTION TO ENVIRONMENTAL, SOCIAL AND GOVERNANCE TOPICS
“They don’t want to take a lot of risks, and a big part of the risk assessment is the ESG side of things,” Boyd said in a phone interview.
The Denver conference, which is being held virtually this year starting Sunday, is also expected to generate discussions about fiscal responsibility, given gold’s near-30% rise this year, and how much free cash flow should go to shareholders. But ESG is the one issue that can rile up investors and miners even more than cash.
“Often it’s the first, and sometimes the only, discussion when we’re meeting with investors in Europe,” Tom Palmer, CEO of top producer Newmont Corp., said by phone. At the World Economic Forum in Davos in January, many times “the only topic of discussion was around carbon intensity and the work that’s being done to reduce greenhouse-gas emissions.”
Vale’s mining dams are still a risk, company must do more, Brazil prosecutor says
RIO DE JANEIRO/SAO PAULO, Sept 18 (Reuters) – Despite two major deadly mining disasters since 2015, Brazilian iron ore miner Vale SA VALE3.SA has not complied with a number of commitments signed with authorities to prevent a third disaster, federal prosecutor Edison Vitorelli told Reuters.
Twenty-nine dams that Vale uses to store mining waste still present elevated safety risks, according to Vitorelli, who forms part of a task-force of about two dozen federal and state prosecutors who pressed charges against the company after the most recent disaster which killed 270 people in January 2019.
Some of the mines linked to the dams that Vitorelli’s team regard as unsafe are vital to Vale’s plans to recover lost iron ore production and grow capacity to 450 million tonnes per year, a level that would make it once again the world’s largest producer of the steel-making raw material.
In two interviews with Reuters over the past week, Vitorelli said Vale, one of the world’s largest mining companies, has repeatedly failed to deliver on commitments to improve on safety made following last year’s collapse of a dam near the town of Brumadinho in the state of Minas Gerais.
India suggests partnership with Japan in Russian Far-East
New Delhi: External Affairs Minister S Jaishankar on Thursday suggested an expansion of the partnership between India and Japan in third countries including Russian Far East. This is first formal expression of interest by India to work with Japan in resource rich Russian Far East.
Speaking at a FICCI virtual event, he said, “one is possibility of economic cooperation in Russian far east, because India has shown much greater willingness to be involved in economic projects there and the other is pacific island countries, we have development partnership and political footprints has grown significantly.”
India-Russia-Japan are planning to launch trilateral format and it could be launched through Track 2 dialogue.
Prime Minister Narendra Modi visited Vladivostok last year for annual India-Russia bilateral Summit and announcing a Line of Credit of $ 1 billion for development projects in the Russian Far East region and announced Indias Act Far East policy.
The Line of Credit (LOC) will facilitate undertaking infrastructure and other development projects in various sectors from energy to agriculture to natural resources. India is exploring partnership with provinces of Russian Far East which are rich in resources but sparsely populated. While it is not pronounced increased presence of India and Japan in Russian Far East is aimed balancing Chinese encroachment into that region. Last year Russia made it compulsory to employ significant number of locals in most projects in Russian Far East amid growing Chinese population in the area.
BNEF: China dominates the Li-ion battery supply chain, but Europe is on the rise
China dominates BloombergNEF’s (BNEF) lithium-ion battery supply chain ranking in 2020, having quickly surpassed Japan and Korea that were leaders for the majority of the previous decade.
China’s success results from its large domestic battery demand—72GWh—and control of 80% of the world’s raw material refining, 77% of the world’s cell capacity and 60% of the world’s component manufacturing, according to data from BNEF.
In 2020, Japan and Korea rank number two and three respectively. While both countries are leaders in battery and components manufacturing, they do not have the same influence in raw materials refining and mining as China. What they lack in the control of the raw materials supply chain, they make-up for in higher environmental and RII (regulations, innovation & infrastructure) scores compared to China.
Iron ore price rally turns into rout
Iron ore prices fell back sharply again on Thursday on the back of rising port inventories and clear signs that supply has caught up with particularly strong demand from China.
According to Fastmarkets MB, benchmark 62% Fe fines imported into Northern China were changing hands for $122.36 a tonne on Thursday, down 6% since Monday.
“It’s now a turning point,” Ban Peng, an analyst at Maike Futures told Bloomberg News:
“Recent exports from Brazil have been slightly better than our expectations, and supply from the top miners including Vale SA should increase in the fourth quarter, which is typically a peak season. ”
According to Shanghai SteelHome, iron ore port inventories rose to 119 million tonnes last week, the highest in five months. Stockpiles could increase further in September and October as congestion at Chinese ports eases.
Vale (NYSE: VALE) said on Wednesday it expects to reach iron ore capacity of 400 million tonnes per year by increasing output across its operations.
The company currently has the capacity to produce 318 million tonnes a year. In 2018, before the Brumadinho dam collapse, Vale produced 385 million tonnes.
In an investor site visit presentation, Rio de Janeiro-based Vale also said it has a target of 450 million tonnes per year “in the future.”
State Bank of India plans coal-loan policy before key auctions
Long-term offtake contracts assuring demand will be central to any lending decision, the person said, asking not to be identified before terms are finalized
State Bank of India is creating a policy to lend to coal miners before landmark auctions that would end decades of state monopoly on the fuel, according to a person with knowledge of the matter.
Long-term offtake contracts assuring demand will be central to any lending decision, the person said, asking not to be identified before terms are finalized. The nation’s biggest bank would prefer a loan tenor closer to five years, the person added.
The planned policy suggests SBI is open to providing some of the financing required to put 41 coal mines with a combined annual production capacity of 225 million tons into private hands. The giant bank has flagged concerns about the sector, and Indian banks are reining in loans to corporate borrowers as the coronavirus pandemic pressures asset quality.
Colombian coal mine Cerrejon’s largest union votes to strike
Some 99 per cent of votes were cast in favor of strike action, the Sintracarbon union said, after extended talks over contract negotiations ended without agreement almost two weeks ago
BOGOTA: The largest workers union at Colombian coal mine Cerrejon said on Thursday its members voted overwhelmingly in support of strike action after contract negotiations between the two parties collapsed.
Some 99 per cent of votes were cast in favor of strike action, the Sintracarbon union said, after extended talks over contract negotiations ended without agreement almost two weeks ago.
Despite the decision, Sintracarbon wants to continue talks in search of an agreement said union president, Igor Diaz, who requested the involvement of Colombia’s labor ministry.
“We are willing to hold talks as long as necessary, to look at possibilities,” Diaz said in a virtual press conference.
Cerrejon, which is owned equally by BHP Group, Anglo American and Glencore, said it respected the decision by workers but called on the union and workers to re-examine the offer.
“The company…reiterates its willingness to build an agreement based on the offer presented,” Cerrejon said in a statement.
Sintracarbon had demanded a 6 per cent salary increase in addition to health, education and housing benefits. Cerrejon offered an increase equal to inflation for 2020 and 2021.
Ganfeng Lithium to raise HK$1.4b in share placements
Ganfeng Lithium (1772) plans to raise HK$1.45 billion through a share placement, the company said today.
The Chinese lithium producer will sell 40.04 million H shares, or 20 percent of the total issued H shares, to at least six placees. The placing price is HK$36.35 apiece, a 9.13 percent discount against yesterday’s closing price.
Ganfeng intends to use the net proceeds for capacity expansion construction, research and development expenses, existing debt repayment, potential investment, replenishment of working capital, and general corporate purposes.
Capacity expansion construction is mainly for the offshore lithium resources projects, it said. Potential investment of the lithium resources may include ores, brine, lithium clay, etc. The company plans to use the net proceeds in the following one to two years. Shares of Ganfeng gained by 2.75 percent as of 2:06 pm.
Historic structure near collapse
An aerial view taken from a drone shows the partially collapsed Building No. 30, right, on Hashima island in Nagasaki, after heavy rains earlier this year.
NAGASAKI, JAPAN >> A building on Nagasaki’s “Battleship Island,” a registered World Heritage Site since 2015 that had partially collapsed following heavy rains earlier this year, sustained further damage after Typhoon Haishen passed through Japan on Sept. 6.
The structure on Hashima island, built in 1916 and known as Building No. 30, is one of the country’s earliest reinforced concrete buildings. It is among the structures that give the island a battleship-like appearance, inspiring its well-known nickname, Gunkanjima (Battleship Island).
The seven-story, 57-foot-high structure was once an apartment building for miners. A portion of the exterior walls and beams of the fourth to seventh floors have vanished, and after Haishen, a beam between the third and fourth floors fell. The structure also has areas of exposed rusted steel.