September Newsletter – 29.09.2020


  • Rhodium price rockets to all-time high
  • Barrick, Japan Gold expand footprint with new project
  • Significant demand from China to boost Zinc prices
  • Mount Isa copper smelter gets three more years with ‘one-off’ incentive from Queensland Government
  • World copper mine production declined by 1% in the first half of 2020 – International Copper Study Group
  • Chemours Invests $86M in Georgia Acquisition, Mining Operation
  • Finnish government’s mining partner linked to suspicious financial transactions
  • Northern Dynasty Minerals: Pebble Partnership CEO Tom Collier Submits ‘Letter of Resignation’
  • Fear puts the shine on gold for mining investment
  • Mining Rare-Earth Elements from Fossilized Fish

Rhodium price rockets to all-time high

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Roaring rhodium

The rhodium price has been on a stomach-churning ride this year, rocketing from $6,050 an ounce at the start of 2020 to a high of $13,800 an ounce by March 10, only to plummet to $7,800 an ounce before the end of that month as covid-19 spread around the world.

This week it hit a new all time high of $14,490 an ounce before slipping to just below $14,000 on Wednesday.

Like its sister metals palladium and platinum, rhodium’s main application is to clean vehicle emissions, and surging demand amid tighter pollution regulation, particularly in Europe and China, and supply shortfalls from top producer South Africa could see the metal rally further.

South African PGM producers extract a mix of metals comprising roughly 60% platinum, 30% palladium and 10% rhodium and supply from the African nation would likely be a fifth below 2019’s total.

Insufficient supplies meant producers short of metal to honour contracts had been buying in the spot market, a rhodium trader told Reuters:

A 17% slump in rhodium supply to 945,000 ounces will leave the market with a 55,000-ounce deficit this year, Heraeus and SFA (Oxford), a research house, said in a recent report.

Heraeus and SFA expect prices to fall back below $10,000 within six months as supplies normalize, but the market could remain volatile, according to Reuters.

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Rhodium is also alloyed with platinum to make reinforcement fibre for the high-tech glass on consumer electronics, and used as a catalyst to make certain chemicals.

Due to rarity, the small size of the spot market (all of which is over the counter) and concentrated supply, prices are typically volatile.

Rhodium had a stunning run in 2019, rewarding investors with steady gains ending in 150% in annual returns, but there are few commodities as volatile as PGMs.

In 2008, rhodium touched $10,025 an ounce just before the global financial crisis hit, but the metal would drop 90% before the end of that tumultuous year.

Barrick, Japan Gold expand footprint with new project

Barrick (TSX: ABX) (NYSE: GOLD) and Japan Gold (TSX-V: JG) are expanding their footprint in the Asian country with the acquisition of the Kanehana project, which comprises 40 new claims and covers seven historic gold mines.

The asset spans 12,431 hectares and adjoins the west side of the Japan Gold’s Ikutahara project on the island of Hokkaido, the country’s second largest.

Under a venture formed in February, known as Barrick Alliance, the companies will explore seven historic gold mines in the Kanehana project: Muka, Jindai, Jomon, Hokushin, Kokka, Hyakuhan and Souryu.

Combined, the Kanehana and Ikutahara projects cover a 25-kilometre strike-zone. Among the mines in this area is the region’s third-largest gold producer, the Kitano-o mine.

Gold-rich area
Japan Gold recently expanded its portfolio to reach a total of 31 projects across Japan’s three largest islands: Hokkaido, Honshu and Kyushu. The venture with Barrick covers 28 of them.

The Canadian exploration company said that one of the advantages of partnering with Barrick is that it retains 100% ownership of the assets if the gold giant chooses to not move forward with any of them.

Japan Gold  can then develop the projects itself or find another third-party to work with.

The Vancouver-based firm has attracted interest from other majors, including Newmont (NYSE: NEM) (TSX: NGT), which has a 13% stake in the Vancouver-based junior.

The world’s no. 1 gold producer became involved with Japan Gold in 2018, when Goldcorp (now part of Newmont) provided financing. As part of the deal, Goldcorp was granted a joint venture right of first refusal on two projects, the Ohra-Takamine and the Ikutahara project.

Significant demand from China to boost Zinc prices

Zinc, the galvanizing metal, surged over 7 per cent and 5 per cent on the LME and MCX respectively since August’20 as the recovery narrative continues to be the solid expansion in China’s economy and massive liquidity infused by global central banks.

Another supporting element for the industrial metal prices was the plummeting US dollar. The accommodative stance adopted by the US Federal Reserve indicated a low interest environment for a prolonged period, which kept the greenback under pressure, making the industrial metals cheaper for other currency holders.

China: The recovery pillar

Zinc and the other industrial metals continued to post strong gains majorly reflecting the steady growth in China whilst the rest of the world struggled recovering from the pandemic led economic slump. The revival story of the biggest metal consumer, China, from the pandemic lows was supported by the enormous stimulus infusion primarily focused towards infrastructural development. Expectations of a surge in government’s construction and infrastructure spending boosted the demand outlook for steel as well as zinc (used in galvanizing steel)

Mount Isa copper smelter gets three more years with ‘one-off’ incentive from Queensland Government

Mount Isa Mines’ copper smelter and the Townsville copper refinery will continue to operate for another three years, securing 1,000 jobs for the region.

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The Glencore Copper Smelter furnace in Mount Isa

In a press conference in Townsville this morning Queensland Premier Annastacia Palaszczuk and Glencore’s Chief Operation Officer Matt O’Neill made the much-anticipated announcement.

In 2016 Glencore received $15 million from the State Government to extend the operation until 2022.

Today’s decision extends the life of the operations a further three years.

Glencore will receive a one-off incentive as part of the Queensland Government’s North Queensland Recovery Plan and will also invest more than $500 million to continue the smelter and Townsville refinery operations.

Ms Palaszczuk said the incentive was commercial in confidence but was “monetary consolidated revenue”.

World copper mine production declined by 1% in the first half of 2020 – International Copper Study Group

World copper mine production declined by 1% in the first half of 2020, with concentrate production
declining by 1.2% and solvent extraction-electrowinning (SX-EW) falling by 0.4%, said International Copper Study Group.

“World mine production is estimated to have declined by 4% in April-May as these two months were the most affected by the COVID-19 related global lockdown that resulted in temporary mine shutdowns/reduced production levels. However, world mine production started to recover in May as lockdown measures eased and June output reached the same level as June 2019,” wrote the group in its September update.

The group noted that stoppages in Peru due to the COVID-19 pandemic, which were combined with operational and weather issues, affected a few major mines and led to a 20% decline in mine output over the first half of 2020 including a significant decline of 38% in April-May compared to the same period of 2019.

“However, as the Peruvian mining industry started to recover the extent of the reduction narrowed to 9% in June, compared to the same month in 2019.”

The group noted that mine production also declined in Australia, Canada, Mexico, Mongolia, and the United States.

“In Chile, the world’s biggest copper mine producing country, output increased by 2.6%, recovering from production constraints in early 2019 (production was down by 2.5% in 1st Half of 2019).”

In the Democratic Republic of Congo (DRC), the group noted that mine production increased by 5% as output from ramp-up mines more than offset the temporary closure of the Mutanda mine in December 2019. In Indonesia, production grew by 18% as output levels improved following the transition of the country’s major two copper mines to different ore zones in 2019.

Chemours Invests $86M in Georgia Acquisition, Mining Operation

Chemical manufacturer Chemours is investing $86 million to acquire a Georgia company and open a new mining operation and plant in Wayne County, Ga., a move that will create 78 jobs.

The Delaware-based DuPont spinoff makes Teflon and other chemical brands and mineral sands used in manufacturing in industries like aerospace, automotive and energy. It’s also a global leader in the production of titanium dioxide, which is used as a coating or as a whitening agent in cosmetics, paint, paper products and even food and medicines.

Chemours will open the new mining facility in Jesup, Ga., near some existing operations of Southern Ionics Minerals LLC, which Chemours acquired. The operation will produce titanium dioxide and zircon sand, the latter of which is to be used in precision metal casting.

Located on land now used to grow timber, the mine will be dug an average of 15 feet into the surface, extracting the valuable minerals from the soil using a gravity spiral separation process that doesn’t require chemicals, according to the company’s website. The desired minerals — zircon, staurolite and ilmenite — make up only about 3 percent of the soil.

A news release from Gov. Brian Kemp’s office said the company plans to recycle 98 percent of the water used in production, and Chemours said the land will be restored and planted with saplings when mining is complete in a few months.

Finnish government’s mining partner linked to suspicious financial transactions

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Terrafame produces metals such as nickel, cobalt and zinc at its mine and production plant in Sotkamo, Finland.

TRAFIGURA, a Singapore-domiciled minority shareholder in Finnish state-owned metals producer Terrafame, is suspected of channelling hundreds of millions of euros to tax havens in transactions that have raised red flags about money laundering.

YLE on Monday reported that major multinational banks have filed reports on tens of billions of euros’ worth of transactions by Trafigura to the Financial Crimes Enforcement Network (FinCEN), a bureau of the US Department of Treasury.

The transactions were flagged primarily for two reasons, according to the public broadcasting company. The Singaporean company has been linked to corruption scandals around the world and transferred hundreds of millions to companies domiciled in tax havens that appear to have no real operations. Some of the suspected shell companies were founded by Mossack Fonseca, the law firm at the epicentre of the Panama Papers.

The reports are part of a trove of leaked documents detailing about 1,800 billion euros’ worth of suspicious financial transactions.

Trafigura declined to comment on the allegations in any way when contacted by YLE.

The multinational commodity trading company currently owns roughly 30 per cent of shares in Terrafame. The vast majority of the remaining shares are owned by Finnish Minerals Group, a fully state-owned special-purpose company tasked with developing the battery and mining industries in Finland.

Northern Dynasty Minerals: Pebble Partnership CEO Tom Collier Submits ‘Letter of Resignation’

Northern Dynasty Minerals Ltd. (TSX:NDM) (NYSE American:NAK) (“Northern Dynasty” or the “Company”) announced today that Tom Collier, CEO of its 100%-owned US-based subsidiary Pebble Limited Partnership (the “Pebble Partnership”), has submitted his resignation in light of comments made about elected and regulatory officials in Alaska in private conversations covertly videotaped by an environmental activist group.

Collier’s resignation has been accepted by Northern Dynasty’s senior management and Board of Directors. The Company has named former Pebble Partnership CEO John Shively, a well-known and respected Alaska business and political leader who most recently served as Chairman of the Pebble Partnership’s general partner, Pebble Mines Corp., as interim CEO pending a leadership search.

Collier’s comments embellished both his and the Pebble Partnership’s relationships with elected officials and federal representatives in Alaska, including Governor Dunleavy, Senators Murkowski and Sullivan and senior representatives of the US Army Corps of Engineers (“USACE”). The comments were clearly offensive to these and other political, business and community leaders in the state and for this, Northern Dynasty unreservedly apologizes to all Alaskans.

Conversations with Collier, as well as others with Northern Dynasty President & CEO Ron Thiessen, were secretly videotaped by two unknown individuals posing as representatives of a Hong Kong-based investment firm with links to a Chinese State-Owned Enterprise (SOE). A Washington DC-based environmental group, the Environmental Investigation Agency, released the tapes online Monday after obscuring the voices and identities of the individuals posing as investors.

“The unethical manner in which these tapes were acquired does not excuse the comments that were made, or the crass way they were expressed,” said Ron Thiessen, Northern Dynasty President & CEO. “On behalf of the Company and our employees, I offer my unreserved apology to all those who were hurt or offended, and all Alaskans.”

Fear puts the shine on gold for mining investment

When Imperial Metals (TSX:III) shut down its Mount Polley copper-gold mine in May 2019, it wasn’t because of the tailings pond failure it suffered in 2014.

It was more about prices for the copper produced by the mine, which had restarted after the dam breach. Copper had fallen below the US$3 per pound mark that mines like Mount Polley need to operate at a profit. The mine, which went into operation in 1997, had shut down before, in 2002, when copper prices tanked.

So when will Mount Polley restart? It’s a question that Imperial Metals CEO Brian Kynoch says he gets quite a lot these days, as he did the last time the mine shut down in 2002:

There are only about seven years of economically recoverable ore remaining at Mount Polley, so the company not only needs sustained higher copper prices, but it is also having to explore for another deposit that can extend the mine’s life.

“It all depends on prices,” Kynoch said. “We probably wouldn’t have closed if the price had stayed above $3 [per pound of copper].”

So what about those prices? And what do they mean for B.C. mine owners?

Copper has rallied, and gold and silver are in the “early innings” of a major bull market, according to Rick Rule, CEO of Sprott U.S. Holdings.

He predicts the current precious metals bull market will be followed by a significant base metals bull market, but not for at least a couple of years. On copper, specifically, he hastens to add, “So far, I’ve been wrong.”

Copper prices have exceeded his expectations. They recently hit US$3 per pound, for the first time in two years, thanks in part to economic stimulus in China and fears of production cuts in South America, due to the COVID-19 pandemic.

Mining Rare-Earth Elements from Fossilized Fish

Strange as it might seem, a 2,500-square-kilometer zone south of one tiny Pacific island could supply four substances that are crucial to modern electronics for centuries.

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Fossil fish tooth

In the western Pacific Ocean lies the tiny isle of Minami-tori-shima, the easternmost territory of Japan. The triangular speck covers only one square mile, and due to an odd wall-like perimeter, most of the island is strangely below sea level. There’s not much on it aside from an airstrip and a Japanese weather station. The nearest land is over 1,000 kilometers away.

Yet in spite of its inauspicious qualities, the island is the key to something extraordinary: a treasure trove of rare earth elements.

Just where that treasure is located is curiouser still. The lode is not on the island or in it. It lies in the clay sediment to the south of the seamount the island sits on, in a superdeposit of bits of fish teeth, scales and bone. The fish fossils are rare earth element traps.

There are so many of them and they have done their job so well that Japanese scientists have calculated that the mud in a 2,500-square-km zone south of this one tiny island could supply four of the world’s rare earth element needs for hundreds of years. But how? And why? And, most importantly, what do we do about it?

Rare earth elements are a set of chemical elements that occupy the broad gully of the periodic table. We are in the middle of a technology boom in which rare earth elements are vital to a bewildering array of machines. Many of them enable us to generate or capitalize on renewable energy.

Every time you purchase a TV, smartphone, LED, compact fluorescent bulb, or rechargeable battery; every time a utility erects a wind turbine; and every time Toyota builds a Prius, a spritz of rare earth elements is placed inside. Many medical and military technologies use them as well. As a result, consumption of the elements has increased in the past decade. Somewhat ironically, at the moment most of the mines from which they come are in China, with the attendant environmental woes.

Yet rare earth elements aren’t actually that rare on Earth. What is rare is finding these elements in a minable deposit. As a consequence of their chemical properties, they don’t often aggregate as rare earth minerals in such a way that they are easy to extract.

That’s where the fish come in. In a paper published this June in Scientific Reports, a team of Japanese scientists sought to date the fish fossils at Minami-tori-shima—and at a second similar site southeast of the Manihiki Plateau in the South Pacific—to determine their origin and whether there might be more elsewhere.


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