Canada’s scrambling to fill a massive global fertilizer deficit

Bloomberg News | March 17, 2022 | 

Patience Lake potash mine. Credit: Nutrien Ltd.

Nutrien Ltd. is increasing output of key crop nutrients in the face of a global shortage. But there’s only so much even the world’s largest fertilizer company can do.


The Canadian company said Wednesday it would boost potash production by about 1 million metric tons in 2022 to a total of 15 million tons, with most of the additional volume coming in the second half of the year.

Nutrien won’t be able to go beyond that in 2022 — even if the market is desperate for it, Interim Chief Executive Officer Ken Seitz said in an interview. To increase output, the company is having to place additional mining machines at three sites, while also pushing off some maintenance operations. But the company needs to balance that ramp up with safety considerations, which limits how much they can add to supplies this year, Seitz said.

The company can continue to boost production over the next two or three years, if it’s still needed, he said.

“We are going to be watching the supply side of the equation, and therefore the pace at which we think about our own potash production ramp up as well,” Seitz said.

Nutrien’s bump of 1 million tons this year may not be nearly enough to meet demand. Sanctions on major producers means there could be a shortage. Second-ranked producer Russia may face sanctions due to its invasion of Ukraine, while third-ranked Belarus has already been cut off from global markets. That leaves Canada scrambling to supply agriculture powerhouses like Brazil, the biggest importer. The northern nation already supplies nearly all of the potash used in the U.S.

Nutrien’s move “while sorely needed by the market, does not come close to fixing the supply gap if both Russia and Belarus are sanctioned out of the global potash trade,” said Alexis Maxwell, an analyst for Bloomberg’s Green Markets.

Russia and Belarus together supply about 42% of the $35 billion global potash trade, or some 24 million metric tons annually, Maxwell said.

Nitrogen fertilizer is also being squeezed on concerns over supply from Russia, which was the world’s largest exporter of nitrogen products last year. The price of natural gas, the number one feedstock for most nitrogen fertilizer, is also climbing in Europe, and some producers are cutting back output.

Nutrien is also stretching its nitrogen production, hoping to add a half a million tons of production over the next couple of years from its North American plants, Seitz said. The company has very competitive production costs because of lower natural gas prices in North America, he said.

“We are expanding production as we speak,” Seitz said.

(By Elizabeth Elkin)

Signet shocks diamond trade with refusal to buy Russian gems

Bloomberg News | March 17, 2022

iStock/Stootsy

Signet Jewelers Ltd., the owner of Kay Jewelers and Zales, sent shockwaves through the global diamond trade on Wednesday, telling suppliers it would no longer buy stones mined in Russia, the world’s biggest source of gems.


The move by the largest diamond retailer in the industry’s most important market will create difficulties through the entire global supply chain. In diamond hubs from the Belgian port-city of Antwerp to Mumbai and Dubai, diamonds from different countries are routinely mixed together at almost every stage of cutting, polishing and trading.

Signet’s decision is the latest example of companies going beyond the sanctions imposed by governments as Russia’s invasion of Ukraine raises concerns about a consumer backlash. Russia vies with Botswana as the world’s biggest diamond producer, supplying almost a third of all stones by volume. The U.S. is easily the industry’s most important market, accounting for about half of all sales.

Other big brands are considering similar moves, according to people familiar with the situation who asked not to be identified as the discussions are private.

Signet has gone much further than U.S. President Joe Biden. In a decree on Friday, he announced a ban on the import of Russian diamonds and while that initially caught the industry off guard, the small print showed the ban only impacted rough diamonds.

Very few rough diamonds are shipped to the U.S. Most end up in India — via trading hubs in Belgium and Dubai — where they are cut, polished and set in jewelry before being shipped around the world. Those goods were not impacted by Biden’s decree.

In a memo — seen by Bloomberg News — Signet told suppliers it will stop buying diamonds and precious metals that originate in Russia.

“Signet has therefore halted all trade in precious metals and diamonds that originate from such sanctioned Russian sources, and you are therefore requested to stop supplying the same to Signet even though the country(s) in which you operate may not have imposed sanctions on Russian precious metals and diamonds,” Signet said in the memo.

Chief Executive Officer Gina Drosos said the request to shun the Russian market is in line with Signet’s years-long effort to ensure the company is sourcing its diamonds and gemstones in an ethical way, a process that includes audits.

“It’s not a shockwave through our vendor community for us to ask them to partner with us to not use Russian diamonds that are sourced after this conflict began,” Drosos said in an interview after the release of the company’s quarterly earnings on Thursday. “They get that.”

The CEO said the majority of Signet’s diamonds by value come from southern Africa, Australia and Canada. The company hasn’t seen a significant impact on the price of diamonds originating in those countries since Russia’s invasion of Ukraine, she said.

While less well known than De Beers, Russia’s Alrosa PJSC produces about the same amount of gems as the iconic diamond company that had a monopoly until the start of this century.

The ban threatens to upend supply chains, but Signet has added caveats to stop an immediate crunch. In the memo, the company said its block applies to goods purchased after Feb. 24, the date Russia invaded Ukraine. The diamond industry has a long supply chain, with many months between buying rough stones to finally handing over finished goods to retailers.

The impact of Signet’s move will likely have ripple effects across the industry. More than a million people work in India’s diamond manufacturing industry and mining the stones is crucial to the economies of countries such as Botswana and Lesotho.

The diamond industry’s ability to satisfy Signet’s demand is also in question. While rough diamonds are issued Kimberley Process certificates — designed to end the sale of blood diamonds that financed wars in the 1990s — that show their origin, these are often replaced in trading centers with “mixed origin” certificates when parcels of stones are mingled.

Very few diamonds remain in one company’s custody through the entire supply chain. Most are cut, polished, manufactured and then set in jewelry by different companies and often traded in between each step. Diamonds are routinely mixed into parcels of similar sizes and qualities throughout this process making origin tracking almost impossible in many cases.

Some in the diamond midstream — which is dominated by private family-run businesses — are already planning on separating supply chains, according to people familiar with their thinking. Russian diamonds, which can still be bought using euros, will be channeled toward Chinese or Indian markets rather than the West.

There are some nascent programs introduced by the industry, such as De Beers’s Tracr program, that track origins. They may work for high-value diamonds, such as those that sell for tens of thousands of dollars in a Tiffany & Co. shop, but are hard to replicate for the millions of small stones that most of the industry works with.

(By Thomas Biesheuvel and Jeannette Neumann)

LONDON METALS EXCHANGE

LME rips up its free-market rule-book to tame wild metals

Reuters | March 17, 2022 |

The LME said the committee was likely to include representatives of nine companies.

(The opinions expressed here are those of the author, Andy Home, a columnist for Reuters.)


You can tell the London Metal Exchange (LME) is new to price limits.

The venerable 145-year-old institution’s first attempt to restart its broken nickel market was over in chaotic minutes on Wednesday as the price immediately fell to – and briefly through – the lower 5% daily limit at $45,590 per tonne.

Thursday’s restart with a widened 8% price band also misfired.

The LMESelect electronic trading platform evidently hasn’t read the memos and keeps allowing small numbers of trades to be executed outside of the new limits.

These trades have been cancelled as were those booked on the March 8 melt-up prior to the market being suspended.

The system’s inability to react to the new trading reality is symptomatic of the tectonic upheaval playing out in the forum for global metals pricing.

The LME has for years epitomised the United Kingdom’s light-touch regulation of its financial services sector but a history of last-minute intervention in disorderly markets looks to be over. The last few days have brought time-spread caps, daily price limits and cancelled contracts.

This is in part due to the LME’s own dysfunction. The nickel crisis has exposed fundamental flaws in the exchange’s regulatory scope.

But it is also because industrial metal markets have turned ever wilder since the start of 2021. The LME may be a damaged lens right now but it is showing up an equally dysfunctional metals market.

Blind-sided

The nature of the short squeeze in nickel – a margin meltdown as China’s Tsingshan Group tried to collateralise its huge short positions – has exposed two regulatory blind spots.

The LME has come in for understandable criticism that it waited too long to suspend the nickel market. The exchange’s compliance department, which has unique insight into trading flows, should surely have seen that something ugly was brewing.

But the LME can only track what it sees. Exchange flows are but the tip of a much bigger metals pricing pyramid, most of it trading over-the-counter (OTC) between producers, merchants, banks and users.

The price risk embedded in often bespoke contracts is channeled to the LME via banks and brokers, who net off differing positions as much as they can before trading any residual risk in the LME system.

What the LME compliance department gets to see is a risk landscape that has been distilled multiple times. Perfect vision on a very narrow screen.

The LME has pointedly noted that “the widely reported large short positions (originated) primarily from the OTC market”. If Tsingshan was sitting in the OTC shadows, the sheer size of its short position may not have been obvious at all.

Nor would any parallel OTC trading strategy. Lost in the media frenzy around Tsingshan and its ebullient owner Xiang Guangda was a March 7 announcement by Zhejiang Huayou Cobalt, Tsingshan’s industrial partner, that it too is facing losses on its nickel positions.

Short sighted

The LME’s difficulties in discerning the true state of positional play have been confounded by a rule-book that interprets market abuse exclusively through the prism of dominant long positions and their ability to squeeze cash metal availability.

Alan Whiting, the executive director of the UK Treasury’s regulation and compliance department, wrote the LME rule-book and even he conceded in 1998 that “while the exchange does not seek to favour shorts, backwardation limits do penalise longs, whereas there is currently no equivalent financial penalty on the misuse of dominant short positions.” (“Market Aberrations: The Way Forward”, October 1998)

The LME explored the possibility of imposing penal margins on dominant shorts but that would require a determination of when a short position is “abusive”, a semantic and regulatory dead-end.

The nickel market’s independent decision to impose its own penal margins on Tsingshan, the trigger for this whole sorry saga, underlines the regulatory dilemma of how to handle a big commodity short position held by a big industry player.

Wild metals

Nickel’s breakdown is intricately tied up with the current crisis in Ukraine, specifically concern around the continued supply of Russian metal to the European physical and LME storage markets.

The exchange cited “geo-political news flow” as one reason for its decision to suspend the contract and what Russia calls its “special operation” in Ukraine is undoubtedly one reason all six core LME contracts are now in special measures.

But Doctor Copper turned wild in October last year, forcing the LME to intervene in its flagship metals contract as available stocks fell to just 14,150 tonnes.

Tin spreads had already gone stratospheric at the start of 2021, the cash premium flexing out to an extraordinary $6,500 per tonne.

Indeed, measured by time-spread turbulence, every LME metal has become much more unstable since the pandemic as global supply-chains have buckled.

Metals such as tin are now pricing in genuine supply scarcity. LME tin took some collateral damage from the nickel suspension, tumbling 21% on March 9. But at a current $41,680 it would still be off any historical chart.

If you believe Goldman Sachs, copper is also heading for scarcity as government spending on green infrastructure accelerates pandemic recovery.

Look beyond the LME and both lithium and cobalt prices have also been on a tear as a rapidly expanding battery supply chain stocks up. Indeed, it was the battery pull on LME nickel stocks that laid the foundations for the short squeeze.

There has been a lot of talk about a metals supercycle and it was starting to take tangible form even before markets had to factor in the possible loss, or at least diversion, of Russian supply.

Higher demand means higher prices and they come with higher volatility.

The LME’s history of laissez-faire regulation rested on an assumption that markets could efficiently be left to price themselves barring the occasional “aberration” requiring intervention.

The synchronised price turbulence across all six base metal contracts challenges that assumption to the core.

That’s why the LME has ripped up the old rule-book. Changed metal markets need a change in rules.

There are some who think it might be time to rip up the LME after last week’s rolling fiasco but the underlying pricing risk won’t go away. Indeed, if the last year is a taster of the metals cycle to come, it’s only going to increase.

(Editing by Kirsten Donovan)

Nickel, the devil’s metal with a history of bad behaviour

Reuters | March 10, 2022 | 

The sky in the smoke from the chimneys of Norilsk Nickel plant. (Stock Image)

(The opinions expressed here are those of the author, Andy Home, a columnist for Reuters.)


The global nickel market is in a pricing black-out.

The London Metal Exchange (LME) three-month nickel price sits in suspended animation at $48,048 per tonne, Monday’s closing price and the last trade with even a semblance of legitimacy.

Tuesday’s mayhem and the resulting decision by the LME to suspend all trading has frozen what is the core reference price for the global supply chain stretching from miners to stainless steel mills and electric vehicle battery makers.

China is also in black-out. The Shanghai Futures Exchange has suspended trading until Friday.

Today there is no global nickel trading and no price formation.

Related Article: Nickel price spike “purely financial” but Tsingshan effect could linger

It’s a truly shocking outcome but not without precedent.

When German miners first discovered nickel in the fifteenth century, they called it Kupfernickel, or “Old Nick’s Copper”, and it has had a history of devilish behaviour ever since the LME launched the contract in 1979.

The underlying cause of the repeated market disorder has never changed.

Ghosts of crisis past

“The LME contract has been criticised as illiquid, unrepresentative, open to manipulation and volatile”.

Hard to disagree given this week’s extraordinary events but those words were written in 1992 by a former colleague, Simon Clow.

The criticism came hot on the heels of what at the time was known as the nickel crisis of 1988.

On Friday Feb. 25 of that year the LME official ring descended into chaos as one house bid up the cash price from $10,000 per tonne to $15,000 per tonne with not a single offer. The cut and thrust of open outcry came perilously close to physical fisticuffs.

By the standards of the time, the liquidity vacuum and price acceleration were just as shocking as Tuesday’s explosion to $101,365 per tonne.

Ring-trading was suspended for the first afternoon session, which at the time amounted to halting the market, while the LME board held an emergency meeting.

A daily backwardation limit of $150 per tonne was imposed as a condition for trading resuming on the second afternoon ring session. The official ring price was scrubbed on the convenient basis that it had not actually traded.

Fast forward to 2007 and the LME had another nickel crisis on its hands. The year stands out as the previous all-time nickel price high – $51,800 per tonne – but that peak coincided with a ferocious squeeze on cash positions.

The pain for short position-holders became so acute the LME had to change its lending rules, categorising several small dominant long positions as a single entity.

A generous view was that the exchange was forcing affordable liquidity across its raging time-spreads. A less generous interpretation was that it had detected collusion among key players.

Here we are again. Time-spread pain. Extreme volatility. Shorts who can’t cover. And another broken nickel market.
Stand and deliver?

The common theme running through all three crises is one of low exchange stocks and the difficulties facing even some of the largest nickel players in delivering physical metal against LME short positions.

Physically-deliverable contracts such as the LME’s are where paper price meets real-world price and wild outcomes around settlement dates are far from rare – think back to April 2020 when front-month WTI oil settled at a negative $37.63 per barrel.

Settlement stress, however, is compounded on the LME by a rolling daily prompt date structure, which can translate into daily premium pain for a short unable to deliver physical metal as an exit route.

And nickel has delivery issues which are all its own.

“Part of the problem, critics say, is linked to the structure of the contract,” Clow wrote in 1992, explaining, “only a minority of the nickel produced every year is deliverable against the LME contract (…) LME stocks represent only a small percentage of worldwide production.”

That is as true today as it was back then.

Only Class I nickel, defined as nickel with greater than 99.8% purity, is deliverable against the LME contract.

Nickel comes in multiple forms and guises – nickel pig iron, nickel matte, ferronickel, nickel sulphate – all of which need to be price-hedged on the LME but none of which can be delivered.

The Shanghai market is no different. If anything it’s more restrictive due to the limited number of registered non-Chinese brands.

Nickel is a small market by comparison with other base metals with global consumption of around 2.77 million tonnes last year, according to the International Nickel Study Group.

Less than half of that is exchange-deliverable and the ratio is shrinking all the time.
Broken pricing

Indonesia, the world’s driver of primary production growth, doesn’t produce nickel in Class I form.

Tsingshan, the Chinese company at the epicentre of the current storm, has massive nickel capacity in Indonesia but its metal is either flowing directly into its stainless steel meltshops or being converted into intermediate products for shipment to Chinese battery makers. None of it is Class 1.

Whatever the mix of price hedging and speculative overlay in the company’s positioning, the short play ultimately had no physical delivery escape path.

Others may have fallen through the same price-delivery gap. The LME’s latest positioning report shows four significant short-position holders on the main March prompt date. If those are hedges against anything other than Class I, the owners are in the same pickle.

Nickel’s deliverability issue has dogged the LME contract since launch. There was intense industry discussion in the 1990s about the disconnect between exchange and supply-chain pricing.

But finding good-delivery criteria for a highly variable product such as ferronickel, which can grade between 20% and 40% with a wide spectrum of iron content, proved impossible.

The stainless steel sector, historically the largest user of nickel, evolved a surcharge system to try and mitigate and pass through nickel’s price volatility, but at the occasional cost of generating an echo-effect in the stainless stocking cycle.

Nickel sulphate, a fast-growing process stream which is destined for battery makers but is also not exchange deliverable, opens up another potential rift in the pricing landscape.

The London Metal Exchange is facing a lot of pressure to think harder about how it manages markets such as nickel after this week’s chaos.

But the nickel market also needs to think a lot harder about how it wants to handle its pricing risk.

(Editing by Elaine Hardcastle)

The $140 billion question: Can Russia sell its huge gold pile?

Bloomberg News | March 16, 2022 

The Kremlin Palace (Stock Image)

Russia spent years building a giant stash of gold, an asset that central banks can turn to during a crisis. But any attempt to sell it will now be a challenge just when it’s needed most.


Bank of Russia expanded its gold reserves almost sixfold since the mid-2000s, creating the world’s fifth-biggest stockpile that’s valued at about $140 billion. It’s the type of asset it could sell to shore up the ruble, which has plunged as global economies isolate Russia following its invasion of Ukraine.

Doing so will be difficult. Sanctions forbid US, UK and European Union institutions from doing business with Russia’s central bank. Traders and banks are wary of buying the country’s bullion indirectly or using other currencies out of fear of reputational damage or falling foul of penalties. And senators in Washington want secondary sanctions on anyone buying or selling Russian gold.

“This is why they bought their gold, it was for a situation just like this,” said Fergal O’Connor, a lecturer at Cork University Business School. “But if no one will trade it with you, it doesn’t matter.”

Moscow may need to look east to central banks in nations like India or China to sell gold or secure loans using it, according to CPM Group Managing Partner Jeff Christian, who has followed precious metals since the 1970s.

“They could pick it up at a discount to the market,” Christian said in an interview from New York. Russia could also sell via the Shanghai Gold Exchange, where it has commercial banks as members, though any sales would likely be small, he said.

Still, a move by a bipartisan group of US senators to further hinder gold transactions may deter banks in places like China and India from buying or lending against Russia’s bullion — and Beijing wants to avoid being impacted by US sanctions over the war. That’s further reducing Russia’s options.

The Bank of Russia didn’t reply to a request for comment.
Gold attempts

In another example of how the West is targeting Russia’s gold trade, the London Bullion Market Association and the CME Group Inc. suspended the country’s refineries from their accredited lists, amounting to a ban on new Russian bars entering the key London and U.S. markets.

The LBMA’s suspension of refineries has restricted countries’ access to the market before. After it suspended Kyrgyzstan’s state refinery last year, the country had to ask Switzerland if one of its refineries could process Kyrgyz gold for its central bank so that it could be accepted on the global market, said people familiar with the matter who asked not to be identified.

At least one Swiss refinery declined to do so on worries of being penalized by the LBMA, one of the people said. The Kyrgyz central bank didn’t specifically comment on the matter.
Related: Gold prices fall despite ongoing war and surging inflation

Other countries have also turned to gold, or tried to, when facing sanctions. Dictator Moammar Qaddafi sold a share of Libya’s reserves to pay troops during an uprising, according to former central bank Governor Farhat Bengdara. And a U.S. indictment against Turkey’s Halkbank in 2019 described how Iranian funds there were converted to gold, exported to Dubai and then sold for cash.

Venezuela has fought to access its gold stored in the Bank of England’s vaults as the UK recognized opposition leader Juan Guaido as president. The BOE is a popular place for central banks to keep their bullion due to its location within the London market.

Former President Hugo Chavez had already repatriated much of Venezuela’s gold. Bank of Russia’s gold is stored domestically, according to its 2020 annual report.


If Russia gets desperate, it could sell bullion domestically to buy rubles, Citigroup Inc. said. If done at a fixed price, that would be tantamount to an internal gold standard.

“If things get worse, you could basically re-anchor to a pile of gold,” Credit Suisse Group AG strategist Zoltan Pozsar said on Bloomberg’s Odd Lots podcast. “You need an anchor in situations like this.”

(By Eddie Spence, with assistance from Greg Ritchie, Yvonne Yue Li, Tracy Alloway, Joe Weisenthal, Nariman Gizitdinov and Áine Quinn)

THE BOLSHEVIKS CAPTURED AND MAINTAINED THE TZARS GOLD STASH THEY WENT ONTO HOLD THE SPAINISH GOVERNMENT GOLD SUPPLY DURING THE SPANISH CIVIL WAR, THEY NEVER RETURNED IT. THEY LOOTED THE TREASURIES OF EASTERN EUROPE OF THEIR GOLD AFTER WWII

Carbon-neutral biosurfactants may help boost mineral extraction from low-grade ores
Staff Writer | March 17, 2022 | 

Copper ore. (Reference image by James St. John, Flickr).

Cleantech company Locus Fermentation Solutions announced the launching of a new mining operating division whose focus will be on developing and commercializing carbon-neutral biosurfactant additives to boost mineral extraction from low-grade ores.


Biosurfactants are compounds of ​​microbial origin that lower the surface tension between two liquids, between a gas and a liquid, or between a liquid and a solid. Thus, they may act as detergents, wetting agents, emulsifiers, foaming agents, or dispersants.

In a press release, LFS said its biosurfactant technology shows potential as an effective, environmentally friendly solution for extracting essential minerals needed to fuel the green energy revolution.

(Graph provided by Locus Mining Solutions).

According to the US-based firm, when tested in traditional copper extraction processes, its renewable biosurfactant additives resulted in 138% more acid-insoluble copper recovered and 28% better performance than sulfuric acid.

The technology also allowed for a 40% reduction in carbon dioxide emissions, while also lowering sulphur oxide-associated emissions by 70% and nitrogen oxide-associated emissions by 70%.

“The world’s growing reliance on minerals and metals in the transition to a clean energy future is exceeding current extraction capabilities creating an imperative need for sustainable technologies that can reach trapped resources,” Andrew Lefkowitz, co-founder of Locus FS, said in the media brief.

“Our zero-carbon biosurfactants have an unmatched ability to reach and extract more natural resources. We’re addressing critical environmental and economic concerns to transform the industry, reduce environmental impact and support economic growth in the US.”

Energy traders lobby for urgent funds to avoid liquidity crisis

Bloomberg News | March 16, 2022 

Image: Shell

Europe’s energy traders are lobbying central banks and governments for urgent funding as the industry faces cash-calls running into the billions of dollars due to soaring commodity prices.


The European Federation of Energy Traders is petitioning for “emergency funding mechanisms” in order to prevent some traders from experiencing liquidity problems that could lead to financial contagion, according to a letter viewed by Bloomberg. Members of the industry group include Shell Plc, TotalEnergies SE, Vitol Group and Mercuria Energy Group Ltd. among others.


“Since the end of February 2022, an already challenging situation has worsened and more energy market participants are in a position where their ability to source additional liquidity is severely reduced or, in some cases, exhausted,” according to the letter.

The EFET didn’t immediately respond to a request for comment.

Prices of commodities from grains and metals to natural gas and oil have jumped at an unprecedented rate as Russia’s invasion of Ukraine set off a scramble to source alternatives to one of the world’s top raw-materials producers. In these circumstances margin calls — demands to deposit additional funds with brokers and exchanges to cover part of the value of commodities contracts — have become a major drain on traders’ cash reserves.

The shock and its potential to impact outside the commodities sector was highlighted in the market for nickel, where prices rose so sharply they triggered margin calls larger than some brokers on the London Metal Exchange would have been able to pay. The exchange canceled a day’s nickel trades and halted transactions on its contract to prevent effective defaults, Chief Executive Officer Matt Chamberlain said at the time.

“Market participants, clearing members and clearing houses are currently encountering major challenges in managing the impact of the current geopolitical situation,” according to the letter. “Massive price movements on European energy exchange markets have resulted in massively increased margin requirements for market participants.”

The Financial Times was first to report the letter on Thursday.

(By Archie Hunter)

BAD CANADIAN MINER TOO

Barrick’s Tanzania gold mine hit by new police abuse accusations
Bloomberg News | March 16, 2022 

The North Mara gold mine is one of the three operations Barrick has in Tanzania. 

(Image courtesy of Twiga Minerals | Instagram.)

A corporate watchdog is alleging that local police are killing and assaulting villagers around a Tanzanian mine owned by Barrick Gold Corp. The Canadian miner denies that it is responsible for police conduct.


UK-based RAID said in a report that since 2019, when Barrick took operational control of the North Mara mine, at least four people have been killed and seven others seriously injured by local police, sometimes after villagers enter the site in search of waste rock. A lawsuit over assaults that occurred before 2019 is going before a British court this week.

RAID’s fresh allegations, which follow the group’s interviews with more than 90 people over the past 28 months, underscore the challenges to mining industry efforts to overhaul its relations with local communities at a time of rising investor scrutiny on environmental and social issues.

“Barrick’s board and investors should ensure an end to the mine’s relationship with the police and set up a truly credible and independent investigation into the abuses,” said RAID executive director Anneke Van Woudenberg.

The report alleges the company has ties to police, including a memorandum of understanding that includes paying and equipping officers assigned to provide security for the mine. But Barrick said that the RAID report was misleading, and that local police operate independently while hired security within the mine site is performed by unarmed employees of a local company.

“The mine is obviously not responsible for their conduct,” Barrick said in an emailed response, referring to the local police force.

The company said the government has agreed to provide human rights training to all officers serving in the area, and added that if RAID has “any evidence of the deaths and injuries it alleges, it should bring this to the attention of the Tanzanian attorney general without delay.”

Barrick subsidiaries are due in a British court on March 17 to face allegations of unlawful killings and assaults at the mine between 2014 and 2019. The claimants include the family of a nine-year-old girl killed by a mine vehicle driven by police, and four women who were fired upon while gathering around her body. Barrick’s subsidiaries deny liability.

In December, Barrick said it had “radically repaired” community relations and established clear boundaries with local police at the North Mara mine after taking operational control from its subsidiary Acacia Mining in 2019.

Barrick cited “significant progress made with regards to environmental, community and security aspects,” including three independent audits that recognized improvements.

According to a Bloomberg analysis of environmental, social and governance data, the Canadian firm’s overall social score is below its peer-group average. However, the company ranks above average in the community rights and relations subcategory.

(By James Attwood)

BAD CANADIAN MINER

Canadian firm aims to double potash output in project near Brazil indigenous lands

Reuters | March 15, 2022 | 

Image courtesy of Brazil Potash Corp.

A Canadian-owned company has proposed doubling planned output of potash from a deposit in Brazil’s Amazon to reduce the agricultural powerhouse’s dependence on fertilizer imports disrupted by the Ukraine war.


Brazil Potash Corp said on Tuesday that its executives met with Brazilian Agriculture Minister Tereza Cristina Dias in Ottawa and discussed increasing from 2.44 million tonnes to over 5 million tonnes per year the output from its Autazes project.

That could cover almost half of Brazil’s need for potash, a key fertilizer. However, the company said it would take at least three years to come on stream once licensing has been obtained.

Brazil Potash owner, investment bank Forbes & Manhattan, whose chairman Stan Bharti met with Dias on Sunday, has been trying to develop the Autazes deposit for more than five years, but the project has been held up by environmental concerns.

Prosecutors recommended in 2016 suspending the license to develop Autazes because the Mura indigenous tribe had not been consulted, in violation of Brazil’s constitution.

Brazil depends on imports for 95% of its potash and is a major buyer from top suppliers Canada, Russia and Belarus. Last year, Brazil imported some 10 million tonnes.

About 30% of global potash supply has been taken out of the market due to the inability of Russian and Belarus producers to export.

“Our view is that the sanctions placed on Russia and Belarus are not going to be short-lived,” Brazil Potash said in a statement sent to Reuters.

As potash prices tripled last year and geopolitical risks threatening supplies from Eastern Europe deepened, interest has grown in Brazil in the Autazes project.

Brazil’s right-wing President Jair Bolsonaro has said Brazil needs to mine the deposit soon and has pushed for a law that would allow mining on indigenous reservations.

The company says the mine would have minor environmental impact. Salt separated from the potash at a surface processing plant would be returned underground, according to plans.

The Mura worry that it will pollute the rivers and scare away game and fish on which they depend.

(By Anthony Boadle and Ernest Scheyder; Editing by Cynthia Osterman)

Caterpillar quietly uses Russia as shipping route after pullback
Bloomberg News | March 15, 2022 

Image source: Caterpillar Inc.

Caterpillar Inc. continues to use Russia as a supply-chain route, even after the company said it had suspended business with the country.


The construction machinery giant’s continued use of Russia for moving parts and equipment sheds new light on already-fragile global supply chains. It also shows how dependent the European Union and China are on shipping routes that traverse Europe’s largest nation by landmass.

An internal document outlining Caterpillar’s logistics and supply-chain activities, seen by Bloomberg, says the company’s rail shipments crossing Russia between Europe and China are operating as normal. Caterpillar began relying more on rail freight through Russia in 2021 when ocean freight became exceedingly tight and costly.

The Deerfield, Illinois-based producer’s ocean freight is being diverted to European ports, and European customs officials are then holding all that cargo destined for Russia for inspection, the document states. All air freight to Russia and Ukraine have been suspended.

Caterpillar spokeswoman Rachel Potts declined to comment.

The company on March 9 said it suspended operations at its manufacturing plants in Russia. The company document, however, shows that shipping through the nation not only hasn’t ceased but acts as a vital supply line for the global machinery producer.

The company moves parts and finished machines between Europe and China through Russia. Most of that is done by rail, a person familiar with the matter said.

Caterpillar stopped shipping parts and machines to its dealerships throughout Ukraine as Russia invaded the nation, according to the person. For now, anything destined for Ukraine is being stored at a warehouse in Belgium, where Ukraine’s dealerships usually store overflow, the person said.

The revelation that Caterpillar continues to use Russia as a transit route is significant, considering that Caterpillar doesn’t normally give out a lot of detail about physical shipping of its goods in Europe, Asia or elsewhere.

The parts and machines affected are used in everything from construction to mining to oil and gas. One concern for the company, suppliers and investors is that Russia could cut rail and road access to U.S. and European companies. Another worry is that tighter sanctions could force Caterpillar to use more costly and circuitous routes.

The global supply-chain crisis that arose last year already forced Caterpillar to shift a significant amount of its ocean freight between Asia and Europe to rail freight, according to the person.

Higher shipping costs could be offset by ballooning commodity prices, particularly in industrial metals, if mining companies use the extra cash to upgrade aging equipment. Caterpillar’s mining equipment business, which yields huge profit margins, accounted for almost one-fifth of sales last year.

Caterpillar reported annual revenue of about $51 billion in 2021, surging more than 20% from the prior year as economies reopened from the pandemic. In January, Andrew Bonfield, Caterpillar’s chief financial officer, said that China represents about 5% to 10% of sales.

(By Joe Deaux)

Rusal diverts ore to Ireland after Ukraine plant shuttered
Reuters | March 15, 2022 | 

Photo by AVTOVAZ Group.

Russian aluminium giant Rusal is diverting bauxite cargoes from Guinea to its refinery in Ireland after the original destination in Ukraine shut down because of the Russian invasion, shipping data shows.


The logistics rethink for the world’s second-largest aluminium producer, which is not under sanctions, illustrates the kinds of supply chain disruptions now rippling through the interconnected global economy, driving up prices for some goods.

Tesla Inc raised its prices in China and the United States for the second time in less than a week on Tuesday, citing surging raw materials costs because of Russia’s invasion of Ukraine, and rival carmaker Volkswagen warned that the conflict is clouding its prospects for this year.

Britain has sanctioned Rusal’s billionaire founder Oleg Deripaska and while the aluminium company itself has not been targeted it is facing a more restricted operating environment, with Anglo-Australian Rio Tinto cutting ties with Rusal as part of its overall withdrawal from Russia.

Rio Tinto was an important supplier of bauxite – an ore used to make aluminium – to the Aughinish refinery near Limerick in Ireland, Rusal’s biggest alumina operation and largest such plant in Europe.
Significant employer

The Irish government is keen for the refinery to continue operations, a spokesperson for the department of enterprise said, adding that Rusal is a significant employer in Limerick.

“The department and its agencies continue to assess the implications of recent developments and are closely monitoring the situation,” the spokesperson said.

Rusal said it is “fulfilling all its obligations towards its employees at all its assets around the world, including paying salaries and is strongly committed to continuing to do so”.

It does not plan to halt any of its operations in Guinea, a spokesperson said while acknowledging that there had been a temporary reduction in bauxite exports from the West African nation because of events in Ukraine.

Rusal operates three mining projects in Guinea.

Its Dian-Dian mines have historically supplied bauxite to Aughinish, and its Friguia project includes a bauxite mine and an alumina refinery. Ore produced by its Kindia operation is typically sent to the Nikolaev refinery near the Ukrainian port city of Mykolaiv.

The Nikolaev plant has annual capacity to refine bauxite ore into 1.7 million tonnes of alumina, about a fifth of Rusal’s output of the material used to make aluminium.

Mykolaiv, however, has been targeted by Russian shelling during the conflict in Ukraine and Rusal this month halted operations at the refinery.
Ships rerouting

A Reuters analysis of Refinitiv shipping data on Tuesday showed that of the six vessels at sea and originally transporting Guinean ore to the Nikolaev facility, four were rerouting to Aughinish.

The two other vessels are in the western Mediterranean Sea awaiting orders, the data shows.

Rusal and its parent company En+ Group, both founded by Deripaska, have said the sanctions against him have no impact on them or their subsidaries.

European Union countries, however, are considering a ban on Russian ships entering the bloc’s ports, which would further hamper Russia’s commercial shipments.

None of the charter vessels transporting Rusal’s ore from Guinea are owned by the aluminium producer or other Russian companies or are registered in Russia.

Britain, though, has already decided to deny entry to British ports to all ships that are Russian owned, operated, controlled, chartered, registered or flagged.

Since July 2020 Rio Tinto has supplied 19 bauxite shipments to Aughinish, amounting to roughly 20% of the refinery’s total ore supply, according to bauxite industry specialist Bob Adam.

Rusal said it plans to increase its supply of bauxite to Aughinish, replacing shipments from Brazil.

Bauxite exports to the Nikolaev refinery will resume as soon as the situation in the region normalises, the Rusal spokesperson said.

Guinea’s ministry of mines did not reply to a request for comment.

(By Joe Bavier, Helen Reid, Clara Denina, Padraic Halpin and Saliou Samb; Editing by David Goodman)