Factbox: Automakers accelerate the drive to secure battery raw materials

Reuters | April 3, 2023 |

The first Tesla Model S. (Image by Steve Jurvetson, Flickr).

Rising demand for electric vehicles (EV) around the world is encouraging automakers such as Tesla Inc, Volkswagen and Stellantis NV to step up efforts to secure raw materials needed for making batteries.


Following are some of the deals major automakers have announced with suppliers and miners:

TESLA

26-Aug-2022 – Panasonic Holdings Corp, a supplier to Tesla, is in talks to build an additional EV battery plant in the United States at a cost of about $4 billion.

01-Mar-2022 – Australia’s Core Lithium will supply up to 110,000 dry metric tonnes of Spodumene concentrate, a chief source of lithium, over four years starting in the second half of 2023.

01-Nov-2021 – China’s Ganfeng Lithium will supply undisclosed volumes of battery-grade lithium for three years starting 2022.

22-July-2021 – Australia’s BHP Group will supply nickel from its plants in Western Australia. Quantities, timing not disclosed.

VOLKSWAGEN

26-Sept-2022 – Volkswagen announced a $2.9 billion battery parts joint venture with Belgian materials firm Umicore, becoming the latest European automaker to bring battery supplies closer to home in the shift towards electric vehicles.

23-Aug-2022 – Volkswagen intensified efforts to secure access to key battery materials lithium, nickel and cobalt by striking a cooperation agreement with top supplier Canada. No financial details were disclosed.

08-Dec-2021 – Vulcan Energy Resources will provide lithium hydroxide for five years starting 2026. Vulcan extracts lithium from geothermal sources in Germany’s Upper Rhine Valley region.

08-Dec-2021 – Belgium’s Umicore will supply cathode materials for Volkswagen’s European battery cell factories under a joint venture. It will start production in 2025 with 20 gigawatt hours for the carmaker’s plant in Salzgitter, Germany.

STELLANTIS

10-Oct-2022 – Carmaker Stellantis has signed a non-binding preliminary agreement with GME Resources to secure supplies of nickel and cobalt sulphate for electric vehicle batteries.

24-June-2022 – Stellantis will invest 50 million euros ($50.3 million) to buy an 8% stake in German-Australian start-up miner Vulcan, becoming its second largest shareholder and extending a lithium supply agreement to 10 years.

2-June-2022 – Controlled Thermal Resources will supply up to 25,000 metric tons per year of lithium hydroxide over 10 years from a project in California.

29-Nov-2021 – Preliminary deal with Vulcan for lithium produced using geothermal energy from Germany. Over five years starting in 2026, Vulcan will supply 81,000-99,000 tonnes of battery-grade lithium hydroxide.

RENAULT

1-June-2022 – Moroccan miner Managem will supply 5,000 tonnes of low carbon cobalt sulphate under a seven-year deal starting from 2025.

21-Nov-2021 – Vulcan will supply 26,000-32,000 metric tonnes of battery-grade lithium chemicals for initial six years starting 2026.

08-Oct-2021 – MoU with Finnish nickel and cobalt miner Terrafame to supply nickel sulphate. Quantities and timeline not disclosed.

MERCEDES BENZ

23-Aug-2022 – Mercedes-Benz strikes cooperation agreement with Canada to secure access to lithium, nickel and cobalt. It will explore a strategic partnership with Rock Tech Lithium (RCK.V) which would supply the carmaker and its battery partners with up to 10,000 tonnes of lithium hydroxide a year from 2026.

BMW

5-Aug-2022 – BMW signs a non-binding memorandum of understanding with European Lithium Ltd for the supply of lithium hydroxide.

7-June-2022 – U.S. startup Lilac Solutions, backed by BMW, was competing for mining partnerships in Bolivia to tap into the world’s largest resources of lithium.

TOYOTA

1-Aug-2022 – A joint venture of Toyota and Panasonic will buy lithium from ioneer Ltd’s Rhyolite Ridge mining project in Nevada to build EV batteries in the United States.

04-Oct-2021 – BHP Group will supply nickel sulphate from Western Australia to Toyota and Panasonic’s joint venture. Details were not disclosed.

GENERAL MOTORS

3-Aug-2022 – GM makes prepayment of $198 million to Livent Corp for a guaranteed six-year supply of lithium from 2025 at a contractual price per tonne. Volume not disclosed.

02-July-2021 – GM will make a “multimillion-dollar investment” in and help develop Controlled Thermal Resources Ltd’s Hell’s Kitchen geothermal brine project near California’s Salton Sea. The project could be producing 60,000 tonnes of lithium – enough to make roughly 6 million EVs – by mid-2024.

12-April-2022 – Miner Glencore will supply cobalt, secured from its Murrin Murrin operation in Australia, to be used in GM’s Ultium battery cathodes. Details were not disclosed.

FORD

22-July-2022 – Ioneer Ltd signs binding offtake agreement with Ford to supply lithium from Rhyolite Ridge in Nevada.

14-July-2022 – Ford Motor, SK On and SK Battery America create joint venture to build and operate an EV battery plant in Tennessee and two plants in Kentucky.

29-June-2022 – Australia’s Liontown Resources will supply up to 150,000 dry metric tonnes per year of spodumene concentrate, a source of lithium, from its Kathleen Valley project in Western Australia for five years starting 2024.

11-Apr-2022 – Ford signs preliminary deal to purchase 25,000 tonnes of lithium annually from Lake Resources’ Kachi project in northern Argentina.

22-Sept-2021 – Ford partners with startup Redwood Materials to form a “closed loop” or circular supply chain for electric vehicle batteries, from raw materials to recycling.

($1 = 0.9939 euros)

(By Bartosz Dabrowski, Ina Kreutz, Agnieszka Gosciak, Tristan Chabba, Dagmarah Mackos, Anastasiia Kozlova, Nilanjana Basu, Yuvraj Malik and Kannaki Deka; Editing by Susan Fenton and Bernadette Baum)

Mine waste finds new life as source of rare earths

Reuters | April 4, 2023 | 

Image: Phoenix Tailings

Sweden, South Africa and Australia are at the forefront of a push to transform piles of mine waste and by-products into rare earths vital for the green energy revolution, hoping to substantially cut dependence on Chinese supply.


Prices of the minerals used in products from electric cars to wind turbines have been strong, and a rush to meet net-zero carbon targets is expected to further boost demand.

Europe and the US are scrambling to wean themselves off rare earths from China, which account for 90% of global refined output.

Six advanced projects outside China, including one operated by Swedish iron ore miner LKAB, are now being developed to extract the materials from mining debris or by-products.

Australia’s RMIT University estimates there are 16.2 million tonnes of unexploited rare earths in 325 mineral sands deposits worldwide, while the US Idaho National Laboratory said 100,000 tonnes of rare earths each year end up in waste from producing phosphoric acid alone.

The six projects, processing material from mineral sands, fertiliser and iron ore operations, are targeting output of over 10,000 tonnes of key elements neodymium and praseodymium (NdPr) oxide by 2027, analysis by Reuters and consultants Adamas Intelligence showed.

That, Adamas says, is equivalent to some 8% of expected demand for the two rare earths, vital for making permanent magnets to power EV and wind turbine motors.

Potentially they will cut the expected deficit in the materials by upwards of 50%, data from Adamas and the Reuters analysis showed.

“These projects are the low-hanging fruit in the supply chain at the moment,” said Ryan Castilloux, managing director at Adamas.

“There’s more demand growth coming in the near to medium term than production, so there’s an opportunity for these readily accessible sources of supply.”
Quicker than new mines

Recovering rare earths from waste is much quicker than setting up new projects from scratch. A new mine that state-owned LKAB is planning to develop at Europe’s largest known deposit of rare earth oxides could take up to 15 years to launch.

In contrast, its project to isolate rare earths from byproducts from two existing iron ore mines in northern Sweden is due to kick off in four.

Material from an initial stage of iron ore processing, which is currently deposited in a tailings dam, will be retained and go through further treatment stages.

“We want to make sure we extract as much value as possible, and when we come to the critical minerals, we have those in our ores already,” said David Hognelid, LKAB’s chief strategy officer for special products.

The company will extract phosphorus for fertiliser, fluorine and gypsum in addition to rare earths.

In South Africa, Rainbow Minerals is also planning to process stacks of waste from years of phosphate mining.

But the biggest such project is in Australia, where mineral sands producer Iluka is gearing up to process 1 million tonnes of stockpiled by-products that have been building up at its Eneabba site since the 1990s.

It is building a rare earths refinery due to open in 2025 that together with related infrastructure is expected to cost between A$1 billion ($677.1 million) and A$1.2 billion, helped by a government loan.

New technology

A key element to making new projects viable is technology developed to separate the rare earths.

Rainbow Minerals will use a new process developed by US company K-Technologies based on ion chromatography, which is common in the pharmaceutical industry and other sectors.

LKAB will be sending its material for separation to Norway’s REEtec, in which it is the biggest shareholder.

Commodity trader Mercuria also bought a stake in REEtec for a new division that targets metals needed for the energy transition.

“REEtec fits the narrative of building processing capacity for rare earths in the part of the supply chain where we think there’s a bottleneck,” said Guillaume de Dardel, head of energy transition metals at Mercuria.

“The company’s technology has a lower environmental footprint compared to the legacy solvent extraction process essentially used for rare earths separation in China.”

In the US, Phoenix Tailings, funded mainly by venture capital funds, is using new technology developed by scientists from the Massachusetts Institute of Technology (MIT).

“There’s zero waste, zero emissions and we’re also doing it competitive with Chinese prices. We’re not going to rely on government to fund us,” said Chief Executive Nick Myers.

Prices of rare earths have climbed in recent years, making new projects more viable. Those of NdPr alloy in China, while down from a peak seen last year, have nearly doubled over the past three years.

($1 = 1.4769 Australian dollars)

(By Eric Onstad; Editing by Veronica Brown and Jan Harvey)

US-based researchers push for more realistic battery science

Staff Writer | April 4, 2023 |

Prius Li-ion battery. (Reference image by Duncan Rawlinson, Flickr.)

Battery researchers at the Pacific Northwest National Laboratory are proposing the idea of fundamental science taking into account the way industry works when it comes to developing EV components.


In an article published in the journal Nature Energy, the scientists wrote that, for instance, the way materials behave in a small laboratory sample is very different from the way they work in a thousand-litre drum.

“Usually when we do fundamental research we do not care too much about cost,” Jie Xiao, lead author of the study, said in a media statement. “But for industrial manufacturing, both the materials and processing need to be cost-efficient. For example, our tendency in the laboratory is to work with the purest raw materials we can obtain, to get the battery materials with the best possible performance. The question we need to be asking now is, ‘what is the tolerance of our system to different levels of impurities?’ It’s a different mindset.”

Xiao added that in the future, researchers might think about designing experiments that look at the effects of different kinds of impurities and different amounts of impurities to define the tolerance level and reduce manufacturing costs.

They can even start thinking about ways to take advantage of certain impurities to enhance material performance while reducing industry manufacturing costs.

“These are pressing questions that require a shift in research priorities, and a collaborative mindset to work across the cultures of academia and industry,” Xiao said.

To reduce the cost of manufacturing, industry seeks high production rates and high efficiency. But these two factors—speed and high volume—can trigger quality control issues.

To increase manufacturing speed, it is important to understand the root causes of production line limits. This is why Xiao and his co-authors reviewed four different methods to detect detrimental metal impurities in battery components that can cause battery failure. In addition, they investigated why production line sensors limit production speed. And they discussed how the combination of online diagnostics and artificial intelligence can enable smart manufacturing.

These and several other research opportunities outlined in the study point the way to bridging the often-difficult gap between laboratory research and commercialization success.

“National Laboratories can help industry to identify the scientific problems in manufacturing first by using their unique scientific tools and facilities, address them at the industry-relevant scale, and help lower the risk and cost manufacturers face in scaling up,” Xiao said.

“We see this article as a service to the scientific and industrial research communities, so they can find ways to come together and revisit what it means to do fundamental research collaboratively in a different way.”

Europe’s lone lithium refinery prepares for new wave of rivals

Bloomberg News | March 31, 2023 |

Credit: Rock Tech Lithium

For 47 years, a chemicals producer in London’s commuter belt has been running a small lithium refinery that’s the only one of its kind in Europe. Now Leverton Lithium is expanding as the rush to secure supplies of the key battery metal intensifies.


The pivotal role of lithium-ion batteries in the electric-vehicle revolution is driving the construction of about half a dozen refinery projects across Europe. At the same time, the strategic importance of those developments has been underlined by the European Union’s initiative to cut its dependence on China for critical raw materials.

Lithium prices surged last year as electric-vehicle demand took off, creating bonanza margins for miners and refiners. While prices have fallen sharply over the past few months, European refinery executives are confident the boom in demand will create a lucrative market that’s big enough to accommodate all of the projects under construction.

“Every Western automaker has a lot of interest in our product,” Dirk Harbeke, chief executive officer of Rock Tech Lithium, said in a Bloomberg TV interview. “We assume that by the end of this decade we will need around 10 converters of the size that we are currently building.”

On Monday, Rock Tech Lithium broke ground on its refinery in Brandenburg, Germany, which is set to come online in 2025. About 115 miles (185 kilometers) away in Bitterfeld, AMG Advanced Metallurgical Group NV said it will begin producing lithium hydroxide in the fourth quarter of this year, initially with an annual output that’s enough for 500,000 electric vehicle batteries. That would make it the first lithium refinery in mainland Europe.

“Everyone is now trying to get hold of these materials,” said Heinz Schimmelbusch, AMG’s CEO.

At an industrial port in the northeast of the UK, Tees Valley Lithium and Green Lithium are planning to build two separate refineries within a few miles of each other. In Finland — a critical industrial hub in Europe’s nascent battery supply chain — South African miner Sibanye Stillwater Ltd. is building a €588 million ($616 million) refinery.

Back in Basingstoke — a small town southwest of London — Leverton has teamed up with German chemicals giant HELM AG to fund a massive expansion of its own. That investment of several hundred million euros could include new plants in Europe.

Still, the barriers for new entrants is high, with feedstock costs alone set to exceed a $1 billion a year for large plants, according to Martin Kuzaj, an executive board member of HELM and a director of Leverton.

“You need to have deep pockets,” he said. “Everyone is saying they will build, but you need to look at how many are actually building,” he said by phone.

The EU is looking to boost production by speeding up permitting and opening up new sources of funding under landmark legislation introduced this month. Brussels is negotiating a deal with Washington in a bid to reduce their dependence on China for critical minerals. In return the US may offer EU companies greater access to some of the Inflation Reduction Act’s subsidies and tax credits.

The US wants to create a club of like-minded countries that agree to reduce their reliance on China for key green metals like lithium, cobalt and nickel. With demand for lithium projected to jump 17-fold by 2050, European Commission President Ursula von der Leyen is aware of the challenge.

“We know this is an era where we rely on one single supplier — China,” von der Leyen said in a speech on Thursday. “We will need more independence and diversity when it come to the key inputs needed for our competitiveness.”

Ultimately, the plants will need more than government backing to thrive, and the focus in Europe’s embryonic lithium industry is on shoring up supplies to feed the plants and striking deals with car-makers who were caught short by last year’s supply squeeze. Tesla CEO Elon Musk said during last year’s boom that lithium refining is a “license to print money,” but the steep decline in prices seen since then offers a reminder of the commercial risks involved.

While some of the refiners are building mines to lock in some of their raw materials, others will be buying purely from the open market, in a strategy that could leave them exposed if there’s another supply squeeze.

Refiners’ profits can quickly wither if the cost of raw materials rises faster than the price of the lithium chemicals they sell, in a trend that started to play out toward the end of last year’s boom. That serves as a reminder that the plants — and the entire electric-vehicle supply chain — are at the mercy of the miners and their ability to bring on new production quickly enough to meet spiraling demand.

“You need to think about who can finance these projects, and who has the backup as a company,” said Kuzaj. “You need to have the right partners with you.”

(By Mark Burton, Oliver Crook, Carolynn Look and Petra Sorge, with assistance from Bryce Baschuk)

Australia sees lithium exports matching thermal coal by 2028

Bloomberg News | April 2, 2023 

Greenbushes lithium mine in Western Australia. (Image by Calistemon, Wikimedia Commons.)

Australia sees its booming lithium sector matching thermal coal’s importance within five years as the world increasingly shifts from fossil fuels to clean energy.


Exports of the battery metal are seen at A$19 billion ($13 billion) in the year to June 2028, matching the record seen for the current financial year, according to government projections released Monday. Meanwhile, the value of power station coal shipments will drop 71% in the period.

Australia has benefited from the global shock to commodities markets following post-Covid supply bottlenecks and Russia’s invasion of Ukraine in February last year. Mineral exports are set to reach a record A$464 billion in the year through June 2023, despite a recent cooling of prices, before plunging to A$289 billion by 2027-28, nearer levels from a decade earlier.

The data show the growing role the metals vital to global electrification, such as lithium and copper, are set to play in Australia, one of the world’s biggest fossil fuel exporters. Mining and energy accounts for almost 14% of the economy in the nation, which is currently the biggest shipper of lithium and the second-biggest provider of thermal coal.

While lithium prices are unlikely to return the records set last year, partly a result of global carmakers competing over limited supply to meet ambitious electric vehicle targets, increased output should see the battery metal match thermal coal as the fifth-biggest export. Along with copper it is the only one of the 12 biggest energy and metal exports that will hold or increase its value, according to the report.

Earnings from shipping copper are set to rise to A$15 billion in 2027-28 from A$13 billion this year. Demand for the red metal, which is used in electrical wiring and is vital in most clean energy technologies, will as much as double over the next decade, according to S&P Global.

Australia has no existing industry that could fill the gaps left by the declining values of fossil fuels, which are expected to drop as the world moves to carbon-free energy, and of iron ore, which is set to see demand plateau over the next decade as China’s growth slows.

Green hydrogen is the only industry that could match fossil fuel export earnings, according to a government report released in January. But while many massive-scale projects have been proposed, none has begun construction and a wide market for the zero-carbon fuel doesn’t yet exist.

(By James Fernyhough)

South Africa pushes to delay coal plant closures
Bloomberg News | March 31, 2023 \

Dragline in the open pit of Isibonelo coal mine in South Africa. Credit: Anglo American

South Africa has told rich countries backing its $8.5 billion energy transition deal that it wants to delay the closure of some units at its coal-fired power plants, people familiar with the situation said.


Years of mismanagement and corruption have decimated South Africa’s coal-dependent power sector but connecting the renewable energy units envisaged under its Just Energy Transition Partnership will take longer than expected.


With blackouts often exceeding 10 hours a day, the government is under pressure to hold on to whatever generation capacity it has.

The government has yet to make a decision and no formal request has been submitted to its JETP partners, but they are likely to take a pragmatic attitude given the power crisis and political constraints, the people said. They asked not to be identified because of the sensitivity of the talks.

Unveiled at the COP26 climate conference in Glasgow, the JETP is meant to help South Africa end its dependence on coal and meet its target of reaching net zero carbon emissions by 2050.

Under the agreement, which was formally signed last year, a mix of loans, grants and debt guarantees from Germany, France, the US, UK and the European Union will help South Africa build out renewable alternatives.

Troubled state power utility Eskom Holdings SOC Ltd. closed the dilapidated Komati plant last year and is due to close another 5 of its 14 remaining coal-fired plants by 2030.

Vikesh Rajpaul, who runs the Just Energy Transition office at Eskom, said life extensions are not being considered for the aging plants but some units may have to be kept open longer than planned to address the electricity crisis.

“There is an understanding and appreciation for the energy shortage that we have,” he said of talks with JETP partners.

Vincent Magwenya, a spokesman for the South African presidency, didn’t immediately respond to a text message or answer his phone. The funding partners all said they remain committed to the JETP, without commenting on the possibility of delays.

(By Antony Sguazzin and Paul Burkhardt)

Fire shuts Peabody coal mine and there’s no estimate for restart
Bloomberg News | March 30, 2023 | 

Shoal Creek coal mine. Credit: Peabody Energy

Peabody Energy Corp., the top US coal producer, shut operations at an Alabama mine following a fire Wednesday with no estimate of when it will reopen.


The Shoal Creek Mine, about 35 miles (56 kilometers) west of Birmingham, is the company’s lone producer of metallurgical coal for export in the US. It is an underground mine that generated about 800,000 tons of coal last year for steelmaking, accounting for a little more than one-tenth of the company’s total met coal exports, according to filings.


Peabody didn’t provide estimates of the fire’s impact on the mine or on its overall operations and didn’t respond to emailed questions. The Mine Safety and Health Administration is investigating, the company said in a statement. Shoal Creek employs 419 workers, all of whom were safely evacuated.

The mine will be shut while the fire is under investigation, said Andrew Blumenfeld, an analyst at McCloskey by Opis. If the cause is easily identified, it could be open within days, Blumenfeld said. But if the investigation is more complicated, the site could be closed for months.

“That’s not atypical with mine fires,” he said.

Met coal for making steel is higher quality than coal for power plants and typically commands a significantly higher price. The fire comes as Peabody is pushing to expand its seaborne metallurgical operations, including by starting redevelopment efforts at the North Goonyella mine in Australia, which has been closed since a 2018 fire.

Peabody said when firefighters evacuated the Shoal Creek mine, they reported no flames were visible. Fires in underground coal mines are notoriously hard to fight because firefighting operations are more challenging underground and because the coal provides fuel for the blaze.

Peabody’s shares were down 2.7% in late trading in New York.

(By Mark Chediak and Will Wade)

Glencore’s bid for Teck shows it’s willing to abandon coal
Bloomberg News | April 3, 2023 |

Credit: Glencore

Glencore Plc’s rejected $23 billion proposal for Teck Resources Ltd. has offered the first concrete sign that the biggest shipper of coal — and for years one of its most vocal defenders — is thinking about exiting the business.


While many rivals have long retreated from thermal coal under pressure from investors, Glencore has continued reaping massive profits from mining the dirtiest fuel. In an interview just last month, chief executive officer Gary Nagle called coal “a necessary fuel for today,” and the company has argued that it is better placed than others to responsibly manage the decline in production over time.

Now, Glencore has proposed an all-share deal to acquire Canadian miner Teck and then spin off the combined companies’ coal operations into a new business. Teck has rejected the proposal, but Glencore indicated on Monday it is doubling down on the idea and seeking discussions with the other company’s management.

Glencore’s current plan is to simply run its coal business to closure by 2050. The company has previously said that it was only prepared to exit the coal business if a majority of its shareholders asked for it.

But the Teck proposal “shows that Glencore do see merit in spinning off coal, which they’ve never said before,” said George Cheveley, a portfolio manager at Ninety One UK Ltd., who owns both Glencore and Teck. “If they can’t do Teck, then people will ask whether it would make sense just to do a coal spin-off.”

The stance on coal has faced pushback from some investors, with almost a quarter of shareholders voting against its climate report in October. The company’s sprawling coal mines, which stretch from Australia to Colombia, have also weighed on the share price by dampening its appeal as an ESG-compliant play.

And the coal assets have also been seen as a possible deterrent for any potential suitor for Glencore itself, at a time when the world’s biggest mining companies are finally regaining their appetite for mega deals. Glencore is a major producer of copper, nickel and cobalt — all strategic metals seen as key to electrifying the world. However, industry leader BHP Group itself is in the process of slowly exiting coal, while others like Rio Tinto Group are out already.

Coal has traditionally vied with copper as Glencore’s biggest driver of earnings. Last year high coal prices meant it contributed $17.9 billion of profit, compared with $5.7 billion for copper. Glencore said Monday that the two combined coal companies would have posted profit of $26 billion last year, while the base metal divisions would have made $16 billion.

Speaking to investors, Nagle argued the Glencore proposal would create more value than Teck’s own plan to split its business.

“What we are doing here is something different, not just a vanilla divestment,” Nagle said. “This is something that’s using the divestment of the coal assets to create value for Glencore and Teck shareholders.”

(By Thomas Biesheuvel, with assistance from Jack Farchy)

Teck said to be open to offers once coal spinoff is complete

Bloomberg News | April 4, 2023 | 

Highland Valley Copper operation in British Columbia. (Image courtesy of Teck Resources).

Teck Resources Ltd. is willing to entertain offers from potential suitors after it finishes the spinoff of its steelmaking coal business, according to people familiar with the matter.


The Canadian miner said Monday it rejected an unsolicited $23 billion proposal from Glencore Plc and will forge ahead with an April 26 shareholder vote on separating its metals and coal divisions. If investors approve, the split is expected to happen by the end of May, with the base metals producer being renamed Teck Metals Corp.

At that point, the Teck board is likely to be open to hearing offers from prospective partners or buyers including Glencore, the people said, asking not to be identified as the matter is private.

The Swiss commodities firm’s offer for Teck, at a 20% premium, is another sign that big mining companies are on the hunt for acquisitions. BHP Group Ltd. and Rio Tinto Plc are also said to be actively looking to increase their copper exposure.

“The board and special committee are confident that the proposed separation into Teck Metals and Elk Valley Resources is in the best interests of Teck and all its stakeholders,” Chris Stannell, a spokesperson for Teck, said in an emailed statement. “Teck’s proposed separation positions Teck Metals and EVR for success and does not foreclose future opportunities for other value-enhancing transactions at the appropriate point and time.”

In rejecting Glencore’s all-share offer, Teck chief executive officer Jonathan Price said Monday that the spinoff structure proposed by the Swiss firm would expose Teck shareholders to its large thermal coal and oil trading businesses. Norman Keevil, Teck’s chairman emeritus, said that “now is not the time to explore a transaction of this nature.”

Teck has also proposed ending the dual-class share structure that gives control to Class A shareholders — the Keevil family and its partners. But that change wouldn’t take effect for six years. In the meantime, a hostile takeover of Teck is impossible.

(By Jacob Lorinc and Dinesh Nair)

NO F...ING WAY

Companies can vie to mine the deep sea starting in July
Bloomberg News | April 4, 2023 | 

The Metals Co, formerly known as DeepGreen, intends to produce metals from polymetalic rocks, found in deep oceans.(Image courtesy of The Metals Company.)

A United Nations-affiliated organization is expected to start accepting applications this summer from companies looking to mine deep sea ecosystems for valuable metals, despite failing on Friday to establish regulations governing the embryonic industry.


That doesn’t necessarily mean mining is set to begin anytime soon. Given the absence of environmental regulations, as well as ongoing disagreement among the International Seabed Authority’s 167 member nations over whether deep sea mining should even proceed, there are doubts about whether licenses will be issued and under what conditions. Regardless, the failure to establish a regulatory framework before the deadline — for environmental standards, royalty payments, environmental impact assessments, inspection or compliance — means that whatever happens next will take the ISA into unchartered territory.

The organization is “sleepwalking into a legally uncertain situation,” Ambassador Hugo Verbist, head of Belgium’s delegation, told the ISA Council on Friday as the organization’s 36-nation policymaking body concluded more than two weeks of negotiations in Kingston, Jamaica.

The UN Convention on the Law of the Sea established the ISA in 1994 to regulate the industrialization of the seabed in international waters and to ensure the effective protection of the marine environment. The ISA had been slowly developing regulations, called the mining code, before Nauru, a South Pacific island nation of 8,000 people, sped things up by triggering a so-called two-year rule in the Law of the Sea treaty. That provision required the ISA to complete the mining code by July 9, 2023, or accept mining applications under whatever regulations exist at the time.

All mining contractors must be sponsored by an ISA member state and Nauru is the sponsor of The Metals Company, a Canadian-registered venture formerly known as DeepGreen. Nauru invoked the two-year rule shortly after The Metals Company told potential investors that it expected to begin mining by 2024, according to US securities filings. The Metals Company also holds contracts sponsored by two other small South Pacific island nations to prospect for cobalt, nickel and other metals used to make electric car batteries.

During the recent ISA Council meeting, a Greenpeace ship anchored off the ISA’s harborside headquarters and anti-seabed mining protestors gathered outside the building. Inside, China, Russia and Norway were among those countries urging the Council to fulfill the ISA’s mandate and complete regulations. But a growing number of nations, including Germany, France, Spain, Costa Rica, New Zealand, Chile, Panama, Palau, Fiji and the Federated States of Micronesia, called for a moratorium or pause in deep sea mining. They cited a lack of scientific knowledge about the biology of deep ocean ecosystems targeted for mining and the role they play in the global climate.

Brazil, Belgium, the Netherlands, Portugal, Singapore, Switzerland and other countries, meanwhile, have indicated that they would not approve any mining contracts until robust environmental protections for the seabed are enacted.

“We reiterate today, conditions don’t exist for deep sea exploitation to be carried out,” Mexican delegate Marcelino Miranda told the Council on Friday. The Dominican Republic on Friday also joined the cause for a pause. “When in doubt, favor nature,” said Dominican Republic’s Ambassador Edward Aníbal Pérez Reyes. “We should not move ahead.”

None of the countries asking for a moratorium or pause on seabed mining have formally proposed such a resolution. Pradeep Singh, an international ocean governance scholar at the University of Bremen in Germany, noted that the Council operates by consensus, requiring unanimity to approve the mining code. “Technically, even if there is one formal objection, then it cannot get adopted,” said Singh, who attended the recent ISA Council meeting as an observer.

Although the ISA Council still has three months to enact regulations, it wouldn’t even be able to agree on any until its next scheduled meeting on July 10, one day after the deadline. A resolution adopted by the Council on Friday requests that the ISA secretary-general notify it within three days of receiving any mining application. The Council also noted that it retains the authority to provisionally approve or reject an application. Left to be decided is whether the Council can postpone a decision on an application until mining regulations are in place.

Nauru has said it won’t sponsor a specific mining application on behalf of The Metals Company until after the Council meeting in July. On a March 23 earnings call, Metals Company executives said they expect to file an application in the second half of 2023 and to receive an ISA mining license in 2024, with production to begin later that year or in early 2025.

But there’s a question about whether The Metals Company, or any other privately owned applicant, will be able to raise the considerable capital needed to begin mining operations. (That’s not an issue for nations like China, which holds five exploration licenses, but to date its state-backed contractors have not indicated they’re ready to begin mining.) The private ISA contractor with the deepest pockets, US defense giant Lockheed Martin, abruptly exited the industry this month when it sold its seabed mining subsidiary to a Norwegian startup.

In securities filings, The Metals Company has estimated a full-fledged mining operation with an onshore processing plant would cost $10.6 billion to launch, with annual operating expenses of $1.8 billion after 2030. On its March 23 earnings call, the company, which had a net loss of $109.6 million in the fourth quarter of 2022, said it would need to raise $100 million to $150 million to begin mining after receiving an ISA license. The company’s shares closed at 83 cents on Friday.

(By Todd Woody)

 

Salvors Begin Oil Containment and Removal for Princess Empress Wreck

PCG / Fukada Salvage

PUBLISHED APR 2, 2023 6:07 PM BY THE MARITIME EXECUTIVE

 

The Philipping Coast Guard and a Japanese salvor have begun a bagging operation to seal off leaks from the sunken tanker Princess Empress, one month after the vessel went down south of Luzon. A supplier from the United Kingdom provided specialized bags for the purpose, which will be installed using an ROV from the Japanese salvage vessel Shin Nichi Maru. 

“We are grateful for all the support from the other countries in addressing this emergency. We hope that along with these international assistance, the integrated response between government agencies and the local government units will enable us to accelerate the effort to contain the leakage,” said Ariel Nepomuceno, head of the Philippines' National Disaster Risk Reduction and Management Council.

The bagging operation is a preliminary step in the remediation process. After sealing identified leaks, the salvors will use hot tapping to siphon off the tanker's fuel oil cargo. 

Illustration of typical hot tapping process

The product tanker Princess Empress went down off Pola, Oriental Mindoro on February 28. The crew were rescued safely by a good samaritan vessel, but petroleum began to leak out of the wreck's cargo tanks, spreading a plume that eventually reached from Calapan and Verde Island in the northwest to the Caluya Islands and Palawan in the south. An estimated 175,000 people have been affected, including fishermen who have lost their livelihoods due to a fishing ban. 

The Princess Empress went down with about 800-900,000 liters of fuel oil on board, and the Philippine Coast Guard estimates that 400,000 liters were released, based on assessments of damage to the vessel's tanks. 14,000 liters of oil water mixture have been collected during the spill response. 

The full cost of the damage and the extent of the claims are not yet known. The damages may exceed the P&I club's limit of liability, triggering additional coverage from the UN-administered International Oil Pollution Compensation Funds (IOPC Funds). The insurers recently agreed to start collecting claims for compensation from affected residents, and have set up local offices in Oriental Mindoro to facilitate the process.