Chile’s president says Codelco output to grow; touts investment climate

Reuters | April 18, 2024 | 

Chile President Gabriel Boric. Credit: Ministerio de las Culturas | Flickr

Chilean President Gabriel Boric told a major copper industry conference on Wednesday he expects production at state-run miner Codelco to grow slowly this year and reach 1.7 million metric tons by 2030, and that he sees copper prices rising.


“The Codelco production will rebound,” he said, offering a vote of confidence for the country’s top copper producer whose output last year hit a quarter-century low, at 1.325 million metric tons.

Boric’s comments came in a surprise appearance at a gathering of top global copper executives and analysts at CESCO Week, which alongside the CRU World Copper Conference, makes up the biggest annual gathering of sector professionals.

At a time when global companies have raised concern about long approval times for new mines and expansions, he said Chile, the world’s biggest copper producer, is dedicated to speeding up the permitting process for mining projects.

He also stressed the need for greater economic distribution of mining industry profits to local communities.

As well, Boric said one of Chile’s strong suits was ensuring long-term security for investors.

“Long-term mining projects work when there is greater certainty, when there are clear rules for all,” he said. “Investments are also based on the perception of trust. And that is something intangible.”


When Boric said he believed this attitude should underscore Chilean policy no matter who is president, the room of nearly 2,000 attendees burst into applause.

He said Canada-based Teck Resources’ CEO Jonathan Price had remarked in a recent meeting that the company might not have invested in copper mine Quebrada Blanca if it had known it would have taken 10 years to get off the ground, but he was proud of the project.

The mine’s expansion last year was among the biggest mining investments in Chile in a decade.

Boric also talked about the government’s efforts to boost lithium production, praising the benefits of public-private partnerships at a time when Codelco is tasked with spearheading such partnerships in Chile’s lithium industry.

A process meant to encourage private investment in lithium kicked off just this week, he said, adding that he expected output of the ultralight metal to double in a decade.

(By Daina Beth Solomon, Alexander Villegas and Ernest Scheyder; Editing by Sonali Paul)

Chile must pass permitting reforms to unblock investment, copper executives say

Reuters | April 16, 2024 | 

Spence copper mine located in the Atacama Desert, in northern Chile. (Image courtesy of BHP).

Chile’s government needs to quickly approve a proposal to streamline permitting for the mining industry to unlock and promote investment in the world’s top copper-producing country, a top executives said on Tuesday.


“In Chile it is urgent to improve the permit system to allow companies to approve large investment projects in a timely manner,” BHP President Americas Brandon Craig said on a panel at the World Copper Conference being held in Santiago.

“This not only applies to new projects, but also to permits needed to optimize current operations,” he added. BHP is a top copper producer and its flagship Escondida mine in Chile is the world’s largest copper mine.

Rio Tinto, which has a 30% stake in Escondida and partnered with state-run Codelco for copper exploration, agreed that more streamlining is needed to boost investment.

“I would like to invest more in Chile, but I need help,” said Bold Baatar, head of Rio Tinto’s copper business. “The more we can streamline the permitting process (in Chile) … I think that would be helpful.”

Mining companies and industry groups have complained about the extensive permitting process in Chile. In January, the government presented legal reforms to streamline permitting for investments, which can currently reach up to 500 requests from various authorities.

The reforms still must be approved by Congress, where the government has faced strong opposition. The government was able to pass a mining tax reform last year, but a major industry request during the debate was to streamline permitting and reduce start-up times for multi-million dollar copper projects, which is Chile’s largest export.

“I hope these reforms are approved quickly so that the industry can unlock large mining investments,” Craig said.

(By Fabian Cambero and Alexander Villegas; Editing by Andrea Ricci and Richard Chang)

Rio Tinto to favour development over acquisition of copper mines — exec

MINING.COM Editor | April 17, 2024 | 

Bold Baatar. (Image courtesy of Rio Tinto | X Feed.)

Rio Tinto (ASX, LON, NYSE: RIO) will prioritize developing new copper mines over acquiring new ones to achieve its goal of producing one million tonnes of the metal annually within the next five years, copper boss Bold Baatar has said.


Speaking at the CRU World Copper Conference in Chile, the executive noted that to boost production from the roughly 700,000 tonnes of copper it currently churns out, Rio is looking mainly at organic growth.

Most of the planned output expansion, Baatar said, will be driven by Rio Tinto’s expansion in Mongolia, Utah, and global exploration efforts, including a partnership with Chile’s owned Codelco, the world’s largest copper producer.

“For us, the focus is organic growth, supply growth and where in projects can we partner rather than necessarily acquiring an existing production,” Baatar, who was recently appointed as Rio’s next chief commercial officer, told reporters in Santiago.

Baatar said Rio would invest more in Chile if the country streamlines its permitting process, not only for new developments, but also for projects to optimize current operations.

Cost-effective

Despite the increasing cost and time required for project development, Baatar believes that building mines is still more cost-effective than buying existing ones, a stance that may disappoint industry watchers betting on a new wave of mergers and acquisitions.

Consolidation in the industry is only logical if it increases the supply of the metal used in wiring, considering the anticipated acceleration in demand growth due to the worlds’ ongoing energy transition, Baatar noted.

“Just bringing one and one together doesn’t add more copper,” he said. “The key question is how can we bring more supply.”

Rising costs to build QB2, Teck’s flagship copper project in Chile, shows how the industry is struggling to expand supply on budget. (Image courtesy of Teck.)

The cost of building new copper mines has significantly increased over the years. In 2000, the average capital needed for a new copper mine sat between $4,000-5,000 to produce a tonne of copper. By 2012, this had risen to $10,000 per tonne, and recent analyses pegged current costs to up to $44,000 per tonne of production.

Robert Friedland, founder and chairman of Ivanhoe Mines, recently estimated the price of copper needed to reach close to $15,000 a tonne and remain there for a long period of time, before the industry can really gear up and build much needed new copper mines.

Baatar, who joined Rio in 2013 and was appointed copper chief in 2021, played a key role in leading the company to successfully complete the underground expansion of the Oyu Tolgoi copper mine in Mongolia.

He takes the post of chief commercial officer in September and industry insiders say he is likely to become Rio Tinto’s next chief executive officer.

(With files from Bloomberg)

Aging copper mines are turning into money pits despite demand

Bloomberg Opinion | April 17, 2024 | 

Chuquicamata mine. Credit: Codelco

Representatives from the world’s biggest copper producers had reason to celebrate when they convened in Santiago on April 15-17 for their annual conference. Global prices for the metal have climbed about 6% over the past year, while those for lithium and nickel have taken double-digit dives.


All three have starring roles in the energy transition, the race to wean economies off planet-warming fossil fuels. But copper has a great many uses besides battery packs—it’s in indoor plumbing, cars and electrical wiring—which has helped buttress prices.

Even the more conservative forecasters see demand growing by a third over the next decade, as governments and businesses step up investments in decarbonization. At the same time, the industry faces numerous obstacles to meaningfully boosting output. The new deposits that are needed to replace maturing mines are getting harder to find and develop, with heightened social and environmental scrutiny and long waits for permits. All of that makes projects more time-consuming and expensive, and also tougher to finance.

To get a close-up look at how the confluence of factors is restraining supply, travel almost 1,000 miles north of Chile’s capital to Chuquicamata, where copper has been mined since pre-Columbian times. (A mummy dating from circa 550 A.D. was unearthed in an old mine shaft in the late 19th century, the apparent victim of a rock fall.)

The world’s largest open-pit copper mine in terms of excavated volume, Chuqui, as locals call it, appears in satellite images as some terraced city buried into the Mars-like landscape of the Atacama Desert. Copper pulled from the 2,350-acre pit has helped turn Chile into the world’s No. 1 supplier of the metal—and one of the most prosperous nations in Latin America.

More than a century of commercial production reduced the amount of ore that can profitably be extracted from the surface, so two decades ago state-run Codelco began drawing up plans to build a modern underground mine at the site to tap the riches deep below.

The company originally envisioned a $2 billion investment. By the time its board signed off on the project in 2014, the budget had risen to $4.2 billion. At the time of the 2019 ribbon-cutting, it had climbed to $5.5 billion. The latest estimate, including related infrastructure, is $7 billion, making it the biggest outlay Codelco’s history.

Behind the budget blowouts is a combination of tricky engineering and geology—building more than 90 miles of tunnels right under an open pit is no mean feat—but there have also been missteps in planning and execution.

The underground portion opened in 2019, pretty much in line with a revised schedule. But because of setbacks, including design adjustments, collapses and glitches with the conveyor belt that transports rock to the surface, the operation won’t reach full production capacity until 2030, at least four years later than planned.

The hiccups caused Chuquicamata’s overall output to dip below 250,000 tons last year, compared with half a million tons in 2010. In an April 15 interview, Codelco Chairman Maximo Pacheco highlighted the complexity involved in what ranks as one of the world’s biggest mining projects. “The rock reacts in a way that we don’t necessarily know exactly how it’s going to be,” he said. “We are in the frontier of knowledge of the technology of underground mining in the world.”

Other miners operating in Chile have run into difficulties on projects designed to extend the profitable life of their assets. Teck Resources Ltd.’s expansion of its Quebrada Blanca copper mine came in at $4 billion over budget. Anglo American Plc has spent at least 14 years doing environmental studies and other paperwork for an around $3 billion overhaul of Los Bronces, its flagship mine in Chile.

“Projects are becoming bigger, the capital intensities are high, and therefore these are very tough decisions,” says Iván Arriagada, chief executive officer of Antofagasta Plc, which pondered an expansion of its Centinela mine for years before pulling the trigger on a $5.4 billion plan in late 2023. The Center for Copper and Mining Studies (Cesco), the Santiago-based research outfit that put on this week’s event, has crunched the numbers and found that the investment needed to produce a ton of copper in Chile has shot up fivefold since 2006.

Around the world, the challenges of building new mines are often even more daunting. Over the past several years, the time from so-called first discovery to first metal has lengthened by an average of four years, to 14, according to Bloomberg Intelligence. The oil industry is going in the other direction, with modern fields such as those off the coast of Guyana taking only five years to come online.

Miners often complain that mountains of red tape are choking development. “It’s permitting gone mad,” says Roque Benavides, chairman of Buenaventura, whose company is active in Peru. In Chile, Peru and elsewhere, major producers have lobbied strenuously for streamlined regulatory frameworks, touting their shift to cleaner and more socially inclusive practices as proof that the industry is moving past its history of environmental damage and ill treatment of local communities.


That message isn’t getting through in many places. In December, Panama’s government shut down one of the world’s largest copper mines following fierce public protests—one reason prices for the metal have outperformed those of other commodities.

Of the top 40 copper projects around the world, 31 face significant social, environmental, regulatory or economic hurdles, according to an analysis by Flashpoint Capital, a merchant bank in Toronto. “Some of these issues are so severe that the viability of developing the projects is questionable,” says Flashpoint partner Colby Mintram.

Those obstacles can drain miners’ enthusiasm for new projects. Goldman Sachs Group Inc. estimates the industry needs to spend $150 billion over the next decade to address a projected 8-million-ton annual supply shortfall. That would require prices to surpass $10,000 a ton, from the current level of around $9,500, Trafigura Group CEO Jeremy Weir told the conference in Santiago this week.

CRU, a metals research and consulting firm based in London, is less bullish about copper demand than many forecasters but still recognizes the supply-side constraints. Mines are getting smaller and more expensive to build, with more than one-third of future projects located in jurisdictions where investors face significant political and regulatory risks, such as Congo. “The stuff is in the ground,” says CRU’s head of base metals, Simon Morris. “It’s whether there’s really the will to do it.”

Chuquicamata stands as a cautionary tale. The stumbles there are one reason Chile’s copper production has sunk to the lowest level in two decades. Many of Codelco’s woes, and those of copper mines the world over, boil down to declining ore quality. Globally, the amount of mineral that can be extracted from a given amount of rock has been halved over the past two decades, from about 1% to 0.5%, as existing mines mature. Meanwhile, exploration has yielded fewer big finds in the past decade or so.

Codelco is now paying the price—along with Chile’s government—for prioritizing payments into state coffers while putting off investments in overhauling depleting mines. Back in 2016 the company was projecting its average annual output would rise to 2.1 million tons through 2040. That forecast has been slashed to about 1.6 million tons, according to a recent company presentation. The difference between the two amounts to enough copper to make 6 million Teslas a year.

Codelco now finds itself in the unenviable position of having to juggle four giant projects simultaneously as part of a $40 billion pipeline—an undertaking few private-sector rivals would ever attempt. Senior management has been responding to the setbacks at Chuqui and other mines by overhauling reporting structures in a bid to improve decision-making. For example, under Rubén Alvarado, who stepped into the CEO job in September, project development has been decentralized, with responsibilities handed back to the various divisions. Management says a gradual recovery is underway as projects get back on track.

Still, Juan Ignacio Guzmán, who heads GEM, a mineral consulting firm in Chile, sees an ongoing risk of disappointments unless the state-owned giant can streamline decision-making. Of Chuquicamata, he says: “If the fundamental organizational problems aren’t resolved, it is only going to keep losing money.”

Pacheco, the company chairman, acknowledges that previous management bit off more than it could chew. “We should never again try to develop four mega projects simultaneously. The country has limited resources. Our company has limited resources, and the complexity of all these projects clearly shows that it’s a better solution going one by one.”

(By James Attwood)

Cobre Panama: How a $10 billion copper mine is now sitting idle in the jungle

Bloomberg News | April 16, 2024 | 

Cobre Panamá operation. (Image courtesy of First Quantum Minerals).

When the group of mining executives arrived at Panama’s regal Palacio de las Garzas, they were ushered past the ornate, wood-paneled ceremonial rooms and straight to the private office of the president.


This was December 2016, before the upswell of anti-mining protests that would throw the country into chaos, and the team from First Quantum Minerals Ltd. were greeted as old friends. After all, they were building the country’s most important project since the Panama Canal had been opened a century earlier.

But as they compared notes on the progress of their Cobre Panama copper mine, the president issued a warning.

First Quantum had lucked into an unusually sweet deal in Panama, he said. Sooner or later, the company would have to agree on new terms with the government and pay more taxes. What was left unsaid: it would be better to do it sooner, under a business-friendly government like his, than to gamble on Panamanian politics.

The stakes were high. The mine was set to be the centerpiece of Panama’s economy, generating between 4% and 5% of its gross domestic product and employing one in every 50 workers in the country. For First Quantum, which had borrowed heavily to construct a mine in the dense Panamanian jungle, it simply had to succeed.

Philip Pascall was unmoved. A swashbuckling Zimbabwean who had built First Quantum from scratch by making bold bets that few others had the stomach for, he brushed aside the president’s warning and quickly moved the conversation away from tax.

It was a gamble that would prove disastrous. Today, the $10 billion mine is sitting idle, shuttered by nationwide protests over a new tax deal signed in October. First Quantum’s share price has plunged by roughly half, and the company is being circled by predatory rivals.


This account of how First Quantum’s flagship investment fell apart is based on interviews with more than a dozen people involved in the project over a decade.

It is in part a tale of First Quantum’s hubris, as the company’s bosses sought to build the mine fast and keep costs low, despite unsettled tax disputes and legal issues. Pascall dismissed private warnings not only from Panama’s government but also from his own advisors that the tax deal put his company in a vulnerable position.

But it is also a story that resonates far beyond the walls of First Quantum’s offices and the borders of Panama, highlighting a dilemma at the heart of the global transition away from fossil fuels. While governments are pushing to secure the raw materials to build electric vehicles, solar panels and high-voltage cables required for the energy transition, few of their citizens want the mines needed to produce them.

The fate of Cobre Panama is one of the central questions facing the miners, traders and hedge fund managers who have gathered in Santiago in Chile for the copper industry’s annual Cesco Week event.

“If I was a copper mining company looking at Latin America, would I want to sink a 50-year operation into one of these countries where there is this rising risk?” said Gracelin Baskaran, a research director and senior fellow for the Energy Security and Climate Change Program at the Center for Strategic and International Studies.

“If the sector is risk-averse, they don’t invest. And if they don’t invest, we don’t have what we need for an energy transition.”
Charismatic leader

Trailblazing projects like Cobre Panama have long been a hallmark of First Quantum’s business. Headquartered in Canada, the company was founded in 1996 by Philip Pascall and his brother Matt.

Philip, who died last year, was a savvy and charismatic leader who forged close ties with key politicians and charmed his way into beneficial arrangements for the company. At 6’5”, he towered over his employees, but he was known within First Quantum as an approachable boss who could spend hours chatting with anyone.

The brothers developed copper mines in countries like Zambia and the Democratic Republic of the Congo, regions with low investment grades where few of its competitors dared to venture. While mines can often take decades to build, the Pascalls cultivated a reputation for getting their projects done ahead of schedule.

In a rare interview in 2013, Philip Pascall described the ethos of his firm to The Australian: “We dare where others don’t, we try new things out, learn from our experiences and have earned a reputation for delivering not only to budget, but before schedule in an industry prone to overrunning both.”

Their boldness was rewarded in the 2000s, as demand from China supercharged the price of copper. By the early 2010s, First Quantum had become a multibillion-dollar success story. With cash to spend and growing ambitions, Philip set his sights on a deposit in Panama, a country until then little touched by the mining industry.

The firm launched a $5.5 billion takeover of the deposit’s owner, Inmet Mining Corp., that quickly turned hostile after the smaller firm twice rejected First Quantum’s approaches.


It was a big bet. First Quantum, which declined to comment on this story, amassed a heavy debt burden to finance construction, narrowly averting a breach on its loan terms. While miners often seek to reduce their risk in uncertain jurisdictions by partnering with other companies, Pascall doubled down, buying out the company’s Korean partner, LS-Nikko Copper Co. Ltd., for $635 million and bringing its total ownership to 90%.

The end result was a $10 billion mining complex larger than the size of San Francisco, isolated in Panama’s tropical rainforest, and capable of producing more than 350,000 tons of copper in a year — enough to build about five million electric vehicles. In an industry where many of the largest deposits have been depleting for decades, it was a rare example of a major new mine.

And the timing seemed fortuitous. China’s industrialization was being supplanted as the major driver of projected copper demand by a new juggernaut — the energy transition. The electric vehicles, charging stations and high-voltage cables needed to electrify the world’s transportation will all require lots of copper. Mining executives started talking about the gap between the amount of copper that would be needed to reach net zero and the anticipated supply from the world’s existing mines. The world would need dozens of new copper mines, they said.
First ore

First Quantum’s success had much to do with its leader, Philip Pascall, and rapport he forged with Juan Carlos Varela, Panama’s president from 2014 to 2019. The two men would dine together, with Philip sometimes supplying wine from his brother’s vineyard in Cape Town.

Varela was eager to see Cobre Panama built. He kept a piece of the first ore rock mined from Cobre Panama in his office. The night before the mine opened in 2019, he joined First Quantum staffers at a luxury resort on Panama’s southern coast to dine on sushi and toast the project’s completion.

Still, the honeymoon wouldn’t last. Even before Varela left office in 2019, Cobre Panama faced increasing scrutiny. The project’s tax requirements were enshrined in an outdated contract struck in 1997 — a time of record-low copper prices — long before the deposit’s value was fully realized. The details of the contract, which First Quantum inherited from the concession’s previous owners, required the miner to pay a 2% royalty rate on minerals revenue — a sweet deal for a metals producer.

Pascall had ignored Varela’s admonitions about the tax deal. In the years before Cobre Panama opened, both Varela and a former Supreme Court justice and board member for the mine’s local subsidiary had pressed Pascall to start arranging a contract that would satisfy the country’s higher tax demands. Insiders at the company said First Quantum’s leadership never acquiesced to Varela’s demands, but Varela didn’t force the issue either, instead allowing First Quantum to proceed with a lenient tax arrangement.

The tax benefits became hard to ignore once the mine opened. In 2019, Cobre Panama’s first full year of operation, the mine’s royalty payments to Panama were a sixth of what First Quantum paid to Zambia for its Kansanshi mine. (In that period, though, Zambia’s tax rate was notably high for foreign mining firms).

The disparities were enough to draw the ire of a new government. When Varela’s business-friendly administration was replaced by the centre-left party of Laurentino Cortizo, the new administration moved to secure a better tax deal for the country.

Cortizo didn’t maintain the same friendly relations with First Quantum. He had steered Panama through a cataclysmic recession caused by the Covid pandemic, that saw employment fall drastically and inflation spike while container ships sat idle in the Panama Canal. Now he needed to refill the government’s coffers, and First Quantum, the country’s biggest investor, became an obvious target.

The government pushed for significantly higher royalties as well as a minimum annual flat tax of $375 million. When the company pushed back, Panama threatened to shutter the mine altogether.

“They were tough negotiations,” said Robert Harding, First Quantum’s chairman. “We were trying to protect our interests and they were trying to protect theirs.”

After long delays and standoffs and over four years of negotiations, the government and company reached a tentative agreement in March last year. First Quantum acquiesced to the bulk of Panama’s demands in exchange for a 20-year extension on the mine’s operating contract.
Hostility brews

To the outside world, it looked like the crisis had been averted. Months passed in relative calm, and the mine kept churning out huge amounts of copper.

Yet on the ground, hostility was brewing. Panama was already seething with discontent over inflation, high unemployment and corruption, and there was long-standing resentment over Cobre Panama’s environmental impact and its contribution to the economy. With a national election looming, the mine became a focal point for all the country’s ills.

In October, when Panama’s congress approved the new contract with First Quantum in what should have been a formality, the decision fueled an uprising of protests that paralyzed large swathes of the country.

One of the driving forces behind the opposition was a powerful and confrontational construction union called Suntracs, which has a history of clashing with companies operating in Panama. The group had sought early on to take part in the mine’s construction, and Suntracs members subsequently stormed the gates of the mine and assaulted employees at least three times between 2015 and 2018. Now Suntracs played a key role in stirring up protests and pushing labor issues to the forefront.

Across the country, protesters blockaded highways and rallied in the cities. Local boats, some of them operated by Suntracs, blocked access to Cobre Panama’s coastal port for weeks, preventing First Quantum and its suppliers’ ships from docking.

As the civil unrest raged, First Quantum had largely lost touch with the government’s decision making, according to employees who spoke with Bloomberg News. The close-knit relationship Philip had once maintained with Varela was virtually absent between Cortizo and Philip’s son Tristan, who had taken over from his father as CEO after overseeing Cobre Panama’s construction as the project’s general manager.

When Cortizo called for a national referendum on the mine’s operating contract in October — a short-lived idea meant to calm mass demonstrations — Tristan Pascall and First Quantum’s other top executives were provided no advance notice. The soft-spoken executive largely conducted damage-control from the company’s London office, eventually visiting Panama briefly in late November following Cortizo’s call to shutter the mine. But Panama’s course was set. The mine produced its last ton of copper in November and has been sitting idle ever since.
Cautionary tale

For the wider mining industry, the story of First Quantum in Panama has become a cautionary tale.

“It’s just a reminder that it’s so, so important that there’s mutual trust, and that what we’re doing is in the interest of all constituents,” said Jakob Stausholm, chief executive officer of Rio Tinto, whose predecessor was ousted after the company irreparably damaged an ancient Indigenous heritage site in Australia. “You cannot run the risk of turning a blind eye to that side of the business.”

In Panama, First Quantum has embarked on a media blitz ahead of presidential elections in May, hoping that it can gain enough popular support to persuade the next government to allow the mine to restart. The company says it’s spending $15 million to $20 million per month to preserve the site, and has committed to reforesting more than 11,000 hectares of Panama’s rainforest — double the area impacted by mining.


Yet some analysts have predicted the shutdown could last a year or longer, while a question mark hangs over who will ultimately own the mine. The project has attracted interest from the likes of Barrick Gold Corp., a much larger mining firm that boasts a history of dealmaking in challenging jurisdictions.

Cobre Panama’s closure was one of the key catalysts behind a global shortage of copper ore currently gripping the industry, which in turn has drawn bullish investors into the market and helped pushed metal prices to the highest point in nearly two years. The mine accounted for roughly 1.5% of the world’s supply of copper.

And the closure of Cobre Panama has intensified warnings from the mining industry that future supplies of metals like copper may not be sufficient to meet the needs of the energy transition. The International Energy Agency has predicted that by 2030, mines in production or currently under construction will only meet half of global demand for battery metals like lithium and cobalt. Copper mines, meanwhile, are projected to meet 80% of global demand in that same time frame.

The operation is “only one example of the geopolitical climate within which today’s copper and other commodity mining operations exist,” said Andrew Kireta Jr., president and CEO of the Copper Development Association, a US-based industry group.

“If we proceed with a business-as-usual approach, these supply constraints and others will impact the US’s ability to meet the projected steep demand acceleration for copper to build out clean energy infrastructure and transition to electric vehicles.”

(By Jacob Lorinc)

Governments must broker local support for mines, industry group says

Reuters | April 17, 2024 |

MINING IS UNSUSTAINABLE

View from above of the pit of an open-pit copper mine in Peru. 

The world’s governments must do more to convince local communities and Indigenous groups to support mines that produce critical minerals needed to power the energy transition and fight climate change, the head of a prominent industry group said.


Mines across the globe increasingly face opposition for religious, ecological or other reasons, with pressure seeming to intensify in the past year after officials in Panama, responding to protests, shuttered a mine that supplies 1% of the world’s copper.

Yet efforts to stem a rise in global temperatures have boosted the use of solar panels, electric vehicles and other technologies that are built with large amounts of copper, nickel and other critical minerals.

If governments are serious about combating climate change, they must find a way for some projects to advance rather than expecting companies and host communities to negotiate between themselves, Rohitesh Dhawan, CEO of the International Council on Mining and Metals, told Reuters on the sidelines of the World Copper Conference in Santiago this week.

“Now that we have governments more actively engaged in increasing the supply of critical minerals … that comes with a responsibility to help broker an effective and trusted relationship between the industry and impacted communities,” said Dhawan, who joined ICMM in 2021 after a career in consulting.

“We can’t have a situation where governments are entirely hands off.”

London-based ICMM, whose 24 members including BHP and Glencore account for roughly a third of the world’s metals production, is reviewing its policy first crafted a decade ago on how miners should interact with Indigenous communities, Dhawan said, in what is known as free, prior and informed consent (FPIC).

“There’s a need for reframing and a need for an honest conversation about where does the responsibility of a mine start and end, and where does the responsibility of government start and end?” Dhawan said.

The review reflects a strategy shift of sorts, with ICMM now pushing governments to bear the full responsibility of obtaining FPIC. Dhawan said industry should instead be responsible for managing a mine’s local impact.

The mining industry, though, should not necessarily build a mine if it receives government approval but not local support, he added. “Everybody benefits when we transition to a low carbon economy, but the impacts are always local.”
Industry leaders

The tension between the rising need for copper and entrenched opposition was a central theme this week at the Santiago conference, which organizers said was attended by more than 500 people.

“Everybody asks for decarbonization, but what we face all the time is absolutely a battle in every permitting process,” said Roland Harings, CEO of Aurubis, Europe’s largest copper producer.

Executives acknowledged the industry has not always had the best reputation, especially after deadly mining accidents in recent years.

“We need to be able to demonstrate that we will partner with host communities in a more responsible and long-term manner,” said Jonathan Price, CEO of Teck Resources, which operates across the Americas.

That was echoed by executives from Codelco, Chile’s state-owned copper giant, as well as BHP and others.

“Mining is good for the world, but it needs to be done well,” said Simon Collins of Australia’s South32, which is developing a zinc mine in the United States that has the support of President Joe Biden’s administration.

(By Ernest Scheyder, Daina Beth Solomon, Julian Luk, Alexander Villegas and Fabian Cambero; Editing by Jamie Freed)

Saudi Arabia nears $1bn deal for stake in Barrick’s Reko Diq

MINING.COM Editor | April 18, 2024 | 

Reko Diq mine camp. (Image: Barrick’s presentation | July 2022.)

Saudi Arabia is said to be close to reaching a deal to acquire a minority stake in Pakistan’s $7 billion Reko Diq copper and gold mine, controlled by Barrick Gold (TSX:ABX)(NYSE:GOLD).


According to Bloomberg, the kingdom’s investment fund Manara Minerals intends to invest close to $1 billion in the project and it may announce a preliminary agreement on the transaction terms within weeks.

The Saudi company might gradually raise its stake in Reko Diq, in which the government of Pakistan has a 25% interest and the province of Balochistan has the remaining 25%.

Discussions are at a very early stage and could still collapse or be postponed, sources close to the matter told Bloomberg.

Barrick chief executive Mark Bristow has said in recent interviews that he doesn’t want to “dilute” the company’s stake in the project, but “would not mind” if Saudi Arabia’s Public Investment Fund (PIF) wants to buy out the equity of the Pakistan government. Pakistan has not publicly stated whether it is considering selling its part in the project.

Barrick, the world’s No.2 gold producer, believes that the proposed mine is one of the world’s largest underdeveloped copper-gold prospects.

The project, in the Balochistan region bordering Afghanistan and Iran, has the capacity to produce 200,000 tonnes of copper and 250,000 ounces of gold annually year for more than 50 years. Production is expected to begin in 2028.

Manara was established as part of Saudi Arabia’s efforts to diversify its economy from oil, tapping its vast resources of phosphate, gold, copper and bauxite while buying minority stakes of up to 20% in assets overseas. It is a joint venture between state-owned miner Ma’aden and the PIF.

Manara’s first major venture overseas was a deal inked with Vale (NYSE: VALE) last July to become a 10% shareholder in the Brazilian miner’s $26 billion copper and nickel spin-off Vale Base Metals.

(With files from Bloomberg and Reuters)

Rio Tinto, Saudi Arabia said to vie for stake in First Quantum mines

Bloomberg News | April 18, 2024 |

First Quantum’s 80%-owned Kansanshi mine in Zambia is Africa’s largest copper operation. (Image courtesy of Liam Richer | YouTube)

Rio Tinto Group and Saudi Arabia’s state-backed Manara Minerals Investment Co. are among suitors considering bids for a stake in First Quantum Minerals Ltd.’s Zambian copper mines, according to people familiar with the matter.


Japanese trading houses Mitsui & Co. and Sumitomo Corp. have also been studying the assets, the people said, asking not to be identified as the talks are private. First Quantum is looking to sell a minority stake in its Sentinel and Kansanshi mines in Zambia and is seeking first-round bids in the coming weeks, they said.

The assets could also attract interest from Chinese companies such as Zijin Mining Group Co. and Jiangxi Copper Co., which is First Quantum’s second-biggest shareholder, the people said. The process is in the early stages and there’s no certainty the parties will proceed with bids.

Zambia accounted for about half of First Quantum’s copper output and revenue last year, and delivered more than $450 million in operating profit.

First Quantum is selling a stake in its Zambian assets after it was ordered to close its flagship copper mine in Panama last year following public protests. That left the company scrambling to refinance the debt it took on to build the mine. The firm sold about $1 billion in stock and raised $1.6 billion from a notes offering earlier this year and has said it may look at divesting smaller mining assets.

A spokesperson for Sumitomo said that the company continues to explore opportunities to acquire stakes in copper operations, declining to comment on specific deals. Spokespeople for First Quantum, Rio, Mitsui and Jiangxi Copper declined to comment. Representatives for Manara and Zijin Mining couldn’t immediately be reached.

The copper mines are attracting interest from a range of investors because demand for the metal is expected to soar in coming years. Copper is crucial for the production of electric vehicles and renewable energy infrastructure, while there is a lack of new mines being built.

And there are also relatively few good assets to buy. Some of the mines available in the central African copper belt, which stretches through Zambia and the Democratic Republic of Congo, aren’t appealing to buyers, and major firms are unwilling to sell stakes in their most important developments.

That means companies that have previously avoided taking stakes in mines in Africa — such as Japanese trading houses — have started to become more open to the possibility.

Rio, the world’s second-largest mining company, is generally reluctant to be a non-operator and has also avoided the central Africa region. The company’s copper head said at a recent conference that he sees much more value in building mines rather than buying existing assets. Still, the company has some ties with First Quantum and sold it a majority stake in a development project in Peru last year.

For Saudi Arabia, the deal would be another major coup following its purchase of a stake in Vale SA’s base metals unit for $2.6 billion. The kingdom is looking to secure supplies of metals for its industrial ambitions as it attempts to diversify its economy away from oil.

(By Dinesh Nair, Vinicy Chan and Archie Hunter)

 

Shipbuilder Hyundai Enters European Wind Market with Agreement in Scotland

Hyundai is entered the European offshore wind market with an agreement in Scotland (file photo)

PUBLISHED APR 17, 2024 4:00 PM BY THE MARITIME EXECUTIVE

 

 

South Korean shipbuilder HD Hyundai Heavy Industries is entering the European offshore wind energy market as it looking for opportunities to leverage its expertise and expand its presence in offshore energy. The company signed an agreement with two of Scotland’s economic development organizations to jointly pursue opportunities in the emerging floating offshore wind power sector.

Hyundai will be working with Scottish Enterprise and Highland & Island Enterprise cooperating on the development of new offshore wind power projects in Scotland. The organizations agreed to assist in the search for financial support in Scotland and to secure human and material networks for potential suppliers, manufacturing facilities, and investors.

They point to the strong anticipated growth in the next phase of offshore wind energy development and the challenges of moving from fixed bottom to floating structure. The UK has been at the forefront of the development of offshore renewable energy. The UK government has committed to expanding its offshore wind energy sector from its current capacity of approximately 14 GW to 50 GW by 2030. Worldwide wind capacity is expected to jump from 63 GW to 477 GW by 2032 according to the Global Wind Energy Council.

Hyundai says the development of floating wind structures requires design and production that takes into account the harsh marine environment. They highlight their expertise in offshore energy and first efforts in Korea to develop the sector while saying they have the capacity to immediately begin manufacturing large structures without changes or investment within the shipyard.

Under the new agreement, Hyundai working with the economic development organizations plans to pursue floating offshore wind power projects in Scotland. The company will leverage its know-how in designing and manufacturing floating offshore structures and support supply chain optimization efforts.

The Scottish authorities commented that the effort continues their strong progress in the offshore energy sector. Scotland’s government has announced plans for a strategic investment of up to £500 million ($622 million) over five years focusing on ports, manufacturing, and assembly for the next phase of the offshore wind sector. They highlight that Sumitomo recently announced plans for a £350 million ($435 million) investment in a cable factory near Inverness.

The efforts to develop the offshore wind market come as the shipbuilder has had a strong start to 2024 but projects dramatically lower orders. The company cut its forecast for 2024 by nearly 40 percent forecasting orders of approximately $16 billion down from approximately $26 billion in 2023. 

After the first 100 days in 2024, however, the company reports overall it has reached nearly three-quarters of its target for the year. HD Korea Shipbuilding & Offshore Engineering (KSOE), the shipbuilding parent company, reports it three yards booked orders for 86 vessels valued at nearly $10 billion. Hyundai Samho has exceeded its annual target with Hyundai Heavy Industries having received half its annual target.

With competition increasing and orders slowing in shipbuilding, HD Hyundai is looking for new market opportunities. Offshore wind fabrication would leverage its capabilities. 

HD Hyundai Partners With American Defense Contractor on Autonomous Ships

Anduril's Dive-LD autonomous underwater vehicle (Courtesy Anduril)

PUBLISHED APR 16, 2024 9:08 PM BY THE MARITIME EXECUTIVE

 

HD Hyundai, the largest Korean shipbuilder, has decided to join forces with American defense contractor Anduril on designing advanced naval vessels for U.S. and South Korean customers. 

“With the rise of autonomous naval systems as a significant component for future maritime defense, we expect to pioneer the market with our warship-building capacity and leading defense technology combined," said Won-ho Joo, COO of naval shipbuilding at HD Hyundai.

Anduril has its roots in the military UAV space, including advanced drone fighters, but it has expanded its portfolio to include autonomous underwater vehicles, maritime domain awareness, and an overarching autonomous command and control system called Lattice OS. Its specialty is in low-cost, mass-produced, attritable autonomous systems - checking all the boxes for the Pentagon's rush to procure unmanned equipment at scale. 

The partnership with HD Hyundai mirrors that low-cost, high-volume, high-autonomy ethos, and offers an answer to the Navy's most serious challenges: limited yard capacity and limited manpower. The announcement follows just a month after Navy Secretary Carlos Del Toro visited HD Hyundai and invited the firm's executives to invest in American shipbuilding.

The partnership will also look at ways that Hyundai can help out with the manufacturing side of Anduril's  maritime product line, including future maritime systems. 

“Together, our companies will define a new maritime arsenal of democracy—one that both restores naval capacity through modern shipbuilding and mass manufacturing practices, while also enhancing naval capability," said Christian Brose, Chief Strategy Officer at Anduril. 

 

Ten Years Later, Survivors and Families Remember the Sewol Tragedy

Korea Coast Guard boat teams rush to rescue passengers from the capsized ferry Sewol,

PUBLISHED APR 16, 2024 6:21 PM BY THE MARITIME EXECUTIVE

 

On Tuesday, relatives of the lost passengers of the ferry Sewol gathered at the city of Ansan to commemorate the 10th anniversary of the vessel's disastrous sinking, which claimed the lives of more than 260 children and 40 adults in 2014. 

On April 16, 2014, the ferry Sewol was under way to the southern resort island of Jeju, off the peninsula's southwestern tip. Most of the passengers were high school students and their teachers on a school field trip. The vessel suddenly capsized during a turn, and more than 300 people were trapped inside the ferry and drowned. Survivors later testified that the crew had told them to stay in their cabins to wait for a rescue - and that the master and crew then departed in lifeboats. Only 172 people abandoned ship on their own initiative and survived. 

In the aftermath, the Korean government hired Shanghai Salvage to conduct the deepest refloat ever attempted. The entirety of the ferry was recovered and transported to shore in one piece, partly for investigative purposes and partly to attempt to recover all human remains. 

The ensuing investigation became mired in political controversy. Families of the victims alleged that then-South Korean president Park Geun-hye's government attempted to interfere with the inquiry by withholding documents and delaying the salvage project, and the scandal played a role in Park's impeachment and removal from office. Her successor, President Moon Jae-in, opened a second independent inquiry at the families' request. 

The investigation found that the ship's top deck level had been augmented with a new compartment, increasing mass high above the waterline. After these modifications, class reduced Sewol's deadweight to about 990 tonnes - but she was carrying 2,140 tonnes of cargo on the day of the casualty, not all of it properly secured. Prosecutors also found that the operator had spent a total of two dollars on safety training for the crew in the prior year, and the sole expenditure was for a paper certificate. 

The captain of the Sewol was sentenced to 36 years in prison for "murder through willful negligence." Other crewmembers received terms of up to 30 years, and the shipowner was sentenced to 10 years. Criminal trials related to the sinking continued up through 2023.

After ten years and two formal investigations, families of the lost students are still pressing for more answers and accountability. "Our demand is very simple. Accept responsibility, apologize and promise disasters like this won't ever happen again," advocacy group leader Park Seung-ryul told Reuters.  

“We need to do serious soul-searching about why we could not find the truth and whether the current system, which failed to punish those responsible in a way acceptable to the people, is truly righteous," said Song Doo-hwan, chairman of the National Human Rights Commission of Korea, in a statement Tuesday. 

Families and friends of the victims marked the 10-year anniversary of the sinking at locations around Korea this week, and several dozen boarded a Korea Coast Guard vessel to visit the wreck site, which is permanently marked with a buoy. At the main commemorative ceremony in Ansan, two top ministers and members of most of Korea's political parties were present; President Yoon Suk Yeol could not join, but offered remarks on the occasion from Seoul. 

 

Turkish NGO With a Murky Past Acquires a Fleet for Gaza Aid Deliveries

Courtesy IHH

PUBLISHED APR 16, 2024 7:52 PM BY THE MARITIME EXECUTIVE

 

The IHH Humanitarian Relief Foundation, a Turkish NGO with a controversial past, has decided to acquire three ships and launch a relief convoy to Gaza.

IHH currently operates relief voyages from Turkey to Egypt for cross-border transport into Gaza, but this new mission is advertised as an all-water route. It would be the second time that the conservative Islamic group has tried to transit through the Israeli naval blockade around Gaza - and the first time ended in violence. 

IHH has acquired three vessels for its "Freedom Flotilla," reflagged them and changed their names. It is planning to depart for Gaza by the end of this month with the freighter Anadolu (ex name Dalya H), passenger vessel Vicdan (ex name The Majestic), and ro/pax ferry Akdeniz (ex name Prince). The NGO has launched a fundraising appeal to help pay for the vessels and their cargo.

The amount of aid cargo that the passenger vessels will be able to deliver is unclear: Gaza has no port infrastructure of its own for merchant ships, and any seaborne cargo must be lightered onto shallow-draft barges or workboats for delivery. It is also unknown whether Israel would allow IHH - which Israel considers a terrorist organization - to enter Gaza's waters. 

IHH has tried this once before, without permission. In 2010, it organized a similar convoy to Gaza with six ships and hundreds of pro-Palestinian activists, intending to run the Israeli blockade and generate publicity. On the lead ship, the Mavi Marmara, a group of about 40 IHH members boarded in Istanbul without a security check, according to a post-incident investigation by a UN panel. This "hardcore" group intended to resist Israeli intervention in the mission, by force if necessary.

When Israeli commandos boarded the Mavi Marmara off Gaza by helicopter, the boarding team was assaulted with iron bars, wooden poles, chains, and slingshots; several commandos were relieved of their weapons, seven were injured, and two were shot (non-fatally). When the dust cleared, nine activists were dead and dozens more were injured with gunshot wounds. Turkey accused Israel of excessive use of force, and diplomatic relations soured; the Israeli blockade remained in place. 

IHH (?nsani Yard?m Vakf?) is a member of Ittilaf al-Kheir, an Islamic charity organization that backs the terrorist group Hamas. The IHH has support from the Turkish government, and also allegedly has ties to Turkish intelligence; in decades past, it has been accused of assisting Al Qaeda, trafficking arms in Libya, funneling funds to Hamas, and serving as an intermediary for Turkish interests in the Syrian Civil War. IHH denies any ties to terrorism and describes itself as a purely humanitarian organization, with interests in search and rescue and aid activities. 

The only other maritime aid operator in Gaza, World Central Kitchen, suspended its work in the territory after Israeli airstrikes killed seven of its employees. The U.S. government is currently working on setting up an alternative maritime aid corridor with more substantial military infrastructure.

 

MSC Works to Release Crew and Cargo from Ship Seized by Iran

MSC is working for the release of the crew and cargo from the seized containership (MSC)

PUBLISHED APR 17, 2024 2:39 PM BY THE MARITIME EXECUTIVE

 

Diplomatic and commercial efforts are underway to gain the freedom of the crew from the MSC Aries containership that Iran seized on Saturday, April 13 as it was nearing the Strait of Hormuz. Iran has come under pressure from Portugal where the ship is registered as well as India, Pakistan, the Philippines, and Russia, all of which have crewmembers aboard the vessel.

MSC Mediterranean Shipping Company released a statement today reporting that all the crewmembers are safe while reporting that “discussions with the Iranian authorities are in progress to secure their earliest release.”

Media reports in Pakistan indicate that Iran has agreed to release two of the country’s citizens among the crew as Iran works to improve relations with the country. Indications are the Pakistanis are planning to host a visit by the Iranians with the reports saying the crew release was designed to not interfere with those efforts.

At the same time, media in India is reporting that the crewmembers were permitted to make calls home on Monday night. It was the first direct contact with the crew from the vessel. India had demanded access to its 17 citizens aboard the vessel which is reported to have a total crew of 25.

The progress for the crew came as the Islamic Republic News Agency (IRNA) quoted Iran’s Deputy President for Legal Affairs Mohammad Dehghan as describing the seizure of the container ship as a “retaliatory move.” He spoke about the MSC Aries during a cabinet session on Wednesday in Tehran according to IRNA.

Portugal reported that its foreign office had summoned the Iranian ambassador and demanded the immediate release of the crew and the ship. They said they were awaiting a formal response from Iran after reporting they had received conflicting messages from the Iranians over the incident.

The crew is reportedly telling family members that they are being well treated and it was indicated that they are not under arrest. They said food is being provided and they are continuing their work aboard the vessel which is anchored offshore. TankerTrackers.com located the ship in the Khuran Straits near three seized oil tankers. Their analysts told CNBC that the containership could be held indefinitely.

MSC said in its statement “We are also working with the Iranian authorities to have the cargo discharged.” The carrier said it is continuing uninterrupted and regular service on its routes in the region.

Bloomberg reports that there are 50 containers aboard with contents classified as hazardous but that most of the cargo appeared to be ordinary industrial goods with possibly some chemicals. They are reporting most of the containers were bound for Turkey, Belgium, and Italy, but that 90 were destined for the United States. 

 

Hapag Wins Tender from Leading Brands to Provide Biomethane Shipping

Hapag-Lloyd won the first tender from a collective of major brands to provide low-emission shipping services

PUBLISHED APR 17, 2024 5:14 PM BY THE MARITIME EXECUTIVE

 

 

In a first-of-its-kind initiative designed to demonstrate the potential of collective efforts to drive the decarbonization of shipping, a group of leading consumer and manufacturing companies banded together to contract for shipper services from Singapore to Rotterdam. The Zero Emission Maritime Buyers Alliance (ZEMBA) reports Hapag-Lloyd won its first tender for ocean shipping.

Under the terms of the agreement, well-known brands including Amazon, Patagonia, Bauhaus, New Balance, Nike, REI, and others agreed to purchase over one billion TEU miles on the route between Singapore and Rotterdam in 2025 and 2026. Hapag as the winner of the tender has agreed to provide an independently certified and exclusive waste-based biomethane service. 

According to the organizers, the project will achieve at least a 90 percent reduction in greenhouse gases on a lifecycle basis relative to fossil fuel-powered shipping. ZEMBA expects to avoid at least 82,000 metric tonnes of CO2 emissions over the two years of the agreement.

ZEMBA and Hapag will utilize a book and claim system to facilitate verification and credible and appropriate allocation of the environmental attributes of the biomethane shipping service. The program highlights that ZEMBA members and Hapag are working with the Mærsk Mc-Kinney Møller Center for Zero Carbon Shipping and RMI on the development of a best-in-class, nonprofit maritime book and claim system.

“Our collective procurement approach is working, and we look forward to continuing to push the boundaries of what’s technically and economically feasible in subsequent tenders, with a strong focus on maritime e-fuels,” said Ingrid Irigoyen, President and CEO of ZEMBA. “Through this first set of deals, ZEMBA members are reducing emissions in the near term, which is critical.”

Hapag CEO Rolf Habben Jansen points to this project as a demonstration of the partnership required to support the shipping industry’s efforts for decarbonization. Hapag this week as part of its 2030 strategy reiterated a goal of net-zero ship operations by 2045 with Jansen saying today that partnerships such as ZEMBA will help to push the boundaries of what is possible.

The consortium made up of many of the largest and best-known consumer brands launched a request for proposals for zero-emission shipping services in September 2023 six months after the project was launched. The RFP provided for 600,000 TEU calling for sufficient capacity from the carriers to cover aggregate demand for 6,000 nautical miles over three years. ZEMBA said it would negotiate a “green premium” for the aggregated demand of its members. The green premium accounted for the added cost of operating a vessel using zero-emission fuels.

Based on forecasts that e-fuels and nonbiological fuels will enter the market by 2027, ZEMBA decided to revise the first tender to focus on 2025 and 2026. A second tender is planned for later in 2024 focusing on e-fuel. ZEMBA reports they are currently working with participants across the maritime value chain to develop e-fuel infrastructure, bunkering, ship design, and other details. 

They believe the ZEMBA’s tender process will also provide insights to inform the development of a global maritime decarbonization policy. The Aspen Institute will work with cargo owners to convey lessons learned from ZEMBA’s tender process to support the International Maritime Organization’s development of lifecycle assessment guidelines. The group worked with organizations including Lloyd’s Register Maritime Decarbonization Hub to develop the tender program.