Yukon government 'ready to step in' if needed on Victoria Gold mine containment, cleanup

Mining company's storage ponds for contaminated water are already full

Emma Tranter · CBC News · Posted: Jul 18, 2024 

The government of the Yukon holds a briefing on the heap leach facility failure at Victoria Gold's Eagle gold mine.

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The Yukon government says it's ready to step in to "complement or supplement" Victoria Gold's work to contain the massive slide that took place last month at the Eagle mine heap leach facility.

Speaking at a media briefing on Thursday morning, Deputy Energy, Mines and Resources Minister Lauren Haney said the company hasn't shared much information publicly about its work to remediate and contain the spill. 

The briefing comes as experts working with the First Nation of Na-Cho Nyäk Dun are sounding the alarm on the level of cyanide contamination at the mine site.

"It is very unfortunate and frankly unhelpful that the company has been so silent in general and specifically around the actions that they are taking on site," Haney said. 

She said the government has been meeting regularly with Victoria Gold and receiving updates on its work. 

"We've learned a lot more about what they are doing at site ... they're diverting water, they're collecting it," she said. 

"That's not to say it's enough," she added.

Containment ponds full

Energy Mines and Resources Minister John Streicker said the mine's containment ponds for contaminated water from the slide are already full.

As a result, Victoria Gold has started recirculating contaminated water back onto the heap, Streicker said. 

Haney also said the mine's water treatment facility is currently unable to treat the contaminated water.

"We are looking at all the scenarios right now and one of the scenarios is taking over activities at the site," Haney said. 

Last week, Victoria Gold warned it might not have the money to remediate the impacts of the heap leach failure — or even reopen.

Yukon government officials speak at a media briefing on the heap leach slide at Victoria Gold's Eagle mine on July 18, 2024 (Sarah Xenos/Radio-Canada )

No elevated levels of cyanide in recent water samples 

Daily water samples are also being taken at the site and being sent to a lab in British Columbia. Results take anywhere from five to seven days to come back. 

Samples taken from Haggart Creek earlier last month showed cyanide at a rate of 0.04 milligrams per litre, which Streicker said at the time, "could affect fish."

Water quality samples from Haggart Creek taken on July 4, 5, 8 and 10 did not detect cyanide above current drinking water guidelines, said Tyler Williams, a water resource specialist with the Yukon government.

Samples taken on July 5 and 10 showed detectable amount of thiocyanate, which does not have guidelines for aquatic life, Williams said. 

The First Nation of Na-Cho Nyäk Dun also called for a halt to all mining activities on its land, where the Eagle mine currently sits. 

"We acknowledge that his is their position," Streicker said, adding that the government is looking at the First Nation's request further. 

He said for now, his focus is on protecting people and the environment. 

Zimbabwe may sell 40% stake in a key gold mine to raise capital

Reuters | July 19, 2024 |

Shamva gold mine, Zimbabwe. (Image courtesy of Metallon Corp.)

Zimbabwe’s state-owned Kuvimba Mining House is broadening its search for equity partners and financiers for its gold and lithium mines in a bid to raise capital and expand mineral production.


Kuvimba could sell a 40% stake in Shamva gold mine – one of the oldest in the country – and is also looking for partners for another gold mine, Freda Rebecca, managing director Patrick Maseva-Shayawabaya said.


“We could accept someone who could take a big chunk (of shareholding in Shamva) but not a majority stake,” Maseva-Shayawabaya told Reuters during a tour of Freda Rebecca gold mine, located about 97 kms (60 miles) north-east of the capital, Harare.

“But we haven’t progressed enough in the discussions for us to be able to say this is the structure we envisage.”

Kuvimba is seeking to raise about $150 million to develop an open cast mine at Shamva as well as build a processing plant. It also needs partners who can invest in extending the life of Freda Rebecca beyond the current five years, he said.

RANKED: World’s top 10 gold mining companies

The financing could also be secured through debt, he added. He declined to name the potential investors the company is talking to.

The company said last month it was finalising talks with potential partners to raise financing for a lithium plant at its Sandawana mine.

In May, one of Kuvimba’s assets, Bindura Nickel Corp, was placed under administration as it struggled to raise financing to revive production after an underground equipment failure in September halted mining operations.

Kuvimba’s gold mines produced about 95,000 ounces of the precious metal last year.

(By Nyasha Chingono and Felix Njini; Editing by Emelia Sithole-Matarise)

Vedanta pays $246 million to regain Zambia copper mines

Bloomberg News | July 19, 2024

Credit: Konkola Copper Mines

Vedanta Resources Ltd. has paid about $246 million to creditors to regain control of the Konkola Copper Mines in Zambia after about five years.


The payment paves the way for “imminent reinstatement” of Konkola’s board and return of full management control to Billionaire Anil Agarwal’s Vedanta, according to a statement. The mines in the African nation hold one of the largest high-grade copper deposits in the world, as well as cobalt reserves, according to Vedanta.



The metals and energy major plans to ramp up copper production from the mines to 300,000 tons a year and cobalt output to 6,000 tons.

Earlier, the company settled a long-standing dispute with the Zambian government after agreeing to clear debts owed to the mine’s creditors through a court approved plan last month. KCM was put into provisional liquidation after the previous government accused its owner of lying about expansion plans and paying too little tax.

Vedanta will turnaround the mines soon “as a world-class copper and cobalt asset that is well equipped with a smelter and a robust tailings leaching plant,” Chris Griffith, chief executive officer of Vedanta Base Metals, said in the statement.

Zambia confirmed the payment and expects an official handover of KCM back to Vedanta next week, Mines Minister Paul Kabuswe told reporters in the capital, Lusaka.

Agarwal, who is looking to reduce the parent company’s massive debt load, has pledged to invest $1 billion in the operation and double copper production, a move that could help shore up Zambia’s flagging copper output, which is expected to hit a 14-year low in 2023.

(By Akriti Sharma)

Zambia asks mines to curtail normal power use by 40% amid crunch

Bloomberg News | July 19, 2024 |

First Quantum’s Kansanshi copper mine (Credit: First Quantum Minerals)

Zambia has asked mining companies in Africa’s second-biggest copper producer to double their power-saving efforts to 40% of normal demand, as the worst drought in decades saps hydroelectric generation.


Zesco Ltd., the state power utility, requested operators to increase curtailments or source their own emergency power from this month, according to First Quantum Minerals Ltd., which accounts for more than half of Zambia’s copper output.

Zesco didn’t respond to a requst for comment.

Because First Quantum has managed to cover more than half of its normal power demand mostly from imports, that’s allowed for a reduced burden on the other mining customers to around 35%, Country Director Anthony Mukutuma said in an interview Thursday.

“That’s really our proactive way of making sure that we are set up better for the rest of the year,” he said, adding that the company is sourcing emergency electricity mainly from Namibia and Mozambique. “If things should get worse, that way we’ve still got our direct imports.”

While he declined to comment on whether the worsening power crisis would impact production — First Quantum in April it didn’t foresee any major interruptions — Mukutuma said sourcing more expensive power would add on average $0.06 per pound of copper to basic cash costs spread over 2024. That’s twice the impact the company saw in April.

Copper is crucial to Zambia. The industry generates about 70% of export earnings, so the government has sought to shield mines from the power crisis. Residential electricity users endure daily power cuts lasting at least 12 hours.

Production has so far been stable thanks to co-operation between the mining industry and the government, said Sokwani Chilembo, chief executive officer at the Zambia Chamber of Mines. So far, power imports from neighboring countries has helped prevent major disruptions, he said by phone Friday.

“We’d have to see how things roll out into the fourth quarter,” he said. “The regional arrangements are robust for now.”

First Quantum is also backing plans for private power companies to build renewable electricity projects in Zambia. The company plans to conclude a power-purchase agreement with a group including TotalEnergies SE for wind and solar projects that will produce a combined 430 megawatts by late 2027, Mukutuma said.

It also looking to partner with developers of 50 megawatts of hydropower projects in parts of Zambia away from existing plants to diversify risks, he said.

(By Matthew Hill)

Mexico government takes step toward classifying Vulcan mine location as protected area

Bloomberg News | July 19, 2024 |

Vulcan Materials’ Columbus quarry. Credit: YouTube

Mexico’s government is preparing a preliminary report with arguments to declare that Vulcan Materials Co.’s Calica mine is located in a “protected natural area,” signaling a potential expropriation of its land.


The report will be evaluated during 30 days by governments of the state of Quintana Roo, where the mine is located, as well social organizations, indigenous communities and universities, the Environment and Natural Resources Ministry said in a statement on Thursday.

Such as decision would support more than 1,600 species of animals and plants in the Yucatan Peninsula forests, the ministry said. Although the release does not specifically mention the mine, the ministry’s press office confirmed the property is located on the land that will be considered.

Mexican President Andres Manuel Lopez Obrador, known as AMLO, has been sparring with the US construction firm for months. AMLO said last week his government would seek a “definitive closure” of the mine through legal means after doing everything to reach a deal to purchase it. He had previously said he could also declare the land where it is located as a protected natural area.

Vulcan Materials said in May it received an offer from Mexico’s government that “substantially undervalues” its property. According to AMLO, the administration offered to purchase the firm’s Caribbean coast assets for $2 billion.

The plant was closed by the government over alleged environmental damage, preventing the US construction firm from extracting limestone at the site it has owned for decades.

The Alabama-based company has sought protection from the Joe Biden administration from what it saw as the threat of a government takeover.

(By Alex Vasquez and Eric Martin)

 WAIT, WHAT THE F

Nippon Steel hires Mike Pompeo to advise on US Steel deal

Reuters | July 20, 2024 |

Former US Secretary of State Mike Pompeo. Credit: Gage Skidmore, Wikimedia Commons

Japan’s biggest steelmaker, Nippon Steel Corp., has hired former US Secretary of State Mike Pompeo to help with its effort to acquire US Steel, the Japanese company said on Saturday.


“We look forward to working alongside him to further emphasize the ways in which Nippon Steel’s acquisition of US Steel bolsters the country’s economic and national security,” Nippon Steel said in a statement to Reuters.

Japan’s Kyodo news agency and Bloomberg, which first reported the appointment, said Pompeo had been hired as an adviser. Nippon Steel said in its statement that Pompeo had not been given a specific job title within the company.

The world’s No. 4 steelmaker added that Pompeo, who served as secretary of state during Donald Trump’s presidency, was a well-respected figure among both Democrats and Republicans.

The steelmaker issued its statement during the US night.

Although both steelmakers have received all regulatory approvals outside of the United States for their proposed $14.9 billion merger, they face political opposition and regulatory scrutiny from within the United States.

Nippon Steel also faces objections from the powerful United Steelworkers (USW) union, which fears the deal could lead to job losses. The Japanese company has pledged to honour agreements between US Steel and USW, while offering some other commitments as well.

Both Republican nominee Trump and President Joe Biden have said they would block the deal.

Nippon Steel’s key negotiator on the deal, vice chairman Takahiro Mori, visited the United States this month, including US Steel facilities, and met stakeholders and employees, the company said earlier this week.

(By Sakura Murakami and Jekaterina Golubkova; Editing by Sam Holmes and Helen Popper)

OPPS

Column: After three years of exports China is now short of lead

Reuters | July 21, 2024 |

Professional male worker using a gas torch to melt lead metal. Stock image.

The global lead market has bifurcated since the start of June with Shanghai Futures Exchange (ShFE) prices significantly outperforming the London Metal Exchange (LME).


LME three-month lead touched a two-year high of $2,359 per metric ton in May but has since retraced to $2,190 and is now up by just 4.3% on the start of the year.

The equivalent Shanghai price has marched higher to six-year highs and is up by 12.4% on the start of January.

The divergence is more pronounced on a cash basis with the LME forward curve in contango and the Shanghai curve in backwardation.

The contrasting fortunes of the two markets for the battery metal derive from the distribution of inventory. The LME warehouse network is awash with metal, while Shanghai is gripped in a rolling squeeze.

LME and ShFE lead inventories

Feast and famine

LME lead stocks more than doubled over the first quarter of 2024, hitting an 11-year high of 275,925 tons on April 2.

The headline figure has since slipped to 208,525 tons but there’s ongoing churn as stocks financiers seek out cheaper storage options, which is itself a sure sign of an over-supplied market.

The bulk of this year’s inflow has been Indian metal, which accounted for 46% of warranted stocks at the end of June, up from 24% at the start of the year.

It’s worth noting that there were another 140,700 tons of off-warrant inventory at the end of May, most of it located at Singapore, the current hub of LME lead stocks activity.

LME warehouses in Singapore have seen 63,000 tons of fresh warranting activity over June and July, suggesting a large part of that off-warrant tonnage is still there.

ShFE stocks, by contrast, total a relatively modest 59,408 tons, representing a marginal year-to-date increase of 6,524 tons.

ShFE lead price, market open interest and spread structure

Shanghai short

Market open interest on the ShFE lead contract has been running at elevated levels, registering a life-of-contract high of 215,224 contracts in the middle of June.

It currently stands at 184,625 contracts, up from 69,000 as recently as March.

The lift in trading activity has coincided with a sharp tightening of the Shanghai time-spread structure with backwardations running all the way through to June next year.

Short-position holders are evidently struggling to find sufficient units to deliver to exchange warehouses, although more metal is expected to arrive on the July contract expiry.

Exchange tightness reflects a shortage of material from both primary and secondary smelters in the domestic market. Spot physical transactions are taking place at a premium even to the elevated ShFE cash price, according to local data provider Shanghai Metal Market (SMM).

China’s primary lead production fell by 4.7% and its secondary output by 8.5% over the first half of the year, according to SMM, reflecting shortages of both mined concentrates and battery scrap.

Imports of concentrates slid by 13% to 418,500 tons in the January-May period with primary smelters topping up with battery scrap at the expense of pure secondary refiners.

Reverse flow

The imbalance between a well-supplied Western market and a tight Chinese market is the polar opposite of the situation just a couple of years ago.

The destructive impact of Covid-19 on supply chains caused LME stocks to shrink to below 50,000 tons in 2021 with physical premiums soaring as buyers struggled to source available metal. ShFE stocks, by contrast, rose above 200,000 tons in September of that year.

The east-west imbalance opened an export arbitrage window through which Chinese smelters shipped much-needed supply to western markets.

China flipped from being a net importer of refined lead in the 2017-2020 period to a significant net exporter over the following years.

Net outbound flows totalled 93,000 tons in 2021 and grew to 115,000 tons in 2022 and to 185,000 tons last year.

Exports have slowed appreciably this year with the January-May total falling by 76% year-on-year to just 14,500 tons.

The current out-performance of Shanghai relative to London has now opened a profitable import arbitrage with signs that trade flows are about to reverse.

This week has brought a spate of LME stocks cancellations with 29,425 tons being prepared for physical load-out.

The benchmark cash-to-three-months spread has contracted sharply to a contango of $22 per ton from over $60 last month.

It’s possible of course that this is just metal on a run-around to cheaper LME storage but it’s clearly caught the London market off-guard.

It’s quite possible that this particular tranche of lead may not reappear in a different LME shed in the near future but may be embarked on a one-way journey to China.

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

(Editing by David Evans)

With no recovery in sight, lithium prices force miners to re-evaluate output

Bloomberg News | July 21, 2024 | 

Albemarle extracts lithium from underground brine deposits at this site in Silver Peak, Nevada. Credit: Albemarle

With lithium prices languishing near three-year lows and showing no signs a recovery is coming, attention is now turning to whether miners will be forced to rein in supply of the battery metal.


The price of the material that’s vital to the energy transition has plunged by around 80% since late 2022, and Benchmark Mineral Intelligence sees the current glut deepening through 2027. While some smaller producers have already cut output, the question now is whether the bigger firms will choose to shutter mines and delay projects from Australia to Chile.




Clearer indications of the intentions of some top miners may be revealed in the coming weeks with the release of quarterly production reports or earnings. The insights from Pilbara Minerals Ltd., Mineral Resources Ltd., Albemarle Corp. and Arcadium Lithium Plc may provide clues on what the supply response might look like.

A prolonged period of low lithium prices could “trigger a renewed wave of mine supply cuts and project delays,” said Alice Yu, the lead metals and mining research analyst at S&P Global Commodity Insights. Prices for spodumene, a lithium-bearing raw material, dropped last week closer to the level when mining output cuts previously occurred between mid-January and end-February, according to data from Platts.

Lithium remains in the doldrums due to slowing growth in electric-vehicle adoption and increased supply. Spot prices of lithium carbonate in China have been hovering near the lowest since March 2021.

The market is expected to see a growth in supply of 32% in 2025, outpacing demand expansion of 23%, according to Benchmark Mineral. The surplus is set to peak in 2027 before a deficit returns at end of the decade, the consultancy said.

Some smaller players have already reacted to the prolonged price slump. Australia’s Core Lithium Ltd. said this month it would halt operations at its Finniss project. In China, two of Zhicun Lithium Group Co.’s carbonate units will be put into maintenance from this month.

The weaker demand-growth outlook for EVs has continued to put downward pressure on lithium, with China’s market maturing while European and American consumers delay purchases.

The EV tariffs imposed by the EU and US against China products “have not only weighed on sentiment but have led to a drop in real-world lithium hydroxide demand,” said Claudia Cook, an analyst at Benchmark Mineral.

Chinese industry giants Ganfeng Lithium Group Co. and Tianqi Lithium Corp. both swung to preliminary net losses in the first half. While major miners such as Pilbara Minerals are still aiming to expand output, there’s growing pressure on other miners to curtail production.

“We’ve downgraded supply forecasts for Brazil, Chile, Argentina, and Australia due to diminished profit margins,” said Linda Zhang, the battery materials lead for Asia Pacific at CRU Group.

Some producers are clinging on despite having little to no profit margin, Benchmark Mineral’s Cook added, citing reasons including maintaining a skilled workforce, avoiding restarting-production costs, and preserving relationships with their buyers.

The stronger focus on supply comes as hopes fade for a significant demand rebound this year, with the supply chain still working through inventories and carmakers rethinking their EV strategies. BloombergNEF last month slashed its EV sales estimates and warned that the auto industry is falling further off the track toward decarbonization.

The question now is how long lithium companies will be able to maintain output should prices remain stagnant, or even fall further.

Curtailments and project deferments are expected to “peak next year,” and that could tighten the market balance in the medium term, CRU’s Zhang said.

(By Annie Lee)

PRIVATEER

BHP hires former Australian state leader for Washington role

Reuters | July 21, 2024 | 

Dominic Perrottet served as the 46th premier of New South Wales from 2021 to 2023. Credit: Facebook

BHP has hired Dominic Perrottet, the former leader of Australia’s most populous state, as a US government and external affairs liaison in Washington, United States, spokespeople for both parties said on Friday.


Perrottet, 41, led the state of New South Wales (NSW) for Australia’s conservative Liberal party between 2021 and 2023, having previously worked as state treasurer, and after a decade in state government.

He will be accompanied by his wife and seven children on his trip to Washington with his new job to begin in the coming weeks, the Australian Financial Review earlier reported.

Perrottet has previously worked on reforms to the state’s tax systems, selling off public assets to bankroll major infrastructure, and a push to reopen the state after the Covid-19 pandemic, among others.

(By Melanie Burton; Editing by Janane Venkatraman)

Zambia sees copper output growing to 1 million tonnes by 2027

Bloomberg News | July 22, 2024 | 

Mopani Copper Mines. (Image courtesy of ZCCM Investment Holdings.)

Zambia’s annual copper production will grow more than 40% to 1 million tons in 2027, according to the country’s Finance Ministry.


Africa’s second-largest copper producer is seeking to take advantage of what many predict will be a supply shortfall in the coming years, as the energy transition causes rising demand for the metal from electric vehicles to wind farms.

Zambia’s copper output hit a 14-year low of 698,566 tons in 2023 as its mining sector faced frequent tax changes and constant clashes with the previous government.

According to the medium-term budget plan published on Sunday by the Ministry of Finance and National Planning, production is projected to increase each year over from 2025 to 2027. That gain is predicated on the resolution of challenges at some of the country’s major mines, green-field projects and the expansion of existing facilities.

The southern African nation, which generates about 70% of its export earnings from copper, plans to increase the percentage of the its landmass that’s mapped for mineral resources through integrated geophysical, geological and satellite imagery surveys. Zambia plans to more than quadruple copper output to 3 million tons by 2031.

(By Taonga Mitimingi)

Western miners push for higher metals prices to ward off Chinese rivals

Reuters | July 22, 2024 

Idaho Cobalt is Jervois’ flagship project. (Image: Jervois Mining.)

The only US cobalt mine sits fallow in the northern Idaho woods, a mothballed hunk of steel and dirt that is too expensive for its owner to operate because Chinese rivals have flooded global markets with cheap supplies of the bluish metal used in electric vehicle batteries and electronics.


Jervois Global, which dug the mine into the side of a nearly 8,000-foot (2,400-meter) mountain, watched helplessly last year as cobalt prices plunged after China’s CMOC Group opened the Kisanfu mine in the Democratic Republic of Congo, pushing global production of the metal to an all-time high.

The Idaho site, which Jervois bought in 2019, was idled in June 2023 just weeks before it was set to open. More than 250 workers lost their jobs. A skeleton crew now rotates unused rock crushing equipment weekly to keep it from flattening under its own weight.

“We were straightforward with our staff and told them: ‘This is all about the price of cobalt,'” site manager Matthew Lengerich told Reuters during a visit to the facility. Jervois says cobalt prices need to reach at least $20 per pound for the site to open. But prices sat near $12.17 in July.

A similar quandary faces BHP, Albemarle and other Western mining companies trying to compete with metals produced by Chinese-linked companies, some of which use coal-generated electricity, child labor or other practices not meeting the standards set by many governments and manufacturers.

Western miners say their competitors have inherent cost advantages that enable rapid production expansions even as prices for cobalt, lithium and nickel have plunged more than a third in the past 18 months. Operational costs for many of these Western companies have, as a result, been exceeding what market prices will cover.

That has fueled growing calls from some policymakers and miners, including Jervois and Albemarle, for a two-tier pricing system with a premium for sustainably produced metals, according to interviews with more than three dozen traders, investors, executives, purchasing agents, and pricing agencies.

The plan is to charge more for a metal that is produced sustainably, whether that is through direct transactions or via multiple prices for a metal listed through futures exchanges, depending on production methods. For example, there would be one price for standard nickel and another for green nickel.

“Western miners simply can’t compete with China, and China has shown the willingness to drive market prices way, way down,” said Morgan Bazilian, director of the Payne Institute for Public Policy at the Colorado School of Mines.

Two-tier pricing could radically shift how metals needed for energy transition have been bought and sold for centuries yet also reduce market transparency as miners could bypass metals exchanges to negotiate directly with customers. It could also, two analysts told Reuters, lead to multiple definitions of what exactly constitutes “green metal.”
‘Commitments have a cost’

Industry leaders have pushed for two pricing structures for several years, but the call for change started gaining more attention from investors, policymakers and customers last fall as Western governments grew more concerned about Chinese competition.

In meetings across Washington and Brussels, mining executives have been pleading with governments for some kind of intervention until two-tiered pricing is more widely embraced, suggesting that tariffs, supply chain transparency requirements, or government insurance for mines could be potential remedies, three industry sources said.


US and EU officials have privately expressed sympathy with the mining industry, according to two of the sources, but have so far been loath to inject themselves into the mechanics of how prices are set by exchanges and others.

“I don’t want to say what the markets should or shouldn’t do to ensure strong ESG practices,” said the US State Department’s Jose Fernandez, who oversees a program designed to facilitate metals supply deals. “But it is true that all of those commitments have a cost.”

As a result, mining industry customers such as automakers are in the uncomfortable position of trying to keep their costs low while maintaining secure and diverse metals supplies. Some deals are taking shape, prodded in part by regulations tied to emissions.

The European Union by 2027 will require EV manufacturers to show where they procure metals and the carbon footprint for their production.

Refusal to comply would mean an EV can’t be sold in the region, a step not yet taken by the United States but one widely seen as the most aggressive globally to boost supply chain transparency and likely to fuel premium metals contracts.

In Canada last year, Northern Graphite started successfully demanding a premium from customers wanting guaranteed North American supplies of the battery metal. Teck Resources earlier this year started selling a lightly processed type of copper known as concentrate to Aurubis, a source with direct knowledge said.

The transaction does not rely on exchange pricing and guarantees Aurubis a steady supply of ESG-compliant concentrate that it turns into copper for sale to the auto industry.

Teck declined to comment. Aurubis said it sees “the way to a green-friendly copper industry as a joint task for the entire value chain, which needs to be honored from the raw material supplier to the end consumer.”

Customers for now do not face a penalty if they do not source sustainable metals, but they increasingly face a reputational risk.

“The question is really for car companies: Are you OK with something that might be priced lower or are you willing to pay premiums knowing that this is sourced sustainably in the correct way?” said Michael Scherb, CEO of Appian Capital Advisory, a private equity firm that invests in mining companies.
‘Weather the storm’

BHP, the world’s largest mining company, said this month it would suspend operations at its Australia nickel mines due to “the substantial economic challenges driven by a global oversupply of nickel.”

The move was a blow to a company that had unsuccessfully bet its customers would be willing to pay a premium for nickel produced in a country that mines sustainably.


BHP warned that nearly two-thirds of Australia’s nickel market is in danger of closing amid low market prices fueled by a 153% increase in Indonesia’s nickel from 2020 through the end of last year due to Huayou Cobalt and others – production that environmentalists say has partly come by tearing up the country’s vast rainforests.

US officials are encouraging Jakarta to improve the country’s mining standards. Huayou Cobalt did not respond to a request for comment.

Australia’s nickel industry is among the cleanest in the world largely due to how it handles carbon emissions, according to data from ESG consultancy Skarn Associates. Nickel processed in Indonesia emits more than five times the amount of carbon as production in Australia, the data show, with emissions from China’s nickel industry nearly seven times worse than Australia.

Albemarle, the top global producer of lithium, laid off staff in January amid low prices caused in part by ramped up production from Yongxing Special Materials Technology and others in China.

“If there isn’t an incentive above current prices, you’re not going to get the investment you need to build the domestic (US) supply chain,” said Eric Norris, who oversees Albemarle’s lithium operations.

Fernandez, the US State official, expects rising minerals demand to offset current “global oversupplies,” but acknowledged that miners, for now, are in a bind.

“We have to find ways to weather the storm,” Fernandez said.
Transparency

Since January, world leaders have taken a range of steps to offset China’s market control.

President Joe Biden imposed tariffs in May on critical minerals produced in China, saying “(metals) prices are unfairly low because Chinese companies don’t need to worry about a profit.”

Jim Chalmers, Australia’s treasurer, in February said governments should consider support for “a differentiated international trading market for resources produced to higher ESG standards.”

Chrystia Freeland, Canada’s deputy prime minister, in April said Ottawa would fight the dumping of critical minerals by China, Indonesia and others.

The Chinese mission to the United Nations did not respond to a request for comment. China has in the last year banned exports of graphite and other metals.

Multiple US senators from both parties have said they are considering legislation to offer price insurance for metals, similar to a government insurance program for crops, according to Senate aides. Such a move would guarantee miners a price for their metals, regardless of market conditions.

Automakers have been moving cautiously as this trend for green pricing premiums evolves, conscious that consumers are reluctant to pay more for EVs.

General Motors, the largest US automaker, believes critical minerals should be produced sustainably but does not want to pay a premium out of concern that it will be unable to compete with Chinese rivals, according to a source directly involved in the company’s minerals procurement.

GM told Reuters it requires suppliers to comply with high standards, a stance echoed by Volkswagen, BMW and Stellantis. Tesla and Ford, which is building an Indonesian nickel processing plant with Huayou Cobalt and PT Vale Indonesia, did not respond to requests for comment.
Exchanges

The London Metal Exchange (LME) said it has received “positive market feedback” regarding its move to price sustainable nickel. Its partner Metalshub, a German online metals auction platform, sold 144 metric tons of low-carbon nickel in May and plans to publish a corresponding price when there are more transactions.

Benchmark Mineral Intelligence, a UK-based provider of critical minerals pricing and data, has launched green metals pricing contracts, with each price derived from how a mining company adheres to 79 criterion that Benchmark said reflect high production standards.

“You will not be able to guarantee by any stretch of the imagination a non-China supply of certain metals unless you’re willing to pay some degree of a premium for that product,” said Benchmark’s Daniel Fletcher-Manuel.

That’s the message that Jervois has been pushing, unsuccessfully. “Ultimately, ESG has a cost,” said Bryce Crocker, the company’s CEO. “It’s a worthwhile cost.”

(By Ernest Scheyder, Pratima Desai, Melanie Burton, Clara Denina, Carlos Barria and Divya Rajagopal; Editing by Veronica Brown and Claudia Parsons)