Monday, July 22, 2024

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)
Congo’s South Kivu governor suspends mining operations in province

Reuters | July 19, 2024 | 

Gold mine in South Kivu, Congo. Credit: Sasha Lezhnev, Enough Project

The governor of Democratic Republic of Congo’s South Kivu province has suspended all mining activities in the restive region and ordered companies and operators to leave mining sites, he said on Friday.


Governor Jean-Jacques Purusi Sadiki said in a statement that the suspension until further notice was due to “disorder caused by the mining operators,” without elaborating.

“All companies, businesses and cooperatives are required to leave the sites and operating locations within 72 hours,” he said.

The decision will hit artisanal miners of metals such as gold and tin hard, as they are the region’s dominant producers.

“The decision is illegal and falls within the scope of abuse of power,” said Jean Pierre Okenda, an analyst on governance in Congo’s extractive sector, adding that Congo’s mines minister should urgently ask for the ban to be lifted.

In a separate statement, the governor called for a July 30 meeting with mining operators to assess the situation.

“If artisanal mining is banned, the whole province will be penalized. It’s this activity that keeps people alive and business going,” said Innocent Watuta Ibungu, a mining operator.

(By Stanis Bujakera, Crispin Kyala, Felix Njini and Bate Felix; Editing by Jason Neely and Rod Nickel)
US says billionaire Gertler’s royalties must go to Congo for sanctions deal

Bloomberg News | July 22, 2024 | 

ERG’s Frontier mine in DRC. Credit: Eurasian Resources Group

A top US official said Dan Gertler’s royalties in the Democratic Republic of Congo must go to the country’s government as part of any deal that would ease sanctions on the billionaire mining magnate accused of corruption.


Amos Hochstein, a senior White House adviser on energy and investment, said in an interview that lifting that punishment is necessary to open up the assets to new investments that support US interests and benefit Congo, and can be snapped back if needed.

“The royalties that he has should be in the hands of the government of the DRC,” said Hochstein, who’s been trying to broker a deal. “It’s an entirely absurd situation that the state is not benefiting more from their own natural resources.”

Hochstein didn’t provide specifics on how to force the transfer, but it would likely involve buying out Gertler, a move that could avoid a legal battle but has angered civil-society groups.

The US sanctioned Gertler in 2017, accusing him of using connections to then-President Joseph Kabila to siphon off more than $1 billion from Congo, a key source of minerals for the transition to green energy.


Gertler cut a deal with Congo in 2022 to give back some of his assets in exchange for help lobbying the US to lift those sanctions, but he retained royalties in the world’s biggest sources of cobalt not owned by Chinese companies.

That scenario has complicated a US push for access to critical minerals independent of China, which Washington sees as a top competitor and unreliable supplier, as Gertler’s continued presence in Congo has made western firms reluctant to invest in his assets.

It’s “very difficult to get a western company with high values to invest if they think there’s a risk of litigation, sanctions and so on,” Hochstein said.

Chinese companies own many of the best mines in the Central African nation, which is the world’s second-largest source of copper and produces about three-quarters of the world’s cobalt, used in many batteries for electric vehicles.

Gertler has never been charged with a crime and denies any wrongdoing. Freeh Sporkin & Sullivan LLP, which represents Gertler, declined to comment when reached by phone Monday.

At the heart of the controversy are royalty streams for projects owned by Eurasian Resources Group and Switzerland’s Glencore Plc, which can be worth about $100 million each year, according to calculations by Congo Is Not For Sale, a consortium of Congolese and international anti-corruption organizations.

Those groups have been critical of a US plan to allow Gertler to potentially sell those assets, alleging he obtained them through corruption and should give them back for free. Bloomberg News has previously reported that the US would ease sanctions if Gertler sells his royalties, exits Congo and submits to audits of his businesses.

“If an arrangement can be reached that continues to punish him, that doesn’t trust him, that opens the door for the kinds of investment we would like to see in DRC,” then the US is open to a deal that would include monitoring of Gertler’s businesses and allow a re-imposition of sanctions “if we need to,” Hochstein said.

“We have to make sure that the sanctions on Gertler are not becoming a punishment for DRC and against the overall interests of enhancing good actors from investing,” he said.

Gertler is from one of Israel’s most prominent diamond families and has connections at the highest levels of the country’s government. His sanctions were briefly lifted under President Donald Trump’s administration in January 2020, when both men were using Alan Dershowitz as a lawyer. President Joe Biden reinstated the sanctions shortly after taking power.

Congo remains one of the poorest countries in the world, presenting a further obstacle to any deal that would require the government to buy Gertler’s royalty streams.

“This is a complicated conversation that’s been going on for more than 18 months,” Hochstein said. “I cannot tell you if it’s going to happen or not, if anything’s going to happen. Our demands are pretty steep and so there are ongoing discussions.”

(By Peter Martin and Michael J. Kavanagh)
High returns lure wealthy investors to fund coal as banks exit

Bloomberg News | July 22, 2024 | 

Stock image.

Wealthy Australians, in search of attractive investment returns, are emerging as an important pool of capital for financing coal projects shunned by banks due to environmental, social and governance concerns.


Income Asset Management Group Ltd. is one fund manager targeting the well-off in Australia to provide private loans to coal and other mining companies, offering investment returns of about of 12% to 13% per year.

“We can go into non-ESG deals as well like mining if a return on the credit works because our investors have appetite for good returns,” Varuna Gunatillake, director, debt capital markets at IAM said in an interview in Melbourne.

The firm has placed over A$500 million ($335 million) of loans in the last three years in coal and commodity-related infrastructure projects. Those included a piece of Whitehaven Coal Ltd.’s recent $1.1 billion private credit loan, and A$170 million in junior debt to Newcastle Coal Infrastructure Group Pty’s coal terminal in New South Wales. It earns a placement fee for each transaction.



For IAM, the rising demand for private credit globally dovetails with a growing interest among some individual investors in Australia for coal and other resource bets that offer strong returns.

Strident opposition to coal developments in the country has been tempered by a slowdown in renewable energy project investments. Developers have had to wrestle with rising costs, lengthy approval processes and capacity constraints in the transmission grid.

A recent decision by Origin Energy Ltd. to push back the closure of Australia’s largest coal-fired power station by two years amid fears of power shortfalls underscores the dilemma posed by the slower-than-expected transition.

As a result, the financing pipeline for coal-related projects in Australia is healthy, notwithstanding opposition from ESG proponents and a pull back by traditional lenders. Some of Australia’s major banks, including Commonwealth Bank of Australia and Westpac Banking Corp., have committed to limit or refrain from lending to thermal coal miners.

A unit of India’s Adani Group recently got a A$500 million private credit loan from non-bank lenders Farallon Capital Management and King Street Capital Management, people familiar with the matter told Bloomberg News. Meanwhile, a consortium led by Indonesia’s Widjaja family sounded out private credit funds to finance its acquisition of a coal mine in Australia from South32 Ltd.

IAM recognized the growing opportunity to earn strong returns from businesses — particularly in mining and mining services — that have been shunned by commercial lenders and institutional investors. IAM has more than A$3 billion in assets under administration including cash deposits, bonds and treasury management, according to information on its website.

“We can be the conduit between these two opportunities and connect the high net worth customers to these institutional deals that are not accessible easily” for the wealthy, Gunatillake said.

The potential pool of liquidity from high-net worth individuals in Australia is enormous. Capgemini, in a June report, estimated wealthy Australians had investable assets of more than $1 trillion in 2023. Overall, high-net worth individuals globally had assets worth $86.8 trillion.
Untested market

The $1.7 trillion private credit market is relatively new, and largely untested in a credit crunch. It remains to be seen if individual investors have enough understanding of the risks of lending to complex projects.

“These family offices and high-net worth clients are highly sophisticated investors,” said Gunatillake. “They have their own financial advisers, investment managers, legal experts and in-house analysts.”

However, Axel Dalman, head of research at Market Forces, an environmental activist group, warned retail investors against investing in a sector shut out of public debt markets.

“Investors need to see the writing on the wall and recognize that coal is a dying market,” he said. “The big banks understand that ESG risk is financial risk, and private creditors may learn that the hard way.”

(By Sharon Klyne)
Australia’s largest iron ore deposits are 
1 billion years younger than we thought


THE CONVERSATION 
Published: July 22, 2024

Iron ore is the key ingredient in steel production. One of the fundamental resources for the Australian economy, it contributes A$124 billion in national income each year.

This is not surprising, considering Western Australia is home to some of Earth’s largest iron ore deposits, and 96% of Australia’s iron ore comes from this state. Yet despite the metal’s significance, we still don’t know exactly how and when iron deposits formed within the continent.

In new research published in the Proceedings of the National Academy of Sciences, we answer some of these questions by directly measuring radioactive elements in iron oxide minerals which form the basis of these resources.

We found that several of Western Australia’s richest iron deposits – such as Mt Tom Price and Mt Whaleback – are up to 1 billion years younger than previously understood. This redefines how we think about iron deposits at all scales: from the mining site to supercontinents. It also provides clues on how we might be able to find more iron.


Punurrunha or Mt Bruce, part of the Hamersley Range in the Pilbara, Western Australia. Julie Burgher/Flickr, CC BY-NC


Where does iron ore come from?

Billions of years ago, Earth’s oceans were rich in iron. Then early bacteria started photosynthesising and rapidly introduced huge amounts of oxygen into the atmosphere and oceans. This oxygen combined with iron in the oceans, causing it to settle on the sea floor.

Today, these 2.45-billion-year-old sedimentary rock deposits are called banded iron formations. They represent a unique archive of the interactions between Earth’s continents, oceans and atmosphere through time. And, of course, banded iron formations are what we mine for iron ore.

These sedimentary deposits have distinctive, rhythmic bands of reddish iron and paler silica. They were alternately laid down on the sea floor seasonally. Such remarkable rocks can be visited today in Karijini National Park, WA.


Typical banded iron formation at Fortescue Falls in Kaijini National Park, Western Australia. Graeme Churchard/Wikimedia Commons, CC BY

The iron content of these banded iron formations is generally less than 30%. For the rock to become economically viable to mine, it must be naturally converted by later processes to around 60% iron.

The nature of this rock conversion is still debated. In simplest terms, a fluid – such as water – will both remove silica and introduce more iron during an “upgrading” process which transforms the rock’s original makeup.

The geochronology (age dating) of this chemical transformation and upgrading is not well understood, largely because the tools required to directly date the iron minerals have only recently become available.

Previous age estimates for the Pilbara iron deposits were indirect but suggested they were at least 2.2 billion years old.
What did we find out?

You may think of iron ore as rusty, red-coloured dust. However, it’s typically a hard, heavy, steely-blue material. When crushed into a fine powder, iron ore turns red. So the red landscape we see across the Pilbara today is a result of the weathering of iron minerals from beneath our feet

.
1.3-billion-year-old steel blue iron ore extracted from Hamersley Province, Western Australia. Liam Courtney-Davies

We extracted microscopic scale “fresh” iron minerals from drill core samples at several of the most significant Western Australian iron deposits.

Leveraging recent advancements in radiometric dating, we measured naturally occurring radioactive elements in the rocks. In particular, the ratio of uranium to lead isotopes in a sample can reveal how long ago individual mineral grains crystallised.

Using the newly generated iron mineral age data, we constructed the first-ever timeline of the formation of Western Australia’s major iron deposits.

We discovered that all major iron ore deposits in the region formed between 1.4 and 1.1 billion years ago, making them up to 1 billion years younger than previous estimates.

These deposits formed in conjunction with major tectonic events, especially the breakup and reemergence of supercontinents. It shows just how dynamic our planet’s history is, and how complex the processes are that led to the formation of the iron ore we use today.

Now that we know that giant ore deposits are linked to changes in the supercontinent cycle, we can use this knowledge to better predict the places where we are more likely to discover more iron ore.

Liam Courtney-Davies completed this research while at John de Laeter Centre, Curtin University.

Author
Liam Courtney-Davies
Postdoctoral Research Associate, University of Colorado Boulder
Disclosure statement
Liam Courtney-Davies received funding for this research through the MRIWA 557 Project and the Australian Research Council.

Rio Tinto ready to build Simandou after almost 30 years of setbacks

Cecilia Jamasmie | July 16, 2024 |

The Tin Djou mining camp at the Simandou project. (Image courtesy of Rio Tinto Simfer | Facebook.)

Rio Tinto (ASX, LON: RIO) said on Tuesday it has all necessary regulatory approvals to resume construction at its vast Simandou iron ore asset, the world’s biggest mining project, which it is co-developing with a Chinese consortium (WCS) in Guinea.


Set to be the world’s largest and highest grade new iron ore mine, the project will add around 5% to global seaborne supply when it comes on line. Rio Tinto owns two of the four Simandou mining blocks as part of its Simfer joint venture with China’s Chalco Iron Ore Holdings (CIOH) and the government of Guinea. Rio Tinto holds a 53% stake, while CIOH holds the rest.

A second mine, the WCS project, will be built by Baowu — the world’s largest steel producer — in partnership with a consortium led by Singapore-based Winning International Group.

Rio Tinto first secured an exploration license for Simandou in 1997. Since then, the country has experienced two coup d’états, seen four heads of state and undergone three presidential elections.

The project involves the construction of a 552km rail line to transport high-grade iron ore from two new mines in the Simandou mountains — one to be built and operated by Rio Tinto — to a new deep water port on Guinea’s Atlantic coast.
“Only” $11.6 billion needed to start

Rio Tinto estimates the development requires initial funding of about $11.6 billion. The company’s annual capital investment from 2024 to 2026 has been pegged at about $10 billion, with the majority going to Simandou as spending winds down at the Oyu Tolgoi project in Mongolia beyond this year.

The company noted that CIOH has fulfilled its financial obligations by making two payments to cover its share of capital expenditures for critical works carried out by Simfer.

Rio said the first payment of around $410 million was made on June 28, covering expenses up to the end of 2023, and the second payment of about $575 million, for 2024 expenditures, was made on July 11. These payments settle all expenses incurred up to the current date.
Construction of Simandou has faced delays over the past 27 years.

The infrastructure capacity developed in collaboration will be split equally between Simfer and WCS, with Simfer focusing on blocks 3 and 4 for a 60 million tonne per year mine, and WCS developing blocks 1 and 2 of Simandou.

Simandou is slated to begin commercial production by the end of 2025, adding an annual supply of around 120 million tonnes of high-quality iron ore after it reaches full capacity.

Rio Tinto, which reported second-quarter iron ore shipments below analyst estimates earlier on Tuesday, said its share of expected capital investment remaining to be spent in Simandou now sits at $5.7 billion, counting from the beginning of 2024.

Simandou has faced construction delays due to legal disputes, local political changes, and the challenges and expenses of building out 600 km rail and port infrastructure.
SUDBURY 
HOME OF THE MOON LANDING

Vale to open new copper-nickel mine in Ontario

Staff Writer | July 22, 2024 | 11:18 am Top Companies Canada Copper Nickel

The old Copper Cliff nickel mine. (Image courtesy of Vale Agency.)

Vale Base Metals is set to open a new open pit mine at the historic Stobie mine site in Sudbury, Ontario. This project is expected to cost C$205 million ($149m) over the next four years.


The new Stobie mine will produce nickel and copper, with an initial production target of 300,000 tonnes nickel and copper this year, ramping up to 1.5 million tonnes annually by 2025, continuing until 2027 or 2028. The project will also yield valuable by-products such as cobalt and precious metals.

Gord Gilpin, director of Ontario operations for Vale Base Metals, highlighted the significance of this venture. “This is a C$205 million project that marks a new era of cooperation and partnership.”

He also emphasized the involvement of local contractors including Indigenous businesses Z’Gamok Construction and Aki-Eh Dibinwewziwin, as well as the United Steelworkers union.

“This project is not just about mining; it’s about creating sustainable and inclusive growth,” Gilpin added.

The Stobie mine will be managed by mining contractor Thiess and will employ members of USW Local 6500.

“We will have approximately 62 to 80 new members during the lifetime of this project, with existing employees handling maintenance,” said a union spokesperson. Jobs will include roles such as excavator operators, dozer operators, haulage truck drivers and maintenance workers.

Vale sees this project as more than just a mining endeavour. “This is the beginning of a legacy of collaboration, respect, and mutual benefit,” said Gilpin. He believes that the success of the Stobie project could be replicated at other sites, contributing to the overall growth strategy for Vale in the next decade.

Work has already begun at the Stobie site, and Gilpin anticipates that full-scale mining production is expected to start soon.

The Stobie pit is the first phase of Vale’s C$945 million plans to revitalize the copper complex in Sudbury.
SASKATCHEWAN

BHP’s potash mine in Canada now 50% ready

Cecilia Jamasmie | July 22, 2024 

Jansen potash mine is more than 50% ready, with phase 2 underway.
(Image courtesy of BHP.)

BHP (ASX, NYSE: BHP) said on Monday that the first phase of its massive Jansen potash mine in Saskatchewan, Canada, has reached and surpassed the halfway point of completion.


The world’s biggest miner noted that phase two was now underway with the project on track to reach first production in 2026, with expected potash output of 4.2 million tonnes a year.

BHP said the focus will now be on completing the mill building, processing plant and port construction, all while finalizing infrastructure and preparing to transfer the project to operations.

“Building one of the largest potash mines in the world requires an all-hands-on-deck approach, and the province has really come together to make a project of this magnitude possible,” BHP’s potash president, Karina Gistelinck, said in the statement.

CONSTRUCTION OF JANSEN’S SECOND PHASE IS EXPECTED TO TAKE SIX YEARS AND DELIVER FIRST PRODUCTION IN 2029.

Construction of Jansen’s second phase is expected to take six years and deliver first production in 2029. The company has said this stage needs an investment of C$6.4 billion ($4.9 billion).

Located 140 km east of Saskatoon, the Jansen project is set to become one of the world’s largest producers of potash, a commodity considered to be a pillar of future growth for the company. It also represents the single largest private economic investment in the province’s history.

Since giving the project its go-ahead in August 2021, BHP has been injecting capital to speed up its development even when potash prices were falling. Even before its approval, the group had spent $4.5 billion on the project.

The proposed potash mine is being built in four stages, with $5.7 billion already spent on the first stage alone. In October last year, BHP announced plans to expand the Jansen project, approving a further $4.9 billion investment for stage two. This brings BHP’s total investment in Jansen to date to about C$14 billion ($10bn).

BHP anticipates that Jansen will become one of the world’s largest potash mines, producing 8.5 million tonnes per annum and boosting global production by an estimated 10%.

Potash is part of Canada’s critical minerals list due to its importance as a key soil nutrient, essential for ensuring global food security. Australia has not yet classified potash as a strategic mineral.

GUESS WHO

Senators Introduce Bill to Shorten Approval Time of Energy and Mining Projects

A bill sponsored by Senate Energy Committee Chairman Joe Manchin and Senator John Barrasso proposes giving the Department of Energy 90 days to approve new LNG export projects and aims to shorten approval times for energy and mining projects.

“The United States of America is blessed with abundant natural resources that have powered our nation to greatness and allow us to help our friends and allies around the world,” Manchin said in a press release. “Unfortunately, today our outdated permitting system is stifling our economic growth, geopolitical strength, and ability to reduce emissions.”

To address the problem, the two legislators “put together a commonsense, bipartisan piece of legislation that will speed up permitting and provide more certainty for all types of energy and mineral projects without bypassing important protections for our environment and impacted communities.”

In a news story on the bill, Bloomberg noted that it was unlikely to be passed as it is but it could make an important part of future energy legislation during the next Congress.

The focus of the bill is on shortening approval times for new energy and mining projects, as well as grid expansion projects that regulators have warned are essential for a changing energy system that relies increasingly on wind and solar generation capacity.

Manchin and Barrasso are among vocal critics of President Biden’s so-called pause on new LNG export capacity approvals, which came into effect earlier this year under pressure from climate activists, who argued natural gas is even worse for the climate than coal. The move prompted more than a dozen states to sue the federal government. Earlier this month, a federal judge in Louisiana blocked the pause.

In his ruling, Judge Cain said that the government’s move had been arbitrary, capricious, and unconstitutional and that it had violated the Natural Gas Act. Judge Cain added that the Department of Energy had gone “above and beyond its scope of authority.”

By Charles Kennedy for Oilprice.com


US Senators release energy permitting reform bill

Staff Writer | July 22, 2024 

US Senator Joe Manchin. Credit: Wikimedia Commons.

US Senators Joe Manchin (I-WV) and John Barrasso (R-WY), on behalf of the Senate Energy and Natural Resources Committee, released on Monday the Energy Permitting Reform Act of 2024.


The legislation could speed up approvals of clean-energy, pipeline and electricity transmission projects by shortening some federal environmental reviews and setting limits on court challenges.

“The United States of America is blessed with abundant natural resources that have powered our nation to greatness and allow us to help our friends and allies around the world,” Manchin said in a news release. “Unfortunately, today our outdated permitting system is stifling our economic growth, geopolitical strength, and ability to reduce emissions.”

He went on to say that the bill is a result of over a year of hearings in the Senate Energy and Natural Resources Committee, considering input from colleagues on both sides of the aisle, and negotiations. Manchin currently serves as Chairman of the Committee.

It signals a win for West Virginia Senator Manchin, previously a Democrat, now serving as an Independent, after a previously stalled legislative effort to fast-track energy projects. A bid to attach the energy-permitting package was dropped from must-pass government funding legislation in the Senate last year when it didn’t have the votes.

“A commonsense, bipartisan piece of legislation will speed up permitting and provide more certainty for all types of energy and mineral projects without bypassing important protections for our environment and impacted communities,” Manchin continued.

“The Energy Permitting Reform Act will advance American energy once again to bring down prices, create domestic jobs, and allow us to continue in our role as a global energy leader.”

“Washington’s disastrous permitting system has shackled American energy production and punished families in Wyoming and across our country. Congress must step in and fix this process,” added Barrasso, Ranking Member of the Committee. “Our bipartisan bill secures future access to oil and gas resources on federal lands and waters.”

The American Exploration & Mining Association (AEMA) released a statement on Tuesday applauding the bill.

“Our inefficient federal permitting system is a significant deterrent to attracting investment in the United States to explore for and develop strategic mineral resources, and it has resulted in the US being increasingly reliant on foreign countries,” AEMA executive director Mark Compton said in the statement.

“The permitting reforms in this deal are a good start, and we look forward to working with both sides of the aisle to see they become law.”

Full text of the Energy Permitting Reform Act of 2024 can be found here.


Study: Warming Waters Will Cause Serious Declines in Regional Fisheries

Chinese distant-water fishing vessels on the high seas of the North Pacific (U.S. Coast Guard file image)
Chinese distant-water fishing vessels on the high seas of the North Pacific (U.S. Coast Guard file image)

PUBLISHED JUL 21, 2024 10:40 PM BY DIALOGUE EARTH

 

 

Global fish catches are likely to plunge if the planet warms by just a few degrees, according to one of the most comprehensive attempts to model this understudied topic. 

The projections are based on the quantity of fish in the sea, rather than focusing on catches. But the finding raises serious concerns for commercial fishers and coastal communities who rely on fish to feed themselves and their families.

Nearly 50 countries and territories face a reduction of 30% or more in their exploitable fish if warming reaches 3 to 4C above pre-industrial levels by the end of the century, according to a report launched by the UN’s Food and Agriculture Organization (FAO) last week.

Holding warming to 1.5 to 2C by achieving net-zero emissions around 2050 would stabilize losses to less than 10% for most countries and territories.  

If every nation achieves its climate action targets, the world would still be on track for a global average temperature rise of 2.5 to 2.9C, according to a UN report from 2023.

The FAO research lead, Julia Blanchard, says fishers with effective management could adapt to likely losses under the 1.5-2C low-emissions scenario. But it would become “quite frightening” with the 3-4C high-emissions scenario. 

Blanchard hopes her latest work will build an even stronger case for cutting emissions when policymakers update their climate action plans and targets, known as nationally determined contributions (NDCs). Nations are due to revise their NDCs by early 2025 under the Paris Agreement.

Fleeing fish means some nations suffer more

A warming ocean reduces nutrient flow from deeper waters to surface layers where many fish live. It decreases the amount of tiny organisms, known as phytoplankton, living near the sea surface and even their average size. This undercuts the base of the marine food web.

Fish generally grow and feed at faster rates in a hotter environment. When their food supply is not sufficient for faster growing, they maintain their body sizes, ending up smaller.

Blanchard’s study projects the “exploitable fish biomass” – meaning the combined weight of fish of between 10g and 100kg – across all countries and territories under low- and high-emissions scenarios. 

The impacts it shows are widespread, with some top fish-producing countries facing particularly significant losses if emissions remain high.

By 2100, exploitable fish biomass within Peru’s exclusive economic zone – the area of ocean stretching 200 nautical miles from its coastline – would likely decline by 37%, and China’s could see a 31% decline. Small island states that are already struggling with the impacts of climate change, including Papua New Guinea, Tuvalu and the Solomon Islands, could see decreases of over 40%.

By 2050, all these countries are likely to face a 10% decline in their potentially catchable fish, the work finds.

If warming does not exceed 2C, declines for all these nations would be kept to a maximum of 13% by the end of the century. 

As ocean temperatures increase, fish biomass in some regions, including the Arctic Ocean, may even increase. But Blanchard says where increases are seen, different models cannot agree on the direction of change. The authors have “very low confidence” in estimated increases.

She also notes that the research models climate impacts on fish but not compounding pressures such as fishing and other human activities. Her team are still working on factoring fishing itself into projections. 

Multiple models deliver ‘best available science’

Scientists who were not involved in the research say the cutting-edge approach of the work provides an unmatched understanding of the range of climate impacts on fisheries.

Instead of applying one or two models, the researchers behind the study used an “ensemble”. This included two Earth system models, which project changing ocean conditions, and up to nine ecosystem models, which capture ecological responses to these conditions. 

Elliott Hazen, a marine spatial ecologist at the US National Marine Fisheries Service (NOAA), says this is one of the first efforts to use this ensemble modeling approach for fisheries.

“It’s really exciting to see,” he says. “They are not just taking one realization of the future. They’re looking at multiple models … to come up with the best available science.” 

Hazen says he has already seen the effects modeled in this work unfolding in the ocean. 

In 2014 and 2015, record-breaking marine heatwaves swept through the Northeast Pacific Ocean. Pacific cod and snow crabs in the Bering Sea went from being abundant to disappearing, Hazen says. 

“Disappearing doesn’t mean that they’re all dead, necessarily. There’s some hope that they moved into other regions,” says Hazen. “But from where we monitor, the change was sudden and stark.” 

Models that project climate change impacts on fisheries often show a linear change over a long period. But events such as the marine heatwaves demonstrate that “the expression of climate change is much more punctuated,” Hazen adds. Large and fast changes such as heat waves can lead to rapid changes in animal numbers.

Time for action

To adapt to climate change, Manuel Barange, the assistant director general of the FAO and one of the report’s authors, says nations should ensure they have institutions capable of managing changes in their fisheries. This could include bilateral or regional institutions to help manage new species that arrive in their waters and those of neighbouring nations.

Policymakers could also support fishers by adding post-harvesting processing to add value to catches, and by providing alternative employment. Risk management, such as setting up insurance to support communities to face future changes, can also help, Barange adds.

Michelle Tigchelaar, an interdisciplinary climate scientist at WorldFish who was not involved in the research, points out that climate models focus on broad trends. “They won’t tell you what is specifically going to happen to this specific species.” 

Looking into how species composition changes within different regions under climate change will be important for future work, she adds. 

Despite these uncertainties, Tigchelaar says the report strengthens the argument that scientists know enough for policymakers to take action now.

“I don’t think we need to sit around and wait for a lot more evidence to come in before prioritizing climate adaptation in fisheries,” Tigchelaar says. “Fisheries need to rise much higher on the climate agenda.”

The key message, experts say, is that greenhouse gas emissions must be reduced to lessen damage to fisheries.

“The more we continue to emit at the higher emission scenarios, the less able we’ll be to recover from this,” says Hazen of NOAA.

“What this [report] is saying is if we do make a change, we can rapidly recover and minimize the impacts of warming.” 

Regina Lam is an ocean and special projects assistant editor at Dialogue Earth, based in London. She joined in 2021 and has worked at major Hong Kong newspapers and has reported for the BBC World Service. She holds an MSc in global affairs from King’s College London.  

This article appears courtesy of Dialogue Earth and may be found in its original form here