April 17th, 2024 - The Mine Wire

METALS MARKET

Most metals managed to maintain their gains from last week due to geopolitical risks which helped gold, silver as well as tin. In fact, Tin prices hit a 21 month high. Another interesting change, natural gas will be cheaper than coal in 2024 for the very first time.

^{**For our chart above we are taking prices from Tuesday 4pm EST to Tuesday 4pm EST, so not the typical week of Monday through Friday.}

KEEPING AN EYE ON GOVERNMENT DECISIONS

With many forecasting significant demand for metals into the foreseeable future, governments are all over the place with their policies. Here are some of the notable moves this week.

• 🇨🇱 On Monday, the Chilean Mining Minister said that private sector groups, both local and foreign, will be able to enquire about Chile's national lithium strategy until May 17th as well as express their interest in developing exploration or production projects until June 17th. bnamericas covers it here. Americas Quarterly came out with a great article on the skepticism around Chile’s lithium strategy. It speaks to resource nationalism and state companies keeping control of the best assets while leaving the less attractive areas to others. Read more here.

• 🇨🇦 The Canadian government is injecting $5 million into an Indigenous-led plan to develop a mine near Great Bear Lake. The money is going to Denendeh Exploration and Mining Company, 100% owned by the Dene First Nations in the Northwest Territories.

• 🇨🇦 A judge in Alberta has ordered the provincial government to turn over thousands of documents related to their decision to push coal mining in the rocky mountains. The government has been trying to block the release of these documents, claiming cabinet confidentiality among other things. Meanwhile, The Yukon Court of Appeal has dismissed an appeal from the Yukon government to reinstate a mineral exploration project in the Beaver River watershed that was overturned by the courts due to a lack of first nations consultation.

• 🇺🇸 🇬🇧 The U.S. and U.K. on Friday prohibited metal-trading exchanges from accepting new aluminum, copper and nickel produced by Russia and banned the import of these metals into the U.S. and Britain. The LME has already moved ahead with these changes.

• 🇺🇸 The Interior Department finalized a rule on Friday making it more expensive for oil and gas producers to drill on public lands. Government’s share of profits on public lands will go from 12.5% to 16.67% and lease amounts per acre will go up significantly as well.

• 🇺🇸 The Department of Labour announced its Mine Safety and Health Administration has issued a final rule to protect miners from silica dust or quartz dust. The final rule lowers the permissible exposure limit of respirable crystalline silica to 50 micrograms per cubic meter of air for a full-shift exposure, calculated as an 8-hour time-weighted average.

• 🇦🇺 The Albanese government in Australia has introduced the “Future Made in Australia Act”, which is meant to mimic the United States Inflation Reduction Act. We will keep you posted through the Mine Wire as we learn more about this program that will likely be in the capital B, billions.

• 🇳🇿 In New Zealand, the Resource Minister has said that the government will bring coal mine consenting into line with other types of mining through their Resource Management Amendment Bill that will be introduced next month. The bill will basically remove additional controls that were put in place by the previous government related to coal mining.

• 🇺🇳 At the same time, United Nations Secretary-General António Guterres urged governments and the private sector to cancel all planned coal projects to give the planet a fighting chance on climate change.

• 🇦🇷 Argentine President Javier Milei was in Austin, Texas to visit Elon Musk and Tesla. They spoke about lithium projects in Argentina as well as promoting free markets. The two gentlemen seem to share admiration for one another and their world views.

• 🇲🇱 Mali’s Junta, supported by Russian troops, has increasingly indicated that it wants stronger government controls over the mining sector. The Globe & Mail reported that Barrick’s mining complex, Loulo-Gounkoto, one of the world’s biggest gold-producing mines, could be at risk of expropriation by the Junta.

• 🇨🇩 The Democratic Republic of Congo has been seeking outside advice on whether to put quotas on cobalt given the slump in prices. Despite the desire for higher prices, the nation is in a tough spot as cobalt-free batteries are becoming more popular. Higher prices may push manufacturers towards the alternative and the EV market is expected to account for 62% of cobalt demand over the next decade.

SPECIAL REPORT BY S&A STRATEGIES

HOW DOES THE CANADIAN BUDGET IMPACT THE MINING SECTOR?

The Trudeau government released their budget on Tuesday this week. For the weeks leading up to the budget, we saw a lot of pre-budget announcements to promote new spending initiatives related to Housing, AI, Youth Mental Health and Childcare among others. It therefore wasn’t surprising that much of the media attention went directly capital gains changes and the $52.9 billion in new spending which means government will run a $40 billion deficit.

SO WHAT CHANGED WITH CAPITAL GAINS?

Moving forward, any individual with more than $250,000 of realized capital gains will now get a third exemption as opposed to half in order to raise more taxes (or um, to make things more fair in the government’s words). Corporations and trusts will automatically only receive the third exemption and then will have to pay gains on the other two thirds. This comes into effect June 25th, 2024 - it will be interesting to see how the stock market reacts leading up to this date. Robert Asselin, head of the Business Council of Canada, may have said it best so far, ““You’re taxing capital at a moment where the economy needs more private investments and when you have a productivity problem that is worsening”.

On the flipside, the government is introducing a new Canadian Entrepreneurs’ Incentive to reduce the inclusion rate to 33.3 per cent on a lifetime maximum of $2 million in eligible capital gains. They are also increasing the Lifetime Capital Gains Exemption from the current amount of $1,016,836 in capital gains tax-free on the sale of small business shares and farming and fishing property to $1.25 million.

WHAT ABOUT MINING?

This budget was somewhat light on mining and critical mineral investments. The government had previously announced $3.8 billion for critical mineral projects so this isn’t a surprise. On page 191 of the budget, under “Getting Major Projects Done”, there are a number of commitments to improve Canada’s regulatory system to get projects approved quick. The government recognizes that the current timelines are simply too long. There are a host of initiatives listed in the document and maybe the most important is the idea of “One Project, One Review”.

In terms of incentives, there was mention of two new tax credit enhancements:

• The Clean Technology Manufacturing investment tax to provide new clarity and improve access for critical minerals projects. Draft legislation will be released for consultation in summer 2024 and the government is targeting legislation in fall 2024. S&A will be following up to understand what this credit may involve/offer.

• The EV Supply Chain investment tax credit: would be available as of January 1, 2024.

WHAT ABOUT AI FUNDING?

On April 7th, the government announced it would be investing $2.4 billion over 5 years into the field of AI. S&A expects the first tranche of funding to be released before the next federal election so there will definitely be opportunities for any technology firms leveraging AI.

• Investing $2 billion to build and provide access to computing capabilities and technological infrastructure for Canada’s world-leading AI researchers, start-ups, and scale-ups.

• Boosting AI start-ups to bring new technologies to market, and accelerating AI adoption in critical sectors - $200 million.

• Investing $100 million in the NRC IRAP AI Assist Program to help small and medium-sized businesses scale up and increase productivity by building and deploying new AI solutions.

S&A is one of the leading government relations firms when it comes to accessing grants. If you are interested in learning more about any of the grants or incentives listed in the budget, feel free to reach out for a conversation.

Click Here to have a free consultation with S&A Strategies.

MINING MATTERS FROM AROUND THE WORLD 🌎

• Rio Tinto will partner with Founders Factory and invest A$14.4 million in global pre-seed and seed stage start-ups over the next three years. The focus will be on technologies in the fields of safe mine operations, decarbonization, exploration processing and automation.

• Australia’s richest person, iron ore billionaire Gina Rinehart, purchased a 5.3% stake in MP Materials (NYSE: MP) which owns the Mountain Pass rare earths mine in California. The news pushed the stock up nearly $3 to $17.44 although it has retreated $1 since then. MP Materials stock is up 25.98% this past month but still down 41.42% the past year.

• Tesla supplier, Piedmont Lithium, got a state mining permit approved by North Carolina regulators, passing a major hurdle towards developing a large lithium deposit in the state. The news sent shares up 15.9% on Monday to close at $14.68 while yesterday brought a partial retreat in gains.

• Speaking of Tesla, the company sent out a memo to staff stating that it will be looking to reduce its workforce by roughly 10% or 14,000 employees. The company is grappling with low sales and fierce price competition from competitors. The news sent the stock 4.8% lower on Monday and Tesla is now down about a third this year.

• S&P Global reported that the average lead time for mines coming online in 2020-2023 was 17.9 years compared to 12.7 years fifteen years ago. When policy makers question why financing is getting harder and harder for these critical projects, they really need to look in the mirror and figure out how to reduce the administrative burden related to getting approvals.

• Privately held Canadian firm Brazil Potash Corporation will proceed with its $2.6 billion project in the amazon after getting a license from the state. Despite opposition from indigenous groups, the state Governor is supportive of the project which will bring 10,000 direct and indirect jobs to the state and help Brazil reduce its dependency on potash imports. Brazil Potash is owned by CD Capital with a 34% stake, Sentient with 23% of shares, and Stan Bharti's Forbes & Manhattan Group, a Toronto-based merchant bank that began the project, which now holds 14%, along with other shareholders.

• Sources claim that Russian copper producer RCC and Chinese firms have avoided taxes and skirted the impact of Western sanctions by trading in new copper wire rod disguised as scrap. Russia reported that 73 tonnes of copper scrap were sold to China in December 2023 yet China reported in January 2024 that it imported 6,607 tonnes of Russian scrap copper. Yeah, ummm, OK.

• Britain’s Advertising Standards Authority has sided with The Natural Diamond Council and banned Skydiamond advertising as it doesn’t clearly state that their diamonds are not mined. They failed to use a clear and prominent qualifier, such as “synthetic,” “laboratory-grown” or “laboratory-created.” Instead they use the term, “Diamonds from the Sky” to describe their process of creating diamonds. However, the BASA found that 25% of people in the UK, weren’t even aware that there was such a thing a synthetic diamonds.

MINING BITS

• 🇮🇹 Are you heading to Italy this summer? If you manage to make it to Naples, check out the ancient 280 mile tunnel network under the city. Originally started over 2,500 years ago by the ancient Greeks, the Romans expanded these tunnels into what they are today.

• 💰 Costco has been selling so many gold bars and silver coins that it is bringing in about $200 million per month in revenue. Even with limits of 2 bars and 5 rolls of silver coins per member, they are still selling out within hours. Despite their popularity, analysts have calculated that Costco is operating on a very low profit margin, if any, for these bars and coins as they are selling them for 2% above spot prices.

• 🇻🇳 Property developer FLC Group chairman Trinh Van Quyet has been charged with fraudulent appropriation of assets and stock manipulation, illicitly earning VND723 billion ($29 million) from the stock manipulation activities. How? He and his associates opened over 500 stock trading accounts and then they placed large orders but canceled them before they were matched to give the impression that there was a large demand for the shares.

• 🇻🇳 But the real news in Vietnam this past week was the sentence given to billionaire Truong My Lan who took out $44 billion in loans from Saigon Commercial bank. Through a vast network of schemes, bribes and shell corporations, she managed to account for 93% of the banks total loans, using the money to fund her property investments. Her sentence - not life, but death.

• 🚜 Congratulations to Komatsu which was voted “The Coolest Thing Made in Illinois” for 2024 for their mining truck. It is always nice to get some recognition from the Governor!

• ⛏️ A FIFO miner in Australia went viral when he did a TikTok video on his ability to make nearly $300,000 per year working in an underground mine. He caught some flak for his style with one commentor replying, “$300k per year with a $20 fit from Kmart.” What do we say? It just goes to show that the mining sector provides economic prosperity for workers and society who benefit from all of those taxes.

• 🪙 50 bitcoins from the “Satoshi era” were sold this past week for over $3 million after being dormant for 14 years. This isn’t the first time large amounts of dormant coins have been transferred. There were a couple cases in 2023 of 1,000+ coins being transferred to new addresses.

• 🥪 This week Consumer Reports urged the USDA to remove lunchables from the National School Lunch Program due to relatively high levels of lead, cadmium and sodium. With 28 million students getting lunches in schools every day, there is a lot on the line for Kraft Heinz, the maker of the product. The widespread coverage in mainstream media has likely had an impact already.

• 🤢 An Berkeley trained engineer was arrested for lacing his bosses water bottle with cadmium for nearly 2 years. The boss only found out after using the water to make porridge for her parents, who then got sick. We personally hope this piece of trash gets convicted of attempted murder.

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