April 24th, 2024 - The Mine Wire

METALS MARKET

Gold & Silver saw a small pull back this past week as geopolitical risks softened. Copper managed to maintain its gains while WTI Crude was down but still well above $80 per barrel.

The big winners this past week were Nickel (7.19%), Tin (6.97%) and Indium (19.75%). Indium prices are up 62.21% this year already. Used in LCDs, touch-screens and the solar industry, Indium is reliant on zinc mining where it is a byproduct.

^{**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.

• 🇺🇸 The U.S. Interior Department essentially blocked the “Ambler Road” project in Alaska that was needed to access copper and zinc deposits in Northwest Alaska. The Biden administration said the road, also known as the Ambler Access Project, would cause irreparable damage to wildlife including caribou, which many local people rely on for food.

• 🇺🇸 President Biden called for tripling tariffs on Chinese Aluminum & Steel while visiting union workers in Pittsburgh. The current tariffs are 7.5%. Donald Trump has promised to put a 60% tariff on all Chinese goods. It is clear that China is very much in the crosshairs of US policy makers.

• 🇺🇸 In fact, New Jersey Republican Rep. Chris Smith has introduced legislation that would ensure minerals used in the green energy transition were not mined using child labor. The name of the bill - “Stop China’s Exploitation of Congolese Children and Adult Forced Labor through Cobalt Mining Act “.

• 🇨🇦 The Alberta government which was forced to release documents through a freedom of information act, was found to have talked with lobbyists about opening up coal mining in the rocky mountains for up to 7 months before they made the public aware of their plans.

• 🇦🇺 The Queensland government has opened its Collaborative Development Program which will give out $5 million in total funding for companies seeking to assess and find ways to extract value from residual materials left behind after the primary phases of mining and mineral processing.

• 🇮🇩 The Indonesia Investment Authority (INA) will aim to invest $1 billion dollars this year with green energy as one of its priorities. It is in talks for potential investment in the electric vehicle ecosystem and geothermal energy, and is providing financing for early retirement of coal-fired power plants.

• 🇿🇲 Zambia, which produces 86% of its electricity from hydropower stations, is looking to import energy as it deals with a drought impacting its domestic energy output. The country is concerned with its mining operations and wants to make sure its copper output isn’t impacted from a lack of energy.

• 🇷🇸 Serbia’s Ministry of Mining and Energy rejected a request from China’s Serbia Zijin Mining company for an extension to its permit to manage mining waste. The company’s license for managing mining waste expired on December 31, 2022. So now some environmental groups are asking what Zijin Mining is doing with it’s mining waste, given that it doesn’t have a permit to dispose of it.

FOLLOW-UP SPECIAL REPORT BY S&A STRATEGIES

HOW DID THE MINING SECTOR & OTHER BUSINESS GROUPS RESPOND TO THE CANADIAN FEDERAL BUDGET?

The Trudeau government released their budget a week ago and we wrote up a summary in last week’s edition of The Mine Wire. So how did mining & business stakeholders respond:

• The Association for Mineral Exploration (AME) welcomed the extension of the Mineral Exploration Tax Credit as well as extensions to the Clean Technology Manufacturing Investment Tax Credit. It approved of the goal to set a target of 5 years or less for Impact Assessments, while also commending the government for its $5 billion dollars in loan guarantees to indigenous nations to allow them to participate in major projects. The AME did caution the government on its changes to capital gains and cautioned them to ensure these changes did not have a negative impact.

• The Prospectors & Developers Association of Canada (PDAC) welcomed the same things as the AME but was more direct on the potential negative impact of the capital gains inclusion rate changes. “Such an increase will reduce the amount of available capital for junior exploration and development companies and create major headwinds for investment into Canadian industry more broadly.”

• The Mining Association of Canada (MAC) also commended the government for the same initiatives and spoke directly to changes to capital gains, “However, the budget's increase to the inclusion rate for corporations and trusts to two-thirds and for individuals to two-thirds will significantly reduce the value of the METC to many individuals. Unless the government increases the adjusted cost base of all flow through shares from zero per cent to higher levels, we believe this budget will be very damaging to financing of mineral exploration in Canada at a time when new investment in critical minerals exploration is most needed.”

• John McKenzie, CEO of TMX Group, parent of the Toronto Stock Exchange, said, "The increase in the inclusion rate on capital gains has been characterized as 'a tax on the rich,' but it is in fact a tax hike on investing in Canada that will serve as yet another barrier to economic growth".

SO DID THE BUDGET ROLL-OUT GO AS ANTICIPATED?

We can only assume government intentions, but the “tax the rich” messaging seems to be sticking with a segment of voters that the Liberal government is counting on to support them next election. We therefore aren’t expecting any changes to the capital gains inclusion rates, but wouldn’t be surprised to see some additional targeted funding, tax credits or carve outs for specific groups or industries.

S&A is one of the leading government relations firms in Canada. If you are interested in learning more about how government relations (or lobbying if you prefer) can help you and your organization, 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 🌎

• Freeport-McMoRan (FCX) reported first quarter earnings that beat analyst estimates. Analysts were expecting a profit of 26 cents per share, but the miner came in with 32 cents per share. The miner produce 1.1 billion pounds of copper, up from 965 million pounds a year earlier. It also doubled its gold output to 568,000 ounces.

• First Quantum Minerals (FM) reported its first quarter earnings on Tuesday as well. The company lost $159 million USD in the first quarter down from a profit of $75 million USD a year prior when it’s Cobre Panama mine was still in operation. Still, the miner was much improved given it had a loss of $1.45 billion in the previous quarter.

• Barrick Gold Corporation (GOLD) reported a preliminary output for the first quarter of 940,000 ounces of gold, below analysts estimates of 984,000 ounces. The stock fell over 5% on the news. Barrick reports its Q1 earnings on May 1st.

• The UAE’s International Holding Company (IHC.AD) has made a $1 billion dollar offer to purchase 51% of Vedanta’s (VDAN.NS) Konkola Copper Mines in Zambia. Sources have said Vedanta is looking for a passive minority investor, but IHC is not interested in that role given that the mine has been a money pit, pun intended, and needs significant investment.

• Another UAE company, United Mining Projects Corporation (UMPC), through its subsidiary Marhen Lithium, will be investing $550 million dollars into a lithium project in Argentina.

• Energy Fuels (UUUU) announced the acquisition of Base Resources (BSE) for A$375 million. Base Resources stock was up over a 100% on the news while Energy Fuels was down 11.48%. The acquisition gives Energy Fuels more production capacity in rare earth metals.

• Russia’s Nornickel (GMKN.MM) said it will close its Arctic copper plant and build one in China with an unnamed partner. Sanctions against Russia have made it difficult to import equipment and the move allows Nornickel to be closer to the world’s largest metals market.

• London is for sale? Some argue that companies listed on the London Stock Exchange have less access to capital and investors and this in turn leads to lower valuations, risking unwanted takeovers. Current concern - the UAE’s state oil corporation is possibly bidding for BP given its lower evaluation. Policy-makers have been concerned as other homegrown companies decide to list in New York instead of London for this very reason.

MINING BITS

• 🚔 Just over a year ago, criminals in Canada managed to walk away with $14.5 million in gold bars and $2 million in bank notes from Toronto’s Pearson airport. They pulled the heist off with remarkable ease, so much so that some called it an “Oceans 11” event. Well to no one’s surprise, insiders were part of the scheme to steal the gold. Last week, one of the conspirators in a traffic stop in Pennsylvania was caught with a cache of 65 guns. Apparently, he used to profits from melting some of the gold to purchase these guns to smuggle back into Canada and sell illegally. When it is covered in CNN, you know its gone viral. Certainly sounds a lot less Canadian than the Maple Syrup Heist of 2012.

• 🪙 Remember Nilam Resources from a few weeks back? They were the ones that announced they were purchasing 24,800 bitcoins and their stock market cap soared to nearly half a billion dollars before falling to zero the next day. Well now they are trying to sell their own crypto token called MindWave.

• 💻 The Oregon Group published a new report that predicts at 10 year super-cycle for critical minerals due to the explosion of artificial intelligence (AI). They look at:

  • nuclear energy and uranium

  • renewable energy and battery metals, including cobalt, graphite, lithium, nickel, manganese, rare earths, fluorspar

  • expanding electricity grids driving copper demand and

  • tin, essential for soldering across the tech revolution.

• 🇰🇷 A great opinion piece on the need for South Korea to reignite their Tungsten production. Did you know the Sang-dong Mine is assessed to hold the world’s largest reserve of Tungsten with a projected lifespan of more than 90 years? The mine closed in 1994 when it could no longer compete with subsidized Chinese mines. But the world is a different place today where access to key minerals is attracting government attention and intervention.

• 🇦🇺 The cost of living crisis in Australia is attracting more women into the mining industry. The number of women employed full time in the mining industry nationally jumped from 8,700 in August 2002 to 45,000 in August 2022. Social media influencers promoting the benefits and flexibility of FIFO work are helping attract more young people into the industry.

• 🇷🇸 Reuters’ The Wider Image covers the story of a Serbian village fighting to escape an ever growing open pit copper mine run by Zijin Mining. While many of the villagers have been moved with the help of the company, the remaining villagers are Vlachs - Orthodox Christians who have preserved their own language and customs through centuries. They want to move as one and want a number of key buildings like their church moved with them to a new location.

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