August 28th, 2024 - The Mine Wire

METALS MARKET

WTI Crude continued its up & down movement over the past week while most metals were flat or up. Palladium (+5.20%) and Zinc (+5.26%) had the best gains this week while Titanium (-6.32%) and Cobalt (-6.54%) had rough weeks. Cobalt is now down -27.23% YoY with only Lithium performing worse at -65.01%.

^{**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 government of Canada announced that it intends to implement a 100 per cent surtax on all Chinese-made EVs, effective October 1st, 2024. It also intends to apply a 25 per cent surtax on imports of steel and aluminum products from China, effective October 15th, 2024. Further, the government will launch a second 30-day consultation concerning other sectors critical to Canada’s future prosperity, including batteries and battery parts, semiconductors, solar products, and critical minerals. A consultation notice will be released in the coming days to help inform any further government action. If you are in Canada and in the critical minerals space, watch out for this consultation. Lastly, the government will be restricting eligibility for incentives for zero-emission vehicles to products from jurisdictions where there is a free-trade agreement in place. (Government of Canada)

• 🇨🇦 In a less popular move with Canadian workers, the Canada Industrial Relations Board (CIRB) imposed binding arbitration on unionized workers and the companies Canadian National Railway (CN) and Canadian Pacific Kansas City (CPKC) after work stoppages halted freight shipments across the country. The Canadian Labour Minister Steven MacKinnon had directed the arm’s length tribunal to start the arbitration on the basis of an impasse between both parties. The government was in a damned if you do, damned if you don’t situation. (CBC)

• 🇺🇸 🇦🇷 The United States and Argentina signed a Memorandum of Understanding (MOU) related to strengthen cooperation on critical minerals. “The MOU signifies the desire of our governments to strengthen cooperation on critical mineral supply chains and to promote trade and investment in critical mineral resource exploration, extraction, processing, refining, recycling, and recovery. The Memorandum sets the direction for further collaboration in critical mineral resource sector governance, investment, and global supply chain security.” (U.S. Embassy in Argentina) 

• 🇬🇧 The Critical Minerals Association (CMA (UK), Institute of Materials, Minerals & Mining (IOM3), Institute of Quarrying (IQ), Mineral Products Association (MPA), Mineral Products Qualification Council (MPQC) and Mining Association of the UK (MAUK) jointly penned a letter to the new Secretary of State highlighting the importance of a robust minerals and mining skills pipeline. With the new government launching a new Skills England program, these associations want to make sure mining is included. Makes sense to us! (Institute of Materials, Metals & Mining)

• 🇦🇺 Australia’s Minister for Climate Change and Energy, Chris Bowen, said that “Methane is among the world’s most powerful greenhouse gases,” and committed to new processes to evaluate industries own methane emissions. Since emissions have been self-reported, the Institute for Energy Economics and Financial Analysis estimates that Australia’s oil and gas sector could be underreporting by as much as 90% and by 80% for coal mining. Officials will take a look at a methodology used to estimate methane emissions from open cut coal mines and potentially put it into practice. (BNN Bloomberg)

• 🇦🇺 Australia will join about two dozen other countries with a new right to disconnect law that allows employees to ignore emails, SMS and phone calls outside of work hours. The law still allows employers to contact employees, but staff can choose to ignore the outreach when it is reasonable to do so. Of course, the guidelines are deemed to be confusing to industry groups and time will tell what sort of impact this has on the workplace. (Reuters)

• 🇳🇿 The New Zealand government’s fast-track legislation seems to be progressing as some coalition groups praised recent changes in the proposal. Final decisions on projects would now sit with an expert panel as opposed to three Ministers. Infrastructure Minister Chris Bishop said, ““By the end of the year there will be a one stop shop, fast track regime in place that makes it a lot easier to build houses, to develop mines, to build infrastructure that New Zealand needs.” Of the 384 applications in, about 5% are currently related to mining. (Te Ao Māori News)

• 🇿🇲 Zambia’s Energy Regulation Board (ERB) rejected state power utility ZESCO’s application to impose emergency tariffs of up to 156%. About 85% of the nations electricity comes from hydropower, but a severe drought has lead to rolling blackouts. Mining companies are supplementing their electricity with costly imports. (BNN Bloomberg) or (Bloomberg)

• 🇦🇫 Afghanistan’s Taliban came out with a 114 page, 35 article document dubbed vice and virtue laws. In one section it outlines what is acceptable for women and well, they have pretty much taken away all rights. Women must cover their body and faces at all times when in public, they must not look at men who they are not related to by blood or marriage and vice versa and they must not be heard singing, reciting, or reading aloud in public. Earlier this summer, the Financial Times had reported children as young as 8 working in mines. Very Sad days. (AP News) & (The Financial Times)

MINING MATTERS FROM AROUND THE WORLD 🌎

• Congratulations to Lucara Diamond (TSE: LUC) which found the 2nd largest rough diamond in history. The 2,492 karat behemoth was found in it’s Karowe Diamond Mine in Botswana. CEO William Lamb touted the companies XRT technology and how it was leveraged to mine the diamond intact. The company’s stock climbed immediately but came back to earth throughout the trading day. It is still up over 27% since the discovery. (Newswire)

• In the coal world, Arch Resources (NYSE: ARCH) will merge with Consol Energy (NYSE: CEIX) to create a North American giant. Consol will issue 1.326 of its common stock for each share of Arch Resources which will leave Arch Resources shareholders with 45% of the new company. The deal is expected to close in the first quarter of 2025 and the combined entity will be named Core Natural Resources. We like it and also like the expected $110m to $140m in annual cost savings to be realized in the first 6 to 18 months. (Reuters)

• In other coal news, Australia’s Whitehaven Coal (ASX: WHC) has sold a 20% stake in its Blackwater mine to Nippon Steel Corp. and a 10% stake to JFE Steel Corp. for $1.08 billion. Whitehaven had recently purchased its Blackwater and Daunia mines from BHP. “We are delighted to welcome Nippon Steel and JFE Steel as joint venture partners at Blackwater,” said Paul Flynn, managing director and CEO of Whitehaven. Given that both Japanese companies are clients of Whitehaven, we think this joint venture makes a lot of sense. (Coal Age)

• Vale (BVMF: VALE3) announced Gustavo Pimenta as the company’s next CEO yesterday. Since 2021, he has been Executive Vice-president of Finance and Investor Relations at Vale S.A. where he was also responsible for the procurement, energy & decarbonization areas. (Reuters)

• Sibanye Stillwater (JSE: SSW) secured a €500m debt financing to help it complete a new lithium mine in Finland. The country’s export credit agency, Finnvera, will guarantee 80% of a €250 million tranche, while the European Investment Bank will provide €150 million and a group of commercial lenders the remaining funds. (Reuters) & (BNN Bloomberg)

• Lundin Mining (TSE: LUN, NASDAQ: LUMI) announced that it has come to an agreement with the union and its workers at its Caserones Mine in Chile. It was announced on August 12th that workers had taken job action reducing operations to about 50%. (Newswire)

• Brazil Potash, which is developing a potash mining project in the Amazon basin of Brazil, filed last Tuesday with the SEC to raise up to $100 million in an initial public offering. (Renaissance Capital)

• Congratulations to Sandvik (STO: SAND) which has acquired Universal Field Robots, a fast-growing Australia-based provider of autonomous interoperable solutions for the surface mining and underground mining markets with about 40 employees. (PR Newswire)

EARNINGS - Many companies have now reported earnings, but here are some of the companies that still reported this past week:

• BHP (ASX: BHP, NYSE: BHP) - (Report Here) - the world’s largest mining company posted an underlying attributable profit for the year ended June 30 of $13.66bn, excluding exceptional items. The company laid out plans for copper growth and expansion as it looks at new opportunities after its failed bid for Anglo-American. The company saw a 2% bump after earnings, but has since given up most of that increase.

• Kazatomprom (LSE: KAP) - (Report Here) - The world's top uranium producer saw profits jump 27% to 283.2 bn Kazakhstani tenge ($590.1m USD). The partially state-owned miner benefited from higher uranium prices although costs also increased. The company warned of continuing delays of construction at new deposits and scarcity in attaining sulfuric acid, which is used to leach uranium from underground deposits. The miner also cut its production outlook to between 25,000 and 26,500 metric tons of uranium, down from 30,500-31,500 tons previously. This pushed other uranium stocks up on the news, but it only lasted a few days as uranium spot prices continue their slow decline. (Morningstar)

• Zijin Mining Group (SHA: 601899) - (Report Here) - The Chinese copper & gold miner saw its net income increase 46% in the first half of 2024 to $2.1 bn. The miner recognized that geopolitical tensions are having an impact on its ability to expand, particularly as many of its potential acquisition targets are located in Canada, which can prevent takeovers by leveraging its strict Investment Canada Act. Despite this, the miner said that it will continue to explore opportunities to expand in copper, gold and lithium. (Benzinga)

MINING BITS

• 🏛️ Goldman Sachs, BASF, HSBC and ICBC Standard Bank agreed to pay $20m to settle an antitrust lawsuit accusing them of conspiring to suppress platinum and palladium prices. They were alleged to have conspired from Jan. 1st, 2008 to Nov. 30th, 2014 to rig the twice-daily platinum and palladium "fixings" by sharing customer data, front-running expected price moves, and placing bogus "spoof" orders. This allowed the banks to avoid losses on short positions they had in the futures market. Not a great public look for these groups. (Reuters)

• 🇨🇱 According to Francisco Delgado, a researcher at the Department of Geology at the University of Chile, the Atacama salt flats are sinking at a rate of 1 to 2 centimeters per year due to lithium brine extraction. This is happening in the southwest area of the salt flat where lithium miners operate. Delgado is the lead author of a report that looked at data collected between 2020 and 2023. It raises questions around the sustainability of the extraction processes and its potential impact on the surrounding environment. (Reuters)

• ♻️ The MIT Technology Review takes a look at the rare earth metal neodymium as an example of the challenges our supply chains may face in the future. It examines the complexity around “Peak Production”, technological innovations that quickly alter in-demand metals as well as the likelihood for recycling to play its part. A very interesting read. (MIT Technology Review)

• 🚀 One company looking to expand the availability of finite resources on earth, is Astroforge. The company just raised $40m, bringing its total funding to $55m. The space mining start-ups 3rd mission to space will be in 2025, as a ride along on Houston company Intuitive Machines' IM-3 moon mission. That launch will send AstroForge's 440-pound (200 kilograms) Vestri probe to dock with a metallic near-Earth asteroid. We will get our popcorn ready for this one. (Space.com)

• 🌕 Another start-up, Starpath, just raised $12m in seed funding, as well as a $800,000 grant from NASA. The company is building robots that it hopes will be able to autonomously mine liquid oxygen from the moon. From this is can produce rocket propellant at a commercial scale to enable lunar refueling. Starpath says its technology will ultimately result in reduced launch costs, a higher launch frequency, and civilization-relevant payloads to the lunar surface. (Techcrunch)

• 🧠 Authors in Nature Communications published a report titled, “Artificial Intelligence investments reduce risks to critical mineral supply.” They argue that the main problem back-ended critical minerals have is that they provide lower value to investors during the initial stages of project development and exploration, due to technical and non-technical risks. These include bauxite, cobalt, lithium, graphite, niobium, nickel laterite, tungsten, scandium, rare earth, vanadium, and zinc. Therefore, they conclude that the best way to reduce the costs associated with energy transition is for governments to invest heavily in AI mining technologies and research. Their analysis suggests that the most important stages to invest in AI to reduce the back-end premium is in applications between exploration and development. (Nature Communications)

• 🎙️ And a couple of interviews this week that may be of interest. First, Sibanye-Stillwater’s CEO Neal Froneman did an interview with McKinsey & Co., while Alamos Gold’s CEO John McCluskey spoke with Benzinga. Check them out here —> (McKinsey & Co.) & (Benzinga)

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