July 24th, 2024 - The Mine Wire

METALS MARKET

It was a tough week for most metals as the market reacted to economic data out of China last week that showed the GDP grew slower than expected. On Monday, China cut its domestic interest rates to try and stimulate growth while other countries like the United States and Canada are expected to cut their rates as well.

Some metals like Tellurium (+7.14), Geranium (+3.83) and Indium (+2.54%) managed gains, but those were few and far between this week.

^{**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 most significant government news came out of the United States for a 2nd week in a row. On Sunday, President Biden officially withdrew from the presidential race which will be decided in November. Vice President Kamala Harris looks like a shoe-in for the democratic nomination with endorsements from President Biden, Former Speaker of the House Nancy Pelosi, Senate Majority Leader Chuck Schumer and House Minority Leader Hakeem Jeffries among others. So where will Kamala Harris differ from President Biden? Expect a tougher stance on the oil and gas industry, a potential ban on “fracking”, continued funding for green technologies, support for renewable energy, a focus on reducing greenhouse gas emissions and well you get the point. We would expect a Harris government to be cautious and tougher on seabed mining but supportive of critical mineral projects. With that said, no one knows how Presidents will act once they get in. Politico has a great comparison here - (Politico).

• 🇺🇸 🇨🇦 The United States and Canada were found to have the 2nd and 3rd worst development times to open a new mine in a report done by S&P Global. Yikes! It takes 29 years on average to open a new mine in the United States while it takes 27 years in Canada and 20 years in Australia. Despite Canada having almost similar timelines, there is significantly more investment due to project certainty. According to S&P Global, for every exploration dollar spent in the U.S., 57% more is spent in Australia and 81% more is spent in Canada. A highly litigious nature in the U.S. and a lack of a department or ministry of mines to shepherd through projects adds to the uncertainty in the nation. (S&P Global)

• 🇺🇸 U.S. Senators Joe Manchin (I-WV) and John Barrasso (R-WY), Chairman and Ranking Member of the Senate Energy and Natural Resources Committee released the Energy Permitting Reform Act of 2024. This bipartisan legislation will strengthen American energy security by accelerating the permitting process for critical energy and mineral projects of all types in the United States according to them. (Senate Committee on Energy & Natural Resources)

• 🇺🇸 The U.S. Department of Energy announced $10m for the California Institute of Technology and the University of Utah. The goal of the funded research is to “reduce the nation’s dependence on foreign supply chains by reimagining the use of coal waste and by-products as a domestic source of the critical minerals needed for clean energy technologies.” (U.S. Department of Energy)

• 🇺🇸 The Environmental Protection Agency (EPA) announced $4.3bn in grants for 25 projects “to implement community-driven solutions that tackle the climate crisis, reduce air pollution, advance environmental justice, and accelerate America’s clean energy transition.” Pennsylvania got $396m for its RISE PA program which stands for Reducing Industrial Sector Emissions - an industrial decarbonization program. (Environmental Protection Agency) & (Pittsburgh Post-Gazette)

• 🇺🇸 🇰🇿 The U.S. Department of State and Department of Energy, in coordination with Kazakhstan’s Ministry of Foreign Affairs and Ministry of Energy, held the 2024 U.S.-Kazakhstan Strategic Energy Dialogue. They signed an MOU whereby the U.S. will help Kazakhstan with financing geological exploration and providing technical expertise for rare earth projects. (The Times of Central Asia)

• 🇰🇿 🇨🇳 Speaking of Kazakhstan, the New York Times did an excellent piece this week on China’s interest and investment in the central Asian nation. As a major producer of oil, uranium, chromium, gold and copper, western companies have started to take interest in the country. The NYT speaks with Kenges Rakishev, one of the richest men in Kazakhstan who you may remember from a congressional inquiry. (New York Times)

• 🇹🇯 🇰🇷 Another Central Asian country, Tajikistan, had its Chairman of the State Committee on Investments and State Property Management give an interview to The Korea Herald to encourage more investment from Korean companies into the nation. According to the Chairman, the country has “identified around 800 deposits, but only 100 are currently in use. This represents about 12 percent of our mining potential.” Rich in minerals like Lithium, Antimony & Silver, the country would like to see more investment. (The Korea Herald)

• 🇦🇺 🇯🇵 The Northern Territory Government in Australia has signed two memorandums of understanding (MOUs) with the Japan Organization for Metals and Energy Security (JOGMEC) to bolster critical minerals and energy cooperation. (Mining Technology)

• 🇯🇵 🇨🇳 Japan extended the designation of its continental shelf some 1,000 kilometers south of Tokyo to the opposition of China. The seabed is rich in cobalt and other minerals and Japan is looking to develop its own domestic sources. Under UN law, a coastal state can claim control of the seabed beyond the traditional 200-nautical-mile limit for its exclusive economic use if it can prove the ocean floor is connected to its continental shelf. (SCMP)

• 🇮🇳 Meanwhile, India will apply for licenses to explore for deep-sea minerals in the Pacific Ocean. They are focused on the Clarion-Clipperton Zone, a vast plain between Hawaii and Mexico which is known to hold large volumes of polymetallic nodules containing minerals used in electric vehicles and solar panels including manganese, nickel, copper, and cobalt. We can only imagine granting such licenses on a first-come, first-serve basis will cause issues down the road. (Reuters)

• 🇷🇸 🇩🇪 German Chancellor Olaf Scholz was in Serbia to meet with President Aleksandar Vučić. They signed a MOU between the EU and Serbia’s government on a “strategic partnership” on sustainable raw materials, battery supply chains and electric vehicles. Serbia is looking to join the EU despite its close ties with China & Russia. It also wants European companies to setup battery manufacturing plants in the country instead of exporting raw materials elsewhere in Europe. The major lithium project by Rio Tinto in Serbia has been highly contentious among the public. (AP News)

• 🇮🇩 Indonesia will be launching an online Nickel & Tin tracking system this week to boost revenue and improve governance. The goal is to replicate the tracking system for coal that was introduced in 2022. The Deputy Coordinating Minister for Maritime & Investment Affairs said, "Smelting companies have to register where they buy the nickel from and where the mines are." Further, the companies will not be allowed to unload ore shipments from mines that have not yet paid their royalties. (Reuters)

• 🇧🇼 Botswana is proposing a law that will ask mining companies, once granted a license, to sell a 24% stake in mines to locals if the government does not exercise its option to acquire the shareholding. The current law allows the government to purchase a 15% stake in mining projects once a license is granted, but these new conditions could allow the country’s pension funds to participate more. (Reuters)

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MINING MATTERS FROM AROUND THE WORLD 🌎

• Yes, quarterly earnings season is upon us where investors start asking all kinds of fun questions. Grupo Mexico (BMV: GMEXICOB) reported a 34% increase in 2nd quarter net profit largely due to higher copper prices and better mining output. The miner had revenues of $4.397bn for the quarter with a net profit of $1.122bn far exceeding analyst expectations. Mr. Wonderful would be happy! For those who don’t know, Grupo Mexico is one of the world's largest copper producers, with mines in Peru, the United States, Spain and Mexico, where it also operates major freight railroads. (Grupo Mexico)

• Freeport-McMoRan (NYSE: FCX) also surpassed analysts expectations as the company posted revenues of $6.62bn compared with $5.74bn a year ago. Higher copper and gold prices have helped the miner beat expectations for each quarter the past year. (Freeport-McMoRan)

• Teck Resources (TSE: TECK.B) posted revenue of $3.873 bn in Q2 compared to $3.519bn a year earlier. Adjusted EBITDA of $1.7bn was driven by record copper production as Quebrada Blanca (QB) continued to ramp-up operations, as well as strong copper prices and steelmaking coal sales volumes. Profit from continuing operations before taxes was $658m in the quarter. President & CEO, Jonathan Price said, "In early July, we completed the sale of our steelmaking coal business, and we now move forward as a pure-play energy transition metals company with leading copper growth. With cash proceeds of US$7.3 billion we will reduce debt, retain cash to fund our near-term copper growth, and return significant cash to our shareholders." (Teck Resources)

• South32 (ASX: S32) wasn’t as lucky with its earnings report. The Australian miner reported $818m USD of impairment charges. It announced a pre-tax write-down of $554m on the value of its Worsley alumina asset, reflecting increased uncertainty created by the Western Australian Environmental Protection Authority's recommended conditions for the Worsley Mine Development Project approval and associated challenging operating conditions. It also announced a pre-tax write-down of $264m USD for its Cerro Matoso nickel project in Colombia, reflecting structural changes in the nickel market which are expected to continue to place pressure on nickel prices and discounts for our ferronickel product. The stock is down 12.28% since the earnings report. (South32)

• First Quantum Minerals (TSE: FM) also reported its Q2 earnings. Revenues were $1.231bn for the quarter, compared with $1.651bn a year prior. This isn’t a surprise given the forced closure of their copper mine in Panama. Net loss attributable to shareholders is $46m compared to a net gain of $168m a year earlier. The miner’s stock is up 36.51% year-to-date but still down over 50% since its flagship copper mine in Panama was closed. (First Quantum Minerals)

• Fortescue Minerals Group (ASX: FMG) announced that it would be laying off 700 senior management roles, as the company merges its mining and energy divisions. The company also announced that it would be putting its $2bn hydrogen project in B.C. on hold as it focuses on projects with the best economics. We certainly hope that all of those packaged out, land quickly. (IBTimes) & (Vancouver Sun)

• Anglo American (LON: AAL) is shrinking its trading operations as part of a restructure in response to a bid from rival BHP Group earlier this year. The miner also announced internally that it will no longer enter into long-term deals to buy commodities that it doesn’t already produce. (BNN Bloomberg)

• Nippon Steel Corp. (TYO: 5401) has hired former U.S. Secretary of State Mike Pompeo to help complete a proposed purchase of United States Steel, a deal facing bipartisan opposition from Donald Trump and U.S. President Joe Biden. The deal is undergoing a National Security Review and is also opposed by the United Steelworkers Union. With an election looming, we can’t imagine either political party wants to support a deal that could be seen as shipping jobs abroad. (The Japan Times)

• BASF has signed an agreement with Solenis, a global producer of specialty chemicals headquartered in Wilmington, Delaware, to sell BASF’s flocculants business for mining applications. The two parties have agreed not to disclose the financial details of the transaction. (BASF) & (Solenis)

• Artem Volynets, chief executive of ACG, who used to be chief of EN+ and head of strategy at Russia’s largest aluminum company Rusal, is looking to roll up copper mines in Africa, North and South America as part of his special purpose acquisition company (SPAC). ACG just did its first deal for $300m for a copper mine in Turkey. (Financial Times)

• Zimbabwe's state-owned Kuvimba signed a $310m deal with a consortium of British and Chinese investors for the construction of a lithium concentrator at its Sandawana mine. While the company would not name the investors, quite a number of Chinese firms have mines in the country. (Reuters)

• Major Drilling Group International (TSE: MDI) is bringing AI to drilling through a strategic partnership with DGI/Kore. Under the agreement, Major Drilling will acquire an approximate 40% interest in DGI/KORE for $15m (CAD) cash consideration. Congratulations to all groups involved. (EIN Presswire)

• Talon Metals & Circulor announced a partnership for tracking responsibly sourced domestic nickel. Talon is in a joint venture with Rio Tinto on the high-grade Tamarack Nickel-Copper-Cobalt Project located in central Minnesota. Like other western miners, they have mentioned concerns with mining practices in jurisdictions like China & Indonesia and the reputational risk for battery manufacturers and EV makers due to worker safety incidents, environmental impacts and human rights violations. Certainly many consumers who purchase an EV do so because they want to protect the environment so it also makes sense that they would like to have their nickel responsibly sourced. We like the project, initiative and hope western governments will take action to differentiate pricing or regulate in a way that prevents dumping of such metals. (Newsfile)

MINING BITS

• 🌊 Scientists working in the Clarion-Clipperton Zone in the North Pacific Ocean have found that metallic nodules on the seafloor produce their own oxygen, dubbed "dark oxygen." The discovery of oxygen produces at 4000m depths where no light can penetrate challenges scientists' belief that Earth's oxygen is only naturally produced through photosynthesis. The discovery also raises questions about seabed mining and the potential impact it could have as these nodules may represent a vital source of oxygen for deep-sea ecosystems according to the researchers. (Live Science)

• 🌻 AP News takes a look into a project in Nevada and the challenge between critical mineral development and environmental protection. Australian miner Ioneer wants to develop a Lithium project in the state, but unfortunately Tiehm’s Buckwheat only grows within the Rhyolite Ridge where the project is based. Regardless of your views on this project, one can understand why the U.S. is ranked 2nd worst for mine development times when there are so many considerations, agencies and studies at play. (AP News) & (Ioneer) 

• 🎙️ We enjoyed the interview by KITCO with Rick Rule at The Rule Symposium on Natural Resource Investing. Mr. Rule stated that "the price of rare earths is going to increase not merely because of geopolitical competition, but rather because the Chinese are beginning to employ Western environmental standards in the extraction of rare earths. And that's the game changer that most people don't recognize." Watch the full interview —>(KITCO)

• 🐻‍❄️ The BBC takes a look at researchers attempts to test a number of tracking devices (tags) for polar bears in the Canadian Arctic. Three new tags were designed by the company 3M in collaboration with the charity Polar Bears International. They all attach to the bears’ coarse fur. They best one lasted 58 days before falling off. With polar bears spending more and more time on land and having more frequent interactions with humans, the tracking devices serve a number of important purposes like understanding polar bear movement as well as keeping them away from communities. (BBC)

• 💲The Securities and Exchange Commission announced an award of more than $37 million to a whistleblower who provided information not previously known to the SEC and which significantly contributed to a successful enforcement action. The whistleblower also met with Enforcement staff and identified potential witnesses and documents, which conserved staff time and resources. Whistleblower awards can range from 10 to 30 percent of the money collected when the monetary sanctions exceed $1 million. That is some payday! (U.S. Securities & Exchange Commission)

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