June 5th, 2024 - The Mine Wire

METALS MARKET

All metal commodities saw a pullback in our week to week except Manganese which was up 4.91% on the week. WTI Crude was the biggest loser this past week with most producers seeing a drop in stock prices.

So was anything else up this week? Cheese (5.12%), Cocoa (9.19%), Butter (8.79%), Potatoes (5.14%) and Eggs (19.29%) were all up. Buckle up for those high grocery prices to continue!

^{**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, Australian Treasurer Jim Chalmers instructed Yuxio Fund and four other international companies linked to China to divest their shares in Northern Minerals. The miner is looking to become the first significant producer of dysprosium outside of China, a key component used in electric vehicles. It turns out the company was hacked months earlier by hacker group BianLian - meaning “two-faced” or “face-changing”. Clearly, mining companies need to be prepared for such attacks as the race for critical minerals heats up between nations. (ABC Australia)

• 🇨🇳 At the same time, China’s Ministry of State Security posted an article to its WeChat account claiming that overseas spy agencies and organizations with “complicated backgrounds” had frequently collected intelligence, stolen technologies and illegally acquired rare earth-related items in recent years. (SCMP)

• 🇺🇸 The U.S. Geological Survey (USGS) is now soliciting proposals for fiscal year 2024 cooperative agreements with state geological surveys for geologic and geochemical mapping projects across the nation through the Earth Mapping Resource Initiative (Earth MRI). They have a budget of $10m to handout, so take a look if it is of interest. (USGS)

• 🇫🇷 🇨🇦 A number of weeks back, Canada took some flak for lifting its ban on Russian titanium in certain circumstances, specifically for a number of aerospace manufacturers. It turns out that French President, Emmanuel Macron, was lobbying Justin Trudeau quite frequently to lift the ban. He wanted to ensure that the French company Airbus could continue its operations uninterrupted. (Reuters)

• 🇷🇺 Speaking of Russia, the Putin government is trying to take advantage of anti-colonial sentiment in military-run nations in Africa to get access to mining interests. At the moment, it is rumored that Russia is going after French State controlled Orano’s uranium assets in Niger. (Business Insider Africa)

• 🇰🇷 South Korea hosted dozens of African leaders in the inaugural Korea-Africa Summit this week. Of the 54 African states, 24 heads of state, as well as representatives from 48 countries were attending the two day summit in the Asian nation. South Korea and the African nations announced on Tuesday that they will start high-level talks aimed at improving cooperation over minerals. South Korea also signaled that it will provide more international aid to the continent. (AP News) & (Yonhap News) & (Korea JoongAng Daily)

• 🇨🇦 The government of Ontario announced its Critical Minerals Talent Strategy last week at the 3rd BEV In-Depth conference in Sudbury. The program will be administered through the Ontario Vehicle Innovation Network (OVIN) and is focused on helping the sector recruit the tens of thousands of workers it will need over the next few decades. The strategy includes engaging with younger generations early on to raise awareness about careers in the sector; increasing access to training and education programs; promoting meaningful engagement of women and other underrepresented groups; and building on long-term trust and partnership with Indigenous communities. (Elliot Lake Today)

• 🇯🇵 The Japanese government is investing ¥30bn ($191USD), to build 10 hubs to recycle electronic waste as it looks to keep copper and other metal resources from being shipped overseas. The government is working with Mitsubishi Materials and others on the initiative. (Nikkei Asia)

• 🇻🇳 Vietnam’s Deputy Prime Minister Tran Hong Ha said that the country will not export raw rare earth elements. With the 2nd largest reserves of rare earths after China, the country believes it has a significant opportunity to exploit and engage in the global semiconductor chip supply chain. Due to the above, the country has attracted significant interest from the US, EU, Japan, South Korea and Taiwan. (VOV)

• 🇮🇩 Indonesia’s out-going President gave religious groups the rights to mining concessions that have been revoked from companies. The decision was slammed by environmentalists and academics who claim these groups have zero experience in exploration and extraction and certainly no ability to ensure responsible mining practices. The decision was seen by some as a reward to the President’s religious backers who kept him elected. (Benar News)

• 🇺🇿 Unauthorized mining will become a criminal offense in Uzbekistan as lawmakers approved strict penalties for illegal mineral extraction. (KUN)

• 🇰🇬 In neighboring Kyrgyzstan, the government has lifted a ban on the mining of uranium and thorium. The law banning uranium and thorium mining was passed in 2019. At that time, authorities wanted to sell the license to develop a deposit, but faced a significant pushback from residents who feared the project could harm the environment and damage the water table. The lifting of the ban is expected to bring significant economic benefit to the country. (The Times of Central Asia)

• 🇰🇿 The Republic of Kazakhstan has entered into an agreement with China Nonferrous Metal Mining to build a copper smelter at a cost of $1.5bn. The smelter is expected to produce 300,000 tons of the metal per year. The trilateral agreement was signed between KAZ Minerals Smelting LLP, China Nonferrous Metal Industry’s Foreign Engineering and Construction Co., Ltd., and NFC Kazakhstan LLP. (The Asiana Times)

SPECIAL REPORT ON NATIONAL ELECTIONS (S&A Strategies)

Mexico, South Africa & India All Went to the Polls!

MEXICO

Mexicans elected North America’s very first female head of state, Claudia Sheinbaum, with a strong majority of roughly 60% of the popular vote. The President-elect belongs to the same leftist party (MORENA) as outgoing President López Obrador. She was endorsed by him and is expected to keep many of his policies in place.

So who is Claudia Sheinbaum? The former Mayor of Mexico City is seen as a climate activist. She holds a PhD in Energy Engineering from the National Autonomous University of Mexico (UNAM) and has significantly contributed to sustainable energy and climate change fields through more than 100 articles and two books. She is an expert on climate change and served on the UN's Intergovernmental Panel on Climate Change (IPCC). If you have mining operations in Mexico, may we suggest you start reading her books yesterday.

So what does that mean for mining? It is clear that she will work to decarbonize Mexico’s energy matrix as soon as possible and is likely to focus on renewable energy like wind and solar. She has already signaled support for mining extraction related to lithium & copper which are critical in the move to electric vehicles, but has also said that no new open mining concessions will be granted.

Despite this, some are hopeful that the President-elect is data-driven and therefore may be open to some changes in policy. "It remains uncertain whether this will lead to any relaxation of restrictions, such as the de facto ban on new open-pit mines. However, we view this as a possibility rather than a probability in the short term,” said Colin Hamilton, Director of Commodities Research, BMO Capital Markets.

South Africa

In South Africa, the African National Congress (ANC) lost its majority for the first time in 30 years. The party that came to power under Nelson Mandela received 40.2% of the overall vote, down from 57.5% in the 2019 election. Angry voters punished the party for high unemployment, rolling blackouts and increasing inequality.

The main opposition party, the white-led, pro-business Democratic Alliance (DA), received 21.8% of votes. Former President Jacob Zuma’s uMkhonto we Sizwe (MK) party received 14.6% of the vote while the far-left Economic Freedom Fighters (EFF), led by former ANC youth leader Julius Malema, got 9.5%.

DA leader John Steenhuise said it was starting talks with other parties to prevent the ANC from forming a coalition with either the MK or EFF parties, which it called a “Doomsday Coalition”. The business community and international investors would like to see the DA brought into the coalition but analysts believe this is unlikely due to the fact that the party is white-led.

We can’t imagine the election outcome is going to be positive for investments into the mining sector. BHP’s bid for Anglo-American on the condition that it sell-off its South African Platinum & Iron Ore businesses brought the country’s issues into the spotlight. Still, we will have to wait to see what the coalition looks like in the coming weeks. The parties have 14 days to sort it out.

India

Prime Minister Narendra Modi was dealt a blow as he also lost a majority but will still govern for a third term. However, he will need to rely on his conservative allies this time to support his government.

Modi's Bharatiya Janata Party is projected to win 240 seats in the 543 seat parliament, down from its 303 seats in 2019. Despite this, with their conservative allies, they will still control roughly 290 seats which is enough to hold a majority. However, Modi will now have to build consensus with his coalition partners.

Much like South Africa, Indians were concerned with rising unemployment (8.1%) and growing inequality between the rich and poor. Most of India’s wealth is concentrated in the top 1% and the impact has been particularly difficult on those in rural areas who have had incomes decrease due to rising food prices.

MINING MATTERS FROM AROUND THE WORLD 🌎

• Certainly the major mining news this past week was BHP giving up on its Anglo-American aspirations. BHP’s third offer of £38.6 bn pounds ($49 bn) was rejected and BHP has pulled away from further negotiations. Under UK regulations, BHP cannot make another bid for 6 months unless another bidder makes an offer. (BBC)

• In quick order, Anglo-American started the process of divestment from both coal & nickel this past week. CEO Duncan Wanblad said, “"Coal and nickel will be the first and then there'll be the regulatory processes associated with those and then the demerger (of Amplats) and then the De Beers process to follow on completion.” An analyst at Bank of America estimates that Anglo’s coal business in Australia could be worth $5.6bn to $7.9bn. (Reuters)

• Meanwhile, De Beers CEO Al Cook is preparing for a world without Anglo. The unit lost $314m last year on revenues of $4.27bn, its worst performance in 15 years. First step, dumping lab-grown diamonds (LGD). The company introduced its LGD brand, lightbox, in 2018 to compete with the new segment that was cutting prices and stealing market share. Now that the LGD market is imploding, De Beers is looking to get out of the business line although questions remain around diamonds in general. See BCG’s report on the industry in our mining bits section. (Bloomberg) or (BNN Bloomberg)

• 🇧🇼 Botswana’s President Mokgweetsi Masisi went further and called synthetic gems a threat to the nation. Botswana is the 2nd largest producer of diamonds, but number 1 in terms of value. The sector contributes up to 40% of the governments revenues and nearly 75% of its foreign exchange earnings. It isn’t surprising that the President said his country will wage, "a peaceful assault against lab grown diamonds, to give confidence to our partners and dampen any attraction to lab growns." (mint)

• Another significant announcement this week was the proposed joint venture between Chile’s Codelco and SQM to mine Lithium in the country. The latter is the world’s 2nd largest Lithium producer and one of its major shareholders is China’s Tianqi Lithium Corp. which owns 20% of the company. Tianqi has already come out saying the deal is bad for shareholders and is asking for a shareholder vote, while SQM is arguing that only a board of directors vote is needed. (Reuters)

• Despite the issues in Chile, a major Chinese recycler, CNGR, has been scouting potential projects in Argentina this past week as its looks to build its upstream lithium supply to serve Western markets. Argentina has the 3rd largest known lithium deposits after Chile & Australia. (SCMP)

• Speaking of Argentina, the Argentine Chamber of Mining Companies (CAEM) spoke out against a proposed 5% increase in royalty rates for mining. The chamber argued that these changes would send the wrong signal to international investors and be counterproductive to the newly released incentive regime for large investments (RIGI). (PERFIL)

• Germany’s Lausitz Energie Bergbau AG, is to receive up to €1.75 billion ($1.90bn USD) from the European Union as compensation for shutting down its coal operations by 2038 as the continent moves away from the use of the fossil fuel. (Reuters)

• Vietnam’s Masan High-Tech Materials Group has sold H.C. Starck Holding (Germany) GmbH to Mitsubishi Materials Corporation Group for $134.5m. Masan purchased the company in 2019 which develops and produces high-quality powders from the refractory metal tungsten and its compounds for their customers. (Morningstar)

• Epiroc had a busy May with 4 acquisitions, most notably, ASI Mining. Based in Mendon, Utah, the company is a provider of mining automation systems, such as remote control, teleoperation and fully autonomous solutions. Epiroc owned 34% which it purchased in 2018 and purchased the remaining 66% for an undisclosed sum. (OEM Off Highway) or (Epiroc)

• Highland Gold, one of Russia’s largest gold producers, is planning to spend 106bn rubles ($1.16bn USD) to develop Lugokan field, which is located in the Far East Russian Transbaikalia Region. In April 2022, Highland Gold purchased Kinross Gold’s Russian assets for $340m USD. (Resource World)

• Mining company Wyloo proposed a nickel processing facility in Northern Ontario this week. The company signed a MOU with The City of Greater Sudbury to find land and build a facility that can process roughly 15,000 tons of nickel per year. Wyloo’s Eagle’s Nest mine is scheduled to open in 2027 and the proposed processing plant would be Canada’s first. (CBC)

• Novelis, the world’s largest recycler of aluminum has announced that it plans to hold an initial public offering (IPO) in the United States. Novelis is a subsidiary of India’s Hindalco Industries which will still control 92.5% of the outstanding shares after the IPO. The company is targeting a valuation of $12.6bn and is looking to raise roughly 945m. Hindalco purchased Novelis in 2007 for roughly $6bn. (Novelis)

• In other aluminum news, Rio Tinto announced that it will keep its New Zealand aluminum smelter operating until at least 2044 after agreeing new electricity supply agreements. Additionally, Sumitomo Chemical has decided to sell all of its shares in New Zealand Aluminium Smelters Limited (NZAS) (representing 20.64% of NZAS’s outstanding shares) and Boyne Smelters Limited (BSL) (representing 2.46% of BSL’s outstanding shares) to Rio Tinto. (Rio Tinto) & (Sumitomo Chemical)

• Occidental Petroleum and Berkshire Hathaway’s BHE Renewables, will enter a joint venture to extract lithium at Berkshire’s geothermal facility in California. Many of the oil majors are getting into different parts of the renewables sector. (Reuters)

MINING BITS

• ✈️ An air hostess on Air India Express was caught trying to smuggle 1kg of gold in her anus according to the Directorate of Revenue Intelligence (DRI). The agency says they suspect more crew members are participating in these activities and will probe further - pun intended! (NDTV)

• 🇨🇭 Meanwhile, SwissAid came out with a report on May 30th that said at least 435 tons of gold were smuggled out of Africa in 2022. This amounted to more than $30bn and the largest destination was the UAE, followed by Switzerland & India. While there were a dozen countries in Africa with more than 20 tons of smuggled gold, the three largest centres were Mali, Ghana & Zimbabwe. It’s no surprise that a number of African nations are trying to crack down on artisanal miners. SwissAid is calling on Switzerland to change its policy of determining origin based on where the gold is processed. (SwissAid)

• 🌿 Another non-profit, the Narwhal, is taking aim at a proposed project in Rossland, BC, Canada where it says the mountain holly fern is threatened. The fern is only known to grow in 2 or 3 locations in the country and tends to grow in the cracks of magnesium-rich rock. Conservationists are calling for an emergency order by the Federal government to block the project. (The Narwhal)

• ⛽ The pump and dump schemes in crypto continue by celebrities who suck in their fans and dump their coins at the top. Rappers Lil Pump and Moneybagg Yo are the latest to be called out for such activities. With names like Lil Pump and Moneybagg Yo we aren’t really sure who is at blame here, the wolf or the sheep. (Coinpedia)

• 🏛️ In a different pump and dump scheme, the SEC brought charges against Robert Scott Murray and his company, Trillium Capital LLC who had taken a position in Getty Images. In order to pump the price, the firm issued a press release saying they were going to purchase Getty Images for $10 a share or almost double the market price. This would have required $4bn in funds, but Trillium Capital had a $13m portfolio with $17.32 in their brokerage account. They sold their position in Getty Images shortly after their pump and ended up settling with the SEC on the charges. (Investment Executive)

• 🔬 Have you heard of Promethium? It is number 61 on the periodic table. It is so rare, that at any time there is only about a pound of it in the earths crust. Discovered in 1945, little was known about its properties until now. A team at Tennessee’s Oak Ridge National Laboratory (ORNL) where it was discovered, did a full analysis with a team of 18. Read more at the link in brackets - (Indy100)

• 🥈 A metal detectorist in the Isle of Man discovered a 1,000 year old Silver Viking Inglot. These silver inglots were the most common form of currency and this particular one would have been worth about £200 or USD$255. (BBC)

• ⚙️ SGS announced that they were were contracted by The Metals Company (TMC) to test, confirm and optimize its onshore processing flowsheet. They say that TMC has shown that it can produce a high-purity nickel sulfate product derived exclusively from seabed polymetallic nodules, offering the battery chemicals supply chain an alternative source. (SGS)

• ☎️ AT&T Inc., BT Group Plc, Orange SA and other global peers are aiming to recover their old copper wiring which could be worth as much as $7bn. UK engineering firm TXO believes there is at least 800,000 tons of recoverable copper, while BT alone believes it can recover around 200,000 tons. (BNN Bloomberg)

• 💎 BCG in collaboration with De Beers put out a report on May 29th, titled, “The Future of the Natural Diamond Industry.” Did you know that 75% of the lab-grown diamonds (LGD) market is in the United States? Read the report at the link. (BCG)

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