May 1st, 2024 - The Mine Wire

METALS MARKET

Copper continued its strong performance with its 5th straight week of positive momentum. Indium (+25.88%) had another strong week is is now up 78.93% this year. Manganese (+18.90%) also made a splash with a big gain this week.

On the other hand Tin saw a pull back this week (-5.55%), while Palladium continued its slide, down another (-6.20%) this week.

Related to commodity prices, billionaire investor David Einhorn came out with an interesting theory on gold’s rise these past months. He argues that countries in the East have been buying gold from countries in the West, but maybe the West is running out of gold it is willing to sell and this is driving up prices. Well that and geopolitical risks, inflation and general global turbulence.

^{**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 United Nations has established a panel on Critical Energy Transition Minerals. It will be co-chaired by Ambassador Nozipho Joyce Mxakato-Diseko of South Africa and Director-General for Energy Ditte Juul Jørgensen of the European Commission. The panel will address issues relating to equity, transparency, investment, sustainability and human rights. The panel has 24 countries represented as well as 14 non-state organizations. The Verge (and the Guardian) took a shot at the non-binding nature of the recommendations that will come out of the panel’s work.

• 🇨🇦 The Deputy Prime Minister of Canada, Chrystia Freeland, let is out that the Five Eyes Intelligence-sharing alliance discussed potential trade measures against China and Indonesia over their market manipulation in the nickel sector. There is a belief that China is potentially working to drive western companies into the ground in the nickel space. Time will tell whether the bark has any bite.

• 🇨🇦 Speaking of trade measures, Canada was getting an earful from Ukraine’s Ambassador this week as it gave exemptions to both Airbus and Bombardier to use Russian Titanium in its production processes.

• 🇺🇸 The U.S. Department of Energy (DOE) announced $17.5 million for four projects that will help lower the costs and reduce the environmental impacts of the onshore production of rare earths and other critical minerals and materials from coal, coal wastes, and coal by-products.

• 🇺🇸 Politico takes a look at the Environment Protection Agencies announcement this week and the politics around it. The change will require the remaining 200 coal-fired power plants to install carbon capture technology if they plan to continue operating past 2039. Only days later the G7 announced that they will end the use of “unabated” coal by 2035 - though the unabated means countries can continue to use coal as long as they have carbon capture technology in place.

• 🇦🇺 Western Australia announced it was axing a five-week-old law to protect Indigenous sites. The law was created in response to the Juukan Gorge incident, but the new Premier, Roger Cook, said the law is too complex and causing divisions in the community. The State will revert back to it’s old legislation with some additional amendments. These will include an obligation for landowners to notify the government of any new information about an aboriginal site. Not surprisingly, indigenous groups are outraged at the walk back of the new law.

• 🇲🇳 The Diplomat takes a look at the Mongolian Parliament’s decision a few weeks ago to establish a sovereign wealth fund. Hopefully, they manage it like Norway and not Alberta.

• 🇨🇩 The government of the Democratic Republic of Congo accused Apple of using illegally exploited minerals from its embattled east. Apple responded, "We found no reasonable basis for concluding that any of the smelters or refiners of 3TG determined to be in our supply chain as of December 31, 2023 directly or indirectly financed or benefited armed groups in the DRC or an adjoining country."

• 🇵🇭 The governor in the province of Palawan brought together a group of stakeholders this week to discuss 84 pending applications for new mineral production agreements. An overwhelming majority of Palaweños want a moratorium on any new applications. Palawan is already home to number of nickel and iron ore mines.

• 🇰🇿 🇦🇫 Kazakhstan and Afghanistan plan to establish a technical committee for geological exploration. The two nations agreed to create a technical committee from specialists from both countries to identify joint projects and their implementation.

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MINING MATTERS FROM AROUND THE WORLD 🌎

• The biggest news this past week in the mining world was BHP’s (NYSE: BHP) offer of $38.8 billion for Anglo-American (LON: AAL). Not surprisingly, the board of directors for Anglo-American responded in short order, rejecting the offer, as they believe it significantly undervalues the company. BHP also made the offer on the condition that Anglo-American first sell off its South African assets (Platinum & Iron Ore). BHP is reported considering an improved offer. The stock is up over 22% since the offer by BHP. Finally, CNBC reported that Elliot Management has acquired a $1.1 billion stake in Anglo-American over the past months for whatever its worth.

• Anglo-American (LON: AAL) is reportedly exploring options for selling its De Beers unit. Last year, Anglo-American took a US$1.6b impairment charge on the unit as it has been hammered by lower prices and demand for diamonds. In 2023, De Beers revenue was down 35% and created a loss for Anglo-American. De Beers also announced this past week that it would be moving its auction HQ from Singapore to Botswana to streamline operations and drive cost efficiencies.

• Glencore (LON: GLEN) signaled that it is considering investing in Nigeria, provided the government guarantees a stable business environment. Nigeria has been courting potential miners to help the nation develop its nascent mining industry. In other Glencore news, it has been reported that some of the miners largest shareholders are not on board with Glencore spinning out its coal business. Glencore’s coal unit is highly profitable, something that most shareholders tend to like.

• Equinox Gold (TSE: EQX) announced that it was purchasing Orion Mine Finance Management’s 40% stake in Greenstone Gold Mine, giving Equinox a 100% stake. The deal is valued at $995m. The stock was down on the news, but is up 18.63% this year.

• 🇦🇺 The Minerals Council of Australia said the nation is “missing out on an average $68 billion worth of potential investment every year, with major mining projects increasingly put in the too-hard basket because of the challenging investment environment in Australia.” That’s a lot of cheddar cheese!

FIRST QUARTER EARNINGS BONANZA

• Agnico-Eagle (TSE: AEM) reported first quarter adjusted net income of $0.76 per share ($377.5m) beating analyst expectations. The stock saw a nice jump on the day of earnings, although it has pulled back since. The stock is up an impressive 21% this year.

• Alamos Gold (TSE: AGI) reported first quarter adjusted net earnings of $0.13 per share ($51.2m). This was inline with analyst expectations. The stock is up 15.85% this year.

• Newmont (TSE: NGT) surprised wall street with its first quarter earnings. The company posted net income of $0.55 per share, beating expectations of $0.36 per share. Sales rose to $4.02b from $2.68b. The stock was up 11.02% on the news but is only up 2.73% on the year.

• Southern Copper (NYSE: SCCO) had revenue of US$2.60b, down 6.9% from a year earlier. Still revenue exceeded analyst expectations by 4.4%. Earnings per share were US$0.95 down from US$1.05 a year earlier while net income was US$736m, down 9.5% from a year earlier. The stock is up a whopping 37.81% this year.

• Teck Resources (TSE: TECK.B) wasn’t as lucky with its earnings as it missed analysts expectations. Compared to a year earlier revenue was up 5.4% at $3.99b but net income was down 71% at $343m. Earnings per share came in at $0.66, down from $2.27 in Q1 2023. Despite the miss, Teck’s copper production was up 76% in the quarter giving the stock a boost. Teck’s stock is up a solid 23.88% this year.

• Cameco’s (TSE: CCO) first quarter revenue totaled $634m, down from $687m in the same quarter last year. The company reported a $7m loss as it was hit with charges related to its acquisition of a stake in Westinghouse Electric Co. The stock was down 6.99% on the news but is still up 12.08% on the year.

• Ivanhoe Mines (TSE: IVN) reported a surprise loss of US$69m in Q1 primarily as a result of non-cash loss on convertible bonds due to 26% quarterly share price increase. Revenue came in a US$618m in the quarter. The market didn’t react well to the news with the stock dropping nearly 9.51% on the day. Still, Ivanhoe Mines has been a darling for investors and is up 45.44% this year.

MINING BITS

• 🌊 Did you know that preliminary research suggests seaweed can trap and store valuable minerals? These include critical minerals like platinum and rhodium, as well as rare earth elements, including neodymium, lanthanum, yttrium, and dysprosium. So far, the US Department of Energy has given 5M to three ventures to explore this further and see whether extraction is possible and practical.

• 🇹🇼 Time Magazine takes a look at Taiwan’s leadership in Urban Mining. So what is Urban Mining? The process of “reclaiming materials from anthropogenic sources like infrastructure and waste products - a recycling approach that goes beyond plastic bottles and aluminum cans.” It certainly sounds a lot more advanced than scrappers stealing Copper & Iron out of old buildings.

• ⛓️Oh how kinky you are! A metal alloy composed of niobium, tantalum, titanium, and hafnium has shocked materials scientists with its impressive strength and toughness at both extremely hot and cold temperatures. This stems from kink band formation within its crystal structure, resisting crack propagation by redistributing damage.

• ☄️ While there have been a lot of articles on asteroid mining, the article this week by CNN on AstroForge is a great read. As the article points out, asteroid mining (samples) has been done already, the real question is whether it can be done profitably. High risk, high reward!

• 🧹 Bloomberg law takes a look at the potential compliance risk mines in the United States will face in the next year due to new regulations around silica dust exposure.

• 🇩🇪 Why did Germany ditch nuclear before coal? A strong anti-nuclear movement has existed since the 70’s, while the incidents at Chernobyl and Fukushima did nothing to improve public support. In fact, the government was forced to speed up its nuclear phase-out after the Fukushima disaster. Germany now produces 60% of its energy from renewable sources, while 24% comes from coal and 16% from natural gas.

• ⌚A pocket watch found on the richest passenger on the titanic, sold for $1.46 million USD this past week at auction. The watch sold for 10x the auctioneer’s presale estimate. The watch belonged to United States business magnate John Jacob Astor who was considered to be one of the richest people in the world at the time of the disaster.

• 🧠 CIO Magazine takes a look at Saudi Aramco and their use of artificial intelligence. The company introduced its own Language Learning Model (LLM) called Aramco METABRAIN and launched a digital innovation system called Saudi Accelerated Innovation Laboratory (SAIL).

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