May 22nd, 2024 - The Mine Wire

METALS MARKET

Our chart above isn’t reporting the full week since we were a day late sending last week, but both Silver (+12.01%) and Nickel (+11.53%) had impressive weeks. Nickel was up largely due to the civil unrest in New Caledonia. As the 4th largest producer of the metal, the riots are a risk to exports and supply. So far there have been 6 deaths in the French territory while the Noumea international airport remains closed. (BBC) or (Politico)

The biggest loser of the week was Lithium (-4.52%) which is down -55.58% year-on-year.

^{**For our chart above we are taking prices from Wednesday 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.

• 🇨🇦 🇺🇸 A pair of miners are receiving joint funding from Natural Resources Canada and the U.S. Department of Defense. Together they are putting $27.2m into Fortune Minerals Ltd., working on a project with bismuth and cobalt in the Northwest Territories, and Lomiko Metals Inc., focused on a graphite project in Quebec. The U.S. Department of Defense is providing $14.9m of the funding - we wish our neighbors were so nice! (Natural Resources Canada) and (U.S. Department of Defense)

• 🇺🇸 🇨🇦 The United States & Canada also announced that they will be extending the bilateral Canada-U.S. Energy Transformation Task Force (ETTF) for an additional year. Through the ETTF, Canada and the United States have advanced shared priorities to deploy clean energy solutions at scale and support the development of critical mineral and civil nuclear supply chains that will fuel the development of an integrated, North American industry capable of supporting the energy transition in their respective countries and around the world. (The White House) and (Department of Finance Canada)

• 🇺🇸 The Department of Defense also announced a $20 million award to South32 via the Defense Production Act Investment (DPAI) Program this week. The award is for South32's Hermosa Project, which will sustainably produce battery-grade manganese in Santa Cruz County, Arizona. (U.S. Department of Defense)

• 🇺🇸 Meanwhile the U.S. Department of the Interior’s Bureau of Land Management quietly posted two proposed plans for comment that would prevent companies from applying for new coal mining rights on federally owned lands in the Powder River Basin in Montana & Wyoming. Companies would still be allowed to extract coal under existing leases, and existing coal mining would be expected to continue through 2060. (The Hill)

• 🇨🇳 🇺🇸 🇨🇦 Not surprisingly, the state-backed China Iron and Steel Association (CISA) as well as the The China Nonferrous Metals Industry Association accused the United States last week of politicizing the steel trade by further hiking tariffs on some Chinese steel products. At the same time, Canada’s Deputy Prime Minister said it will not allow Canada to become a dumping ground for diverted Chinese steel or aluminum. (The Asahi Shimbun) and (The Globe & Mail)

• 🇦🇺 We always enjoy watching political parties jostle post-budget. Last week we had a special report on the Australian budget. This week, the Leader of the Official Opposition, Peter Dutton, dubbed the production tax credits for the mining industry as “Billions for Billionaires”. Chris Ellison, Managing Director of Mineral Resources, fired back that he doesn’t know any billionaires that are going to get rich off these incentives as most are known for iron ore mining, not processing. Regardless of the back & forth, it seems clear to us that western governments need to provide these incentives to compete with lower cost jurisdictions. (Financial Review)

• 🇦🇺 The Minister for Resources and Minister for Northern Australia, Madeleine King, also addressed the opposition’s comments in her interview with ABC Pilbara. The interviewer pointed out that despite the Opposition Liberal Leaders comments, the Western Australia State Liberal leader Libby Mettam, welcomed the investments. Are we surprised that opposition parties always slam the governing party no matter what they do? Not really. Pigs aren’t flying just yet. (Australia Government)

• 🇦🇺 The New South Wales State parliament will launch an inquiry to investigate new and innovative approaches to post-mining land use. (NSW Government)

• 🇬🇧 662 mineral exploration project reports are now available through the UK Critical Minerals Intelligence Centre. The reports include geological mapping, soil and stream sediment geochemistry data, geophysical surveys, drill core logs and assay data. (British Geological Survey)

• 🇫🇷 🇩🇪 🇮🇹 France, Germany & Italy have announced a €2.5bn Raw Materials Funds and asked for private investment to match public funding to develop the critical raw materials’ value chain. The fund will cover the full value chain of mining, processing and recycling and it may take a minor stake in the operations. (Euro News)

• 🇰🇷 South Korea has increased its critical minerals stockpile budget by 526% this year to $171m. The country is apparently stashing Lithium while prices are low. Sounds like a smart move to us, particularly after reading the IEA report this week on critical minerals (see our In Focus). (BNN Bloomberg) or (Mining.com)

• 🇮🇩 The Indonesian government has made an offer to Tesla CEO Elon Musk to construct an electric vehicle battery plant in the nickel-rich country. Musk had a chance to speak with the Indonesian President at a water conference on the island of Bali. While he didn’t commit to any investments, he said it was likely his company would invest in the country. (AP News)

• 🇾🇪 The Yemen Parliament listened to the explanatory memorandum of the draft law establishing the National Mining Company this week. The government would like to take advantage of its largely untapped resources and the civil war makes outside investment very improbable. (Yemen News Agency)

• 🇿🇼 Zimbabwe encouraged all of its ASM and larger miners to increase their output of gold as the country makes its sixth attempt in 15 years to have a functioning currency. The new ZiG currency launched last month is backed by 2.5 tons of gold and $100m. Since 2022 the country has asked miners to pay royalties partially in gold as well as cash to help increase reserves. (BNN Bloomberg) or (Xinhua)

IN FOCUS

The International Energy Agency’s Global Critical Minerals Outlook 2024 Report

On May 17th, the International Energy Agency released their outlook report for critical minerals. First & Foremost, it is made clear that “sharp declines in critical mineral prices mask risks of future supply strains as energy transitions advance.” It will come as no surprise to those in the mining industry that certain metals have seen large price declines as more supply came online before demand caught up. Here are some of the key findings:

• Battery materials saw particularly large declines with lithium spot prices plummeting by 75% and cobalt, nickel, and graphite prices dropping by 30-45%.

• Demand for critical minerals experienced strong growth in 2023, with lithium demand rising by 30%, while demand for nickel, cobalt, graphite and rare earth elements all saw increases ranging from 8% to 15%.

• Not surprisingly, the main reason for price declines has been a strong increase in supply and ample inventories of technologies made with critical minerals - think Africa, Indonesia and China.

• Today’s well-supplied market may not be a good guide for the future, as demand for critical minerals continues to rise.

• The combined market value of key energy transition minerals – copper, lithium, nickel, cobalt, graphite and rare earth elements – more than doubles to reach USD 770 billion by 2040.

• The benefits of market expansion are shared across different regions, especially for mining.

• Increases in 2023 were smaller than those seen in 2022, but investment in critical mineral mining nonetheless grew by 10%. Investment by lithium specialists saw a sharp rise of 60%, despite weak prices. Exploration spending also rose by 15%, driven by Canada and Australia.

• China’s spending on and acquisition of overseas mines has grown significantly in the past ten years reaching record levels of USD 10 billion in the first half of 2023 with a particular focus on battery metals such as lithium, nickel and cobalt.

• US and European companies play a major role for copper and lithium supplies whereas Chinese companies have a greater role for nickel and cobalt production.

The IEA has developed two supply scenarios in their report to forecast demand in 2035. The base case includes production from existing assets and those under construction, along with projects that have a high chance of moving ahead. Based on their calculations they have found the following:

• There is a significant gap between prospective supply and demand for copper and lithium: Anticipated mine supply from announced projects meets only 70% of copper and 50% of lithium requirements.

• Balances for nickel and cobalt look tight relative to confirmed projects, but better if prospective projects are included (their high production case).

• Graphite and rare earth elements may not face supply volume issues but are among the most problematic in terms of market concentration: over 90% of battery-grade graphite and 77% of refined rare earths in 2030 originate from China.

What did we take away from this report? Maybe it is time for us to pick up some Lithium stocks and hold long-term. Check out the report at the International Energy Agency for more information.

MINING MATTERS FROM AROUND THE WORLD 🌎

• Michael Burry’s Scion Asset Management bought 444,000 units of the Sprott Physical Gold Trust (PHYS) in the first quarter, which is valued at more than $10 million. Burry gained fame in 2008 by accurately predicting the crash of the U.S. housing market which was the basis for the movie, The Big Short (pic above). (KITCO)

• Solaris Resources (SLS.TO) has given up on its plan to sell a minority stake to China’s Zijin Mining Group (601899.SS) citing concerns with the Canadian government’s Investment Canada Act. The deal would have seen Solaris sell a 15% stake for C$130m to help develop its Warintza copper project in Ecuador. Unfortunately, it seemed unlikely the Canadian government would approve of the investment or give a response in a timely fashion. (Reuters)

• Meanwhile China’s state owned SDIC Mining Investment Co. is in advanced talks to purchase 49% of Thailand’s Asia Pacific Potash Corporation from Italian-Thai Development (ITD) which owns 90% of the company. The deal is worth roughly $400m and should satisfy Thailand’s Foreign Business Act which stipulates that businesses benefiting from natural resources, such as mining ventures, must be Thai legal entities. The technical minority stake of 49% means that the company would still be a “Thai entity” according to the Director General in the Department of Primary Industries & Mines. (The Nation)

• BYD’s Chief of Americas Stella Li said that the Chinese car maker will postpone plans to build a $290m lithium cathode plant in Chile. She chalked the pause up to market uncertainties. It was clearly news to Chile’s economic development agency CORFO who said plans were on pace and they would have to reach out to BYD for more information. (KITCO)

• Saudi Arabian Mining Company Ma'aden has successfully extracted lithium from seawater, although it is still in the pilot phase and not commercially viable at the moment. It was also made clear that its joint venture with the kingdom’s sovereign wealth fund, Manara Minerals, is not interested in buying De Beers. "The kingdom does not need diamonds for its downstream development," the Vice Chairman said, "Manara's mandate is industrial metals that fuel the downstream growth." (Reuters)

• Hyundai Motor Co. and Kia Corp. have partnered with South Korea's universities to secure materials for vehicle electrification components. The joint research laboratory will conduct research on non-rare earth magnetic materials to replace rare earth elements, rare earth recycling to recover and reuse rare earth elements from motors, and magnetic property evaluation to advance the measurement of magnetic materials. (The Korea Economic Daily)

MINING BITS

• 🍻 We wanted to once again thank our sponsors for an amazing launch party at the CIM Conference on May 14th. We plan to bring more events in the future. To our presenting sponsor CEC Mining Systems and supporting sponsors of Kamengo, Precision Petrographics, S&P Global and S&A Strategies, we once again salute you!

• 🥔 What do you do with 100,000 extra bags of potatoes that you can’t sell? Do you turn them into feedstock? Put them back into the ground where they become fertilizer? Well thanks to The Farmlink Project, a U.S. based non-profit, farmers are able to donate food to people who need it when the food would otherwise become waste. The project has delivered over 90m kilograms of food to people in Canada, The United States and Mexico. (CBC) 

• ⛏️ Listen to the BBC’s “The Six Billion Dollar Gold Scam” podcast. It covers the biggest gold mine fraud of all time, Bre-X. The company’s shares went from 20 cents to $280 with a valuation of $6bn on the basis of a significant gold find in Indonesia. It turns out that the rock samples had been tampered with through the process of salting. Further, the Chief Geologist never had a chance to explain himself due to an untimely or suspiciously timely death. (BBC)

• 🔬 Steve Chingwaru, a 26 year old geometallurgist in South Africa estimates that 420 tons of “invisible gold” worth 24bn is sitting in Witwatersrand’s tailings. In his graduate research he explored why recovery rates were so low from these dumps. He found that the majority of the gold was hidden in pyrite or “fools gold”. While prohibitively expensive to extract, some South African tailings reprocessors are interested in his research, particularly given the prices of gold these days. They believe they can make the economics work. (Al Jazeera)

• 📖 Research conducted by the University of Utah in partnership with the Utah Geological Survey & Colorado Geological Survey showed that rare earth elements are in elevated concentrations along the Uinta coal belt of Colorado and Utah. Given the importance of REE’s in the energy transition, it may make sense to extract the elements in addition to the coal. (The University of Utah)

• 📰 The International Labour Organization came out with a document on Chemical Exposures in Mining. The report gives credit to large-scale industrialized miners for safe practices. The organization is concerned about artisanal and small-scale mining (ASM) which don’t have sufficient worker protections or practices to prevent exposure to deadly chemicals like mercury, cyanide, sulfuric acid and solvents as well as deadly explosives. The top ASM countries by workers are India (15m), China (9m) and Indonesia (3m). The report covers data on children working in mines as well. Lots of interesting data in this report. (International Labour Organization)

• 🎙️ Listen to Energy Evolution’s Taylor Kuykendall who interviews Bruno Arcadier, head of Vale Ventures, the venture capital arm of Vale. They are looking to invest in cutting-edge technology and are focused on four verticals: decarbonization, circular mining, sustainable mining of the future, and energy transition metals. Listen at the link - (S&P Global).

• 💵 In terms of ventures, congratulations to BANIQL which raised $1.6m in seed capital to develop a novel and sustainable approach to nickel and cobalt extraction from laterites using first principles. The company’s initial target market is Indonesia but is working to enter the South Korea, Philippines and Australia markets. (Technode Global)

Not Signed Up to The Mine Wire Yet? 

We do the hard work and curate news from around the globe related to mining and bring it to you once a week in a free and easy to read format. Whether you’re a seasoned industry professional or a curious enthusiast, our newsletter delivers the latest updates, cutting-edge trends, and expert analysis straight to your inbox in an exciting format once a week. Subscribe below!