November 20th, 2024 - The Mine Wire

METALS MARKET

Yesterday, President Putin updated Russia’s policy on using nuclear weapons which created some unease in the market. President Putin approved a change that would allow Russia to consider a nuclear strike in response to a conventional attack on Russia or its ally Belarus if it "created a critical threat to their sovereignty and (or) their territorial integrity". This came in response to Ukraine firing a number of U.S. ATACMS missiles deep into Russian territory for the first time since the war started. We won’t get into the politics of this one, just know that any escalation will potentially impact markets.

Last week Russia also put a ban on enriched uranium exports to the United States. This gave uranium a boost although news yesterday suggested that some Russian exporters will still be able to export to the United States with approval. Russia is the world's sixth largest uranium producer and controls about 44% of global uranium enrichment capacity.

^{**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

Here are some of the notable government policy moves this week:

• 🇧🇷 The G20 Summit took place in Rio de Janeiro this past week. The G20 is an intergovernmental forum comprising of 19 sovereign countries, the European Union (EU), and the African Union (AU). The conference focused on topics like sustainable development, hunger and poverty, climate change, global health, economic recovery, and the future of multilateralism. However, we suspect that the main topic of private discussions may have been incoming U.S. President Donald Trump and what that means for individual jurisdictions. (Politico)

• 🇺🇸 Speaking of President Trump, his transition team is already working on ending the $7,500 consumer tax credit for electric-vehicle purchases. It might sound odd, but Elon Musk is actually supportive of the change. Turns out the subsidies help his competitors more than Tesla and we would contend that their. consumers are similar to Apple ones. They love the brand and don’t mind paying a price premium. However, if the country is going to transition to electric vehicles, the move seems a bit short-sighted. Certainly not great news for miners relying on a big uptick in EV adoption. What do you think?

• 🇺🇸 The U.S. House of Representatives approved the Critical Mineral Consistency Act of 2024 with bi-partisan support (245 - 155) which would combine the Department of Energy’s critical mineral list with the U.S. Geological Surveys. So what you say? Well Copper is on the DOE’s list but not the USGS’s. Adding it would give copper miners federal subsidies and streamlined permitting. Next up, the Senate.

• 🇺🇸 The U.S. Department of Energy’s (DOE’s) Critical Materials Innovation Hub (CMI Hub) announced up to $10 million in federal funding to accelerate the early-stage technology research and development (R&D) necessary to reduce material criticality for energy innovations requiring critical materials – rare earth elements, gallium, and copper. This request for proposals (RFP) solicits project proposals across five topic areas. Concept papers and submissions are due by 6:00 p.m. ET on Dec. 20, 2024. (U.S. DOE)

• 🇦🇺 Australia’s National Reconstruction Fund will invest A$40m (USD$26m) in Queensland-based Russell Mineral Equipment (RME) as part of a joint A$100m co-investment partnership with Resource Capital Funds. The fund was setup in 2023 and this is the very first investment. Congratulations to RME!

• 🇨🇦 Up north in Canada, the government was touting a $25m investment to help the Government of the Northwest Territories with its Taltson Hydro Expansion Project. The government plans to build a new 60-megawatt generation facility near the existing Taltson Hydro Facility south of Great Slave Lake, as well as a 230-kilovolt transmission line connecting the Taltson grid with the Snare hydro system grid north of Great Slave Lake. This is all through the Critical Minerals Infrastructure Fund. (Cision)

• 🇨🇦 In other Canadian news Prime Minister Trudeau took aim at Mexico as a renegotiated North American Free Trade Agreement (NAFTA) is due by July 2026. He said, “There are concerns around the level of Chinese investment in Mexico that I think need to be addressed.” Two Premiers, Doug Ford in Ontario & Danielle Smith in Alberta, have called for a free trade agreement between Canada & the United States directly. This one will be interesting to watch as President Trump is expected to take a hardline on foreign countries, particularly those he feels are taking advantage of the United States.

• 🇨🇳 China announced last Friday that it will change export tax rebates for a range of products, effective Dec. 1st. The announcement, jointly issued by the Ministry of Finance and the State Taxation Administration, said that export tax rebates for aluminum, copper and chemically modified animal, plant or microbial oils and fats will be cancelled. Meanwhile, the export tax rebate rate for some refined oil products, photovoltaic products, batteries and certain non-metallic mineral products will be reduced from 13 percent to 9 percent. (The People’s Republic of China)

• 🇨🇳 Chinese President Xi Jinping was in Peru last Thursday to meet with President Dina Boluarte before heading to the G20 summit in Rio de Janeiro. The two leaders participated by video link in the inaugural opening of the Chancay port, which is about 80 kilometres (48 miles) north of Lima on the Pacific Ocean. The initial $1.3bn port was built by China’s Cosco Shipping Ports and will be a vital link for trade between Latin America and Asia.

• 🇲🇱 First let us say shame on all of the global media organizations that got their headlines wrong this week. Words like Mali “wins”, “secures”, “strikes”, “agrees to” and well you get the picture, are grossly incorrect. RFI got it correct with their headline, “Australian mining company to pay Mali junta $160m for release of CEO.” Let’s be clear, the executives were in the country for what they thought were routine negotiations and got arrested on bogus charges. If that isn’t plain old extortion through the threat of violence, we don’t know what is. We personally have nothing against national jurisdictions negotiating and pushing for fair terms. In fact, they have a responsibility to their citizens to do so. However, doing it through this manner is wrong and will only hurt the country in the long run as companies avoid investing further. The first payment of $80m will be paid imminently from current cash reserves while another $80m will be paid in the coming months.

• 🇿🇦 In South Africa, the country is grappling with a very public stand-off with illegal miners in Stilfontein town. Police have blocked the entrance and prevented supplies from entering for days in order to force the miners out, but activists went to the courts and a judge ordered the supply blockade to end. Despite that, police are still surrounding the mine shaft to catch illegal miners when they resurface. The government has refused to send in any workers to help with any rescue attempts due to the fear of armed gangs inside. Therefore, volunteers are working to get some of the estimated 350 - 400 miners out, but are struggling with difficult conditions.

• 🇧🇼 In Botswana, the President announced Bogolo Kenewendo as the new Mines Minister. He is an economist who served as the Trade and Industry Minister from April 2018 to November 2019. He will take on the task of negotiating a new agreement with De Beers.

• 🇨🇫 Speaking of diamonds, the Central African Republic announced that it has convinced the regulatory body for global diamond trading to end a decade-old export embargo. It was originally imposed in 2013 during a bloody civil war to prevent “Blood Diamonds”.

• 🇬🇧 The United Kingdom announced that it will introduce new legislation as soon as possible to restrict the future licensing of new coal mines. (UK Government)

• 🇻🇳 Meanwhile in Vietnam, the government said it’s coal-fired power plants are expected to operate at high levels next year to meet the country's rising demand for electricity. Coal power accounts for 48.7% of the countries electricity and demand is expected to rise 11% to 14% next year.

• 🇺🇳 The United Nations Environment Programme (UNEP) and the Intergovernmental Forum on Mining, Minerals, Metals and Sustainable Development (IGF) signed a Memorandum of Understanding during the 20th IGF Annual General Meeting. With the new agreement, the two partners solidified their commitment to work together and strengthen the environmental sustainability of minerals and metals management. Sounds like a lot of fluff to us, but maybe we are wrong. (United Nations)

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MINING MATTERS FROM AROUND THE WORLD 🌎

• 🇨🇦 Orla Mining Ltd. (TSX: OLA, NYSE: ORLA) announced that it has entered a definitive agreement to purchase the Musselwhite Gold Mine in Ontario from Newmont Corp. for an upfront cash consideration of $810m and gold-price linked contingent consideration of $40m. With an operating mine in Mexico and exploration projects in Panama and the United States, this is the Canadian-based miners first expansion into Canada - well, welcome home! Jason Simpson, President & CEO, gave a shout-out to shareholders, notably Pierre Lassonde and Prem Watsa of Fairfax, as well as their banking and financial partners. The miner was up roughly 8.6% on the news.

• 🇦🇺 Australia’s Sayona Mining (ASX: SYA) will merge with U.S. based Piedmont Lithium (ASX: PLL) to create a $623m lithium miner in an all stock deal. Sayona is paying a 6% premium for Piedmont, based on their closing share prices on Monday. Shareholders of the two companies will own evenly the new entity.

• 🇪🇺 In other acquisition news, Sweden’s Boliden AB (STO: BOL) is apparently close to making a deal with Lundin Mining (TSX: LUN) to purchase the Canadian company’s two mines in Europe. Lundin’s two mines, Zinkgruvan in Sweden and Neves-Corvo in Portugal, were put up for sale last year as the miner looks to expand copper operations in Latin America. The two mines produce zinc and copper among other things and would fit nicely into Boliden’s portfolio. The Swedish miner is in the process of expanding production capacity at its Odda Zinc smelter in Norway by 75% to 350,000 tons per year. The two Lundin mines produced just over 185,000 tons of zinc last year - good fit? Seems like it!

• 🇦🇺 Mineral Resources (ASX: MIN) announced last week that it would shut its Bald Hill Lithium mine immediately due to depressed prices for the metal. The closure cuts 300 jobs with only a small team of about 10 staff remaining to manage the site’s transition to care and maintenance until prices make it worth opening again. Founder and Managing Director Chris Ellison said the decision was a “prudent” one, but not “made lightly”. Hopefully the company can move most team members to other sites.

• 🇰🇷 The madness continues at Korea Zinc as the company decided to pull it’s $1.8bn share sale after the regulator halted the sale and said it would investigate. The company said, "We have decided to humbly accept concerns from the market and shareholders." The Chairman of the Board said he will step down and be replaced with an independent director. On Tuesday, South Korea’s Ministry of Trade, Industry and Energy designated Korea Zinc’s high-nickel precursor manufacturing technology as a national core technology under the Act on Prevention of Divulgence and Protection of Industrial Technology. That means that any sale of Korea Zinc will require government approval. This definitely complicates private equity firm MBK Partners attempted takeover of the company. This one is truly like a soap opera.

• 🇬🇧 Do you remember that little nickel short-squeeze issue a few years ago on The London Metal Exchange where $12bn in booked trades were cancelled retroactively? Well the LME is proposing some new reforms to help strengthen the market. The LME says, “LME Clear has undertaken a review of its membership terms and proposes to enhance credit-related requirements by increasing clearing members’ minimum net capital requirement from US$10 million to US$30 million. This proposal, which has been discussed with the relevant committees and advisory groups, would better align member capital requirements with those of peer CCPs and reassure market stakeholders of the resilience of LME Clear markets.” This and other changes are open for stakeholder feedback until December 16th, 2024. (The London Metal Exchange)

• Companies with earnings this past week included: K92 Mining, K+S Group, KGHM Polska Miedz S.A., Korea Zinc, Lucara Diamond Corp., The Mosaic Company, Orla Mining, Osisko Development, and Seabridge Gold.

MINING BITS

• 🇧🇪 The National Bank of Belgium (NBB) released a new analysis showing that diamond imports and exports have been falling steady over the past decade. In 2014, diamond imports and exports were worth about 15bn euros while in 2023 they were only worth 8.5bn euros. Factors include moving diamond processing from Belgium to lower-cost India, the rise of Dubai and Botswana in the diamond trade as well as a decline in consumer demand.

• 🇨🇦 We enjoyed reading this BBC coverage on the opportunity for Canada to become a nuclear energy ‘superpower’. Currently, Kazakhstan produces the most uranium with 21,200 tonnes in 2022. However, Canada was in second with 7,400 tonnes and only 8 countries have more than a 1,000 tonnes per year in production. They point to a 2023 Ipsos poll that indicates that 55% of Canadians support nuclear energy. Count us among them. Comments from the CEO’s at NexGen & Cameco are included in the article so definitely worth a read. (BBC)

• 🇬🇱 We found this research article on Greenland and it’s rare earth elements very insightful. While the country has an abundance of natural resources, the public is quite split on whether to allow mining and currently, only one mine is operational in the country. Australian mining firm Greenland Minerals was close to securing approval to mine in Southern Greenland when the newly elected government banned uranium mining in 2021. The government argued that extracting rare earths at the project site would unavoidably entail mining uranium, which was now prohibited. In response, Greenland Minerals has sought $11.5bn in compensation, initially via arbitration and then in court. Needless to say, between the technological hurdles, cost-efficiency concerns, environmental implications, and complex legal and political dynamics, it likely isn’t very high on most companies target list. (NZZ)

• 🇨🇦 There was quite a bit of coverage this week of a new company called Nations Royalty Corp. (TSXV: NRC) which is the first majority indigenous-owned royalty company in Canada. The Nisga’a Nation, a self-governing B.C.-based First Nation, owns 77 per cent of the company. Nations Royalty holds Nisga’a-owned royalties from five different mining projects within B.C.s “Golden Triangle” in its current portfolio. However, there are roughly 400 such agreements between First Nations and mining companies across Canada. Nations Royalty Corp. will invite them to join the new venture as it creates opportunities for those who have a signed agreement but the mines are not operational as of yet. Very interesting concept and we wish the new venture lots of luck.

• ❤️ We love this new parental leave policy that Sandvik implemented last month. According to the company, the parental leave program provides 90 percent of the base salary for 14 weeks to all employees in countries where no equivalent or better benefit already exits. As many countries where Sandvik operates do provide an equivalent or better benefit to women, the new program is expected to primarily benefit male employees. The leave must be taken within 12 calendar months of the birth or adoption of a child. All full-time and part-time employees who have completed 12 months of service are eligible and the benefit is optional. Definitely a great recruitment tool in jurisdictions where the benefit doesn’t already exist - plus a 90% top-up is quite generous.

• 🌀 Interested in geology? Well this BBC article might be interesting or maybe you’ll find it a bit elementary, but we certainly enjoyed it. They take a look at ‘Precariously Balanced Boulders’ and how these giant rocks can help us study past seismic activity. Lots of interesting places, studies and pictures in this one. We are definitely going to have to make it out to Arches National Park in Utah at some point. (BBC)

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