October 9th, 2024 - The Mine Wire

METALS MARKET

Geopolitical factors drove a lot of the changes in the market this week. Iron Ore is up nearly 20% this past week on China’s stimulus news. WTI Crude was up over $77 per barrel earlier this week on concerns related to middle east tensions, although we saw a pullback yesterday.

Better than expected jobs data out of the United States weighed on gold prices as most analysts now expect a quarter basis point reduction at the next Federal reserve meeting in November. Hopes had been for a larger half basis point, but with unemployment at 4.1%, we will wait to see if pigs fly beforehand.

^{**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.

• 🇧🇫 Last Saturday, Burkina Faso’s Junta leader Ibrahim Traoré said that the country would be withdrawing mining permits from some foreign companies as it looks to produce more of its own gold. Of course, he didn’t say which permits and a slight panic hit the market on Monday. Shares of Fortuna Mining (TSE: FVI) were down 8.6% while Orezone Gold Corp. (TSE: ORE) was down 8.2%. IAMGOLD Corporation (TSE: IMG) was down 9.6% on the day. Endeavour Mining (TSE: EDV) which has several mines in the country was only down 3.3%. All of the companies put out statements explaining that they were in good standing with the government as far as they were aware. None of the companies have seen their share price bounce back as of yet. It looks like investors are taking a wait and see approach. (Fortuna Mining) & (IAMGOLD) & (Endeavour Mining) & (Orezone Gold)

• 🇲🇱 Next door in Mali, sources say it’s military government is looking for $512m from Barrick Gold Corporation in unpaid taxes, related to taxes for the 2020, 2021 and 2002 tax years. While no official sources have commented on the negotiations, Mali’s government has been seeking a larger share of revenues from mining operations. According to the Globe & Mail, “sources close to the talks in Mali said the junta is using a mixture of coercion, including arrests of local staff, and the potential threat of mining licenses being revoked, as they squeeze the mainly Western firms for more cash.” (Globe and Mail) or (Reuters)

• 🇺🇬 Uganda has formed a state-owned mining company to manage the government's equity interests in mining operations. Under a new mining law approved in 2022, the government can compulsorily take a 15% free carry stake in all mining operations in the country. (Reuters)

• 🇿🇼 Zimbabwe’s Deputy Mines Minister Polite Kambamura told Reuters that the country would now take a measured approach towards lithium producers and has softened its stance on in-country processing. Previously, the country had required miners to submit proposals on how they would process lithium in Zimbabwe. However, with Chinese miners asking for concessions and the global market in the dumps, the country will now look at projects on a case-by-case basis. (Reuters) & (Engineering News)

• 🇺🇸 🇨🇩 The United States Government Accountability Office found that the U.S. Securities and Exchange Commission's (SEC) 2012 conflict minerals disclosure rule has not reduced violence in the Democratic Republic of the Congo (DRC) and has likely had no effect in adjoining countries. (U.S. GAO)

• 🇺🇸 🇮🇳 Indian Trade Minister Piyush Goyal and U.S. Commerce Secretary Gina Raimondo signed an agreement to cooperate on supply chains related to critical minerals. (Reuters)

• 🇺🇸 The U.S. Supreme Court declined to put on hold new federal air pollution rules which will tighten limits on mercury and methane emissions. For mercury the new limits cut emissions of toxic metals for all coal plants by 67% and mercury emissions from lignite coal plants by 70%. Opponents to these changes argue that this will put in jeopardy electricity supply and further, encroaches on the right of states to determine emission standards. (Reuters)

• 🇨🇦 The Canadian government announced $13.8m in funding for four projects in Northern Ontario. The investments include: $5.5m to Green TM Resources Canada Ltd.; $1.4m to Rock Tech Lithium Inc.; $6.1m to Frontier Lithium Inc.; and $771,100 to Generation PGM Inc. (Canadian Government)

• 🇨🇦 Paladin Energy (ASX: PDN) got notice from the Canadian Minister of Innovation, Science and Industry that its proposal to acquire Fission Uranium Corp. (TSE: FCU) will be reviewed under the Investment Canada Act (ICA). While we understand the importance of applying the rules fairly, it is hard for us to understand how an Australian company poses a risk to national security interests, particularly when Fission Uranium’s project is in Canada. Hopefully this one goes through quickly. (Reuters)

• 🇳🇿 On the 6th of October, the New Zealand government announced its decisions to list 149 projects in the Fast-track Approvals Bill’s (FTA Bill) Schedule. These include 11 mining projects. Once the government passes the Bill which includes these projects, organizations will be able to apply to the Environmental Protection Authority to have an expert panel assess the project and apply relevant conditions. Companies with projects include OceanaGold (TSE: OGC), Matakanui Gold (ASX: SMI), Bathurst Resources (ASX: BRL) and others. (New Zealand Government)

• 🇪🇺 The European Union pressed ahead with its tariffs on Chinese electric vehicles despite opposition from Germany. Ten countries voted in favor of the tariffs led by France, Italy and Poland, while 5 countries opposed tariffs. Another 12 abstained from voting. In retaliation, China announced tariffs on European brandy including French brands like Hennessy and Remy Martin. We expect this one to heat up. (Reuters)

• 🇰🇷 The chief of South Korea's Financial Supervisory Service ordered a probe into tender offers for Korea Zinc and to monitor for any unfair trade practices. Things have heated up in recent weeks as private equity firm MBK Partners and Young Poong made an offer for Korea Zinc to oust the current Chairman who now has the backing of Bain Capital. The watchdog is concerned that the fierce competition for the company between the two sides could erode shareholder value in the long-term. (Reuters)

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MINING MATTERS FROM AROUND THE WORLD 🌎

• Rio Tinto (ASX: RIO) will acquire Arcadium Lithium (NYSE: ALTM) in an all cash transaction of $5.85 per share. This represents a premium of 90% to Arcadium’s closing price of $3.08 per share on the 4th of October 2024. It values Arcadium at $6.7bn. A very nice win for any short-term investors who bought the news, but still lower than the $7.11 per share Arcadium was trading for a year ago. This will make Rio Tinto the 3rd largest lithium producer globally and helps the mining giant diversify its portfolio. We assume this news will send lithium miners up higher as they look under-valued and are potential take-over targets. (Rio Tinto)

• Coeur Mining (NYSE: CDE) announced that it will acquire SilverCrest Metals Inc. (TSX: SIL) for roughly $1.7bn. SilverCrest shareholders will receive 1.6022 Coeur common shares for each SilverCrest common share which works out to $11.34 per SilverCrest common share or a 22% premium to the October 3rd, 2024 closing price. (Newswire)

• Newmont Corporation (NYSE: NEM) announced yesterday that it will sell its Akyem operation in the Republic of Ghana to Zijin Mining Group Co. (SHA: 601899) for up to $1bn. Under the terms of the agreement, Newmont is expected to receive cash consideration of $900m upon closing. A further $100m is expected to be received upon the satisfaction of certain conditions. The gold mine is one of two operations Newmont has in Ghana and they are the company’s only operations in Africa. (Newmont Corporation)

• KoBold Metals has apparently raised $491m of a targeted $527m round according to TechCrunch (and SEC filings). KoBold leverages AI to find deposits and delivered with a major copper find earlier this year in Zambia. The company plans to develop the mine itself which will cost roughly $2.3bn. (TechCrunch)

• Vale and Brazil’s development bank BNDES will each contribute $250m reais or $45m USD to create a private equity fund that can invest in roughly 20 junior and mid-sized companies working in mineral research, development and implementation of strategic mineral mines in Brazil. (Mining Weekly)

• Hedge fund Elliott Associates lost an appeal against the dismissal of its lawsuit against the London Metal Exchange over billions of dollars of cancelled nickel trades, which judges said were vital for the stability of the overall market. The LME suspended trading and annulled $12 billion in nickel trades in March 2022 when prices doubled to records above $100,000 a metric ton in a few hours of chaotic trade. (Reuters)

• The Nordic Investment Bank & Epiroc AB have signed a 10 year $150m USD ($136m EUR) sustainability linked loan. The loan is connected to Epiroc’s climate targets, which support the decarbonization of the mining industry. Very cool. (Cision)

• Congratulations to Newmont CEO Tom Palmer, who has been announced as the new Chair of ICMM which comprises the CEO’s of 24 member companies. The organization is dedicated to mining with principles. (ICMM) or (Newmont)

MINING BITS

• 🇨🇦 A Vancouver Island, BC man is suing RBC Dominion Securities Inc., RBC Wealth Management Financial Services Inc., and Grant Thornton LLP. Why? The carpenter and part-time investor managed to turn $88,000 into a $415m, yes MILLION, in only a few years between 2019 and 2021 by purchasing put and call options for Tesla stock. However, due to leveraging his margin account, when the stock fell, he ended up with virtually nothing. The claim states, "But for the defendants' inadequate advice ... the plaintiffs would have preserved a substantial portion of their wealth and implemented financial planning that would not have resulted in the loss of their entire net worth." This will be an interesting one to watch. (CBC)

• 🇺🇸 Costco launched platinum bars on its website for $1,089.99, an addition to the company’s precious metals selection of gold bars and silver coins. Costco has been selling something in the neighborhood of $200m per month in gold with new stock selling like hot cakes, often gone in the first few hours. Those in Louisiana, Nevada and Puerto Rico can’t participate however, as delivery is unavailable - we assume due to state regulations, but could not find a clear answer. (CNBC)

• 🇧🇷 We enjoyed this deeper look at Brazil’s critical minerals in the context of a clean energy revolution. Patricia Vásquez of the Wilson Center outlines a country with huge natural reserves of key minerals. For example, Brazil currently accounts for 90% of the world’s niobium production. With significant reserves of Rare Earth Elements, Lithium, Manganese, Graphite, Niobium and Nickel, Brazil is well positioned to play a crucial role as a responsible producer of these minerals. However, Vásquez points out that, “Brazil cannot do it alone: it lacks technological know-how, has limited funding, and some regions–the Lithium Valley among them–lag in infrastructure development.” She suggests that both the United States and Brazil would welcome a critical minerals agreement. (Wilson Center)

• 🇺🇸 Gracelin Baskaran and Meredith Schwartz at The Center For Strategic & International Studies published policy recommendations to incentivize investment in semiconductor supply chains. They point out that, “in the early 2000s, an oligopoly of seven companies, known as the Seven Sisters and all located in the United States, Japan, and Germany, dominated the polysilicon market. Today, six companies dominate the global polysilicon supply—five out of those six companies are Chinese owned.” Their recommendations include:

  • Initiate an Investment Tax Credit (ITC) for mineral processing and refining projects at sites with Western-allied mining operations.

  • Fund a research and development laboratory to build the technological know-how for semiconductor-specific critical mineral refining.

  • Subsidize price premiums to ensure Western companies can compete for offtake agreements.

  • Dedicate more DPA Title III funding toward projects focused on securing semiconductor mineral supply chains. (CSIS)

• 🇯🇵 Finally, Reuters takes a look at Japan’s engineering marvel - its underground regulating reservoir which can absorb rainfall of 75mm per hour to prevent flooding during typhoons. The reservoir took 13 years to build and came online in 2006. It can hold as much water as 100 Olympic sized swimming pools. Inside are 59 massive pillars, each weighing 500 tonnes (551 tons) and stretching 18 metres (59 ft) tall. When nearby rivers flood, the overflow moves through 6.3 km of massive underground tunnels before collecting in the reservoir. Check out the article for lots of pictures and explanations. (Reuters)

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