September 4th, 2024 - The Mine Wire

METALS MARKET

Yesterday, markets reacted to the U.S. Manufacturing Purchasing Managers’ Index which showed that the economy may be slowing quicker than previously thought. Construction spending data also showed bigger than expected declines. The result? Everything was punished on Tuesday from oil, to metals, to hot technology stocks. Nvidia (NASDAQ: NVDA) lost nearly $279bn in market value, the largest one-day fall for a U.S. company.

^{**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.

• 🇨🇦 🇨🇳 China’s Ministry of Commerce said it will launch an anti-discrimination investigation into Canada's tariff hike on electric vehicles as well as steel and aluminum products imported from China. It will file an appeal to the World Trade Organization (WTO) dispute settlement mechanism against these practices. Further, it will also launch anti-dumping investigations into rapeseed imports and relative chemical products from Canada. According to China, Canada exported $3.47bn USD of rapeseed to the Asian nation, up 170% year-on-year with prices moving downward. Like us, you may be more familiar with the term Canola which is the genetically modified version of rapeseed. (China Government)

• 🇨🇳 Beijing is hosting its 2024 African Summit from Wednesday to Friday this week which will welcome 50 nations. While the African countries are expected to raise previous infrastructure commitments by China, the Asian nation is expected to push its own advanced and green technologies. Last year, China offered 13 loans of $4.2bn to eight African states and two regional banks. Despite the seemingly low amount, China is still the largest financial and trade partner for the continent. Stay tuned for what comes out of the summit this week. (Reuters)

• 🇺🇸 The Biden Administration is considering using federal dollars to prop up U.S. critical minerals projects given the impact that cheap Chinese supply has had on domestic project cancellations. An unnamed official from the Energy Department’s Manufacturing and Energy Supply Chains Office said the government is considering a policy whereby the department would set a price floor and agree to pay the difference when market prices fall below that threshold for critical minerals produced by certain U.S. projects. Certainly there is a national security argument for doing so, but how should government go about deciding which projects and which minerals? Lots to think about. A great read if you have time. (Politico)

• 🇺🇸 🇵🇪 The United States and Peru signed a Memorandum of Understanding (MOU) to strengthen cooperation on critical minerals. While MOU’s like this in and of themselves don’t mean a heck of a lot, it does signal that the two governments are on good terms. (U.S. Department of State)

• 🇨🇦 The Yukon government released it’s “What We Heard” report following an extensive public engagement on new minerals legislation. They said that “some respondents want new mining laws that better balance mining activities against other land uses, and that implement reforms regarding security, royalties, Indigenous government involvement, socio-economic benefits. Other respondents expressed concerns that substantial changes to the current system would result in too much uncertainty for the mining industry and would harm the Yukon’s economy and investment climate.” Further, they promised that “this new legislation will address every stage of mining activity, from prospecting through to the operation of a mine, closure and site remediation. It will aim to improve the management of the Yukon’s mineral resources in a way that protects the environment, better reflects First Nations’ relationships with the land, protects taxpayers and supports a competitive and responsible mining industry.” If you are doing work in the Yukon you are likely already familiar with this, but anyone interested can read the report here —> (Yukon Government)

• 🇩🇪 🇿🇦 Germany is seeking clarity on South Africa’s coal closure slowdown. The African nation wants to extend the life of three of its coal-fired power plants that it previously agreed to shut down by 2030 as part of a $9.3bn agreement where it was given grants and loans in exchange for cutting it reliance on coal. Germany was a founding member of this “Just Energy Transition Partnership” program and therefore wants to understand how South Africa will reduce emissions in other places to meet its reduction goals. (BNN Bloomberg)

• 🇮🇳 Meanwhile in India, the federal coal ministry has identified 38 rail projects that will be fast-tracked in order to boost coal transport. As you’ll see later, India has the second fastest growth of coal power projects in development after China. (S&P Global)

• 🇿🇲 Zambia’s Mines Minister Paul Kabuswe announced a strategy by the government to launch a new state firm that will own at least 30% of the production from new mining projects. Additionally, the government intends to make investors in the critical minerals sector allocate at least 35% of procurement costs to local suppliers. (BNN Bloomberg) or (Mining.com)

MINING MATTERS FROM AROUND THE WORLD 🌎

• General Motors (NYSE: GM) and Lithium Americas (TSE: LAC) have agreed to postpone an additional $330m investment by GM until the end of the year. The is the second tranche of a $650m investment by GM. One of the conditions for the second tranche of funding includes Lithium Americas closing a $2.26 billion loan agreement with the U.S. Energy Department, which the company is rushing to finish before the November U.S. presidential election. Donald Trump has promised to “end the electric vehicle mandate” and focus on extracting oil and natural gas. (Reuters) 

• BHP (ASX/LON/NYSE: BHP) has opened applications for its 2025 Xplor program. This program is designed to accelerate participants' exploration opportunities while fostering long-term relationships with BHP. Participants will benefit from up to $500K USD equity-free funding, expert mentorship, and invaluable connections within BHP’s extensive network of suppliers and service providers. Good luck to all of those who apply. (BHP Xplor)

• Midnight Sun Mining Corporation (TSXV: MMA) (OTC Pink: MDNGF) reported that the Zambian Ministry of Mines and Minerals Development published a decision on its website indicating the company's renewal application for one of its exploration licenses which hosts the Kazhiba Dome target, has been rejected. While the company is hopeful that the issue can be resolved, the stock lost nearly half its value on the news and has yet to recover. (Newswire)

• Uzbekistan-based Navoi Mining and Metallurgical Co. (NMMC) is the world's fourth-largest gold producer and owned by the state. It announced last week that it has signed a $150m USD loan agreement with Mitsubishi UFJ Financial Group, Inc. (MUFG). (NMMC)

• South Korean giant POSCO International (KRX: 005490) will invest $40m into Australian miner Black Rock Mining (ASX: BKT) to help it develop its flagship Mahenge graphite project. This will bring POSCO’s equity stake to 19.9%. The stock was up roughly 3.64% on the news. (KED Global)

EARNINGS - Here are some of the companies that reported this past week:

• Sibanye-Stillwater (JSE: SSW) - the mining giant will report first half earnings on September 12th but flagged that it will report a loss as it takes a 7.5bn Rand ($420m USD) writedown on its U.S. assets due to falling palladium prices. (Reuters)

• Fortescue (ASX: AMG) - (Report Here) - The Australian miner reported first half earnings that were slightly below analyst expectations. Underlying net income for the 12 months to June was $5.68bn, up 3% from the previous year —> median analyst expectations were for $6.12bn. Higher costs related to shipping, fuel, labour and contractors impacted balance sheets. However, the miner announced a dividend of $0.89 which was higher than analyst estimates of $0.85 which pushed the stock up in early trading. However, the stock is down 12.98% since earnings and down over 44% in 2024.

• Mineral Resources (ASX: MIN) - (Report Here) - The diversified company reported an underlying net profit after tax of $158m AUD for the year ended June 2024, compared to a profit of $769m AUD a year earlier. Despite 40%+ increases in Lithium production at two of its mines, its achieved prices were down 76%. The Founder & Managing Director also took a shot at global automakers saying, “Our lazy First-World car manufacturers... all of the leaders of those companies are making great profits out of combustion engines,” he said. “They don’t want to invest the money and waste their profits on developing the electric vehicle.” With that said, he confirmed the company’s commitment to conserving cash and being ready for the Lithium demand that will ultimately come as more and more electrification happens. The stock is down 50% in 2024 but did get an upgrade from Goldman Sachs from Sell to Neutral. (The Sydney Morning Herald)

• Tianqi Lithium (SHE: 002466) registered a net loss of 5.2bn yuan ($734m USD) in the first half of 2024 (H1 2024), down from a profit of 6.45bn yuan in H1 2023. Like Mineral Resources, earnings were severely impacted by a major slump in Lithium prices. (Mining Technology)

MINING BITS

• 💡 Big Media, not to miss a headline, took some comments from Mineral Resources Founder & Managing Director Chris Ellison and spun them into catchy headlines. During an investor call Mr. Ellison spoke about requiring staff to be in the office 5 days a week and used some language that media turned into “keeping them (employees) captive” or not allowing them to go outside for a coffee or even banning coffee breaks. Our own take is the company wants people focused and engaged and understands that having amenities like cheap daycare ($20 a day), gyms and restaurants on-site, helps create that atmosphere. Back to work policies have been unpopular post-COVID with many employee groups fighting back against even hybrid options. However, some companies like UPS, Boeing, Netflix and Goldman Sachs have implemented full five day weeks. Some CEOs have said it is unfair for corporate employees to do their jobs remotely part of the time while front-line staffers must show up daily. We certainly think in industries where there is a lot of collaboration, team-based project work, apprenticeships and so on, a regular return to office makes sense. What do you think? Participate in our poll at the bottom and we will share the results next week! (BBC) & (The Guardian) & (News.com.au)

• 🇨🇳 🇮🇳 According to Global Energy Monitor’s latest Global Coal Plant Tracker (GCPT) results, two countries, China & India, are responsible for roughly 86% of new coal power plant capacity globally. Further, despite many countries moving away from coal, the growth in new projects is roughly double the capacity of those power plants coming offline. The 15 largest markets for continued development are China, India, Indonesia, Bangladesh and Zimbabwe, along with Vietnam, Laos, Russia, Kazakhstan, Turkey, South Africa, Pakistan, the Philippines, Kyrgyzstan, and Mongolia. There is an in-depth look in the article and a by-country account of activity. (Carbon Brief)

• 🇪🇬 ⛏️ A study published in Geology shows that there was significant metalworking activity on the Nile at Khufu Harbor in Cairo, near the Great Pyramid of Giza. Researchers used inductively coupled plasma–mass spectrometry (ICP-MS) to measure levels of copper and arsenic, as well as of aluminum, iron, and titanium, with six carbon-14 dates to establish a chronological framework. They found that metal contamination started around 3265 BCE with it peaking around 2500 BCE (late pyramid construction) and persisting until about 1000 BCE. Some interesting conclusions drawn about ancient Egyptian society from this study. (Live Science)

• 💴 Congratulations to Envirosuite (ASX: EVS) which secured a $10m AUD investment from Hitachi Construction Machinery Co., Ltd. (TSE: 6305). This will make Hitachi CM the largest single entity shareholder with roughly 12% equity. (Hitachi CM) & (Envirosuite)

• 🚔 The CEO of South Korean company Aricell was arrested last week over a factory fire in June that killed 23 workers. Investigators have said Aricell’s management is suspected of workplace safety violations. Safety issues at the plant, included a failure to address quality defects in batteries and hiring unskilled staff to handle dangerous materials. It is alleged that the company cheated in quality inspections related to contracts with the military. The safety of workers should always be paramount so if these allegations are true, we say throw the book at them. (BBC) 

• 🎙️ This week take a look at CNN’s interview with KoBold Metals CEO, Kurt House, to hear more about their AI Technology and the work they are doing in Zambia. (CNN)

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!