Tuesday 2nd June 2020

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Crisis response

A look at mining, exploration, infrastructure and supply chains under the pandemic

by Greg Klein | April 3, 2020

A look at mining, exploration, infrastructure and supply chains

 

Idled explorers: Can you help?

“Essential supplies and personnel are needed to create and operate temporary facilities for testing, triage, housing and isolation areas for vulnerable populations,” states the Association for Mineral Exploration. “As mineral explorers, we have access to the supplies needed and are in a unique position to help.”

AME calls on the industry to contribute excess capacity of the following:

  • Insulated structures (both hard and soft wall)

  • Camp gear such as furniture, lighting and kitchen appliances

  • Medical equipment

  • Camp support personnel such as caterers, housekeepers, janitors, etc.

  • Available medical staff including such qualifications as OFA3s, paramedics, RNs, etc.

  • Other supplies or skills

If you can help, please fill out this form and AME will be in touch. 

For further information contact Savannah Nadeau.

Preparing for a wider emergency

Given the danger of one crisis triggering others, essential infrastructure remains at risk. One plan to safeguard Ontario’s electricity service would require Toronto workers to bunk down in employer-supplied accommodation under lockdown conditions better known to isolated locations.

A look at mining, exploration, infrastructure and supply chains

Quarantines might require essential
services to provide job-site bed and board.
(Photo: Independent Electricity System Operator)

It hasn’t happened yet, but the province’s Independent Electricity System Operator stands ready for the possibility, according to a Canadian Press story published by the Globe and Mail. A not-for-profit agency established by the province, the IESO co-ordinates Ontario electricity supply to meet demand.

About 90% of its staff now work at home but another 48 employees must still come into work, CEO Peter Gregg said. Eight six-person teams now undergo 12-hour shifts in two Toronto-area control rooms.

“Should it become necessary, he said, bed, food and other on-site arrangements have been made to allow the operators to stay at their workplaces as a similar agency in New York has done,” CP reported.

Similar plans may well be underway not only for essential infrastructure but also for essential production, processing, manufacturing, communications, transportation and trade. One sign of the times to come could be locked-down camps in supermarket parking lots for our under-appreciated retail-sector heroes.

Meanwhile, retaining and protecting care-home staff already constitute a crisis within a crisis.

Australia guards against predatory foreign takeovers

With China prominently in mind, Australia has taken extra measures to protect companies and projects shattered by the COVID-19 economy. Canberra has temporarily granted its Foreign Investment Review Board extra powers to guard distressed companies and assets against acquisitions by opportunistic foreigners. Although previous foreign acquisitions came under review only when the price passed certain thresholds, now all such transactions get FIRB scrutiny.

The changes follow concerns raised by MPs on Australia’s intelligence and security committee. The Sydney Morning Herald quoted committee chairperson Andrew Hastie warning of “foreign state-owned enterprises working contrary to our national interest. More than ever, we need to protect ourselves from geo-strategic moves masquerading as legitimate business.”

Committee member Tim Wilson added, “We can’t allow foreign state-owned enterprises and their business fronts to use COVID-19’s economic carnage as a gateway to swoop distressed businesses and assets.”

Among protected assets are exploration and mining projects, utilities, infrastructure and an interest of 20% or more in a company or business.

Critical minerals become ever more critical

As Lynas Corp extended the suspension of its rare earths processing facility in line with Malaysian government pandemic orders, the company noted the importance of its products “in permanent magnets used in medical devices including ventilators, and in lanthanum products used in oil refineries for petroleum production.”

A look at mining, exploration, infrastructure and supply chains

The suspension of its Malaysian plant prompted
Lynas to emphasize REs’ criticality to virus treatment.
(Photo: Lynas Corp)

Originally set to expire on March 31, the government order currently stays in force until April 14. RE extraction continues at Lynas’ Mount Weld mine in Western Australia.

In late February Malaysia granted the company a three-year licence renewal for the processing facility, which had been threatened with closure due to controversy about its low-level radioactive tailings. Among conditions for the renewal are development of a permanent disposal facility for existing waste and putting a cracking and leaching plant in operation outside Malaysia by July 2023 to end the practice of transporting radioactive material to the country.

Committed to maintaining a non-Chinese supply chain, the company plans to locate the C&L plant in Kalgoorlie, Western Australia.

Sharing the disease, hoarding the treatment

A problem recognized in American defence procurement has hit health care—the need to build non-Chinese supply chains. Most of the world’s ventilators and about half the masks are manufactured in China, points out a recent column by Terry Glavin.

The West is learning, finally and the hard way, “that thriving liberal democracies cannot co-exist for long within a model of neo-liberal globalization that admits into its embrace such a tyrannical state-capitalist monstrosity as the People’s Republic of China.”

The U.S., for example, relies heavily on China for antibiotics, painkillers, surgical gowns, equipment that measures blood oxygen levels and magnetic resonance imaging scanners. China effectively banned medical equipment exports as soon as Wuhan went on lockdown, Glavin adds.

“It probably didn’t help that Ottawa sent 16,000 tonnes of gear to China back in February. That was a lot of gear—1,101 masks, 50,118 face shields, 36,425 medical coveralls, 200,000 pairs of gloves and so on—but a drop in Beijing’s bucket. A New York Times investigation last month found that China had imported 56 million respirators and masks, just in the first week of the Wuhan shutdown.

“It is not known how much of that cargo came from the massive bulk-buying campaign organized and carried out across Canada by affiliates of the United Front Work Department, the overseas propaganda and influence-peddling arm of the Chinese Communist Party.”

A look at mining, exploration, infrastructure and supply chains

Desperate need for health care supplies
pits country against country. (Photo: 3M)

Nor does the non-Chinese world display altruism. In response to the crisis, the EU and more than 50 countries have either banned or restricted exports of medical equipment, Glavin states.

By April 3 global health care products supplier 3M revealed that Washington asked the company to stop exporting U.S.-manufactured N95 respirators to Canada and Latin America. 3M noted “significant humanitarian implications” but also the possibility of trade retaliation. “If that were to occur, the net number of respirators being made available to the United States would actually decrease.”

The company did win China’s permission to import 10 million of its own Chinese-manufactured N95s into the U.S.

Meanwhile the Canadian government comes under increasing criticism for discouraging the public from wearing masks.

Chinese supply chains also jeopardized by Chinese disease

As the world’s main exporter of manufactured goods, China’s the main importer of raw materials, especially metals. But, as the world’s main exporter of disease, China managed to threaten its own supplies.

Reuters columnist Andy Home outlined lockdown-imposed cutbacks of copper, zinc and lead from Chile and Peru, and chrome from South Africa; reductions in cobalt from the Democratic Republic of Congo, in tin from already depleting Myanmar, and in nickel from the Philippines, the latter a hoped-for replacement after Indonesia banned unprocessed exports.

The longer the lockdowns, “the greater the potential for supply chain disruption,” Home comments. “As the biggest buyer of metallic raw materials, this is a ticking time-bomb for China’s metals producers.”

Miners’ providence unevenly distributed

Probably no other foreign shutdowns have affected as many Canadian miners and explorers as that of Mexico. Considered non-essential, their work will be suspended until April 30, with extensions more than likely. Mexico’s announcement must have sounded familiar to Pan American Silver TSX:PAAS, which had already pressed the pause button to comply with national quarantines in Peru, Argentina and Bolivia. That currently limits the company’s mining to Timmins, where production has been reduced by about 10% to 20% to allow physical distancing.

A look at mining, exploration, infrastructure and supply chains

Mauritania exempted Kinross Gold’s Tasiast mine
from domestic travel restrictions. (Photo: Kinross Gold)

One company more favourably located, so far, is Kinross Gold TSX:K. As of April 1, operations continued at its seven mines in Nevada, Alaska, Brazil, Mauritania, Russia and Ghana, while work went on at its four non-producing projects in Alaska, Mauritania, Russia and Chile.

Expanded shutdowns ordered by Ontario on April 3 include many construction and industrial projects but exempt mining. Earlier that day New Gold TSX:NGD announced Rainy River’s restart after a two-week suspension to allow self-isolation among employees. Many of the mine’s workers live locally and made short trips into Minnesota before the border closed.

Quebec border restrictions have hindered the Ontario operations of Kirkland Lake Gold TSX:KL, cutting off a source of employees and contractors. As a result the company reduced production at its Macassa mine and suspended work at its Holt complex, comprising three gold mines and a mill. Kirkland reduced operations at its Detour Lake mine effective March 23, after a worker showed COVID-19 symptoms and self-isolated on March 14. He tested positive on March 26. Production continues at the company’s Fosterville mine in Australia.

Some explorers have been idled by government restrictions, others by market conditions. Still, some companies have money and jurisdictions in which to spend it. Liberty Gold TSX:LGD, for example, resumed drilling its Black Pine gold project in Idaho on March 31.

Some jurisdictions, like B.C. and New Brunswick, have extended work requirement deadlines to help companies keep exploration claims active.

“China needs to be held responsible”

A few Canadian journalists are saying what we might never hear from our politicians. Here, for example, is Toronto Sun columnist Lorrie Goldstein:

“China needs to be held responsible. The problem is, because of its political power— and you see it in the World Health Organization announcements, in Canadian announcements—they’ve been praising what China did. There would have been a virus anyway. China made it worse. More people are dying, more people are being infected, and its dictators need to be held to account.”


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