Tuesday 2nd June 2020

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Posts tagged ‘bauxite’

Robust or bust

May 7th, 2020

Will supply chain challenges culminate in a long-overdue crisis?

by Greg Klein | May 7, 2020

It might take premature complacency or enormously good fortune to look back and laugh at the Early 2020 Toilet Paper Panic. But from today’s viewpoint, bumwad might be the least of our worries. There won’t be much need for the stuff without enough food to sustain life. Or water. Medicine, heat and electricity come in handy too.

Sparsely stocked supermarket shelves have been blamed on hoarders who thwart the industry’s just-in-time system, a process credited with “robust” reliability when not challenged by irrational buying sprees. Consumer concern, on the other hand, might be understandable given the credibility of official positions such as Ottawa’s facemask flip-flop and initial arguments that closing borders would actually worsen the pandemic.

Will supply chain challenges culminate in a long-overdue crisis?

A North Vancouver supermarket seen in mid-March. While
stockpiling has abated, supply lines show signs of stress.
(Photo: Steeve Raye/Shutterstock.com)

Meanwhile Canadian farmers worry about the supply of foreign labour needed to harvest crops, dairy farmers dump milk for lack of short-distance transport and deadly coronavirus outbreaks force widespread closures of meat and poultry plants across Canada and the U.S.

Highlighting the latter problem were full-page ads in American newspapers from meat-packing giant Tyson Foods. “The food supply chain is breaking,” the company warned in late April. “Millions of animals—chickens, pigs and cattle—will be depopulated because of the closure of our processing facilities.”

Within days the U.S. invoked the Defense Production Act, ordering meat plants to stay open despite fears of additional outbreaks. 

Just a few other pandemic-related food challenges in Canada include outbreaks at retail grocers, a shortage of packaging for a popular brand of flour and an Ontario supermarket warning customers to throw away bread in case it was tainted by an infected bakery worker.

Infrastructure supplying necessities like energy, fuel, water and communications faces pandemic-related challenges of its own, including availability of labour and expertise.

Supply chain complexity has been scrutinized in The Elements of Power: Gadgets, Guns, and the Struggle for a Sustainable Future in the Rare Metal Age. One example from author David S. Abraham was the electric toothbrush, a utensil comprising something like 35 metals that are sourced, refined and used in manufacturing over six continents.

Dissecting a 2017 smartphone, the U.S. Geological Survey found 14 necessary but mostly obscure elements. As a source country, China led the world with nine mineral commodities essential to mobile devices, and that list included rare earths in a single category.

In a recent series of COVID-19 reports on the lithium-ion necessities graphite, cobalt, lithium and nickel, Benchmark Mineral Intelligence stated: “From the raw material foundations of the supply chain in the DRC, Australia, Chile and beyond, through to the battery cell production in China, Japan and Korea, it is likely that the cells used by the Teslas of the world have touched every continent (sometimes multiple times over) before they reach the Model 3 that is driven (or drives itself) off the showroom floor.”

Will supply chain challenges culminate in a long-overdue crisis?

Consumers might not realize the complex
international networks behind staple items.

Or consider something more prosaic—canned tuna.

That favourite of food hoarders might be caught in the mid-Pacific, processed and canned in Thailand following extraction of bauxite (considered a critical mineral in the U.S.) in Australia, China, Guinea or elsewhere, with ore shipped for smelting to places where electricity’s cheap (China accounted for over 56% of global aluminum production last year). Then the aluminum moves on to can manufacturers, and transportation has to be provided between each point and onward to warehouses, retailers and consumers. Additional supply chains provide additional manufactured parts, infrastructure, energy and labour to make each of those processes work.

Still another supply chain produces the can opener.

Daily briefings by Canada’s federal and provincial health czars express hope that this country might “flatten the curve,” a still-unattained goal that would hardly end the pandemic when and if it’s achieved. Meanwhile the virus gains momentum in poorer, more populous and more vulnerable parts of the world and threatens a second, more deadly wave coinciding with flu season.

And if one crisis can trigger another, social order might also be at risk. Canada’s pre-virus blockades demonstrated this country’s powerlessness against a force not of nature but of self-indulgence. Even a cohesive, competent society would have trouble surviving a general infrastructure collapse, a scenario dramatized in William R. Forstchen’s novel One Second After. When transportation, communications, infrastructure and the financial system break down, so do a lot of people. Dangerous enough as individuals, they can form mobs, gangs and cartels.

How seriously Washington considers apocalyptic scenarios isn’t known. But prior to the pandemic, the U.S. had already been taking measures to reduce its dependency on China and other risky sources for critical minerals. Now, Reuters reports, COVID-19 has broadened American concerns to include other supply chains and inspired plans for an Economic Prosperity Network with allied countries. Questions remain about the extent that the West can achieve self-sufficiency and, in the U.S., whether another administration might undo the current president’s efforts.

Certainly globalist confidence persists. The Conference Board of Canada, for example, expects a slow return of supply chain operations to pre-pandemic levels but a renewed international order just the same. “Global co-operation is needed not only to tackle the health crisis, but also to restore trust in global supply chains and maintain the benefits that the growth in global trade has brought over the last two decades.”

Will supply chain challenges culminate in a long-overdue crisis?

New cars leave the manufacturing hub and disease
epicentre of Wuhan prior to the pandemic.
(Photo: humphery/Shutterstock.com)

One early COVID-19 casualty, the multi-continent diamond supply chain, already shows signs of gradual recovery according to Rapaport News. Despite mine suspensions, “there is more than enough rough and polished in the pipeline to satisfy demand as trading centres start to reopen. Belgium and Israel have eased lockdown restrictions, while India has allowed select manufacturing in Surat and special shipments to Hong Kong.”

Also struggling back to its feet is global automotive manufacturing. Writing in Metal Bulletin, Andrea Hotter outlines how the disease epicentre of Wuhan plays a vital role in making cars and supplying components to other factory centres. “If ever there was a masterclass in the need to disaster-proof a supply chain, then the COVID-19 pandemic has provided a harsh reminder to the automotive sector that it’s failing.”

So regardless of whether apocalyptic fears are overblown, there are lessons to be learned. As Benchmark points out, COVID-19 has disrupted “almost every global supply chain to such a profound extent that mechanisms for material sourcing, trade and distribution will likely never be the same again.”

In the meantime, a spare can opener or two might be prudent. Or maybe several, in case they become more valuable than bullion.

March 9th, 2016

PDAC 2016 convention exceeds 22,000 attendees Equities.com
Five tests for the commodities bounce NAI 500
The gold bull market is back. Will it last? GoldSeek
VSA Capital’s Paul Renken on gold and lithium companies Streetwise Reports
Bauxite and alumina: No light at the end of the refractories tunnel Industrial Minerals
Lithium prices experiencing strongest ever surge Benchmark Mineral Intelligence
Electric car war sends lithium prices sky high Stockhouse

March 8th, 2016

VSA Capital’s Paul Renken on gold and lithium companies Streetwise Reports
Bauxite and alumina: No light at the end of the refractories tunnel Industrial Minerals
An exciting time for gold GoldSeek
Lithium prices experiencing strongest ever surge Benchmark Mineral Intelligence
Electric car war sends lithium prices sky high Stockhouse
Canadian gold miners keen to tap equity market as gold price pops NAI 500
Is the deflation trade over? Equities Canada

March 7th, 2016

VSA Capital’s Paul Renken on gold and lithium companies Streetwise Reports
Bauxite and alumina: No light at the end of the refractories tunnel Industrial Minerals
An exciting time for gold GoldSeek
Lithium prices experiencing strongest ever surge Benchmark Mineral Intelligence
Electric car war sends lithium prices sky high Stockhouse
Canadian gold miners keen to tap equity market as gold price pops NAI 500
Is the deflation trade over? Equities Canada

March 4th, 2016

Bauxite and alumina: No light at the end of the refractories tunnel Industrial Minerals
An exciting time for gold GoldSeek
Lithium prices experiencing strongest ever surge Benchmark Mineral Intelligence
Electric car war sends lithium prices sky high Stockhouse
How to take advantage of a possible upswing in gold in all currencies Streetwise Reports
Canadian gold miners keen to tap equity market as gold price pops NAI 500
Is the deflation trade over? Equities Canada

Indonesia ban rocks nickel market

January 13th, 2014

by Frik Els | January 12, 2014 | Reprinted by permission of MINING.com

Indonesia rocked the mining world on January 12, putting into effect an outright ban on nickel, bauxite and tin ore exports.

The Asian nation is the world’s premier thermal coal and tin exporter and is also a gold and copper powerhouse, but the ban on nickel and bauxite ore would have the most dramatic effect on markets.

Last week Indonesian energy and resource ministry officials scrambled to ease provisions of the raw mineral export prohibition that President Susilo Bambang Yudhoyono signed into law on January 12, the most controversial decision of his 10-year presidency.

Indonesia dominates the nickel export business, accounting for over a fifth of global supply at an estimated 400,000 tonnes of contained metal. Chinese nickel pig iron producers imported more than 30 million tonnes of nickel ore from Indonesia last year and China’s aluminium smelters rely on Indonesia for 20% of their feedstock.

According to the latest rules under the ban, base metals including copper, manganese, lead, zinc and tin will be allowed to be exported in concentrate until 2017.

This benefits producers like Freeport-McMoRan Copper & Gold NYE:FCX, which operates the world’s third-largest copper mine at Grasberg in the West Papua province and warned about a 60% drop in output should copper form part of the ban. Phoenix-based Freeport-McMoRan and Newmont Mining NYE:NEM together account for 97% of Indonesia’s copper exports.

[The ban] is the biggest supply risk facing base metals in a long time. The market has been very complacent, thinking the Indonesians would backtrack.

However against expectations of a last-minute climbdown by authorities, the nickel and bauxite ore ban, as well as the prohibition of unprocessed exports of tin, chromium, gold and silver, went into effect January 12.

FT.com quoted Gayle Berry, base metals analyst at UK bank Barclays earlier as saying the ban “is the biggest supply risk facing base metals in a long time. The market has been very complacent, thinking the Indonesians would backtrack.”

Privately owned Ibris Nickel last week announced it will cease operations in Indonesia, laying off 1,400 workers at its two-million-tonne-per-year mine. The nickel industry employs some 200,000 Indonesians across hundreds of small-scale operations.

Reuters reports the Indonesian Mineral Entrepreneurs Association said it planned to challenge the ban in the Supreme Court and Constitutional Court while almost 30,000 mine workers have been laid off, sparking protest in the capital Jakarta:

“We call on all mining workers to prepare to go on the streets and swarm the presidential palace if the government goes ahead with the implementation of the ban,” said Juan Forti Silalahi of the National Mine Workers Union in a statement on January 11.

So far the price of nickel has not reacted in a big way to the looming ban, but now all bets are off.

 

 

Three-months nickel on the LME retreated more than 20% in 2013 from opening levels of $17,450 and, after hitting a high of $18,700 in February, dropped to a four-year low in October amid an oversupplied market.

After a brief uptick in December to over $14,200, the steelmaking raw material last week fell back to the mid-$13,000s and on January 10 the contract closed at $13,725.

Even without the Indonesian ban, the prospects for nickel aren’t rosy.

Global output is forecast to rise for the first time to over two million tonnes in 2015. That’s up from 1.4 million tonnes in 2007.

Stockpiling of ore and metal in anticipation of Indonesian disruptions and the inexorable rise of nickel warehouse levels over the past two years—hitting a record 260,000 tonnes last week—have also kept prices subdued.

 

 

Indonesia, with a population of 240 million, goes to the polls for parliamentary elections in April and in July will choose a new president, so much can change over the course of the year before the true extent of the ban can be felt.

Reprinted by permission of MINING.com

Guinea strikes $5-billion mine deal with Abu Dhabi, Dubai

November 25th, 2013

by Cecilia Jamasmie | November 25, 2013 | Reprinted by permission of MINING.com

Guinea reached a $5-billion deal on November 25 with the emirates of Abu Dhabi and Dubai to develop a bauxite mine and alumina refinery in a fresh attempt to revitalize the West African nation’s natural resources sector.

The agreement, reports Reuters, includes $1 billion for extraction and exports of bauxite to the United Arab Emirates’ aluminum plants. It also involves a $4-billion aluminum refinery and a port.

The pact modifies a previously planned project and highlights a need in the Gulf to obtain raw materials to feed the recently created Emirates Global Aluminum, a national champion for the UAE company, set to become the world’s fifth-largest producer of the metal.

Under the deal, Guinea Alumina Corp—an Abu Dhabi-Dubai joint venture—will develop a bauxite export mine and a port, to be operational by 2017, and an alumina refinery with an initial capacity of two million tonnes a year. Commercial production from the refinery is estimated to begin in 2022.

Guinea is one of the main producers of bauxite, the raw material used in aluminum production, and mining has long been seen by the country as having potential to deliver much-needed income. However some of the country’s resources that are considered among the world’s largest, such as the Simandou iron ore deposit, have not been touched yet because of both financial and political reasons.

Reprinted by permission of MINING.com