Sunday 25th June 2017

Resource Clips


Posts tagged ‘belarus’

More critical than ever

April 13th, 2017

The USGS promotes awareness about essential resources and their supply chains

by Greg Klein

Let’s call it Critical Minerals Awareness Month. The U.S. Geological Survey hasn’t actually labelled April that way, but the agency does have a “big push” underway to inform American decision-makers and the general public about the country’s often tenuous hold on commodities vital to the economy and security of that country. Of course those concerns apply to its allies as well.

The USGS promotes public awareness about essential resources and their supply chains

“We decided to do a big push on critical minerals in April largely because we’ve got several big publications coming out on the subject,” USGS public affairs specialist Alex Demas tells ResourceClips.com.

“One of the things we’ve been focusing on is supply chain security, so with the sheer number of mineral commodities that are used in the United States, and the number of them deemed critical, we felt it was important to emphasize where a lot of those mineral resources are coming from and if there are any potential issues in the supply chain, getting them from the source to the United States.”

Computers provide an obvious example, increasing their use from “just 12 elements in the 1980s to as many as 60 by 2006,” points out one recent USGS news release. Smartphones offer another example. Looking back 30 years ago, “‘portable’ phones were the size of a shoebox and consisted of 25 to 30 elements,” states another USGS release. “Today they fit in your pocket or on your wrist and are made from about 75 different elements, almost three-quarters of the periodic table.”

Larry Meinert, USGS deputy associate director for energy and minerals, pointed out some of the sources. “For instance, the industrial sand used to make the quartz in smartphone screens may come from the United States or China, but the potassium added to enhance screen strength could come from Canada, Russia or Belarus. Australia, Chile and Argentina often produce the lithium used in battery cathodes, while the hard-to-come-by tantalum—used in smartphone circuitry—mostly comes from Congo, Rwanda and Brazil.”

That brings an ominous warning. “With minerals being sourced from all over the world, the possibility of supply disruption is more critical than ever.”

The campaign also reveals the agency’s methods for tracking this essential stuff. A USGS-designed early warning system described as “mathematically rigorous and elegant” helps the U.S. Defense Logistics Agency monitor a watch list of about 160 minerals. Not all have been labelled critical, but those so defined can change due to technological development and geopolitical conflict.

The USGS itself tracks something like 90 minerals important to the American economy or security but sourced from about 180 countries. For last year the agency identified 20 minerals on which the U.S. relied entirely on imports and 47 on which the country imported more than half its supply.

Not all the source countries are always best buddies with the West. China supplies most of America’s mined commodities, including 24 of the 47 minerals supplied 51% or more by imports. Among the critical items are rare earth elements, 100% imported, over 90% directly from China and much of the rest through supply chains originating there.

As a supplier, Canada came a distant second, the chief provider of 16 minerals, not all of them critical. Runners-up Mexico, Russia and South Africa were each chief suppliers for eight American mineral imports.

Among the research reports coming soon will be “a compendium of everything the USGS knows about 23 minerals critical to the United States,” Demas says. “It’s going to cover the industry side of things, the reserves, production, shipment, etc. It’s going to cover geology and sustainability. Each chapter on each mineral will have a section on how this can be mined sustainably so we can meet our needs not only today, but also in the future.”

In part the publications target “decision-makers in Congress, as well as the Defense Department and others who use mineral resources,” Demas adds. But he emphasizes the campaign wasn’t motivated by the proposed METALS Act (Materials Essential to American Leadership and Security). Currently before U.S. Congress, the bill calls on government to support domestic resources and supply chains of critical and strategic minerals. On introducing the bill, Rep. Duncan Hunter argued the risk of foreign dependence to national security “is too great and it urgently demands that we re-establish our depleted domestic industrial base.”

As Demas notes, “Since we are a non-regulatory, non-policy agency, we don’t directly influence policy. But we do want policy-makers to have our tools available so they can make the best science-informed decisions.”

And while this month will see special attention to critical minerals, Demas says the subject’s an ongoing concern for the USGS. Some of the reports coming out now will be updates of annual publications.

“We’re really trying to promote the idea that USGS has a lot of really useful information that we put out all the time,” he adds. “This information will hopefully be useful to people when they’re considering where their resources are coming from.”

Follow USGS news here.

Read about the West’s dependence on non-allied countries for critical minerals here and here.

USGS: Possibility of supply disruption more critical than ever

April 5th, 2017

by Greg Klein | April 5, 2017

USGS: Possibility of supply disruption more critical than ever

Many and various are the sources of smartphone minerals.
(Map: U.S. Geological Survey)

 

In another article warning of foreign dependency, the U.S. Geological Survey uses smartphones as a cautionary example. Looking back 30 years ago, “‘portable’ phones were the size of a shoebox and consisted of 25 to 30 elements,” pointed out Larry Meinert of the USGS. “Today they fit in your pocket or on your wrist and are made from about 75 different elements, almost three-quarters of the periodic table.”

USGS: Possibility of supply disruption more critical than ever

Smartphones now require nearly 75% of the periodic
table of the elements. (Graphic: Jason Burton, USGS)

The increasing sophistication of portable communications results from a “symphony of electronics and chemistry” that includes, for example, “household names like silicon, which is used for circuit boards, or graphite used in batteries. Then there are lesser known substances like bastnasite, monazite and xenotime. These brownish minerals contain neodymium, one of the rare earth elements used in the magnets that allow smartphone speakers to play music and the vibration motor that notifies you of new, funny cat videos on social media,” the USGS stated.

Almost as varied are the sources. “For instance, the industrial sand used to make the quartz in smartphone screens may come from the United States or China, but the potassium added to enhance screen strength could come from Canada, Russia or Belarus. Australia, Chile and Argentina often produce the lithium used in battery cathodes, while the hard-to-come-by tantalum—used in smartphone circuitry—mostly comes from Congo, Rwanda and Brazil.”

Rwanda and the Democratic Republic of Congo are also sources of conflict minerals.

“With minerals being sourced from all over the world, the possibility of supply disruption is more critical than ever,” Meinert emphasized.

The April 4 article follows a previous USGS report on an early warning system used by the U.S. Defense Logistics Agency to monitor supply threats. In January the USGS released a list of 20 minerals for which the country relies entirely on imports. Whether or not by design, the recent awareness campaign coincides with a bill before U.S. Congress calling on government to support the development of domestic deposits and supply chains for critical minerals.

See an illustrated USGS report: A World of Minerals in Your Mobile Device.

Read about the West’s dependence on non-allied countries for critical minerals here and here.

Potash in perspective

February 21st, 2014

The long-term outlook and an advanced-stage project bring Asian interest to Western Potash

by Greg Klein

The long-term outlook and an advanced-stage project bring Asian interest to Western Potash

As the world’s population grows, arable land shrinks, causing greater demand for fertilizer.

 

It’s an opportunity best characterized as “a marathon, not a sprint.” That’s how Western Potash TSX:WPX VP of corporate development John Costigan refers to his company’s Milestone project. The high-grade potash solution mine proposed for southern Saskatchewan achieved full feasibility in December 2012 and final environmental approval last April. Then came tumultuous times, with what Costigan calls the “Russian-Belarusian debacle” that took down the commodity’s price. Now, with solid Asian investment and indications of a market revival, the advanced-stage project might be seen as an early-stage opportunity emerging anew.

Understandably, enthusiasm for potash plunged with the price following Uralkali’s breakup with cartel partner Belaruskali last summer. Late last year, however, JP Morgan pronounced a more optimistic outlook for 2014. By January analysts were saying prices might have bottomed in the Chinese contracts signed by Uralkali and Canpotex, the marketing arm of PotashCorp TSX:POT, Agrium TSX:AGU and Mosaic NYE:MOS.

More recent news suggests funding’s picking up. On February 18 Verde Potash TSX:NPK reported significant progress in its application for US$105 million in loans, grants and investment from the Brazilian government for the company’s Cerrado Verde project. Six days earlier came news that fertilizer giant ICL was buying a $25-million stake in Allana Potash TSX:AAA, with potential up to $84 million, along with an offtake agreement for the company’s Danakhil project in Ethiopia. Last June Western got a $31.98-million cash injection from a Chinese joint venture.

The attraction was the full-feas, fully permitted Milestone. The operation calls for solution mining, in which water is pumped into underground caverns and then retrieved as potash-rich brine. A relatively simple but highly effective technique, solution mining would allow Western to build the greenfield operation in about 40 months.

The long-term outlook and an advanced-stage project bring Asian interest to Western Potash

Just 60 kilometres away the same approach is being taken by the giant K+S Group. Now under construction, the Legacy project is scheduled to begin potash solution mining in 2016.

Milestone benefits from Saskatchewan’s mining-friendly policies and rich infrastructure. Two continental railways pass through the 35,400-hectare property, as do roads, power and gas lines. An agreement with the city of Regina, 30 kilometres away, provides a supply of treated waste water to extract the potash—enough water, in fact, to flush out 2.8 million tonnes per year for the mine’s projected 40-year life.

Those benefits have already attracted a $31.98-million investment from CBC (Canada) Holding Corp, a JV comprised of fertilizer producer China BlueChemical and Benewood Holdings, a subsidiary of the Hong Kong investment firm Guoxin International Investment Corp. The deal comes with a 20-year offtake agreement for the lesser of 30% of Milestone’s production or a million tonnes a year.

With a 19.9% stake in Western, CBCHC plays an active role in the strategic alliance. One China BlueChemical appointee serves on Western’s board and another acts as an observer. The alliance has struck two six-person committees, one to study Milestone’s technical, construction and procurement details and another to recommend financing strategies, meet potential financiers and evaluate proposals.

The alliance brings technical synergies. It also offers potential financial flexibility that could help the junior put together the $2.91-billion capex—a considerable sum but substantially less than K+S is spending 60 kilometres away. One possible Milestone scenario could involve Chinese investment banks which, Costigan points out, can structure finance agreements with a 3:1 debt-to-equity ratio. With one or more additional partners, Western could make the transition to a potash producer.

The company already has mining expertise, most notably with project director Richard Lock. In fact his career has been based on projects much more challenging than a southern Saskatchewan solution mine. While with Rio Tinto NYE:RIO, Lock took the Northwest Territories’ Diavik diamond mine from exploration to production. Among other accomplishments, he also acted as project director for Arizona’s Resolution project, now in pre-feasibility and potentially North America’s largest copper mine.

As for potential partners, discussions have picked up, Costigan says. “There’s renewed interest now. People think the market has settled. If we see prices rise, there’ll be even greater interest.”

The commodity’s long-term fundamentals remain strong, he says. Nothing’s stopping population growth. Meanwhile the global decline of arable land calls for ever-higher crop yields.

“Look at the growth in Chinese potash consumption—it’s definitely why our partners came in,” Costigan says. “They recognize they’re going to see big increases in their consumption. China’s ramping up their domestic supplies, they’re in Thailand, Africa, Kazakhstan. But when you look at the projects out there, there’s nothing that compares with Milestone for volume, quality, cost, location, infrastructure and political stability. There’s nothing that compares globally.”

Q3 winning streak over: “Considerable underperformance” among Canadian miners in Q4

February 6th, 2014

by Ana Komnenic | February 6, 2014 | Reprinted by permission of MINING.com

Canadian mining stocks experienced a 45% decrease in market capitalization in 2013, with the last quarter alone showing a 9% drop, according to Ernst & Young’s Canadian Mining Eye Q4 2013 report.

It’s well known that concerns over global economic growth and uncertainty over what the U.S. Federal Reserve would do next dragged down commodity prices, leading companies to write down assets and cut costs.

But, despite some mild improvements in the third quarter, last quarter of 2013 unfolded much like the rest of the year—poorly.

The Canadian Mining Eye index—which tracks the performance of 100 TSX and TSXV mid-tier and junior companies with market capitalizations between $1.4 billion and $55 million in Q3—shed 9%. The preceding quarter the index rose by 5%.

“This indicated a considerable underperformance relative to the S&P/TSX Composite index that gained 7% in the fourth quarter,” according to the report.

Q3 winning streak over: “Considerable underperformance” among Canadian miners in Q4

Chart from Canadian Mining Eye Q4 2013, Ernst & Young

 

By commodity group, the only winners were among the diamond, platinum group metals, and coal and consumable fuels sectors.

The gold and fertilizer minerals sectors were hit the hardest; gold dropped 27% over the year and the potash industry was crushed by the breakup of the Russian-Belarusian potash cartel in July.

As for individual companies, Colossus Minerals TSX:CSI is the index’s biggest loser; the company experienced a net share price decline of 91% during the quarter.

One-third of the companies tracked by the Canadian Mining Eye index realized a net gain in the fourth quarter, compared with more than half in the third quarter.

Lucara Diamond TSX:LUC came out on top, gaining 66% on its share price. Brigus Gold TSX:BRD gained 42% throughout the quarter after its flagship Black Fox mine achieved record gold production.

But miners can take solace in the fact that 2013 is over and, at least according to Ernst & Young, 2014 will provide growth opportunities for companies across the sector.

“We note that a new year has brought some transactional activity for companies with good quality projects and lower valuations,” researchers wrote.

“Investors are likely to view the current underperformance as a buying opportunity as projects are de-risked. We expect companies to continue to adopt a disciplined approach to capital management and to seek creative financing options to withstand the downturn.”

Reprinted by permission of MINING.com

China grabs a 12.5% stake in potash leader Uralkali

September 24th, 2013

by Cecilia Jamasmie | September 24, 2013 | Reprinted by permission of Mining.com

China grabs a 12.5% stake in potash leader Uralkali

Uralkali processing plant. (Photo: Wikimedia Commons)

China’s sovereign wealth fund (CIC) acquired Tuesday a 12.5% stake in beleaguered Russian potash miner Uralkali, the world’s No. 1 producer of the fertilizer, adding the investment to a growing list of recent commodity-related acquisitions.

The move is a major one for China, the world’s top potash consumer, as the country is securing in this way a steady supply in a market shaken by the fresh breakup of the Russia-Belarus cartel, which controlled more than 40% of world exports.

CIC is no stranger to Russia. Last year it secured a 5% interest in Polyus Gold and in February helped with the flotation of the Moscow stock exchange. But today’s deal has special significance, as it comes amid rumours of mogul Suleiman Kerimov wanting to sell his 20% stake in Uralkali over the dispute between Russia and Belarus.

Uralkali’s CEO Vladislav Baumgertner has been jailed in Belarus since August 26, when he was arrested on charges of abuse of power, following the firm’s departure from the potash cartel.

The CIC is now the second-largest shareholder in the world’s biggest potash producer.

Reprinted by permission of Mining.com