Saturday 25th May 2019

Resource Clips


Posts tagged ‘cobalt’

Turbulent times for Lynas

May 17th, 2019

Rare earths provide a cautionary tale about supply chain weaknesses

by Greg Klein | Updated May 21, 2019

Rare earths provide a cautionary tale about supply chain weaknesses

One of the world’s biggest supplies of magnet metals
undergoes separation at Lynas’ Malaysian facility. (Photo: Lynas Corp)

 

How often does an investor presentation draw such keen interest from non-investors?

No doubt representatives from a number of governments and industries watched intensely on May 21 as Lynas CEO/managing director Amanda Lacaze accentuated her company’s “will to win.” Lynas has plans in place and funding en route to overcome what previously appeared to be an unattainable ultimatum. Far from becoming a takeover target, let alone a jurisdictional fatality, the miner expects to continue building a rare earths supply chain “focused on rest-of-the-world markets, that is non-Chinese markets.”

That was her message, and if stirring delivery could convince listeners, Lacaze made her case. But insufficient details cast a pall of uncertainty. Clearly the company can’t meet a September 2 deadline to remove over 450,000 tonnes of radioactive waste from Malaysia and thereby avert a processing plant shutdown in that country which would render useless the company’s Mount Weld mine in Western Australia.

Rare earths provide a cautionary tale about supply chain weaknesses

One of the world’s richest rare earths deposits, Mount Weld boasts reserves expected to give over 25 additional years of production at 22,000 tonnes of rare earth oxides annually. Included is an especially bountiful distribution of the magnet metals neodymium and praseodymium. Lynas concentrates ore in WA before shipping material to Malaysia for refining and separation. But while rare earths metallurgy has stymied some other non-Chinese operations, this facility has operated successfully since 2012.

At least it did so under Malaysia’s previous government. Its first electoral defeat since the country’s 1957 independence brought to office a party long opposed to Lynas’ operation in Kuantan. Concerns about waste containing thorium and uranium brought to mind a Malaysian RE refinery operated by Mitsubishi up to 1992. The plant closed down after an increase in leukemia and birth defects that critics attributed to the operation’s waste.

Following an environmental review of Lynas’ facility late last year, the new government delivered two formidable demands: Ensure that all material brought into the country has been rendered non-radioactive. And remove seven years of accumulated radioactive tailings from the country by September 2. Failure to do so will shut down the plant, the government warned.

An enormous logistical problem notwithstanding, Lacaze and her “dream team” told investors they have solutions backed by a AU$500-million “capital envelope” from senior lender Japan Australia Rare Earths (JARE) and the Japanese trading company Sojitz Corp.

“Of course we cannot do this on the smell of an oily rag, much as we might like to,” Lacaze acknowledged.

Rare earths provide a cautionary tale about supply chain weaknesses

Lynas managing director Dato’ Mashal Ahmad at the
podium, CEO Amanda Lacaze holding the microphone
at the company’s May 21 shareholder presentation.

A new cracking and leaching plant to be built in WA would “detox” Mount Weld material. Plans to pour money into Malaysia to upgrade the company’s Kuantan facility also sounded an optimistic note. But accumulated waste remains troublesome.

As managing director Dato’ Mashal Ahmad explained, the company will counter the ultimatum by asking the government to choose one of two options: Allow Lynas to treat the waste by producing a type of fertilizer, or allow Lynas to build another waste depository in Malaysia. The company already has four years of research backing Option 1. As for Option 2, “which Lynas is prepared to do anytime,” the company has already chosen three potential sites.

To those skeptical that Malaysia would accept the proposals, Ahmad said the environmental review, which hasn’t been officially translated, pronounced the Kuantan operation safe. Politicians, not the report’s authors, issued the ultimatum, he maintained. Discussions with the government continue and another decision will come from the entire government, not individual politicians, Lacaze added. Based on what she termed “relatively constructive” public comments from Prime Minister Mahathir Mohamad, she expressed “confidence in the outcome.”

An entirely different possibility for Lynas arose last March when Wesfarmers launched a AU$1.5-billion bid for the miner. One of Australia’s largest listed companies and a multi-billion-dollar conglomerate with interests including chemicals, energy, fertilizers and industrial products, Wesfarmers imposed a daunting condition: Kuantan must retain a valid permit for a “satisfactory period following completion of the transaction.” 

Lynas spurned the offer, provoking talk from Wesfarmers of going hostile. Undeterred, and the day before proclaiming its “will to win,” Lynas joined one of its customers, downstream rare earths processor Blue Line Corp, to announce a memorandum of understanding to build an RE separation plant in Texas. The proposed joint venture “would be the only large-scale producer of separated medium and heavy rare earth products in the world outside of China,” the companies stated.

Of course the Blue Line MOU lacks certainty, as does the strategy of presenting options in the face of a government ultimatum. $500 million isn’t all that much. To industry observers, the predicament once again emphasizes the need to create non-Chinese supply chains.

Rare earths provide a cautionary tale about supply chain weaknesses

A founding principal of Technology Metals
Research LLC and a senior fellow at the
Institute for Analysis of Global Security,
Jack Lifton has over 55 years’ experience
with technology metals.

Speaking with ResourceClips.com the week before Lynas’ May 20-21 announcements, Jack Lifton discussed the urgency of addressing critical minerals challenges.

A chemist specializing in metallurgy, a consultant, author and lecturer focusing on rare earths, lithium and other essentials that he labels “technology metals,” Lifton was one of four scientists hired by the previous Malaysian government to evaluate the Kuantan facility prior to its initial permit.

Wesfarmers “would have the money and the time” to solve Lynas’ problems, he said. “A $38-billion company can spend a year fixing problems and stay in business. If Lynas were shut down for a year, I think that would be the end of it.”

Earlier this month Wesfarmers offered AU$776 million for ASX-listed Kidman Resources, which shares a 50/50 JV with Sociedad Quimica y Minera de Chile SA (SQM) on the advanced-stage Mount Holland lithium project in Western Australia.

“Wesfarmers clearly knows all the problems with Lynas but they’re still interested in buying it,” Lifton pointed out.

The possibility of a Chinese buy-out, on the other hand, could meet opposition from either of two governments. Malaysia’s previous administration feared Chinese influence, Lifton says.

As for Australia, “I do not think that the government, as it will be constituted after this election, will allow the Chinese to buy what is basically the largest high-grade deposit of magnet rare earths on the planet,” he says. Even so, Chinese control could eliminate the Malaysian problem. “China has immense facilities and excess capacity for treating ore like that. They wouldn’t need the Malaysian plant, not at all.”

Control need not mean total ownership. Following Molycorp’s bankruptcy, California’s Mountain Pass mine quietly resumed production last year under MP Materials. With China’s Shenghe Rare Earth Company a minority shareholder, North America’s sole rare earths producer exports all its output to China.

Shenghe Resources comprises the world’s second-largest RE company by output. It holds a majority stake in ASX-listed Greenland Minerals, which describes its Kvanefjeld polymetallic deposit as having “potential to become the most significant Western world producer of rare earths.” Last August the companies signed an offtake MOU for the proposed mine’s total RE production.

Huatai Mining, a subsidiary of Chinese coal trader Shandong Taizhong Energy, holds 15.9% of ASX-listed Northern Minerals, which plans to become the “first significant dysprosium producer outside China” at the Browns Range project in Western Australia.

“Everything from Browns Range is now going to China for refining and use,” Lifton notes. “My understanding is that’s what’s going to happen in Greenland.”

Neither Greenland nor Northern can handle separation, he explains. “They can concentrate the ore, but where are the facilities to separate individual rare earths from the mixed concentrate? They are, today, overwhelmingly in China. The Chinese have an advantage in excess refining capacity.”

While Lifton thinks Malaysia would welcome Japanese ownership of Lynas, the Japanese no longer have processing abilities. They’re also burdened by Mitsubishi’s legacy.

“China does not, to the best of my knowledge, have ore as rich as Mount Weld. I don’t know of any other deposit on earth that’s so high-grade and well-distributed with magnet materials. So anyone who has processing would love to have that.”

If we don’t reconstitute a total American supply chain, if the Europeans don’t do the same, for the critical materials like rare earths, cobalt, lithium, we’re going to be out of luck.—Jack Lifton

Such a fate is now pure speculation but should Lynas face a Sino-scenario, it would only intensify a trend well underway, he adds. “They already have the largest RE industry on the planet and they’re buying RE, cobalt and other critical assets in Greenland, Africa, Australia, South America.

“If we don’t reconstitute a total American supply chain, if the Europeans don’t do the same, for the critical materials like rare earths, cobalt, lithium, we’re going to be out of luck. The Chinese in my opinion are already self-sufficient in rare earths, lithium and cobalt. They have mines all over the world that they own and operate, they have the bulk of chemical processing. They’re going to take care of their domestic needs first, and then if they want to export, they’ll control the price, the supply, and they do control the demand because at this time about 60% of all world metals goes to China.

“In America there’s a lot of talk now about critical minerals and some people are saying we need ‘a conversation’ on the subject. So while we think about it and have conversations, the Chinese are setting themselves up for the rest of this century.”

A Capitol idea

May 7th, 2019

This U.S. bipartisan bill aims to reduce America’s critical minerals dependency

 

This won’t be the first time Washington has seen such a proposal. Announced last week, the American Mineral Security Act encourages the development of domestic resources and supply chains to produce minerals considered essential to the country’s well-being. But the chief backer, Alaska Republican Senator Lisa Murkowski, acknowledges having introduced similar standalone legislation previously, as well as addressing the topic in a previous energy bill.

A U.S. bipartisan bill would reduce America’s critical minerals dependency

This time, however, the proposal takes place amid growing concern. In late 2017, following a U.S. Geological Survey report that provided the first comprehensive review of the subject since 1973, President Donald Trump called for a “federal strategy to ensure secure and reliable supplies of critical minerals.” In early 2018 the U.S. Department of the Interior formally classified 35 minerals as critical. A September 2018 report responded to the presidential order, urging programs to address supply chain challenges that leave the U.S. relying heavily on countries like Russia and especially China.

Even so, Murkowski and the other three senators think Washington needs a little push.

“I greatly appreciate the administration’s actions to address this issue but congress needs to complement them with legislation,” she said. “Our bill takes steps that are long overdue to reverse our damaging foreign dependence and position ourselves to compete in growth industries like electric vehicles and energy storage.”

The senators referred to USGS data from 2018 showing 48 minerals for which their country imported at least 50% of supply. Foreign dependency accounted for 100% of 18 of them, including rare earths, graphite and indium.  

Focusing on energy minerals, Simon Moores of Benchmark Mineral Intelligence lauded the bipartisan group for addressing “a global battery arms race that is intensifying.

“Lithium, graphite, cobalt and nickel are the key enablers of the lithium-ion battery and, in turn, the lithium-ion battery is the key enabler of the energy storage revolution. Globally they are facing a wall of demand, especially from electric vehicles. Yet the U.S. has been a bystander in building a domestic supply chain capacity.

“Right now, the U.S. produces 1% of global lithium supply and only 7% of refined lithium chemical supply, while China produces 51%. For cobalt, the U.S. has zero mining capacity and zero chemicals capacity whilst China controls 80% of this [at] second stage.

These supply chains are the oil pipelines of tomorrow. The lithium-ion battery is to the 21st century what the oil barrel was to the 20th century.—Simon Moores
Benchmark Mineral Intelligence

“Graphite is the most extreme example with no flake graphite mining and anode production compared to China’s 51% and 100% of the world’s total, respectively. And it’s a similar story with nickel—under 1% mined in the U.S. and zero capacity for nickel sulfate.

“These supply chains are the oil pipelines of tomorrow,” Moores emphasized. “The lithium-ion battery is to the 21st century what the oil barrel was to the 20th century.”

Looking at another critical mineral, the White House has until mid-July to respond to a U.S. Department of Commerce report on the effects of uranium imports to American national security. According to the USGS, the fuel provides 20% of the country’s electricity but the U.S. relies on imports for over 95% of supply.

A recent book by Ned Mamula and Ann Bridges points to rare earths as the “poster child for U.S. critical mineral vulnerability.” In Groundbreaking! America’s New Quest for Mineral Independence, the authors say REs remain “essential for military and civilian use, for the production of high-performance permanent magnets, GPS guidance systems, satellite imaging and night vision equipment, cellphones, iPads, flat screens, MRIs and electric toothbrushes, sunglasses, and a myriad of other technology products. Since they offer that extra boost to so many new technologies, these rare earth metals rival energy in importance to our 21st century lifestyle.”

Among the proposed act’s provisions are:

  • an updated list of critical minerals every three years

  • nationwide resource assessments for every critical mineral

  • “practical, common-sense” reforms to reduce permitting delays

  • R&D into recycling, replacing and processing critical minerals

  • a study of the country’s minerals workforce by the U.S. Secretary of Labor, National Academy of Sciences and the National Science Foundation

The senators made their announcement at Benchmark Minerals Summit 2019, a private event for industry and U.S. government representatives. In a February presentation to the U.S. Senate Committee on Energy and Natural Resources chaired by Murkowski, Moores issued a “red alert on the lithium-ion battery supply chain and the raw materials of lithium, cobalt, nickel and graphite.”

Read more about U.S. efforts to secure critical minerals here and here.

Saville Resources reports favourable geology, plans Phase II drilling at Quebec niobium-tantalum project

April 29th, 2019

by Greg Klein | April 29, 2019

Assays are pending but the first drill program since 2010 has Saville Resources TSXV:SRE optimistic about results. With five holes totalling 1,049 metres, the season devoted four holes to the Mallard target in the property’s southeastern area. Historic, non-43-101 results from Mallard’s previous campaign brought near-surface high grades that included:

  • 0.82% Nb2O5 over 21.89 metres, starting at 58.93 metres in downhole depth

  • 0.72% over 21.35 metres, starting at 4.22 metres
  • (including 0.9% over 4.78 metres)
Saville Resources reports favourable geology, plans Phase II drilling at Quebec niobium-tantalum project

A spring campaign under winter conditions
comprised the project’s first drill program since 2010.

True widths were unknown.

The spring campaign sunk an additional hole 60 metres from another location of high-grade, near-surface results that included an historic, non-43-101 interval of 0.71% Nb2O5 over 15.33 metres, starting at 55.1 metres. The new hole tested the intercept down-dip as well as the strike extension of the main mineralized zone.

“In each hole, favourable rock types and coarse-grained pyrochlore mineralization were visually identified over varying widths and concentrations,” the company stated. “Portable XRF data and detailed geological logging further support these observations.”

Saville plans further drilling at Mallard, as well as Miranna and several other targets, to build a 43-101 resource estimate. Previous boulder samples from Mallard include an exceptional 5.93% Nb2O5, as well as 2.75%, 4.24% and 4.3% Nb2O5. Tantalum samples from the area reached up to 1,040, 1,060 and 1,220 Ta2O5.

Work on the 1,223-hectare Niobium Claim Group takes place under a 75% earn-in from Commerce Resources TSXV:CCE, whose Ashram rare earths deposit a few kilometres away moves towards pre-feasibility.

In early April Saville released assays from last year’s campaign on the Bud property in southern British Columbia’s historic Greenwood mining camp, with samples reaching as high as 4.57 g/t gold, 27.7 g/t silver and 6.7% copper.

A private placement first tranche that closed in December brought Saville $311,919. In March the company optioned its James Bay-region Covette nickel-copper-cobalt property to Astorius Resources TSXV:ASQ. A 100% fulfillment would bring Saville $1.25 million over three years, with Astorius spending another $300,000 on exploration within two years. Saville retains a 2% NSR.

Read more about Saville Resources.

Saville Resources begins niobium-tantalum drilling in Quebec

March 25th, 2019

by Greg Klein | March 25, 2019

The search for critical minerals on the Labrador Trough’s Quebec side continues as Saville Resources TSXV:SRE puts a rig to work on the Niobium Claim Group property this week. A Phase I program of at least four holes totalling a minimum 700 metres will target an area that—despite encouraging historic assays—hasn’t been drilled since 2010.

Saville currently works on a 75% earn-in on the 1,223-hectare property from Commerce Resources TSXV:CCE, whose Ashram rare earths deposit a few kilometres away advances towards pre-feasibility.

Saville Resources begins niobium-tantalum drilling in Quebec

Saville’s focus will be the Mallard target, previously known as the Southeast target. Location of the most extensive work so far, Mallard underwent nine holes totalling 2,490 metres, with EC10-033 featuring impressive, near-surface intervals in these historic, non-43-101 results:

  • 0.82% Nb2O5 over 21.89 metres, starting at 58.93 metres in downhole depth

  • 0.72% over 21.35 metres, starting at 4.22 metres
  • (including 0.9% over 4.78 metres)

True widths were unknown.

The current program will test the hole’s southeastern extension. “Strong mineralization has been returned at this target historically and confirming and extending this trend is a logical next step as we advance towards an initial mineral resource estimate,” said president Mike Hodge.

A Phase II campaign would continue at Mallard as well as other targets including Miranna, an undrilled area where boulder samples reached as high as 2.75%, 4.24% and 4.3% Nb2O5, along with an outstanding 5.93% Nb2O5. Miranna’s tantalum samples graded up to 1,040, 1,060 and 1,220 Ta2O5.

The company expects Phase I to wrap up in about a month.

Both niobium and tantalum have been classified as critical minerals by the U.S. government. Used in steel and superalloy production, 88% of world niobium supply comes from Brazil, according to 2018 data from the U.S. Geological Survey. Sixty-six percent of global tantalum supply, necessary for automotive electronics, cellphones and computers, came from the strife-torn countries of Rwanda and the Democratic Republic of Congo, the USGS reported. Additional concerns involve opaque supply lines that can mask conflict sources in those countries.

In late December Saville closed a private placement first tranche of $311,919. Earlier this month the company optioned its James Bay-region Covette nickel-copper-cobalt property to Astorius Resources TSXV:ASQ . A 100% fulfillment would bring Saville $1.25 million over three years, while Astorius would spend another $300,000 on the project within two years. Saville retains a 2% NSR.

Read more about Saville Resources.

Infographic: Climate Smart Mining and minerals for climate action

March 14th, 2019

sponsored by the World Bank | posted with permission of Visual Capitalist | March 14, 2019

Climate Smart Mining Minerals for climate action

 

Countries are taking steps to decarbonize their economies by using wind, solar and battery technologies, with an end goal of reducing carbon-emitting fossil fuels from the energy mix.

But this global energy transition also has a trade-off: to cut emissions, more minerals are needed.

Therefore, in order for the transition to renewables to be meaningful and to achieve significant reductions in the Earth’s carbon footprint, mining will have to better mitigate its own environmental and social impacts.

Advocates for renewable technology are not walking blindly into a new energy paradigm without understanding these impacts. A policy and regulatory framework can help governments meet their targets, and mitigate and manage the impacts of the next wave of mineral demand to help the communities most affected by mining.

This infographic comes from the World Bank and it highlights this energy transition, how it will create demand for minerals and also the Climate Smart Mining building blocks.

Renewable power and mineral demand

In 2017, the World Bank published The Growing Role of Minerals and Metals for a Low Carbon Future, which concluded that to build a lower carbon future there will be a substantial increase in demand for several key minerals and metals to manufacture clean energy technologies.

Wind
Wind power technology has drastically improved its energy output. By 2025, a 300-metre-tall wind turbine could produce about 13 to 15 MW, enough to power a small town. With increased size and energy output comes increased material demand.

A single 3 MW turbine requires:

  • 4.7 tons of copper

  • 335 tons of steel

  • 1,200 tons of concrete

  • 2 tons of rare earth elements

  • 3 tons of aluminum

Solar
In 2017 global renewable capacity was 178 GW, of which 54.5% was solar photo-voltaic technology (PV). By 2023, it’s expected that this capacity will increase to one terawatt with PV accounting for 57.5% of the mix. PV cells require polymers, aluminum, silicon, glass, silver and tin.

Batteries
Everything from your home, your vehicle and your everyday devices will require battery technology to keep them powered and your life on the move.

Lithium, cobalt and nickel are at the centre of battery technology that will see the greatest explosion in demand in the coming energy transition.

Top five minerals for energy technologies

Add it all up, and these new sources of demand will translate into a need for more minerals:

 

  2017 production 2050 demand from energy technology Percentage change (%)
Lithium 43 KT 415 KT 965%
Cobalt 110 KT 644 KT 585%
Graphite 1200 KT 4590 KT 383%
Indium 0.72 KT 1.73 KT 241%
Vanadium 80 KT 138 KT 173%

 

Minimizing mining’s impact with Climate Smart Mining

The World Bank’s Climate Smart Mining (CSM) supports the sustainable extraction and processing of minerals and metals to secure supply for clean energy technologies, while also minimizing the environmental and climate footprints throughout the value chain.

The World Bank has established four building blocks for Climate Smart Mining:

  • Climate change mitigation

  • Climate change adaptation

  • Reducing material impacts

  • Creating market opportunities

Given the foresight into the pending energy revolution, a coordinated global effort early on could give nations a greater chance to mitigate the impacts of mining, avoid haphazard mineral development and contribute to the improvement of living standards in mineral-rich countries.

The World Bank works closely with the United Nations to ensure that Climate Smart Mining policies will support the 2030 Sustainable Development Goals.

A sustainable future

The potential is there for a low carbon economy, but it’s going to require a concerted global effort and sound policies to help guide responsible mineral development.

The mining industry can deliver the minerals for climate action.

Posted with permission of Visual Capitalist.

Saville Resources options Quebec nickel-copper-cobalt property to Astorius Resources

March 1st, 2019

by Greg Klein | March 1, 2019

By granting an option on its James Bay-region Covette property, Saville Resources TSXV:SRE stands to gain a cash infusion while another company works the project. Under the agreement, Astorius Resources TSXV:ASQ may acquire 100% of the nickel-copper-cobalt property by paying $1.25 million over three years and spending $300,000 by February 2021. Saville retains a 2% NSR.

Saville Resources options Quebec nickel-copper-cobalt property to Astorius Resources

Covette sits 10 kilometres north of the all-weather
Trans-Taiga road and adjacent powerline.

Previous work on Covette includes a 2016 VTEM survey and early-stage field work in 2017 and 2018, which included grab samples grading up to 0.09% copper and 0.19% nickel. Samples from outcrop showed up to 1.2% zinc, 68.7 ppm silver, 0.15% copper and 0.19% nickel.

In July Saville filed a 43-101 technical report recommending detailed mapping, surface sampling, channel sampling and further geophysics.

Saville’s focus remains the Niobium claim group in northern Quebec, a 75% earn-in from Commerce Resources TSXV:CCE, whose Ashram rare earths deposit a few kilometres away advances towards pre-feasibility. Autumn work on the Saville project found 22 boulder samples above 0.7% Nb2O5, with one peaking at 1.5%. Fourteen of the samples exceeded 0.8% Nb2O5 and brought encouraging tantalum results.

The program included a ground magnetic survey and also opened up a new target area where one standout boulder sample graded 1.28% Nb2O5 and 260 ppm Ta2O5, while another showed 0.88% Nb2O5 and 1,080 ppm Ta2O5.

In late December Saville closed a private placement first tranche of $311,919.

Read more about Saville Resources.

‘The great enabler’

January 16th, 2019

A new era of energy depends on mining and especially copper, says Gianni Kovacevic

by Greg Klein

A new era of energy depends on mining and especially copper, says Gianni Kovacevic

 

Gold and precious metals can attract people seeking wealth or beauty, while diamonds and other gems convey an intrigue of their own. But who becomes downright passionate about a base metal? To those who’ve head him talk, Gianni Kovacevic quickly comes to mind. Copper’s his metal of interest but his real fascination is the future—that, and a vision of the importance this metal holds to a new era of energy history.

Chairperson of CopperBank Resources CSE:CBK, an authority on energy systems and author of My Electrician Drives a Porsche?, he’s an especially engaging public speaker who’s possibly more effective than anyone in communicating mining’s importance to non-mining people.

A new era of energy depends on mining and especially copper, says Gianni Kovacevic

The era of electrification offers promise to both
developed and emerging economies, says Kovacevic.

But those in the industry find his message captivating too. He calls mining, metals and especially copper “the great enabler” of electrification. And electrification’s the key to a new era in which copper usage will grow by magnitudes, he declares.

That’s happening already as developed countries wean themselves off fossil fuels and emerging countries use more and more electricity for consumer items and transportation or—from village to village and home to home—as they adopt electricity for the first time.

Among other vital metals are aluminum, lithium, vanadium and cobalt. “I like anything that enables electrification,” Kovacevic explains. “The sensitive one is cobalt. If people are talking about reducing cobalt in batteries or eliminating it altogether, who wins? Nickel. But no question about it, we will require hundreds of millions, in fact billions, of new battery cells.”

Overall, approximately 19% of energy use now comes from electricity, he says. But he expects the number to reach about 50% by 2050. His data for current and planned copper production, however, shows alarming shortfalls in capacity.

Half of the world’s primary copper production now comes from 25 mines. Just two countries, Peru and Chile, provide a combined 45%. One major copper mine, First Quantum Minerals’ (TSX:FM) Cobre Panama, has commissioning planned this year. Nothing else over 110,000 tonnes is expected until around 2022.

A new era of energy depends on mining and especially copper, says Gianni Kovacevic

First Quantum’s Cobre Panama will be the only
major new copper mine until about 2022, Kovacevic says.

In 2010 the 15 largest copper producers boasted average grades around 1.2%. The 2016 average was 0.72% and falling. Over the next half-century he expects average grades to slip below 0.5%.

Clearly more copper production will require much higher prices to make lower grades economic, Kovacevic emphasizes. He’s not alone in that outlook. Among others extolling the metal’s virtues is Robert Friedland, who also considers copper the key to electrification and maintains that declining grades will require higher prices.

Over the last nine months, however, prices haven’t co-operated. In late May spot copper approached a five-year high in the range of $3.30 a pound, but fell steeply after June 1. Current prices sit around $2.60 to $2.65, although that’s well above levels seen through most of 2015 and 2016. But Kovacevic says warehouse inventories suggest the market has reached a supply deficit.

Two decades of prices show an ironic connection with the commodity that fueled the previous energy era, he adds. “Copper’s never left its long-term bull market but it’s been pushed around by oil, because 90% of the time it’s correlated with oil. But now the prices have to decouple. Copper has to go much, much higher.”

Referring to himself as a “realistic environmentalist,” Kovacevic says the metals and mining crucial to the new energy era also remain crucial to emerging societies. Blocking new mines from development hinders new economies from development. “I can’t say to someone in India, for example, that they’re never going to have electricity or running water in their homes. You can’t say ‘build absolutely nothing anywhere near anyone.’ People want basic human progress. Fortunately, as we go into this new pivot of energy we’re going to bypass the old ways of receiving energy in many applications.”

Kovacevic expands on his message in an illustrated keynote speech and also hosts a lithium investment panel discussion at the Vancouver Resource Investment Conference on January 20 and 21. To avoid the $30 admission fee, click here for free registration.

Visual Capitalist: The bull case for energy metals going into 2019

January 10th, 2019

by Jeff Desjardins | posted with permission of Visual Capitalist | January 10, 2019

 

The rapid emergence of the world’s renewable energy sector is helping set the stage for a commodity boom.

While oil has traditionally been the most interesting commodity to investors in the past, the green energy sector is reliant on the unique electrical and physical properties of many different metals to work optimally.

To build more renewable capacity and to store that energy efficiently, we will need to increase the available supply for these specific raw materials, or face higher costs for each material.

Metal bull cases

Ahead of Cambridge House’s annual Vancouver Resource Investment Conference on January 20 and 21, 2019, we thought it would be prudent to highlight the “bull case” for relevant metals as we start the year.

It’s important to recognize that the commodity market is often cyclical and dependent on a multitude of factors, and that these cases are not meant to be predictive in any sense.

In other words, the facts and arguments illustrated sum up what we think investors may see as the most compelling stories for these metals—but what actually happens in the market, especially in the short term, may be different.

Overarching trends

While we highlight 12 minerals ranging from copper to lithium, most of the raw materials in the infographic fit into four overarching, big-picture stories that will drive the future of green energy:

Solar and wind
The world hit 1 TW of wind and solar generation capacity in 2018. The second TW will be up and running by 2023, and will cost 46% less than the first.

Electric vehicles
Ownership of electric vehicles will increase 40 times in the next 13 years, reaching 125 million vehicles in 2030.

Energy storage
The global market for energy storage is rapidly growing, and will leap from $194 billion to $296 billion between 2017 and 2024.

Nuclear
150 nuclear reactors with a total gross capacity of about 160,000 MW are on order or planned, and about 300 more are proposed—mostly in Asia.

Which of these stories has the most potential as a catalyst for driving the entire sector?

Based on these narratives, and the individual bull cases above, which metal has the most individual potential?

Visit Visual Capitalist at Booth #1228 at #VRIC19.

Posted with permission of Visual Capitalist.

Click here for free VRIC registration up to January 11.

Read more about the Vancouver Resource Investment Conference.

Updated: DRC’s increasing instability heightens critical minerals concern

December 31st, 2018

This story has been updated, expanded and moved here.

Mixed messages

December 14th, 2018

Perspectives differ on 2018 small cap performance

by Greg Klein

Perspectives differ on 2018 small cap performance

Not everyone agrees, but some sources represent 2018 as a comeback year for mining and exploration.
(Photo: PwC Junior Mine 2018)

 

It was the best of times, the worst of times or some middling but still promising times—you’d have the dickens of a time trying to reconcile these conflicting viewpoints. Such was the state of junior miners this past year, when varying fortunes eluded generalization. Just how the sector performed depended on who did the talking.

Outright despair came from Peter Clausi last October, as the CEO of GTA Resources and Mining TSXV:GTA discussed the company’s proposal to sell its assets amid a change of business:

A look at some different perspectives on 2018 small cap performance

In this difficult Canadian mining environment, it was almost impossible for the board not to come to this decision. The lackluster commodity markets, the depressed public market for junior explorers and the severe challenge of raising further capital all contributed to this decision. We believe GTA’s shareholders will be better served in a growth industry other than junior exploration.

Not every CEO would turn a press release into such a cri de coeur, but stats show GTA’s hardly alone. Evaluating 378 mining and other companies with market caps ranging from $4 million to $588 million, the S&P/TSX Venture Composite Index shows a nearly 35% drop in valuations since the relatively heady days of last January.

Yet an entirely different perspective came from PricewaterhouseCoopers in December, with the 2018 edition of its annual Junior Mine report. Unlike the S&P/TSXV Composite, this data focuses only on miners and comes from 12 months ending June 30. Furthermore it examines the Venture’s top 100 miners by market cap, a selection that could tilt results in favour of success.

And a degree of success PwC found, with the aggregate valuation growing to $12.9 billion, a 6% increase over the previous year, the third consecutive annual increase and the best performance “since the heydays of 2011.”

Not just the top 100, but Venture miners and explorers overall increased their total market caps by 5% to $21.1 billion, PwC reported.

Even so they were outperformed by cannabis, fintech and cryptocurrencies. “As a result, mining companies’ share of the TSXV’s total value declined to 43.8%, down from 47.4% a year earlier. Nevertheless, mining remains by far the dominant sector on the exchange, with life sciences (13%), finance (11%) and technology (9%) representing the next-largest industries by valuation.”

Investors favoured top 100 companies moving from development into production, while royalty streaming and the energy metals lithium, cobalt and nickel took on greater prominence at gold’s expense.

Financing for Venture miners overall rose 6.5% to $2.7 billion, almost $2.2 billion of that from equities that mostly went to explorers and development-stage companies, PwC stated. Companies in the production stage increasingly turned to debt financing, which rose 65.9% over the previous 12-month period.

Fifty-one of the top 100 raised more than $10 million apiece, while 10 companies each raked in over $50 million.

Apart from market caps and financings, spending provides another guide to the sector’s health. Some upbeat numbers came in October from Natural Resources Canada, following a survey of companies’ 2018 commitments for Canadian projects. If all went to plan, exploration expenditures for the year came to $2.36 billion, an 8% increase over 2017 and the highest amount since 2012. Juniors, struggling or not, accounted for over 45% of the total commitments.

With coffers at their fullest in seven years, equity and debt financings on the rise and commodity prices relatively stable, the industry has entered a long-awaited period of opportunity.—The PwC Junior Mine 2018 report

The exploration category included engineering, economic, feasibility and environmental studies, as well as general expenses. All that’s part of the much larger category of total Canadian mineral resource development investments, which totalled $11.86 billion this year, compared with $10.61 billion in 2017, NRCan found.

In fact Canada leads an encouraging global trend among juniors, according to S&P Global Market Intelligence. Using different methodology, the group found budgets for nonferrous exploration leaping by 19% worldwide this year to hit $10.1 billion. Juniors showed the highest budget jump at 35%, their first increase since 2012.

Canadian companies lead the world in nonferrous exploration, boasting a 31% budget increase this year, leaving Australia and the U.S. in second and third place, S&P added.

Of course all that can sound like smiley-faced consolation to companies struggling with jurisdictional difficulties, commodity performance, investor negativity or other challenges. But in an industry not always shy about basking in reflected glory, the continuing success of some companies must offer reassurance to the sector as a whole.