Tuesday 6th December 2016

Resource Clips


Posts tagged ‘democratic republic of congo’

Amnesty International researcher Mark Dummett warns that brand name consumer items might contain conflict cobalt

November 1st, 2016

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King’s Bay Gold to acquire never-drilled copper-cobalt property in Labrador

October 28th, 2016

by Greg Klein | October 28, 2016

An intriguing chance find has King’s Bay Gold TSXV:KBG hoping the Trans-Labrador Highway will be a road to discovery. That’s the story behind the company’s October 27 announcement of a definitive agreement to acquire the Lynx Lake copper-cobalt property in south-central Labrador.

King’s Bay Gold to acquire never-drilled copper-cobalt property in Labrador

Powerlines and the Trans-Labrador Highway
run adjacent to the Lynx Lake copper-cobalt property.

As Newfoundland was building the highway in 2008, a provincial contractor with prospecting experience noticed evidence of disseminated and massive sulphides, King’s Bay geologist/director Nick Rodway explains. Some geological sleuthing eventually drew the contractor to the property’s east side, where a quarry had been blasted for aggregate.

Grab samples assayed the following year showed non-43-101 results up to 1.39% copper, 0.94% cobalt, 0.21% nickel and 6.5 g/t silver. Regional low-res magnetic surveys undertaken by the province and preliminary work in 2014 with a hand-held EM-16 device suggest strong conductors underlying the area.

Grab samples taken on the property’s west side in 2015 brought non-43-101 results up to 1.03% copper, 0.566% cobalt, 0.1% nickel, 5 g/t silver, 0.36% chromium, 0.39% molybdenum and 0.23% vanadium.

With a team returning to Lynx Lake next week, King’s Bay intends to conduct a sampling program to bring 43-101 results, along with further EM-16 surveys. Should all go to plan, airborne geophysics could follow this winter.

Open to year-round work, highway-accessible and with adjacent powerlines, the 20-square-kilometre property sits about 100 kilometres southeast of the town of Happy Valley-Goose Bay.

Subject to approvals, the acquisition costs King’s Bay $100,000 over three years and 900,000 shares over two years. On October 27 the company also announced a private placement of up to $1 million.

The news comes amid growing concerns over future cobalt supply. Nearly 60% of global production comes from the Democratic Republic of Congo, a country rife with political instability and conflict mining.

At the same time increased demand comes from “the energy storage revolution,” reports Benchmark Mineral Intelligence. Its data shows “2015 total global supply at 100,000 tpa, of this the battery market consumed 48,000 tpa.

“With a lithium-ion battery production surge well underway—and Benchmark recently revising its megafactories tracker to now 14 that are under construction ranging from three- to 35-GWh capacity—lithium-ion battery demand for cobalt is set to exceed 100,000 tpa by 2020.”

Conflict cobalt uncertainty continues to haunt consumer industries

October 3rd, 2016

by Greg Klein | October 3, 2016

Nine months after issuing a report on cobalt produced by child labour, Amnesty International says major manufacturers still can’t guarantee conflict-free sources.

The organization’s January report focused on the Democratic Republic of Congo, where children work in dangerous conditions up to 12 hours a day, making between $1 and $2 a day. “In 2014 approximately 40,000 children worked in mines across southern DRC, many of them mining cobalt, according to UNICEF,” Amnesty noted.

Conflict cobalt uncertainty continues to haunt consumer industries

DRC children sorting ore.
(Photo: Amnesty International/Afrewatch)

“Frankly companies owe it to their consumer to be transparent about their supplies and to map out their supply chains so that they know where it’s coming from,” Amnesty researcher Mark Dummett told Thomson Reuters Foundation, the charitable arm of the Thomson Reuters news agency. He maintains there’s no guarantee that the lithium-ion batteries in brand name consumer items, including vehicles, phones, computers and other devices, aren’t tainted with conflict cobalt.

Oddly enough, U.S. laws barring conflict minerals don’t cover cobalt. The Amnesty report stated at least half the world’s supply originates in the DRC, with about one-fifth of the national total coming from artisanal mines.

Benchmark Mineral Intelligence attributes over 60% of global output to the DRC.

While several manufacturers said they were scrutinizing their sources, Dummett countered that they weren’t disclosing what efforts they made to exclude child labour from their supply chains.

Last month Industrial Minerals reported that RealLi Research analyst Mo Ke told a Beijing conference there would “probably be a shortage next year” of the commodity. “Some commentators, such as Ian Pringle, managing director of Bayrock Materials and Pacific Basin Bluestone, thinks that this is an understatement,” IM added.

Already suffering from civil and political unrest, the DRC was hit by corruption allegations last week from the U.S. Securities and Exchange Commission. An SEC lawsuit claims that a DRC partner of the Och-Ziff Capital Management Group bribed government officials with more than US$100 million over 10 years.

An anonymous source alleged the partner was Dan Gertler, Bloomberg reported. “Glencore and Gertler’s Fleurette Group are partners in the $1.8-billion Mutanda copper and cobalt mine in the African country, with Glencore owning 69% and Fleurette the remainder,” the news agency added. Gertler and Fleurette denied allegations of wrongdoing.

In May Freeport-McMoRan NYSE:FCX announced a definitive agreement to sell its stake in the DRC’s Tenke copper-cobalt mine to China Molybdenum for US$2.65 billion and a contingent consideration of up to US$120 million. But a Bloomberg dispatch from last month stated that Gécamines, the DRC’s state-owned mining company and a co-owner of Tenke, said any decision by Lundin Mining TSX:LUN to divest its 24% share of the mine could threaten the deal.

Download the Amnesty International report.

A cautious approach

September 16th, 2016

Jon Hykawy discusses lithium, cobalt and a battery-fuelled frenzy

by Greg Klein

Making its Western Hemisphere debut in Toronto from September 26 to 28, Mines and Money kicks off with a full day dedicated to battery metals. That would seem to cast a resoundingly positive vote in lithium’s boom-or-bubble debate. But while conference speaker Jon Hykawy sees an enduring case for the celebrated commodity, he counsels investors to tread carefully.

A physicist with an MBA in marketing who’s covered energy metals and industrial minerals for Byron Capital Markets, he’s been focusing much of his attention on rechargeable batteries, fuel cells and renewable energy since founding Stormcrow Capital.

He sees renewed optimism in resources generally, especially in battery materials. But he sounds wary about lithium’s most recent price increases.

Jon Hykawy discusses lithium, cobalt and a battery-fuelled frenzy

“They look to me like what I would have expected if we had major producers that weren’t yet under pressure to increase output, speculators buying and warehousing material for future sale, and some panic buying and resulting over-stocking by end-users,” Hykawy tells ResourceClips.com. “It’s the situation we had in uranium back in 2007 and 2008 and with rare earths in 2010 and 2011. That’s not to say there’s going to be a catastrophic collapse in prices because fundamental demand for lithium is growing at a pretty respectable pace. But it doesn’t mean that every junior is going to see production.”

Of course assessing juniors involves assessing their projects. That brings up the distinction between two types of deposits, brine and pegmatite.

Brines generally offer lower operating costs, he points out. But “there are only so many natural brines out there. Some natural brines are problematic, some are in bad jurisdictions. No one’s going to go into Bolivia under the current government. That eliminates one of the largest resources in the world.

“But recently we’ve had new technologies come to the fore that could enable alternative brines that hadn’t been considered viable at any reasonable economic level,” Hykawy adds. Extraction processes developed by companies like POSCO, Eramet and Tenova Bateman Technologies “can pull lithium directly out of brine,” eliminating the lengthy solar evaporation phase.

That would open up more types of brines, for example fossilized brines from oil fields, which might hold a very good grade of lithium but a huge quantity of calcium or magnesium. And it opens up different locales.—Jon Hykawy, president of Stormcrow Capital

“Some of these technologies don’t worry as much or at all about the contaminants that conventionally impact solar evaporation production,” he continues. “That would open up more types of brines, for example fossilized brines from oil fields, which might hold a very good grade of lithium but a huge quantity of calcium or magnesium. And it opens up different locales. Let’s say you’re pulling lithium out of brine from oil fields near the U.S. gulf coast. The high humidity and heavy rainfall works against solar evaporation. But if you have a direct extraction technology, you can put that lithium through the process. If it ignores contaminants, all the better.”

He credits speed as the biggest advantage of hard rock deposits. “Once you’ve got a hard rock lithium mine up and running, the time it takes to pull ore out of the ground and turn it into saleable product is measured in days. That makes hard rock mines look like far more reliable suppliers.” The advantage comes with a higher opex, however.

Then there’s the distinction between lithium hydroxide and lithium carbonate. The latter results from solar evaporation of brine and served as “ a decent feedstock for the initial type of lithium-ion battery that used lithium-cobalt oxide as a cathode material.”

Better suited to more modern battery chemistries, however, is lithium hydroxide, now considered “something of a wonderkid,” Hykawy says.

It’s associated with hard rock deposits, but not limited to them. Solar evaporation of brine can produce lithium chloride in solution or carbonate as a precipitate, he explains. “You can then send the carbonate or chloride to a processing company that will turn it into lithium hydroxide.”

That makes market share comparisons for carbonate and hydroxide problematic when it’s not clear how much hydroxide originated as carbonate.

“Some technologies can produce carbonate or hydroxide directly from brine, but they’re not in commercial use yet. Over time the industry will become more flexible.”

Hydroxide fetches the higher prices. “What you’re really paying for in lithium carbonate or hydroxide are the lithium units, the actual amount of lithium chemical…. Today you’re getting a very substantial premium for lithium units in hydroxide, much more than you’d expect. That suggests to me there’s a secular shortage of hydroxide and people are willing to pay up, especially in the spot market, because they themselves don’t have the ability to buy carbonate and convert it into hydroxide.”

Looking at graphite, he’s satisfied that increasing demand can be met by existing producers and up-and-coming projects. But cobalt presents a more intriguing story.

Normally mined as a byproduct of copper or nickel, most of it comes from the conflict-plagued Democratic Republic of Congo, where production has been reduced or suspended with the decline in base metals prices.

While battery demand raises cobalt prices, steel acts as a restraint. More than half of cobalt production has gone to the troubled industry. “That’s becoming less and less a factor in cobalt prices because a growing component of cobalt, well over 40% today, now goes into batteries.”

Cobalt prices have been climbing but, Hykawy says, “if you have access to them, the cobalt sulphates that are actually used in batteries have done far better in price than the cobalt metal.”

Getting back to lithium’s boom-versus-bubble debate, Hykawy takes the latter position. “Yeah, there’s momentum to be played, but just understand the floor you’re standing on might not be as strong as you thought…. There’s a long-term, strong growth trend in lithium demand and the prospects for lithium companies. But pick your entry points and the horse you’re going to ride carefully.”

Hykawy addresses the Mines and Money Battery Metals conference at St. Andrew’s Club in Toronto on September 26.

July 18th, 2016

John Mauldin: Implications of the Turkish coup/The age of no returns GoldSeek
Nickel near eight-month high as metals gain on stimulus speculation NAI 500
Cobalt supply tightens as battery demand looms Benchmark Mineral Intelligence
Markets are telling us what the elites won’t: Life goes on after Brexit Equities.com
New stock market highs correlate to $57 trillion in printed global currency units Streetwise Reports
Canada welcomes move towards ratification of EU trade deal Industrial Minerals
Gold junior climbs on assays SmallCapPower
A classic case of failed socialism: What’s next after Brexit? Stockhouse
Limestone: Commodity overview Geology for Investors
Lithium in Las Vegas: A closer look at the lithium bull The Disruptive Discoveries Journal

July 15th, 2016

Nickel near eight-month high as metals gain on stimulus speculation NAI 500
Cobalt supply tightens as battery demand looms Benchmark Mineral Intelligence
A Brexit in name only? GoldSeek
Markets are telling us what the elites won’t: Life goes on after Brexit Equities.com
New stock market highs correlate to $57 trillion in printed global currency units Streetwise Reports
Canada welcomes move towards ratification of EU trade deal Industrial Minerals
Gold junior climbs on assays SmallCapPower
A classic case of failed socialism: What’s next after Brexit? Stockhouse
Limestone: Commodity overview Geology for Investors
Lithium in Las Vegas: A closer look at the lithium bull The Disruptive Discoveries Journal

July 14th, 2016

Cobalt supply tightens as battery demand looms Benchmark Mineral Intelligence
A Brexit in name only? GoldSeek
Markets are telling us what the elites won’t: Life goes on after Brexit Equities.com
New stock market highs correlate to $57 trillion in printed global currency units Streetwise Reports
Citigroup backs commodities for 2017 in “especially bullish” call NAI 500
Canada welcomes move towards ratification of EU trade deal Industrial Minerals
Gold junior climbs on assays SmallCapPower
A classic case of failed socialism: What’s next after Brexit? Stockhouse
Limestone: Commodity overview Geology for Investors
Lithium in Las Vegas: A closer look at the lithium bull The Disruptive Discoveries Journal

Jon Hykawy comments on China Molybdenum’s majority acquisition of a DRC mine considered to be the world’s premier cobalt producer

June 17th, 2016

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Looking at lithium, cobalt too

June 2nd, 2016

Jon Hykawy examines the case for the celebrated metal and its overlooked partner

by Greg Klein

Jon Hykawy examines the case for the celebrated metal and its overlooked partner

Under a $2.65-billion deal expected to close in Q4, China Molybdenum gets
majority interest in a DRC mine that’s “the world’s premier cobalt producer.”

 

Even with his own “conservative” forecasts, Jon Hykawy sees a strong case for lithium. But li-ion batteries call for other commodities too, and cobalt stands out as a critical material facing uncertain supply. Hykawy, president of the consulting firm Stormcrow Capital, sees markets through a number of perspectives. That comes from being a 14-year Bay Street veteran, a physicist who conducted post-doctoral work in nuclear power, and a research scientist who’s scrutinized the world of rechargeable batteries and fuel cells, as well as wind and solar energy.

Hykawy claims a middle ground between lithium’s boosters and detractors. “We see lithium demand kind of doubling by about 2025 from current levels,” he says. “But prices are going to correct from their current levels.”

Jon Hykawy examines the case for the celebrated metal and its overlooked partner

He cites Q1 prices outside China in the range of $11,000 a tonne for lithium carbonate and about $14,000 for lithium hydroxide. “If you look inside China, however, you can find spot prices over $20,000 a tonne.”

With historic levels closer to $5,000, “I don’t think there’s any question prices are overdone right now.” Hykawy expects a decline to about $7,000 or $8,000 a tonne until 2018. “Then you’ll see a gradual but steady increase in pricing. And that leaves a lot of room for companies to make a lot of money because the cost of producing lithium is way below that.”

Nor does lithium strongly affect battery prices, whose steady decline has been crucial to the electrification boom. With a Chevy Volt battery, for example, lithium probably contributes less than 5% of the total cost, he says.

Projections of long-term market strength notwithstanding, he maintains that the planet has lithium to spare. “We’ll never have a fundamental shortage. But the market does require some juniors to come into the space.”

But what are chances of an entirely new battery technology taking over? None in the foreseeable future, according to Hykawy.

“The lithium battery was developed in the late ’70s, it really became ubiquitous in the ’90s, and now you’re seeing the fruit of four decades of research. Any replacement would have to go through the same degree of scrutiny. They have to be confident that battery is safe, especially, especially if they plan to sell that device in the United States, the land of the lawyer and the home of the litigious.”

Additionally, li-ion has “such a lengthy head start, such advantages in scale and cost, that newcomers couldn’t compete in price.”

Looking at graphite, he expects rising demand from batteries “but nothing particularly wondrous. It really comes down to a cheap supply, and likely the cheapest supply is going to come out of China. There are juniors trying to bring alternate sources to the market, but they’ll have to compete with Chinese pricing.”

Then there’s cobalt.

“It’s a very important part of the battery, it helps increase the amount of energy the battery can contain,” Hykawy points out. “The problem is, even with my conservative growth figures for battery use, by 2025 all the cobalt mined in the world today would be required for the battery industry. There wouldn’t be anything left for steel.”

Jon Hykawy examines the case for the celebrated metal and its overlooked partner

Jon Hykawy: “We should view this as a
warning, as an indication that there’s
more to batteries than just lithium.”

He says battery and steel manufacturing each take up roughly half of current supply.

Most cobalt comes as a byproduct of nickel and copper mining. “But when the price of cobalt hasn’t really moved, which it hasn’t, and the price of nickel and copper aren’t doing well, then you’ve got projects that are shutting down.”

Problematic too is the source of so much supply. The U.S. Geological Survey attributes nearly 51% of last year’s mined cobalt to the Democratic Republic of Congo. A disturbingly unstable country fraught with armed combat, it’s also a notorious purveyor of conflict minerals. In January Amnesty International revealed children as young as seven suffer very harsh conditions to produce cobalt that might find its way to major manufacturers.

As for the DRC’s legit mines, they haven’t gone unnoticed by the Middle Kingdom. Last month China Molybdenum signed a $2.65-billion definitive agreement to buy out Freeport-McMoRan’s (NYSE:FCX) 56% stake in the DRC’s Tenke Fungurume mine, the country’s largest source of copper and “the world’s premier cobalt producer,” according to Freeport.

China Moly also has negotiations underway to take over Freeport’s interests in a copper-cobalt exploration project near Tenke, as well as a cobalt refinery in Finland and a related global sales and marketing business.

“We should view this as a warning, as an indication that there’s more to batteries than just lithium,” says Hykawy. “If we’re going to be serious players in this space, either from the strategic point of view of nations, or from the point of view of companies, we’ve got to think about the entire supply chain. It’s not enough to worry about a headline material like lithium and bypass all the other stuff.”

Yet lithium remains a “critical material in batteries, and will probably continue so for decades at least,” he says. “But investors should understand there’s a lot of lithium out there. The market’s going to become more robust over time, you’re going to have more buyers competing for whatever material is available. That’ll be good for prices, as long as no one does anything stupid like bringing excess supply onto the market.”

Jon Hykawy addresses the Vancouver Commodity Forum on June 14. Click here for free registration.

Emmanuel Umpula of Africa Resources Watch says major electronics manufacturers might rely on child labour for their cobalt

February 12th, 2016

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