Monday 13th July 2020

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Posts tagged ‘drc’

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.

Li-ion under the pandemic

April 20th, 2020

COVID-19 cuts energy minerals demand but heightens future shortages: Benchmark

by Greg Klein | April 20, 2020

The pandemic will shrink lithium-ion battery demand by at least 25% this year even prior to further economic setbacks. But electric vehicles hold greater likelihood than many other industries not only for recovery but growth. Current reductions in lithium, cobalt, graphite and nickel supply will only mean greater need later this decade, according to Benchmark Mineral Intelligence.

COVID-19 cuts energy minerals demand but heightens future supply shortages

In an April 16 webinar presented by managing director Simon Moores and head of price assessments Caspar Rawles, the two warned that pandemic conditions and responses will worsen an already critical supply scenario later this decade.

That “lost quarter” of a 25% reduction in demand will likely be just the beginning, Moores said. “If there’s going to be a longer economic impact, which is most likely going to happen, a severe economic impact globally, then of course we lose more than a quarter.”

Yet exponential growth should continue for Li-ion battery megafactories. Five years ago just three such plants were in production or planned, with capacity totalling 57 gigawatt hours. By 2018 the number of plants climbed to 52, for 1,147 GWh. This year the figures jumped to 130 plants totalling 2,300 GWh now in production or slated for completion by 2030. That’s enough for 43 million EVs averaging 55 kWh each.

That future seems distant, compared with the current production limitations brought on by health-related mine suspensions, along with delayed expansions and development of new mines. Transportation challenges also loom large, such as the South Africa lockdown that restricts cobalt transshipment from the Democratic Republic of Congo.

As the pandemic cuts supply, it curtails demand as well. Chinese automakers, the main producers of EVs, have largely shut down.

Lithium faced over-supply well before the pandemic, prompting cutbacks among majors like SQM, Albemarle, Ganfeng and Tianqi. “Also we saw that the majority of Tier 2 or 3 converters in China were already planning on going offline due to the low pricing we’ve seen in the market,” Rawles said.

So what that means down the road is those expansions which really need to be happening now to meet the future demand are not happening.—Caspar Rawles,
Benchmark Mineral Intelligence

“The key thing is that downturn in conversion capacity in China will mean that the backlog of spodumene feedstock material that’s sitting in China will take longer to work through, so we’re looking at a longer-term potential low-price environment,” he explained. “That threatens the economics of new projects of course and an increased risk of price volatility going forward…. So what that means down the road is those expansions which really need to be happening now to meet the future demand are not happening.”

What does a typical (35 GWh) NCM Li-ion battery plant consume in a year? Benchmark estimates 25,000 tonnes of lithium hydroxide or carbonate, 6,000 tonnes of cobalt hydroxide, 19,000 tonnes of nickel sulphate and 33,000 tonnes of graphite.

“The supply chain won’t be able to build quick enough to meet this electric vehicle demand,” emphasized Moores. Even if estimates of EV growth were cut by 25% to 30%, “you’re still not going to have enough mining capacity, chemical capacity in the supply chain to make these. The lithium-ion supply chain has to grow by eight to 10 times in a seven-year period, and now that might be pushed to a 10-year period.”

You’ve got a big lithium problem on the horizon, [supplying] only 19 million EVs, compared to the 34 million we think we’re going to need.—Simon Moores,
Benchmark Mineral Intelligence

Production from current mines and those likely to enter operation suggest about 900,000 tonnes of annual lithium supply by 2030, enough to power about 19 million EVs. That constitutes “a big, big problem,” Moores said. “You’ve got a big lithium problem on the horizon, [supplying] only 19 million EVs, compared to the 34 million we think we’re going to need.”

Showing “a similar trajectory,” cobalt supply estimates come to 228,000 tonnes by 2030, enough for only about 17.9 million EVs.

“The mining companies are being super-cautious or even beyond super-cautious, considering we’re going to need 34 million EVs-worth. And even if that goes down to 25 million, you’re still way off,” he added.

Future demand will continue to be dominated by China, Benchmark maintains. Of the 130 battery plants currently expected by 2030, China would host 93. The country’s capacity would equal about 1,683 GWh, enough for 31 million EVs averaging 55 kWh. A dismal second, Europe follows with 16 plants totalling 413 GWh for 7.4 million EVs. The U.S. would have just seven plants for 205 GWh and 3.7 million EVs.

Currently producing about 73% of Li-ion batteries, China’s forecast to maintain that proportion with about 70% of global production in 2029.

For all that, Moores said European megafactories and Tesla’s U.S.-based Gigafactories set an example for supply chains in other industries.

“What the coronavirus has shown is that truly global supply chains in the 21st century don’t work. They’re too fragile, there’s too many question marks out there. Even pre-coronavirus that was the case…. The battery industry was well ahead of the curve on localizing the supply chain as much as possible…. That will continue, I think it’s a blueprint for other industries to follow. The battery supply chain is ahead of the curve on that.”

But, he cautioned, “the U.S. has to take on the same scale as China.”

Crisis response

April 3rd, 2020

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

by Greg Klein | April 3, 2020

A look at mining, exploration, infrastructure and supply chains

 

Idled explorers: Can you help?

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

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

  • Insulated structures (both hard and soft wall)

  • Camp gear such as furniture, lighting and kitchen appliances

  • Medical equipment

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

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

  • Other supplies or skills

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

For further information contact Savannah Nadeau.

Preparing for a wider emergency

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

A look at mining, exploration, infrastructure and supply chains

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

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

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

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

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

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

Australia guards against predatory foreign takeovers

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

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

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

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

Critical minerals become ever more critical

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

A look at mining, exploration, infrastructure and supply chains

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

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

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

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

Sharing the disease, hoarding the treatment

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

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

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

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

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

A look at mining, exploration, infrastructure and supply chains

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

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

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

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

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

Chinese supply chains also jeopardized by Chinese disease

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

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

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

Miners’ providence unevenly distributed

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

A look at mining, exploration, infrastructure and supply chains

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

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

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

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

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

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

“China needs to be held responsible”

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

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

Policy or geology?

February 28th, 2020

What’s behind Canada’s plunging reputation among miners?

by Greg Klein | February 28, 2020

If you think that’s bad news, be glad the poll ended when it did. The Fraser Institute Survey of Mining Companies 2019 imposed a November 8 deadline on respondents. Shut Down Canada didn’t really gain momentum until a bit later.

Even so, for the first time in a decade no Canadian jurisdiction made the top 10 for the survey’s main list, the Investment Attractiveness Index (IAI). Media coverage played up the role of provincial and territorial governments in jeopardizing what was—until recently and at least by Canadians—generally considered the world’s pre-eminent mining country. In doing so, reporters followed the institute’s commentary which, in keeping with its advocacy purpose, emphasized politicians’ ability to help or hinder the industry. But a closer look suggests miners and explorers gave other concerns higher priority.

What’s behind Canada’s plunging reputation among miners?

(Image: Fraser Institute)

The survey bases the IAI on two other indices, Policy Perception and Mineral Potential. The first is determined by company responses to government actions or in-actions affecting the industry. The second (assuming an un-interfering nirvana of “best practices” by those governments) considers companies’ appraisals of geology. The survey provides separate ratings for policy and geology, but also weighs them 40% and 60% respectively to compile the IAI. The 40/60 split reflects institute intel about how companies make investment decisions.

Despite Canada’s disappearance from the IAI top 10, three provinces rated highly for Policy Perception. Alberta, Newfoundland and Saskatchewan rated sixth, eighth and ninth in the world respectively. Five Canadian jurisdictions showed Policy Perception improvements over the previous year. Moreover, the most dramatic declines from 2018 appeared in the Mineral Potential index.

“We know there’s not a lot that policy-makers can do about the geology in particular areas,” says Fraser Institute senior policy analyst Ashley Stedman. “But when we see declines on the policy index, that’s something policy-makers should be paying attention to.

“In particular we saw significant declines in Saskatchewan, which dropped from third the previous year to 11th, and that was largely the result of concerns about policy factors including taxation, regulatory duplication and inconsistencies, and trade barriers. And in Quebec we saw a decline from fourth to 18th, with uncertainties about environmental regulations and about the administration or enforcement of existing regulations. We can see from both these jurisdictions and a number of other Canadian jurisdictions that regulatory issues are escalating and this should be a serious concern for policy-makers.”

What’s behind Canada’s plunging reputation among miners?

But while Saskatchewan’s Policy Perception rating fell from first place to ninth, the province’s Mineral Potential rank fell farther, from seventh to 21st. Quebec dropped from 10th to 21st in Policy Perception but plummeted from sixth to 25th in Mineral Potential.

Other dramatic Mineral Potential declines included Manitoba (from 11th to 26th), New Brunswick (49th to 72nd), Newfoundland (18th to 50th), the NWT (fourth to 29th), Nunavut (fifth to 16th) and Yukon (10th to 22nd).

Four provinces—Alberta, B.C., Nova Scotia and Ontario—did show improvements. Still, the question remains: What the hell happened to Canadian geology?

Some causes might be resource depletion, recalcitrant commodity prices or (talk to enough CEOs and this seems very possible indeed) confusion about how to answer survey questions.

Stedman suggests another likelihood. Discoveries in some jurisdictions might dampen enthusiasm for others. “We do have to keep in mind that this is a relative ranking, so if other places are seen as more attractive, that can have an impact on other jurisdictions as well.”

Although policy factors affect just 40% of a jurisdiction’s IAI ranking, “our write-up focuses on the policy rankings as an area that policy-makers can pay attention to,” Stedman explains. In some cases governments do respond to the survey’s findings. “Reporters will often ask policy-makers to comment on the rankings.”

As for other countries, “we do get quite a bit of interest globally for this survey and we’ve seen a lot of countries and jurisdictions ask us questions about the rankings. There’s quite a lot of interest in this publication in particular.”

Confidentiality, however, prevents her from divulging how many respondents are based in Canada.

The survey provides “a policy report card for governments on areas that require improvement and areas where certain jurisdictions are performing well,” she adds.

In general we see that investment dollars will flow to jurisdictions with attractive polices, and governments need to focus on adopting competitive policies to attract valuable investment dollars that will ultimately create jobs.—Ashley Stedman,
senior policy analyst
for the Fraser Institute

With geology beyond the reach of government power, policy improvement would be Canada’s only means of re-entering the IAI’s global top 10. “In general we see that investment dollars will flow to jurisdictions with attractive polices, and governments need to focus on adopting competitive policies to attract valuable investment dollars that will ultimately create jobs.”

Whether the pre-PDAC week timing will cast a pall on the Canadian industry’s biggest annual bash remains to be seen. COVID-19 has cast a bigger pall on travel while, at time of writing, there seems nothing to stop Shut Down Canada from turning its attention to airports, hotels and convention centres.

The following charts show the global IAI top 10, Canada’s IAI top 10, Canada’s top 10 for Policy Perception and Mineral Potential, and—consoling for its lack of Canadian content—the global bottom 10.

With fewer responses this time, the 2019 survey covers 76 jurisdictions compared with 83 the previous year. Here are the global IAI rankings for 2019, with 2018 spots in parentheses.

  • 1 Western Australia (5)

  • 2 Finland (17)

  • 3 Nevada (1)

  • 4 Alaska (5)

  • 5 Portugal (46)

  • 6 South Australia (8)

  • 7 Irish Republic (19)

  • 8 Idaho (16)

  • 9 Arizona (8)

  • 10 Sweden (21)

All Canadian jurisdictions except Ontario, Alberta and Nova Scotia fell in the IAI. Here’s the list for Canada, with global numbers provided for 2019 and 2018:

  • 11 Saskatchewan (3)

  • 16 Ontario (20)

  • 18 Quebec (4)

  • 19 British Columbia (18)

  • 23 Yukon (9)

  • 26 Nunavut (15)

  • 28 Newfoundland and Labrador (11)

  • 30 Alberta (51)

  • 34 Manitoba (12)

  • 35 Northwest Territories (10)

  • 52 Nova Scotia (57)

  • 60 New Brunswick (30)

Here’s Canada’s Policy Perception ratings. Alberta, Newfoundland, Ontario, B.C. and Nunavut improved their standings.

  • 6 Alberta (14)

  • 8 Newfoundland and Labrador (18)

  • 9 Saskatchewan (11)

  • 13 New Brunswick (9)

  • 18 Nova Scotia (11)

  • 21 Quebec (10)

  • 24 Ontario (30)

  • 32 Yukon (24)

  • 36 British Columbia (44)

  • 44 Nunavut (45)

  • 50 Northwest Territories (42)

  • 53 Manitoba (33)

Mineral Potential showed Canada’s most dramatic downfalls, although Alberta, B.C., Nova Scotia and Ontario managed to move upwards.

  • 10 British Columbia (13)

  • 16 Nunavut (5)

  • 18 Ontario (20)

  • 21 Saskatchewan (7)

  • 22 Yukon (10)

  • 25 Quebec (6)

  • 26 Manitoba (11)

  • 29 Northwest Territories (4)

  • 50 Newfoundland and Labrador (18)

  • 54 Alberta (74)

  • 61 Nova Scotia (79)

  • 72 New Brunswick (49)

And finally the global IAI bottom 10:

  • 67 Nicaragua (81)

  • 68 Mali (50)

  • 69 Democratic Republic of Congo (67)

  • 70 Venezuela (83)

  • 71 Zambia (45)

  • 72 Dominican Republic (76)

  • 73 Guatemala (80)

  • 74 La Rioja province, Argentina (75)

  • 75 Chubut province, Argentina (69)

  • 76 Tanzania (66)

Download the Fraser Institute Survey of Mining Companies 2019.

Read about last year’s survey.

Open and shut cases: Ontario

January 3rd, 2020

2019-2020 brings new technology, new gold, possible cobalt but diamond depletion

by Greg Klein

2019-2020 brings new tech, new gold and possible cobalt but diamond depletion

Pure Gold’s plan to revive this Red Lake mine has deep-pocketed supporters.
(Photo: Pure Gold Mining)

 

Our survey of mine openings and closures for 2019 and 2020 continues with a look at Ontario. This is Part 3 of a series.

 

While mining sustains the electric vehicle revolution, EVs enhance sustainability at Newmont Goldcorp’s (TSX:NGT) “mine of the future.” The company announced Borden’s commercial production on October 1, eight days after an official inauguration attended by representatives from industry, government and natives. The new operation boasts “state-of-the-art health and safety controls, digital mining technologies and processes, and low-carbon-energy vehicles.” The latter distinguish Borden as Canada’s first underground mine to spurn diesel-fueled vehicles in favour of EVs.

2019-2020 brings new tech, new gold and possible cobalt but diamond depletion

Borden’s fleet of underground EVs includes
this battery-powered bolter. (Photo: Business Wire)

Borden now begins a projected 15 years of operation, although milling takes place at the company’s Timmins-region Porcupine facility, 180 diesel-burning kilometres east.

Even so, Ottawa and Queen’s Park each contributed $5 million to subsidize the environmentally correct underground vehicles.

Borden comprises one of four mines in as many continents that Newmont Goldcorp brought to commercial production in 2019—all on schedule, within budget and, the company already claims, making a profit.

Such technical prowess might make this mechanically impractical mixed metaphor surprising, but president/CEO Tom Palmer said Borden “leverages our leading land position to anchor this new gold district in Ontario.” Anchors and levers notwithstanding, he gave up other Ontario turf by selling Red Lake to ASX-listed Evolution Mining in November. Expressing no nostalgia for an operation that was once integral to Goldcorp’s existence, the deal nonetheless contributes US$375 million to a total US$1.435 billion from three recent divestitures by Newmont Goldcorp, one of 2019’s biggest merger stories.

 

2019-2020 brings new tech, new gold and possible cobalt but diamond depletion

Test mining readies Madsen for anticipated production in late 2020.
(Photo: Pure Gold Mining)

That’s not to say the company forsakes Red Lake altogether. As one of four entities together holding over 30% of Pure Gold Mining TSXV:PGM, Newmont Goldcorp backs the camp’s next miner-to-be. Other financial support comes from Rob McEwen, the man behind Goldcorp’s Red Lake success, AngloGold Ashanti NYSE:AU and especially Eric Sprott.

Having started construction in September, Pure Gold expects to start pouring yellow metal at Madsen by late 2020.

Lowering capex while speeding construction, refurbishable infrastructure from two former mines includes a 1,275-metre shaft, 27 levels of underground workings, a mill and a tailings facility.

The property gave up about 2.6 million ounces from 1938 to 1976 and 1997 to 1999. Madsen’s feasibility calls for 12.3 years to chew through a probable reserve of 3.5 million tonnes averaging 8.97 g/t for 1.01 million gold ounces. With the deposit open in all directions, Pure Gold continues exploration in hopes of extending the lifespan.

 

Ontario’s Cobalt camp, meanwhile, was much better known for silver but left a critical mineral legacy in North America’s only permitted primary cobalt refinery. With financial backing from global top cobalt producer Glencore, First Cobalt TSXV:FCC hopes to restart the facility by Q4 2020.

That depends, however, on findings of a pre-feasibility study that might get upgraded to full-feas for an initial 12-tpd operation.

2019-2020 brings new tech, new gold and possible cobalt but diamond depletion

Depending on feasibility and financing, First Cobalt
might reintroduce cobalt refining to North America.
(Photo: First Cobalt)

Commissioned in 1996 and on care and maintenance since 2015, the refinery was permitted for 12 tpd back in 2001. A possible advantage to the study’s economics might be the current improvement in cobalt prices, largely resulting from Glencore’s November suspension of its Mutanda mine in the Democratic Republic of Congo.

The shutdown erased about 20% of worldwide cobalt production, according to Benchmark Mineral Intelligence.

Should the 12-tpd scenario work out, First Cobalt plans another feasibility study for an expansion to 55 tpd in 2021, which would place the company fourth in cobalt refining outside China.

Glencore loaned US$5 million to fund the studies and could advance up to US$40 million for rehab work, to be repaid by processing Glencore feed. “The refinery will be an important strategic asset for the North American market and we look forward to working with First Cobalt to help the asset fulfill its potential,” said Nico Paraskevas, Glencore’s head of copper-cobalt marketing.

Faintly suggesting a possible North American supply chain, First Cobalt’s portfolio includes an inferred resource at the Iron Creek cobalt-copper project in Idaho. On its Ontario property, the company drilled some 23,300 metres in 2017 and 2018 around former operations which had historically been mined for silver with cobalt-copper byproducts.

 

Turning to the James Bay region, this diamond mine’s closure might have been preventable but Victor lived up to its name in a number of ways. The shutdown, for example, could have happened nearly six years earlier. Winter road blockades in 2013 almost prevented arrival of heavy crucial supplies that couldn’t be flown in. Some of the protesters from the Attawapiskat reserve 90 kilometres east wanted to renegotiate the Impact Benefit Agreement. Others reportedly wanted their dismissals rescinded.

2019-2020 brings new tech, new gold and possible cobalt but diamond depletion

As humans replant a surrounding forest,
nature converts this 11-year mine to a northern lake.
(Photo: De Beers)

As quoted in the Timmins Daily Press, De Beers’ external and corporate affairs director Tom Ormsby warned that “Victor is a very solid, steady mine but it can’t keep taking all of these financial hits.”

Ontario Provincial Police initially refused to enforce a court order against the blockade, then finally moved in after protesters left voluntarily. Transport resumed and Victor lived out the rest of its nearly 11-year lifespan. Mining ended in early March 2019, by which time the total output of 8.1 million carats far surpassed the company’s original estimate of six million. Processing continued on stockpiled ore until late May.

But Tango, a smaller, lower-grade kimberlite seven kilometres away, might have added another five or six years of mining. Attawapiskat representatives, however, declined De Beers’ efforts to consult.

Victor’s closure leaves De Beers with just one mine outside Africa. The company holds the majority of a 51%/49% JV with Mountain Province Diamonds TSX:MPVD on Gahcho Kué in the Northwest Territories. De Beers put its NWT Snap Lake mine on extended care and maintenance in late 2015 as construction of Gahcho Kué neared completion. Efforts to sell Snap Lake proved unsuccessful.

But the global giant reiterated its interest in Canada with the 2018 purchase of Eric Friedland’s Peregrine Diamonds. That brought De Beers the Chidliak project on Baffin Island, with two of 74 kimberlites currently hosting inferred resources.

As for Victor, a $15.4-million reclamation program that began years earlier had planted its millionth tree within weeks of closure.

This is Part 3 of a four-part series.

Towards a critical resource

June 13th, 2019

Saville Resources exceeds historic high grades for niobium-tantalum in Quebec

by Greg Klein

The project’s first drill campaign in nine years poses a big question: Why was this the project’s first drill campaign in nine years?

Saville Resources/Commerce Resources report best-yet niobium hole from Quebec critical minerals project

Saville president Mike Hodge examines
core at the Niobium Claim Group.

Even in the face of highly encouraging historic niobium-tantalum results, this program’s first hole exceeded expectations. More near-surface high grades and wide widths followed, culminating in a fourth hole that surpassed them all. Now Saville Resources TSXV:SRE looks forward to more drilling to build an inferred resource on the Niobium Claim Group in northern Quebec’s Labrador Trough.

But why the nine-year hiatus? The answer can be illustrated by Commerce Resources’ (TSXV:CCE) Ashram rare earths deposit, two kilometres away. Moving that project towards pre-feasibility took precedence, even when the company found strong niobium-tantalum intercepts on another part of its Eldor property. To give these other critical minerals their due, Commerce and Saville signed an agreement last year allowing the latter company to earn 75% of the 1,223-hectare niobium claims.

Additional high-grade boulder samples renewed interest in a number of prospective areas but Saville’s initial drill program in spring 2019 targeted Mallard, the most advanced zone with 17 historic holes totalling 4,328 metres. The new program added five holes (one hole was lost) and 1,049 metres.

“We were confident that we could improve on the historic drill results and we did that,” notes Saville president Mike Hodge.

Near-surface highlights from the best hole showed 0.8% Nb2O5 over 31.5 metres, 0.79% over 37 metres, 0.67% over 19.95 metres and 0.5% over 33.5 metres. Eleven individual samples from that hole exceeded 1%, with one sample reaching as high as 1.68% over 1.5 metres. (True widths were unknown.) Tantalum and phosphate also brought strong numbers.

A 50-metre step-out east of another of the campaign’s successful holes, 50 metres southeast of a second and 200 metres southeast of a third, EC19-174A was also proximal to impressive historic results.

Saville Resources exceeds historic high grades for niobium-tantalum in Quebec

In just a few of the recent highlights, however, EC19-173 featured 0.66% Nb2O5 over 14.5 metres. EC19-171 hit 0.7% over 38.28 metres, including 1.1% over 5.41 metres. EC19-172 reached 0.62% over 19 metres.

Among tantalum grades were 274 ppm Ta2O5 over 100.8 metres from EC19-172, and 267 ppm over 26 metres from EC19-171.

The step-outs extend Mallard’s strike 100 metres southeast and also suggest a possible northern extension towards the project’s Miranna and Spoke targets, as yet undrilled.

That’s despite very high-grade boulder samples from Miranna showing 2.75%, 4.24%, 4.3% and an exceptional 5.93% Nb2O5.

“These are still untested targets which we believe could have significantly higher grades than Mallard,” says Hodge. “But my first goal would be an inferred near-surface resource in the Mallard area.”

Contributing to that would be historic data, which includes intervals of 0.82% Nb2O5 over 21.9 metres, 0.9% over 4.8 metres and 1.09% over 5.8 metres.

In all, the Niobium Claim Group underwent 41 historic holes for 8,175 metres, with all field work since 2008 conducted by Dahrouge Geological Consulting. Saville has so far exceeded its first-year spending commitment of $750,000 out of a five-year, $5-million exploration agenda that would earn 75% of the project from Commerce.

But if Miranna’s 5.93% Nb2O5 sample looks outstanding, another boulder collected west of the project’s Northwest area soared up to 16.1%, also showing 7,540 ppm Ta2O5.

“That was the highest, but there were plenty in the 3% to 6% niobium range,” Hodge emphasizes.

Saville Resources exceeds historic high grades for niobium-tantalum in Quebec

With overlapping boulder trains on the property, “there are a few locations they could be coming from,” he adds. “But the likelihood of it coming from the Spoke or Miranna areas would be the highest probability.”

Other areas of interest include the Northwest zone, northwest of Miranna. Location of 11 historic holes totalling 2,257 metres, its results included 0.61% Nb2O5 over 12 metres.

South of Mallard, the Star Trench area has four historic holes for 664 metres, with results including 1.5% Nb2O5 and 1,810 ppm Ta2O5 over 0.52 metres, and 1.69% Nb2O5 and 2,220 ppm Ta2O5 over 0.31 metres.

Niobium and tantalum both rank on the U.S. list of 35 critical minerals. Heightened concern has brought concerted American efforts to develop reliable sources and create supply chains domestically and with allied countries. In early June the U.S. unveiled its Energy Resource Governance Initiative to work with allies as part of the president’s critical minerals strategy announced a few days earlier.

Imports provide America’s total supply of both niobium and tantalum. Niobium, used for alloys and super-alloys in jet engines, rockets and other manufactures, comes to the U.S. mostly from one company in Brazil. According to 2018 figures from the U.S. Geological Survey, Brazil mined 88.2% of global supply, while Canada extracted another 10.3%.

Tantalum finds widespread use in electronics as well as super-alloys for jet engine components. USGS numbers from last year attribute 39.5% of global supply to the Democratic Republic of Congo, 27.8% to Rwanda, 8.3% to Nigeria and 6.7% to China. Apart from security of supply, concerns about conflict minerals result from troubling conditions and murky supply routes in the DRC and Rwanda.

Meanwhile Hodge wants to get back to the field. “We made a great first step in expanding on what we had,” he says. “All of these holes ended in a mineralized zone. The reason we stopped them there was to start a near-surface inferred resource. There’s carbonatite with mineralization in niobium, tantalum and phosphate open in all directions, so the results definitely call for more drilling.”

See more highlights from the Niobium Claim Group’s spring 2019 program.

DRC on the brink

January 3rd, 2019

The Congo’s increasing instability heightens critical minerals concern

by Greg Klein

Update: In what’s been called the DRC’s first peaceful transfer of power since 1960, Felix Tshisekedi was sworn in as president on January 24. That follows a controversial election in which two parts of the country had voting delayed until March and supporters of candidate Martin Fayulu accused the electoral commission of rigging the results in favour of Tshisekedi, who they say struck a pact with outgoing president Joseph Kabila. Catholic church observers had earlier disputed the outcome and Fayulu asked the Constitutional Court to order a recount. “The court, made up of nine judges, is considered by the opposition to be friendly to Kabila, and Fayulu has said he is not confident that it will rule in his favour,” Al Jazeera reported.

 

This is the place that inspired the term “crimes against humanity.” As a timely new book points out, American writer George Washington Williams coined that phrase in 1890 after witnessing the cruel rapaciousness of Belgian King Leopold II’s rubber plantations in the country now known as the Democratic Republic of Congo. After rubber, the land and its people were exploited for ivory, copper, uranium, diamonds, oil, ivory, timber, gold and—of increasing concern for Westerners remote from the humanitarian plight—cobalt, tin, tungsten and tantalum. Controversy over recent elections now threatens the DRC with even greater unrest, possibly full-scale war.

The Congo’s increasing instability heightens critical minerals concern

The country of 85 million people typically changes governments through coup, rebellion or sham elections. Outgoing president Joseph Kabila ruled unconstitutionally since December 2016, when his mandate ended. He belatedly scheduled an election for 2017, then postponed it to last December 23 before pushing that date back a week. The December 30 vote took place under chaotic conditions and with about 1.25 million voters excluded until March, a decision rationalized by the Ebola epidemic in the northeast and violence in a western city.

The epidemic marks the second-worst Ebola outbreak in history, the DRC’s tenth since 1976 and the country’s second this year. Although the government delayed regional voting on short notice, the health ministry officially recognized the current epidemic on August 1.

Responsible for hundreds of deaths so far, this outbreak takes place amid violence targeting aid workers as well as the local population. Like other parts of the country, the region has dozens of military groups fighting government forces for control, and each other over ethnic rivalries and natural resources. The resources are often mined with forced labour to fund more bloodshed.

With no say from two areas that reportedly support the opposition, a new president could take office by January 18. Already, incumbent and opposition parties have both claimed victory.

The Congo’s increasing instability heightens critical minerals concern

Voting in two regions has been delayed
until after the new president takes office.
(Map: U.S. Central Intelligence Agency)

Kabila chose Emmanuel Ramazani Shadary as his successor candidate but didn’t rule out a future bid to regain the president’s office himself.

Election controversy contributed to additional violent protests in a month that had already experienced over a hundred deaths through ethnic warfare as well as battles between police and protesters. Yet that casualty toll isn’t high by DRC standards.

Published just weeks before the election, Congo Stories by John Prendergast and Fidel Bafilemba relates a harrowing story of a country the size of Western Europe that’s fabulously rich in minerals but desperately poor thanks to home-grown kleptocracies and foreign opportunists. Forced labour, war and atrocities provide a deeply disturbing backdrop to the story of conflict minerals.

According to 2017 numbers from the U.S. Geological Survey, the DRC supplied about 58% of global cobalt, 34.5% of tin and 28.5% of tantalum. The U.S. has labelled all three as critical metals. Tin and tantalum, along with tungsten and gold, are currently the DRC’s chief conflict metals, Prendergast and Bafilemba note. In addition to Congo tantalum, the world got 30% of its supply from DRC neighbour Rwanda, another source of conflict minerals.

Prendergast and Bafilemba outline the horror of the 1990s Rwandan Tutsi-Hutu bloodshed pouring into the Congo, making the country the flashpoint of two African wars that involved up to 10 nations and 30 local militias. During that time armies turned “mass rape, child soldier recruitment, and village burnings into routine practice.”

For soldiers controlling vast swatches of mineral-rich turf, rising prices for gold and the 3Ts (tantalum, tungsten and tin) provided an opportunity “too lucrative to ignore.” Brutal mining and export operations drew in “war criminals, militias, smugglers, merchants, military officers, and government officials,” Prendergast and Bafilemba write. “Beyond the war zones, the networks involved mining corporations, front companies, traffickers, banks, arms dealers, and others in the international system that benefit from theft and money laundering.”

DRC leaders did well too. “Mobutu Sese Seko, who ruled Congo from 1965 to 1997, is seen as the ‘inventor of the modern kleptocracy, or government by theft,’” Prendergast and Bafilemba state. “At the time of our writing in mid-2018, President Joseph Kabila is perfecting the kleptocratic arts.”

The Congo’s increasing instability heightens critical minerals concern

Westerners might be even more disturbed to learn of other beneficiaries: Consumers “who are usually completely unaware that our purchases of cell phones, computers, jewelry, video games, cameras, cars, and so many other products are helping fuel violence halfway around the world, not comprehending or appreciating the fact that our standard of living and modern conveniences are in some ways made possible and less expensive by the suffering of others.”

Not all DRC mines, even the artisanal operations, are considered conflict sources. But increasing instability could threaten legitimate supply, even the operations of major companies.

The example of Glencore subsidiary Katanga Mining TSX:KAT, furthermore, shows at least one major failing to rise above the country’s endemic problems. In mid-December Katanga and its officers agreed to pay the Ontario Securities Commission a settlement, penalties and costs totalling $36.25 million for a number of infractions between 2012 and 2017.

Katanga admitted to overstating copper production and inventories, and also failing to disclose the material risk of DRC corruption. That included “the nature and extent of Katanga’s reliance on individuals and entities associated with Dan Gertler, Gertler’s close relationship with Joseph Kabila, the president of the DRC, and allegations of Gertler’s possible involvement in corrupt activities in the DRC.”

In December 2017 the U.S. government imposed sanctions on Gertler, a member of a prominent Israeli diamond merchant family, describing him as a “billionaire who has amassed his fortune through hundreds of millions of dollars’ worth of opaque and corrupt mining and oil deals” in the DRC.

“As a result, between 2010 and 2012 alone, the DRC reportedly lost over $1.36 billion in revenues from the underpricing of mining assets that were sold to offshore companies linked to Gertler.”

Just one day before imposing sanctions, U.S. President Donald Trump signed an executive order calling for a “federal strategy to ensure secure and reliable supplies of critical minerals.” Approaches to be considered include amassing more geoscientific data, developing alternatives to critical minerals, recycling and reprocessing, as well as “options for accessing and developing critical minerals through investment and trade with our allies and partners.”

Unofficial DRC election results could arrive by January 6. Official standings are due January 15, with the new president scheduled to take office three days later. Should the Congo see a peaceful change of government, that would be the DRC’s first such event since the country gained independence in 1960.

 

January 7 update: The DRC’s electoral commission asked for patience as interim voting results, expected on January 6, were delayed. Internet and text-messaging services as well as two TV outlets remain out of service, having been shut down since the December 30 election ostensibly to prevent the spread of false results. On January 4 the U.S. sent 80 troops into nearby Gabon in readiness to move into the DRC should post-election violence threaten American diplomatic personnel and property. The United Nations reported that violence in the western DRC city of Yumbi over the last month has driven about 16,000 refugees across the border into the Republic of Congo, also known as Congo-Brazzaville.

Updated: DRC’s increasing instability heightens critical minerals concern

December 31st, 2018

This story has been updated, expanded and moved here.

Digital addictions reach new dimensions in British Columbia

September 27th, 2018

by Greg Klein | September 27, 2018

Maybe this represents a distinctly West Coast weirdness inapplicable to the real world. If not and the trend grows, however, the engagement diamond trade looks doomed, as does procreation. But while waiting for our species to die out, we should be heartened by increased demand for rare earths, tantalum and other necessities of the electronic age.

Digital addictions reach new dimensions in British Columbia

B.C. has long been liberal on issues of sexual preference.

A BC Hydro study found its customers devote an average of 4.7 hours a day, 33 hours a week and 132 hours a month—about a third of their waking time—with the electronic love of their lives, smartphones and tablets. So strong is the passion for smartphones that it can take precedence over human relationships.

“Over a quarter of British Columbians aged 25 to 54 would rather give up seeing their spouse or partner for a day than give up their smartphone or tablet for 24 hours,” the provincial utility reports. “This jumps to one-third for those aged 55 to 64.”

Nor does the preference preclude intimacy. “One-fifth of British Columbians admit to sleeping with their smartphone in bed—and 70% of those aged 18 to 24 at least occasionally sleep with their device.”

Not surprisingly, then, nearly a third of the province between 18 and 24 would give up home heating on a cold winter day rather than their smartphone. Same thing for a day’s pay in the 18-to-34 age bracket.

Maybe most startling of all, “two-thirds of British Columbians would be willing to forgo their morning coffee for two days than their smartphone or tablet for the same time frame.”

Although the BC Hydro report focuses on the implications of electronic devices for electricity consumption, there’s no mention of even greater demand from electric vehicles.

A separate subject, of course, concerns supply of the materials that make up electronic devices. Last year the U.S. Geological Survey broke down the smartphone’s ingredients to demonstrate society’s dependency on wide-ranging and often insecure supply chains. Among them are rare earths from China and tantalum from Rwanda and the Democratic Republic of Congo, both sources of conflict metals. Heightened supply concern has brought an increasing American government focus on critical minerals, while the potential effects of a U.S.-China trade war threaten to exacerbate the situation.

Streamers turn to cobalt as Vale extends Voisey’s Bay nickel operations

June 11th, 2018

by Greg Klein | June 11, 2018

It was a day of big moves for energy minerals as China bought into Ivanhoe, Vale lengthened Voisey’s and streaming companies went after the Labrador nickel mine’s cobalt.

On June 11 Robert Friedland announced CITIC Metal would pay $723 million for a 19.9% interest in Ivanhoe Mines TSX:IVN, surpassing the boss’ own 17% stake to make the Chinese state-owned company Ivanhoe’s largest single shareholder. Another $78 million might also materialize, should China’s Zijin Mining Group decide to exercise its anti-dilution rights to increase its current 9.9% piece of Ivanhoe.

Streamers turn to cobalt as Vale extends Voisey’s Bay nickel operations

At peak production, Voisey’s underground operations are expected to
ship about 45,000 tonnes of nickel concentrate annually to Vale’s
processing plant at Long Harbour, Newfoundland.

Proceeds would help develop the flagship Kamoa-Kakula copper-cobalt mine in the Democratic Republic of Congo and the Platreef platinum-palladium-nickel-copper-gold mine in South Africa, as well as upgrade the DRC’s historic Kipushi zinc-copper-silver-germanium mine. Ivanhoe and Zijin each hold a 39.6% share in the Kamoa-Kakula joint venture.

Even bigger news came from St. John’s, where Newfoundland and Labrador Premier Dwight Ball joined Vale NYSE:VALE brass to herald the company’s decision to extend Voisey’s Bay operations by building an underground mine.

The announcement marked the 16th anniversary of Vale’s original decision to put Voisey (a Friedland company discovery) into production. Mining began in 2005, producing about $15 billion worth of nickel, copper and cobalt so far. Open pit operations were expected to end by 2022. Although a 2013 decision to go ahead with underground development was confirmed in 2015, the commitment seemed uncertain as nickel prices fell. That changed dramatically over the last 12 months.

With construction beginning this summer, nearly $2 billion in new investment should have underground operations running by April 2021, adding at least 15 years to Voisey’s life. The company estimates 16,000 person-years of employment during five years of construction, followed by 1,700 jobs at the underground mine and Long Harbour processing plant, with 2,135 person-years in indirect and induced employment annually.

Nickel’s 75% price improvement over the last year must have prodded Vale’s decision. But streaming companies were quick to go after Voisey’s cobalt. In separate deals Wheaton Precious Metals TSX:WPM and Cobalt 27 Capital TSXV:KBLT have agreed to buy a total of 75% of the mine’s cobalt beginning in 2021, paying US$390 million and US$300 million respectively. They foresee an average 2.6 million pounds of cobalt per year for the first 10 years, with a life-of-mine average of 2.4 million pounds annually.

Both companies attribute cobalt’s attraction to clean energy demand and a decided lack of DRC-style jurisdictional risk. But Vale also emphasizes nickel’s promise as a battery metal. Last month spokesperson Robert Morris told Metal Bulletin that nickel demand for EVs could rise 10-fold by 2025, reaching 350,000 to 500,000 tonnes.

Total nickel demand currently sits at slightly more than two million tonnes, Morris said. New supply would call for price increases well above the record levels set this year, he added.