Saturday 27th May 2017

Resource Clips


Posts tagged ‘russia’

More critical than ever

April 13th, 2017

The USGS promotes awareness about essential resources and their supply chains

by Greg Klein

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

Follow USGS news here.

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

USGS: Possibility of supply disruption more critical than ever

April 5th, 2017

by Greg Klein | April 5, 2017

USGS: Possibility of supply disruption more critical than ever

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

 

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

USGS: Possibility of supply disruption more critical than ever

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

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

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

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

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

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

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

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

Infographic visualizes the world’s deepest oil well

March 20th, 2017

Infographic by Fuel Fighter | text by Jeff Desjardins | posted with permission of Visual Capitalist | March 20, 2017

In the world’s deepest gold mine, workers venture four kilometres below the Earth’s surface to extract gold from a 0.8-metre-wide vein of ore.

While these depths are impressive, mining is limited by the frailty of the human body. Going much deeper would be incredibly dangerous, as limitations such as heat, humidity, logistics and potential seismic activity all become more intense.

Luckily, the oil industry does not have such human restrictions and drilling deep into the Earth’s crust is instead limited by a different set of circumstances—how deep can the machinery and technology go before the unfathomable heat and pressure renders it inoperable?

The world’s deepest oil well

This infographic comes to us from Fuel Fighter and it helps visualize the mind-boggling depths of the world’s deepest oil well, which is located in a remote corner of eastern Russia.

 

Visualizing the world’s deepest oil well

 

The world’s deepest oil well, known as Z-44 Chayvo, goes over 12 kilometres into the ground—equal to 15 Burj Khalifas (the tallest skyscraper) stacked on top of each other. That’s also equal to twice the record height for air balloon flight.

Perhaps more importantly to the operator, Exxon Neftegas Ltd, the wells on this shelf are expected to produce a total of 2.3 billion barrels of oil.

That’s some serious depth

But even before the Z-44 Chayvo Well and other holes like it were drilled on the eastern side of Russia, the famous Kola Superdeep Borehole set the record for drill depth.

Located in western Russia, this time just 10 kilometres from the border with Norway, the Kola Superdeep Borehole was rumoured to have been discontinued in 1992 because it actually reached “hell” itself. At its most extreme depth, the drill had pierced a super-hot cavity and scientists thought they heard the screams of damned souls.

All folklore aside, the Kola Superdeep Borehole is super interesting in its own right. It revealed many important things about our planet and it still holds the record for depth below the surface.

Read more about deep underground mining.

U.S. Congress to vote on support for domestic critical materials supply lines

March 9th, 2017

by Greg Klein | March 9, 2017

With an eye to national defence, American lawmakers will decide whether their government should help develop domestic supplies of rare minerals. A Congressional bill introduced March 7, Rep. Duncan Hunter’s proposed METALS Act (Materials Essential to American Leadership and Security) would offer a number of inducements to create supply lines for strategic and critical commodities.

U.S. Congress to vote on support for domestic critical materials supply lines

A “dangerous lapse in the supply chain for strategic and
critical materials” will be examined by the U.S. Congress.

“The U.S. must no longer be wholly dependent on foreign sources of strategic and critical materials,” said Hunter, a veteran of two combat tours in Iraq and one in Afghanistan. “The risk of this dependence on national security is too great and it urgently demands that we re-establish our depleted domestic industrial base.”

Pointing to China’s lockhold on over 90% of global rare earths supply, Hunter argued the U.S. has “ceded” its ability to produce REEs. Following the bankruptcy of the last U.S. rare earths miner, Molycorp “sold a portion of its assets to the Chinese,” said a statement from Hunter’s office. “The mine is now being considered for purchase by a firm with ties to a Russian billionaire.”

As reported by the Wall Street Journal last month, a group including Vladimir Iorich’s Pala Investments has offered US$40 million for Molycorp’s former Mountain Pass mine in California. The METALS Act would prohibit foreign acquisition of American rare earths deposits.

It would also provide five-year interest-free loans for new production or manufacturing techniques involving strategic or critical minerals. Additionally, Washington would reimburse defence programs for higher costs of domestic products. Funding would divert 1% of Department of Defense administration spending, Hunter said.

The act would also bar foreign interests from sourcing American supplies of ammonium perchlorate, a propellant for rockets and missiles. The bill further calls for a study on the viability of using thorium-fuelled nuclear reactors in naval vessels.

Besides encouraging supply chains essential to national security, the bill “supports the U.S. domestic industrial base by aiding domestic investment opportunities,” according to Hunter’s office.

Speaking with ResourceClips.com last month, David S. Abraham expressed skepticism about Hunter’s proposal. “Most bills on critical materials have not passed and his bills usually have the least chance of passing…” said the author of The Elements of Power: Gadgets, Guns, and the Struggle for a Sustainable Future in the Rare Metal Age. “That’s not to say the U.S. hasn’t given money to metallurgy and mining before, but with the exception of some dabbling in beryllium in the ’90s, I can’t recall a time where the U.S. was really investing in mines from a defence perspective.”

But Washington defence lobbyist Jeff Green told ResourceClips.com of “a totally different dynamic” in circles of power that would be willing to “invest in America to protect our national security and grow our manufacturing base.”

A January report from the U.S. Geological Survey stated the country was wholly dependent on foreign sources for 20 minerals last year, some of them considered critical or strategic “because they are essential to the economy and their supply may be disrupted.”

As of press time Hunter’s office hadn’t responded to an interview request.

Infographic: Countries of origin for raw materials

November 16th, 2016

Graphic by BullionVault | text by Jeff Desjardins | posted with permission of Visual Capitalist | November 16, 2016

Every “thing” comes from somewhere.

Whether we are talking about an iPhone or a battery, even the most complex technological device is made up of raw materials that originate in a mine, farm, well or forest somewhere in the world.

This infographic from BullionVault shows the top three producing countries of various commodities such as oil, gold, coffee and iron.

Infographic Countries of origin for raw materials

 

The many and the few

The origins of the world’s most important raw materials are interesting to examine because the production of certain commodities is much more concentrated than others.

Oil, for example, is extracted by many countries throughout the world because it forms in fairly universal circumstances. Oil is also a giant market and a strategic resource, so some countries are even willing to produce it at a loss. The largest three crude oil-producing countries are the United States, Saudi Arabia and Russia—but that only makes up 38% of the total market.

Contrast this with the market for some base metals such as iron or lead and the difference is clear. China consumes mind-boggling amounts of raw materials to feed its factories, so it tries to get them domestically. That’s why China alone produces 45% of the world’s iron and 52% of all lead. Nearby Australia also finds a way to take advantage of this: It is the second-largest producer for each of those commodities and ships much of its output to Chinese trading partners. A total of two-thirds of the world’s iron and lead comes from these two countries, making production extremely concentrated.

But even that pales in comparison with the market for platinum, which is so heavily concentrated that only a few countries are significant producers. South Africa extracts 71% of all platinum, while Russia and Zimbabwe combine for another 19% of global production. That means only one in every 10 ounces of platinum comes from a country other than those three sources.

Graphic by BullionVault | posted with permission of Visual Capitalist.

Pushing the boundaries

October 12th, 2016

Technology opens new mining frontiers, sometimes challenging human endurance

by Greg Klein

This is the second of a two-part feature. See Part 1.

“Deep underground, deep sky and deep sea” comprise the lofty goals of Three Deep, a five-year program announced last month by China’s Ministry of Land and Resources. Part 1 of this feature looked at the country’s ambitions to take mineral exploration deeper than ever on land, at sea and into the heavens, and also outlined other countries’ space programs related to mineral exploration. Part 2 delves into undersea mining as well as some of the world’s deepest mines.

Looking to the ocean depths, undersea mining has had tangible success. De Beers has been scooping up alluvial diamonds off southwestern Africa for decades, although at shallow depths. Through NamDeb, a 50/50 JV with Namibia, a fleet of six boats mines the world’s largest-known placer diamond deposit, about 20 kilometres offshore and 150 metres deep.

Technology opens new mining frontiers, sometimes pushing human endurance

Workers at AngloGold Ashanti’s Mponeng operation
must withstand the heat of deep underground mining.

Diamond Fields International TSXV:DFI hopes to return to its offshore Namibian claims, where the company extracted alluvial stones between 2005 and 2008. The company also holds a 50.1% interest in Atlantis II, a zinc-copper-silver deposit contained in Red Sea sediments. That project’s now on hold pending a dispute with the Saudi Arabian JV partner.

With deeper, more technologically advanced ambitions, Nautilus Minerals TSX:NUS holds a mining licence for its 85%-held Solwara 1 project in Papua New Guinea waters. A seafloor massive sulphide deposit at an average depth of 1,550 metres, its grades explain the company’s motivation. The project has a 2012 resource using a 2.6% copper-equivalent cutoff, with the Solwara 1 and 1 North areas showing:

  • indicated: 1.03 million tonnes averaging 7.2% copper, 5 g/t gold, 23 g/t silver and 0.4% zinc

  • inferred: 1.54 million tonnes averaging 8.1% copper, 6.4 g/t gold, 34 g/t silver and 0.9% zinc

Using the same cutoff, the Solwara 12 zone shows:

  • inferred: 2.3 million tonnes averaging 7.3% copper, 3.6 g/t gold, 56 g/t silver and 3.6% zinc
Technology opens new mining frontiers, sometimes pushing human endurance

This Nautilus diagram illustrates
the proposed Solwara operation.

A company video shows how Nautilus had hoped to operate “the world’s first commercial high-grade seafloor copper-gold mine” beginning in 2018 using existing technology from land-based mining and offshore oil and gas. Now, should financial restructuring succeed, Nautilus says it could begin deployment and testing by the end of Q1 2019.

Last May Nautilus released a resource update for the Clarion-Clipperton Fracture Zone in the central Pacific waters of Tonga.

Another deep-sea hopeful, Ocean Minerals last month received approval from the Cook Islands to explore a 12,000-square-kilometre seabed expanse for rare earths in sediments.

A pioneer in undersea exploration, Japan’s getting ready for the next step, according to Bloomberg. A consortium including Mitsubishi Heavy Industries and Nippon Steel & Sumitomo Metal will begin pilot mining in Chinese-contested waters off Okinawa next April, the news agency stated. “Japan has confirmed the deposit has about 7.4 million tons of ore,” Bloomberg added, without specifying what kind of ore.

Scientists are analyzing data from the central Indian Ocean where nodules show signs of copper, nickel and manganese, the Times of India reported in January. The country has a remotely operated vehicle capable of an unusually deep 6,000 metres and is working on undersea mining technology.

In August the World Nuclear News stated Russia is considering a nuclear-powered submarine to explore northern seas for mineral deposits. A government report said the sub’s R&D could put the project on par with the country’s space industry, the WNN added.

If one project alone could justify China’s undersea ambitions, it might be a 470.47-ton gold deposit announced last November. Lying at 2,000 metres’ depth off northern China, the bounty was delineated by 1,000 workers and 120 kilometres of drilling from 67 sea platforms over three years, the People’s Daily reported. Laizhou Rehi Mining hopes to extract the stuff, according to China Daily.

China’s deep underground ambitions might bring innovation to exploration but have been long preceded by actual mining in South Africa—although not without problems, as the country’s deplorable safety record shows. Greater depths bring greater threats from rockfalls and mini-earthquakes.

At 3.9 kilometres’ depth AngloGold Ashanti’s (NYSE:AU) Mponeng holds status as the world’s deepest mine. Five other mines within 50 kilometres of Johannesburg work from at least three kilometres’ depth, where “rock temperatures can reach 60 degrees Celsius, enough to fry an egg,” according to a Bloomberg article posted by Mineweb.com.

In his 2013 book Gold: The Race for the World’s Most Seductive Metal, Matthew Hart recounts a visit to Mponeng, where he’s told a “seismic event” shakes the mine 600 times a month.

Sometimes the quakes cause rockbursts, when rock explodes into a mining cavity and mows men down with a deadly spray of jagged rock. Sometimes a tremor causes a “fall of ground”—the term for a collapse. Some of the rockbursts had been so powerful that other countries, detecting the seismic signature, had suspected South Africa of testing a nuclear bomb.

AngloGold subjects job-seekers to a heat-endurance test, Hart explains.

In a special chamber, applicants perform step exercises while technicians monitor them. The test chamber is kept at a “wet” temperature of eighty-two degrees. The high humidity makes it feel like ninety-six. “We are trying to force the body’s thermoregulatory system to kick in,” said Zahan Eloff, an occupational health physician. “If your body cools itself efficiently, you are safe to go underground for a fourteen-day trial, and if that goes well, cleared to work.”

Clearly there’s more than technological challenges to mining the deeps.

By the way, credit for the world’s deepest drilling goes to Russia, which spent 24 years sinking the Kola Superdeep Bore Hole to 12,261 metres, halfway to the mantle. Work was halted by temperatures of 180 degrees Celsius.

This is the second of a two-part feature. See Part 1.

Ever deeper, ever higher

October 11th, 2016

China takes on three mining frontiers, but not without competition

by Greg Klein

This is the first of a two-part feature. See Part 2.

Nearly a century before laggard Europeans got around to their Age of Exploration, Chinese merchant vessels had been travelling at least as far as eastern Africa, returning with vast shiploads of treasure. The voyages ended abruptly in 1433, for reasons debated by historians, and rulers ordered a massive merchant fleet destroyed. That largely left the New World to Westerners, evidently not a policy China intends to repeat. Now the country plans the conquest of three new frontiers: “deep underground, deep sky and deep sea.”

Such are the goals of Three Deep, a five-year plan announced last month by the country’s Ministry of Land and Resources. China’s funding R&D that would take mineral exploration deeper than ever on land and at sea, while exploring from outer space as well. But formidable as they are, the three frontiers aren’t completely uncharted. The expansionist, resource-hungry regime will have competition.

China takes on three mining frontiers, but not without competition

By 2020 the country wants the ability to mine land-based deposits that begin two kilometres in depth, find minerals at three kilometres, and identify oil and gas at 6.5 to 10 kilometres, the South China Morning Post reported October 5. China intends to develop underground communities too, although those details were even more scarce.

China also plans technology for undersea mineral exploration and mining, working towards the ability to send a remotely operated vehicle (ROV) to 11 kilometres’ depth by 2020, the paper added. That’s slightly beyond the deepest known point of any seabed. The country has already sent an ROV seven kilometres deep in the Pacific. In the Indian Ocean, Chinese have been studying seabed mining technology on a 10,000-square-kilometre area south of Madagascar, the SCMP stated.

Going from the depths to the heavens, China wants 27 satellites in orbit by 2020 to conduct surveys and research, partly on terrestrial mineral potential. The country also has expressed ambitions for moon and Mars landings, and for sending its citizens into space. A Chinese competitor to SpaceX, One Space Technology, plans its first commercial rocket launch in 2018.

SpaceX, of course, retains its Elon Musk confidence even after the Falcon 9 rocket blew up prior to take-off last month, destroying a $300-million communications satellite. Having received NASA contracts to ferry people and cargo to the International Space Station, Musk continues to talk about sending colonists to Mars. He’s already sent some lithium stocks to the moon.

Probably among the more credible companies talking about mining the heavens are Planetary Resources and Deep Space Industries. Both develop technology for NAFTA and both have signed MOUs with Luxembourg that would help finance mineral exploration and mining of near-Earth asteroids. The Grand Duchy, a global leader in satellite communications, has announced its willingness to invest in extra-terrestrial mining to become a world leader in other worlds. The country also plans to create a legal framework for its outer space endeavours, after the U.S. passed legislation giving Americans the right to keep any extra-terrestrial commodities they extract.

Deep Space says it will launch its Prospector X experimental asteroid explorer “in the near future.” By the first half of the next decade, Planetary expects to begin small-scale extraction of asteroid water for its oxygen and hydrogen.

Already a nine-year veteran of the main asteroid belt, NASA’s Dawn craft now orbits the dwarf planet Ceres after having studied the proto-planet Vesta. Last month the space agency’s NASA OSIRIS-REx set off for the asteroid Bennu, with arrival expected in 2018 and return in 2023.

JAXA, the Japan Aerospace Exploration Agency, has been to that neighbourhood and back after its Hayabusa craft delivered asteroid samples in 2010.

Last month the European Space Agency ended the 12-year, eight-billion-kilometre odyssey of its Rosetta craft, which spent the last two years studying a comet. In a joint project with Russia’s Roscosmos, the ESA expects to land a capsule on Mars on October 19 to search for signs of previous life.

Russia’s moon exploration program sees potential for minerals delivered by asteroid impact. “In the next few years, all scheduled moon flights will focus on its southern polar region, where low-temperature reservoirs of rare earths, as well as unknown volatile substances, have been detected,” Industrial Minerals quoted Vladislav Shevchenko of Moscow State University. Given higher commodity prices, mining could be viable, he added.

Boeing NYSE:BA recently matched Musk’s big talk as CEO Dennis Muilenburg spoke about sending holidayers to orbiting tourist traps prior to linking up with the Red Planet. “I’m convinced the first person to step foot on Mars will arrive there riding a Boeing rocket,” Bloomberg quoted him last week. As a NASA contractor Boeing competes with SpaceX on its own and through the United Launch Alliance, a JV with Lockheed Martin NYSE:LMT.

This is the first of a two-part feature. See Part 2.

Russia plans 11 new nuclear reactors by 2030, Japanese restarts forecast to pick up

August 10th, 2016

by Greg Klein | August 10, 2016

Not counting six already under construction, Russia’s government calls for 11 new nuclear reactors by 2030, according to an August 10 World Nuclear News story. The report follows a July 28 WNN article citing forecasts that Japan will have 19 reactors back in operation by the end of March 2017.

[The Russian project’s] ultimate aim is to eliminate production of radioactive waste from nuclear power generation.—World Nuclear News

Russia also approved expansions of six existing nuclear power plants. In addition the government approved construction of a facility “to produce high-density uranium-plutonium neutron fuel and the construction by 2025 of the BREST-OD-300 fast neutron reactor,” WNN added. “BREST-OD-300 is part of the Russian state nuclear corporation’s ‘Proryv,’ or Breakthrough project, to enable a closed nuclear fuel cycle. The ultimate aim is to eliminate production of radioactive waste from nuclear power generation.”

The Japanese forecast comes from the country’s Institute of Energy Economics, the WNN stated. Seven of the 19 predicted restarts could take place by the current fiscal year-end on March 31. Four reactors have already restarted, although court injunctions put two of them back offline. Judicial rulings and local consents will continue to influence the rate of restarts, the institute pointed out.

Should the 19 units come back into operation, they would generate “some 119.8 terawatt-hours of electricity annually, compared with total nuclear output of 288.2 TWh in FY2010, the year prior to the accident at the Fukushima Daiichi plant,” WNN stated.

China leads the world in nuclear energy expansion with 20 reactors under construction, 42 planned and 136 proposed, according to August 1 figures from the World Nuclear Association. Globally the numbers come to 61 under construction, 170 planned and 339 proposed by 2030.

All those plans, proposals and forecasts have had little if any effect on uranium’s price, however. Ux Consulting’s August 8 price indicator shows energy’s yellow metal floundering at $26, not far above its post-Fukushima lows.

World’s largest rough diamond fails to meet Lucara’s price expectations

June 29th, 2016

by Greg Klein | June 29, 2016

Dissatisfied with a reported $61-million bid, Lucara Diamond TSX:LUC declined to sell its 1,109-carat Lesedi La Rona stone. The company had hoped Sotheby’s June 29 London event would pull in $70 million or more.

The stone’s currently the largest gem-quality diamond in captivity and history’s second largest after the 3,106.75-carat Cullinan diamond. Found in 1905, Cullinan was cut and polished into nine gems for the Crown jewels and royal sceptre. Lucara took the unusual step of delegating the Lesedi La Rona sales job to an auctioneer, not standard procedure for rough. But a heavy promotional campaign failed to find a sufficiently astronomical price.

World’s largest rough diamond fails to meet Lucara’s price expectations

Despite its record size, as well as exceptional quality and
transparency, the Lesedi La Rona drew disappointing bids.
(Photo: Donald Bowers/Getty Images for Sotheby’s)

Yet the miner’s expectations might have been understandable. In May Lucara sold its 812.77-carat Constellation for $63.11 million, or $77,649 per carat, “the highest price ever achieved for a rough diamond,” the company stated. Lucara kept a 10% interest in Constellation’s sale after being cut and polished.

Exceptional cut-and-polished prices in recent months included the Blue Moon of Josephine which went for $48.4 million last March, then considered “a new record price for any gemstone and per carat.” Just one day earlier the same buyer paid $28.5 million for the 16.08-carat Sweet Josephine.

In April, however, Sotheby’s rejected a top bid of $22 million for the 9.54-carat Shirley Temple Blue diamond, having hoped for $25 million to $35 million.

Lucara’s recent record finds came from its Karowe mine in Botswana, aided by an improved recovery circuit. The two Josephines came from South Africa’s Cullinan mine, now operated by Petra Diamonds. That company’s most recent large find weighs in at 121.26 carats. It’s currently on tender.

Earlier this month ALROSA announced one of Russia’s biggest finds, a 241.21-carat rough that followed the previous month’s 207.29-carat stone, each from a different pipe at Yakutia in Siberia.

See an infographic: Six of the world’s most famous diamonds.

Opportunities in adversity

June 9th, 2016

John Kaiser talks Trump, turmoil, gold, scandium and the juniors

by Greg Klein

It’s said to be an ancient Chinese curse: “May you live in interesting times.” Much about our own epoch obviously interests and probably fascinates John Kaiser. But he might be accused of ambivalence for the silver linings he sees among the gathering clouds. The analyst and creator of Kaiser Research Online spoke with ResourceClips.com on a range of subjects, but with mineral exploration always in mind.

On gold’s rally

This one has a stronger foundation than previous upswings, Kaiser believes. Chinese aggression, Russian expansionism, Middle East volatility, Brazilian instability, the possible Brexit and the chances of a Donald Trump U.S. presidency all mean “we’re looking at an extremely turbulent world,” he says. “There’s good reason to expect gold to go higher as capital starts to hedge against all these gloomy scenarios.”

John Kaiser talks Trump, turmoil, gold, scandium and the juniors

That could push prices between $1,600 and $2,000 in the next year, he maintains. “And if that’s happening in the absence of any inflation, that really leverages those ounces in the ground that the juniors have and makes operating mines more profitable. Even for exploration companies it lowers the bar for what counts as a new discovery.”

On the juniors’ rally

Kaiser attributes this year’s rebound partly to gold, but also to renewed interest in discovery exploration.

“I’m very pleased that the rally that started the third week of January did not succumb to the PDAC curse and slow down,” he says. “By May everything’s usually in the garbage can before the summer doldrums. We’re not seeing these substantial gains continue that we saw from February to April, but we haven’t seen the markets give up the gains either.

“We’re probably not going to see a roaring global economy driving up demand and catching supply off guard like we did during China’s supercycle. However, as this world gets more belligerent, we could see massive disruptions of supply.”

John Kaiser talks Trump, turmoil, gold, scandium and the juniors

John Kaiser: “I’m very pleased that the rally
that started the third week of January did not
succumb to the PDAC curse and slow down.”

That would bring greater concern about jurisdictional risk for vital commodities. “An opportunity for the juniors would be to seek out existing deposits of these metals. They might not be worth developing now, but they could be treated by the market as leveraged bets on these big-picture geopolitical outcomes.”

On the Donald

A Vancouver native who’s spent 26 years in the U.S., Kaiser’s firmly among those who consider that country’s anti-establishment presidential contender an outrage.

“He’s basically touching on all the latent prejudices and biases of the country,” says Kaiser. “But another reason people will vote for him is he is not an anti-Keynesian. He and Hillary Clinton both understand that to get America cranking again we need fiscal stimulus in the form of infrastructure renewal. The Republicans have blocked anything along those lines….Trump could prove to be a giant wrecking ball for the stalemate that characterizes Washington. That could put him into power.”

But Kaiser wonders if Trump has a hidden motive to his campaign strategy.

“This guy is an extremely smart person and it’s possible that everything he says is just BS designed to manipulate the public. It’s like he’s satirizing everything. And if he ever did get into power, well first he’d have to deal with the limitations that congress imposes, but once he’s in power he might change his tune and discover all these reasons why it’s not practical to do all the stupid things he said he would do.

“The frightening thing is, what if this sub-narrative is wrong, that the man is indeed insane or worse. Or that he ends up being co-opted by the truly insane in the background, who make him the lever on all the insane stuff that he said, because he is just a human being and he has no true power structure. It would be a reverse takeover of Trump.”

Kaiser downplays the possibility of a Trump presidency meeting an extraordinary end—for example assassination, an establishment putsch or a distinctively American court order annulling the election.

But “whether it’s Hillary or Trump, tensions with China and Russia are on an increasing trajectory,” he says. “That would be good for gold and good for the juniors.”

On the scandium Field of Dreams

“The problem with scandium—and it makes me want to tear out my hair that the market doesn’t get it—is that the uses for scandium have been understood for 30 or 40 years.”

By being able to demonstrate that these deposits have long-term supply, they can produce as much scandium as you want if you’re willing to pay $1,500 or $2,000 a kilo. That will coax demand off the sidelines.

Used for aluminum-scandium alloys and solid oxide fuel cells, the rare earth element also finds its way into ceramics, electronics, lasers, lighting and radioactive isotopes, according to the U.S. Geological Survey. The stuff is widely abundant, but rarely in concentration. As a result it’s mined as a byproduct in China, Kazakhstan, Russia and Ukraine, producing just 10 to 15 tons a year, the USGS states.

But if supply could grow, so would demand, Kaiser says. The aerospace and automotive industries would be prime customers. “The highest-grade deposits have been around 70 or 100 ppm, as in the Zhovti Vody mine in Ukraine, where the Soviets got scandium to build their airforce fleet. But nobody else has been able to produce a very meaningful supply that is scalable.”

That’s changing as two advanced Australian projects lead the way, Scandium International Mining’s (TSX:SCY) 80%-owned Nyngan project and Robert Friedland-backed, ASX-listed CleanTeQ Metals’ Syerston project.

“The difference these discoveries made is their 400-ppm grades are well above the 200 or 250 ppm you need to produce the stuff at $2,000 a kilo,” Kaiser explains. “At $2,000 a kilo it starts making sense to use a scandium-aluminum alloy. By being able to demonstrate that these deposits have long-term supply, they can produce as much scandium as you want if you’re willing to pay $1,500 or $2,000 a kilo. That will coax demand off the sidelines.

“The next few years will be interesting because those companies are going to try producing 35 to 40 tonnes a year. If they can succeed in demonstrating that they’ve got the recoveries figured out, they’ve got the costs figured out, they can scale these things each to about 150 to 200 tonnes of output, that will set the stage for all kinds of plans to utilize it. It’s really a Field of Dreams where if you build it, they will come.

“But you have to understand that there are all these applications for scandium that can’t be commercialized unless there’s a reliable, scalable supply.”

John Kaiser addresses the Vancouver Commodity Forum on June 14. Click here for free registration.