Tuesday 22nd September 2020

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Posts tagged ‘russia’

Stan Sudol to Elon Musk:

July 26th, 2020

Stop fretting over potential nickel shortages and back some potential nickel mines

by Stan Sudol | posted with permission of Republic of Mining

Stop fretting over potential nickel shortages and back some potential mines

As its Gigafactory continues to ramp up production, Tesla already
produces more kWh of batteries than all other automakers combined.
(Photo: Tesla Inc.)

 

Elon Musk is practically begging nickel miners to boost production as potential future shortages would severely impact his ability to manufacture electric vehicles, as the metal is a key component for the batteries Tesla Inc. depends on.

Historically, nickel has always been a boom/bust metal due to the fact the world only produces about 2.1 million tonnes of the material a year, as opposed to a more commonly used metal like copper at 20 million tonnes. And roughly only half of nickel production is of the Class-1 type that is used in batteries that run electric vehicles.

Currently the cost of nickel is nearing a cyclical bottom, hence the reluctance of nickel miners to invest the possible near-billion it takes to bring on a new mine.

Musk is a multi-billionaire and his company stock is at an all-time high. Instead of whining to the mineral industry to invest “their shareholder money” in new nickel production at a time of low returns, here are some suggestions to calm his fear of future shortages:

 

Stop fretting over potential nickel shortages and back some potential mines

“At the heart of these products are batteries,” says Tesla.
But Elon Musk worries about the nickel needed to make them.
(Photo: Joni Hanebutt/Shutterstock.com)

1. Why can’t Tesla start stockpiling Class-1 nickel now during a time of low prices? The American military stockpiled nickel during the 1950s and 1960s as it was in constant short supply due to a booming economy and its use as a critical metal for military production—the Korean conflict, Vietnam War and the Cold War between the U.S.A. and U.S.S.R. What is to prevent the company from stockpiling two or three years’ worth of nickel needed for its car batteries? This would help firm up prices and encourage more exploration or expanded production.

During the 1950s, the U.S. government gave Falconbridge/Glencore a $40-million subsidy—roughly an astonishing $390 million in 2020 dollars—to help develop one of their Sudbury nickel mines and ensure diversity of supply. At the time, INCO supplied almost 80% to 90% of the West’s supply of nickel and the military were terrified of being so dependent on one key supplier. Perhaps subsidizing a few companies that are near production might be the route to go.

 

2. Polish miner KGHM has a terrific nickel deposit—the Victoria in the Sudbury Basin. They don’t seem to be that interested in developing the project that some analysts feel would need roughly a billion to put into production.

For much of the last century, the Sudbury Basin was basically the Saudi Arabia of nickel mining for the Western world.

Just a quick tangent for any Americans or Canadians who are not “mine literate.” For much of the last century, the Sudbury Basin was basically the Saudi Arabia of nickel mining for the Western world. The communist East had the astonishingly rich nickel mines of Norilsk, located in the isolated wilderness of Siberia. There are still enormous nickel reserves in the Sudbury Basin. Why we are not producing more would practically take an entire book to explain!

Why doesn’t Musk try to buy the deposit from KGHM and hire contractors to build and run his own mine? He would get nickel, copper and some cobalt for his car batteries. In addition, the mine would also provide him with platinum group metals and some gold and silver. If KGHM refuses to sell at a reasonable price, Ontario/Canada might enact some sort of “build/sell it or lose it” legislation!

 

3. Sudbury junior miner Wallbridge Mining has some very promising nickel properties in the Parkin Offset Dyke in the northeastern corner of the Sudbury Basin. According to the Wallbridge website, “The quality of the mineralization found in the Parkin Offset is high. The average nickel tenor for the mineralization found within the Parkin Offset is approximately 4%, which is comparable to the tenors of some deposits found in the Copper Cliff Offset Dyke.” Some of the Sudbury Basin’s biggest nickel mines, past and present, are on the Copper Cliff Offset Dyke, hence the importance of that statement!

Unfortunately, Wallbridge is not doing any exploration on this property during 2020 as the company is focused on its Quebec gold properties. Who can blame it with the precious metal hitting $1,900 an ounce? Why doesn’t Musk buy an equity position in the junior and fund it to the tune of $20 million or $40 million worth of exploration on the Parkin Offset Dyke?

 

4. Another junior nickel explorer that might be worth looking at is Canada Nickel and its promising nickel-cobalt sulphide project near Timmins, Ontario. A maiden resource estimate last February showed 600 million tonnes (measured and indicated) at 0.25% nickel and 310 million tonnes (inferred) at 0.23% nickel. As with all junior explorers, financing is always a challenge. Perhaps a significant equity position by Musk in exchange for future nickel and cobalt would ensure Tesla has no problems accessing these critical metals.

 

For crying out loud, it’s a skinny 300-kilometre gravel road and a couple of bridges. We are not building the Panama Canal or the Pyramids of Giza!

5. And finally there is the enormous mineral potential of the Ring of Fire with a 43-101 nickel deposit owned by junior miner Noront Resources. More nickel deposits may be discovered. Perhaps Musk could chat with Premier Ford and impress on him the importance of shortening environmental assessments and building that road into the Ring of Fire. For crying out loud, it’s a skinny 300-kilometre gravel road and a couple of bridges. We are not building the Panama Canal or the Pyramids of Giza! In the 1940s, the Canadian-Alaskan highway—roughly 2,700 kilometres—was built in eight months. No typographical error folks, less than one year!

The proposed road is on the traditional territories of Webequie and Marten Falls first nations, who both want it built. Hell, Musk should even consider putting a few hundred million in financing that road—I say this only half in jest as both the provincial and federal levels of government might be broke before construction starts.

And Premier Ford might even share the seat on that bulldozer with Musk to start building that vital road which was promised during the 2018 Ontario election campaign.

The Ring of Fire not only has nickel but potentially significant deposits of copper, zinc and various other critical metals along with chromite. And Premier Ford might even share the seat on that bulldozer with Musk to start building that vital road which was promised during the 2018 Ontario election campaign. It’s been a little over two years since the Conservatives have come to power and the patience of the entire sector is wearing thin! Road construction would be a terrific infrastructure investment to help alleviate the pending COVID recession/depression!

 

6. Sorry about the Ring of Fire road digression. I have not even mentioned the Thompson, Manitoba Nickel Belt, Newfoundland’s Voisey Bay nickel mine and Quebec’s Raglan nickel deposits, all of which probably have some juniors that could use some seed funding to drill near these world-class deposits—as the old saying goes, the best place to find a new mine is in the shadow of a headframe.

 

So I wish Elon Musk all the best, but please stop complaining about possible Class-1 nickel shortages and perhaps start strategically investing in the Canadian nickel sector yourself, if you really want to ensure that you have access to this vital metal.

 

For a brief history of the extraordinary Sudbury nickel deposits and their geo-political significance, click here.

Stan Sudol is a Toronto-based communications consultant, freelance mining columnist and owner-editor of Republic of Mining.

Posted with permission of Republic of Mining.

The U.S. Nuclear Fuel Working Group warns of Chinese and Russian supremacy in domestic and exported nuclear energy capacity

July 7th, 2020

…Read more

Economist Atif Kubursi explains negative oil prices

July 3rd, 2020

…Read more

Sergey Saveliev of Russia’s space agency Roscosmos accuses the U.S. of plans to “expropriate outer space”

June 30th, 2020

…Read more

U.S. calls for expanded domestic uranium supply, nuclear R&D and infrastructure exports

April 23rd, 2020

by Greg Klein | April 23, 2020

US calls for expanded domestic uranium supply, nuclear R&D and foreign infrastructure competition

Nuclear energy provides about 20% of American electricity,
serves vital military purposes and offers geopolitical opportunities.

 

The strategy vows to pull the American industry “back from the brink of collapse and restore our place as the global leader in nuclear technology.” An advisory group established by U.S. President Donald Trump last July has issued recommendations to revive the country’s nuclear supply chain, end foreign reliance, encourage R&D, and compete globally with Russia and China to supply nuclear energy infrastructure.

Stating the U.S. Congress “has provided broad bipartisan and bicameral support for U.S. nuclear energy,” the Nuclear Fuel Working Group starts with proposals for a revitalized mining, milling and conversion chain. In addition to streamlined permitting and licensing, the report calls for government purchases of uranium to expand the national reserve. Such quantities would “directly support the operation of at least two U.S. uranium mines and the re-establishment of active domestic conversion capabilities.”

The working group estimates the reserve would need 17 to 19 pounds of U3O8 beginning this year and domestic conversion providing 6,000 to 7,500 tons of UF6 beginning no later than 2022. Beginning possibly in 2023, 25% of domestic enrichment should be available for defence.

The military needs low-enriched uranium to produce tritium for nuclear weapons and highly enriched uranium to fuel navy nuclear reactors. Current stockpiles hold sufficient uranium to 2041 for weapons and into the 2050s for navy propulsion.

The report also foresees the development of micro-nuclear reactors for military bases in the U.S. and abroad, strategically ending their dependence on the grid. “In a future of increasingly electrified warfare, power delivery becomes increasingly critical to mission success.”

A far-reaching goal would enhance international stature by competing with Russia and China to install nuclear energy globally. “Establishment of nuclear infrastructure incorporates large-scale cross-cutting economic, security and geopolitical relationships between the purchasing nation and the technology-providing nation for the ensuing 100 years,” the working group points out. American neglect “has empowered Russia and China to establish long-term relationships with nations, inimical to U.S. national interests.”

Using state-owned and supported enterprises, the rivals bolster their geopolitical advantage.

Russia—a nation that has “weaponized” its energy supply as an instrument of coercion—dominates nuclear markets. Russia is advancing its economic and foreign policy influence around the world with $133 billion in foreign orders for reactors, with plans to underwrite the construction of more than 50 reactors in 19 countries. China, a strategic competitor that uses predatory economics as a tool of statecraft, is currently constructing four reactors abroad, with prospects for 16 more reactors across multiple countries, in addition to the 45 reactors built in China over the past 33 years, and the 12 reactors currently under construction in China.

Meanwhile, the United States is entirely absent from the global new build nuclear reactor market with no foreign orders. The United States is missing out on a nuclear reactor market that the U.S. Department of Commerce estimates is valued at $500 billion to $740 billion over the next 10 years.

Nowhere are the predatory tactics of state-owned enterprises more evident than in the realm of export financing.—U.S. Nuclear Fuel Working Group

The group urges American financing institutions to support the civilian industry against foreign state financing. “Nowhere are the predatory tactics of state-owned enterprises more evident than in the realm of export financing.” The report also encourages expanded, government-funded R&D in co-operation with private projects, along with education and training.

“The decline of the U.S. industrial base in the front end of the nuclear fuel cycle over the past few decades has threatened our national interest and national security,” commented U.S. Secretary of Energy Dan Brouillette. “As a matter of national security, it is critical that we take bold steps to preserve and grow the entire U.S. nuclear energy enterprise.”

Predictably, the report drew praise from U.S. producers. With two mines and a mill, Energy Fuels TSX:EFR noted it’s the country’s biggest uranium producer “and holds more uranium production capacity and more permitted uranium resources than any other U.S. company.” Another domestic producer, Ur-Energy TSX:URE operates the Lost Creek ISR mine and moves its Shirley Basin project through advanced licensing.

In the wake of pandemic-caused mining suspensions around the world, uranium prices have surged past $33 a pound from approximately $27.35 at the end of March.

USGS unveils comprehensive moon map amid lunar controversy

April 21st, 2020

by Greg Klein | April 21, 2020

The result might resemble a beach ball coated in psychedelic pizza but the U.S. Geological Survey calls it the first-ever comprehensive map of its kind. A culmination of six Apollo-era projects as well as more recent satellite missions, the chart details our nearest celestial neighbour at 1:5,000,000 scale.

USGS unveils comprehensive moon map amid controversy over US ambitions

Orthographic projections show the geology of the moon’s
near side (top) and far side (bottom), with shaded
topography from the Lunar Orbiter Laser Altimeter.
(Images: NASA/GSFC/USGS)

The USGS redrew previous maps to align them with modern data while retaining previous observations and interpretations. Besides merging old and new data, researchers also developed a unified description of the moon’s stratigraphy, or rock layers. “This resolved issues from previous maps where rock names, descriptions and ages were sometimes inconsistent,” the USGS stated.

The outcome should interest international scientists and educators, as well as the public. It will also help guide earthlings on their future visits.

“People have always been fascinated by the moon and when we might return,” said USGS director Jim Reilly, a former NASA astronaut. “So it’s wonderful to see the USGS create a resource that can help NASA plan for future missions.”

While the agency placed the map in the public domain, international controversy surrounds the U.S. president’s executive order earlier this month on mining the moon and other extraterrestrial turf.

Donald Trump called for commercial partners to take part in an “innovative and sustainable program headed by the United States to lead the return of humans to the moon for long-term exploration and utilization, followed by human missions to Mars and other destinations.”

Among the goals would be resource extraction, including water and minerals.

Trump rejected a 1979 international agreement on outer space activities which he said discouraged some commercial endeavours. “Outer space is a legally and physically unique domain of human activity, and the United States does not view it as a global commons.”

Just 18 countries, Canada not among them, ratified the 1979 agreement.

Trump also called on the U.S. to “negotiate joint statements and bilateral and multilateral arrangements with foreign states regarding safe and sustainable operations for the public and private recovery and use of space resources.”

His statement drew a warning from Roscosmos, Russia’s space agency. “Attempts to expropriate outer space and aggressive plans to actually seize territories of other planets hardly set the countries (on course for) fruitful co-operation,” said the agency’s Sergey Saveliev.

“History knows examples of a country starting to seize territories for its own benefit—everyone remembers the outcome.”

Download the USGS Unified Geologic Map of the Moon.

See the map on an animated rotating globe.

Some earlier lunar depictions not only lacked scientific rigour but took an unacceptable approach to indigenous consultation:

 

Oil crash explained

April 21st, 2020

How are negative oil prices even possible?

by Atif Kubursi, McMaster University
posted with permission of The Conversation | April 21, 2020

It’s hard to believe that the price of any commodity, let alone oil, can dip into negative territory. But that’s just what’s happened to oil prices.

COVID-19 has prompted lockdowns, shuttered factories and stopped people from travelling. The global economy is contracting.

Oil crash explained How are negative oil prices even possible?

Pumpjacks pump crude oil near Halkirk, Alberta, more than a decade
ago. Oil prices have plunged into negative territory due to the glut
created by the COVID-19 global economic shutdown.
(Photo: Canadian Press/Larry MacDougall)

The pandemic has also reduced global demand for oil by about 29 million barrels a day from about 100 million a year ago. OPEC and other producers agreed to cut production by 9.7 million barrels a day, far less than the decrease in demand, leaving a huge surplus of oil on the market and no buyers.

Storage capacity on land has filled up quickly. Many oil-importing countries have stored large quantities of oil, taking advantage of cheap prices that may not last.

Some oil producers, hoping to maintain their market share, have taken to storing their excess oil at sea, leasing tankers at high costs. Some are believed to be paying in excess of $100,000 per day for each tanker. (All dollar amounts in U.S. currency.)

Oil prices will come back up

So how have Alberta oil prices and even future prices for West Texas Intermediate (WTI) slipped into negative territory?

It starts with the futures contracts for WTI—oil to be delivered in a few months at today’s price. It lost $6 a barrel on Monday, fetching $11.66, but ended the day at -$37 as holders of future contracts tried to dump their contracts before oil is actually delivered with nowhere to store it.

But Alberta oil, primarily derived from oilsands (referred to as Western Select), typically sells at $10 to $15 below the price of WTI, because it has to be extracted from deep rocky terrain. That makes it harder to refine, and it also has to be transported thousands of kilometres to American refineries.

Oil crash explained How are negative oil prices even possible?

An oil refinery in Kansas: Oil from Alberta’s oilsands is processed
at American refineries. (Photo: Canadian Press/AP/Charlie Riedel)

And so Alberta oil prices have become negative in the sense that the benchmark price is now lower than the cost of production, transport and storage.

This state of affairs cannot be expected to last for long. Producers, in the short term, may accept prices below their variable cost as long as they are able to pay some of the costs they will incur even if oil production shuts down.

As time passes, more and more rigs will stop operating (technically, a few will be kept operational in order to avoid being compromised) and a new balance between supply and demand will be established at prices that exceed total average cost. But this doesn’t bode well for either Alberta or the United States.

Collateral damage

Alberta oil is now the collateral damage of the oil war between Russia and Saudi Arabia, with COVID-19 launching an additional attack. Either of these two factors could have disrupted Alberta’s oil production. But the Saudi-Russia hostilities combined with the global pandemic have proven catastrophic for Canada, and could have a similar outcome for the U.S. energy industry.

Russia and Saudi Arabia depend heavily on their oil revenues to sustain their economies. Of course, Saudi Arabia’s economy is less diversified than the Russian economy, but both share a similar distortion, where oil revenues represent a very high share of their GDPs (Saudi Arabia about 50%, Russia 38.9%), budgets (Saudi Arabia 87% and Russia 68%), and exports (Saudi Arabia 90% and Russia 59%). It’s difficult to believe that either country can do with such low prices.

Russia needs a price of $60 a barrel to balance its government budget and even a higher price to balance its current account, meaning exports of goods and services minus imports of goods and services, plus net short-term capital transfers.

Oil crash explained How are negative oil prices even possible?

Prince Abdulaziz bin Salman Al-Saud, Saudi Arabia’s energy minister, leads a recent virtual summit of the G20 energy ministers at his office
in Riyadh, Saudi Arabia. (Photo: Saudi Energy Ministry via AP)

Saudis also need a much higher oil price

Saudi Arabia, which remains the lowest-cost oil producer in the world, can make money when the price per barrel exceeds $20, and Russia can at a price of $40.

But making a profit when prices are higher than cost is not sufficient. Saudi Arabia needs an $80-per-barrel price to balance its budget, realize its plans to diversify its economy and sustain a heavily subsidized economy. In the balance is the stability of both the Russian and Saudi Arabian political systems and current regimes.

The longer the COVID-19 pandemic lasts, the greater the damage oil producers will endure. It’s hard to tell now how high oil prices will rise once the pandemic subsides. They will likely go higher as marginal producers are eliminated, but not for long. Using oil and other fossil fuels is no longer consistent with avoiding the expected disasters of climate change. Oil is increasingly becoming a stranded asset.
The Conversation

Atif Kubursi, Professor Emeritus of Economics, McMaster University

This article is republished from The Conversation under a Creative Commons licence. Read the original article.

Oil crash explained: How are negative oil prices even possible?

April 21st, 2020

This story has been moved here.

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.”

The end is still nigh

August 21st, 2019

So James Rickards found time to write another doomsday survival guide

by Greg Klein

So James Rickards found time to write another doomsday survival guide

 

St. John wrote just one Book of the Apocalypse but James Rickards has finished six so far. His most recent, Aftermath: Seven Secrets of Wealth Preservation in the Coming Chaos, offers a warning and advice for the economic end times that he considers imminent. Exactly how and when that’ll happen, he doesn’t say. But this book continues his exposé of the world’s monetary system: “the real system as distinct from the one elites would have you believe exists.”

What Aftermath offers in addition to Rickards’ trademark pitch for gold are some very general tips on investment and asset allocation—so general, however, that they hardly merit a book. This volume’s strength comes in its essays, discussions and digressions on a variety of (usually related) topics.

Among the most important is public debt, primarily that of the U.S. Long unsustainable, the burden groans under a 300% increase over 20 years, currently fuelled by Donald Trump’s revival of trillion-dollar deficits. He gets away with it, though: “Entitlements and defense both get to gorge at the trough, so there’s no dissension in D.C. The only loser is the country.”

So James Rickards found time to write another doomsday survival guide

Among the less-acknowledged causes of American debt are student loans, “now more than 50 percent larger than the junk mortgage pile in the last financial crisis” and growing. Also growing are the default rates, already more than three times that of mortgages at the height of the 2007-to-2008 crisis.

Debt hardly distinguishes the U.S. from other countries, and the entire world remains at risk from contagious sovereign defaults in emerging countries. Rickards’ at-risk list might surprise some readers.

China is a Ponzi like Madoff. China has trillions of dollars in external dollar-denominated debt, wealth management products, bank loans, intercompany loans, and other financially engineered arrangements that can never be repaid. If everyone with a claim on China wanted her money back, China couldn’t come close to satisfying even a small portion of those seeking liquidity.

…. Apart from borrowed money, wasted infrastructure investment, and fictitious accounting, there is no Chinese economic growth miracle.

While the U.S. denominates its debt in U.S.-printable U.S. dollars, money-creation won’t work forever. The only thing supporting fiat currency is confidence, and that can’t last, Rickards argues. History, psychology and common sense demonstrate that “confidence in money is fragile, easily lost, and impossible to regain.”

Spreading to all reserve currencies, “this loss of confidence will be exacerbated by malicious efforts on the part of Russia, China, Turkey, Iran, and others to abandon dollars entirely and to bypass the U.S.-dollar payments system.”

This accumulation of risk factors is entirely new, and outside the experience of any trader or quant.

Contagion demonstrates one danger of interconnected systems, but exceedingly complex technology and financial instruments intensify the peril. Flash crashes only hint at the possibilities, Rickards suggests. “Markets now confront a lethal brew of passivity, product proliferation, automation, and hypersynchronous behavioral responses. This accumulation of risk factors is entirely new, and outside the experience of any trader or quant.”

Getting back to currencies, the author presents intriguing evidence that a gold standard is actually in place. Using research from D.H. Bauer, Rickards says that special drawing rights, the International Monetary Fund reserve asset that’s speculated to replace the U.S. dollar as the world currency, have been pegged to gold. Bauer’s data shows yellow metal hovering around SDR900, fluctuating no more than SDR50 in either direction.

 An important pillar of a global monetary reset seems already in place.

Rickards blames China. “Even if the peg is nonsustainable in the long run, it’s a clear short-run signal that China is betting on the SDR and gold, not the yuan or the dollar. An important pillar of a global monetary reset seems already in place.”

Sometimes digressive in his subject matter, Rickards’ other topics include an interesting perspective on the Uranium One purchase. He served on a CIA advisory board as manoeuvres by Frank Giustra and Bill and Hillary Clinton led to the company’s takeover by Rosatom. “It’s as if the deal were being handled inside the intelligence community on a special track, precisely to avoid the analysis our group was formed to provide.”

Another digression looks at the disturbing prevalence of surveillance, data mining and choice architecture to monitor and manipulate citizens. “Neofascist” China plans 600 million surveillance cameras, digital facial and gait recognition software and internet monitoring to reward its people for good deeds or penalize them for offences ranging from smoking in public to tweeting verboten thoughts.

Most plans for catastrophe will fall apart in the first five minutes of being needed.

He also criticizes some alternative end time strategies. “Most plans for catastrophe will fall apart in the first five minutes of being needed.” Survivalists holed up in bunkers will face “pop-up militias,” he warns. The ultra-rich, with plans to flee to their luxurious New Zealand estates, haven’t considered how they’ll get to the airport, how they’ll refuel their private planes en route, whether they’ll get past the NZ military on arrival, or how they’ll ensure the loyalty of their private security guards. The catastrophe will be worse than they imagine.

Even so, too many of his digressions are unnecessary, such as his tedious account of being locked out of his car, an unnecessarily long rebuttal of behavioural psychology and the rather weird discussion of finite size involving King Kong, Godzilla, skyscrapers and whales.

“Investors should not focus on the cause of the collapse (it’s a long list and the timing is uncertain),” he notes. Certainly the book’s rambling nature belies any sense of urgency. He even hopes to finish another volume before the catastrophe finally hits. That would be his seventh on the subject since 2012.