Newsletter 7/08/2023

Newsletter – 7.08.2023

7/8/23                                      WEEKLY NEWSLETTER
  • Plans for deep sea mining gains momentum despite no permission from international authority
  • US adds copper to critical raw materials list
  • Chinese overseas investment in metals and mining to reach record levels this year
  • Valor secures final drilling permit for Peruvian copper project
  • Britain agrees deals on clean energy, critical minerals with Zambia
  • Trafigura’s $600 million cobalt play faces cash crunch in Congo
  • Peru’s coffers get $600,000 following approval of mining-related permits
  • China nickel producers look to London exchange in dash for profit
  • Insight: Amazon rainforest gold mining is poisoning scores of threatened species

Plans for deep sea mining gains momentum despite no permission from international authority

A Canadian company is aiming to start production in the Pacific Ocean in 2025 - but the plan comes with fierce opposition. No agreement over licencing deep sea mining has been made and 21 countries have called for the process to be halted.

A company has said it intends to start mining minerals from the deep sea bed despite an international meeting failing to grant permission.

Parts of the ocean floor are rich in so called "poly-metallic nodules" containing elements like nickel and copper, which are essential to green tech and renewable energy.

Canadian firm The Metals Company is aiming for a licence next year for mining in part of the Pacific Ocean, possibly starting production as early as 2025.

These nodules look like a lump of coal and are spread across some of the abyssal plain in their trillions.

They form as metals dissolved in seawater like nickel, copper, manganese and cobalt aggregate around a particle and grow over millions of years.

They are key elements in our increasingly electrified future, vital for electric cars, batteries and turbines - so we will need to find a lot more.

The Metals Company has been exploring an area between Mexico and Hawaii, pulling up nodules from around 4,000m deep.

US adds copper to critical raw materials list

In its finalised Critical Materials Assessment for 2023, the US Government has for the first time included copper as a critical material.

The US Department of Energy (DoE) officially added copper to its list of critical raw materials earlier this week in an historic move that reflects the growing importance of energy transition technologies.

In its finalised Critical Materials Assessment for 2023, the US Government has for the first time included copper as a critical material, following the example set by the EU, Japan, India, China and Canada. The Critical Materials Assessment evaluates materials based on whether they “serve an essential function” in the production of energy transition technologies such as electric vehicles (EVs). It is also defined as any non-fuel mineral that has a high risk of supply chain disruption.

The critical materials list will inform eligibility for government subsidies under the Inflation Reduction Act (IRA). The final list includes aluminium, cobalt, copper, dysprosium, electrical steel, fluorine, gallium, iridium, lithium, magnesium, natural graphite, neodymium, nickel, platinum, praseodymium, terbium, silicon and silicon carbide.

Chinese overseas investment in metals and mining to reach record levels this year

Chinese overseas investment in metals and mining is due to reach record levels this year, according to research from Fudan University in Shanghai. 

According to the report from the Green Finance and Development Centre, Chinese investments and new contracts in the metals and mining sector was more than $10bn in the first half of 2023, a 131% growth rate compared with the same period in 2022.

The report explores investment in the Belt and Road Initiative (BRI) during the first half of 2023. The BRI is an extensive China-led infrastructure project that was launched in 2013 and seeks to connect China with Europe, Asia and further afield. Mineral resources play a key role in the project, and in 2015, Beijing launched the Belt and Road Mining Industry Development Fund.

Transition minerals used in batteries, such as lithium, are of particular interest to Chinese investors, the report states. Uranium, steel, copper and iron have also seen investment.

China is currently the world’s biggest producer of electric vehicles, batteries, solar panels and wind turbines, a position which it is working to maintain.

“Major growth countries of Chinese engagement were Bolivia, Namibia, Eritrea, and Tanzania,” the report, which was published 1 August states. Additionally, 26 countries including Turkey, Poland and Kenya saw a 100% drop in BRI engagement. Huayao Cobalt and battery giant CATL were both key investors throughout the year so far.

Valor secures final drilling permit for Peruvian copper project

The company will undertake 5,000m of diamond drilling work to initially test four key targets.

Valor Resources has secured the final regulatory approval from the Peruvian Ministry of Energy and Mines (MEM) to commence the drilling programme at the Picha Copper Project.

With the receipt of the Autorización de Inicio (permission to begin drilling), the company can drill up to 120 holes within the approved effective area at the project.

Valor will undertake 5,000m of diamond drilling work to initially test four key targets: Cobremani, Cumbre Coya, Maricate and Fundicion.

The permit follows the issuance of the environmental impact statement (EIS) for the Picha project in March 2023.

Valor executive chairman George Bauk said: “Valor has developed an incredible pipeline of large-scale, high-impact porphyry, epithermal and CRD targets across the Picha Project tenements – and we are very much looking forward to unlocking the enormous potential of this project through the maiden 5,000m drill programme scheduled to commence in September.”

Britain agrees deals on clean energy, critical minerals with Zambia

Impala Terminals strategic copper warehousing along the eastern rail corridor in in Ndola, Zambia.

Britain on Thursday said it had agreed deals with Zambia on clean energy and critical minerals as foreign minister James Cleverly ends a four-day visit to Africa to deepen ties.

Cleverly has used the trip, which fell shortly after a coup in Niger, to seek to enhance Britain’s sway in Africa, welcoming regional talks on the Niger crisis and announcing support for Nigeria’s agriculture sector.

The foreign ministry said Cleverly would agree a UK-Zambia Green Growth Compact, aimed at generating 2.5 billion pounds ($3.17 billion) of British private sector investment in Zambia’s mining, minerals and renewable energy sectors alongside 500 million pounds of government-backed investments.

“The UK-Zambia Green Growth Compact and our landmark agreement on critical minerals will support investment between UK and Zambian business, creating jobs in both countries,” Cleverly said.

Zambia is a major copper producer, and also has deposits of critical minerals such as cobalt, manganese and nickel. Last year Britain emphasised the importance of diversifying its supply chains in a critical mineral strategy.

Cleverly will visit a copper mine in Zambia and sign a memorandum of understanding (MoU) on critical minerals, which Britain said would “lay the foundation for further UK support for the responsible mining of copper, cobalt and other metals essential to the global clean energy transition.”

Britain has agreed to deepen collaboration on critical minerals with other countries such as the United States, Japan, Australia, Kazakhstan and Saudi Arabia.

Trafigura’s $600 million cobalt play faces cash crunch in Congo

The Mutoshi project

Trafigura Group has been forced to seek new funding for one of its flagship investments — a $600 million copper-cobalt project in the Democratic Republic of Congo — in the latest headache for the trading house’s embattled metals business.

The project being developed by Chemaf SA, a longtime partner of Trafigura, has run into difficulties amid cost overruns and weak cobalt prices according to people familiar with the matter, who asked not to be identified discussing private information.

Trafigura’s metals unit is already under fire after announcing in February it was the victim of a massive alleged nickel fraud. Trafigura vies with rival Glencore Plc for the status of the world’s largest metals trader, but the business has been overshadowed in recent years by the eyewatering profits earned by its energy traders — even before the nickel scandal became public.

Trafigura last year announced a $600 million loan for Chemaf for the construction of what it said would be one of the largest copper and cobalt mines in Congo at Mutoshi, as well as a processing plant there and another at its Etoile operation in Lubumbashi.

However, the project has overshot its budget and can’t be completed with the current loan facility, the people said. As a result, Trafigura has been sounding out investors who could provide additional money to help complete the project. The trading house is seeking additional funding of about $200 million to $300 million, according to one of the people.

It’s not clear how much of the $600 million loan has been drawn down. The loan is secured against Chemaf’s assets, according to one of the people.

Peru’s coffers get $600,000 following approval of mining-related permits

The Zafranal porphyry copper-gold deposit in southern Peru owned by Teck Resources and Mitsubishi Materials Corp.

Following the approval of several mining-related permits that had been stalled, in some cases for years, Peru’s coffers received $600,000, the government announced.

According to a statement by the Specialized Investment Monitoring Team (EESI), an agency of the Ministry of Economy and Finance, Teck Resources (TSX: TECK.A and TECK.B, NYSE: TECK) tops the list of approvals after receiving a rubber stamp on the detailed environmental impact assessment and the confirmation of its surface rights for its Zafranal copper project located in the Arequipa Region. This will allow the company to start the construction phase.

On the other hand, Chinalco’s Toromocho copper mine obtained approval for the modification of its beneficiation plant which is part of the mine’s phase II expansion project. The initiative will allow production of the red metal to rise to  170,000 tonnes from the current 141,000 tonnes.

Similarly, Hochschild Mining’s (LON: HOC) modified environmental impact assessment for its flagship Inmaculada gold-silver mine in southern Peru was greenlighted. This approval will allow the company to expand the mine’s life for another 20 years and create over 750 new jobs.

China nickel producers look to London exchange in dash for profit

Chinese nickel producers are looking to list metal on the London Metal Exchange (LME), two China-based industry analysts said, as they seek improved access to global markets and rush to lock in profits while they boost output.

That could be a boost for the exchange, the world’s oldest and largest forum for trading metals, which is struggling to reinvigorate its nickel contract after a severe price crunch in March 2022 damaged its trading volumes and its credibility.

In March of this year, the exchange announced plans to cut waiting times and scrap fees for approving new nickel brands for delivery against its contract, aiming to boost stocks of the stainless steel material in its approved warehouses.

These changes, combined with high nickel prices on the LME compared with prices of lower-grade nickel pig iron and nickel sulfate, spurred Chinese producers to start looking at the potential for delivering into the LME system.

“The good profits, and the need to hedge with futures and to enhance their international presence, are the main reasons for the interest in an LME listing, plus the fast track provided by the exchange,” said Zhang Yuan, an analyst at state-backed CITIC Futures.

Insight: Amazon rainforest gold mining is poisoning scores of threatened species

LOS AMIGOS BIOLOGICAL STATION, Peru, Aug 5 (Reuters) - In a camping tent in the Peruvian jungle, four scientists crowded around a tiny patient: An Amazonian rodent that could fit in the palm of a human hand.

The researchers placed the small-eared pygmy rice rat into a plastic chamber and piped in anesthetic gas until it rolled over, asleep. Removing the creature from the chamber, they fitted it with a miniature anesthetic mask and measured its body parts with a ruler before gently pulling hairs from its back with tweezers.

The hairs, bundled into a tiny plastic bag, would be carried to a nearby lab at the Los Amigos Biological Station for testing to determine whether the rat is yet another victim of mercury contamination.

Los Amigos lies in the rainforest of southeastern Peru's Madre de Dios region where some 46,000 miners are searching for gold along river banks in the country's epicenter of small-scale mining.

Tests like this are providing the first extensive indications that mercury from illegal and poorly regulated mining is affecting terrestrial mammals in the Amazon rainforest, according to preliminary findings from a world-first study shared with Reuters.

Absorbing or ingesting mercury-contaminated water or food has been found to cause neurological illness, immune diseases and reproductive failure in humans and some birds.

But scientists don't yet know its full effects on other forest animals in the Amazon, where more than 10,000 species of plants and animals are at a high risk of extinction due to destruction of the rainforest.

Reuters accompanied the researchers in Madre de Dios over three days in late May and reviewed their previously unreported findings. Their data showed mercury contamination from informal gold mining making its way into the biodiversity hotspot's mammals — from rodents to ocelots to titi monkeys.


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