Newsletter – 7.05.2024

7/05/24                                      WEEKLY NEWSLETTER
  • Manara Minerals’ team in Pakistan for talks on Reko Diq stake
  • BHP bombshell puts South African mining in a hole
  • Boliden to restart Europe’s largest zinc mine
  • First Quantum hopes new Panamanian leader brings fresh look to disputed copper mine
  • A leadership battle is brewing at deep sea mining’s regulatory body
  • Pan American sells La Arena gold project in Peru to Zijin for $295 million

Manara Minerals’ team in Pakistan for talks on Reko Diq stake

Barrick Gold has targeted 2028 as the year of first production for Pakistan’s Reko Diq copper-gold mine.

Executives from Saudi Arabian mining company Manara Minerals are in Islamabad to continue talks about buying a stake in Pakistan’s Reko Diq gold and copper project, a Pakistan government document showed on Monday.

Located in Pakistan’s restive southwestern Balochistan province, it is considered one of the world’s largest underdeveloped copper-gold areas by global mining company Barrick Gold Corp, which owns the project jointly with Pakistan.

The Manara officials are part of a large delegation of Saudi investors and companies that arrived in Islamabad on Sunday, according to a document seen by Reuters listing officials in the delegation.

The document listed Manara Minerals’ general manager as wanting to “continue the negotiations on the Reko Diq project”.

Barrick has said it will invest up to $10 billion to develop the project.

Manara Minerals, a joint venture between state-owned Saudi miner Ma’aden and Saudi Arabia’s Public Investment Fund (PIF), declined to comment.

Pakistan’s Petroleum Minister Musadik Malik and Commerce Minister Jam Kamal said on Monday that the Saudi delegation, representing three dozen investors and companies, will meet Pakistani companies to explore investment in sectors including agriculture, mining, aviation and livestock.

BHP bombshell puts South African mining in a hole

BHP has put South Africa and its mining sector on the spot. The $140 billion Australian group’s ambitious swoop on rival Anglo American would see one of the Rainbow Nation’s most familiar companies largely withdraw from the country more than a hundred years after it was founded. The question is whether the government in Pretoria can stop the $39 billion transaction – and whether it should.

South African officials have so far given BHP’s proposal a mixed reception. Gwede Mantashe, the country’s mining minister, told Bloomberg he “wouldn’t support” the deal. But President Cyril Ramaphosa’s spokesperson described the approach as “normal market activity”.

In reality, Pretoria has a host of reasons to be awkward. South African mining is in decline: as a contribution of GDP it has fallen from 21% in 1980 to 7.5% in 2022. The country’s platinum, diamonds, coal and iron ore are not integral materials to the all-important energy transition. Corruption scandals at state utility Eskom and issues at freight carrier Transnet have led to frequent electricity blackouts and problems for miners trying to get shipments out of the country.

Boliden to restart Europe’s largest zinc mine

Tara zinc mine, in Ireland, is Europe’s largest.

Swedish miner Boliden (STO: BOL) will resume production at its Tara zinc mine in Ireland after reaching an agreement with unions to lower costs, which will result a reduction of a third of the operation’s workforce.

Boliden halted Tara, Europe’s largest zinc mine, last year after prices of the metal hit a three-year low and the operation faced expensive energy costs and production challenges.

The miner plans to gradually ramp up Tara’s operations in the fourth quarter, with the expectation of reaching full capacity in January 2025. Exploration activities at the site will also be resumed.

The number of full-time workers will be reduced to approximately 400, down from the previous count of over 600 before the shutdown last year, Boliden said.

The company announced that it plans to record a restructuring cost of €30 million ($32m) in the second quarter tied to the job cuts and other organizational changes. The total impact on the quarter’s results, including previously disclosed costs for care and maintenance, is expected to be €43 million ($46m), Boliden said.

First Quantum hopes new Panamanian leader brings fresh look to disputed copper mine

First Quantum Minerals said on Monday it is looking forward to talks with Panama’s new government to find a resolution to the Canadian company’s disputed Cobre Panama mine.

Panama on Sunday elected Jose Raul Mulino as its new president.

Analysts see the election result as a positive development for the Cobre Panama mine, which accounts for about 1% of global copper output. Panama’s outgoing government ordered the mine shut down last year after public protests over environmental damage from mining in the Central American country.

Mulino won the election with 34% of the vote, in a campaign mostly centered on his former boss, ex-President Ricardo Martinelli, who had strong popular support, but was barred from running in March due to a money laundering conviction.

A leadership battle is brewing at deep sea mining’s regulatory body

Miners plan to extract cobalt and other battery metals from the seabed.

The secretary-general of the International Seabed Authority is set to run for a third term leading the United Nations-affiliated organization that regulates deep sea mining, as control of mineral resources used to make electric car batteries becomes a focus of US-China rivalry.

The ISA’s 168 member nations and the European Union will elect the next secretary-general at what is expected to be a pivotal meeting in July. Secretary-General Michael Lodge, a UK lawyer, will be opposed by Brazilian marine scientist Leticia Carvalho in an election that will shape the future of deep sea mining. It comes as the ISA faces pressure to finish writing regulations that could allow mining to begin within the next two years.

The choice of the next secretary-general could have significant economic and environmental consequences for deep sea mining, if regulations are ultimately approved. The ISA’s charter gives the person in that role authority over the operations of the organization’s administrative arm and the secretary-general negotiates contracts with mining companies.

Pan American sells La Arena gold project in Peru to Zijin for $295 million

Pan American Silver (NYSE: PAAS) (TSX: PAAS) said on Wednesday it has agreed to sell its 100% interest in the La Arena gold property in Peru to Jinteng Mining in Singapore, a subsidiary of China’s Zijin Mining Group.

Total consideration consists of $245 million cash upfront and a $50 million contingent payment. The transaction is expected to close in the third quarter of 2024.

The La Arena property is located in the La Libertad province of Peru. It comprises the La Arena gold mine and the La Arena II project, which is in advanced exploration. The open-pit mine has been in operation since 2011.

Since acquiring the mine from Tahoe Resources in 2019, Pan American said it has added 535,521 oz. of gold through exploration and extended the mine life from 2021 to 2026, with the potential for further extension.

Under the terms of the deal, Zijin will grant Pan American a life-of-mine gold net smelter return royalty of 1.5% on the La Arena II project.

“With the sale of La Arena, we continue to deliver on our strategy to optimize our portfolio, following the Yamana transaction, while maintaining future upside through the retention of royalties,” Pan American CEO Michael Steinmann said in a news release.


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