Republic of Mining

COLUMN-Restrained copper is the sensible commodity in China – by Clyde Russell (Reuters U.S. – May 10, 2016)

May 10, 2016

http://www.reuters.com/

May 10 Copper is probably the best reality check right now for China’s commodity markets, with the industrial metal showing why the recent surge in commodity prices was unjustified, but also why a collapse is not warranted.

China’s imports of unwrought copper fell sharply in April to 450,000 tonnes, down 21.1 percent from March’s 570,000 tonnes, and only up a modest 4.7 percent from the same month a year earlier, according to customs data.

It wasn’t just refined metal that showed a marked pullback from March’s exuberance, with imports of ores and concentrates slipping 8 percent in April from the prior month to 1.26 million tonnes. There are some fundamental factors that help explain the drop in April’s copper imports, such as the closing of the arbitrage window between London and Shanghai prices and bulging domestic inventories.

Tesla Battery Drive Lures China Molybdenum Into Cobalt – by Danielle Bochove (Bloomberg News – May 9, 2016)

May 10, 2016

http://www.bloomberg.com/

China Molybdenum Co. is the latest company to bet on the future of electric cars with its plans to acquire cobalt assets in the Democratic Republic of Congo.

On Monday, Freeport-McMoRan Inc. agreed to sell its controlling stake in the Tenke Fungurume copper-cobalt mine to CMOC, as the Luoyang, China-based company is known, for $2.65 billion. CMOC is also negotiating to buy Freeport’s interests in other cobalt assets.

The deal marks the Chinese company’s entry into cobalt, one of the specialty metals used in rechargeable batteries. The battery market is expanding as more consumers turn to electric cars made by companies such as Tesla Motors Inc. and look to store renewable energy to power appliances when there’s little wind or sunshine.

[Commodities] The World’s Most Extreme Speculative Mania Unravels in China (Bloomberg News – May 10, 2016)

May 10, 2016

http://www.bloomberg.com/

From the Dutch tulip craze of 1637 to America’s dot-com bubble at the turn of the century, history is littered with speculative frenzies that ended badly for investors.

But rarely has a mania escalated so rapidly, and spurred such fevered trading, as the great China commodities boom of 2016. Over the span of just two wild months, daily turnover on the nation’s futures markets has jumped by the equivalent of $183 billion, outpacing the headiest days of last year’s Chinese stock bubble and making volumes on the Nasdaq exchange in 2000 look tame.

What started as a logical bet — that China’s economic stimulus and industrial reforms would lead to shortages of construction materials — quickly morphed into a full-blown commodities frenzy with little bearing on reality. As the nation’s army of individual investors piled in, they traded enough cotton in a single day last month to make one pair of jeans for everyone on Earth and shuffled around enough soybeans for 56 billion servings of tofu.

Unlikely heroes: how lithium mining could change the Pilbara for the better – by Max Opray (The Guardian – May 10, 2016)

May 10, 2016

http://www.theguardian.com/

Currently the world’s biggest producer of lithium, Australia is well-placed to take advantage of the lithium-ion battery solar storage boom

Out Western Australia way unlikely new environmental heroes can be found toiling in the red ochre dust of the Pilbara. Until recently companies such as Altura Mining, which has a long rap sheet of coal projects to its name, weren’t exactly contributing to the effort to curb global carbon emissions, but that is about to change.

The coal price has slumped, so too that of iron ore – the Pilbara’s primary source of income – and mining companies are eyeing off the building blocks of green economies of the future, such as neodymium and yttrium rare earths for the magnets used in wind turbines, and gallium and indium for solar panels and energy-efficient lighting.

While these all have varying levels of supply capacity relative to demand, where the supply chain falls seriously short in comparison to the projected need is the materials needed for battery systems crucial for storing the intermittent energy output of solar and wind as well as powering the fleets of electric cars that companies such as Tesla are planning to roll out in huge numbers over the coming decade.

Chronicle of a Bust Foretold as Iron Ore Futures Slide Below $50 – by Jasmine Ng (Bloomberg News – May 10, 2016)

May 10, 2016

http://www.bloomberg.com/

Iron ore sagged again on Tuesday, fulfilling widespread expectations that a bust would follow a brief boom as a trading frenzy in China unwound and swelling inventories revived concerns about oversupply.

The SGX AsiaClear contract for June settlement sank as much as 2.3 percent to $49.85 a metric ton in Singapore, the lowest since March 16, and traded at $51.25 at 3:20 p.m. local time. In Dalian, iron ore futures closed 0.6 percent lower as steel in Shanghai tumbled for the fifth time in six days. In Sydney, BHP Billiton Ltd., Rio Tinto Group and Fortescue Metals Group Ltd. all fell.

Iron ore soared in April after Chinese investors dived into raw-material futures, spurring forecasts that the excessive enthusiasm would prove too much for fundamentals to justify.

Tesla Shakes Up Market for Lithium, Other Metals – by Stepanie Yang and Biman Mukherji (Wall Street Journal – May 5, 2016)

May 10, 2016

http://www.wsj.com/

‘In order to produce half a million cars a year…we would basically need to absorb the entire world’s lithium-ion production,’ Elon Musk said in March

Tesla Motors Inc., shaking up the auto industry with its battery-operated cars, is now reshaping metals markets, too. Tesla and other electric-vehicle makers are swallowing up lithium, a lightweight material that some call “white petroleum” for its use in lithium-ion batteries that power electric cars.

Lithium carbonate prices rose 47% in the first quarter compared with the average price in 2015, according to the most recent available data from data provider Benchmark Mineral Intelligence. In 2015, when most other metals and commodities still were in the doldrums, lithium prices rose 28%, Benchmark Mineral Intelligence said.

Orders for the soft metal show no sign of abating. A report from Goldman Sachs Group Inc. says lithium demand could triple by 2025 to 570,000 tons, driven principally by smartphone and electric-car applications. Telsa isn’t the only consumer, but its voracious appetite for lithium is getting significant attention.

[Potash Corp. and Western Sahara] Companies need to do due diligence on human rights abroad – by Fred Pinto and Peter Chapman (Globe and Mail – May 10, 2016)

May 10, 2016

http://www.theglobeandmail.com/

The sale of Canadian military vehicles to Saudi Arabia has once again raised the age-old debate over whether Canada should do business with countries that have dubious human-rights records or in conflict-torn regions.

But it’s not just a question for governments to address. Companies also need to understand the human-rights risks they face in overseas operations and supply chains. And, increasingly, their investors do, too.

New international instruments such as the United Nations Guiding Principles on Business and Human Rights as well as new reporting requirements under securities regulations are increasingly emphasizing the need for global businesses to assess their own human-rights risks, and to take steps to ensure that they are not contributing to rights violations.

Ontario climate plan signals stormy future – Postmedia Network Editorial (Brantford Expositor – May 10, 2016)

May 10, 2016

http://www.brantfordexpositor.ca/

Premier Kathleen Wynne is preparing to impose another suite of climate-related energy policies on the province. The Climate Change Action Plan promises to be even more expensive and more economically intrusive than the Green Energy Act. Which should give voters cause for alarm.

The public details of the plan that have emerged so far outline a policy thrust that sounds more like a war on personal mobility and the automotive industry than an environmental blueprint. It has already proved so concerning to the auto industry that the government has been forced to reassure the sector it means it no harm.

For instance, draft plans of the policy say Ontario intends to require that 80% of the province either walk, take transit or bike to work by 2050. How are they going to do that without imposing draconian new rules on where companies choose to invest and where people live? It’s hard to imagine that rule applying in Ontario counties where bus service is limited.

Silver Wheaton confident despite rivals adopting streaming model – by Ian McGugan (Globe and Mail – May 10, 2016)

May 10, 2016

http://www.theglobeandmail.com/

Silver Wheaton Corp. acknowledges that competition is growing in the red-hot business of funding cash-strapped miners, but says its size and experience will allow it to defend its turf against newer rivals.

So-called streaming companies such as Silver Wheaton provide mining companies with cash today in exchange for metal tomorrow. The streamers buy the right to purchase “streams” of a mine’s future production at a fixed, heavily discounted price. Silver Wheaton pioneered such transactions 12 years ago, but now faces a horde of rivals, including well-established firms such as Royal Gold Inc.

Newer entrants ranging from Sandstorm Gold Ltd. to private-equity firms have also shouldered their way into the space.

Editorial If coal is too dirty for the U.S., why would Oakland build a dock to export it to Asia? (Los Angeles Times – May 9, 2016)

May 10, 2016

http://www.latimes.com/

If coal is indeed king, it is the lord of a shrinking realm, which ought to be good news for the environment. With the nation’s electricity production shifting to cleaner sources of power, U.S. coal consumption is declining.

But here’s a problem: As major coal-mining companies watch their sales diminish domestically, they are struggling to find export markets in which they can continue to do business. And what have we really gained if coal that the U.S. doesn’t use just gets shipped to other countries for them to burn?

That’s the question that needs to be answered as officials consider a proposal to build a new coal port in Oakland as part of the conversion of a decommissioned Army base. There are a lot of problems with the proposal, which we’ll get to, but just from an environmental standpoint, it is a bad idea.

The Mining Stock Boom Has Dramatically Outstripped Rising Metals Prices – by Mike Bird and Ese Erheriene (Wall Street Journal – May 9, 2016)

May 9, 2016

http://blogs.wsj.com/

Compared to their average over the last six months, mining stocks have exploded upwards, breaking the link with base metals

Mining stocks are rallying far ahead of the price of metals they mine, leaving some analysts wondering whether they have overshot fundamentals.

Over each of last four weeks, mining and metals companies on the MSCI AC World index have risen by at least 17% compared to their level averaged out over the previous six months. The gain on each of those four weeks was a record stretching back to 2002.

Though metals prices have also risen, on the back of dollar weakness and speculative buying, the gains have not been as sharp. Copper prices, for instance, have risen by as much as 6.6% compared to its six month average price.

A new industry that uses bacteria to remediate old mines? – by Jonathan Migneault (Sudbury.com – May 9, 2016)

May 9, 2016

https://www.sudbury.com/

Province grants Laurentian $630,000 to create an Industrial Research Chair position in bio-mining, bio-remediation and science communication

A new Laurentian University Industrial Research Chair position in bio-mining, bio-remediation and science communication has the potential to kickstart a new industry in Sudbury that could create hundreds, or even thousands of jobs, says the director of the Vale Living with Lakes Centre.

“It’s not an exaggeration to say there will be an entire industry built around this,” saidLaurentian professor John Gunn, who is also the Canada Research Chair for stressed aquatic systems. “The demands are so big.”

Sudbury MPP Glenn Thibeault announced Monday the province is investing more than $630,000 through the Northern Ontario Heritage Fund Corporation to create the five-year research chair position at the university.

[Resources] Canadian companies ‘try to do the right thing’ – by Elliot Ferguson (Kingston Whig-Standard – May 8, 2016)

May 9, 2016

http://www.thewhig.com/

KINGSTON — Most Canadian mining, gas and oil companies working abroad are good corporate citizens, says the federal government official tasked with keeping tabs on their actions. But Jeffrey Davidson, speaking in Kingston, says there is always room for improvement.

As the extractive sector corporate responsibility counsellor for Foreign Affairs, Trade and Development Canada, Davidson’s office advises the government on how to make sure Canadian companies act appropriately while doing business internationally.

The office also provides advice to companies navigating the often complex social, economic, cultural and political landscape of other countries.If necessary, the office also gets involved in a dispute resolution role.