Friday, December 31, 2021

Codelco signs multi-year contracts in Southeast Asia

 Chile's Codelco signs multi-year contracts in Southeast Asia

Codelco executives. (Reference image by Codelco, Flickr). 

Chile’s state-controlled Codelco, the world’s largest copper producer, said on Thursday it has successfully concluded its sales plan for 2022 in Southeast Asia with the signing of multi-year deals.

The company had announced in July it was seeking to quadruple its sales in the region by 2023 with the opening of an office in Singapore. The miner also expressed interest in the Indian market as it tries to reduce its dependence on China.
Codelco said in a statement sent to Reuters that it has generated positive figures in 2021, while exceeding its sales estimate for the next year and “satisfactorily fulfilling its plan to enter Southeast Asia”.

“We had a plan to increase sales of refined copper in the region and achieved 100% of it for 2022,” Codelco added, without providing details.

The miner also said it was able to “successfully execute” its plans in China, where copper premiums rose by approximately 20%. In Taiwan and South Korea, the increase was even higher than 20%.

The higher prices over contracts traded on the London Metal Exchange point to an outlook of strong copper demand as the global economy continues to recover from the pandemic.

“Our strategy of opening up to new markets going forward was a success, as the consumption of refined copper in Southeast Asia is expected to show a sustained growth for the next 20 years,” Codelco’s Vice President of Marketing, Carlos Alvarado, said.

He also noted that the firm was able to maintain its number of customers while increasing premiums by 30% in Europe.

(By Fabián Andrés Cambero and Peter Frontini)

Thursday, December 30, 2021

U.S. Authorizes Pemex Purchase of Shell Refinery, AMLO Says 

The U.S. government has authorized Petroleos Mexicanos’ bid to take over Royal Dutch Shell Plc’s Deer Park refinery, according to Mexico President Andres Manuel Lopez Obrador.

“It’s something historic,” the president, broadly known as AMLO, told reporters Wednesday.

Pemex has been awaiting approval from the U.S. Treasury Department to acquire Shell’s stake in the Texas plant, a move that would expand its refining capacity and secure critical fuel supplies for the state oil producer. The purchase comes as AMLO seeks to increase state control of the country’s energy markets, refine all of its own oil, and reverse more than a decade of production declines.

A Treasury Department representative declined to comment.

The acquisition will cost $1.2 billion, AMLO said at a press conference, more than twice the price the company announced in May. Pemex will pay off the refinery’s debt to complete the purchase, tapping Mexico’s National Infrastructure Fund, Pemex Chief Executive Officer Octavio Romero said Wednesday.

Bloomberg previously reported that Pemex could spend about $1.6 billion on the takeover, using the infrastructure fund and a bridge loan from commercial banks to pay off the refinery’s debts, a part of the deal that wasn’t clear when it was first announced.

Pemex Refinery Deal May Cost $1 Billion More Than Announced

Pemex is making the acquisition even as its finances are so dismal the government is injecting billions of dollars into the company as debt has soared to $113 billion, the most of any oil company in the world.

Mexico’s Foreign Affairs Minister Marcelo Ebrard said the Committee on Foreign Investment in the United States approved the sale in a letter. There were no pending issues of national security, and the review of the sale was concluded, Ebrard said, citing the letter.

CFIUS is responsible for reviewing sales of critical U.S. infrastructure to foreign buyers for national security.

Shell previously said the deal was expected to close early next year, subject to regulatory approvals.

The sale has sparked controversy, with critics claiming that it could affect national energy security in the U.S., due to rising gasoline costs and concerns that Pemex lacks the funds and expertise to run a U.S. refinery.

Last week, two New York businessmen filed a lawsuit in a U.S. District Court in Houston, alleging that the sale would increase gasoline prices and impact their business’s energy costs. In June, U.S. Representative Brian Babin published a letter to CFIUS opposing the deal because he claimed that Pemex didn’t have a record of operating refineries to international standards.

Pemex owns and operates six refineries in Mexico, but due to a lack of investment they are operating at less than half of their capacity, and Mexico imports almost 80% of the gasoline consumed in the country. Pemex is also constructing a new, 240,000-barrel-a-day refinery in AMLO’s home state of Tabasco that has gone over budget after the government’s initial estimate of $8 billion.

Top iron ore stories of 2021 and what to expect in 2022

 Top iron ore stories of 2021 and what to expect in 2022 

The iron ore price went on a white knuckle ride in 2021.

Prices jumped to a record of $237 a tonne in May, and crashed to about $85 in November on China’s pledge to reduce steel output. In November, Fitch Solutions said the iron ore price rally was over. In the last weeks, however, the metal rallied 50%.
Iron ore price 2021

According to analysts, the volatility is set to persist into 2022. Here are the top iron ore stories of 2021.

#1 China

Iron ore is a barometer for the Chinese economy, so Chinese steel curbs to control carbon emissions set the tone for the metal’s performance during the year.

In March, the Tangshan government issued a second-level pollution alert, urging heavy industrial companies such as steelmakers and coking plants to cut production accordingly.

The move dampened the market’s optimism about a post-Lunar New Year demand boost for iron ore in the world’s top steel producer.

Concerns about the debt problems of Chinese property developers, a sector that accounts for about a quarter of the domestic steel demand, also added pressure on prices of iron ore and steel.

After rumours of financial difficulties, heavily indebted property giant Evergrande failed to sell assets to raise money and missed a September 23 deadline on an $83.5 million interest payment due on some of its dollar-denominated bonds.

The iron ore price in China sank to the lowest close in nearly three years as fears over the real estate market deepened.

#2 Oversupply is back

On the supply side, improving production growth from Brazil and Australia has started to loosen tight supplies on the seaborne market.

The iron ore oversupply is back

Vale is working at a current iron ore production capacity of 330 million tonnes. The company’s Q1 2021 iron ore production was 68 million tonnes, 14.2% above Q1 2020, while Q2 2021 production came in at 76 million tonnes, 12% higher than Q2 2020.

Meanwhile, in Australia, Fortescue beat its full-year shipment estimate with a total volume of 182 million tonnes in FY2021 and set shipment guidance for FY2022 at 180-185 million tonnes.

Similarly, BHP reported iron ore production of 253.5 million tonnes for FY2021, which sits at the upper end of its forecast range.

“Among the major producers, only Rio Tinto painted a dismal outlook in its half-yearly results, warning that shipments are likely to come in at the bottom end of its 325-340 million tonnes guidance for 2021 at best, and this would require a significant ramp-up in output over the next five months,” said Fitch.


While major producers had positive outlooks in 2021, one treasure remained untouched.

At two billion tonnes of iron ore with some of the highest grades in the industry, the giant Simandou deposit in Guinea continued to be the subject of dispute between Vale and Israeli billionaire Beny Steinmetz.

In December, Steinmetz was arrested in Greece after a Swiss court found him guilted of minerals rights-related bribery in January.

TIMELINEThe battle for Simandou

At full production, the concession would export up to 100 million tonnes per year and be by itself the world’s fifth-largest producer behind Fortescue Metals and BHP.


Strong headwinds are building for iron ore next year.

China is pushing ahead with cutting carbon emissions ahead of the 2022 Winter Olympics in Beijing, steel output is expected to shrink for a second year, while the debt-laden property sector is weighing on steel consumption and broader growth.

“Iron ore demand will broadly, gradually decline,” said CITIC Futures Co. analyst Zeng Ning.

“The property industry is rather weak, steel consumption is likely to contract and more mills will use scrap to reduce emissions.”  

UBS Group AG expects iron ore to average $85 a tonne in 2022, while Citigroup sees $96. Capital Economics predicts $70 by the end of next year.

“We are neutral on iron ore prices in the near term, given the collapse they recorded in H2 21. However, we see them trending lower later in 2022, and averaging $90 tonne next year,” Fitch said in a report.

Among bright spots are potential fiscal stimulus in China, possible further easing in monetary policy, and more support for the property industry, while steel output could rebound when limits are removed after the Olympics.

(With files from Reuters and Bloomberg)

Wednesday, December 29, 2021

Dubai can’t shake off the stain of smuggled African gold

Dubai can’t shake off the stain of smuggled African gold

Al Bastakiya, Dubai, United Arab Emirates. Credit: Wikipedia 

In the moon-like landscape of northern Sudan, informal gold miners toil with spades and pickaxes to extract their prize from shallow pits that pockmark the terrain.

Mining ore in the sweltering heat of the Nubian desert is the first stage of an illicit network that has exploded in the past 18 months following a pandemic-induced spike in the gold price. African governments desperate to recoup lost revenue are looking to Dubai to help stop the trade.

Interviews with government officials across Africa reveal smuggling operations that span at least nine countries and involve tons of gold spirited over borders. That’s a cause for international concern because the funds from contraband minerals dealing in Africa fuel conflict, finance criminal and terrorist networks, undermine democracy and facilitate money laundering, according to the Organisation for Economic Cooperation and Development.

While it’s impossible to say precisely how much is lost to smugglers each year, United Nations trade data for 2020 show a discrepancy of at least $4 billion between the United Arab Emirates’ declared gold imports from Africa and what African countries say they exported to the UAE.

The UN and NGOs have long questioned the apparent role of one of the Emirates — Dubai — in facilitating the trade by closing its eyes to imports from dubious sources. The UAE strenuously denies any involvement in illegal practices. But as global scrutiny over corporate governance intensifies, the extent of the smuggling now under way poses increasingly uncomfortable questions for Dubai and its reputation as a gold trading hub.

Allegations that it’s not doing enough to stamp out questionable flows of the precious metal have led to public slanging matches with London, home to the world’s largest gold market, and with Switzerland, the top refiner. Deputy U.S. Treasury Secretary Wally Adeyemo discussed concerns about gold smuggling with Emirati officials during a visit to Dubai and Abu Dhabi in mid-November, according to two people with direct knowledge of the matter who asked not to be identified because they’re not permitted to speak publicly about it. 

That same week, the head of Dubai’s commodities exchange, Ahmed bin Sulayem, answered the accusations head on. 

“I want to address the elephant in the room: namely, the consistent and unsubstantiated attacks launched on Dubai by other trading centers and institutions,” he said at a conference in the Emirates. They are, he said, “lies.”

African governments are adding to the pressure. Besides Sudan, authorities in Nigeria, the Democratic Republic of Congo, Zimbabwe, Mali, Ghana, Burkina Faso, Central African Republic and Niger complain that tons of gold leaks across their borders each year, and they allege most of it heads to Dubai.

“It’s a huge loss,” Nigerian Mines Minister Olamilekan Adegbite said in an interview in his office in Abuja, the capital, where glass cabinets display rock samples that illustrate the nation’s mining potential, so far largely untapped.

The bulk of Africa’s illegally mined gold is channeled to Dubai through refineries in countries like Uganda and Rwanda, or is flown there directly in hand luggage, often with false papers, according to government and industry officials, UN experts and civil rights groups. Once there, it can be further melted down to obscure the source before being turned into jewelry, electronics or gold bars, they say.Play Video

“Most European countries will ask you for your certificates of export from the country of origin,” said Adegbite. “If you do not have that, the gold is confiscated and returned back to source.”

On paper, the UAE requires the same. “But, you see,” Adegbite added, “in Dubai they look the other way.”

The UAE’s foreign trade ministry declined to answer questions on gold from Africa. Bin Sulayem said in an interview that a global ban on gold hand-carried on airlines — a traditional means of smuggling — would fix the problem. “We have a better track record than any of the major cities,” he said. “The main complaint we’re getting is ‘you’re too tough.’”

Gold smuggling is an age-old practice, but it became all the more rewarding as the price of bullion soared to a record $2,075 an ounce in August 2020. The illicit trade has since taken off like never before in Africa and authorities there have made scant headway in reining it in, an analysis of publicly available data from governments and other sources show. 

Sudan’s Finance Ministry, for example, estimates that 80% of gold production goes unregistered. Rwanda is set to ship $732 million worth of the metal this year, more than two-and-a-half times the value of its 2019 exports, according to International Monetary Fund figures. That’s despite Rwanda barely mining any gold of its own, prompting accusations from the government in neighboring Congo that the precious metal originates from its territory.

Rwanda is working to become a regional mineral processing hub, which accounts for its increased exports, Rwanda Mines, Petroleum and Gas Board said in a statement. It has invested in new facilities which “source raw materials from local and regional operators in compliance with legal and regulatory requirements,” the board said.

Reports from the UN and other sources point to 95% of production from east and central Africa ending up in Dubai. That’s a potential problem because much of the region is designated by the OECD as a conflict or high-risk area, meaning companies are required to show that imported gold is responsibly sourced. The European Union brought in legislation this year aligning it with U.S. efforts to stem the trade. However, enforcement is notoriously difficult.

Uganda, one of Africa’s main refiners of informal, or artisanal gold, more than doubled its exports this financial year to some $2.25 billion, central bank statistics show. Again, the UAE was by far the top destination, according to UN trade data.  The UN has accused Uganda and Rwanda of trading in gold smuggled from neighboring eastern Congo, a region mired in conflict.

In an unprecedented move, the London Bullion Market Association, which regulates the world’s biggest gold market, last year threatened to bar its accredited refineries from sourcing metal from countries that didn’t meet its responsible sourcing standards. While it didn’t name any state, Bin Sulayem issued a rebuke on behalf of Dubai, accusing the association of trying to undermine the UAE’s gold market.

The UAE signed up to LBMA’s recommendations and “has long been cooperative with all international regulations and best practices including anti-money laundering efforts and unethical sourcing of gold,” minister of state for foreign trade, Thani Al Zeyoudi, said in a statement to Bloomberg News. “The UAE is committed to embedding the very highest international gold standards.”

More than 12 months later, the LBMA has yet to follow through on its threat. Sakhila Mirza, its general counsel, said the association is still assessing what the UAE has done to combat smuggling. The LMBA does see the need for urgency, but has to act within the rules, and “disengaging is the last step,” Mirza said in an interview.

Dubai’s long association with the gold trade is evident in its main market in the oldest part of the city, where scores of shops with elaborate window displays of glittering necklaces, bodices and sunglasses line a pedestrian walkway. Trading operations are conducted in an adjacent rabbit-warren of a building, where men run between small offices, some with reinforced security doors.

“We welcome the world, we welcome anyone who wants to do trade”

Several traders who spoke on condition of anonymity because they feared repercussions said they risked having their supply cut off by Emirati refineries if they asked too many questions about where it came from. Still, controls have been tightened to tackle money laundering, with customers who spend more than $15,000 required to submit their identity documents and source of funds.

During his visit last month, the U.S. Treasury’s Adeyemo noted that stronger enforcement efforts targeting illicit finance could give the UAE a competitive advantage in the region, according to the two people with knowledge of the talks. The Treasury Department declined to comment through a spokesperson for the Office of Foreign Assets Control, who asked not to be named due to the sensitive nature of sanctions policy.

Thani Al Zeyoudi told reporters last month that Dubai will introduce a publicly accessible system for monitoring imports and exports of gold, and the Dubai Multi Commodities Centre’s “Good Delivery Standard,” will be rolled out nationwide — if only on a voluntary basis. All gold refineries in the UAE will be required to conduct audits that prove bullion deliveries are responsibly sourced, starting in February, the Economy Ministry said in a statement in December.    

“We’re trying to be a real hub when it comes to gold trading,” Thani Al Zeyoudi said. “So we welcome the world, we welcome anyone who wants to do trade and we want to make sure that we adhere to the international standards through the delivery standards.”

In October, Switzerland’s State Secretariat for Economic Affairs instructed Swiss refineries to take steps to identify the true country of origin for all gold emanating from the UAE, saying that was necessary to ensure they weren’t being sent illicit supplies. Bin Sulayem again took to LinkedIn to say the Emirates enforced the OECD’s guidelines on sourcing minerals and accused the Swiss authorities of hypocrisy.

Michael Bartlett-Vanderpuye, the chairman of M&C Group Global, which mines and sources gold from Ghana that’s mainly sold to clients in the UAE, described the clashes with London and Switzerland as “an international gold power play” with each center protecting its turf.

“I always found it very difficult to believe that people are actually able to bring gold to the UAE without the documentation,” he said. “When I look at the system at the airport, I find it near to impossible.”  

Swiss refiner Metalor Technologies SA remains skeptical.

“We don’t think everything coming from Dubai is illegal, but we have doubts about the legitimacy of some of the integrity of the supply chain,” Jose Camino, Metalor’s group general counsel, said in an interview. “We are happy to pass it by.”

Dubai’s supporters claim African customs data aren’t reliable and even the UN can’t accurately measure illicit trade flows. Behind closed doors, UAE officials point the finger at their counterparts in Africa and forgers who obscure the gold’s origins by issuing documents that are impossible to distinguish from the real thing.

That’s little comfort to the authorities in the Democratic Republic of Congo, a vast central African country that’s struggling to rebuild after more than two decades of conflict. It has some of the world’s richest reserves, including Kibali in the northeast of the country — Africa’s biggest gold mine — yet, perversely, the DRC is one of the biggest losers of the illicit gold trade.

An army of small-scale miners operate below the government’s radar, but data show the informal industry generated just $2.4 million in official gold exports last year. Statistics from the UN and IMF suggest the fruits of their labor slipped across the border instead: Uganda and Rwanda shipped bullion worth $1.8 billion and $648 million respectively in 2020, despite having little gold of their own.

“It’s ours,” Congolese Finance Minister Nicolas Kazadi said in an interview at his office in the capital, Kinshasa. “It’s gold from Congo.”

Under U.S. law, gold from Congo and its neighbors is considered a “conflict mineral,” meaning companies publicly traded in the U.S. are required to report to the Securities Exchange Commission if they might be using gold mined in conflict areas — but there’s no sanction for doing so. A June report by UN experts found that much of the illegal gold trade in Congo is overseen by armed groups or soldiers, who traffic it across the borders or fly it directly to Dubai using forged documents to obscure its origin.

Sasha Lezhnev, policy consultant for Washington-based anti-corruption group The Sentry, said that refiners trading in conflict gold aren’t being held publicly accountable by the UAE. “Dubai is the linchpin for change in the gold trade in east and central Africa,” he said.   

Smuggling is also troubling the government in Nigeria, where most minerals are extracted by at least 100,000 informal miners whose operations are difficult to regulate and tax. Formal gold production totaled just 1,288 kilograms last year, almost all of which went to Dubai, according to Nigerian government data.

Efforts are being made to formalize the industry. Fatima Shinkafi is head of the Presidential Artisanal Gold Mining Initiative, which has registered 10,000 informal miners and is developing a supply chain whereby their output will be sent to LBMA-certified refineries in Europe, processed and transferred to the central bank to boost Nigeria’s foreign reserves. 

Adegbite, the mines minister, wants to work with the UAE to combat smuggling, and says he even proposed to his government that it split the proceeds “50-50” with the Emirati authorities of any undeclared Nigerian gold recovered. The UAE Ministry of Economy and the Ministry of Foreign Affairs and International Cooperation didn’t respond to emailed requests for comment on the minister’s proposal.

In Sudan, more than 2 million small-scale miners produce some 80% of the nation’s gold. They are paid about a quarter less for what they extract than it would fetch on international markets and are charged a $64 tax on each ounce of output, which encourages some to bypass official trading channels.

Some of Sudan’s internal trade happens in a dank six-story building in downtown Khartoum, the capital, where men melt rough nuggets into bars and dealers can be seen exiting the premises carrying piles of cash wrapped in cling film. Illicitly traded gold is flown to Dubai through the porous international airport or trafficked into neighboring Egypt, Ethiopia and Chad, according to industry experts.

Political upheaval has frustrated efforts to ensure Sudan’s people benefit from its mineral endowment. Dictator Omar al-Bashir was toppled in a popular uprising in 2019, then a transitional government was overthrown in an Oct. 25 coup as the military reasserted itself.

The security forces have set up road blocks between mining areas and Khartoum to combat smuggling. But controls remain woefully inadequate, according to Dafalla Idriss, the deputy chair of a panel in River Nile state set up to freeze assets plundered by the al-Bashir regime. 

“There is corruption inside all government institutions,” he said. “The gold that leaves the country is getting past everyone.”

(By Simon Marks, Michael Kavanagh and Verity Ratcliffe, with assistance from Ben Bartenstein, William Clowes, Eddie Spence, Leanne de Bassompierre, Yinka Ibukun, Prinesha Naidoo, Daniel Flatley and Saul Butera)

Philippines ends open-pit mining ban to reinvigorate industry

 Philippines ends open pit mining ban to reinvigorate industry

Wilfredo Moncano, director of the Mines and Geosciences Bureau of the Philippines. (Image by the MGB, Facebook). 

The Philippines has lifted a four-year-old ban on open-pit mining for copper, gold, silver and complex ores, an official said on Tuesday, marking the second landmark policy move this year as the government tries to revitalize the industry.

Environment and Natural Resources Secretary Roy Cimatu has signed an administrative order lifting the ban, Mines and Geosciences Bureau Director Wilfredo Moncano said.
The government imposed the ban in 2017, when the ministry, which oversees the mining industry, was led by an anti-mining advocate who had blamed the sector for extensive environmental damage.

After several years of restrictive policies that have been blamed for stagnating the industry, the government now wants stalled and new mining projects to attract investments and help stimulate the pandemic-hit economy.

In April, President Rodrigo Duterte lifted a moratorium on new mineral agreements imposed in 2012.

Open-pit mining remained a globally accepted method of extracting minerals, Moncano said.

Cimatu’s predecessor at the environment department, Regina Lopez, had enforced the ban, infuriating miners who argued that the country’s large copper and gold deposits could be exploited only through open-pit mining.

But environmental activists expressed dismay over the policy reversal, with the Alyansa Tigil Mina (Alliance to End Mining) group describing it as “a short-sighted and misplaced development priority of the government”.

The Philippines’ annual export revenue from its mineral extraction industry could increase by up to $2 billion over the next five to six years as new mining projects take off, according to the government.

The Southeast Asian country is China’s biggest supplier of nickel ore and also has substantial copper and gold reserves.

More than a third of the Philippines’ total land area of 30 million hectares (74.1 million acres) has been identified as having “high mineral potential”, but only less than 5% of its mineral reserves has been extracted so far, according to the mines bureau.

(By Enrico Dela Cruz; Editing by Ed Davies)

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Monday, December 27, 2021

Top copper stories of 2021 and what to expect in 2022

 Ivanhoe’s Kamoa-Kakula concentrator beating design throughput target

Members of Kamoa-Kakula’s construction team. Image from Ivanhoe.

The copper price catapulted to a record high of $4.762 per pound ($10,476 a tonne) in 2021 as top consumer China staged an economic rebound and exchange inventories hit a 47-year low.

Disruptions in top producers Chile and Peru and the Biden Administration’s infrastructure plan also helped to build momentum for the bellwether metal, crucial in the global push for a greener economy.

The bullish sentiment was defined by Goldman Sachs, which called the metal the “new oil” in a May report.

Meanwhile, the biggest copper mining project in decades began production in May. In a turbulent year, here are the top copper stories of 2021.

#1 Chile

The world’s top producer decided to rewrite its Pinochet-era constitution that underpinned nearly three decades of mining growth in the South American nation.

A new taxes and royalties bill already approved by the Senate could, if unaltered, put at risk some 1 million tonnes of annual output, representing around 4% of global copper supply.

The legislation, which faces multiple procedural hurdles, would impose a royalty as high as 75% on sales of copper to pay for social programs.

Taxing copper Chile. Bill

Companies including BHP say the bill as it stands — with sales tax brackets that increase as metal prices rise — would derail investments.

With the election of leftist president Gabriel Boric in December, the bill could become law.

Boric, a 35-year-old former law student, vowed during his campaign to bury Chile’s “neo liberal” economic model. Although he later softened his message, he has kept the idea of giving the State a more active role in the sector, as well as higher royalties.

During his victory speech, Boric reiterated he would oppose mining initiatives that “destroy” the environment, particularly the controversial $2.5 billion Dominga copper and iron ore project that was approved this year.

“Destroying the world is destroying ourselves. We do not want more ‘sacrifice zones’, we do not want projects that destroy our country, that destroy communities and we exemplify this in a case that has been symbolic: No to Dominga,” he said.

Chile’s copper output sank to a seven-month low in September, on the back of labour disruptions, including an almost one-month strike at Codelco’s Andina mine near the capital Santiago.

#2 Peru

Neighboring country Peru, the second-largest producer of copper in the world also saw the rise of a new left-wing leader.

In June, socialist Pedro Castillo won a long and tense presidential election battle. 

Castillo says he wants to increase spending on healthcare and education by raising the funds from mining tax hikes, redistributing profits to Andean communities like those around the huge Las Bambas project, owned by China’s MMG.

The promises are now being tested, with protests and blockades at Las Bambas in the country’s south straining government negotiators, a reflection of wider tensions between indigenous communities and the key mining sector.

The government and one local community agreed on a temporary truce last week after a three-week-long road blockade of a key transport road in the region of Chumbivilcas almost led to a shutdown of the mine that produces some 2% of global copper.

But tensions remain high, with threats of further blockades as critics say the leftist government has not lived up to its promises to voters in mining regions, who bolstered his campaign.

Chile and Peru together constitute close to 40% of the world’s copper production.

# 3 Kamoa-Kakula

While top producer South America saw turbulence in 2021, Canada’s Ivanhoe Mines (TSX: IVN) announced the beginning of operations at its massive Kamoa-Kakula project in the Democratic Republic of Congo (DRC) months ahead of schedule.

Kakula, the first mine planned at the concession, is initially forecast to generate 3.8 million tonnes of ore a year at an average feed grade “well in excess of 6% copper” over the first five years of operation, the company said.

Ivanhoe founder Robert Friedland believes the project will become the world’s second-largest copper mine and also the one with the highest grades among major operations. 

See how Kamoa-Kakula fares among the world’s top 10 biggest copper mines:

The Vancouver-based company has also vowed to produce the industry’s “greenest” copper, as it works to become the first net-zero operational carbon emitter among the world’s top-tier copper producers.

# Chinese investment

China consumes nearly 14 million tonnes of copper each year – more than the rest of the world combined. But domestic supply last year was only around 2m tonnes, including scrap, and mined output has been stagnant for years.

In a presentation at the Wood Mackenzie LME Forum, Nick Pickens, research director for copper markets, showed two graphs that put China’s significant copper supply challenges in perspective.

Imported concentrate, including from roughly 30 Chinese-owned mines in Africa and elsewhere, now supplies 40% of the country’s needs, a share that has more than doubled over the past decade as imports set fresh records every year.

Over and above direct foreign investment in mining projects around the world, China has splashed more than $16 billion on buying overseas copper companies and assets since 2010.

Glencore’s disposal, under some duress, of Las Bambas in Peru to a Chinese consortium, China Moly’s 2016 acquisition of the Tenke Fungurume mine from Freeport for $2.65 billion and Zijin Mining’s joint venture with Ivanhoe Mines on the Kamoa-Kakula mine, both in the Congo, are three high-profile examples. 


Higher supplies and softer demand are expected to cool copper prices next year.

Expectations of slower demand growth in China and rising supplies from operations such as Anglo American’s Quellaveco mine in Peru are likely to keep prices subdued next year.

“Long-term prospects for copper remain bullish, but the market looks set to be on pause next year compared to this year,” said Karen Norton, senior base metals analyst at Refinitiv, who expects a modest copper surplus next year.

Goldman Sachs sees fears of China’s property slowdown as overblown, saying gains from EVs, renewables and electrical network investment outweigh the policy-moderated drag from property and machinery.

Mine supply is expected to rise 3.9% to nearly 22 million tonnes next year, according to the International Copper Study Group, which expects a surplus of 328,000 tonnes in the refined market.

Bank of America expects demand to hold firm next year and only sees a surplus in 2023. It forecasts prices to average $9,813 a tonne next year and $8,375 a tonne in 2023.

Demand for copper from efforts to decarbonise will intensify, with JPMorgan forecasting it will account for more than 40% of overall demand growth next year in the 25-million-tonne market.

JPMorgan forecasts total copper demand from energy transition rising from 1.8 million tonnes this year, to more than 3 million tonnes by 2025.

(With files from Reuters and Bloomberg)

Saturday, December 25, 2021




Definition of Christ

1 : messiah
2 : jesus
3 : an ideal type of humanity
4 Christian Science : the ideal truth that comes as a divine manifestation of God to destroy incarnate error

Christ / biographical name 

Definition of Christ


Other Words from Christ


Christlike \ ˈkrīst-​ˌlīk

\ adjective
Christly \ ˈkrīst-​lē
\ adjective

Thursday, December 23, 2021

“Mining has brought nothing but poverty” – young environmentalists plan rewrite of Chile copper mining rules

Regional subdivision of Chile and copper mine locations. 

Environmental activists like Constanza San Juan have been peripheral figures at best in Chile’s emergence as the dominant supplier of copper over the past few decades. Now, she and others like her are rewriting the rules, with tens of billions of dollars in investments riding on the outcome.

The 35 year old, who’s been fighting mining ever since Barrick Gold Corp. arrived to her region two decades ago, is on a committee that will decide how the environment and natural resources will figure in a new constitution to replace the one that dates back to the dictatorship of Augusto Pinochet. 
“We need to completely change the extractivist model to one that is in harmony with nature,” San Juan said in an interview, vowing not to meet with lobbyists during the process. “Changes must be done in the spirit of what started this whole movement to transform Chile. Mining has brought nothing but poverty.”

Deliberations will begin in earnest early next year, with members likely to be emboldened by Sunday’s election of the most left-leaning president since Salvador Allende. Proposals range from setting time limits on concessions to banning mines altogether under some conditions. The copper industry is pushing hard to retain the indefinite concession model, which it says is critical for long-term planning that underpins investments.

There’s a lot at stake. Chile’s government lists a total of almost $70 billion in possible mining projects this decade. Some of that will depend on how the new constitution turns out and whether it’s ratified in a referendum. As such, the document will help determine how much of the world’s biggest copper and lithium reserves will be tapped in the coming years to meet rising global demand in the transition away from fossil fuels.

“Until this is clarified — the issue of legal security and any new rules — we’re not going to see large investments,” said Diego Hernandez, head of Chilean mining society Sonami.

Committee members

A quick look at the makeup of the committee — and that of the broader 155-person constitutional assembly — explains the industry’s fears. In a process born from street protests that erupted two years ago, about three quarters of the committee are left-wing or social and environmental activists of some kind. That means conservatives gunning for a continuation of investor-friendly rules are in a clear minority. 

For example, there’s 26-year-old independent Juan Jose Martin, who co-founded a sustainability youth organization; Camila Zarate, 29, an environmental lawyer who advocates for water rights; and San Juan, who sees sustainable mining is a contradiction in terms and calls for a ban on all mines near water sources, including glaciers and salt flats that hold much of the world’s lithium reserves.

San Juan’s views were shaped by the aborted attempt by Barrick to develop a giant open pit at the top of her valley. Construction was halted in 2013 amid environmental breaches that led to fines and lawsuits. “Technology allows mining companies to go all the way up to the glaciers and we won’t allow that because that’s where 70% of the country’s water comes from,” she said.

Election results

Mining companies have more at risk from constitutional reform than from the presidential election, according to Hernandez. While companies probably would have fared better under conservative candidate Jose Antonio Kast than left-wing President-elect Gabriel Boric, an evenly split congress limits the likelihood of radical policies.

The copper industry, which accounted for more than half of Chile’s exports last year and 11% of GDP, is responding to mounting pressure to find cleaner ways to operate. Producers have also indicated a preparedness to pay more taxes for social spending, as well as adhere to stricter exploration rules. But the industry says sticking to the indefinite concession model is crucial for planning.

“No company estimates their cash flow looking four years ahead,” BTG Pactual analyst Cesar Perez-Novoa said. “Worst case scenario, it’s a 15-year horizon and best case, 30 to 50. The constitution is what’s important here, not the president.”

The industry is encouraged by the make-up of congress, not only because it’s set to moderate policy, but also because it suggests the electorate may not sign off on radical constitutional reform. Even activist San Juan, speaking before Sunday’s presidential election, indicated that the exuberance for change when the assembly was elected may have waned a little. Still, Boric’s landslide victory Sunday may help rekindle some of that momentum.   

Hernandez, a former chief executive of Codelco and Antofagasta Plc., is also banking on people recognizing that mining will have to play a big role in keeping the economy going after the impact of pandemic stimulus peters out.

Still, major mining companies including Freeport-McMoRan Inc. and Lundin Mining Corp. have said they won’t be pulling the trigger on new investments in Chile until the political and regulatory environment becomes clearer.

(By James Attwood and Alvaro Ledgard)

Tuesday, December 21, 2021

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Chilean miners ask leftist president-elect to foster industry

 Chilean miners ask leftist president-elect to foster country’s industry

Boric pledged to decentralize Chile, implement a welfare state, increase public spending and include women, non-binary Chileans and Indigenous peoples. (Image courtesy of YouTube. 

A leftist millennial who rose to prominence during anti-government protests in 2019 was elected on Sunday as Chile’s next president, following a bruising campaign against a free-market and anti-immigrant candidate often likened to Donald Trump.

The National Mining Society (Sonami), an industry body, congratulated Gabriel Boric and said voters hade “sent a clear message” about the need to maintain Chile’s economic and social development.

“We trust that the spirit of programmatic convergence, moderation and openness to dialogue shown during the last week of the campaign will prevail,” Sonami said in a statement.

Boric, a 35-year-old former law student, vowed during his campaign to bury Chile’s “neo liberal” economic model. Although he later softened his message, he has kept the idea of giving the State a more active role in the sector, as well as higher royalties.

He is also a fierce supporter of a state lithium firm and green investments. Since Chile is the world’s top copper producer and also has the largest known reserves of lithium, Boric’s vision could prove positive for the country if he is able to deliver on his campaign promises.

Both copper and lithium are among the most coveted commodities as they are both used in electric vehicles (EVs) and infrastructure to support other green technologies.

During his victory speech, Boric reiterated he would oppose mining initiatives that “destroy” the environment, particularly the controversial $2.5 billion Dominga copper and iron ore project that was approved this year.

“Destroying the world is destroying ourselves. We do not want more ‘sacrifice zones’, we do not want projects that destroy our country, that destroy communities and we exemplify this in a case that has been symbolic: No to Dominga,” he said.

While the political shift isn’t likely to have immediate supply impacts, a slowdown in permitting or higher costs imposed by the government could slow investment in capacity to produce copper, a metal seen as key to the energy transition. That could send prices back up to record levels seen earlier this year.

“Copper and lithium miners will naturally be in the crosshairs, particularly with both commodities at or close to record prices, while we would expect a weakening of the Chilean peso,” BMO Capital Markets analyst Colin Hamilton said in a note.

Boric’s victory spells good news for copper producers outside of Chile in the medium term, according to Hamilton. Any additional delays to potential projects as they wait for approval while the new government pushes new legislation through Congress could add to copper supply issues.

Changes ahead

Born in 1986 to an educated middle-class family in the country’s southernmost Punta Arena region, Boric attended one of the most elite private schools there before studying law at the University of Chile in Santiago. He didn’t graduate, but it took his interest in activism to new heights.

In 2011, he became one of the main leaders of a historic student movement demanding free education for all, which eventually led to a wide educational reform. In 2013, he was elected to Congress, and in 2016, he started his own political party, the Autonomist Movement.

Chilean miners ask leftist president-elect to foster country’s industry
Chilean-born actor Pedro Pascal, known for his roles in Game of Thrones (2011), Narcos (2015) and The Mandalorian (2019), was one of the many public figures to support Boric. (Image: Pascal’s Instagram.)

Political scientists, Including Chilean Eugenio Tironi, have highlighted that Boric’s vision connects with this century’s agenda: climate change, feminism, decentralization, green economy, diversity and direct democracy.

It will be challenging delivering on his equality promises as Chile, once the most stable economy in Latin America, also has one of the world’s largest income gaps. About 1% of the population owns 25% of the country’s wealth, according to the United Nations.

Boric, Chile’s youngest president in history, has promised to address this inequality by expanding social rights and reforming the country’s pension and healthcare systems, as well as reducing the work week from 45 to 40 hours, and boosting renewable energy.

Other major challenges include the delicate redrafting of a constitution to replace the divisive text adopted in 1980 during General Augusto Pinochet’s regime.

Mining royalty bill

The election happened against the backdrop of a controversial tax reform bill that could put a third of the world’s copper supply at risk. 

Under the proposed change, the “royalty” rate – the amount taken by the government – would be based on output rather than profits and could rise to 75% when copper prices exceed $4 per pound.

Around 14 of the country’s large copper mines have production costs above $2.50 per pound. With a royalty, many could be forced to close when prices slip again.

Click here for an interactive chart of copper prices

“Many low-grade operations will be put out of businesses, destroying jobs,” Manuel Viera, president of the Chilean Mining Chamber, said in May.

The full impact of the new tax would not be felt immediately. According to the Mining Council of Chile, most privately owned mines are covered by tax invariability agreements signed with the State until 2023.

The government has projected mining investments of about $70 billion through the end of the decade, most from private firms.

Chile produced last year a third of the world’s copper in the form of concentrates, anodes and cathodes. The nation is also the no. 2 producer of lithium and is home to large zinc, molybdenum, gold, silver and lead reserves. 

It’s estimated that Chile would need $150 billion in investment to hit its goal to nearly double copper output by 2050.

Chile’s peso fell over 3% and shares in lithium giant SQM (NYSE: SQM) slumped more almost 13% on Monday as markets woke up to the news of Chile’s new president.

SQM has been in the crosshairs over the potential environmental impacts of its operation in Chile’s dry north.

(With files from Bloomberg)

Monday, December 20, 2021

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Europe’s green deal needs to get round anti-mining roadblock

 Europe's green deal needs to get round anti-mining roadblock: Andy Home

Geamana village in Romania flooded with waste water from mining, 2019 (Stock Image) 

(The opinions expressed here are those of the author, Andy Home, a columnist for Reuters.)

Protesters took to the streets in Serbia again on Saturday. It was the third consecutive weekend of marches and road blockades against the government’s push to develop its mining sector.

Opposition groups have coalesced around one project in particular – Rio Tinto’s proposed lithium mine in the Jadar Valley.

In Portugal’s Serra d’Arga mountains lithium is also the target of environmental resistance, with five local mayors leading a demonstration in October to protest against a mining project.

Opponents of the proposed Rovina Valley copper mine in Romania have gone a step further, buying parcels of land “strategically located” within the project development area, according to Mining Watch Romania.

There are 19 metal “mining conflicts” in the European Union (EU), which does not include Balkan states such as Serbia, a research paper published last year by the Geographical Society of Finland said.

It’s a big problem, given Europe’s Green Deal will be driven by metals such as lithium and copper and policy-makers want more of them to be produced locally.

Green credentials?

The European Commission has placed sustainable and responsible extraction at the heart of the bloc’s green minerals policy.

However, Europe’s environmental credentials came in for some sharp criticism at a Dec. 2 public hearing of the European Parliament.

The claim in a Nov. 24 parliamentary resolution on critical materials that mining in the EU is subject to the highest environmental and social standards “is not true in theory and it is not true in fact,” Dr Steven H. Emerman said.

Dr Emerman is not your typical eco-warrior. He is a geophysics expert with qualifications from Princeton and Cornell Universities, 31 years teaching experience and 70 peer-reviewed publications.

He also chairs the Body of Knowledge Subcommittee of the U.S. Society on Dams and has formidable expertise on tailings dams, where mine waste is stored.

His testimony to the hearing cited several instances of suboptimal dam maintenance and planning.

The risk of failure at a saturated dam in Spain is “equivalent to an annual round of Russian roulette,” he said.

A lithium mine project in Portugal includes a design for a 193-metre high tailings dam that is “highly experimental” and an example of “reckless creativity”.

A copper project in Spain plans an 81-metre high dam located on a steep slope at less than 200 metres above a village. That would be illegal in Brazil, Ecuador and even China, which stipulates a one-kilometre gap between a tailings dam and a population centre, Dr Emerman said.

“I have not said one word against mining,” he told the hearing, but warned European policy-makers not to rush into opening new mines “without a convincing demonstration that there will be no adverse impacts on human life or the environment”.

Waste management

Although the EU has publicly committed to a clean mining sector, the process of aligning regulations across 27 countries is painfully slow versus the breakneck stampede to invest in critical mineral supply chains.

The EU adopted the Mineral Waste Directive in 2006 after tailings dam failures in Spain in 1998 and in Romania two years later.

Its 2017 progress report found that as of November 2016 four member states had yet to correctly transpose the directive onto their statute books, the reporting system wasn’t fit for purpose and there were no guidelines on inspections.

The technical guidelines on inspections have since been introduced but only last year.

Mining and quarrying are the second largest source of waste in the European Union after construction, accounting for 26.3% in 2018. Most is stored in some form of storage ponds or tailings dams, the most visible reminder that mining is a dirty business.

And a potentially fatal one. Public perceptions of mining have been shaped by the devastating 2015 and 2019 tailings dam failures in Brazil.

The problem is compounded by old, abandoned mine sites leaking contaminated water into the local eco-system, each of them adding fuel to the eco-warrior fires.

Squaring the green circle

How to square the circle of needing more green metals and assuaging growing green opposition to mining those metals?

As a matter of urgency, the EU should accelerate the full implementation of its own mining waste directive.

If it is to boast about its green mining credentials, they must bear scrutiny.

Tailings dams, existing and planned, should be studied with particular care. A tailings dam failure on home turf would be a hammer-blow for both Europe’s mining sector and policy-makers.

Europe could also consider following the lead of the United States, which has directed the United States Geological Society to map and collect data on mine waste.

This serves the double purpose of identifying sites in need of remediation and unearthing potential mineral riches.

Tailings are full of elements once deemed worthless by-products and now on the critical minerals list. Even current tailings dams may contain minerals not yet considered essential but which might one day be so.

Exploiting such urban mines, however, is unlikely to be commercially viable if it is conditional on long-term stewardship of the site, which may include reconstructing unsafe dams and an extensive clean-up of the surrounding area.

The EU is spending cash on stimulating investment in new mining and processing capacity. It could usefully channel some of that into old mine sites.

Apart from the chance of discovering useful metals, restoring the sites could help remove some of the unhelpful reminders of the industry’s contaminated legacy.

New European mines could come with a government-backed quid pro quo of cleaning up abandoned sites and ensuring the long-term stewardship of any waste storage facilities.

If the EU is going to persuade its citizens of its green credentials, policy-makers may have to roll up their sleeves and get into the dirty side of mining.

(Editing by Barbara Lewis)

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