Polyus becomes world’s largest gold miner by reserves

Sukhoi Log is the world’s largest gold deposit among both greenfield and developed mines. (Image courtesy of Polyus.)

https://www.mining.com/web/polyus-becomes-worlds-largest-gold-miner-by-reserves/?utm_source=Precous_Metals_Digest&utm_medium=email&utm_campaign=MNG-DIGESTS&utm_content=polyus-becomes-worlds-largest-gold-miner-by-reserves 

Russia’s largest gold producer Polyus on Thursday said that its total proved and probable ore reserves had risen by 71% to 104 million ounces of gold at the end of 2020 due to inclusion of reserves at its giant Sukhoi Log deposit.

“Polyus is now confirmed to have the largest reserve base globally, with approximately 97% of these reserves attributable to our operating mines and our flagship greenfield project, Sukhoi Log,” Polyus CEO Pavel Grachev said in a statement.

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Polyus was previously the world’s third-largest gold miner by reserves behind Newmont and Barrick.

The Russian gold producer plans to take a final investment decision on the Sukhoi Log project in Siberia in 2022.

The company’s measured, indicated and inferred mineral resources were estimated at 204 million ounces of gold at the end of December, compared with 188 million ounces at Dec. 31, 2019, it added.

(By Polina Devitt; Editing by David Goodman)

The Supreme Court Case That Could Change Everything For US Pipelines

https://www.zerohedge.com/energy/supreme-court-case-could-change-everything-us-pipelines 

Authored by Charles Kennedy via OilPrice.com,

A Supreme Court hearing began this week that could seal the future fate of gas pipelines across the United States. It could also change the balance of power between federal and state authorities in a way that federal authorities would hardly like. The case involves the proposed PennEast pipeline, a 120-mile, 1-billion-cu-m piece of infrastructure that will take natural gas from the Marcellus shale across Pennsylvania and New Jersey. New Jersey is opposing the pipeline. PennEast and FERC want to use eminent domain to condemn the state and private land they need to build the infrastructure.

On the face of it, it is a simple case—just another pipeline dispute of the sort that has been enjoying growing popularity among environmentalist groups and politicians in the past few years. In this case, the politicians want to stop PennEast from receiving easements for 40 parcels of federal land. The only way for PennEast to receive these easements, then, is to sue New Jersey. What makes this case different is that its outcome could have major implications for the industry.

As Forbes’ Christopher Hellman explained in an article from earlier this week, the argument of the New Jersey political pipeline opponents is that under the 11th Amendment to the Constitution, states have sovereign immunity against lawsuits brought against them by private parties such as companies. In other words, PennEast simply has no right, under the Constitution of the United States, to sue New Jersey’s politicians on the pipeline issue.

A counter-argument, used by a district court in 2018 to rule in favor of the natural gas project, is that PennEast is not acting on its own with its plans to carry 1 billion cubic meters of natural gas across two states. It is acting, the court ruled, under the auspices of a government authority: the Federal Energy Regulatory Commission.

Forbes’ Hellman notes this was not a first, either: since the passing of the Natural Gas Act in 1938, FERC has on more than one occasion delegated its powers to invoke eminent domain to energy companies. From PennEast’s perspective, then, since federal power supersedes state power and since FERC has approved the New Jersey pipeline, it has every right to sue the state for that land.

New Jersey appealed the district court ruling, and the appeals court found in its favor. It said that the state had sovereign immunity against lawsuits brought against it by private entities such as PennEast, noting that the power to invoke eminent domain as delegated to it by FERC was a completely different matter from its right to sue a state.

“Thus, the federal government’s ability to condemn State land … is, in fact, the function of two separate powers: the government’s eminent domain power and its exemption from Eleventh Amendment immunity,” the U.S. Court of Appeals for the 3rd Circuit said in its decision.

“A delegation of the former must not be confused for, or conflated with, a delegation of the latter.”

And this is what makes this case so fascinating and so important for the industry.

• If the Supreme Court sides with PennEast, it would mean that the power to invoke eminent domain supersedes states’ sovereign immunity.

• But if it sides with New Jersey, it would be very bad news for energy companies because it would mean that pipeline projects—federally approved projects, no less—will be banned left and right on the grounds of sovereign immunity from lawsuits seeking to clear the way for eminent domain.

In truth, New Jersey has conceded in its brief to the Supreme Court that the federal government has the constitutional power to seize state property such as land. However, it has been argued that the federal government does not have the right to delegate that power to private parties. According to PennEast, however, this is not true.

“It was well-established at the founding that the sovereign eminent-domain authority was delegable. Thus, conceding federal eminent-domain power but contesting its delegability is not a valid option,” the company said in its own brief to SCOTUS.

It is still in the early days. But for now, the Supreme Court appears to be equally open to hearing both sides of the story. According to media reports, some see a 70-percent chance for the court siding with PennEast, citing one Supreme Court Judge, Stephen Breyer, as saying that gas pipelines had a decades-long history and he was wondering whether a ruling in favor of New Jersey would cause disruption to this existing infrastructure.

Chief Justice John Roberts, however, sees things differently, according to a report by the Engineering News-Record. According to him, based on a previous SCOTUS ruling that corporations are people, New Jersey’s argument that it has sovereign immunity from private party lawsuits has a solid standing: PennEast is registered in Delaware and the 11th Amendment, on which New Jersey’s argument hinges, says that states cannot be sued by citizens of other states.

Things will only get more interesting as court hearings progress. The ruling is expected in mid-summer.

Home: China ramps up tin exports as rest of the world runs dry

 

Soldering accounts for around half of global tin usage. (Stock Image) 

https://www.mining.com/web/home-china-ramps-up-tin-exports-as-rest-of-the-world-runs-dry/?utm_source=Australasia_Digest&utm_medium=email&utm_campaign=MNG-DIGESTS&utm_content=home-china-ramps-up-tin-exports-as-rest-of-the-world-runs-dry 

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

The super-squeeze in the tin market rolls on.

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The London Metal Exchange (LME) three-month tin price is hovering just below February’s 10-year high of $27,500 per tonne, last trading at $27,135.

LME time-spreads remain acutely stressed. Cash tin closed on Monday valued at $28,250, commanding a $1,200-per tonne premium over three-month metal. The backwardation has been wider, flexing out to $6,500 in February, but is still extreme by any historical yardstick.

Step away from the LME paper market into the physical arena and things get even uglier with Fastmarkets lifting its premium assessments to record levels of up to $2,000 per tonne over LME cash.

Parts of the world seem to have run out of the metal essential for circuit-board soldering.

China is now stepping up as the supplier of last resort, the country flipping from net importer to net exporter of refined tin.

Chinese flip

China is the world’s largest tin producer but was a steady net importer over most of 2019 and all of 2020.

That changed in February and March’s exports of 939 tonnes were the highest monthly tally since April 2019.

Cumulative exports over the first quarter were 2,151 tonnes, already almost half last year’s count.

Imports, meanwhile, have almost dried up and China flipped to marginal net exporter over the first quarter of 2021.

This may, as the International Tin Association notes, reflect some demand suppression in China due to the current high price environment.

But the most powerful driver is the premium commanded for spot tin in the rest of the world which has forced open an export-friendly arbitrage between the Shanghai Futures Exchange’s (ShFE) tin contract and the LME.

As long as that arbitrage window remains open, more exports can be expected to flow through it.

The rest of the world needs this supply.

Indonesian exports fall

Super-high prices have so far failed to generate a producer supply response outside of China.

Shipments from Indonesia, the world’s largest exporter of tin, slid 24% over the first three months of 2021, extending a downtrend that has been running since 2018.

The country’s top producer PT Timah has guided to lower production and sales this year. It remains to be seen whether the private tin sector can lift production and, equally importantly, get it exported through Indonesia’s tight controls.

Meanwhile, a furnace outage at Malaysia’s MSC and the deferral of around 500 tonnes of production wouldn’t normally make the headlines but right now it’s another unwanted hit to an already struggling supply chain.

Physical market seizes up

Parts of the physical supply chain appear to have almost totally seized up.

Fastmarkets has been lifting its assessments of physical premiums since the start of this year and all regions are now at record highs.

Need tin urgently in Europe? It’ll cost you at least $1,000 per tonne over the LME cash price and that’s assuming you can find anyone to sell to you.

If you need it in the United States, it’s going to cost you at least $2,000 over LME cash and possibly quite a lot more, again assuming you can find a seller.

Taiwanese premiums have also shot up recently to $800-900 per tonne, even though Kaohsiung is one of the few LME warehouse locations still to hold metal, albeit only 145 tonnes.

Indeed, the stress on physical supplies is preventing LME stocks from rebuilding despite that massive backwardation.

The high premium for LME delivery has enticed odd parcels of metal into exchange warehouses but what has arrived has turned around and departed just as quickly.

LME inventory currently stands at just 1,290 tonnes, 570 tonnes lower than at the start of the year. Moreover, a third of that is earmarked for physical load-out, attesting to the continued strong demand for units across the physical supply chain.

Low LME stocks are in turn keeping time-spreads tight and the cash price elevated, which will help keep Chinese exports flowing through the arbitrage gap.

China to the rescue?

Visible inventory in China is higher. ShFE stocks currently total 7,512 tonnes, although they have fallen from a March high of 8,853 tonnes in line with the seasonal pattern around the country’s new year holidays.

Chinese refined tin production is rising and supplies of raw material from Myanmar appear to be unaffected by the political upheaval in that country, so far at least.

China now holds the key to the immediate price landscape. Indonesian exports may ramp up later this year but until they do Chinese exports are going to be the most significant route to alleviating the super-squeeze in the rest of the world.

Just how much metal the country can itself afford to lose in a global market defined by scarcity remains to be seen.

(Editing by Jane Merriman)

Record metals prices catapult mining profits beyond big oil

Bundles of copper cathode. (Image by ChrisFountain, Wikimedia Commons). 

https://www.mining.com/web/record-metals-prices-catapult-mining-profits-beyond-big-oil/?utm_source=Daily_Digest&utm_medium=email&utm_campaign=MNG-DIGESTS&utm_content=record-metals-prices-catapult-mining-profits-beyond-big-oil 

Major oil producers, for decades the natural resource industry’s top earners, are being eclipsed by once-smaller mining peers who are churning out record profits thanks to red-hot metals markets.

The mining windfall is the latest sign of a boom in iron ore, copper and other metals that’s sending an inflationary wave through the global economy, increasing the cost of everything from electrical wires to construction beams.

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In the corporate world, the top five iron ore mining companies are on track to deliver bottom-line profits of $65 billion combined this year, according to estimates compiled by Bloomberg. That’s about 13% more than the five biggest international oil producers, flipping a decades-old hierarchy.

“It’s wild,” said Mark Hansen, chief executive officer of London-based trading house Concord Resources Ltd. “The value right now has shifted from energy to metals.”

The eye-watering mining profits are mainly a product of iron ore, the world’s biggest commodity after oil. The crucial steelmaking ingredient has been trading just a whisker below $200 a ton and on par with record prices from a decade ago, when voracious Chinese demand triggered what became known as the commodities supercycle. The largest Australian mining companies can pull a ton of iron ore from the ground for less than $20 a ton.

Copper prices have also jumped near to all-time highs, crossing the $10,000-a-ton barrier for the first time in a decade. A basket of base metals including aluminum, nickel, copper, tin, lead and zinc is trading at levels only reached twice in modern history: in 2007-08 and 2011.

For the big five iron ore miners — BHP Group, Rio Tinto Group, Vale SA, Anglo American Plc and Fortescue Metals Group Ltd. — this fiscal year will be just the second time this century that they’ll out-earn their oil peers, estimates show. It would be only the first time if their oil rivals hadn’t been weighed down by huge writedowns in 2020.

During the previous commodity boom, which peaked between 2008 and 2011, Big Oil easily made larger profits than Big Mining. A decade ago, for example, the five energy majors — Exxon Mobil Corp., Chevron Corp., Royal Dutch Shell Plc, Total SE and BP Plc — delivered adjusted earnings that were double those of the big five iron ore miners.

Now, the surge in mining profits is another headache for the large oil companies as they struggle to attract shareholders amid mounting concern over climate change. While the miners are already returning more cash to investors, the oil producers are only just starting to do so, after some cut dividends last year.

The miners also have a better story to tell: while oil contributes to a warming world, some metals — particularly copper — are key to building a greener future based on electric cars.

Inflation concerns

The mining windfall matters beyond the natural resources industry. It’s an indication that companies across multiple sectors will face rising costs, which at some point could translate into broader inflation, potentially hitting bond and foreign exchange markets.

“After a year of strong commodity-price increases, inflation pressures are now building downstream in supply chains,” said John Mothersole, pricing and purchasing research director at consultant IHS Markit Ltd.

So far, central banks — notably the U.S. Federal Reserve — have largely disregarded those pressures, saying they’re one-time price surges that are unlikely to start an inflationary problem. The Fed said April 28 that while inflation has risen, the increase largely reflects “transitory factors.”

Iron ore is in a dream scenario: demand, especially from China, is rampant, while supply is constrained. China, which accounts for about half of global steel production, is making a record amount of the metal, while industrial output is surging across the rest of the world as huge stimulus packages fuel a recovery from the pandemic. At the same time, producers are struggling to keep mines running at full capacity.

Returning cash

Yet underpinning the tightness in metals is a strategic decision made by the big miners half a decade ago. After spending years pumping ever-expanding supply onto the global market, they ripped up growth plans and focused instead on shareholder returns. The result was that supply largely stopped rising and prices started to pick up.

The good news for investors is that during this wave of high prices they’re likely to see more of the profits. Unlike in the last commodity supercycle, the miners — still bruised from a series of disastrous deals and projects — are reluctant to pour their extra earnings into acquisitions or new mines, instead choosing to distribute record dividends.

That point was made clear by Vale’s CEO last week, after the Brazilian mining giant posted its best quarterly result since the high-point of the supercycle a decade ago.

“You shouldn’t expect extreme” spending, Eduardo De Salles Bartolomeo said on Tuesday. “There is nothing on our radar like that. And secondly — the question that a lot of people make so I’ll take the opportunity to make it clear — there is no transformation and M&A on our radar as well.”

Big Oil is now doing the same, with companies from Exxon to BP abandoning oil output growth plans in an effort to regain shareholder trust: they have slashed spending on new projects, and after paying down debt, are promising to reward investors rather than develop new fields and refineries as they did during the previous cycle. That’s likely to result in lower oil supply later this decade, which in turn could support prices.

(By Thomas Biesheuvel, Javier Blas and James Attwood)

Copper price tops $10,000 a tonne for first time in ten years

Production of copper wire, bronze cable in reels at factory. (Stock Image)

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Copper topped $10,000 a tonne for the first time since 2011, nearing the all-time high set that year as rebounding economies stoke demand and mines struggle to keep up.

Prices rose as much as 1.3% to $10,008 a tonne on the London Metal Exchange, before slipping back to trade near unchanged. The metal hit a record $10,190 in February 2011.

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Copper for delivery in May was down 0.3% midday Thursday, with futures at $4.4860 per pound ($9,8615 a tonne) on the Comex market in New York.

Analyst at CRU Group Robert Edwards believes copper has further to go:

”The copper price has gone stratospheric and probably has further to go, which is a boon for miners who are currently making at least two dollars for every one they spend getting metal out of the ground,”

Click here for an interactive chart of copper prices

The rally in copper, which has more than doubled in price from its covid-lows, has been fuelled by a widely-held belief that demand for the bellwether metal will receive a massive boost, not just from post-pandemic economic stimulus, but also from a worldwide push for decarbonisation. 

For Tai Wong, head of metals derivatives trading at BMO Capital Markets, the all-time high at $10,190 is just around the corner and now practically a “foregone conclusion,”

“This is a remarkable run for copper in terms of magnitude and consistency,”

Senior commodities strategist at ING Bank Wenyu Yao also believes the copper rally still has legs to go:

“The outlook for the US economy keeps getting better. Economic reopening coupled with massive stimulus, faster-than-expected vaccine rollouts, and supportive fundamentals all point to even higher prices,”

While almost all agree copper’s longer-term future is bright, there is much less consensus on how much the price of the metal will shine in the next few years.

A monthly poll conducted by FocusEconomics shows wide disparities in forecast prices by the investment banks, brokers, economists, and governments in the survey compiled April 13 –18.

(With files from Bloomberg)

Oil Tanker Seized by U.S. Authorities for Illegal North Korean Trade

 

https://ihsmarkit.com/research-analysis/tanker-seized-by-us-authorities-for-illegal-north-korean-trade.html 

The U.S. government has seized an oil tanker for involvement in ship-to-ship (STS) cargo transfers with a sanctioned vessel and other sanctions evading activity. The vessel Courageous (IMO: 8617524), owned and operated by a Singaporean citizen, stopped transmitting its AIS (Automatic Identification System) location signal between August and December 2019. During this period, the Courageous transferred oil cargo worth $1.5m to the North Korean flagged vessel Saebyol (IMO:8916293). Saebyol eventually discharged her cargo at the port of Nampo, North Korea.

In the period leading up to the STS cargo transfer, the movement activity of the Courageous placed it at the port of Kaohsiung throughout 2019. She idled in the anchorage of the Taiwanese port for considerable periods of time both before and after the STS with the Saebyol. After her prolonged period of not transmitting an AIS signal, the Courageous reemerged back on the radar in February 2020 at Kaohsiung and departed for Cambodia. On reaching the port of Kompong Som, in Cambodia in March, the vessel was held by Cambodian authorities and subsequently seized by the U.S.

As part of the STS operation with the Saebyol, the Courageous was also noted to have falsely identified itself as another vessel. She has previously operated under the name Sea Prima with the flag of St Kitts and Nevis.

The pattern of activity by the Courageous closely resembles that of another vessel, the Wise Honest, seized by the U.S. in 2019. The two vessels have a similar movement pattern used to evade sanctions ranging from AIS dark outages, STS cargo transfers and falsifying cargo documentation with which to transmit payments through the U.S. financial system. This latest seizure of the Courageous underlines the key sanctions evasion techniques highlighted in the Office of Foreign Assets Control (OFAC) advisory of May 2020 on 'Guidance to Address Illicit Shipping and Sanctions Evasion Practices'. The United Nations Security Council has also imposed economic sanctions on North Korea, prohibiting among other things the conduct of ship-to-ship transfers with DPRK-flagged vessels and the provision of petroleum products to North Korea.

Within the OFAC advisory a series of deceptive shipping practices were highlighted as operational recommendations for sanctions compliance teams to be aware of and to incorporate into their daily maritime screening processes. There is a strong correlation between OFAC's general practices for identifying shipping risk and the evasion of sanctions by the Courageous.

The core OFAC recommendations are:

• Disabling or Manipulating a Ship's AIS Signal: The Courageous had minimal coverage under AIS, when its AIS was transmitting there was very little port call history, suggesting a vessel not fully engaged in normal shipping practices
• Flag Hopping and Flag Changes: In 2019-2020, the Courageous changed flags on three separate occasions, flags of convenience were used in all cases
• Vessel Name Changes: Between 2016 and 2019 a series of name changes to the vessel also occurred - Blue Sea, Sea Prima and finally Courageous
• Age of the Ship: Older vessels have been identified as being more likely to be engaged with illegal maritime activity. The Courageous was built in 1987
• Ownership and Management: Four different corporate entity changes occurred within the ownership structure of the Courageous between 2017-2020

Additionally, the vessel had no port state control inspection since 2004 and had been 'disclassed' by the Nippon Kaiji Kyokai ship classification society in 2011. While flags of convenience, vessel name or ownership changes do not always constitute red flags, when taken as a whole with a pattern of AIS outages, no hull inspection activity and prolonged periods of idling, the risk level increases for that ship.

For trade compliance teams to protect themselves, they must ensure they include in their toolbox the key lessons from the seizure of the Courageous and understand the types of activity such vessels engage in order to avoid transactional risk.

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Posted 27 April 2021 by Byron McKinney, Director - Product Management, Maritime & Trade, IHS Markit

Iron ore price surges to record high

Chinese steel futures also closed at all-time highs, underpinned by robust demand and concerns over production curbs. (Stock Image)

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Iron ore prices jumped to a fresh high on Monday on robust Chinese demand.

Iron ore futures on the Dalian Commodity Exchange, for September delivery, closed 4.3% higher at 1,145 yuan. The contract jumped 6.3% earlier.

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According to Fastmarkets MB, Benchmark 62% Fe fines imported into Northern China (CFR Qingdao) were changing hands for $193.58 a tonne on Tuesday, up 3.93% from Friday trade.

The high-grade Brazilian index (65% Fe fines) also advanced to a record high of $226.90 a tonne.

“Iron ore prices are mainly supported by structural contradiction of supplies, there’s shortage in medium and high-grade products,” Zhuo Guiqiu, analyst with Jinrui Capital, told Reuters.

Even the low-grade Super Special Fines with 56.7% iron content is at over 1,200 yuan a tonne, which is more expensive than the most-traded futures contract, Zhuo added.

Chinese steel futures also closed at all-time highs, underpinned by robust demand and concerns over production curbs.

The northwest Shaanxi province recently urged local departments, as requested by China’s state planner and other authorities, to verify local steelmakers’ crude steel output in 2020 and explain those whose production exceeded designated capacity or didn’t meet it.

Another major steelmaking city Handan in the Hebei province recently issued a notice, asking mills to implement production-control measures in the second quarter.

Copper jumped to a 10-year high as commodities advance toward the highs of the last supercycle

The measures have sparked concerns of more curbs in the ferrous sector, lifting prices as demand is still strong during the peak season.

The most-active construction rebar on the Shanghai Futures Exchange, for October delivery, rose as much as 4.3% to 5,475 yuan ($843.63) a tonne. It closed up 2.3% at 5,371 yuan.

Top iron ore producers Rio Tinto, BHP, and Vale released disappointing output figures last week. And a weaker dollar is making commodities traded in the currency cheaper to buy.

Aluminum is surging and copper jumped to a 10-year high as commodities advance toward the highs of the last supercycle. Metals are benefiting as the world’s largest economies announce stimulus programs and climate pledges as they rebuild from the coronavirus shock.

“Biden’s new climate promises and at least lip service by China to greener domestic policies are keeping the demand picture rosy,” Tai Wong, head of metals derivatives trading at BMO Capital Markets told Bloomberg.

(With files from Bloomberg and Reuters)