TOP NEWS

Vale's former CEO, employees charged with homicide over Feijao tailings dam collapse

Fabio Schvartsman, the former CEO of Vale SA, was charged with 270 counts of homicide for the fatal Feijao tailings dam collapse in January 2019, Bloomberg reported. In addition, Vale and contractor TÜV SÜD AG were accused of environmental crimes. “Fabio Schvartsman acted directly to create corporate incentives, not to avoid risks, but to channel efforts into protecting Vale’s market value,” state prosecutor William Coelho told reporters in Minas Gerais. Vale's American depositary receipts on the NYSE closed at US$13.25, down 2.8% for the biggest decline since November.

Australian wildfires hit BHP Group's thermal coal production

The wildfires in Australia are affecting BHP Group's production levels, with thermal coal output in New South Wales falling due to reduced air quality. BHP Group said that its New South Wales Energy Coal production fell 11% to 7 million tonnes in the half-year ended Dec. 31, 2019, due to the impact of smoke in December 2019 as well as a strategy change to focus on higher quality products. Total thermal coal output was down 12% year on year to 11.73 Mt in the six-month period, while iron ore output inched up 2% to 121.40 Mt and copper production grew 7% to 885,000 tonnes.

Mechel's buyback option on top Russian coal mine lapses

Russian coal and steel producer Mechel PAO decided not to exercise its right to buy back a 34% stake in the Elga coal mine, Reuters reported, citing AO Gazprombank, the company's creditor. Mechel had until Jan. 20 to exercise its preemptive right to buy back the stake. A company representative said Mechel abandoned the option because it received an alternative offer. No further details were provided on the offer, which Mechel is reportedly studying. The company still owns 51% of Elga.

BASE METALS

* Western Areas Ltd. said that it reached off-take deals with BHP Group unit BHP Billiton Nickel West Pty Ltd. and Jinchuan Group Co. Ltd. for nickel concentrate produced from Western Areas' Forrestania project in Western Australia.

* Zinc prices are expected to fall moderately and will likely average US$2,300 per ton starting April 1 as the market turns to a surplus for the first time after four years of deficits, according to Mitsui Mining & Smelting Co. Ltd.'s metal sales group general manager Kenji Sugawara, Bloomberg reported.

* The 25-year financial and technical assistance agreement awarded to Sagittarius Mines Inc.'s Tampakan copper and gold reserve in the Philippines set to expire on March 21 has been extended for 12 years until March 21, 2032, Minda News reported.

PRECIOUS METALS

* An updated preliminary economic assessment on AngloGold Ashanti Ltd. and B2Gold Corp.'s Gramalote Ridge deposit, part of the Gramalote gold project in Colombia, generated a posttax net present value of US$671 million at a 5% discount rate, with an 18.1% internal rate of return and a 3.6-year payback period. The study assumed a gold price of US$1,350 per ounce and gold production of 3.85 million ounces over an initial mine life of 13.6 years.

* Ghana is delaying the sale of US$750 million shares in a gold mining fund as the government reviews the processes for mineral royalty payments, Bloomberg reported, citing unidentified sources. The public offering was initially prepared for this month, but it has been postponed until March, the sources said.

* The price of palladium has the potential to surge and test US$3,000 per ounce, according to Jeffrey Currie, Goldman Sachs Group's head of global commodities research, Bloomberg reported. Currie noted that such peaks would not be sustained as the record levels would cut into demand.

* U.K.-based Caledonia Mining Corp. PLC said that it completed the acquisition of an additional 15% stake in the Blanket gold mine in Zimbabwe from Fremiro Investments (Pvt.) Ltd. Caledonia Mining settled the consideration price of about US$16.7 million by canceling Fremiro's loan, worth nearly US$11.5 million as of June 30, 2018, and by issuing 727,266 new shares at US$7.15 apiece that gave Fremiro a 6.3% stake.

* Resolute Mining Ltd. is looking to raise up to A$196 million via an equity raising to repay a US$130 million finance facility from Taurus Funds Management Pty. Ltd. before the repayment deadline of Jan. 31.

* Canada-headquartered First Majestic Silver Corp. expects to produce 21.5 million to 24 million ounces of silver equivalent at cash costs of US$5.76 to US$6.97 per ounce and all-in sustaining costs of US$13.37 to US$15.46 per ounce.

* Mexus Gold US and its partner Elias Felix decided to seek a joint venture for the Ures project in Mexico. The company said it will retain a royalty under an agreement.

* Highland Gold Mining Ltd.'s production of gold and equivalents shot up 27% year over year to 83,429 ounces in the fourth quarter of 2019, bringing its total output over the full year to 300,704 ounces.

* Cygnus Gold Ltd. started a 20,000-meter aircore drilling program on the Lake Grace and Yandina projects, the company’s joint venture with Gold Road Resources Ltd.

* China's 2019 gold consumption dropped 12.9% year on year to 1,002.8 tonnes amid high prices and economic slowdown that hit the world's largest gold market, Reuters reported, citing a statement from the China Gold Association.

* India's gold imports may rebound this year to 750 tons from a three-year low as consumers increase purchases after holding off last year, according to N. Anantha Padmanaban, chairman of the All India Gem & Jewellery Domestic Council, Bloomberg reported. The country's inbound gold shipments were estimated at 690 tons in 2019.

BULK COMMODITIES

* A seasonal dip in demand depressed PJSC Magnitogorsk Iron & Steel Works's production of crude steel by 3.9% in the fourth quarter of 2019 compared to the previous quarter, while its sales of finished products declined 4.0% to 2.8 million tonnes. Output of the alloy totaled 3.1 Mt in the final quarter of the year, bringing full-year production to 12.5 Mt, a drop of 1.6% from 2018.

* Russian steelmaker PAO Severstal invested in Dutch robotics firm Airborne, which has developed automation technology that would help improve efficiency in carbon fiber composite production. Severstal said the deal could enable the company to offer lower prices for composites, which are said to be stronger and significantly lighter than steel, over the next five to seven years.

* PT Indonesia Asahan Aluminium intends to triple its production capacity to 750,000 tons by building a 500,000-ton smelter in North Kalimantan on the Indonesian side of Borneo, as the state-owned company seeks to utilize the region’s abundant bauxite reserves, Bloomberg reported, quoting managing director Oggy Achmad Kosasih.

* Allegiance Coal Ltd. inked a binding agreement with Cline Mining Corp. to acquire the New Elk Coal Co. LLC, owner of the New Elk hard coking coal in Colorado for US$1 and initial debt repayment to Cline amounting to US$11 million in cash and shares.

SPECIALTY

* Zentree Investments Ltd., the top minority shareholder of Energy Resources of Australia Ltd. with a 15.94% stake, did not rule out attempting to block Rio Tinto's attempt to take over the company by participating in its A$476 million renounceable entitlement offer, The Australian Financial Review reported. Zentree is considering whether to participate fully or partially in the offering.

* A feasibility study on Boss Resources Ltd.'s Honeymoon uranium project in South Australia defined a posttax net present value of A$166 million at an 8% discount rate, with a 33.29% internal rate of return and a 4.5-year payback period, assuming a U3O8 price of US$50 per pound.

* Deep Yellow Ltd. will move towards the completion of a pre-feasibility study for the Reptile uranium project in Namibia after a positive scoping study for the Tumas deposit.

* Altura Mining Ltd. achieved a record shipment of 24,500 wet tonnes of lithium concentrate produced from its Pilgangoora mine in Western Australia to Chinese off-take partner Ganfeng Lithium Co. Ltd.

* Black Rock Mining Ltd. executed a nonbinding cooperation framework agreement with China Railway Group Ltd.'s subsidiary China Railway Seventh Group Co. Ltd. for the latter to act as head engineering, procurement and construction contractor of the module one Mahenge graphite project's process plant and nonprocess infrastructure.

* A new environmental impact study for Sayona Mining Ltd.'s flagship Authier lithium project was lodged with Québec’s Ministry of the Environment and the Fight against Climate Change. The company said that the filing of the study is a further step towards the planned integration of Authier with North American Lithium.

INDUSTRY NEWS

* The mining companies with the 20 largest exploration budgets in 2019 allocated a total of US$2.93 billion for exploration during the year, accounting for 32% of the US$9.29 billion global exploration total. As part of the 30th edition of S&P Global Market Intelligence's "Corporate Exploration Strategies" study, corporate exploration profiles of the top 10 of these larger players are available in the Research Library.

* The U.S. still has a long way to go to minimize dependence on China as it works to diversify its critical minerals supply chain, according to industry observers from the U.S. and Australia.

* Australian mining contractor MACA Ltd. will exit Brazil, effective this month, following the early termination of a contract with an OZ Minerals Ltd. subsidiary for the Antas copper mine. MACA said it will retain ownership of the majority of the plant and equipment at Antas and sell assets not redeployed to other operations.

* Metal-cutting tools and mining gear maker Sandvik AB reported a loss of 149 million Swedish kronor in the fourth quarter of 2019, swinging from a year-ago profit of 2.55 billion kronor. Earnings were impacted by an impairment of 3.9 billion kronor related to the ongoing divestment of its drilling and completion unit. Full-year 2019 profit fell 33% to 8.52 billion kronor from 12.67 billion kronor.

The Daily Dose has an editorial deadline of 7 a.m. Hong Kong time. Some external links may require a subscription. Links are current as of publication time, and we are not responsible if those links are unavailable later.