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Samarco seeks restart; MMK plans Fortescue stake sale; Rio Tinto OKs US$5.3B Oyu Tolgoi expansion

Greenhouse gas and gold mines Nearly 1 ton of CO2 emitted per ounce of gold produced in 2019

Essential Metals & Mining Insights - September 2020

Essential Metals & Mining Insights - August 2020

State of the Market: Mining Q2-2020


Samarco seeks restart; MMK plans Fortescue stake sale; Rio Tinto OKs US$5.3B Oyu Tolgoi expansion

TOP NEWS

Samarcoinitiates regulatory approval process to restart operations

Following Brazilian court endorsement of Samarco'ssettlement, BHP BillitonGroup said its joint venture with , , has initiatedthe process of seeking required approvalsfrom relevant authorities to enable a restart of its operations."Samarco's operations will restart only when it is safe to do so, and whenall regulatory approvals are granted and accepted by the relevant authoritiesand communities," the company statement said, without providing a timeframe.

will likely repay US$614 million in debt ahead of schedule this yearusing most of its spare cash on hand, CFO Sergey Sulimov said, adding that thecompany was aiming to close a deal to pay down most of its debt maturing thisyear by the summer. He also confirmed executives were keen to repay"expensive" debt taken on in 2009 to finance construction of thecompany's Turkish steel plants, since the yield was high. The Russian steelmaker also confirmed thatit sold part of its 5.37% stake in Australian iron ore major in Marchand suggested that a sale of the remaining 3% stake could come soon.

, and thegovernment of Mongolia have approvedthe next development stage for the Oyu Tolgoi copper-gold mine in Mongolia. The developmentof the underground mine will start in mid-2016 following the approval of aUS$5.3 billion investment by the partners and the recent granting of allnecessary permits. First production is expected in 2020, and full ramp up toproduction of over 500,000 tonnes of copper per year is expected in 2027.

DIVERSIFIED

* Following Brazilian court endorsement of Samarco'ssettlement, BHP BillitonGroup said its joint venture with , , has initiatedthe process of seeking required approvalsfrom relevant authorities to enable a restart of its operations."Samarco's operations will restart only when it is safe to do so, and whenall regulatory approvals are granted and accepted by the relevant authoritiesand communities," the company statement said, without providing a timeframe.

* The Association of Mineworkers and Construction Union inSouth Africa presented a memorandum of demandsto Glencore Plc,seeking a minimum wage of 6,000 South African rand a month for all employeesand a 10% pay increase for those earning above that threshold, Mining Weekly reported. The union alsodemanded health benefits and housing and transport allowances,

BASE METALS

* RioTinto, Turquoise HillResources Ltd. and the government of Mongolia have the next developmentstage for the OyuTolgoi copper-gold mine in Mongolia. The development of theunderground mine will start in mid-2016 following the approval of a US$5.3billion investment by the partners and the recent granting of all necessarypermits. First production is expected in 2020, and full ramp up to productionof over 500,000 tonnes of copper per year is expected in 2027.

* OZ MineralsLtd. said it has decided to accelerate the pre-feasibility study on its copperproject in South Australia, using a larger scope of 4 million tonnes throughputper annum from the previous 2.8 million-tonne-per-annum operation, with a viewto achieving first copper concentrate production in 2019.

* Chinese state-owned MMG Ltd. is among the bidders in discussions to buycopper miner Freeport-McMoRanInc.'s 56% stake in the Tenke Fungurume asset in the Democratic Republic ofCongo for as much as US$2 billion, the SouthChina Morning Post reported. Previously, MMG acquired the copper project in DRCfor US$1.36 billion in early 2012.

* L'seaResources International Holdings Ltd. said the total productionvolume of tin in concentrates from the Renison joint venture project, part of the Bluestonemines in Tasmania, for the month of April camein at 335 tonnes, representing a year-over-year decline of 41.2%, while theproduction volume for January to April totaled 2,012 tonnes, reflecting a 6.4%decline.

* BMR GroupPlc said the Zambia Environmental Management Agency has approvedthe company's Environmental Social Impact Assessment with regard to itstailings retreatment process and the construction of its planned pilot and maintreatment plants at its at its Kabwe property in Zambia.

* ChileanMetals Inc. said it will enter definitive agreements withCogonov Inc. topurchase the Lynn,Parrsboro and Bass River copper-gold projects in central Nova Scotia throughissuing about 20.5 million common shares to Cogonov shareholders. The companiesentered into a nonbinding letter of agreement over the projects in September.

* Claiming the illegal confiscation of land, villagers inMyanmar took to the streets to protest against the recommencement of operationsat the Chinese-backed Letpadaung copper mine, a joint venture between MyanmarWanbao, a unit of a Chinese weapons maker, and Myanmar Economic Holdings Ltd.,a conglomerate controlled by the Myanmar military, Reuters reported.The operations at the mine were suspended after violent protest in 2012 and2013.

PRECIOUS METALS

* StillwaterMining Co. reported a consolidated first-quarter net lossattributable to shareholders of US$9.9 million, from year-ago profit of US$23.0million. The company attributed the fall to a 29.7% year-over-year drop in theaverage sales price per mined palladium and platinum ounce to US$612. Totalrevenues were US$133.6 million, down from US$200.5 million a year ago.

* ChinaNonferrous Gold Ltd. secured a US$120 million loan from its 38.36%shareholder, China NonferrousMetals International Mining Co. Ltd., to refinance a previous loanand lower the cost of servicing its debt. The funds will be used to refinance aloan facility with Industrial and Commercial Bank of China (Macau) Ltd., underwhich the company has drawn US$115 million to date, and for working capital.

* Shanta GoldLtd. said it plans to raise US$10 million via a placement of newshares and has secured around US$5.3 million from a streaming agreementfor silver byproduct from its New Luika gold mine in Tanzania with Silverback Ltd.

* ChinaHanking Holdings Ltd. unit Hanking Gold Mining Pty. Ltd. acquireda 100% interest of two strategic mining tenements which host the Zeus golddeposit in Western Australia from Cazaly Resources Ltd. unit and a thirdparty, near China Hanking's wholly owned Great Victory gold deposit area, whichis part of its SouthernCross gold project.

* LeyshonResources Ltd. entered a deed of settlement with Newmont Australia Pty. Ltd. toresolve the dispute over management services related to the site closureperformed by the Newmont. The company agreed to transfer the mining licensesand environmental authority to Newmont as well as provide Newmont with cashand/or shares as additional compensation. Newmont will pay Leyshon aboutUS$220,000 in expenses incurred on the tenements in 2015.  

* ABMResources NL said Independence Group NL has to enter into afarm-in and joint venture agreement in accordance with the over theLake Mackaygold project in Australia's Northern Territory.

BULK COMMODITIES

* Russian steelmaker OJSC Magnitogorsk Iron & Steel Works into the black in thefirst quarter, unveiling earnings of US$157 million, 19.9% lower than the sameperiod of 2015, but up from the US$125 million net loss in the previousquarter. First-quarter revenues fell 11.1% quarter on quarter to US$1.05billion, due to lower seasonal prices for steel in its core central Russianmarket, as well as the further depreciation of the Russian ruble against theU.S. dollar early in the quarter. The Russian steelmaker also confirmed that itsold part of its 5.37% stake in Australian iron ore major , when ironore prices rallied at the start of the year.

* MMK will likely repay US$614 million in debt ahead of schedule this yearusing most of its spare cash on hand, CFO Sergey Sulimov said, adding that thecompany was aiming to close a deal to pay down most of its debt maturing in2016 by the summer. He also confirmed executives were keen to repay"expensive" debt taken on in 2009 to finance construction of thecompany's Turkish steel plants, since the yield was high. Sulimov alsosuggested that a sale of the remaining 3% stake in Fortescue could come soon.

* Fitch Ratings placed Noble Group Ltd.'s long-term issuer default rating,senior unsecured rating and debt ratings of BBB- on Rating Watch Negative. Themove is driven by Fitch's expectations that Noble will focus more onshorter-term and secured financing to lower financing costs amid a difficultoperating environment, which is likely to result in less financial flexibilityfor the company. The Rating Watch Negative will be resolved when Noblecompletes refinancing of its committed bank facilities, due in May, and on theannouncement of its first-quarter results.

* ITOCHUCorp.'s fiscal 2016 net profit attributable to shareholders for itsmetals and minerals segment dropped ¥35.5 billion to ¥11.6 billion, on lower grosstrading profits. Gross trading profit for the metals segment was down by ¥34.5billion to ¥32.5 billion due to lower iron ore and coal prices, which waspartially offset by an increase in iron ore sales, reduction in iron ore costs,and improvement in foreign currency translation in iron ore and coal companies.Revenue for the company's metals and minerals segment decreased by ¥33.4 billionto ¥220.1 billion.

* Meanwhile, Reuters wrote that ITOCHU is planning toacquire "selective"natural resource assets in collaboration with China's Citic Group, to benefit froma commodity downturn, while it also signaled it may invest in assets beyondiron ore and coal. "We are standing by to make purchases of resourceassets," ITOCHU President and CEO Masahiro Okafuji said.

* ArcelorMittalnarrowed itsfirst-quarter net loss to US$416 million from US$728 million a year ago. On ayearly basis, EBITDA fell to US$927 million from US$1.38 billion while salesdropped to US$13.40 billion from US$17.12 billion a year earlier, reflectinglower steel prices. Crude steel production reached 23.2 million tonnes,compared to 23.7 million tonnes recorded a year earlier, with shipments dippingto 21.5 million tonnes from 21.6 million tonnes. For 2016, ArcelorMittalexpects EBITDA of over US$4.5 billion and plans to become free cash flowpositive.

* Russia's antitrust regulator 's sale of its railway track toGazprombank in a deal that could finally dispel the threat of bankruptcy thathas dogged the coal group for the past two years. The Federal AntimonopolyService will allow Gazprombank to buy a 75% stake in the 321-kilometer railtrack, which links the massive Elga coal hub to the country's main transportsystem.

* India's steel imports in April fell15.5% year over year to 654,000 tonnes due to government-imposed tariffs onshipments from China and other countries, Bloomberg News reported, citingprovisional data from the Steel Ministry.

* VEB is actively searching for buyers for the mining andmetallurgical assets controlled by the bank, Kommersant reported.According to sources, these include assets of Industrial Union of Donbass andRussian coal company SibuglemetHolding. EvrazPlc has formally controlled Sibuglemet since the end of 2015.

* AltechChemicals Ltd. said it enteredinto a settlement and option agreement with the free landowners covering itsmining lease application M70/1334 at Meckering, Western Australia.

* KatowickiHolding Weglowy SA requires over 500 million Polish zlotys forrecapitalization, restructuring of its debt that is nearing 3 billion zlotys,as well as organizational changes to improve efficiency, Puls Biznesu reported,citing representatives of Poland's Ministry of Energy. The recovery plan isexpected to be ready in two months.

* Koks (Coke) Group breached the covenants on Gazprombank'sloan amounting to about 4.5 billion Russian rubles due to the revaluation ofthe currency of the debt, Vedomosti reported.

* Chinese iron ore imports rose 4.6% year over year to 83.92million tonnes in April, Reuters reported.  However, it declined 2.2% from March.  

SPECIALTY

*Following completion of due diligence over the Lemare lithium project in Quebec, directedLepidico Ltd. toproceed withexercise of the Lemare option. Lepidico secured the right to up to a 75% interest in theproject from Critical ElementsCorp. in February.

* LithiumPower International Ltd. is looking to raise up to A$8 million byoffering 35 million shares at 20 Australian cents each in an initial publicoffering, MiningNews.net wrote.The company owns hard rock projects in Pilgangoora, Tabba Tabba and Greenbushesin Western Australia, as well as brine salars in Argentina. The planned IPO isexpected to close in May with an ASX listing targeted in early June.

INDUSTRY NEWS

* Mining companies in China reduced their spending onminerals exploration in 2015, but have become more interested in securingmining licenses at a time when authorities are slowing the pace of granting newlicenses to curb capacityexpansion, latest official data shows. A total of 32.61 billion Chineseyuan was invested in exploration programs in China in 2015, down 19.0% from the40.27 billion yuan recorded in 2014, while companies paid a total of 1.37billion yuan to acquire 948 exploration licenses in 2015, down 77% and 25.4%,respectively, from a year ago, according to the annual resources reportpublished by the country's Ministry of Land and Resources in April.

* While the Philippines is said to sit atop some of theworld's largest mineral reserves, the country's mining sector , held back by red tape andcivil society opposition, among others. Four out of the five presidentialcandidates in the Philippines have expressed support for mining, but only understrict compliance with the law.

* TheMining Association of Canada contributed C$50,000 on behalf of its Canadianminer members to the Red Cross to support the communities which were affectedby the wildfire in Fort McMurray and surrounding areas in Alberta, MiningWeekly reported. 

The Daily Dose is updated as of7 a.m. Hong Kong time, and scans news sources published in Chinese, English,Indonesian, Malay, Portuguese, Russian, Spanish, Thai and Ukrainian. Someexternal links may require a subscription.