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MMK delays restart of US$2B Turkish steel complex on global trade jitters

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Essential Metals & Mining Insights - January 2021

Industry Top Trends 2021: Metals and Mining

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

Essential Metals & Mining Insights - September 2020


MMK delays restart of US$2B Turkish steel complex on global trade jitters

TOP NEWS

MMK delays restart of US$2B Turkish steel complex on global trade jitters

Russian steelmaker PJSC Magnitogorsk Iron & Steel Works is delaying the relaunch of its MMK Metalurji complex in Turkey, which was built between 2007 and 2010 for over US$2 billion, due to market uncertainty amid ongoing global trade wars, Reuters reported, citing an interview with Andrey Eremin, the company's director for economics. The future of the hot-rolled steel project, which was estimated to add US$90 million to US$100 million to the company's core earnings, will be decided in November. Production was suspended in 2012 amid low steel prices. The company also sees lower steel demand growth in Russia of 2%, compared to 4% previously, after a government proposal to increase value-added tax to 20% from 18%.

Petropavlovsk cuts gold output guidance; Q2 production falls YOY

Petropavlovsk PLC lowered its full-year gold production guidance to about 400,000 to 410,000 ounces from 420,000 to 460,000 ounces as it excluded Pokrovskiy POX production from full-year estimates. Cash costs are expected to be 15% to 20% higher than the previous guidance of US$700/oz to US$750/oz due to the "suboptimal organization" of mining works in the first half. Gold production in the second quarter dropped to 88,800 ounces, compared to 114,300 ounces in the year-ago quarter.

Chinese investors to fund US$10B metallurgical complex in South Africa

Chinese investors signed agreements to build a US$10 billion metallurgical complex in South Africa, and construction is set to start in 2019, Reuters reported. The project will include plants with production capacities of 3 million tonnes per annum of stainless steel, 3 mtpa of ferrochrome and 500,000 tonnes per annum of silicomanganese.

DIVERSIFIED

* Mining majors BHP Billiton Group and Rio Tinto are forecast to distribute A$6.7 billion of dividends amid bullish commodity prices, Bloomberg News reported. Coal rail network operator Aurizon Holdings Ltd. is tipped to increase its payout by 56%, and copper miner OZ Minerals Ltd. is slated to increase its dividend by 50%.

* The Indian government is planning to auction 12 mineral blocks within the next two months, comprising eight iron ore mines, three graphite blocks in Jharkhand and one limestone block in Andhra Pradesh, The Press Trust of India wrote, citing an official document.

BASE METALS

* Workers at BHP's Escondida copper mine in Chile agreed to vote on a strike after rejecting the mining giant's final wage offer, Reuters reported, citing an internal union document. The vote on a strike was set to begin July 28 and will continue through the middle of the week of July 30.

* South32 Ltd. could seek to resolve an ongoing legal battle over its Cerro Matoso nickel mine in Colombia through international arbitration, The Australian Financial Review reported. Earlier in the year, the Colombian Constitutional Court determined that waste from Cerro Matoso had led to members of seven indigenous and Afro-Colombian communities being diagnosed with problems, and it ordered the company to pay damages and apply for a new operating license.

* Turquoise Hill Resources Ltd. named Ulf Quellmann its CEO, effective Aug. 1. He was most recently the vice president of strategic projects at Rio Tinto's copper and diamonds product group. Quellmann was the group treasurer at Rio Tinto from 2008 to 2016 and led the arrangement of the US$4.4 billion project finance facility for the Oyu Tolgoi copper-gold project in Mongolia.

* Thor Mining PLC said Environmental Copper Recovery SA Pty. Ltd. received a A$2.8 million research grant from the Australian Government Ministry for Science, Jobs and Innovation for the Kapunda in situ copper-gold recovery trial over 30 months. The company has a right to earn up to a 60% interest in Environmental Copper Recovery, which holds a 75% option with Terramin Australia Ltd. over the metals that can be recovered via in situ recovery contained in the Kapunda deposit.

* About 85% of the 800-strong workforce at First Quantum Minerals Ltd.'s Las Cruces copper mine in Spain started a strike, demanding the payment of hazard pay for subcontractors, Mining.com reported, citing Spanish media.

* GreenBank Capital Inc. asked the TSX Venture Exchange to delay the approval of Minfocus Exploration Corp.'s attempt to sell shares to insider and affiliate Francis Manns, calling the move by Minfocus' directors "irresponsible."

* Nongovernmental organization Chennai Solidarity Group claimed that Vedanta Ltd.'s Tuticorin copper smelter in southern India's Tamil Nadu state emitted between 2 and 21 tonnes of cancer-causing arsenic into the environment every day during its operations, The Hindu reported.

* Lundin Mining Corp.'s C$1.4 billion takeover bid for Nevsun Resources Ltd. will put shareholders to the test with one key question: is it enough? Some analysts speculate that shareholders will hold out for a sweeter deal, while others expect that the offer will satisfy appetites.

* ECobalt Solutions Inc.'s two major shareholders, Australia's Regal Funds Management and hedge fund Tribeca Investment Partners, called for a change in the company's senior management or the launch of a sales process due to concerns that the delay in developing the Idaho cobalt project is wasting the windfall from high demand in the battery sector, Reuters reported. Separately, Jervois Mining Ltd. acquired 4.54% of eCobalt's issued share capital.

* Jiangxi Copper Co. Ltd. expects its first-half net profit to increase between 415 million Chinese yuan and 664 million yuan, or between 50% and 80%, on a yearly basis, driven by higher prices for the company's major metal products during the period.

PRECIOUS METALS

* Gold Road Resources Ltd. CEO Ian Murray told S&P Global Market Intelligence that the company is looking at acquiring early stage assets in tier-one jurisdictions in Canada and the U.S. as the Gruyere JV with operator Gold Fields Ltd. has given it the freedom to explore in its own right and was preferable to funding the project with bank debt.

* Kingsgate Consolidated Ltd. unit Akara Resources PCL, operator of the Chatree gold mine in Thailand, rejected the results of a fact-finding committee, which concluded that a leak occurred at its first tailings storage facility, Thailand's The Nation reported. The committee, formed two years ago, said heavy metals from the leak may have contaminated the environment. The company raised doubts over the report and committee's credibility, saying "Most members of the committee are not specialists or have technical knowledge on this field of study. Moreover, the process to approve this questionable study was only asking the opinion of the committee members, whether they are in agreement with the study finding or not." Thailand ordered the closure of Chatree in May 2016 after public uproar over environmental and health issues.

* Gold Fields CEO Nick Holland believes that the company's South Deep mine in South Africa can succeed, despite spending about US$2.3 billion on the mine and consistently missing production targets, Bloomberg News reported.

* Capital costs for the Gruyere joint venture between Gold Fields and Gold Road were bumped up further to A$621 million, with first gold targeted for production in the June quarter in 2019. The revised capital cost reflected an increase from the original A$507 million estimate and the revised estimate of A$532 million.

* Adam Nikitins, Brett Lord and Samuel Freeman of Ernst & Young were appointed as joint administrators of WPG Resources Ltd. as the ASX-listed gold miner can no longer meet the conditions of a previously signed term sheet with the Byrnecut Entities to complete its recapitalization process.

* Indian state miner National Mineral Development Corp. Ltd. won an e-auction to acquire a gold mine in the country's Andhra Pradesh state, beating out Adani Enterprises Ltd. and Vedanta, Reuters reported, citing Chairman Baijendra Kumar.

* Newmont Mining Corp. unit Newmont Tanami Pty. Ltd. elected to proceed with the proposed joint venture over Nova Minerals Ltd.'s Officer Hill gold project in Australia's Northern Territory.

* The Darasunsky gold mine in Russia's Zabaikalye region suspended work for two months due to financial problems. A loan is needed to restore its operations, Kommersant reported, citing a report by Interfax.

* Dome Gold Mines Ltd. tapped IHC Robbins to complete a definitive feasibility study for the Sigatoka iron ore project in Fiji.

BULK COMMODITIES

* CITIC Resources Holdings Ltd.'s attributable net profit in the first half surged 186% year over year to HK$529.1 million, or HK$6.73 per share. Revenue rose 40.1% to HK$2.15 billion, partly due to a turnaround in its aluminum smelting segment given higher sales volumes and average selling prices.

* Usinas Siderúrgicas de Minas Gerais SA swung to a net loss of 19 million Brazilian reais in the second quarter, from net income of 176 million reais a year earlier. The results were affected by a 16% depreciation of the reais against the U.S. dollar in the period. Revenue totaled 3.20 billion reais, a 24.7% increase on an annual basis, while adjusted EBITDA slipped 30.8% to 519 million reais.

* Sundance Resources Ltd. reached a binding term sheet to convert A$133 million in notes due to mature in September 2019 into about A$58.2 million in shares and a capped production royalty.

* Rey Resources Ltd. agreed to sell the Duchess Paradise thermal coal project in Western Australia through the sale of subsidiary Blackfin Pty. Ltd. to Yuanrun Investment Ltd. for A$24 million.

* Vostokugol received a 50% stake in Rostec's Ogodzhinskoye coal deposit in Russia's Amur region and in the Vera port in Primorye, Kommersant reported.

SPECIALTY

* Sociedad de Inversiones Pampa Calichera SA, one of the companies through which businessman Julio Ponce holds his stake in Chile's Sociedad Quimica y Minera de Chile SA, sold US$275 million of bonds in the local market, Reuters reported. The 15-year bond had a 4.5% annual interest rate.

* Syrah Resources Ltd. slashed its full-year graphite production guidance to between 135,000 and 145,000 tonnes, from 160,000 tonnes previously. C1 cash operating costs are slated to increase to between US$430/t and US$450/t, from US$400/t.

* Separately, Syrah CEO Shaun Verner said the company may postpone its move into production of battery-grade graphite to avoid raising additional funds by issuing more shares, The Australian Financial Review reported. The company spent US$55.2 million, about half of its cash balance, in the prior six months and expects to go through US$17 million in the third quarter and US$30 million to construct a beneficiation plant in Louisiana to process graphite. "If we have to flex anything it will be around the timing of [the Louisiana plant]," Verner said.

* Orano SA's net loss reached €205 million in the first half, widening from €154 million in the year-ago period. Revenue in the period slipped to €1.71 billion from €1.79 billion.

* Lucapa Diamond Co. Ltd. recovered an 11.88-carat diamond from a bulk sampling program at the North zone of its 70%-owned Mothae diamond mine in Lesotho.

* Tango Mining Ltd. sold a 42.26-carat diamond recovered from run-of-mine gravel at the Oena diamond mine in South Africa for US$11,267 per carat on a tender at the Kimberley Diamond Exchange.

* Lithium Consolidated Mineral Exploration Ltd. secured seven lithium assets covering 2,340 hectares in Zimbabwe's Mutare Greenstone Belt.

* Wolf Minerals Ltd. increased an existing bridge facility to £69 million from £65 million and secured a standstill from senior lenders on the deferral of approximately £2.1 million in principal and interest repayments until Oct. 28.

* Core Exploration Ltd. signed a nonbinding term sheet with Shandong Ruifu Lithium Co. Ltd. for the off-take of up to 150,000 tonnes per year of lithium concentrate from the Finniss lithium project in Australia's Northern Territory. Shandong Ruifu will provide a conditional US$35 million prepayment facility and secure a 10% interest in the ASX-listed explorer.

* Liontown Resources Ltd. outlined a maiden resource at the Cambridge deposit, part of the Toolebuc vanadium project in Queensland, Australia. The inferred resource for the deposit stood at 83.7 million tonnes grading 0.30% vanadium pentoxide, using a 0.25% cutoff grade.

INDUSTRY NEWS

* Private equity fund Appian Capital is looking to raise about US$1.2 billion through eight separate deals to extend longer-term financing to small-scale mines globally, The Daily Telegraph reported. It will be the London-based firm's second fund after a US$375 million fund launched in 2014 that invested in eight projects, of which five are now producing and two have been sold, according to the report.

* The administration of Chilean President Sebastián Piñera will submit a bill to modernize the country's Environmental Impact Assessment System, La Tercera reported. Changes include an 18-month consultation process conducted by private companies before submitting the environmental impact study of a project for approval and the formalization of the agreements act that serves as the basis for any future EIA that enters the system.

* A Brazilian mining regulator established in late 2017 with an aim to accelerate regulatory process and attract foreign investment in the sector has yet to begin activities, with experts cautioning that the agency could be stalled at least through the October general elections or until 2019, Reuters wrote.

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