TOP NEWS
Report: Rio Tinto ready to sell Grasberg stake to Indonesia for US$3.5B
Rio Tinto is ready to sell its stake in the Grasberg copper mine to Indonesia for US$3.5 billion, Bloomberg News reported, citing anonymous sources. Responding to media reports, Rio Tinto confirmed that discussions between the parties are ongoing, but no deal has been agreed yet and there is no certainty that binding agreements will be signed. Rio Tinto's exit from the giant mine depends on Freeport-McMoRan Inc. reaching a deal to transfer some of its stake to state-owned PT Indonesia Asahan Aluminium (Persero). Rio Tinto holds the right to a 40% share of output above specific levels, and had expected that to shift to 40% of all production from 2023.
US facing US$3.5B in retaliatory tariffs from Russia, EU, others
Russia may implement trade tariffs amounting to US$538 million on U.S. goods in response to American customs duties on Russian steel and aluminum, according to a Russian filing with the World Trade Organization. The document proposes "an increase in duty on selected products originating in the U.S." within 30 days of the Council on Trade in Goods being notified. The document does not say whether the notification has been sent or when Russia is planning to send it. Japan said it could impose retaliatory measures of US$440 million against the tariffs, while Turkey is adding a further US$267 million, Reuters reported. The EU, China and India put their claims at US$1.6 billion, US$612 million and $165 million, respectively, bringing the total bill to around US$3.5 billion per year.
Vale denies reports suggesting talks with BHP for Samarco Mineração stake
Vale SA denied reports from Brazilian media that suggested the company was in talks with BHP Billiton Group or has reached an agreement to acquire the latter's stake in their Samarco Mineração SA joint venture in Brazil.
DIVERSIFIED
* For most precious metals companies, higher oil prices are a pain in the bottom line, but not so for Franco-Nevada Corp. A royalty company largely focused on the precious metals sector is showing increasing revenue-generating muscle on the back of rising oil and gas prices and a fossil fuel portfolio it expanded over the past of couple years. Its revenue from oil and gas rose from US$28 million in 2015 to US$47 million in 2017. Further, the company guides for higher revenue year over year in 2018, with a projection between US$50 million to US$60 million based on a West Texas Intermediate oil price of US$55 per barrel.
* Australian Vanadium Ltd. confirmed the successful recovery of cobalt, nickel and copper in sulfide concentrate at its Gabanintha vanadium project in Western Australia. The company said the discovery adds another salable battery metal opportunity to its flagship project.
BASE METALS
* Rio Tinto warned Mongolia against interfering in contracts related to the Oyu Tolgoi copper mine in the Gobi desert if the country wants to attract foreign investors, the Financial Times reported. Rio Tinto copper business head Arnaud Soirat said at the Mongolia Economic Forum that Mongolia may become a "successful resource nation," but only if it would honor tax and royalty agreements.
* Arnaud Soirat, Rio Tinto's copper and diamond head, said the market for copper will become under-supplied by 2021, resulting in higher prices for the metal, Bloomberg News reported.
* A protest against Vedanta Resources PLC-owned Tuticorin copper smelter in the Indian state of Tamil Nadu saw police firing on protesters when the demonstration turned violent, leaving nine people dead, The Economic Times of India reported, citing a government official. At least 30 other people have been injured as several thousand people joined the protest against the planned expansion of the facility.
* On a quarterly basis, only one-third of the 15 largest copper producers reported positive production trends in the three months to end-March: BHP Billiton Group, Zijin Mining Group Co. Ltd., KAZ Minerals PLC, PJSC Norilsk Nickel Co. and Anglo American PLC. As a result, the top 15 companies' quarter-over-quarter production fell by 4.8%, according to a Metals and Mining Research team at S&P Global Market Intelligence. However, on an annual basis, production rose 14.8% in the March quarter.
* Cobalt 27 Capital Corp. secured a stream of over 55.0% and 27.5% on Highlands Pacific Ltd.'s attributable share of cobalt and nickel production, respectively, from the Ramu
* Myanmar Metals Ltd.'s indicated and inferred resource at its 85%-owned Bawdwin project in Myanmar increased to 82.0 million tonnes at 4.7% lead, 119 g/t of silver, 2.4% zinc and 0.2% copper.
PRECIOUS METALS
* Harmony Gold Mining Co. Ltd. CEO Peter Steenkamp said the company's acquisition and recapitalization of the Hidden Valley gold mine in Papua New Guinea and the acquisition of the Moab Khotsong, combined with a few other projects, will put it on track to achieve production of 1.5 million ounces of gold per annum, Mining Weekly reported.
* Goldcorp Inc. CEO David Garofalo said that ideally the company should have an asset in Nevada's Carlin Trend, adding that he would also like to acquire something in Peru, Bloomberg News reported. "Those are the two holes in our portfolio geopolitically I'd love to be able to fill in due course," Garofalo said.
* Mongolia-focused explorer Steppe Gold Ltd. completed its previously announced IPO and raised C$21.1 million.
* Excelsior Gold Ltd. updated the mineral resource estimate at its Kalgoorlie North gold project in Western Australia to 14.8 million tonnes at 1.7 g/t of gold for 825,000 contained ounces.
* Algold Resources Ltd.'s preliminary economic assessment for the Tijirit gold project in Mauritania pegged a posttax net present value, discounted at 8%, of US$69.0 million, a 23.5% internal rate of return and a 1.8-year payback period.
* DGO Gold Ltd. now holds 7.0% of De Grey Mining Ltd.'s ordinary shares after making a A$5 million investment through the subscription of 25 million shares at 20 cents each.
BULK COMMODITIES
* EU Trade Commissioner Cecilia Malmstrom said Washington appeared unsatisfied with the bloc's proposal for greater market access to U.S. industrial products in exchange for a permanent exemption from tariffs on metal imports from Europe, Reuters reported. "There have been signals from the U.S. that the exemptions will not be prolonged, so either they will be imposed on us on June 1, or there will be other sorts of limiting measures," said Malmstrom. Meanwhile, the U.S. is said to be considering measures to cut imports of steel and aluminum from the EU by around 10%, The Wall Street Journal reported.
* Activist investor Elliott is nearing the acquisition of a stake in Germany's ThyssenKrupp AG, Reuters reported, citing a source. The move could result in increased pressure on management to restructure the group, as the activist fund steps up its activities in Europe.
* Henan Shenhuo Coal & Power Co.,Ltd will move 451,000 tonnes of annual aluminum smelting capacity to China's Yunnan province as part of a larger project in the area, Reuters reported.
* Itafos signed a definitive agreement with a syndicate of lenders to provide a US$165 million secured term loan facility. The funds are earmarked for working capital, to cover other cash requirements of the Arraias phosphate operations in Brazil and the Conda phosphate operations in the U.S., and to develop other phosphate projects, including Paris Hills in the U.S. and Farim in Guinea-Bissau.
* Coal India Ltd.'s coal stockpiles are set to rise by 15 million tonnes annually as three new rail projects linked to high-capacity mines near completion, The Economic Times reported, citing company executives.
* Tata Steel Ltd. is targeting achieving about a 100% ramp up of Bhushan Steel Ltd's operational capacity in the next couple of years, Press Trust of India reported. Bhushan Steel is currently operating at around 3 million to 3.5 million tonnes, while Tata believes that the plant could be operational at a level of 4 million to 4.5 million tonnes "quite easily."
* Westmoreland Coal Co. secured a new financing commitment in the form of a US$110 million delayed draw term loan from an ad hoc group of its existing secured creditors holding roughly 79% of its term loan and senior secured notes. The loan could be converted into a post-petition financing package if Westmoreland were to pursue an in-court restructuring. It warned investors in April that it may seek Chapter 11 bankruptcy protection or be subject to an involuntary petition for bankruptcy.
* Australia's federal environment department will evaluate Clive Palmer's proposal for the development of the Alpha North coal project in Queensland by his company Waratah Coal Pty. Ltd., including its impact on the Great Barrier Reef, The Guardian reported. With a footprint of 144,000 hectares, it will be the biggest open cut coal mine in the southern hemisphere.
* Finnish steelmaker Outokumpu Oyj expects the European Commission to implement safeguard measures to protect the steel sector from the upcoming implementation of U.S. tariffs on global imports of steel and aluminum, Reuters wrote, citing CEO Roeland Baan. According to the CEO, the tariffs could divert imports to the EU, though Outokumpu is set to benefit through its operations in the U.S. and an exemption for Mexico.
* The Queensland Resources Council estimated that the state's coal royalties will hit a record A$3.7 billion in 2018, A$536 million more than the government's previous royalty forecast, Mining Weekly wrote.
SPECIALTY
* Juniors remain hopeful of Tanzania's "openness" even as uncertainty over the country's new mining laws and the likelihood of high-grade, low-cost projects being delayed has put at risk CRU Group's forecast of natural graphite market balance by 2023. Australia-listed graphite hopefuls were optimistic that the naming of a mining commission to deal with a huge backlog of license applications reflected that Tanzania listened to their concerns.
* Tesla representatives are set to meet with West Australian Premier Mark McGowan and other government ministers this week to discuss lithium battery technology. According to The Sydney Morning Herald, Tesla requested the meetings as West Australia has the resources to supply all 35 raw materials needed to produce renewable energy storage batteries.
* An independent expert estimated that Mineral Deposits Ltd.'s value is at least 40% more than Eramet's recent bid, sending the takeover target's shares to four-year highs May 22, The Australian Financial Review reported. Accounting firm Grant Samuel valued Mineral Deposits at between A$408 million and A$503 million, well over the A$287.5 million valuation implied by Eramet's offer.
* Anglo American subsidiary De Beers SA generated sales revenue of US$550 million in the fourth sales cycle this year, an increase from the US$522 million in sales generated in the fourth sales cycle of 2017.
* Gem Diamonds Ltd. recovered a 115-carat, top white color, type IIa diamond from the Letseng mine in Lesotho. The company noted that it is the ninth diamond of over 100 carats recovered this year, already exceeding the total number of diamonds over 100 carats recovered in 2017.
* Altura Mining Ltd. completed the first stage of commissioning at its wholly owned flagship Altura lithium project in Western Australia. The company said it is on track for first lithium concentrate production in the second quarter and first shipment in July.
INDUSTRY NEWS
* The head of the federal agency charged with protecting U.S. miners told the industry that technology is the key to reducing mining fatalities to zero from 2017's total of 28. The agency is looking to deploy technologies including proximity detection for surface mines, seat belt detection devices and safety systems for conveyor belts.
* S&P Global Market Intelligence's Pipeline Activity Index was up slightly in April to 77, from 76 in March, as increases in drilling activity and significant financings were offset by decreases in initial resources and project milestones. By target, the gold PAI was down to 93 from 116, while the base metals PAI rose to 62 from 46.
* The commodities market remains bullish, with the majority of the price consensus forecasts, as collated May 15, remaining above the actual 2017 averages. Recent price predictions follow the trend of the previous month's forecast. A few precious metals saw a slight decline in the latest price forecasts compared with those in April, with silver dropping 1.2% to US$17.20/oz, platinum down 1.1% to under US$987/oz and palladium falling 2.3% to US$965/oz. Base metals saw a general increase in their May consensus forecast for 2018.
* Islamic State fighters in Afghanistan are profiting from the illegal mining of talc, much of which ends up in the U.S. and Europe, Reuters wrote, citing a report from advocacy group Global Witness. In the first quarter, about 500,000 tonnes of talc was exported from Afghanistan, and nearly all of it went to Pakistan. Pakistan exports almost a third of U.S. talc imports.
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