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Cyclone disrupts Rio Tinto bauxite shipments; Nippon Steel assets may be seized

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


Cyclone disrupts Rio Tinto bauxite shipments; Nippon Steel assets may be seized

TOP NEWS

Cyclone Penny disrupts Rio Tinto's bauxite shipments at Weipa

Tropical Cyclone Penny hit the far north coast of Queensland, triggering warnings of flash flooding and damaging winds, The Australian Financial Review reported. The cyclone was expected to disrupt shipping operations at the northern Australian port of Weipa, Reuters reported, citing the weather bureau. Rio Tinto ships bauxite from its Weipa mine in Queensland through the Port of Weipa, which remained shut for a third day due to the cyclone. The miner said that it was monitoring the cyclone and making appropriate preparations.

Forced labor plaintiffs in South Korea ask court to seize Nippon Steel assets

Nippon Steel & Sumitomo Metal Corp.'s assets in South Korea are under threat of seizure after South Korean plaintiffs filed a court application, Reuters reported, citing local newspaper Chosun Ilbo. The Japanese steelmaker holds a 30% stake in the POSCO-Nippon Steel RHF Joint Venture with South Korea's POSCO. The move comes after an October 2018 ruling by the Supreme Court in the country, which ordered the Japanese steel producer to pay four South Koreans 100 million South Korean won each to compensate for wartime forced labor.

Barrick, Randgold merger takes effect

The all-share merger between Barrick Gold Corp. and Randgold Resources Ltd. has officially taken effect to form a gold miner with a market capitalization of US$18.3 billion.

DIVERSIFIED

* The founder of private security company Blackwater, Erik Prince, is launching a fund focused on battery metals, the Financial Times reported. The fund looks to raise up to US$500 million, with investments targeted for deposits of metals such as cobalt, copper and lithium, largely in Africa and Asia.

BASE METALS

* Amid government mediation, Greek state-controlled electricity provider Public Power Corp. S.A., or PPC, will supply Europe's largest nickel producer Larco SA until Jan. 11, extending the previous Jan. 1 deadline to cut off power supplies, Reuters reported. Majority-owned by the Greek state and partially by PPC, Larco owes €280 million in unpaid electricity bills to the utility. PPC extended the deadline as a sign of goodwill as more talks are scheduled.

* Shares in Highlands Pacific Ltd. soared just over 39% after Cobalt 27 Capital Corp. inked a definitive deal to acquire all of the issued ordinary shares of Highlands that it does not already own for an all-cash offer price of 10.5 Australian cents per share, in a deal valued at around US$70 million. The deal will boost Cobalt 27's attributable exposure to the Ramu project's nickel production from 27.5% to 100% and cobalt production from 55% to 100%, at nearly half the cost of the US$113 million nickel-cobalt stream acquired in May 2018. Highlands Pacific CEO Craig Lennon told S&P Global Market Intelligence that while his company considered a revised stream agreement, the lack of streaming players in nickel and cobalt and the changed market conditions meant a takeover was a "good outcome."

* Taruga Minerals Ltd. said the licensing process for the Kamilombe and Mwilu cobalt projects in the Democratic Republic of the Congo was delayed by a week due to the presidential elections in the country. The licenses are expected to be issued in January.

* AusQuest Ltd.'s shares tanked 21.05% after deciding it will not progress with the Western Australia-based Blue Billy zinc and Jimberlana nickel projects into 2019 under the strategic alliance agreement with South32 Ltd. The drill testing of targets at both prospects did not yield sufficient results to justify ongoing exploration.

* Chile's copper production rose 7% year over year to 540,720 tonnes in November, its highest level in 13 years, Reuters reported, citing Chilean national statistics agency INE.

PRECIOUS METALS

* Nevsun Resources Ltd. announced board and management changes in accordance with Zijin Mining Group Co. Ltd.'s acquisition of 89.37% of its issued and outstanding shares. Xian Jian Guo was appointed as CEO and a director, replacing Peter Kukielski, while Xuelin Cai was named as CFO, replacing Ryan MacWilliam.

* Separately, Zijin Mining plans to issue up to 3.4 billion A shares in a public offering to raise around 8 billion Chinese yuan. The proceeds will be used to complete the company's acquisition of Nevsun Resources.

* Sino Prosper (Group) Holdings Ltd. terminated a nonbinding letter of intent with a potential investor for the disposal of its indirect stake in Aohanqi Xinrui En Industry Co. Ltd. Sino Prosper, which holds a 70% stake in the Dongduimiangou gold mine in China through Aohanqi Xinrui, did not provide any reasons for the deal termination.

* ECR Minerals PLC submitted nine exploration license applications in the Yilgarn region of Western Australia, covering 523 square kilometers and collectively dubbed as the Windidda gold project.

BULK COMMODITIES

* Rio Tinto plans to further delay the payment of outstanding bonuses to former CEO Sam Walsh amid continued the probe into the Guinea payment scandal, Bloomberg News reported. The miner in 2017 postponed short- and long-term incentives owed to Walsh for at least 2 years, and is now planning to extend that period. Rio Tinto has been facing legal challenges and regulatory investigations in connection with US$10.5 million in payments made to a consultant providing "advisory services" on the Simandou iron ore project in Guinea.

* The London Metal Exchange will lift its suspension on United Co. Rusal PLC-produced aluminum if the U.S. government removes its sanctions on the Russian company, Reuters reported, citing the exchange. The LME said the sanctions on Rusal are expected to be lifted on or around Jan. 18.

* Operations at the Mitsubishi Corp. and BHP Group Ltd.-owned Saraji coal mine in Queensland, Australia, were suspended after a person died in a machinery accident on Dec. 31, 2018, Daily Mercury reported. An investigation into the incident is ongoing, according to a spokesperson for the Department of Natural Resources, Mines and Energy.

* Brazil's Administrative Council for Economic Defense approved Vale SA's joint venture with South Korean steelmakers POSCO and Dongkuk Steel Mill Co. Ltd. to build an integrated steel mill in Ceara state, in northern Brazil, Valor Econômico reported.

* Tata Steel Europe Ltd. CEO Hans Fischer is optimistic of the long-term viability of producing strip steel at the Port Talbot steelworks in south Wales, but warned that a turnaround was not yet complete, the Financial Times reported.

* U.S. coal producers' credit quality has generally stabilized over the past two years as companies focus on shareholder returns and increased capital spending after many producers cleansed the debt from their balance sheets through bankruptcy restructurings. Among some of the top-ranked U.S. coal miners, according to an S&P Global Market Intelligence analysis using a tool called the credit health panel, are companies that either recently went through a bankruptcy reorganization such as Peabody Energy Corp. or were spun out of bankruptcy reorganizations of their predecessors, as is the case with Warrior Met Coal Inc. and Contura Energy Inc.

* The surge in U.S. coal exports helped offset the lag in domestic coal demand through much of 2018, but as the year ends, some western coal producers are no closer to taking advantage of the seaborne market than they were a year ago. Two proposed coal export terminals along the West Coast have not made much headway in the last year, as the proponents continue battling localities and environmental organizations in the courtroom.

* Sundance Resources Ltd. agreed to extend the end date for AustSino Resources Group Ltd. to acquire a 50.8% stake in Sundance in a A$58.3 million deal to March 31.

* Gulf Manganese Corp. Ltd. reached an agreement with cornerstone investor PT Jayatama Tekno Sejahtera and subsidiary PT Jayatama Global Investindo to restructure its existing A$6 million convertible note with Gulf Manganese into 25.1% of the explorer's issued share capital and an approximately A$5 million loan, which will be repayable from the profits from commercial production of the Kupang smelting hub.

* Giyani Metals Corp. completed the environmental management plan for its K.Hill manganese prospect in Botswana and submitted it to the Department of Environmental Affairs. A review of the K.Hill plan will complete in about two months.

* India's Bank of Baroda is seeking to sell 15.51 billion Indian rupees worth of nonperforming loans that were made to Bhushan Power and Steel Ltd. The bank is seeking bids from asset reconstruction companies, banks, nonbanking financial companies and financial institutions for the nonperforming loans by Jan. 15.

SPECIALTY

* Largo Resources Ltd. agreed to repurchase and retire US$47.8 million of its 9.25% senior secured notes due in 2021 in consideration for US$51.2 million in cash. The outstanding principal amount will be US$45 million, representing a 51% decrease to its current outstanding notes.

INDUSTRY NEWS

* Right-wing nationalist Jair Bolsonaro was sworn in as Brazil’s president on Jan. 1, Reuters reported. Bolsonaro's vow to follow the U.S.'s footsteps and pull Brazil out of the Paris Agreement on climate change has sparked concerns among environmentalists, as well as his plans to build hydroelectric dams in the Amazon and open up the reservations of indigenous peoples to mining.

* Internet and SMS services across the Democratic Republic of Congo remain suspended for the second day as the administration looks to avert chaos before the presidential election results, Reuters reported. The election could lead to the exit of long-serving leader, Joseph Kabila, in the first transfer of power through voting since independence in 1960. The publication of the complete election results is expected on Jan. 6.

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