Spot gold set a new record of $2,222.39 during the early hours of trading, before retreating to $2,206.10 by 9:05 a.m. EDT for a 1.0% gain. US gold futures soared 2.4% to $2,208.20.

[Click here for an interactive chart of gold prices]

Gold’s latest rally, which started mid-February, is underpinned by longstanding tailwinds including heightened geopolitical risks and increased central bank buying. This month alone, the safe-haven metal hit new highs on five occasions.

Its rapid ascent, according to Bloomberg columnists, has surprised many seasoned market observers, as there hasn’t been a clear catalyst. What has been partially driving bullion are expectations for looser monetary policy in the US, and that has now been reaffirmed by the Fed.

On Wednesday, Fed chair Jerome Powell continued to highlight officials would like to see more evidence that prices are coming down, but “it’s still likely in most people’s view that we will achieve that confidence and there will be rate cuts,” he said.

“What we saw last night was the green light really for gold traders to come back in,” said Chris Weston, head of research for Pepperstone Group.

“The Fed have said that right now they’re tolerant of the inflation that we’ve seen, they’re tolerant that the labor market strength is not going to be the impediment,” Weston told Bloomberg.

Speculation around the timing of the Fed’s long-anticipated pivot may have provided the trigger for recent gains, with data showing that traders boosted their net long positions on gold in the week through March 5 by the most since 2019.

The metal stands to benefit even more when US interest rates actually do come down, as bullion-backed exchange traded funds look likely to increase their holdings, according to UBS Group.

On the geopolitical front, there are a number of risks boosting gold’s allure as a haven asset: Russia appears to be gaining the upper hand in its war in Ukraine, the Israel-Hamas conflict continues unabated and has led to a re-routing of global shipping, while the US presidential election at later this year could prove massively consequential for markets.

Chinese buying has also underpinned prices. As well as the central bank, people have been stocking up on coins, gold bars and jewelry to safeguard their wealth from a years long property downturn and losses in the country’s stock market.

(With files from Bloomberg)

The report, commissioned by the Kootenay-based environmental organization, underscores a substantial disparity between the C$1.9 billion required by the province for Teck to reserve for emergency shutdowns and mine reclamation, and the projected expenses of the company’s initiatives to combat selenium pollution resulting from coal mining in BC’s Elk Valley.

Selenium, a naturally occurring element toxic to fish in high concentrations, has been seeping for decades from waste rock piles surrounding Teck’s coal mines.

Teck, in response to Reuters, said Wildsight’s estimates were inaccurate and inconsistent with calculations made under BC government policy.

“Their provisions with respect to capital spend do not align with BC government policy and their use of simplified assumptions overstate ongoing water treatment operating costs alone by 50-60%,” Dale Steeves, Teck’s director of stakeholder relations said.

The report, conducted by consulting firm Burgess Environmental, calculated the C$6.5 billion by assessing the costs of implementing Teck’s current plan, which involves constructing water treatment plants until 2027 and operating them for 60 years.

Since 2014, Teck has allocated over C$1.4 billion towards mitigating selenium concentrations, with plans to invest an additional $150 million to $250 million by the end of 2024.

The miner sold its coal assets to Glencore and two Asian steelmakers for $8.9 billion last year as it shifts its focus to critical metals like copper. The deal is pending approval from the Canadian government.

Glencore declined to comment on the report.

“We hope that both Glencore and the Canadian government will give careful consideration to this report as they assess the sale, ensuring accountability for the selenium crisis is upheld throughout the ownership transfer,” said Simon Wiebe, mining policy and impacts researcher at Wildsight.

(With files from Reuters)

Greenpeace activists in late 2023 disrupted a research expedition when they boarded sea explorer The Metals Company’s vessel in the remote Pacific. Five Greenpeace activists boarded the MV Coco on November 25 and disabled its A-frame hoist/crane.

The vessel, engaged by TMC’s subsidiary, Nauru Ocean Resources (NORI) for environmental assessments, faced a week of disruptions from Nov. 23 by Greenpeace activities, which a Dutch court deemed unsafe and unlawful.

In December, a Dutch court ordered the activists to vacate the research vessel after the deep-sea mining company sued Greenpeace in the Netherlands, where the organization is headquartered.

The Metals Company says the research trip interrupted by Greenpeace was for scientific research aimed at improving knowledge of the effects of nodule collection.

It says the work had been requested by the ISA as part of an impact assessment, and that Greenpeace deliberately hampered those efforts when its activists boarded the company’s research vessel.

Greenpeace says the action was justified because The Metals Company has stated its plans to proceed with mining before regulations have been agreed upon.

Minerals and metals such as cobalt, nickel, copper, and manganese can be found in potato-sized nodules on the ocean floor. Reserves are estimated to be worth anywhere from $8 trillion to more than $16 trillion, and they are in areas where companies, including The Metals Company, plan to target.

Many NGOs and environmental groups, however, argue that mining the seafloor could have a devastating impact on the planet.

A recent report by the non-profit Planet Tracker says mining the seafloor for key minerals and metals could negatively impact the mining industry, resulting in $500 billion of lost value and causing damages to the world’s biodiversity estimated to be up to 25 times greater than land-based mining.

Read More: US bill supporting seafloor mining lifts The Metals Company

Tumbling metal prices account for more than half all of impairment charges, declared when fixed assets fall below market values, the study of 105 TSX-listed mining companies found. They incurred $68 billion in charges from 2002 to 2015. Using unfamiliar technology and locating in developing countries also contributed, data show.

Metal price drops accounted for 143 of 268 cases and $25.2 billion in impairment charges, according to the study published last month in Resources Policy, an international journal on mineral rules and economics with editors in the United States, Australia and China. The research appears appropriate at a time when nickel and lithium prices have crashed from 2022 highs as gold has set new records.

“While impairments have been shown to be a common occurrence across mining companies, they also are a major contributor to the industry’s low average returns,” said the authors led by Andrew Gillis of Edmonton-based Aurora Hydrogen.

“The degree of impairments is higher at mines in developing countries and at mines where the geographic location and mining processes are new to the company operating the mine,” said the authors, which included John Steen and W. Scott Dunbar of the Department of Mining Engineering at the University of British Columbia in Vancouver, and Andrew von Nordenflycht of the Beedie School of Business at Simon Fraser University in Burnaby, BC.

Get lucky

Forecasting by its nature is uncertain. But some firms get lucky and only face a few impairments, while others get unlucky and suffer many or large impairments, the authors said. Their targeted years of research coincided with the rise of the commodity super-cycle 20 years ago followed by the financial crisis and declining metals prices from 2012.

The group recommended mining companies should improve their forecasting of mineral reserves, capital costs, production costs and commodity prices, which all impact future cash flows. It noted how C-suites might blame falling metal prices for impairments because other slips in capital or operating costs could be directly attributed to their own forecasting. The flip side is that rising metal prices can hide some other forecasting errors. And forecasting in foreign lands is simply more difficult, the authors said.

“Higher impairments in developing countries stem from lower information availability about market conditions and/or more volatile local market prices and conditions,” the authors said. “The sources of uncertainty are just greater, making forecasts harder and forecast errors easier, even for experienced forecasters.”

In the end, the researchers recommended more studies on forecasting. They could try to pinpoint the root causes of forecasting errors through personal interviews with project participants, detailed comparisons of feasibility studies and actual outcomes as well as assessing their methods of error prevention.

“Asset impairments have been identified as a primary determinant of long-term shareholder returns across Canadian mining firms,” the authors said. “Our findings suggest looking more closely into price forecasting procedures at mining companies to see if certain techniques or circumstances lead to more or fewer price-driven impairments.”

The first, and main focus of Northern Dynasty’s legal actions, was filed with Alaska’s federal district court, seeking to vacate the US Environmental Protection Agency’s (EPA) veto of a development at Pebble.

The proposed mine would have become the largest copper, gold and molybdenum extraction site in North America. However, for the better part of two decades, the project was met with strong resistance due to its potential environmental impact. The Bristol Bay area, where the mine would be located, is home to the world’s largest sockeye salmon fisheries.

In January 2023, the EPA made its decision to block Northern Dynasty’s US-based subsidiary from storing mine waste in the Bristol Bay watershed, essentially killing the project.

In its complaint, the company alleges that the EPA veto was issued in violation of various federal statutes regarding Alaska’s statehood rights and a land exchange approved by Congress.

Specifically, it claims that the veto decision was based on an “overly broad legal interpretation” of EPA’s jurisdiction, which has since been overruled by the Supreme Court, its geographic scope exceeds that allowed by the statute, and it was based on information previously developed by EPA in what it calls “an illegal pre-emptive veto process” that was designed to reach a predetermined result.

The company also says the factual basis stated to support the veto is directly contradicted by the July 2020 environmental impact statement published by the United States Army Corps of Engineers (USACE), which is an important part of the administrative record.

“The EPA has not demonstrated that either the development of the Pebble deposit will have unacceptable adverse effects under Section 404(c), or that there are any impacts to Bristol Bay fisheries that would justify the extreme measures in the final determination (veto),” Northern Dynasty said in a news release.

“Whatever authority the EPA may have under section 404(c), the general provision in the Clean Water Act cannot authorize the EPA to take action to block the specific economic activity that was Congress’s express purpose for granting these lands to the State of Alaska under the Cook Inlet Land Exchange,” Northern Dynasty CEO Ron Thiessen said.

The other legal action was filed with the US Court of Federal Claims in Washington, DC, claiming that the actions by the EPA represent an unconstitutional “taking” of Northern Dynasty’s property. To that extent, the company is asking the court to defer considering this action until the above-mentioned EPA veto case is resolved.

“Our permitting strategy is focused entirely on winning the EPA veto case and permitting the Pebble project. We have filed a takings case against the federal government to preserve our ability to seek compensation for a violation of our rights in line with the protections under the Fifth Amendment,” the company said.

Still, according to Thiessen, the company’s priority is to advance the district federal court complaint, because “overturning the illegal veto removes a major impediment from the path of getting the permit to build the proposed mine.”

Over an estimated 20-year mine life, Pebble is expected to churn out 6.4 billion lb. of copper; 7.4 million oz. of gold and 300 million lb. of molybdenum, plus 37 million oz. of silver and 200,000 kg of rhenium.

Northern Dynasty’s shares rose by 1.1% to C$0.44 by 10:45 a.m. ET, trading between a 52-week range of C$0.28-C$0.58. The company has a market capitalization of C$239.6 million ($177.3m).

Decarbonization emerges as one of the industry’s foremost challenges, as the survey conducted last month with 75 mining company decision-makers revealed.

Survey respondents anticipate heightened scrutiny from investors this year regarding their decarbonization strategies.

Findings indicate that fewer than a quarter have made formal commitments to achieve all scope-related carbon emission reductions by 2050 or earlier. About a quarter have not yet made formal commitments but are actively developing emission reduction plans. Moreover, 10% lack both ESG and carbon reduction strategies, while 7% either do not intend to implement such strategies or face challenges in reducing emissions at present, according to KMPG data.

Scope 1 encompasses greenhouse gas (GHG) emissions directly owned or controlled by organizations, while scope 2 includes indirect emissions resulting from the production of purchased energy. Reducing scope 3 emissions, which traverse the company’s value chain, poses a considerable challenge.

“Many in the industry face substantial hurdles to reducing scope 3 emissions, particularly due to Canada’s limited smelting or refining capacity for critical minerals,” wrote Heather Cheeseman, national mining leader for KPMG in Canada.

Intermediary minerals produced in Canada are shipped to smelters worldwide.

“Until Canada develops smelting or refining capabilities for mined minerals, miners will encounter limitations,” Cheeseman said.

According to the survey, nine out of 10 Canadian mining leaders are optimistic about the country’s potential to emerge as a global leader in critical minerals.

However, an overwhelming majority (98%) said there is an urgent need for increased investment, government commitment, and favorable tax policies to bolster the sector’s growth.

Read More: Canada plans scrutiny of Chinese offtake deals, minister says at PDAC

Spot gold climbed as much as 1.3% to $2,187.30 per ounce by 12:15 p.m. ET, rising for an eighth straight day. US gold futures gained 1.5%, trading at $2,196.80 per ounce in New York.

[Click here for an interactive chart of gold prices]

Bullion’s momentum grew on Friday after data showed US employment surpassed expectations in February while wage gains moderated, adding to signs of healthy economic growth and softer inflation.

Meanwhile, the central bank’s long-anticipated pivot to looser monetary policy is widely expected to boost gold’s appeal compared with yield-bearing assets like bonds. Persistent geopolitical tensions in the Middle East and Ukraine have also bolstered the precious metal’s role as a safe haven asset.

The frenzied nature of this month’s gains has led some analysts to conclude that major new buyers are stepping into the market, such as investment funds making bold bets on the global macroeconomic outlook.

The broad question is what might fuel the next leg of the rally.

“We expect gold prices to trade higher this year as safe-haven demand continues to be supportive amid geopolitical uncertainty with the ongoing wars and the upcoming US election,” ING Groep commodities strategist Ewa Manthey said in a note to Bloomberg.

“Gold tends to become more attractive in times of instability when investors pile into safe-haven assets as a hedge against the economic climate, geopolitical tensions or inflation,” Manthey added.

“We still believe the same underlying premise remains, which is the combination of the expectation that the Fed is still going to cut rates later this year and dollar weakness,” David Meger, director of metals trading at High Ridge Futures, told Reuters.

(With files from Bloomberg and Reuters)

The province’s current Mineral Tenure Act (MTA) permits anyone with a free miner certificate to acquire mineral claims online through an automated system in First Nations’ territories, without their consultation or consent.

In October 2021, the Gitxaała Nation filed a legal challenge in Supreme Court seeking to overturn the province’s granting of multiple mineral claims from 2018 to 2020 on Banks Island, in their territory on BC’s northern coast.

The Gitxaała claimed they never consented to issuance of claims, were not consulted, and were never notified of the pending decisions. The lawsuit asked the province to invalidate existing claims and suspend staking in Gitxaala territory.

The court began hearing arguments in April 2023 and in September ruled that the province must consult with Indigenous groups before granting mineral claims, upholding the Crown’s duty.

The judge found that the province owes a constitutional duty to consult with First Nations prior to registering mineral tenures under the MTA and that there are negative impacts to Gitxaała Nation’s and Ehattesaht First Nation’s territories and rights from registration of mineral claims and gave BC 18 months to reform the MTA to incorporate the duty to consult.

Gitxaała and Ehattesaht had remaining concerns that the impacts on their rights found by the court would continue while MTA reform was underway and until a new regime was in place. The Nations filed appeals including requested orders to quash specific mineral claims and prevent new claim registrations until a consultation regime is in place. They have agreed not to proceed with those aspects of their appeals in light of protective measures enacted by the Province.

“This resolution demonstrates that meeting in person, government to government, allows us to develop solutions together, and I want to recognize and express my gratitude to Ehattesaht and Gitxaała for coming to the table with us to move forward the important work of reforming the Mineral Tenure Act,” Josie Osborne, Minister of Energy, Mines and Low Carbon Innovation, said in Thursday’s news release.

“These interim measures mean that instead of ongoing litigation that could have far more significant and longer-term impacts to the sector, we are instead able to focus on our work together to reform the act,” she said.

The two Nations and the Ministry have also agreed to support amendments to the interim orders if Ehattesaht or Gitxaała reach agreement with companies seeking to explore or mine in their territories.

“Gitxaała is ready to work with the Province and other First Nations to ensure BC meets its commitment to establish a mineral tenure law that aligns with the United Nations Declaration on the Rights of Indigenous Peoples and respects Gitxaała laws,” Gitxaała-elected Chief Councillor Linda Innes said.

“The orders enacted by the Province are an important step to begin this work together.”

The quest for substitutes for fossil fuels has increased the need for metals used in the batteries that power electric vehicles (EVs) and in green-energy applications. Minerals and metals such as cobalt, nickel, copper and manganese can be found in potato-sized nodules on the ocean floor. Reserves are estimated to be worth anywhere from $8 trillion to more than $16 trillion and they are in areas where companies, including deep-sea mining pioneer The Metals Company (NASDAQ: TMC), plan to target. 

According to the report, entitled “How to lose half a trillion” by non-profit Planet Tracker, extracting metals from the seafloor could cost the mining industry $30 to $132 billion in value destruction.

François Mosnier, head of Oceans and report lead author at Planet Tracker, told MINING.COM this estimate is the result of adding the combined value loss the activity would cause for both ocean floor and terrestrial miners.

“For the deep sea mining sector, focusing only on polymetallic nodules in international waters, the cost would reach $35 billion-$49 billion of value destruction,” Mosnier said. 

“This amount was computed based on the estimated invested capital in the sector in 2043 ($115 billion), the industry’s estimated return on invested capital (-2%) and the industry’s weighted average cost of capital (WACC) and long-term growth (3%).”

Put simply, the deep-sea mining industry would not beat the cost of the capital it requires to exist, he said.

“Before factoring in any environmental impacts, the economics already appear uncompelling,” Mosnier said. “High operating expenditures mean that returns will be negative for investors in deep sea mining, which will also destroy value in other sectors, such as terrestrial mining and fishing.”

On top of that, major global banks such Credit Suisse, Lloyds, NatWest, and Standard Chartered, Dutch bank ABN Amro, and Spanish group Banco Bilbao Vizcaya Argentaria, have all introduced policies that rule out funding deep-sea exploration and extraction.

The report highlights the positive financial impact of respecting nature as sectors dependent on preserving intact ecosystems have outperformed those exploiting resources threefold over the last three decades.

It also urges investors to focus on nature preservation rather than resource extraction a repeats its call for a moratorium on deep-sea mining.

Ready to start

While the International Seabed Authority (ISA) has yet to set rules for the extraction of minerals and metals from the ocean floor, there already is a country that doesn’t need to wait: Norway.

The nation secured in December parliamentary majority to go ahead with plans to open the Arctic Ocean to seabed mineral exploration, despite environmental groups and the fishing industry’s warnings that the move would risk the biodiversity of vulnerable ecosystems.

The European country, where vast oil and gas reserves have made it one of the world’s wealthiest nations, plans to search for minerals on its extended continental shelf.

China is another nation investing heavily in deep-sea mining technology, including remotely operated vehicles, vessels, and sonar scanning systems.

Chinese companies, according to the Pentagon, hold more International Seabed Authority contracts (five out of 31 for exploration and development) than any other country.

Opponents to seafloor mining have long-warned that consequences of both exploration and extraction of minerals from the seabed are unknown and that more research should be conducted before going ahead.

Those that support the expansion of activity believe deep-sea mining is central to meeting the increasing demand of mineral growth. The demand for copper and rare earth metals is predicted to grow by 40%, according to the International Energy Agency. 

The agency also expects that the demand share for nickel, cobalt and lithium from clean energy technologies alone will grow by 60%, 70% and 90%, respectively. 

According to a study published in the Journal of Cleaner Production, producing battery metals from nodules could reduce emissions of CO² by 70-75%,  cut land use by 94% and eliminate 100% of solid waste.

Global investment in clean energy is rising, and so is demand for minerals essential to battery production. Major mining companies are using M&A to acquire assets in the green metals space to stay competitive and accelerate beyond the traditional process and timeline.

Last year showed a 40% increase in deals across lithium, cobalt, and nickel – four times higher than 2019, according to international law firm Sidley, and one of the few bright spots in M&A in 2023.

Sidley M&A partner Joseph Michaels advises metals and mining clients, providing guidance on corporate governance, SEC disclosure, fiduciary duties for M&A, private equity, venture capital, and corporate finance transactions.

Michaels advised Allkem Limited in its merger of equals with Livent Corporation, a transaction valued at $10.6 billion, and which created the world’s third largest lithium miner and co-authored “Key Considerations for Cross-Border M&A in the Mining and Metals Industry,” Chambers and Partners, in 2023.

Chicago-based Michaels shares his industry insights exclusively with MINING.COM.

MDC: With M&A activity in the sector increasing significantly over the past year as mining companies are consolidating operations to create cost efficiencies and synergies, what opportunities for deals does this create amidst increased competition?

Michaels: Recent years have been eventful in the mining and metals industry. We continue to see mining and metals companies explore and pursue M&A at the highest levels in years.  Some dealmakers in other industries have adopted a wait and see approach until various conditions improve, but that has not been the case in the mining and metals industry.

The rise of M&A has been notwithstanding volatile markets, and in many cases actually because of the dynamics underlying them.  Dealmaking has been fueled by the green energy transition, rising costs to develop new projects, new government incentives, potential for risk-sharing, and continuing desires to build scale, enhance value chains and diversify. 

We expect M&A activity in the industry to remain strong.  We remain optimistic that the robust levels of M&A activity in the industry are sustainable and compelling opportunities will continue to arise.

MDC: Transactions in metals and mining sectors are highly influenced by commodity prices. What should companies anticipate when changes in the prices of metals can significantly impact the valuation and prospects of a potential deal?

Michaels: Changes in the prices of metals can significantly impact the valuation and prospects of a potential deal.  At the end of the day, deal discipline is required of buyers, sellers and partners. 

On one hand, current market realities need to be recognized and accounted for since they will impact valuation exercises, financing, integration efforts, and market messaging.  At the same time, it is important to give due consideration to longer-term views as well, particularly in light of energy transition dynamics and reserve levels. Quality assets are always going to sell, even in difficult markets, so long as agreement on valuation can be reached. Sometimes, that requires creative pricing structures.

MDC: Majors are looking to acquire mid-tiers and beleaguered juniors in a cash starved environment to enter the green energy metals space.  What growth opportunities do you see in this scenario?

Michaels: In this market, there are opportunities for many types and sizes of companies to benefit.  We are seeing a wide range of transaction types being proposed and discussed, including buyouts, investment opportunities, and partnership arrangements. 

Dealmaking is an important tool in any management team’s strategic option toolkit.  Depending on the nature of the parties and transaction, deal drivers may include opportunities presented by the green energy transition, rising costs to develop and operate new projects, new government incentives, the potential for risk-sharing, and the continuing desires to build scale, enhance value chains and diversify.

MDC: Given the nature of the sector, what due diligence is vital in transactions to understand the value of assets, liabilities, potential risks?

Michaels: A transaction in the mining and metals industry is a unique endeavor.  A thoughtful, well-advised and agile approach is critical to achieve the potential rewards of dealmaking, especially in a fluid market.  Mining and metals companies have particular due diligence needs, the breadth and depth of which is not necessarily seen in all other industries. 

In terms of valuation drivers, in addition to cash flow, resource and reserve, and operations due diligence, buyers and investors should have a sense of relevant synergies, government incentives, trade policies, tax considerations, and cash management practices.  When assessing risk, it is important to be mindful of a target company’s government relations, compliance programs, labor practices, land and water usage, pollution sources, supply chain, ESG profile, and local community relations.  An effective and calibrated due diligence process is often part of what makes a deal successful.

MDC: What regulatory hurdles should be anticipated? 

Michaels: There is little doubt that the regulatory environment is challenging in certain areas of the world right now.  Regulators have become quite active, in some cases discouraging or delaying certain dealmaking.  In a few instances, the heightened regulatory focus has been specifically targeted at the mining and metals industry, given its economic and geopolitical significance. There are obviously ways to get deals done when they are compelling.

While deals implicate various regulatory areas, obtaining antitrust and foreign screening clearance typically need to be top of mind for dealmakers.  These are often the biggest hurdles to executing a transaction, given that antitrust regulators and foreign investment screening regimes in many jurisdictions have increasingly scrutinized deals. 

This is emphasized in the mining and metals industry, given that the nature of the industry and the location of critical minerals has led to significant M&A activity occurring on a cross-border basis.  There is a premium on being well-prepared and developing an effective strategy to communicate why a deal is compelling and address any concerns.

MDC: What are the key requirements for legal expertise in the space for successful execution of an M&A deal?

Michaels: All M&A requires coordination among a broad range of constituencies and advisors.  In the mining and metals industry, interdependencies among stakeholders are magnified by the globe-spanning business and the exposure to government scrutiny.  It is critical to be well-prepared and well-advised from the outset. 

An early understanding of deal structure and approval requirements and insight into local conventions permits dealmakers to effectively manage the process, avoid pitfalls and seize opportunities. We continue to see in-house legal teams in the industry consist of elite level practitioners.  Experience in the industry is key for both in-house and outside counsel supporting M&A efforts, given the complexity and specialized considerations. 

While industry factors are important in any M&A transaction, they are emphasized in the mining and metals industry where due consideration needs to be given to unique government approval, public disclosure, community relations, ESG, and labor relations, among other matters.

The DOC calculated countervailing duties from each country in the following ranges: imports from China at rates of 15.41% to 169.66%, imports from Indonesia at rates of 6.69% to 43.56%, imports from Mexico at rates of 1.68% to 77.80%, and imports from Turkey at rates of 1.45% to 147.53%.

The US Aluminum Extruders Coalition and the United Steel, Paper and Forestry, Rubber, Manufacturing, Energy, Allied Industrial and Service Workers International Union were petitioners in the case.

Following the publication of a preliminary determination in the Federal Register in approximately one week, the DOC will instruct US Customs and Border Protection to begin suspending liquidation and collecting preliminary duties (in the form of cash deposits) on entries of aluminum extrusions from China, Indonesia, Mexico and Turkey.

In October 2023, the DOC initiated antidumping duty (AD) and countervailing duty (CVD) investigations of aluminum extrusions from the four countries, as well as AD investigations from Colombia, the Dominican Republic, Ecuador, India, Italy, the Republic of Korea, Malaysia, Taiwan, Thailand, United Arab Emirates and Vietnam.

The preliminary determinations are just the beginning of a broader investigation into the subsidy practices of these countries, it said.

The DOC said it is yet to investigate all potential subsidies thoroughly, including new allegations of subsidy and creditworthiness. The final determination, expected later this year, may adjust these rates, potentially increasing the financial burden on importers of aluminum extrusions from these countries.

“We are encouraged that the Commerce Department has taken preliminary action to remedy the unfair and illegal subsidization of aluminum extrusions from China, Indonesia, Mexico and Turkey,” said Robert E. DeFrancesco, trade counsel to the petitioners and a partner in the International Trade Practice at Wiley Rein LLP.

“The widespread subsidization confirms that foreign governments are willing to provide meaningful and unfair support to boost aluminum extrusion exports, and it is, therefore, critical that Commerce continue to rigorously counter these harms to the US aluminum extrusion industry,” he added.

Spot gold rose another 1.0% to a fresh high of $2,149.25 an ounce, surpassing Tuesday’s intraday high of $2,141.60 an ounce. US gold futures went as high as $2,157.50 an ounce in New York.

[Click here for an interactive chart of gold prices]

The uptick follows Fed chair Jerome Powell’s prepared testimony to a House panel, in which he told lawmakers that it will likely be appropriate to begin lower borrowing costs “at some point this year.”

“Powell’s neutral to slightly dovish tilt has given gold and especially silver added momentum into the US session,” said Ole Hansen, a commodity strategist at Saxo Bank A/S.

Gold’s has climbed 5% over the last five sessions, a swift ascent that has taken some in the market by surprise, particularly since there hasn’t been any major change in expectations for when the US central bank will lower borrowing costs.

Swaps markets show a 65% chance of a cut in June, compared with 58% at the end of February, according to Bloomberg data.

“Powell did confirm that cuts are happening later this year,” said Aakash Doshi, an analyst at Citigroup. “There’s less hawkish risk.”

Meanwhile, the bank has raised its gold forecast for the next three months to $2,200 an ounce, and upgraded the projection to $2,300 for the next six to twelve months. It cited recession risks in the second quarter which can favor gold, “especially given the recent equity and credit market rallies.”

Beyond rates, other factors have contributed to gold’s strength. Macro funds, which haven’t been active in the market until recently, were a new force of buying.

Bullion’s role as a haven asset is also being aided by elevated Middle East tensions and disruptions to global shipping, China’s persistent economic woes and the US presidential election at the end of the year.

The risk of a US stock market correction — flagged by weak manufacturing data on Friday — may have persuaded some investors to move out of equities and into gold, Saxo’s Hansen said.

(With files from Bloomberg)

On Tuesday, spot gold rose as much as 1.3% to hit a new record of $2,141.60 per ounce, before paring its gains to 0.6%. US gold futures had a similar run, peaking at $2,150.50 per ounce then falling to $2,134.80.

[Click here for an interactive chart of gold prices]

Gold has added about $100 in the past five sessions, fueled by a combination of expectations for monetary easing, geopolitical tensions and the risk of a pullback in equity markets.

According to Bloomberg, the scale of the recent move has surprised some market watchers, who said it may be partially driven by momentum,

The rising risk of a stock market correction — flagged by weak US manufacturing data on Friday — may have persuaded some investors to move out of equities and into gold, said Ole Hansen, commodity strategist at Saxo Bank A/S.

While the timing of the Fed’s pivot remains uncertain, signs that it’s getting closer have supported gold since mid-February. Swaps markets show an almost 60% chance of a rate cut in June, a higher probability than early last month.

The recently rally has also highlighted an increasing disconnect between spot prices and outflows from bullion-backed exchange traded funds. Holdings in SPDR Gold Shares, the world’s largest such ETF, fell by 0.3% on Monday, taking the total to the lowest level since July 2019, according to data compiled by Bloomberg.

Those outflows have partly been offset by persistent central bank demand for the precious metal, which helped keep prices elevated even as real interest rates spiked last year. Bullion was also supported over the Lunar New Year, as Chinese consumers sought a hedge against turmoil the country’s stock market and property sector.

In the first months of this year, gold’s role as a haven asset is being underlined by elevated geopolitical risks, with attacks on shipping in the Red Sea showing escalating Middle East tensions. China’s economic woes and the US presidential election at the end of the year make it a potentially volatile mix.

“Speculation over a Fed rates pivot and continued geopolitical tensions keep gold shining,” said Ewa Manthey, commodities strategist at ING Groep. “We expect gold prices to trade higher this year as safe-haven demand continues to be supportive amid geopolitical uncertainty with ongoing wars and the upcoming US election.”

Still, bullion has further to go to reach its inflation-adjusted peaks set more than a decade ago. It has risen more than 600% since the turn of the millennium, though adjusted for inflation it remains below the high of $850 touched in January 1980, which would be equivalent to more than $3,000 in today’s dollars.

(With files from Bloomberg)

While experts continue to debate the potential implications of adopting AI at both a personal and business level, the mining industry has not stayed still waiting for the conclusions.

The sector has already embarked on a quest to transform operations from the traditional heavy-equipment and men-on-site operations, to mines that integrate connectivity, automation and AI.

On a visit to MWC Barcelona, an annual trade show dedicated to the mobile communications industry, MINING.COM was able to see how the world of telecommunications and mining are increasingly intertwined. 

Invited by telecommunications giant Huawei, MINING.com — the first mining media to ever attend MWC — saw sensors, smart cameras and 5G relay boxes ready to be deployed to mines around the world.

There was buzz around the new generation of mobile internet — “5.5G,” or “5G Advanced”. The new standard is expected to make the networks themselves more “intelligent” through the application of AI and machine learning, while also boosting performance and reducing overall power consumption.

When Huawei vice president of global marketing and solutions for mining and oil and gas, Jack Chan, was asked why the company began developing solutions for the industry, the answer was as quick as clear: safety.

“In China we have almost 3 million coal miners working in 4,400 coal mines, which are underground and often register deadly accidents,” Chan said. “When taking workers out of the tunnels and into a room full of screens displaying numbers, graphs and images, not only a company is saving lives, but is also more appealing to the new generations.”

Chan added that Information and Communications Technology (ICT) infrastructure is crucial to support intelligent mining. Without fast and reliable communication networks, robust computing power, rapid data storage, and vigilant network security, essential tasks, including real-time monitoring and instant data exchange would be impossible, he explained.

“Young people don’t want to spend hours underground, hot and breathing recycled air, but they are happy to sit in a room with air conditioner and monitor activities in real time,” he said.

Data on extraction, personnel location and danger detection is centralized on a system designed to eliminate problems caused by human error and miscommunication. Instead of people, robots patrol and inspect the dark and narrow underground corridors.

“AI service architects and AI algorithm engineers will become key roles in the era of intelligence,” Chan predicts.

Remote and digital solutions are common in other coal operations, such as those in Canada and Australia, but China has lagged and now the government has set the goal of achieving basic digitalization of all mines by 2035.

Huawei is a step ahead with is AI-based Pangu Mining, a suit of applications launched in July last year, which were developed based on the pilot verification of large AI models at industrial levels. 

The name Pangu comes from ancient Chinese mythology and folklore. The legendary figure is associated with the creation of the world.

There are altogether 21 application scenarios related to nine operating activities, namely, coal mining, tunneling, primary transportation, auxiliary transportation, lifting, safety monitoring, rock burst prevention, coal preparation, and coking.

Rock bursts are a particularly challenging issue in mining. The primary means of preventing rock bursts is drilling destress holes, whose quality matters. Shandong Energy has managed to address this challenge in its Lilou and Xinjulong coal mines by deploying Huawei’s AI model. 

Thanks to its visual recognition capabilities, Pangu can intelligently analyze the quality of stress relief drilling, and assist rock burst prevention personnel in quality verification, reducing their review workload by 82%. It used to take three days to complete such checks; now the time has been shortened to 10 minutes, with a 100% acceptance rate.

Chile’s Codelco, the world’s largest copper miner, has also adopted Huawei solutions with the goal of turning around under-performing mines and projects that have crimped both production and profit.

The state-owned company is looking to streamline structures and prioritize productive areas at a time when copper output is at the lowest level in a quarter of a century.

It’s all about connectivity

Being a telecommunications company at heart, Huawei has been able to deploy connectivity solutions, from networks to an operative system able to run a wide range of equipment and smart machines. Named Harmony, the OS enables different devices to speak the same language, facilitating better connection and collaboration, and bringing a simple, continuous, secure and reliable interaction experience in all scenarios.

“In the era of intelligence, digital intelligence transformation can be accelerated only by combining AI technology with industry cognition and valuable data accumulated by enterprises,” Jason Liu, President, Learning & Certification Services of Huawei told the audience during MWC Barcelona 2024.

Liu said AI solutions should be used as a tool, not as a replacement of human intelligence.

Pangu, for instance, can detect a problem, inform the location and characteristic of such problem and provide solutions suggestions. The application is predictive, in the sense it can fill in the blanks at a very deep level.

AI is enabling mining companies to become insight‐driven enterprises that utilize data to make faster, accurate decisions, improve health and safety, boost efficiency through error elimination and reduce operations footprint.

Digital thinking is not just a tool for mining companies, but a core value that shapes their business. One of Huawei’s key messages is that to succeed in the industry, miners need to foster an organizational culture that embraces innovation and adapts to changing technologies.

The latest restriction adds to a ban on Russian diamonds announced in December and will provide Canadians “additional assurance that the diamonds that they purchase are not supporting Russia’s illegal war,” the Canadian foreign ministry said in a statement.

“Canada has been at the forefront of imposing economic barriers on the Putin Regime since he launched his brutal full-scale illegal invasion of Ukraine, which caused devastating losses to Ukrainians. Along with our allies and partners, we have imposed severe sanctions on the Russian regime, and we will continue to do so to hold Putin and his enablers to account,” said Canada’s Minister of Foreign Affairs, Mélanie Joly.

Russia is the world’s largest rough diamond producer, with its production valued at more than approximately $4.7 billion in 2022. It is also a significant global exporter of diamonds and diamond products, with the value of its total exports exceeding $5.2 billion in the same year.

Together, G7 countries represent 70% of the world diamond market.

Following Russia’s full-scale invasion of Ukraine in 2022, Canada sanctioned Russia’s state-owned Alrosa.

Canada also revoked Russia’s most-favoured nation status, which effectively imposed a 35% tariff on all Russian imports to Canada.

This led to a drastic decrease in the value of all Russian imports, including products that will be subject to this ban, from $327,224 in 2022 to $13,440 for the first eight months of 2023.

Read More: Diamond producers warn of pitfalls in G7’s Russia gem ban

Russia is the biggest global supplier of uncut diamonds by volume. The international community has imposed new sanctions targeting Russian diamond transactions as part of a wider strategy aimed at reducing Moscow’s income streams, which support its military actions in Ukraine.

In December, the G7 nations of Canada, France, Germany, Italy, Japan, the U.K. and the U.S. declared an outright ban on Russian diamonds, effective from Jan. 1. That is to be followed by gradual implementation of restrictions on indirectly imported Russian diamonds starting from March 1. By September, a new system for verifying the origins of these gems is expected to be in place, although details regarding the verification process and its location remain uncertain.

“The G7 must understand that the direction they have chosen will cause great damage to the world diamond industry. We hope that the concerns we are voicing will convince the G7 governments that an alternative solution must be found,” WFDB president Yoram Dvash said in a Feb. 28 statement to The Northern Miner.

Criticism of the sanctions comes against a backdrop of lower demand for diamonds from India and China, and falling prices for rough stones, estimated by the Zimnisky Global Rough Diamond Price Index to be down about 25% from their early 2022 high.

‘Irreparable’ industry harm

The industry leaders are worried that enforcing these sanctions could lead to logistical, operational, and financial challenges. Among the sanctions’ new effects, one rule is that non-Russian diamonds must now be certified in Antwerp, Belgium before being sent to other markets.

They’re concerned about possible supply bottlenecks and unbalanced advantages to one player to the detriment of others.

“While strongly agreeing that the time has come for the industry to be able to trace the origin of their diamonds, we should be working together to meet these objectives but feel that the process that has been suggested will cause irreparable harm to the non-Russian industry,” presidents and members of the 27 diamond bourses within the WFDB said in the open letter.

Dvash says the WFDB is actively seeking industry consensus to address the challenges at hand. “Sanctions should work in the right direction, punishing the intended party and not the entire industry,” he said, adding that the sanctions could inadvertently make Russian diamonds more desirable due to increased costs and reduced supply of non-Russian alternatives.

The effect on the cost of rough and polished diamonds from non-Russian sources being forced into one node wasn’t considered in the calculations, the WFDB letter argued, voicing strong opposition to designating Antwerp as the single verification point.

“As diamond experts, we know that this would add no value to the objectives of the G7 member states and would result in a major restriction for all non-Russian diamonds, with terrible impacts on the industry,” the letter reads.

What’s more, the higher anticipated costs of shipping the diamonds to Belgium, which will ostensibly include extra financing terms for the diamond traders as well as insurance and freight charges will add significantly to the price of the stones.

Sovereign interference

The diamond bourses say the process detailed by the EU, as it stands, undermines sovereign African governments’ ability to send their gemstones directly to their chosen market. It also undermines legitimate local industry beneficiation and could encourage smuggling, which the WFDB says would be counterproductive.

Belgium favours conducting these verifications locally. Its support aligns with the Belgian government’s and the Antwerp World Diamond Centre’s aim to establish a hardy, traceable system for verifying the origins of diamonds to prevent Russian gems from entering the market under pretenses.

Botswana, Africa’s diamond hub, issued a statement on Feb. 9, generally supporting the initiatives to ensure that the diamond trade is responsible and does not fund conflict. Despite potentially facing added costs in a new verification system, the Botswana government sees an opportunity for enhanced value for its natural diamonds.

While the country has not directly banned Russian stones, it favours continued dialogue and partnerships with the G7 and other stakeholders to build a market that benefits development and avoids funding illegal activities. Botswana aims to protect and promote its diamonds-for-development narrative while ensuring its diamond industry remains a positive example of ethical sourcing and economic benefits.

Reuters reported on Feb. 8 from the Cape Town Mining Indaba that De Beers, a unit of Anglo American (LSE: AAL), and Botswana’s state-owned Okavango Diamond Company asked the G7 to consider unintended consequences as the bloc prepares to impose the second phase of the ban on Russian diamonds, concerned that African prices would be hugely inflated.

“Effectively (African producers) would be forced to send all their diamonds in one direction rather than choosing … (and) ethical African diamonds would become much more expensive,” De Beers CEO Al Cook told Reuters on the sidelines of the conference.

De Beers had previously urged the G7 to engage Botswana, Namibia, South Africa, Angola and India to develop the framework with input from across the industry.

Diamond market outlook

The diamond leaders call for more explicit guidance and a more global, collaborative approach to ensure transparency and ethical sourcing without disproportionately impacting the broader industry. They stress the need for solutions that do not centralize trade to a single point (such as Antwerp) and request the adoption of technology that could support the ethical tracking of diamonds across all regions, including support for artisanal and small-scale miners.

The signatories also want the G7 and EU to give assurance that whichever provenance-proving technology they settle on for diamond verification should be shared universally with non-Russian diamond producers to enable their continued inclusion in the market.

Artisanal and small-scale miners must also have free access to the technology and should be able to send their rough stones to any cutting centre.

While the Russian diamond sanctions intensify, De Beers said in a Feb. 22 market update that industry conditions are expected to remain “challenging” in the short term but that the long-term outlook is favourable.

De Beers says the heightened emphasis on the origins of diamonds, particularly with the upcoming G7 restrictions, may boost demand for De Beers’ diamonds, especially those tracked via their blockchain platform, Tracr.

However, the global supply of rough diamonds may decrease due to aging mines and few discoveries.

Further, De Beers says the market for lab-grown diamonds is experiencing a significant price drop, impacting manufacturers and possibly reducing retail prices, which could enhance the perceived value of natural diamonds compared to lab-grown alternatives.

The redomiciliation, SRG said, will provide the company with expanded “strategic optionality” as the UAE has a double taxation treaty and a bilateral investment treaty with the Republic of Guinea, where SRG’s main asset, the Lola graphite project, is located.

The move will also avoid a national security review into its financing deal with China’s Carbon ONE New Energy Group (C-ONE), the Globe and Mail reported.

The Canadian government has scrutinized Chinese investment in the country’s junior mining sector, and in 2022, it asked three Chinese companies to sell their stakes in Toronto-listed lithium explorers after a national security review, a move that raised questions about the future of other Chinese investments in the Canadian mining sector.

Canada’s Energy and Natural Resources Minister Jonathan Wilkinson told Reuters last year that the Canadian government would not force Chinese state investors to divest their stakes in large mining companies, including Teck Resources, Ivanhoe Mines and First Quantum Minerals, to avoid policy uncertainty.

C-ONE, a private anode materials company based in China, announced in July 2023 it planned to invest C$16.9 million ($12.7 million) into SRG in exchange for 19.4% of SRG’s share capital, matching La Mancha’s stake in the company upon exercise of its anti-dilution right. The deal established C-ONE as one of SRG’s largest shareholders ─ La Mancha Resource Fund is the largest.

The funds will be used to advance SRG’s large-scale mine development project at the Lola graphite project, as well as the development of an anode material plant, the location of which is yet to be determined.

The company said at the time the transaction is subject to registration with Chinese regulatory agencies as well as the Canadian government, pursuant to a voluntary notification filing pursuant to the Investment Canada Act.

The company said it has met with other strategic partners who have expressed interest in becoming a Tier 1 supplier to the Western battery end markets and has been advancing discussions with multiple parties who have expressed interest in providing financing to advance SRG towards first production.

Located approximately 1,000 km southeast of Conakry, the capital of Guinea, the Lola deposit boasts a large mineral reserve of 42 million tonnes at a grade of 4.17% graphitic carbon (Cg). Over an estimated mine life of 29 years, it is expected to produce 54,600 tonnes of natural flake graphite annually.

SRG is currently updating the project’s feasibility study to confirm the capital and operating costs for a target initial production of 100,000 tonnes per annum, double from the initial 50,000 tpa envisioned in the 2019 feasibility study.

SRG said it aims to develop a fully integrated source of battery anode material to supply the European lithium-ion and fuel cell markets.

Kazakhstan is expected to deliver the highest uranium production growth in 2024, GlobalData says, driven by the planned higher output from the country’s largest uranium producer Kazatomprom. The continuous ramp-up of Canada’s McArthur River uranium mine will also contribute to the global increase, it adds.

Kazakhstan accounted for 37.3% (20.1kt) of total global uranium supply in 2023. Despite a 5.1% dip in output in 2023 due to planned lower production from Kazatomprom, its output is expected to recover in 2024, with forecast production of 23.2kt. This will be supported by the company’s plan to produce between 21.2-21.6kt on a 100% basis, while production is expected to increase to between 25.9-26.7kt with no restrictions in 2025.

Meanwhile, global uranium production in 2024 will be further bolstered by continuous ramp-up of Canada’s McArthur River, which is aiming to produce 6.9kt of uranium (8.2kt of U3O8) for 2024. In October 2023, the Canadian Nuclear Safety Commission renewed the licences for McArthur River for a further 20 years, allowing the mine to continue operations until October 2043.

Global uranium production is expected to grow with a compound annual growth rate of 4.1% from 2024 to 2030, as output reaches 76.8kt in 2030.

Read More: Uranium price jumps to 15-year high as top miner flags shortfall

Canada’s eight largest pension funds hold some C$2.1 trillion in assets but only a quarter was even invested in the country last year, according to research by Montreal-based fund manager Letko Brosseau. The so-called Maple Eight devoted just 3% to domestic equities, the lowest of a group of six countries including the United States, the United Kingdom and Japan, data show.

“They’ve taken the vast majority of this money – 75% of it – and invested it outside Canada to create jobs outside of Canada to the detriment of Canadians,” Lassonde, a founder of Franco-Nevada (TSX: FNV; NYSE: FNV) and a former president of Newmont (NYSE: NEM; TSX: NGT), said in a phone interview this month. “Essentially, the mining industry has been ignored.”

Pension funds are not investing in large Canadian mining companies, which may in turn invest in juniors, in part because few domestic options remain. Switzerland-based Glencore’s (LSE: GLEN) acquisition of most of Teck Resources’ (TSX: TECK.A/TECK.B; NYSE: TECK) coking coal assets in November for about C$9 billion is the latest large deal scooping up Canadian assets.

Xstrata, now part of Glencore, bought nickel giant Falconbridge for C$39 billion in 2006, the same year Brazil’s Vale (NYSE: VALE) purchased the country’s other main nickel producer, Inco, for C$19 billion. Australia’s Rio Tinto (NYSE: RIO; LSE: RIO; ASX: RIO) followed a year later in acquiring aluminum producer Alcan for C$38 billion. Lassonde and Giustra say pension fund investing might have helped them stay.

“We’re talking about very large companies, mining giants that we lost to foreigners,” said Giustra, who founded Lions Gate Entertainment (Fahrenheit 9/11, The Hunger Games) and helped start Wheaton Precious Metals (TSX: WPM, NYSE: WPM; LSE: WPM) and Endeavour Mining (TSX: EDV; LSE: EDV).

“These aren’t risky companies. This was the backbone of our mining industry in this country.”

Rules eroded

Indeed, Canadian pensions were required to invest 90% of their assets domestically in 1990, but federal governments gradually reduced the limit before removing it entirely in 2005. Total domestic exposure as a percentage of assets ranges from 55% held by the Healthcare of Ontario Pension Plan to 13% run by Public Sector Pension Investments (PSP). The average of other pension funds around the world is 52%, according to Letko Brosseau.   

Pensions are the largest repository of wealth in many countries and globally hold nearly $50 trillion. Reaching net zero emissions by 2050 will require annual clean energy investment worldwide to more than triple by 2030 to around $4 trillion, according to the International Energy Agency. Just mining enough battery metals over the next three years will cost as much as $450 billion, the agency said. In 2022, Ottawa budgeted nearly C$4 billion in spending on critical minerals by 2030 but it’s not clear how pension funds are being engaged to support projects.  

“The government of Canada continues to engage with critical minerals stakeholders, including pension plans and other institutional, arms-length investors,” Michael MacDonald, a spokesman for the federal Natural Resources Ministry, said in an emailed reply to questions.

It was MacDonald’s only reference to pension funds in what was otherwise a page-long list of government programs stemming from its critical minerals strategy. He suggested the Canada Development Investment Corp. (CDEV), a federal Crown corporation that advises the government on financial matters, might explain how mining companies could seek funding from the C$15 billion Canada Growth Fund. CDEV didn’t reply in time for this story.

Pensions mum

Pension funds themselves were even more reticent to discuss the issue. Only the Caisse de dépôt et placement du Québec (CDPQ), which Lassonde praised for its resource funding, replied to emails seeking comment. The Canada Pension Plan (CPP), the Ontario Teachers’ Pension Plan (OTPP), the Ontario Municipal Employees Retirement System (OMERS), and the PSP didn’t reply or declined to speak.

“CDPQ is active in the mining sector in Quebec and Canada and has an investment team dedicated to the sector,” Kate Monfette, the pension’s media director, said by email. “Among other things, with a fund like Sodémex which supports exploration projects, we remain on the lookout for developments and opportunities in the mining and materials ecosystem. Our priority is to focus on the most promising companies in order to help them develop while generating a return for our depositors.”

British Columbia Investment Management (BCI) said it invests 29.4% in Canada and referred other inquiries to its annual report. OMERS said it wouldn’t comment on the topic.

Canada should consider Australia’s example, Lassonde and Giustra said. Its pensions, which are called superannuation funds, hold A$3.5 trillion (C$3.1 trillion), the third-largest amount behind the US and the UK. Domestic equities make up 21.9% of their assets. The large stakes prevent foreign takeovers, the entrepreneurs argued.

“That’s what keeps their domestic mining industry alive,” Giustra said. “We’re a comparable country in terms of how prolific our mining opportunities are, same as Australia, and we don’t have that same opportunity.”

Letko Brosseau says Canada’s top eight pension funds have invested more in China than in Canadian companies: C$88 billion versus C$81 billion. CPP has 2% in domestic shares, BCI has 0.5% and OTPP has 0.1%, the firm says.  

Economics urged

Giustra said mining CEOs must lobby pension funds with moral suasion for why they should invest in Canada and make an economic argument. With China’s current woes from property market turmoil and a long-term population decline in motion, its boom years are over and it’s time for Canadian pension funds to repatriate funds to the world’s second-largest country by landmass that has top-tier mining regulations.

Lassonde went further and said federal and provincial governments must legislate pension funds to increase their investments in Canadian resource companies. He’s backed Letko Brosseau’s presentations to finance ministers in BC and Ontario as well as to officials in Ottawa.

“We’re trying to get to the decision makers and trying to make them understand what Canada is losing by doing nothing,” he said. “They created these funds, it’s in their power to legislate how these funds are managed.”

Giustra, who heads private equity firm Fiore Group invested in Aris Gold (TSX: ARIS) with mines in Colombia, and Ontario-focused explorer West Red Lake Gold Mines (TSXV: WRLG), said Canadian asset managers slashed their non-pension dedicated mining funds to C$2.8 billion in 2022 from C$16 billion in 2010.

“There’s just no source of capital, the industry starves,” he said. “You don’t have the seniors funding them, the pension funds aren’t there and we’ve lost the traditional mining funds here as well.”

Lassonde, who led a group of investors assembling an offer in May for Teck’s coking coal assets that was later beat by Glencore, said he approached BCI and Ontario pensions for input but got no response.

“If you want steel and you want the lowest carbon-emitting steel in the world, it’s that coal, OK, and there was nobody to talk to,” he said. “In Australia, we could have done this deal in about five days.”

So what happened to cause prices to tumble? 

The pandemic years brought generational volatility to diamond supply. In 2020, production dipped to the lowest levels since the 1990s. A recovery in 2021 through 2023 ensued. However, the new “normal” for output is still some 15-30 million carats below pre-2020 levels.   

Global diamond production should hit 118 million carats this year, which compares to an estimated 110 million carats in 2020, but well short of the 136 million carats in 2019 and the 147 million carats in 2018. 

Demand for diamonds has been equally volatile over the last four years, impacting both rough and polished prices.  

Last year, the industry experienced a “bullwhip effect” of sorts as producers and traders rushed to replenish depleted stock following furious demand in 2021 and early 2022. The flood of new goods resulted in the buyers of rough diamonds (the midstream comprised of rough buyers, polishers and jewelry manufacturers) stringently curtailing new purchases as 2023 wound down. 

As a result, in last year’s fourth quarter, De Beers’ sales fell some 70% year-over-year in value terms – equating to an estimated $1 billion build in stock. Russia’s Alrosa suspended all sales outright in October and November, resulting in the accumulation of stock worth hundreds of millions of dollars.  

While the majors’ healthier balance sheets give them more flexibility in such situations, the impact on smaller, independent producers has been more immediate and consequential. 

In late October, Canada’s Stornoway Diamonds filed for bankruptcy for a second time. The first time was in 2019 and the Renard mine in Quebec was most recently run by creditors of the previously listed company, including Osisko Gold Royalties (TSX: OR) and Investissement Québec. Stornoway put Renard on indefinite care and maintenance following what it described as a “significant and sudden drop” in global diamond prices. The mine, which began production in late 2016, has produced upwards of 2 million carats annually. 

In early November, South Africa’s Petra Diamonds (LSE: PDL) deferred as much as $60 million in capital projects related to the extension of its two primary assets, the Cullinan and Finsch mines. The impact on supply will likely be felt in the back half of 2024 and into 2025.

Lab-made diamonds have also had an impact on the natural diamond sector. However, while they currently make up about 20% of global diamond jewelry demand, they have yet to gain wide acceptance outside of the United States. It should also be recognized that they have added incremental demand – i.e. some buyers of lab-grown diamonds would never have considered a natural diamond. 

2024 wildcard

Going into 2024, it is likely that miners will release into the market at least some excess stock they hold on any sign of a demand recovery. However, by the second half of the year, the market’s medium and longer-term supply dynamic could become more noticeable. 

An added “wildcard” will be the impact of wider Western sanctions on Russian diamonds, which come into full force this year. While the immediate impact of the embargo may not be as acute as some are projecting, the risk of further supply disruptions remains a possibility, especially in the medium term.  

As of March, all 1-carat-plus polished Russian stones (including those cut and polished outside of Russia) will be targeted by the G-7 countries and the larger European Union. As of September, the threshold will be expanded to include all stones 0.5 carat and larger. That said, the half-carat cutoff still excludes the majority of Russian supply by volume and an estimated 30-40% by value as Russian production is disproportionately skewed towards smaller diamonds.  

On a more micro supply note, commercial production at the newly inaugurated Luele mine (formerly referred to as Luaxe) in Angola will ramp up this year. A nearly completed first-phase processing plant will allow the mine to produce up to 4-5 million carats annually, making it an important source of new supply as aging mines around the world are depleted.  

During a press conference in November, Angolan officials said that Luele production could be “gradually” expanded as additional plant phases are added – which could eventually triple output. Luele’s resource is estimated at over 600 million carats, which could support a 60-plus year mine life. 

A moderate recovery in both rough and polished prices is likely this year. Price gains from seasonal restocking early in the year will probably be modest, as supply that was held back late last year is sold. However, by mid-year the midstream’s efforts to control supply could start to take effect. That could be further compounded by the global supply impact of the sanctions on Russian diamonds. 

Any price rise would still need to be supported by demand – for example, via a “soft landing” in a global macro-economic sense, which financial markets are implying. Demand out of China, the diamond industry’s second largest end-consumer market remains another key variable as the nation grapples with a secular slowdown in its economy and what some consider an emerging property crisis. 

Paul Zimnisky is a chartered financial analyst and independent diamond industry consultant based in New York (www.paulzimnisky.com). He can be reached at paul@paulzimnisky.com and followed on X @paulzimnisky. 

That company was called Allied Mining and Processing and you’ve probably never heard of it. But from small roots this tiny outfit grew into one of Australia’s largest listed companies with a market cap exceeding A$88 billion. 

Twenty years ago, Andrew (Twiggy) Forrest renamed this micro-cap stock to Fortescue Metals Group (ASX: FMG). The rest is history, but it was quite the story behind Twiggy’s road to immense wealth. 

Fortescue was perhaps the single biggest success story from the last mining boom. A stock that grew from a measly A2¢ per share back in 2003 to more than $10 a share just five years later. 

It seems absurd, but that’s around a 50,000% return. 

Junior iron ore miners were the poster child from the early 2000s China-led commodity rush. However, it wasn’t a smooth road to success.  

You see, back in 2003, Forrest was looking to break into the monopolized iron ore market, a sector dominated by mining giants Rio Tinto (NYSE: RIO; LSE: RIO; ASX: RIO) and BHP (NYSE: BHP; LSE: BHP; ASX: BHP). 

At the time, his ambitious venture was mocked by analysts and journalists. 

Accessing cash to build a capital-intensive iron ore operation was near impossible in the early 2000’s. Sure, iron ore mining in Australia is relatively cheap and relatively easy to extract. Simply load rock on a boat and ship it to China’s massive steel refineries.  But few consider the vast infrastructure required to get to that point. Iron ore is a bulky commodity. 

Mine feasibility studies must include costs that extend well beyond the mining operation: railways, ports, loading facilities. It’s this barrier to entry that enabled the majors to retain their grip over iron ore supply in Australia. Yet these challenges didn’t deter Forrest. 

Similar to today’s evolving energy transition story, China was emerging as a powerful source of demand for iron ore. In 2003, the country’s GDP was surging at around 9% per year. But few predicted this growth would continue, and fewer still could have comprehended the incredible trajectory of iron ore prices over the next five years.  

In 2003, the global economy was reeling from a tech bust and terrorist attacks, with iron ore prices sitting below $20 per tonne. 

History repeating?

2023 was a terrible year for most commodities — especially those tied to the renewable energy trend. That’s despite investment in renewable energies hitting an all-time high in 2023 at $1.8 trillion. 

According to BloombergNEF that was up 17% from 2022. Yet, junior mining stocks have endured back-to-back years of underperformance. 

But while the mainstream narrative turns bearish on critical metal stocks, the world’s most liquid insiders continue to build exposure. That includes mining tycoons Andrew Forrest, Gina Rinehart and Robert Friedland. 

These heavyweights are still long on the critical metals mega-theme.  

Have no doubt, the spoils will go to those who are able to stick with these gargantuan commodity trends. Twenty years ago, that was iron ore: a commodity that was slow to respond to China’s rampant growth before a massive takeoff. 

By 2005, iron ore prices had almost tripled reaching $50 per tonne. Three years later and the price was hovering just below $200 per tonne — almost a 10-fold surge in five years. 

Liquidity challenges stalling new mines

Ultimately, higher iron ore prices turned Andrew Forrest’ iron ore ambitions into reality, despite steep development costs. 

Which brings us back to today’s market. In a case of history rhyming, critical metal developers sit at the edge of enormous opportunity. It’s why I like to say critical metals stocks are the iron ore developers from 2003. 

Sitting at the precipice of a major upward leg in the commodity cycle — yet hobbled by enormous cost of capital required to get projects underway. 

Just like it did with iron ore in the early 2000s, expect downbeat sentiment to shift rapidly in line with rising prices. 

This is how commodity cycles work. This is how inconceivable capex finds its way into new projects. But don’t take my word for it — watch the world’s biggest insiders and follow their lead. 

James Cooper runs the commodities investment service Diggers and Drillers. You can follow him on X @JCooperGeo.

“Clearly now, we are reaching a very high level of interest so I would say that yes it seems to be inevitable,” said Michael Lodge, the secretary-general of the ISA, in an interview with CNBC.

“One of the main drivers of industrial interest is the potential to produce larger quantities of minerals at equivalent or lower cost to what can be produced on land,” Lodge added.

His comments come as the ISA prepares to recommence talks on deep-sea mining in Kingston, Jamaica, next month.

Recently, Norway’s parliament greenlit seabed mining exploration in the country’s territorial waters. The determination on January 9 made Norway the first country to formally authorize seabed mining activities in its waters.

Minerals and metals such as cobalt, nickel, copper and manganese can be found in potato-sized nodules on the ocean floor. Reserves are estimated to be worth anywhere from $8 trillion to more than $16 trillion.

According to a study published in the Journal of Cleaner Production, producing battery metals from nodules could reduce emissions of CO² by 70-75%,  cut land use by 94% and eliminate 100% of solid waste.

Meanwhile, scientists have warned that the full environmental impacts of deep-sea mining are hard to predict, and environmental campaign groups say the practice can lead to ecosystem destruction and species extinction.

“It hasn’t been done yet, so it is very hard to say conclusively that it would be as destructive as some people claim that it would be,” said Lodge.

Robert Friedland, the billionaire founder of Ivanhoe Mines, agrees, forecasting the base metal will hit $9,500 a tonne this year, up from about $8,400 currently. His bullish prediction is based on lower interest rates and a ramp-up in demand from China.

Peru, which accounts for 10% of world copper supply, has been racked by protests since its former president, Pedro Castillo, was ousted a year ago.

A strike is currently underway at the Las Bambas mine owned by China’s MMG Ltd.

At the same time, Panama’s top court ruled that First Quantum Minerals’ contract to operate the Cobre Panama mine is unconstitutional. The government then ordered First Quantum to end operations at its $10-billion copper mine, which has only been operating for four years.

Between those two mines, the copper industry has lost nearly 600,000 tonnes of production.

Friedland told Bloomberg TV that, contrary to consensus thinking, China has not slowed its copper consumption. In fact, the country set a record in 2023, importing 27.54 million tons.

“Everybody knows about the weak real estate market in China… but military demand, national security demand, [and] demand for militarization is very high,” the mining tycoon said.

Reuters reported recently that the country’s property sector is showing signs of recovery, including new home prices rising and government land sales turning positive after nearly two years. Nikkei Asia said China’s move to pump about a trillion yuan ($140 billion) will act as a further catalyst, boosting copper demand.

“So, really, this is like a power keg ready to explode as soon as the Fed cuts in the second half,” Friedland said separately.

Goldman Sachs reported the shutdown of Cobre Panama last year, combined with lower grades in Chile, has left the copper market prematurely tight. The influential bank is calling for $9,000 a tonne this year. Truth is, today’s copper price is too low for new mines to be economical. Incentive pricing in the copper industry is considered to be US$11,000 a tonne — much higher than the current ~$8,200/t. Friedland says even $11,000 is too low to incentivize new mines. For that, the market needs $15,000, he said.

From a 2021 report by Goldman Sachs titled ‘Copper is the new oil’ encapsulates the situation:

Copper on a necessary path to $15,000. To capture the precise dynamics of this process we construct long-run models of scrap supply and substitution, as well as extend our balance out to 2030. The immediate conclusion is that current copper prices ($9,000/t) are too low to prevent a near-term risk of inventory depletion, while our current long-term copper ($8,200/t) is not high enough to incentivise enough greenfield projects to solve the long-term gap. If copper remains at $9,000/t through the next two years, then we estimate the resultant deficits would generate a depletion of market inventories by early 2023. Based on our scrap and demand modelling, we believe that the most probable path for copper price from here – that both avoids depletion risk and as well as a sharp surplus swing – is to trend into the mid-teens by mid-decade.

One way to make an educated guess as to the direction of the copper price is to look at the copper-gold ratio. To find the ratio, simply divide the price of a pound of copper by the price of an ounce of gold. While some prefer to calculate it on an ounce-vs.-ounce basis, the absolute value of the ratio is not the primary focus. What truly matters is the direction of the ratio and its divergence or convergence with Treasury yields. The current ratio is 0.0019, which is meaningless unless we know the direction it’s taking.

We can see that in the chart below, re-printed by Schiff Gold. The copper-gold ratio is a key indicator for the 10-year Treasury yield. The two variables are graphed on the chart. The ratio gives insight into the market’s risk appetite versus the perceived safety of Treasuries.

Historically, when the copper-gold ratio and the 10-year yield diverge, the 10-year tends to follow the ratio. For example in the third quarter of 2022, yields moved higher while the copper-gold ratio moved lower.

This trend continued in 2023, with the current divergence implying a potentially significant downward move in Treasury yields within the next six to 12 months, according to Schiff Gold.

“The Li Keqiang index dominates China’s official GDP in its importance to commodity and currency investors. The official growth rate of China is of intense interest to economists and investors worldwide. The gross domestic product of the world’s second largest economy is also subject to a certain degree of skepticism. Observers ponder over its unusual stability and unfailing ability to fall within the consensus estimate. Among the skeptics is none other than Li Keqiang, the Premier of the People’s Republic of China. His remarks to a U.S. diplomat a decade ago describing the official GDP as “man-made,” inspired The Economist to create an index of his three preferred measures of economic growth in China that now bears his name: the Li Keqiang index.

The index, which comprises the annual growth rate of outstanding bank loans (40%), electricity consumption (40%) and rail freight (20%), shows a significantly more volatile trajectory for China’s growth than the official GDP.

The most important point, however, is that copper prices demonstrate a much higher correlation to the Li Keqiang index (as much as +0.55, four quarters, or one year, later) than it does with China’s official GDP. The latter achieves a peak correlation of only around 0.25, with a lag of 1-3 quarters.”

Let’s take a look at Li Keqiang’s three preferred preferred measures of growth:

New bank loans in China jumped by more than expected to an all-time high in January, as the central bank moved to shore up the sputtering economy, reinforcing expectations for more stimulus in the coming months. January lending more than quadrupled from December’s 1.17 trillion and exceeded the previous record of 4.9 trillion yuan in the same month a year earlier.

China had a total electricity consumption of around 9’220 terawatt hours in 2023. This was a notable increase compared to the previous year, when consumption amounted to approximately 8,640 terawatt hours. 

In the year 2023, the China-Europe freight train has reached 17,000 trips, transporting 1.9 million TEUs, marking a notable increase of 6% and 18% year-on-year, as per the statistics released by the China State Railway Group.

More precise data from China Railway Container Transport (CRCT) reveals that there were 17,523 trips and 1,901,949 TEUs in 2023. Among these, 9,343 trips were westbound, while 8,180 trips were designated for eastbound transportation.

A couple of factors identified by us at AOTH indicate that 2024 will be much better for copper, with the metal potentially knocking on the door of $4 a pound or higher. Most important is supply failing to keep up with demand. The second factor is a weakening of the US dollar if market expectations of monetary easing come to pass.

If the Fed cuts rates, the dollar will weaken, as it has done in the past, and will do so again.

Benchmark Mineral Intelligence (BMI) forecasts global copper consumption to grow 3.5% to 28 million tonnes in 2024, and for demand to increase from 27 million tonnes in 2023 to 38 million tonnes in 2032, averaging 3.9% yearly growth.

Yet, the US Geological Survey reports supply from copper mines in 2022 amounted to only 22 million tonnes. The 2023 figures aren’t in yet.

Chile is the world’s largest copper producer, outputting 5.2 million tonnes in 2022 according to the USGS. The country also has the biggest copper-mining company, state-owned Codelco.

Bloomberg wrote that Codelco’s production in 2023 was the lowest in 25 years, following a series of setbacks at projects and mines that exacerbated the impact of declining ore quality after decades of underinvestment. 

Production for the last three months of 2023 was 358,000 tonnes, less than the 384,000 tonnes produced in the fourth quarter of 2022 alone. Full-year production was 1.324 million tons.

Chile’s copper output has been dented by a long-running drought in the country’s arid north. Cochilco estimates the use of desalination at mines to increase 156% through 2030, with 90% of the desalinated seawater used for copper processing.

Neighboring Peru, which accounts for 10% of world copper supply, has been racked by protests since its former president was ousted in 2022. In November, a strike at Las Bambas, a copper mine owned by China’s MMG Ltd., threatened ~250,000 tonnes of annual production.

Last year 400,000 tonnes of global copper production was lost when the Panamanian government abruptly ordered First Quantum Minerals to end operations at Cobre Panama. 

Goldman Sachs, via Oilprice.com, has said it predicts a deficit of over half a million tonnes in 2024 due to mining disruptions. “The supply cuts reinforce our view that the copper market is entering a period of much clearer tightening,” analysts at the bank wrote.

Major copper producer Anglo American plans to reduce output in 2024 and 2025 to cut costs.

Some of the world’s largest mining companies, market analysis firms and banks are warning that by 2025, a massive shortfall will emerge for copper, which is now the world’s most critical metal due to its essential role in the green economy.

(On July 31, 2023, the US Department of Energy officially put copper on its critical materials list, marking the first time a US government agency has included copper on such a list, following the examples set by the EU, China, Canada, and other major economies.)

The deficit will be so large, The Financial Post stated, that it could hold back global growth, stoke inflation by raising manufacturing costs, and throw global climate goals off course.

To achieve net-zero emissions targets, annual copper demand is likely to double to 50 million tonnes by 2035, according to a study by S&P Global.

Simply put, electrification doesn’t happen without copper, the heartbeat of the global energy economy.

Along with the usual applications in construction wiring and plumbing, transportation, power transmission and communications, there is now added demand for copper in electric vehicles, EV charging stations, and renewable energy systems.

How much red metal actually becomes available is seriously in doubt, as we have outlined above. And China, THE player in demand, seems like its going to continue it’s record copper demand in 2024.

Legal Notice / Disclaimer

Ahead of the Herd newsletter, aheadoftheherd.com, hereafter known as AOTH.

Please read the entire Disclaimer carefully before you use this website or read the newsletter. If you do not agree to all the AOTH/Richard Mills Disclaimer, do not access/read this website/newsletter/article, or any of its pages. By reading/using this AOTH/Richard Mills website/newsletter/article, and whether you actually read this Disclaimer, you are deemed to have accepted it.

Any AOTH/Richard Mills document is not, and should not be, construed as an offer to sell or the solicitation of an offer to purchase or subscribe for any investment.

AOTH/Richard Mills has based this document on information obtained from sources he believes to be reliable, but which has not been independently verified.

AOTH/Richard Mills makes no guarantee, representation or warranty and accepts no responsibility or liability as to its accuracy or completeness.

Expressions of opinion are those of AOTH/Richard Mills only and are subject to change without notice.

AOTH/Richard Mills assumes no warranty, liability or guarantee for the current relevance, correctness or completeness of any information provided within this Report and will not be held liable for the consequence of reliance upon any opinion or statement contained herein or any omission.

Furthermore, AOTH/Richard Mills assumes no liability for any direct or indirect loss or damage for lost profit, which you may incur as a result of the use and existence of the information provided within this AOTH/Richard Mills Report.

You agree that by reading AOTH/Richard Mills articles, you are acting at your OWN RISK. In no event should AOTH/Richard Mills liable for any direct or indirect trading losses caused by any information contained in AOTH/Richard Mills articles. Information in AOTH/Richard Mills articles is not an offer to sell or a solicitation of an offer to buy any security. AOTH/Richard Mills is not suggesting the transacting of any financial instruments.

Our publications are not a recommendation to buy or sell a security – no information posted on this site is to be considered investment advice or a recommendation to do anything involving finance or money aside from performing your own due diligence and consulting with your personal registered broker/financial advisor.

AOTH/Richard Mills recommends that before investing in any securities, you consult with a professional financial planner or advisor, and that you should conduct a complete and independent investigation before investing in any security after prudent consideration of all pertinent risks.  Ahead of the Herd is not a registered broker, dealer, analyst, or advisor. We hold no investment licenses and may not sell, offer to sell, or offer to buy any security.

Fitch expects to see demand for critical minerals surge, with a number of key markets at risk of going into deficit in the long term.

The growing threat of supply deficits is acting as an incentive for miners to increase the share of critical mineral projects in their asset portfolio, Fitch noted.

Fitch analysts noted a significant uptick in M&A activity within the mining industry in recent years, starting in 2020 and accelerating throughout 2021-2022.

In 2023, deal activity remained robust, approaching the highest level seen in the last decade in terms of total deal value, Fitch said, adding that the number of deals remained relatively unchanged from 2022, indicating that individual deals were of higher value in 2023 than in 2022.

“In the coming years, we expect mining and metals M&A activity to remain strong, in terms of both value and count, as miners continue seeking new growth opportunities within a challenging environment for the development of new projects,” Fitch said.

Much of the strong M&A activity in 2022-2023 was centered around critical minerals as industry players continue shifting their mining portfolios to bridge the impending supply gap, with copper accounting for 11% of the total deal value in 2023, Fitch noted.

The largest transactions included BHP’s acquisition of OZ Minerals in May 2023 for $6.4 billion which boosted its copper and nickel portfolio and Rio Tinto’s takeover of Turquoise Hill Resources in December 2022, which strengthened its access to copper resources through greater control over the Oyu Tolgoi project in Mongolia.

The $10.6 billion merger between Livent and Allkem forms a new integrated  lithium producer, Arcadium Lithium, reinforcing the industry consolidation trend in response to the rising demand for green metals, Fitch noted.

The new company will take ownership of hard rock lithium mines, including Mt Cattlin in Australia and James Bay in Canada, as well as brine mines in Argentina. The Mt Cattlin spodumene mine, previously owned by Allkem, is currently operating at full capacity levels, having reached production of 131,000 tons of spodumene concentrate in FY2023.

Gold sets the bar

Aside from critical minerals, gold remains a top target among industry players, Fitch said.

In 2023, most notable deals in the gold sector were Newmont’s acquisition of Newcrest and Pan American Silver’s acquisition of Yamana Gold. Newmont’s acquisition of Newcrest is the biggest gold deal in the industry’s history, with the world’s biggest gold miner projecting annual output at around 8 million ounces of gold and 150,000-160,000 tons of copper.

Read the full report here.

Under the new Electric Vehicle Availability Standard, auto manufacturers and importers must meet annual ZEV regulated sales targets. The targets begin for the 2026 model year, with a requirement that at least 20% of new light-duty vehicles offered for sale in that year be ZEVs. The requirements increase annually to 60% by 2030 and 100% by 2035. 

This is only one part of the government’s ambitious 2030 Emissions Reduction Plan put in place in 2022. The plan targets emissions reductions of 40% below 2005 levels by 2030 and net-zero emissions by 2050.  

These ambitious goals are similar to other countries. The United States aims to reduce greenhouse gas emissions by 50% below 2005 levels by 2030. The European Union targets reducing emissions by at least 55% below 1990 levels by 2030. Even China has set the goal to increase renewable energy as the primary source of energy consumption from current levels of around 15% to 25% by 2030 — and pledged to achieve carbon neutrality before 2060.  

These goals are admirable, but the reality is that meeting them will require more critical minerals than are currently in the production pipeline.  

To meet international EV adoption targets, the world will need 50 new lithium mines, 60 new nickel mines and 17 new cobalt mines by 2030, according to the International Energy Agency (IEA). Cathode materials, anode materials and battery cells will also require additional raw material, adding up to about 388 new mines, it says.  

This gap in production for energy transition metals provides an opportunity for Canada. As of 2021, there were only 70 metal mines in Canada, this compares to 270 metal mines operating across the US Investments in clean energy need to grow from $1.3 trillion today, to over $4 trillion by 2030 to meet governments’ goals, according to the IEA.

Spurring new development 

To help support their decarbonization plans, governments around the world have introduced more than 100 new initiatives over the last few years, ranging from trade and investment policies to restrictions on imports, exports and international ownership of resources.  

Some initiatives aim to help spur investment into natural resources domestically (and with countries deemed ‘friendly.’ Some policies giving the state more control over and revenue from resources have been quickly rolled out, shifting the playing field for investors. Recent examples include Mexico nationalizing its lithium industry in 2022, and Chile raising copper mining royalties while increasing the role of state-owned miner Codelco. Other countries are also reviewing their mining policies and encouraging investment in the industry through tax and other incentives.  

The changing geopolitical environment has further complicated government goals. The supply chain issues during Covid-19, and the shift towards domestic production and ‘friend-shoring’ have seen governments favour domestic supplies of critical minerals and securing minerals from allied countries. All while many years of under-investment in mining infrastructure and processing facilities in Western nations presents big hurdles to self-sufficiency.

Production woes 

Geopolitics, namely tensions between the US and China and the West and Russia, have introduced new supply risks as global trade splinters. But even friendly nations could present supply risks caused by changing political landscapes, social unrest, or civil wars. For example, unrest in Mexico, Peru and Chile has led to strikes and temporary mine closures. While geopolitical risks are top of mind, the main supply constraint for critical minerals remains the need for increased mine production along with new infrastructure to refine the minerals, a report by the International Renewable Energy Agency (IREA) found last year (Geopolitics of the Energy Transition: Critical Metals).

To compound the problem, the recent decline in battery metal prices is further delaying mining projects due to lack of capital. Lithium prices have plummeted more than 80%, while other battery metal inputs, such as cobalt, nickel, and graphite are down more than 30%. If prices don’t recover, it will deepen shortages of materials in the coming years, putting the brakes on governments’ ambitious agendas to decarbonize their economies. 

Analysis from S&P Global Market Intelligence (June 2023) reports that the global average lead times for mine development from discovery to production is 15.7 years, and in Canada this timeline is about nearly 26 months longer.   

Investor interest in mining is currently very low partly because of the long-time horizon and the uncertainty that exploration stage projects will be economically viable. 

Mine developers in Canada have formidable barriers to overcome. One key problem is that funding for mine innovation per project, at a reasonable dollar amount, with a fair cost of capital, is limited. Lack of infrastructure in remote regions of Canada can also create extra barriers and increase the capital costs for mine developers. The Canadian government addressed the difficulties mining companies face in its 2022 Critical Minerals Strategy pledging that it would partner with the private sector to finance new projects, support building infrastructure needed to develop priority deposits, streamline permitting and regulatory processes and strengthen Indigenous engagement to boost mine supply.

The federal government currently offers incentives to mining companies mostly in the form of tax credits. Some of those include capital cost allowances; exploration expense claims, which are 100% deductible in the year they occur; and the ability to carry forward unused balances or transfer them to investors as flow-through shares. (Flow-through shares allow a mineral exploration company to “flow through” certain expenses to a shareholder; the expenses can then reduce the investor’s taxable income.) Other incentives include the Mineral Exploration Tax Credit and the Critical Mineral Exploration Tax Credit.    

Mining companies can also get federal government support through the Clean Growth Hub, Sustainable Development Technology Canada, and access joint funding and research opportunities through CanmetMining. 

More to be done 

However, to meet energy transition goals, more is needed. Ottawa could improve the chances of developing successful domestic supplies by making all steps of mine study, metallurgy, and materials testing in battery and vehicles eligible for flow-through tax credits until 2030. This should include any end customer testing by global OEMs or their battery manufacturers. Having a more defined and expanded flow-through tax credit system would increase markets’ willingness to fill the funding gap.  

To date, government incentives outlined in The Canadian Critical Minerals Strategy appear to help manufacturers (i.e. funding for processing plants and auto manufacturers) more than miners. This could be in part because processing plants and auto manufactures are usually larger companies and entering into contracts with them is easier for government. These facilities are also higher visibility, can often be built faster and provide jobs in more populated areas.  

Mining has made immense leaps in technology across recent decades, each step ushered into reality by rigorous third-party engineering and community support. However, critical mining innovation is distinct from precious metals mining innovation, — especially for lithium and graphite — and there are viable projects in critical minerals mining that are facing hurdles that deserve focused support from Ottawa.  

The plans announced to date are a start but more action is needed on already outlined plans, such as reducing red tape between federal, provincial and local governments, and increasing incentives (and longer time horizons) for investors. There’s also room to loosen restrictions on investor incentives, and make access to government funding and loan programs simpler.  

In short, the Canadian government should consider refining and redoubling its plans for industry support of mine project development, especially in the exploration and mine-site design and planning stages to support domestic production of critical minerals to meet the ambitious energy transition goals.   

Chantelle Schieven is head of research at Toronto-based Capitalight Research (capitalightresearch.com).

The Sydney-based publication suggests that the companies may be in talks to merge, potentially forming the world’s largest producer of rare earths outside China.

Both Lynas, with a mine in Western Australia and a plant in Malaysia, and MP, with operations in California’s Mountain Pass, have faced challenges due to plummeting rare earth prices.

Over the past year, MP shares have plummeted by over 50%, while Lynas shares declined by approximately 40%.

China’s recent ban on the export of rare earth extraction and separation technologies aims to safeguard its market dominance amid speculation about China cutting off supply amid deteriorating US relations.

Last year, Lynas managing director Amanda Lacaze told the AFR the company consistently receives merger and acquisition proposals. She reportedly emphasized the need for a source of heavy rare earths to complement its Australian operations and fulfill commitments to the US Department of Defense. The latter is funding a Lynas downstream processing plant in Texas.

Las Vegas-based MP Materials also has backing from the Pentagon, including a contract to boost heavy rare earths supply.

Greenbushes cuts spodumene output, updates offtake pricing

Greenbushes’ JV partner IGO confirmed this week a much-anticipated sales volume cut from the world’s premier Western Australian spodumene mine.

In response to falling lithium chemical demand and prices, guidance for FY2024 sales were lowered to 1.3-1.4 Mt (from 1.4-1.5 Mt) of SC6. Despite this, the JV remains committed to completing the CGP3 plant which would add 500 ktpa SC6 capacity in 2025.

Further, a new monthly pricing mechanism for offtake was agreed, which will replace existing quarterly pricing. An average price basket will be used, less a 5% volume discount, FOB Australia.

The Kemerton lithium hydroxide refinery remains operational at 10% of design capacity, having produced only 617t LiOH.H2O in the quarter.

Adamas take: Annualised, the ~100 kt SC6 reduction in half-year sales translates to roughly 28 kt LCE of mined chemical grade supply, or ~2% of 2024E supply. The curtailment will go a long way in balancing the market in 2024 though is certainly not a market mover in and of itself.

Mineral Resources delivers solid outcomes at WA lithium assets

Mineral Resources recently announced a 30% increase in Q2 FY24 spodumene concentrate production from the Mt. Marion mine in Western Australia. 166 kt of production was achieved grading 4.2% Li2O, “driven by higher utilization of the plant and improved ore recoveries from a higher volume of fresh ore”. Much of the mine’s past production was at the 3.7% Li2O level.

Also unveiled was the first figures of Bald Hill’s production since MinRes’ November 1, 2023, acquisition. 26 kt grading 5.4% was produced for the 2 months reported, with cost guidance to be provided in the upcoming half-year results.

Wodgina is expected to significantly reduce FOB costs from A$845/t to A$550/t by September 2024 as feed quality improves and the strip ratio declines.

Adamas take: If Mt. Marion can stay within fresh rock it will comfortably generate cash, like the Wodgina asset has done. Without higher fractions of fresh rock (>50%) Mt. Marion could become a marginal producer on an AISC basis. Bald Hill appears on track given its production rate is just shy of previous guidance of 145 ktpa SC6.

Sayona endures a tough quarter as strategic review sets in

Sayona Mining, operator of Quebec’s NAL mine, announced last week outcomes of its ongoing strategic reviews, which sees the departure of CEO Guy Belleau among 14 other colleagues.

The mine, which re-sparked hopes of some North American lithium supply security, is operating at 58% nameplate capacity according to the Q4 CY2024 report. Accordingly, unit costs came in at $918 FOB Quebec, 48% higher than realized selling prices and 14% higher than previous quarter.

Lithia recovery has trended up from 43% at March to 66% in December 2023 as a range of ramp-up optimizations took effect.

Adamas take: The previously mothballed operation from 2018-2019, restarted in 2023, remains a swing producer at the troughs of these lithium cycles and is currently under threat of going into care and maintenance, again. Current cash of A$158M gives a 2-quarter runway at current burn rate. It is likely to take a significant re-tooling to make this asset profitable. The high iron content and dilution from thin seams lend to high production costs. Further, the JV deal struck with Piedmont Lithium meant Sayona were less able to capitalize on high lithium prices, which it encountered briefly in 2023.

AVZ Minerals upgrades Manono MRE to 842 Mt

AVZ Minerals released an updated MRE for the Manono project in the DRC this week.

268 Mt of resource was added to the Roche Dure deposit, bringing the global Manono resource base to 842 Mt grading 1.61% Li2O (0.5% Li2O cutoff), containing 33.4 Mt of LCE. For comparison, Greenbushes’ resource contains 13.9 Mt LCE. 500 Mt, or 59% of Manono’s total resource is in the M&I categories.

The resource update derives from a 53 drill holes program from 2022 and 2023 which totaled 15,685m, yielding of 18 Mt/km. The additional tonnes are expected to improve on the 2020 DFS defined 20-yr mine life and 0.48 waste-to-ore strip ratio.

The company is currently in arbitration over project ownership disputes. AVZ’s securities have remained in a trading halt since May 2022.

Adamas take: The update serves a reminder of what’s at stake in the ongoing legal proceedings: the fate of the most globally significant spodumene resource.

Sigma adds 27% to Grota do Cirilo MRE

Sigma Lithium this week released an updated MRE for its Grota do Cirilo mine in Minas Gerais, Brazil.

23.4 Mt of resource was added, bringing the global Grota do Cirilo resource base to 109 Mt grading 1.39% Li2O (0.3% Li2O cutoff), containing 3.8 Mt of LCE. 93.4 Mt, or 86% of Sigma’s total resource is in the M&I categories.

The drill program allows mine planners to conceptualize the NDC and Murial deposits into a single open pit for Phase 3 & 4 of development.

The company currently operates 8 drill rigs and eyes a 150 Mt resource target.

Adamas take: The resource upgrade is timely for Sigma given its currently marketing for a takeover. What started as a modest 20 Mt deposit at Xuxa (13m thick pegmatite, dipping 50° over 1,700m strike), has grown to an impressive field of pegmatite dykes further south, allowing expansion optionality prospective suitors look for.

Financial commentator Grant Williams last week highlighted to the Vancouver Resource Investment Conference (VRIC) the record levels of gold buying by central banks, arguing it indicates a strategic shift in reserve asset preferences against the backdrop of an evolving international geopolitical landscape.

“Amidst these changes, there’s an increasing interest in gold as a reserve asset. Central banks, recognizing the risks associated with large dollar reserves, are turning to gold for stability,” he said.

For the mining sector, these shifts present both challenges and opportunities. The rising demand for gold could boost the gold mining sector, necessitating increased investment and exploration. The strong policy supports the energy transition enjoy as the go-to tool for governments in their fight against climate change also means a bonanza of funds available and earmarked for resource and downstream beneficiation infrastructure.

However, the industry must also prepare for potential volatility in commodity prices and investment flows due to these macroeconomic changes.

A keynote panel discussion on Jan. 21 titled ‘Tectonic shifts in money and power,’ moderated by event host Jay Martin examined the theme of de-dollarization in depth. Panelists discussed how nations and central banks are diversifying away from the U.S. dollar in response to geopolitical events and the quest for more stable reserve assets.

“The world is looking to de-dollarize,” Williams said, highlighting an incremental but undeniable shift towards assets like gold while the global reserve currency transitions.

During his presentation, Martin highlighted three indicators that historically point to an empire’s decline: financial insolvency or instability. Historically, empires fall into financial trouble by spending more than they earn. To manage this, they print more money. This action devalues their currency and creates a gap between the wealthy (asset owners) and the rest.

Second, internal conflict emerges from the financial problems, leading to societal divisions. His research has found that these divisions turn minor issues into major conflicts, causing unrest.

Third, the emergence of external competitors speeds an empire’s decline when others challenge its dominance. “This signals the world that the empire is weakening, and new powers are rising,” Martin said.

He observed that these signs are visible today. He noted the massive debts, economic issues political polarization current superpowers. Additionally, new global forces are emerging to challenge the existing order. Martin suggests these signs could mean a shift in global power, similar to historical empire falls.

Continued reserve status?

The dollar’s continued status as the global reserve currency is increasingly in question, a series of panels heard, mainly because oil is priced in dollars, creating artificial dollar demand. However, the shift towards green energy, with goals of 50% adoption of zero-emissions vehicles by 2030 and 80% by 2050, poses questions about the future demand for the dollar in a scenario where oil trade is curtailed.

“Twenty per cent of last year’s oil sales were done in currencies other than the dollar,” Andy Schectman, president of Miles Franklin Precious Metals, said.

Schectman underlined the pivotal changes confronting the mining industry as the world re-evaluates the dollar’s dominance, coupled with the burgeoning debt estimated somewhere above US$40 trillion, not counting the estimated US10 trillion in bonds due this year and another US$140 trillion in unsecured obligations.

Part of the challenge is comprehending the enormity of the U.S.’s financial situation, says Schectman, emphasizing the difficulty in grasping the scale of a trillion compared to a million. “A trillion seconds ago was 31,688 years ago. The numbers are getting far too large,” he said.

Meanwhile, analysts argue that traditional remedies such as central banks raising interest rates to levels seen in the past, like the 18.5% under Paul Volcker (12th chairman of the Federal Reserve from 1979 to 1987), could today cause significant market disruptions across stocks, bonds, real estate, and banking.

“By weaponizing the dollar and pushing green policies, the U.S. might inadvertently be setting the stage for countries like China, Russia, and OPEC nations to pivot away from the dollar,” Schectman said.

Brent Johnson, CEO of Santiago Capital, with US$175 million in assets under management, argued that while the idea of moving away from the dollar is appealing, the practicalities are complex due to the overwhelming U.S. debt. This situation places the U.S. in a precarious position, where raising interest rates to attract investment in its debt might dangerously strain its economy.

“While there is a desire for de-dollarization, the ability to execute it is another matter,” he said, pointing out that this shift, driven partly by geopolitical tensions and the need to reduce reliance on a currency influenced by U.S. policies, signals a significant transformation in global financial dynamics.

The growth of trade alliances like BRICS that includes Brazil, Russia, India, China and South Africa further accelerates the trend. South Africa’s Foreign Minister, Naledi Pandor, announced on Wednesday that Egypt, Ethiopia, Iran, Saudi Arabia, and the United Arab Emirates have accepted invitations to join the BRICS group. These invitations, extended during a summit in Johannesburg last August, also included Argentina. The members see the addition of these countries to BRICS as a step towards updating what they consider to be an antiquated global order.

Contrarian view

In the ‘Global Macro Outlook’ panel, speakers like Danielle DiMartino Booth further emphasized the interconnectedness of global economies, focusing on the Chinese economy’s state and its impact on markets like Canadian housing. She pointed out the dual nature of demand and supply in shaping inflation, arguing that both must be considered in understanding economic trends.

Offering an opposing view to the arch of the discourse, Brent Johnson has developed his ‘Dollar Milkshake Theory,’ that explains how the U.S. could benefit from global financial turmoil. The theory suggests that despite the significant debt and economic challenges facing the U.S., global economic conditions will lead to a stronger dollar.

The core idea is that as economic troubles arise worldwide, investors will seek safety in the dollar, seeing it as a stable reserve currency. This influx of capital into dollar-denominated assets, like U.S. treasuries and stocks, will effectively “suck” global capital into the U.S., much like a milkshake straw pulls liquid upwards. This process will strengthen the dollar compared to other currencies.

Johnson’s theory also posits that this dynamic will occur even as the U.S. prints money and accumulates debt due to the dollar’s dominant role in the global financial system and the lack of viable alternatives. The result could be a paradoxical situation where the U.S. benefits from global financial instability, reinforcing the dollar’s supremacy despite its own economic challenges.

The data included sensitive information such as social insurance numbers, payroll reports, financial information, and home addresses and cell numbers for senior executives, all of which were published online by the hackers, the report said.

The attack was apparently carried out by Black Basta, the same ransomware group responsible for prior attacks on Sobeys and Yellow Pages Canada, said Josh Rubin, author of the report, citing a mining industry cybersecurity expert.

As noted in the article, the data breach took place some time in April 2023. “Our operations were at no time impacted. We remain vigilant in protecting our systems and have put measures in place to address any personal information loss,” Alamos said in a statement at the time.

The gold miner currently employs more than 1,900 people. It operates three mines in North America: the Young-Davidson and Island gold mines in northern Ontario, Canada, and the Mulatos mine in Sonora state, Mexico.

Alamos Gold closed Wednesday’s session down 0.7% to C$16.28 a share, having traded between C$13.35 and C$20.20 over the past 52 weeks. The intermediate gold producer has a market capitalization of approximately C$6.5 billion ($4.8bn).

Mining’s cyber threat

The latest incidence with Alamos Gold highlights the increased concerns of digital security within the mining industry and the frequency of attacks that can hamper the mineral extraction business.

Last December, global miner Anglo American (LSE: AAL) saw its email distribution channels get compromised, resulting in a crudely worded message and an inappropriate graphic sent to company subscribers. Four months earlier, Freeport-McMoRan (NYSE: FCX) also suffered a cyberattack, albeit a minor one that it said had limited impact on production.

In March of 2023, Rio Tinto (ASX: RIO) reported what was considered the largest cyberattack on miners at the time, which saw personal data of current and former employees being uploaded onto the dark web.

In late 2022, Vancouver-based Copper Mountain Mining — now owned by Hudbay Minerals (TSX: HBM; NYSE: HB) — dealt with a ransomware attack that led to a six-day shutdown of its Canadian treatment plant.

EY Global Information Security survey reported that 54% of mining and metals companies experienced significant cyberattacks, with 55% of executives expressing concern over their ability to manage such threats.

Vancouver-based Skeena last week signed the permitting Process Charter for the Eskay Creek gold-silver project, which is in the Tahltan Nation’s territory in the Golden Triangle of British Columbia.

The property hosts the former Eskay Creek mine that produced 3.3 million oz. of gold and 160 million oz. of silver from 1994 to 2008. The Process Charter is a collaboration between Skeena, the Tahltan Central Government (TCG) and the Government of British Columbia.

While the project has the support of the Tahltan, the Southeast Alaska Indigenous Transboundary Commission (SEITC) said on Tuesday they are seeking recognition from the governments of British Columbia and Canada to protect the Unuk River watershed from being damaged by the Eskay Creek mine.

Eskay Creek is one of at least six proposed and operating mines dotting the Taku, Stikine and Unuk rivers upstream of the US-Canada border.

The Alaska-based consortium of Tlingit, Haida and Tsimshian Tribal governments this week applied to the Canadian environmental regulators to have their historic presence recognized along the Unuk River, which they say is threatened by rapidly expanding transboundary mining.

The SEITC said the proposed mine plan conflicts with their obligation to protect traditional lands for future generations.

The rivers, amongst the last wild salmon habitats remaining in the world, hold significant cultural importance for the southeast Alaska tribes, who said “recklessly underregulated gold mining” in northwest British Columbia threatens to disrupt vulnerable watersheds and leach copper, selenium and other toxins downstream across the border.

“We are talking about poisoning our rivers to help mining companies turn a profit,” SEITC vice-president Rob Sanderson Jr. said in a press release. “We have relied on and stewarded these rivers for millennia. Canada has no right to endanger our way of life.”

In 2021, the Supreme Court ruled that non-resident Indigenous people have constitutional rights in Canada if they are modern-day successors of past occupants.

The Inter-American Commission on Human Rights recently recognized that Canada’s refusal to consult with Alaska Native Tribes on large-scale mining development along the transboundary watersheds could violate international human rights. The case, brought by Earthjustice on behalf of SEITC, will move into its briefing phase in February.

If the SEITC succeeds, it would be the first time in history that a US-based tribe is granted Participating Indigenous Nation status in Canada.

At the end of 2023, the MINING.COM TOP 50* ranking of the world’s most valuable miners reached a combined $1.42 trillion, up a healthy, if far from spectacular $48.7 billion over the course of 2023. Mining’s top tier is also worth $330 billion less than in March 2022.

Metal and mineral markets are volatile at the best of times – the nickel, cobalt and lithium price collapse in 2023 was extreme but not entirely unprecedented. Rare earth producers, platinum group metal watchers, iron ore followers, and gold and silver bugs for that matter, have been through worse.

Mining companies have become better at navigating choppy waters and as a whole the majors performed fairly consistently last year despite geopolitical and market turmoil, but within the ranking, 2023 fortunes were made and lost over what seemed like days.

The forced closure of one of the world’s biggest copper mines – and the subsequent collapse of owner First Quantum Minerals stock – served as a stark reminder of the outsized risks miners face over and above market swings.

Panama root canal

After months of protests and political pressure, at the end of November the Panama government ordered the closure of First Quantum Minerals’ Cobre Panama mine following a ruling by the Supreme Court that declared the mining contract for the operation unconstitutional.

Public figures, including climate activist Greta Thunberg and Hollywood actor Leonardo Di Caprio backed the protests and shared a video calling for the “mega mine” to cease operations, which quickly went viral. 

That mining cobre is at the nexus of the green energy transition is clearly an irony lost on those trying to save the world.  FQM is seeking arbitration and completely winding down operations will take time, but a reopening of Cobre Panama is not on the cards. 

From 25th position in the ranking at the end of March 2022 and a valuation well above $20 billion, the November-December sell off saw FQM drop out of the top tier altogether, ending 2023 at number 58 with a market cap below $6 billion. 

Cobre Panama supplied more than 40% of the company’s revenue, and with nickel prices plummeting FQM has also been forced to suspend operations at its Raventhorpe mine in Australia. 

Amid the inevitable takeover rumours now in circulation, shares in the Vancouver-based company have rallied in 2024, but still not enough to reenter the top 50.

No. 12 with a bullet 

If 2023 was an annus horribilis for FQM it was mirabilis for Amman Mineral Internasional. Stock in the Indonesian firm surged by 269% from its July debut in Jakarta to reach a market capitalisation of more than $30 billion at the end of last year – and number 12 in the ranking. 

That valuation is quite an achievement on annual revenue of $2 billion no matter how fat margins are at the company’s Batu Hijau copper and gold mine.  Batu Hijau is the third largest mine worldwide in terms of copper equivalent output (but no match for Cobre Panama when it comes to the orange metal alone)  and has been in production since the turn of the millennium. Amman is also developing the adjacent Elang project on the island of Sumbawa. 

Amman Minerals’ ascent has minted at least six new billionaires and the stock appears to be building on its success in 2024, rising by double digits in January already.

Indonesia’s other major mining IPO, Harita Nickel, was on a different trajectory altogether. After listing in April and raising $672m, the company has had a tough go of it and the stock has shed more than 38% since then as nickel prices continue to decline.

Shiny gold, dull silver, tarnished PGMs

The price of gold hit an all-time record on December 1, 2023.  But bullion’s best ever level passed without the usual fanfare and despite bullish indications for 2024, gold mining stocks did not exactly storm the rankings of the most valuable miners.

Over the course of 2023 gold and royalty companies on the MINING.COM TOP 50* ranking of the world’s most valuable miners added a collective $20.8 billion in market cap. 

And judging by gold miners’ performance so far this year, gold above $2,000 is not providing enough support. Newmont is already down 17%, Barrick has shed 13% and Agnico Eagle shareholders are 9% poorer. 

The number of precious metals companies in the top 50 has also been relatively stable over the years. With Newmont’s absorption of Newcrest now complete, the open slot was taken up by Kinross, which spent a few years in the wilderness. 

Anglogold Ashanti was just edged out by Jiangxi Copper for position number 50 on the last trading days of 2023, but based on its performance so far in 2024 the London-listed company is already back among the top tier. Indeed Anglogold is the only major gold player in the black year to date.

Silver has not been able to ride gold’s coattails and the top 50 has not had a silver specialist for a few years after Fresnillo dropped out (now at #61) and while Pan American Silver has come close in recent years at the end of last year it made it to #58 only. 

The exit of platinum and palladium majors like Sibanye Stillwater and Impala Platinum, now both valued at less than $4 billion, made space for Royal Gold to reenter at 47 at the end of last year, up from 57th in 2022. 

After a dismal 2023, the sole remaining PGM specialist Anglo American Platinum looks likely to lose more ground this quarter as palladium and platinum prices continue to slide into the new year.

Not too tough at the top 

London-listed Anglo American has had a rough year in part due to its exposure to platinum group metals and control of AngloPlat, and is now valued at $30 billion after peaking at $70 billion in March 2021.  

Were it not for the London-listed company’s iron ore operations, the 40%-plus slump in share value may have been deeper. Rumours that Glencore may be sniffing around now that the Swiss behemoth’s bid for all of Teck Resources has soured is also keeping Anglo from falling further down the rankings .  

Investors in Anglo, with a history going back more than a hundred years on the South African gold and diamond fields, have had a particularly wild ride over the last few years. In January 2016, Anglo’s market cap fell below $5 billion after it came close to suffocating under a pile of debt.  

Against expectations, iron ore seems to be holding above $120 a tonne, Chinese property bankruptcies and Beijing’s tepid stimulus response notwithstanding. 

Iron ore’s resilience despite Chinese troubles has also kept the share prices of the other diversified majors, which make their fattest profits from the steelmaking ingredient, from skidding. 

The top 10 mining companies have been able to keep their share of the total above 50% for a few years now. Not quite the magnificent seven, but size does matter in mining, particularly when access to capital is no longer a headache but a migraine. 

Expectations of another active year of M&A in the sector is likely to make the Top 50 top-heavier, especially now that it’s painfully obvious just how one-commodity companies like the lithium stocks can so easily be derailed. Coal miners’ strong 2023 suggests there are still exceptional minerals that prove the rule.   

Lithium losers 

After defying gravity early on, the combined losses for lithium miners in the top 50 climbed to nearly $30 billion in market cap over the 12 month period. Four counters occupy the worst performance table for 2023. 

The M&A drama surrounding Liontown, Albermarle and Hancock Prospecting turned out to be a soap opera and Chile’s move to take control of its lithium industry now appears far less consequential than feared.

Despite the precipitous decline in lithium prices in 2023, after hitting all time highs above $80,000 a tonne in November 2022, none of the battery metal miners’ stock performance was dire enough to drop out of the Top 50.

The merger of Livent and Allkem to form Arcadium Lithium could in fact up lithium mining’s representation in the ranking to seven should Pilbara Minerals’ January bleeding be stanched. But with lithium prices far from stabilizing, the battery metal’s presence in the top 50 may fade further. 

Pilbara Minerals, which unlike its peers was still able to show share price gains last year,  joined the Top 50 last year, bringing the number of companies based in the Western Australia capital to five, surpassing the tally of Vancouver, BC as the top home base in the ranking. 

With the exit of First Quantum, three mining companies in the top 50 call Vancouver home while the return of Kinross saw the ranks of Toronto-headquartered miners move back up to four.  

Nuclear options

Uranium prices more than doubled during 2023 and recently hit triple digits for the first time in 16 years. The breakthrough for the nuclear fuel comes after a decade in the doldrums following the Fukushima disaster in Japan.

Canada’s Cameco made the best quarterly performer list once again in Q4 and after doubling in market worth in 2023.  The Saskatoon-based company now sits at no 23 in the ranking after jumping 22 places since end-2022.    

The value of shares in Kazatomprom, the world number one uranium producer, topped $10 billion at the end of 2023, placing it at position 38.  Until last year the state-owned Kazakh company was outside earshot of the Top 50 since its dual-listing in London and Astana in 2018.  

None of the smaller uranium companies are likely to pierce the top 50 by themselves, but combinations among the rank and file may edge in when countries aiming to ditch fossil fuels stop thinking they can have their yellowcake and eat it too.

*NOTES:

Source: MINING.COM, Morningstar, GoogleFinance, company reports. Trading data from primary-listed exchange at December 28 2023 to January 2, 2024 where applicable, currency cross-rates January 2, 2024. 

Percentage change based on US$ market cap difference, not share price change in local currency.

As with any ranking, criteria for inclusion are contentious. We decided to exclude unlisted and state-owned enterprises at the outset due to a lack of information. That, of course, excludes giants like Chile’s Codelco, Uzbekistan’s Navoi Mining, which owns the world’s largest gold mine, Eurochem, a major potash firm, and a number of entities in China and developing countries around the world.

Another central criterion was the depth of involvement in the industry before an enterprise can rightfully be called a mining company.

For instance, should smelter companies or commodity traders that own minority stakes in mining assets be included, especially if these investments have no operational component or warrant a seat on the board?

This is a common structure in Asia and excluding these types of companies removed well-known names like Japan’s Marubeni and Mitsui, Korea Zinc and Chile’s Copec. 

Levels of operational or strategic involvement and size of shareholding were other central considerations. Do streaming and royalty companies that receive metals from mining operations without shareholding qualify or are they just specialised financing vehicles? We included Franco Nevada, Royal Gold and Wheaton Precious Metals on the basis of their deep involvement in the industry.

Vertically integrated concerns like Alcoa and energy companies such as Shenhua Energy or Bayan Resources where power, ports and railways make up a large portion of revenues pose a problem. The revenue mix also tends to change alongside volatile coal prices. Same goes for battery makers like CATL which is increasingly moving upstream, but where mining still makes up a small portion of its valuation.  

Another consideration is diversified companies such as Anglo American with separately listed majority-owned subsidiaries. We’ve included Angloplat in the ranking but excluded Kumba Iron Ore in which Anglo has a 70% stake to avoid double counting. Similarly we excluded Hindustan Zinc which is listed separately but majority owned by Vedanta.

Many steelmakers own and often operate iron ore and other metal mines, but in the interest of balance and diversity we excluded the steel industry, and with that many companies that have substantial mining assets including giants like ArcelorMittal, Magnitogorsk, Ternium, Baosteel and many others.

Head office refers to operational headquarters wherever applicable, for example BHP and Rio Tinto are shown as Melbourne, Australia, but Antofagasta is the exception that proves the rule. We consider the company’s HQ to be in London, where it has been listed since the late 1800s.

Please let us know of any errors, omissions, deletions or additions to the ranking or suggest a different methodology.

In a letter sent on Wednesday to the Canadian Minister of Energy and Natural Resources, Jonathan Wilkinson, the CEOs of 19 miners, including top producers Coeur Mining, Hecla Mining, and First Majestic Silver, say that considering silver a critical mineral would position the country to be a supplier of choice for strategic allies.

In December 2023, Natural Resources Canada opened a public commentary period for proposed updates to Canada’s Critical Minerals list and methodology. One of the criteria used is that the mineral must be necessary for the national transition into a “low carbon and digital economy”.

“Silver is identified as the best electrical conductor, the best metallic thermal conductor, and the best reflective material. These qualities make silver an essential and irreplaceable component for many industrial and technological applications,” the letter reads.

The demand for technologies such as solar power has led to increasing industrial demand for silver.

In 2023, global silver demand was estimated to be 1,167 million ounces (Moz), of which 576.4Moz (50%) was industrial use. Photovoltaics demanded 161.1 Moz in 2023, or 14% of the global silver demand.

Silver is also a common component of nuclear reactors. In the letter, the miners argue that with Canada joining other countries at COP28 to commit to tripling nuclear energy capacity by 2050, the demand for silver in nuclear is also likely to increase.

The metal is also used in electric contacts and connectors in EVs and hybrids. As fleets increasingly move toward electrification, demand for silver in the automotive industry is expected to increase.

In the letter, the mining CEOs say that a misconception about silver availability is the main reason why the metal has been excluded as a critical mineral.

“Researchers from around the globe have raised the alarm that silver is a potential bottleneck in the transition to a low-carbon economy due to supply limitations, disruptions to supply chain, competition for other uses, and increased demand,”

“Unfortunately, the reputation of silver as a readily available, budget-friendly precious metal has led to misconceptions that have to date blocked policy alignment with academic consensus.”

A new list of critical minerals for Canada is expected to be published before summer 2024.

According to Jillian Lennartz, director, ESG for First Majestic Silver, written questions about the methodology adopted by the US Geological Survey have also been submitted to a House of Representatives subcommittee expressing concerns about the USGS’s methodology for its critical minerals list and offering suggestions for improvement.

“We also had direct calls with the Department of Energy (DOE) about their most recent assessment and expressed our concern with silver’s omission. They admitted that based on their methodology silver was not quantitatively assessed, and requested we submit our concerns in writing for their review,” Lennartz told MINING.COM.

The National Mining Association and the Silver Institute also sent a letter to the DOE in October last year arguing that the amount of silver in proved or probable reserves does not meet the projected demand and that silver recycling is unlikely to provide a significant material stream.

Questioned about a possible inclusion of silver, a source at the USGS said that all minerals for the 2025 list are being evaluated based on formulas. The list and methodology are expected to be released in the federal register later this year.

An analysis of the firm’s database reveals that BMO Capital Markets advised on transactions worth a total of $27.4 billion, positioning it at the forefront of significant industry consolidations. Canaccord Genuity Group advised on 15 deals throughout the year, leading the sector in terms of deal volume.

“Canaccord Genuity Group registered significant growth in the volume of deals advised and ranking by this metric in 2023 compared with the previous year,” GlobalData lead analyst Aurojyoti Bose said.

“In fact, it was the only adviser to hit the double-digit deal volume in 2023.”

BMO Capital Markets secured joint second place by deal volume with nine transactions, with Allenby Capital matching this volume with nine deals of its own. Macquarie followed closely with seven deals and Rothschild & Co with six.

“BMO Capital Markets was the top adviser by value in 2022 and managed to retain its leadership position in 2023 as well. The total value of deals advised by it jumped by more than double-fold in 2023 compared with 2022,” Bose added.

Goldman Sachs took second spot in this metric, advising on deals amounting to $25 billion. Bank of America was not far behind with advisory deals totalling $22.6 billion. Barclays and Lazard also featured prominently, advising on deals worth $21.8 billion and $20.3 billion respectively.

The amendment is in accordance with 2019 Declaration on the Rights of Indigenous Peoples Act (DRIPA), the provincial framework for reconciliation with Indigenous peoples.

It was posted without a media advisory, but Vancouver law firm McMillan published a release commenting on its significance – changes to the way land use decisions are made in the province could have a big impact on the resource sector.

“Make no mistake – the subject matter of the consultation is unprecedented and of profound importance to any company that requires authorization to use Crown land in BC,” the firm stated in a release on Friday.

“These include things like grazing leases, mining leases, licenses of occupation, [and] dock permits.”

Historically these decisions have  been made by the minister responsible for the Land Act (or her or his delegates in the senior ranks of the public service), with a corresponding duty to consult affected First Nations, McMillan noted.

In late 2023, the British Columbia Supreme Court ordered the BC government to update its provincial mining legislation to ensure First Nations are consulted before any staking of mineral claims. The Court ruled that the existing online system, which doesn’t include a consultation framework, violates the Crown’s constitutional obligations.

Under the new amendments being proposed, the firm stated, changes will be made to enable agreements with Indigenous groups such that they will be provided a veto power over decision making about Crown land tenures and/or have joint decision making power with the minister.

As such, the Crown alone would no longer have the power to make decisions about Crown land that it considers to be in the public interest.

Public engagement is open until March 31, 2024 here.

Now, heading into 2024, what trends can we anticipate in the rare earth industry, and how are global supply chain dynamics evolving outside of China?

The downturn of strategic metals

Although there has been a downward trend in strategic metals prices carrying over from last year to 2024, it’s important to remember the cyclical nature of the mining industry.

Many factors, including economic conditions, technological advancements, and geopolitical events, can influence the status of rare metals, and this recognition is crucial for making informed investment? decisions and navigating the industry’s dynamics effectively. Not only that, but the way these strategic metals are traded can also have an impact.

Suppose traders or firms active in physical commodities trading stockpiles these metals in large amounts driving metals up or several end users exit the market after fully stockpiled for the year– these are factors that can result in significant swings in metal prices.

So, while the current trend may suggest a temporary decline in strategic metals, understanding the underlying factors and  cyclical nature underscores that periods of contraction often pave the way for subsequent phases of growth.

Economic factors and EV demand

Diving further into the factors that have been impacting rare earth elements, it would be remiss not to mention the effects that the current inflationary environment is having. The impact of rising interest rates, most notably in North America, from a near-zero rate environment to 5% has directly contributed to the slowdown in demand for electric vehicles (EVs).

People are more cautious about buying EVs, in part due to the costs but also because manufacturers like Tesla have decreased their prices significantly over the last quarter. As a result, consumers are holding out, wondering if or when they might see yet another decrease. However, it’s not just EVs that need to be considered. There are also many other uses for these critical metals, rare earths for instance are used in military technologies, agriculture, and medical equipment like MRI machines, showcasing their significance in multiple sectors.

China’s ongoing influence

Although there has been a downward trend in strategic metals prices, influenced by a significant slowdown in EV demand, we must also recognize the intricate web of challenges posed by the global supply chain dynamics, especially the substantial influence exerted by China.

While efforts to diversify production outside of China have been making headway, there are still many supply chain complexities to work out, meaning the refining and manufacturing of end products still predominantly revolve around China.

This reliance on China for both rare earth metal production and related technologies remains a pivotal aspect influencing market trends (sometimes for the better, and sometimes not). For example, export restrictions imposed by China led to a support in graphite prices last year, showing their influence even as we move away from their dependence.

Key takeaways

Looking ahead, the goal of many rare earths mining companies is to continue developing robust offshore supply chains that can support not only the mining of these strategic metals but also the refining, processing, and manufacturing processes.

Although we are still 5-10 years out from the total realization of this goal, it’s a step in the right direction for building a healthy supply chain so that the rest of the world can benefit from access to sustainable, conflict-free metals.

(Dr. Luisa Moreno is a Physics Engineer, an analyst in rare earths and president of Defense Metals)

According to local media, the new head of the MEM, Víctor Hugo Ventura, announced the measure in response to multiple complaints regarding bribes, corruption and other illegal activities taking place within the country’s mining sector. 

Talking to journalists, Ventura noted that mining started in Guatemala 70 years ago and that all decisions that are made regarding the sector will balance out the social, economic, environmental and financial costs and benefits. 

To deal with bribery and corruption accusations, the minister requested the support of the Comptroller General of Accounts, as well as information from interested parties, including countries such as the United States of America.

Ventura recalled that back in 2022, the US Office of Foreign Assets Control applied sanctions to the export licenses of Compañía Guatemalteca de Níquel (CGN) and Compañía Procesadora de Níquel de Izabal (ProNiCo), which are subsidiaries of the Swiss-based Solway Investment Group, as well as to Mayaníquel, owned by International Nickel Supply. These sanctions were lifted on the third week of January 2024 and Guatemalan authorities are asking for further information to re-authorize their operations.

The MEM’s approach is aimed at following the principles of transparency and zero tolerance for corruption that the administration of President Bernardo Arévalo is promoting, after taking office on January 15.

On the same note, the Guatemalan Ministry of Environment and Natural Resources (MARN) announced that it will review Bluestone Resources’ (TSX-V: BSR) Cerro Blanco operation, whose environmental license was granted in 2007 and updated on January 9, 2024, giving the green light to open-pit exploitation of gold deposits in the Asunción Mita municipality. 

Initially, the Vancouver-based miner had proposed an underground operation but decided to switch the mining method as a response to the results of advanced engineering and optimization work that revealed an opportunity to capitalize on the project’s near-surface, high-grade mineralization through an open-pit development scenario. The assessment showed a doubling of the gold resource ounces and production profile.

A feasibility study for Cerro Blanco released in February 2022 calls for an open-pit gold mine with an average annual production of 197,000 ounces over its 14-year life. At peak production, the operation would produce 347,000 ounces of gold a year.

However, the fact that an open-pit operation would require the use of cyanide set off the alarms of nine environmental groups both in Guatemala and El Salvador, who expressed concern over the potential contamination of shared freshwater bodies such as the Güija lagoon and the Lempa River. The latter is the main water source for San Salvador, the Salvadoran capital.

In a recent meeting between the Salvadoran Foreign Affairs Minister, Alexandra Hill, and the Guatemalan ambassador to El Salvador, Rubén Estuardo Nájera, the former expressed her concern over the mine.

Yet, Bluestone has said that the mine’s development plans include a cyanide destruction process to neutralize it, which should ease such concerns.