Along with close relative rhodium, the two metals are chiefly used in the catalytic converters used to clean exhaust fumes by the auto sector, an area that accounts for some 40% of platinum demand, and 80% of palladium offtake.

Losing that demand will be significant for all three metals – and for palladium and rhodium, there is currently no other industry that can realistically replace the volumes that will be lost as consumers transition to electric vehicles, which don’t need autocatalysts.

Analysts see a long tail for PGMs use in traditional internal combustion engines, and a drop in supply as mining becomes less economic has kept prices relatively well supported. But with fellow precious metal gold at all-time highs this year, that’s a disappointing performance.

“The PGM sector is facing a shift in which palladium and rhodium will see declining demand with no major alternative demand sector on the forecast horizon,” Wilma Swarts, head of PGMs at consultancy Metals Focus, told Reuters.

Estimates of when the erosion of PGM demand from auto makers will become significant vary, and depend on views of future sales of pure internal combustion vehicles versus hybrid or electric vehicles.

According to analysts at Macquarie, demand for both platinum and palladium from the auto sector will start falling beyond 2025.

Earlier this decade palladium was a standout performer among precious metals, more than tripling in price between late 2018 and early 2022 to more than $3,000 an ounce. At just over $1,000 an ounce, it has now given up the price premium it had held to platinum since 2018.

Both palladium , down 9% so far this year after a 39% slump in 2023, and rhodium, a small, illiquid market which has clawed back a little ground this year after dropping almost two-thirds in 2023, have further to slide, according to analysts whose estimates cover the next five years.

But platinum , down 9% so far in 2024 after sliding 8% in 2023, may fare better. It is the only major metal in the group that is expected to rise by 2028 from last year’s level, helped by demand in non-auto industries such as jewellery.

Producers and analysts also hope the metal has potential to benefit from new demand from the hydrogen economy via fuel cell vehicles, a slower-growing competitor to battery electric technology in cars.

But hopes for an acceleration of demand from fuel cell vehicles appear to be built on shaky ground.

“The current pace of deployment of fuel cell vehicles is certainly disappointing,” said one person at a company involved with the technology.

In Macquarie’s base case scenario, total annual hydrogen-related demand will struggle to rise materially above 250,000 ounces of platinum by 2030. For comparison, the auto sector currently consumes 3.3 million ounces of platinum a year.

Analysts are more certain that the supply side will support platinum in the future through declining output from mines.

The World Platinum Investment Council, whose members are major Western producers, expects platinum to be in an average annual deficit of 500,000 ounces until 2028. Shortages will cut above-ground stocks to six weeks of demand by end-2028 from 23 weeks at end-2023.

Macquarie’s five-year outlook, which sees average 2028 palladium prices falling by 40% from 2023 levels to $800 per ounce, conversely expects platinum prices to rise to $1,250 an ounce by 2028, up 29% from 2023.

For South Africa’s platinum miners, that is cold comfort. According to consultancy Metals Focus, South African PGM miners currently get just 35% of their revenue from platinum.

Even at current prices, around half of South African mines are producing their PGMs at a loss, prompting them to rely on other products such as chrome. Mines in North America are under pressure too, according to Metals Focus.

“Palladium was over-valued compared to platinum in recent years,” said a major PGMs producer. “That was certainly very pleasant, but it’s over.”

(By Polina Devitt and Ashitha Shivaprasad; Editing by Veronica Brown and Jan Harvey)

African Rainbow Minerals (ARM) said on Friday it was deferring plans to expand output at its Bokoni mine due to low platinum group metal (PGM) prices after reporting a 43% drop in its half-year profit.

The diversified South African miner’s headline earnings declined to 2.96 billion rand ($158.5 million) in the six months to December 2023, from 5.17 billion rand previously, as lower thermal coal and PGM prices hit income.

ARM cut its interim dividend to 6 rand per share, from 14 rand per share previously.

The miner acquired the Bokoni mine in South Africa from Anglo American Platinum and Atlatsa Resources Corporation in 2022 as part of its plans to expand PGM output.

Bokoni mine, which had been put under care and maintenance by its previous owners in 2017, resumed production in November 2023, with plans to further expand output.

However, the sharp fall in PGM prices over the past year, mainly due to weaker demand in China and an uncertain global economic outlook, has forced South African miners, who account for 70% of world output, to suspend projects and cut costs.

ARM said a bankable feasibility study for the phased development of Bokoni, a key step towards securing funding, had been deferred “due to depressed commodity prices and uncertain immediate outlook”.

The company said the prices of palladium and rhodium fell 42% and 70%, respectively, during the period under review, resulting in a 40% decline in the average realized rand price for its set of PGMs.

ARM said its immediate priority is to conserve cash while ramping up production on a phased basis from the installed capacity of 60,000 metric tons of ore per month using existing infrastructure.

($1 = 18.6702 rand)

(By Nelson Banya; Editing by Jamie Freed, Eileen Soreng and Emelia Sithole-Matarise)

The precious metals producer kicked off in October a restructuring process at its four loss-making mines that was expected to result in the loss of 4,095 jobs. 

Sibanye-Stillwater said the reduction in the number of layoffs was possible thanks to strategic decisions taken in consultation with interested parties. These include going ahead with the announced closure of the Simunye shaft, which ceased production in 2023, as well as keeping the 4 Belt (4B) shaft at Marikana open.

The miner said that the Marikana mine shaft, which employs 1,496 permanent workers and 54 contractors, will only stay in production if it does not run up net losses on a monthly basis.

Two other shafts, Rowland and Siphumelele, which were hit by operational and geological issues, “have been repositioned for sustainable levels of production at a lower cost structure”, Sibanye-Stillwater said.

The Johannesburg-based firm noted that almost 1,300 employees had voluntarily left their jobs or accepted early retirement packages, while 467 people left since September due to “natural attrition”.

The company said earlier this week that it expects to report a 91% loss for 2023 due to multiyear-lows for platinum-group metals prices. It also flagged an impairment of 47.5 billion rand ($2.58 billion). 

Palladium and platinum prices decline has driven producers in South Africa, including Sibanye-Stillwater to apply severe cost-cutting measures. 

Impala Platinum Holdings has offered voluntary job cuts, including at its deep-level Rustenburg complex, while Anglo American Platinum (Amplats) has announced plans to cut 3,700 jobs after its profit plunged 71% last year.

The company said it expects to report in March a loss per share for 2023 of 12.68 rand to 14.01 rand, compared with a profit of 6.51 rand a share the previous year. This is equivalent to an eye-popping 91% drop in annual profit.

The announcement comes only two months after the South African miner announced it would lay off 1,500 workers from its gold mines. It also said at the time it had begun talks that could affect 4,000 more employees at its platinum group metals (PGMs) operations, including those in the United States.

“We have already taken proactive steps to address loss-making production at unprofitable operations and the group remains focused on ensuring the sustainability of our business and delivering on our strategical essentials through this period of low commodity prices,” the company said in a statement.

Sibanye shares fell more than 5% in afternoon trading in Johannesburg, closing at ZAC 1,994. The stock has lost almost 48% of its value in the past year, mainly due to the prices decline of palladium and rhodium.

The sharp drop of PGMs prices decline has driven producers to apply severe cost-cutting measures. Anglo American Platinum said on Monday it would cut 3,700 jobs at its South African operations, or 17% of the Anglo American unit’s workforce. 

Impala Platinum Holdings has offered voluntary job cuts, including at its deep-level Rustenburg complex.

Despite the challenges, Sibanye noted that all its South African and Australian operations were profitable before the end of the fourth quarter of 2023. 

RELATED: In election year, South African mines bleed cash, jobs

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.

A year where the gold price sets an all-time record should be unalloyed good news for the mining and exploration industry, which despite all the buzz surrounding battery metals and the energy transition still represents the backbone of the junior market.

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, but the forced closure of one of the biggest copper mines to come into production in recent decades served as a stark reminder of the outsized risks miners face over and above market swings.

Panama shuts down giant copper mine

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. 

FQM’s latest statement on Friday said Panama’s government hasn’t provided a legal basis to the Vancouver-based company for pursuing the closure plan, a plan that the industries ministry of the central American nation said will only be presented in June next year.

FQM has filed two notices of arbitration over the closure of the mine, which has not been operating since protesters blocked access to its shipping port in October. However, arbitration would not be the company’s preferred outcome, said CEO Tristan Pascall.

In the aftermath of the unrest, FQM has said it should have better communicated the value of the $10 billion mine to the wider public, and will now spend more time engaging with Panamanians ahead of a national election next year. FQM shares have bounced in the past week, but is still trading more than 50% below the high hit during July this year.

Projected copper deficit evaporates

Cobre Panama’s shutdown and unexpected operational disruptions forcing copper mining companies to slash output has seen the sudden removal of around 600,000 tons of expected supply would, moving the market from a large expected surplus into balance, or even a deficit.

The next couple of years were supposed to be a time of plenty for copper, thanks to a series of big new projects starting up around the world.

The expectation across most of the industry was for a comfortable surplus before the market tightens again later this decade when surging demand for electric vehicles and renewable energy infrastructure is expected to collide with a lack of new mines.

Instead, the mining industry has highlighted how vulnerable supply can be — whether due to political and social opposition, the difficulty of developing new operations, or simply the day-to-day challenge of pulling rocks up from deep beneath the earth.

Lithium price routed on supply surge

The price of lithium was decimated in 2023, but predictions for next year are far from rosy. Lithium demand from electric vehicles is still growing rapidly, but the supply response has overwhelmed the market.

Global lithium supply, meanwhile, will jump by 40% in 2024, UBS said earlier this month, to more than 1.4 million tons of lithium carbonate equivalent.

Output in top producers Australia and Latin America will rise 22% and 29% respectively, while that in Africa is expected to double, driven by projects in Zimbabwe, the bank said.

Chinese production will also jump 40% in the next two years, said UBS, driven by a major CATL project in southern Jiangxi province.

The investment bank expects Chinese lithium carbonate prices could fall by more than 30% next year, dipping as low as 80,000 yuan ($14,800) per tonne in 2024, averaging at around 100,000 yuan, equivalent to production costs in Jiangxi, China’s biggest producing region of the chemical.

Lithium assets still in high demand

In October, Albemarle Corp. walked away from its $4.2 billion takeover of Liontown Resources Ltd., after Australia’s richest woman built up a blocking minority and effectively scuppered one of the largest battery-metals deals to date.

Eager to add new supply, Albemarle had pursued its Perth-based target for months, eying its Kathleen Valley project — one of Australia’s most promising deposits. Liontown agreed to the US company’s “best and final” offer of A$3 a share in September — a near 100% premium to the price before Albemarle’s takeover interest was made public in March.

Albemarle had to contend with the arrival of combative mining tycoon Gina Rinehart, as her Hancock Prospecting steadily built up a 19.9% stake in Liontown. Last week, she became the single largest investor, with enough clout to potentially block a shareholder vote on the deal.

In December, SQM teamed up with Hancock Prospecting to make a sweetened A$1.7 billion ($1.14 billion) bid for Australian lithium developer Azure Minerals, the three parties said on Tuesday.

The deal would give the world’s no.2 lithium producer SQM a foothold in Australia with a stake in Azure’s Andover project and a partnership with Hancock, which has rail infrastructure and local experience in developing mines.

Chile, Mexico take control of lithium

This week Chile’s President Gabriel Boric hailed the formation of a new government-controlled lithium partnership that fuses assets of state-run Codelco with private miner SQM, as the leftist leader advances his push for greater public control over the battery metal. 

SQM said it would partner with copper giant Codelco for the future development and production of the metal in the Atacama salt flat, in a tie-up set to kick off in 2025 and run through 2060.

The deal gives Codelco majority control in line with the president’s plans announced in April to strengthen state control of lithium to generate more broad-based benefits from surging demand and to allow only public-private partnerships to participate in its exploitation.

For much of the year, the firms had been locked in talks over the future of lithium mining and production in the salt flat, located in Chile’s north and the home to 90% of the nation’s lithium reserves. The South American country has the world’s largest proven lithium reserves.

Mexican President Andres Manuel Lopez Obrador in February signed a decree handing over responsibility for lithium reserves to the energy ministry.

Lopez Obrador urged the private sector to work with the new state miner, saying the size of the investment needed means the government needs partners.

But analysts argue that companies are more likely to focus near-term investments in Chile or Argentina’s sprawling salt flats, where industries are more established and policies more market-friendly.

In August, Chinese lithium giant Ganfeng said Mexico’s mining authorities had issued a notice to its local subsidiaries indicating nine of its concessions had been terminated.

Gold to build on record-setting year

The New York futures price of gold set an all-time high at the beginning of December and looks set to surpass the peak going into the new year. 

London’s gold price benchmark hit an all-time high of $2,069.40 per troy ounce at an afternoon auction on Wednesday, surpassing the previous record of $2,067.15 set in August 2020, the London Bullion Market Association (LBMA) said.

“I can think of no clearer demonstration of gold’s role as a store of value than the enthusiasm with which investors across the world have turned to the metal during the recent economic and geopolitical turmoils,” said LMBA’s chief executive officer Ruth Crowell. 

JPMorgan predicted a new record back in July but expected the new high to occur in the second quarter of 2024. The basis of JPMorgan’s optimism for 2024 – falling US interest rates – remains intact:

“The bank has an average price target of $2,175 an ounce for bullion in the final quarter of 2024, with risks skewed to the upside on a forecast for a mild US recession that’s likely to hit sometime before the Fed starts easing.”

Even as gold climbed new peaks, exploration spending on the precious metal dipped. A study published in November overall mining exploration budgets fell this year for the first time since 2020, dropping 3% to $12.8 billion at the 2,235 companies that allocated funds to find or expand deposits.

Despite the sparkling gold price, gold exploration budgets, which historically have been driven more by the junior mining sector than any other metal or mineral, dropped by 16% or $1.1 billion year-on-year to just under $6 billion, representing 46% of the global total. 

That’s down from 54% in 2022 amid higher spending on lithium, nickel and other battery metals, a surge in spending on uranium and rare earths and an uptick for copper. 

Mining’s year of M&A, spin-offs, IPOs, and SPAC deals

In December, speculation about Anglo American (LON: AAL) becoming the target of a takeover by a rival or a private equity firm mounted, as weakness in the shares of the diversified miner persisted.

If Anglo American doesn’t turn operations around and its share price continues to lag, Jefferies analysts say they can’t “rule out the possibility that Anglo is involved in the broader trend of industry consolidation,” according to their research note.

In October, Newcrest Mining shareholders voted strongly in favour of accepting the roughly $17 billion buyout bid from global gold mining giant Newmont Corporation.

Newmont (NYSE: NEM) plans to raise $2 billion in cash through mine sales and project divestments following the acquisition. The acquisition brings the company’s value to around $50 billion and adds five active mines and two advanced projects to Newmont’s portfolio.

Breakups and spin-offs were also a big part of 2023 corporate developments.

After being rebuffed several times in its bid to buy all of Teck Resources, Glencore and its Japanese partner are in a better position to bring the $9 billion bid for the diversified Canadian miner’s coal unit to a close. Glencore CEO Gary Nagle’s initial bid for the entire company faced stiff opposition from Justin Trudeau’s Liberal government and from the premier of British Columbia, where the company is based.

Vale (NYSE: VALE) is not seeking new partners for its base metals unit following a recent equity sale, but could consider an IPO for the unit within three or four years, CEO Eduardo Bartolomeo said in October.

Vale recruited former Anglo American Plc boss Mark Cutifani in April to lead an independent board to oversee the $26-billion copper and nickel unit created in July when the Brazilian parent company sold 10% to Saudi fund Manara Minerals.

Shares in Indonesian copper and gold miner, PT Amman Mineral Internasional, have surged more than fourfold since listing in July and are set to keep rising after its inclusion in major emerging market indexes in November.

Amman Mineral’s $715 million IPO was the largest in Southeast Asia’s biggest economy this year and counted on strong demand by global and domestic funds.

Not all dealmaking went smoothly this year.

Announced in June, a $1 billion metals deal by blank-cheque fund ACG Acquisition Co to acquire a Brazilian nickel and and a copper-gold mine from Appian Capital, was terminated in September.

The deal was backed by Glencore, Chrysler parent Stellantis and Volkswagen’s battery unit PowerCo through an equity investment, but as nickel prices slumped there was a lack of interest from minority investors at the stage of the $300 million equity offering which ACG planned as part of the deal.

Talks in 2022 to acquire the mines also fell through after bidder Sibanye-Stillwater pulled out. That transaction is now the subject of legal proceedings after Appian filed a $1.2 billion claim against the South African miner.

Uranium upsurge

In late November uranium prices scaled $80 per pound for the first time in 15 years, driven by a resurgence in demand for nuclear power and supply disruptions.

Global yellowcake supply might reach 145 million lb. this year or next according to the World Nuclear Association. But annual demand is already at 180 million lb. and the industry group expects it to nearly double to 300 million lb. by 2040.

Some 60 nuclear plants are under construction globally and more are planned. Countries like Germany and Japan that considered phasing them out are reversing course.

Activity in northern Saskatchewan’s Athabasca uranium hotspot is intensifying. NexGen received environmental approval for its Rook I project in November, the province’s first OK for such a project in two decades. Denison Mines released a feasibility study for its Wheeler River project before investing in junior explorer F3 Uranium’s Patterson Lake North property.

Also, IsoEnergy took over Consolidated Uranium in September. Uranium Energy spent C$570 million over the past two years buying Uranium One, UEX Corp. and Rio Tinto’s Roughrider project. Cameco and Brookfield Renewable Partners in October closed their deal to buy Westinghouse’s nuclear plant construction unit for $7.9 billion.

Nickel nosedive

In April, Indonesia’s PT Trimegah Bangun Persada, better known as Harita Nickel, raised 10 trillion rupiah ($672 million) in what was then Indonesia’s largest initial public offering of the year. 

Harita Nickel’s IPO quickly turned sour for investors, however, as prices for the metal entered a steady and long decline. Nickel is the worst performer among the base metals, nearly halving in value after starting 2023 trading above $30,000 a tonne.

Next year is not looking great for the devil’s copper either with top producer Nornickel predicting a widening surplus due to lacklustre demand from electric vehicles and a ramp-up in supply from Indonesia, which also comes with a thick layer of cobalt:

“…due to the continuing destocking cycle in the EV supply chain, a greater share of non-nickel LFP batteries, and a partial shift from BEV to PHEV sales in China. Meanwhile, the launch of new Indonesian nickel capacities continued at a high pace.” 

Palladium also had a rough year, down by more than a third in 2023 despite a late charge from multi-year lows hit at the start of December. Palladium was last trading at $1,150 an ounce.

China flexes its critical mineral muscle

In July China announced it will clamp down on exports of two obscure yet crucial metals in an escalation of the trade war on technology with the US and Europe.

Beijing said exporters will need to apply for licenses from the commerce ministry if they want to start or continue to ship gallium and germanium out of the country and will be required to report details of the overseas buyers and their applications.

China is overwhelmingly the top source of both metals — accounting for 94% of gallium supply and 83% of germanium, according to a European Union study on critical raw materials this year. The two metals have a vast array of specialist uses across chipmaking, communications equipment and defence.

In October, China said it would require export permits for some graphite products to protect national security. China is the world’s top graphite producer and exporter. It also refines more than 90% of the world’s graphite into the material that is used in virtually all EV battery anodes, which is the negatively charged portion of a battery.

US miners said China’s move underscores the need for Washington to ease its own permit review process. Nearly one-third of the graphite consumed in the United States comes from China, according to the Alliance for Automotive Innovation, which represents auto supply chain companies.

In December, Beijing banned the export of technology to make rare earth magnets on Thursday, adding it to a ban already in place on technology to extract and separate the critical materials.

Rare earths are a group of 17 metals used to make magnets that turn power into motion for use in electric vehicles, wind turbines and electronics.

While Western countries are trying to launch their own rare earth processing operations, the ban is expected to have the biggest impact on so-called “heavy rare earths,” used in electric vehicle motors, medical devices and weaponry, where China has a virtual monopoly on refining.

Rhodium has lost two thirds of its market value and palladium a third during 2023, pushing the six-element PGM basket price to $1,250 per oz., two thirds lower than its peak in April 2021, the World Platinum Investment Council says in a report released on Thursday.

The PGM supply deficit is forecast at 8% of demand through 2027 while above ground stocks may fall by 70% during the period to 1.4 million oz., the council said. A quarter of mines are operating unprofitably and putting them on care and maintenance will worsen the supply problem, it said.

“The decline in PGM basket prices over the last 12 months has materially undermined the economic sustainability of significant portions of primary supply,” the council said. “Markets are already projected to be in deficit through our two- to five-year forecast horizon. This, we believe, strengthens the investment case for platinum.”

The price drop is partially due to how supplies from the main PGM producers South Africa and Russia haven’t been disrupted as much as the industry predicted. Declines in their currencies haven’t offset lower prices in US dollars and production cost inflation, putting profitability of their miners at risk. It is forcing mines to increase production to reduce unit costs, sell excess inventory to generate more cash, slash capital spending, renegotiate supply agreements and cut dividend payments.

Output at risk

Mothballing mines to weather the poor prices could put 1.3 million oz. of platinum output and 1.2 million oz. of palladium production at risk, the council said. Primary platinum production is forecast to average about 5.6 million oz. a year between 2020 to 2024, which is 9% lower than the five-year annual average production of 6.1 million oz. from 2015 to 2019, according to the report. Palladium output may fall 6%, the council said.

The ramp up of projects at Northam Platinum’s Booysendal, Eland and Zondereinde; African Rainbow Minerals’ Two Rivers; Implala Platinum Holdings’ (JSE: IMP) Styldrift and Zimplats; Sibanye-Stillwater’s (JSE: SSW; NYSE: SBSW) Stillwater and K4; and Anglo American’s (LSE: ALL) Motololo could add about 1 million oz. of annual PGM production growth, the council said.

Mines depend on prices when fixed costs account for about a quarter of an open pit mine and two thirds of an underground mine, the council says. The earnings before interest, tax, depreciation and amortization of primary PGM miners have fallen an average of 54% in this year’s first half compared to the same period in 2022. That’s more than double the 21% revenue drop during the same period.

Still, some miners have an operating cushion after higher prices during 2020-22.

“Being largely debt free should provide some headroom to take one or several short-term actions to improve or tolerate current margins,” the council said. “However, we estimate that these types of actions are only likely to reduce loss-making ounces by 5-10%.”

In its Platinum Quarterly report released this week, the WPIC highlights a booming demand for the metal, slated to rocket by 27%, hitting 8.23 million ounces. This overshadows a barely changing supply forecast, stagnating at 7.22 million oz., just 31,000 oz. above last year’s figures.

“These statistics spotlight a market under intense pressure, with potential ramifications for investors and industries dependent on this precious metal,” WPIC research director Ed Sterck tells The Northern Miner in an interview. (See video below)

The recovering automotive sector drives this demand upswing, with Sterck’s data projecting a 13% (or 381,000 oz.) increase in 2023. Ramped-up vehicle production rates underpin this surge, with forecasts indicating a 6% and 7% growth for light-duty and heavy-duty vehicle production, respectively.

Sterck highlighted the ongoing platinum for palladium substitution in gasoline vehicles, an adjustment dictated mainly by the existing price differential between the two materials. On the industrial front, significant capacity additions in the chemical and glass sectors are influencing the demand surge.

The Chinese government has been implementing stricter emission standards from July 1, further bolstering platinum demand as industries integrate more platinum group metal (PGM) coated particulate filter systems. This trend is set to elevate the global platinum automotive demand to an anticipated 3.28 million ounces.

Simultaneously, the industrial sector is smashing records, with predictions setting the demand at 2.67 million oz., a notable 14% year-on-year increase. This rise mainly stems from substantial capacity expansions in the glass and chemical sectors, seeing growth rates of 50% (251,000 oz.) and 12% (82,000 oz.), respectively. In contrast, the electrical and petroleum segments anticipate a dip in demand, slated to fall by 8% (9,000 oz.) and 11% (22,000 oz.).

Investment circles also embrace the platinum trend, with predictions setting the net investment demand at 386,000 oz. for 2023. Platinum ETF holdings experienced a significant surge, growing by 155,000 oz. in the June quarter, marking the most substantial quarterly increase since the third quarter of 2020.

Stagnant supply

However, the supply side fails to mirror this burgeoning demand, notes Sterck.

Refined mine production of platinum has plummeted by 4% or 65,000 oz. over last year, settling at 1.46 million oz. in Q2. South Africa, which contributes 75% of global supply, saw a 9% dip in output year-on-year, a decrease linked to ongoing maintenance activities and relentless power disruptions due to the state-owned power utility’s ongoing load curtailments.

Sterck says recycling avenues, too, are on a downturn, reporting a 12% reduction in global recycling in the second quarter.

According to Sterck, these trends underscore the dwindling availability of above-ground stocks to cushion this growing deficit, hinting at a precarious situation where, by the end of 2023, the stocks might cover only five months of annual demand. “A significant portion of these reserves, held in China, are not readily exportable to meet global demands, potentially heightening concerns over metal availability,” Sterck says.

As the market tightens, the intertwined narratives of soaring demand and constricted supply are positioned to offer both short and long-term value incentives for investors. Moreover, platinum’s pivotal role in facilitating a green hydrogen economy, albeit nascent in 2023, is set to burgeon substantially in the medium term, carving a promising pathway for investors seeking a stake in global decarbonization efforts.

VIdeo is here: https://vimeo.com/862155056

Muller said there was no immediate risk of mine closures, but management would weigh each mine’s potential to generate profit, given the price fall.

The Johannesburg-based miner on Thursday said headline earnings in the year to June 30 declined 41% to 18.8 billion rand and cut its full-year dividend by 65% to 5.85 rand per share.

Impala and its South African peers, including Sibanye Stillwater and Anglo American Platinum, had been making record returns when rhodium hit almost $30,000 an ounce in 2021 and palladium surged to more than $3,400 an ounce after Russia’s invasion of Ukraine last year.

Rhodium, which was trading around $4,100 per ounce on Thursday, has dropped more than two thirds in 2023 so far, while palladium, at around $1,230 an ounce, is down 31% this year.

Muller said the company understood the record high prices were not sustainable, but the precipitous decline, particularly in rhodium and palladium, was a surprise.

“It was the speed at which it happened that surprised us, not necessarily the fact that record highs we experienced from 2021 have not been maintained,” Muller told a conference call.

South Africa is the world’s top rhodium supplier and second-largest palladium producer behind Russia. The metals are used in catalysts that curb toxic vehicle emissions.

Production of the metals has also been hit by rolling power cuts in South Africa that reduced Impala’s platinum metals output by 4% to 2.9 million ounces in the year to June 30.

Impala shares in Johannesburg were down 3% by 1241 GMT.

The company hopes to boost output from next year, which could proportionately lower its production costs.

Its output should rise as it incorporates assets acquired from Royal Bafokeng Platinum, which it acquired in a deal finalized this month. Its refined platinum group metals output is expected to rise to between 3.3 million and 3.45 million ounces.

Analysts said that weaker demand from China and the impact from Russian metal being sold at a discount in the Asian economy could be contributing to the fall in prices.

“China’s lower platinum group metals demand and the prioritization of discounted Russian material has been a key driver in our view,” UBS said in a note.

(By Felix Njini and Swati Verma; Editing by Muralikumar Anantharaman, Barbara Lewis and David Goodman)

The restrictions — most frequently taxes, but also quantitative limits — have increased more than five-fold in the last decade to a point where 10% of the global value of exports is subject to at least one measure, the OECD said.

China, India, Argentina, Russia, Vietnam and Kazakhstan are the top six in terms of new curbs in the last decade. Those are also among the countries many of the OECD’s members depend on for supply, the organization said.

“The research so far suggests that export restrictions may be playing a non-trivial role in international markets for critical raw materials, affecting availability and prices,” researchers Przemyslaw Kowalski and Clarisse Legendre said. “Taking into account OECD dependencies on relevant imports described in this paper, this situation warrants scrutiny.”

The findings come as the OECD also said a significant scaling up of production and trade in the materials is needed to meet an expected four-to-six-fold increase in demand for the green transition.

Lithium, rare earth elements, chromium, arsenic, cobalt, titanium, selenium and magnesium saw the largest increase in production in recent years.

“While the production and trade of most critical raw materials has expanded rapidly over the last ten years, growth is not keeping pace with projected demand for the metals and minerals needed to transform the global economy,” the OECD said.

(By William Horobin)

South Africa’s Northam Platinum has terminated its offer to buy Royal Bafokeng Platinum, citing low prices of platinum group metals (PGM) as it ended a year-long takeover battle with bigger rival Impala Platinum.

Northam had outbid Impala’s initial offer to acquire RBPlat, but on Wednesday said that PGM prices had fallen to levels amounting to a “material adverse change” that proved fatal to its offer.

“Northam Holdings hereby notifies RBPlat shareholders that the offer is terminated with immediate effect,” it said.

The miner said that the rhodium closing price has remained below $9,000 an ounce for 12 consecutive trading days, while the basket price for four PGMs had fallen below 33,000 rand ($1,830.91) per ounce for 10 consecutive trading days.

Northam’s decision to end its pursuit of RBPlat clears the path for Impala, the world’s second-biggest PGM producer, to strengthen its hold on a miner with high-grade assets that made it an attractive takeover target.

Impala and Northam have built holdings in RBPlat of 40.71% and 34.52% respectively during the takeover battle.

Northam did not say whether it would retain its stake or sell to Impala, but Northam chief executive Paul Dunne told analysts on March 24 that his company could consider jointly running RBPlat with Impala.

($1 = 18.0238 rand)

(By Anait Miridzhanian and Nelson Banya; Editing by Jan Harvey and David Goodman)

“Will our investors continue to get their returns? Yes, they will, but the size of returns will be slightly softer,” Chief Executive Officer Natascha Viljoen said in an interview. “Will it be the returns we had in 2021? probably not.”

A year ago, the Anglo American Plc unit announced a record payout as automaker demand buoyed the price of rhodium and palladium, which are produced as byproducts of platinum mining. While metal prices have slipped back from 2021 levels, the biggest drag faced by miners are intensifying power blackouts as state-owned utility Eskom Holdings SOC Ltd. struggles to keep its unreliable coal-fired plants working.

The challenges are “worrying” as they hit hard on a sector that’s already grappling with criminal activities and sabotage at mine sites, said Viljoen. She added that the extra time she devotes to managing power outages means she only gets about six hours sleep a night. Still, at current prices, Amplats’s margins are “really good,” she said.

The power outages could cut South Africa’s output of platinum-group metals by a fifth this year, after an estimated reduction of 10% in 2022, Sibanye Stillwater Ltd. CEO Neal Froneman said in an interview last week. While the lower volumes of metals being mined from South Africa will probably help buoy prices, producers will struggle to keep a lid on costs, he said.

“What is for sure is earnings will be impacted negatively,” Froneman said in an interview. “Companies may still have some flexibility to ensure dividends and payouts to shareholders and stakeholders can still be met.”

(By Felix Njini)

The new inferred resource estimate raised tonnage by 62% compared with figures from 2021, according to a company filing on Wednesday. Contained metal jumped across the board: nickel up 52%; copper 44%, cobalt 31%; platinum 66%, gold 30% and rhodium 76%.

“These increases speak to the fantastic growth potential and under-explored nature of the Stillwater West project,” president and chief executive officer Michael Rowley said in a news release. “Its world-class endowment of eight critical minerals is unique in the United States as a district-scale asset located in an active, producing district that has a long history of large-scale critical mineral production.”

The project about 320 km southeast of state capital Helena in the Stillwater igneous complex lies beside Sibanye-Stillwater’s Stillwater, East Boulder, and Blitz mines, the world’s highest-grade major platinum group metals operations and largest outside South Africa and Russia.

Stillwater is among companies in the exploration surge for battery and other minerals deemed critical by Western nations for modern technology and to challenge China’s dominance in their production. The Vancouver-based company says it sees similarities between the project’s site and the world’s largest reserves of platinum group metals north of Pretoria, where Ivanhoe Mines (TSX: IVN) is developing its Platreef project.

Danie Grobler, vice-president of exploration, is working with Prof. Wolfgang Maier at Cardiff University in Wales on models targeting the ultramafic mineralization at Stillwater and how it compares with the bushveld complex in South Africa.

“Our 2023 exploration programs will be focused on expansion of these thick zones of mineralized pegmatoidal pyroxenite/peridotite and associated chromites, as well as broad zones of massive to net-textured sulphides near the base of the layered sequence,” Grobler said in the release. “We are seeing similar metal distribution characteristics when compared to the Platreef.”

The 32-km-long Montana project’s new resource estimate is focused on five deposits in its 9-km central area, all open along strike and at depth with geophysical anomalies showing expansion potential, Stillwater said. The project could use a conventional flotation recovery process since sulphur grades of 1.13% to 6.16% indicate high nickel in the sulphide, it said.

The company has also inventoried 2.3 billion lb. of critical mineral chromium.

The Stillwater West project has 255 million tonnes grading 0.19% nickel, 0.09% copper, 0.02% cobalt, 0.15 gram platinum per tonne, 0.25 gram palladium, 0.05 gram and 0.02 gram rhodium (0.39% nickel-equivalent and 1.19 grams palladium-equivalent per tonne), according to the company filing. The cut-off grade is 0.2% nickel.

Contained metal is 1.1 billion lb. nickel, 499 million lb. copper, 91 million lb. cobalt, 1.2 million oz. platinum, 2.1 million oz. palladium, 395,000 oz. gold and 115,000 oz. rhodium (2.2 billion lb. nickel-equivalent and 9.8 million oz. palladium-equivalent).

That compares with a 2021 estimate of 157 million tonnes grading 0.2% nickel, 0.1% copper, 0.02% cobalt, 0.15 gram platinum, 0.26 gram palladium, 0.06 gram gold, and 0.01 gram rhodium per tonne (0.45% nickel-equivalent and 1.2 grams palladium-equivalent).

Contained metal was 694 million lb. nickel, 347 million lb. copper, 69.4 million lb. cobalt, 758,000 oz. platinum, 1.3 million oz. palladium, 303,000 oz. gold and 61,000 oz. rhodium (1.6 billion lb. nickel-equivalent and 6.1 million oz. palladium-equivalent).

Visualizing the metals you can buy with $1,000

For millennia people have purchased and relied on metals for decorative and industrial uses, figuring out their values based on their practical applications and visual luster.

Today, precious and industrial metals markets quote figures in millions and billions as they exchange thousands of ounces, with varying densities and values of metals making it difficult to compare them.

Using price data from TradingEconomics, this graphic visualizes how much of each metal you can buy for $1,000 so you can see just how much, or how little, of each metal you get for your money.

How we value precious and industrial metals

Characterized by their natural shine, metals are valued using the two key principles of rarity and their industrial uses, with unique properties such as their appearance or cultural significance also affecting their value.

• Rarity: A more scarce metal or resource will often have a higher value than one which is more abundant.
  • For example, while there are an estimated 2.1 billion tonnes of identified copper deposits, there are only 57,000 tonnes of underground gold reserves. While copper is valued at $0.24 per troy ounce, gold is worth around $1,815 per troy ounce.
• Industrial uses: Metals which are needed for important industrial processes will often have a high demand from manufacturers, increasing their valuation.
  • For example, for most of its history cobalt was used decoratively for its striking blue color and for the creation of superalloys and steel products. However, when it was recently discovered that cobalt could be a key component in lithium-ion batteries for EVs, demand for cobalt surged sending its price from around $23,000 per tonne to more than $90,000 per tonne at one point.

Along with these two primary factors, unique properties and historical uses can also affect a metal’s valuation.

Former monetary metals like gold and silver are still sought after by investors for their potential ability to retain value over time compared to today’s fiat currencies. Meanwhile, platinum’s durability, resistance to tarnishing, and its bright white color makes it highly sought after for jewelry, raising the demand and value of the precious metal.

Getting less for more: Comparing metal density

A key factor that determines the volume of a metal you get for a certain price is also the metal’s density. Precious metals tend to be more dense than industrial metals, with sometimes more than double the density depending on the specific metals compared.

As seen in the graphic above, $1,000 worth of highly dense metals like gold (19.32 g/cm³), iridium (22.56 g/cm³), and osmium (22.59 g/cm³) amount to small cubes less than a centimeter across. Meanwhile, $1,000 of a less dense (and also less valuable) metal like aluminum with a density of only 2.7 g/cm³ yields a large cube nearly two feet tall.

To put these densities in comparison, if gold had the same density as aluminum, its cube on the graphic above would be more than seven times larger.

While it’s impossible to directly compare the value of each metal’s industrial uses and applications, seeing just how much (or how little) of a metal you get for $1,000 can give some perspective to their value.

(This article first appeared in the Visual Capitalist Elements)

The proposed mine, located 10 km from Marathon, Ontario, is expected to produce an average of 245,000 ounces of palladium equivalent production annually over an estimated 13-year mine life. 

Platinum group metals, which includes palladium, platinum and rhodium, are key materials used in n the manufacturing of catalytic converters, which remove harmful chemicals from car exhaust emissions. 

Copper, the other metal to be produced at the mine, is a critical in the manufacturing of electric vehicles (EVs) and associated charging infrastructure. An EV battery requires 2.5 times more copper than a standard internal combustion engine vehicle. 

Generation Mining said it would now proceed with obtaining any additional permits from federal offices, including Fisheries and Oceans as well as the department of Natural Resources.

“The minerals mined through this project, mainly palladium and copper, will play an important role in Canada’s transition to a low-carbon economy,” Environment and Climate Change Minister Steven Guilbeault said in a statement.

It is also expected to help build the supply chain for critical minerals and the automotive manufacturing industry in Ontario, the province said in a separate statement.

Hundreds of jobs

Building the Marathon mine will require the construction, operation, decommissioning and remediation of three open pits. It would also need an on-site ore processing facility, a 115 kV transmission line, an access road and a water management system among other infrastructure.

The processing plant will operate at about 9.2 million tonnes a year of ore to produce about 87,000 tonnes of copper concentrate annually. The concentrate will be delivered to a third-party facility for further downstream processing into refined critical minerals.

Site construction is anticipated to take 18 to 24 months and will employ around 900 workers. The operating workforce is estimated at 375 people, Ontario’s Minister of Mines George Pirie said.

Based on current mineral reserves, Marathon is expected to deliver 1.91 million ounces of palladium, 467 million pounds of copper, 537,000 ounces of platinum, 151,000 ounces of gold and 2.82 million ounces of silver in payable metals.

Guilbeault, who is also responsible for the Impact Assessment Agency of Canada, noted that approving the Marathon project will also result in important benefits for members of Biigtigong Nishnaabeg First Nation.

Ontario’s mining industry generates more than C$11 billion in annual mineral production and supports 75,000 direct and indirect jobs.

The sector is the largest private employer of Indigenous peoples in Canada. In Ontario, First Nation workers made up 11% of the province’s direct mining jobs.

Law enforcement officials also executed 32 search warrants and seized millions of dollars in assets including homes, bank accounts, cash and luxury vehicles, the Department of Justice said Wednesday in a news release. The government is seeking forfeiture of more than $545 million in connection with the case.

“This national network of criminals hurt victims across the country,” FBI Director Christopher Wray said in the statement. “They made hundreds of millions of dollars in the process — on the backs of thousands of innocent car owners.”

Metal thieves in search of platinum, rhodium and palladium have been stealing catalytic converters in ever-greater numbers, sending auto-insurance claims soaring across the country, State Farm said earlier this year. The insurer said it paid $62.6 million for 32,265 catalytic converter theft claims nationally — a 1,173% increase from 2019.

A catalytic converter is an emissions-control device that’s in the exhaust system under many gas-powered vehicles.

The defendants in the theft ring were charged in two separate indictments in California and Oklahoma federal courts.

California has higher emissions standards than the rest of US, so catalytic converters on vehicles registered in the state contain higher concentrations of precious metals, the US said in a court filing in Sacramento federal court.

“Last year approximately 1,600 catalytic converters were reportedly stolen in California each month, and California accounts for 37% of all catalytic converter theft claims nationwide,” said US Attorney Phillip Talbert for the Eastern District of California.

The thieves know which vehicle makes and models contain the most precious metals in the catalytic converters, the government said in the court filing.

“The design of the Toyota Prius and other hybrid vehicles employ a very high concentration of palladium,” the US said. “Therefore, they are targeted by thieves for their high value, specifically the 2004-2009 model years.”

The nine people charged in Sacramento were involved in a conspiracy to ship the stolen catalytic converters from California to DG Auto facilities in New Jersey, where the precious metal powders were extracted and sold for profit, the US said.

DG Auto employees created a pricing application for both Apple and Android platforms that provided real-time pricing information for catalytic converter thieves and their customers, according to the indictment.

A call to DG Auto was forwarded to an answering machine, which said the mailbox was full and couldn’t accept any more messages.

The cases are US v. Khanna, 22-cr-0213, US District Court, Eastern District of California (Sacramento) and US v. Khanna, 22-cr-348, US District Court, Northern District of Oklahoma.

(By Joe Schneider)

 The mining industry relies on a relatively small number of giant deposits to fuel growth — and new discoveries of this nature are few and far between. 

Using data from sister company Miningintelligence, MINING.COM compiled a ranking of the world’s 10 richest working base and precious metal mines by calculating the aggregate value of mineral resources based on ruling prices. 

Number 1 on the list, Norilsk Nickel’s eponymous operations in Russia’s far north, date back to 1960 with the discovery of the Talnakhskoye field although the refinery processing Soviet nickel output started up decades earlier. Today a complex of several mines around Norilsk extract the Ni, Cu, Pt, Pd and Au metals from the magmatic sulphide deposit.      

The second most valuable orebody in the world being mined today – Olympic Dam in South Australia – was discovered in the mid-1970s, while no. 3 Mogalakwena in South Africa began operations in the 1990s. The world’s largest copper mine Escondida, which sits at no. 4 on the list, was discovered in 1981 but wouldn’t hit current production in excess of one million tonnes per year before 2004. 

While these mines are approaching middle age, they are relative newcomers considering that no 8 Morenci began operations in 1873, mining activity at no. 4 Collahuasi dates back to the 1880s,  no. 10 Los Bronces went into production in 1916 and Grasberg (then Ertsberg or Ore Mountain) was first explored in 1936. Indeed, the world’s top 20 copper mines have a weighted average age of nearly 100 years from initial discovery.     

The discovery of Congo’s Tenke Fungurume dates back to the 1970s, but standout on the list for its youth is Kamoa Kakula with first production only in May last year although the high-grade copper deposit in the DRC was first discovered in the early 2000s. 

Mining’s 2022 has been a particularly volatile year with a few metals – including bellwether copper – hitting all-time highs during the first quarter only to plunge to multi-year lows during the summer. 

Measured from the start of the year all base metals – except nickel – are down by double digit percentage points with copper officially in a bear market with a 20% drop in 2022. Among precious metals palladium is showing gains for the year and platinum is trading flat, but gold is down nearly 10% and silver has lost 16% in value. 

A back of the envelope calculation shows the value of the contained metal at Norilsk would’ve pushed $1.5  trillion back when palladium (representing 43% of the dollar value) was trading above $3,000, nickel (30%) over $48,000 and copper (19%) more than $10,000 back in March. 

The same sum for Olympic Dam sees the copper (64% of the overall value), gold (19%), uranium (15%) and silver mine also top a $1  trillion measured using the 52-week highs of the metals and nuclear fuel. Uranium’s comeback continues to gain momentum and the price of yellowcake is up more than 20% since the start of the year.

While not nearly all the contained metals in measured and indicated resources in these deposits will be extracted, the exercise does illustrate just what valuable assets mines like these are. And perhaps more pertinent – just how uneven rich deposits like these are scattered across the planet.

More data is at Miningintelligence.

Platreef is a palladium, rhodium, nickel, platinum, copper and gold development project that is 64% owned by Ivanhoe. A 26% interest is held by Ivanhoe’s broad-based, black economic empowerment (B-BBEE) partners, which include 20 local host communities with approximately 150,000 people, project employees and local entrepreneurs. A Japanese consortium owns the remaining 10% interest.

The project hosts a thick, underground deposit known as Flatreef, containing approximately 58.8 million oz. of precious metals (palladium, rhodium, platinum and gold), as well as 6.2 billion lb. of copper and nickel in indicated resources, plus 94.3 million oz. of precious metals and 11.9 billion lb. of copper and nickel in inferred resources.

It is located on the northern limb of South Africa’s Bushveld Complex, where platinum group metals mineralization is primarily hosted within the Platreef, a mineralized sequence that is traced more than 30 km along strike.

Ivanhoe’s project, within the Platreef’s southern sector, comprises two contiguous properties: Turfspruit and Macalacaskop. Turfspruit, the northernmost property, is contiguous to Anglo Platinum’s Mogalakwena group of properties. The Flatreef deposit lies entirely on the Turfspruit and Macalacaskop properties.

The initial scope of the development plan is to fast-track Platreef into production, starting with an initial 700,000 t/y underground mine using the existing Shaft 1 and a new on-site concentrator. First concentrate production from Phase 1 is planned for Q3 2024, with the Phase 2 expansion expected following the commissioning of Shaft 2 in 2027.

Phase 1 average annual production is expected to be 113,000 oz. of precious metals, plus 5 million lb. of nickel and 3 million lb. of copper. The average annual production of the Phase 2 expansion is expected to increase to 591,000 oz., plus 26 million lb. of nickel and 16 million lb. of copper.

Platreef is projected to become Africa’s lowest-cost producer of platinum group metals, nickel, copper and gold.

New exploration territory

The new exploration rights form a continuous block situated on the southwest border of Ivanhoe’s existing Platreef mining rights at Turfspruit and Macalacaskop, which together cover 78 square kilometres in area.

The exploration rights overlap a significant geophysical gravity anomaly known as the “Mokopane Feeder”, the centre of which is located approximately 10 km from Platreef’s Shaft 1.

“The Bushveld Complex sits among the most unique and valuable mineral endowments on our planet. These exploration rights are postulated to be geologically significant by our leading geoscientists. The new exploration rights are located at the intersection of a highly significant gravity geophysical anomaly and major regional geological structures,” said Robert Friedland, Ivanhoe’s executive co-chairman.

“Therefore, the ‘Mokopane Feeder’ may be related to the actual source of the giant mineralizing system feeding the entire northern limb of the Bushveld Complex,” he added.

The Bushveld Complex is currently the largest known, layered igneous complex in the world and is host to the largest known reserves of platinum group metals, chromium and vanadium, as well as gold and base metals including nickel and copper.

According to the geological team at Ivanhoe, the “Mokopane Feeder” anomaly is the most significant gravity feature in the entire Bushveld Complex. Academic studies based on historical data hypothesized that the anomaly represents a primary feeder zone to the Rustenburg layered suite of the northern limb.

To better understand the conceptual “Mokopane Feeder” target, Ivanhoe said it will begin a detailed high-resolution, airborne-magnetic and gradiometer-gravity survey over the project area. The surveys are expected to be completed in early 2023.

The company’s evaluation of the flagship Stillwater West project continues to confirm more parallels to South Africa’s Bushveld Igneous Complex, and positions the company as the second-largest landholder in the Stillwater Complex, with a 100%-owned position next to Sibanye-Stillwater’s (JSE: SSW; NYSE: SBSW) PGE mines in south-central Montana.

“Given global geopolitical tension on several fronts, the world is increasingly looking towards North America and other first-world jurisdictions to supply the critical minerals such as PGMs, nickel, cobalt, copper and gold the modern economy requires,” Rowley said in an interview with The Northern Miner.

“With Stillwater West, we’re at a remarkable sweet spot. It’s got a lot of data, a supportive U.S. Geological Survey backing, but it’s, remarkably, not well understood,” Rowley said. “We’re rewriting the book on the Lower Stillwater Complex, quite literally. And there’s a lot of potential there. It’s a big and well-mineralized system.”

Since acquiring the project in 2017, Stillwater Critical, then known as Group 10 Metals, has focused on the potential for Stillwater West to host large-scale Platreef-style nickel and copper sulphide deposits, enriched in palladium, platinum, rhodium, gold and cobalt.

The company’s work to date has confirmed Stillwater West’s location in the Stillwater Igneous Complex relative to Sibanye-Stillwater’s productive J-M Reef deposits as comparable to Ivanhoe Mines’ (TSX: IVN; US-OTC: IVPAF) Platreef deposit and Anglo American’s (LSE: AAL) PGE-nickel-copper Mogalakwena mine in a similar geologic setting in the U.S.

Stillwater’s most important milestone yet was the release in October 2021 of an initial inferred resource estimate encompassing five Platreef-style deposits totalling 1.1 billion lb. of nickel, copper and cobalt, and 2.4 million ounces of palladium, platinum, rhodium and gold. The constrained model totals 157 million inferred tonnes averaging 0.45% total nickel-equivalent (or 1.2 grams palladium-equivalent per tonne), using a 0.2% nickel-equivalent cut-off.

Since then, Stillwater Critical has reported several wide, high-grade battery and precious metal intercepts in wide step-outs from known mineralization in expansion drilling.

Notable comparables

The $16 million, 5-year, government-funded project will employ NASA’s Airborne Visible/Infrared Imaging Spectrometer high-altitude earth remote sensing platform and MODIS/ASTER Airborne Simulator to collect hyperspectral data over large regions in the arid and semi-arid western United States. 

Hyperspectral data are reflections of light from surfaces, measured across hundreds of frequency bands. These measurements capture not only light visible to the eye, but also bands of light beyond the visible, into the infrared.

According to the USGS and NASA, the data collected can be very useful in studying surface rock formations because each mineral in rocks has its own unique reflection characteristics across the various bands of light. Thus, looking for these patterns or ‘spectral signatures’ can help identify locations with high potential for mineral resources.

The research will also include evaluating critical mineral potential in mine waste.

“Mine waste is receiving increasing attention for its potential to contain critical mineral resources, particularly those that are most often produced as byproducts, while also offering an opportunity for remediation of contaminated sites,” the agencies said in a media statement.

“For instance, the USGS recently analyzed mine tailings from historical iron production in the Adirondacks of New York for rare earth element potential.”

The Geological Survey has also used hyperspectral data in the past to analyze mineral potential in Alaska, while finding these data useful for understanding a variety of other earth science and biological issues including geologic acid mine drainage, debris flows, agriculture, wildfires and biodiversity.

“This exciting scientific effort is made possible through President Biden’s Bipartisan Infrastructure Law’s investments and will enable NASA and the USGS to leverage our unique capabilities toward a common goal,” USGS director, David Applegate, said in the press brief.

“The data we’re collecting will be foundational for not only critical minerals research but also for a wide range of other scientific applications, from natural hazards mitigation to ecosystem restoration.”

The $16 million allocated to this project are part of a larger, $510.7 million investment provided by the Bipartisan Infrastructure Law for the USGS to support integrated mapping and interpretation of mineral resources data, the preservation of data from geochemical samples from Earth MRI, and the construction of a USGS energy and minerals research center in Golden, Colorado.

In a paper published in the journal JACS Au, the scientists explain that, globally, more than 1 billion people contract a fungal infection and that although they are harmless to most, over 1.5 million patients die each year as a result of such infections.

According to the group led by Angelo Frei, despite more and more fungal strains becoming resistant to one or more of the available drugs, the development of new drugs has come to a virtual standstill in recent years. This lack of interest is what inspired him and his colleagues to look into using metals to breathe new life into the search for treatments.

“The opinion that metals are fundamentally harmful to us is widespread. However, this is only partially true. The decisive factor is which metal is used and in which form,” Frei said in a media statement. “Many of the metal compounds [tested] demonstrated a good activity against all fungal strains and were up to 30,000 times more active against fungi than against human cells.”

The researcher said that out of the 21 compounds, the 11 most active ones were tested in a model organism, the larvae of the wax moth. Only one of the metal compounds showed signs of toxicity, while the others were well tolerated by the larvae. In a subsequent step, some metal compounds were tested in an infection model, and one compound effectively reduced the fungal infection in larvae.

“Our hope is that our work will improve the reputation of metals in medical applications and motivate other research groups to further explore this large but relatively unexplored field,” Frei said.

“If we exploit the full potential of the periodic table, we may be able to prevent a future where we don’t have any effective antibiotics and active agents to prevent and treat fungal infections.”

Extreme volatility on metal and mining markets intensified in the second quarter and after hitting record highs in March, copper, nickel, aluminium, zinc and tin went into meltdown mode over the three months to end June. 

Copper is trading at its lowest since November.  After soaring above $200 this time last year iron ore prices are again coming dangerously close to double digits. 

Despite historically low stockpiles – 700kt vs 2.4m tonnes a year ago – industrial metals continue to be hammered down. Nickel’s wild ride ended up going nowhere with the price of the stainless steel ingredient back to where it started the year. 

After initially offering safe harbour for investors, gold has now also succumbed to weakness dropping to nine month lows this week.

While prices for lithium have held not far off recent all-time highs, stock prices have not. The Ukraine war lit a fire under PGMs, only to give up those gains and more.

Tough at the top

As fear overtook greed in Q2, MINING.COM’s TOP 50* ranking of the world’s most valuable miners fell by $383 billion – based on primary exchange share price movements converted into US dollars – over the course of the second quarter and are now worth $1.37 trillion, down from $1.75 trillion at the end of March this year. 

As an indication of just how volatile the market has become and how much sentiment has changed over the last three months measured from the stocks’ 52-week highs, mining’s top tier stocks lost a stunning $636 billion. 

The top 10 mining companies lost a combined $289 billion – with BHP one of the worst performers. At the end of June, nervous investors had shaved nearly $50 billion, or 28% from the market value of the world’s largest miner since the stock hit a record high little less than a year ago (and came within an inch of that level again in April).  

Among the heavyweights, pureplay copper producers were hardest hit and most of those losses came in the past couple of weeks.

Freeport, the world’s number two copper producer behind Chile’s state-owned Codelco, has lost 30% year-to-date while Southern Copper, Antofagasta, First Quantum and Jiangxi are all down 20% or more.  

Cool coal 

After spending time outside the top 10 last year, Glencore just pipped Vale’s market cap at the end of June to become the world’s third most valuable mining company. Unlike its peers, Glencore has not abandoned coal mining amid a spike in prices, and its trading arm is benefiting from sky high prices for energy, helping the Swiss firm stay in the black year to date.   

Coal companies are the best performers on the index – with Shaanxi Coal and Yanzhou Coal both up more than 65% this year and the world’s top producer, Coal India, also enjoying a bull market, up nearly 20% in 2022.

While coal producers did well across the board, the top performer year to date and Chile’s sole entry into the ranking is lithium extractor SQM.

Russian resilience 

While trading on Western markets in Russian stocks have been halted, the country’s miners, much like the rouble and the Moscow Stock Exchange, have proved resilient. 

While there is a measure of artificiality to the valuation of the likes of Norilsk Nickel because of captive investors on the MCX, it is remarkable that the palladium, nickel and copper producer has managed to show gains so far in 2022 and strong gains in Q2 after the resumption of trading.  

Diamond giant Alrosa also returns to the ranking thanks to a robust quarter, and Polyus is just in positive territory YTD.

Chinese cheer

With the addition of Huayou Cobalt at position no 23, the combined value of miners from China has now surpassed that of the US at $236 billion versus $185 billion. The market worth of the country’s miners was boosted by coal and lithium mining, with Tianqi and Ganfeng both jumping in value in the second quarter.  

In terms of numbers, China now also has the most firms represented at ten, followed by Canada, the US and South Africa. Australia is down to 5 representatives after lithium company Mineral Resources had to make way for uranium giant Kazatomprom, which returns to the ranking based on units in the company trading in London. 

*NOTES:

Source: MINING.COM, Miningintelligence, Morningstar, GoogleFinance, company reports. Trading data from primary-listed exchange at June 30, 2022 where applicable, currency cross-rates July 4, 2022. 

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

Market capitalization calculated at primary exchange from total shares outstanding, not only free-floating shares.

As with any ranking, criteria for inclusion are contentious issues. 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, Singapore-based trader Trafigura,  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 was another central consideration. 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.

Lithium and battery metals also pose a problem due to the booming market for electric vehicles and a trend towards vertical integration by battery manufacturers and mid-stream chemical companies.  Battery producer and refiner Ganfeng Lithium, for example, is included because it has moved aggressively downstream through acquisitions and joint ventures.   

Vertically integrated concerns like Alcoa and energy companies such as Shenhua Energy where power, ports and railways make up a large portion of revenues pose a problem as do diversified companies such as Anglo American with separately listed majority-owned subsidiaries. We’ve included Angloplat in the ranking as well as Kumba Iron Ore.

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.

Following an initial assessment of the impact of weather-triggered inundation and mudslides, Sibanye-Stillwater said that its operations were largely unaffected.

Access to the East Boulder mine and Columbus metallurgical facilities remains intact and both facilities continued operating during the flooding events, the company said.

Around its Stillwater mine, which accounts for 60% of the company’s production in the US, several bridges were damaged, and sections of the primary access road have been severely eroded. This has restricted access to the mine and required rerouting of water, tailings and other piping, the company said.

Sibanye-Stillwater said it has started remediation work on its east/west access bridge, which will be completed in a month. Operations at Stillwater mine will remain suspended longer, until safe access to the mine is restored and production can resume.

“We will continue to work with the local authorities and other stakeholders to fast-track the recovery of the region,” chief executive Neal Froneman said in a statement.

The South African company’s mines in the US produced a combined 570,400 ounces of platinum group metals last year.

The device, called a “catalytic condenser,” is the first to demonstrate that alternative materials that are electronically modified to provide new properties can yield faster, more efficient chemical processing.

In a paper published in the journal JACS Au, the scientists behind the innovation explain that it opens the door for new catalytic technologies using non-precious metal catalysts for applications such as storing renewable energy, making renewable fuels, and manufacturing sustainable materials.

The inspiration behind this work is what the group sees as a major barrier to advancing technology: the short supply of rhodium and palladium, globally, and their high prices.

Given this state of affairs, the researchers decided to use their knowledge of how electrons behave on surfaces to test a theory that states that adding and removing electrons to one material could turn the metal oxide into something that mimicked the properties of another.

“Atoms really do not want to change their number of electrons, but we invented the catalytic condenser device that allows us to tune the number of electrons at the surface of the catalyst,” Paul Dauenhauer, the professor of chemical engineering and materials science at the University of Minnesota that led the research team, said in a media statement.

“This opens up an entirely new opportunity for controlling chemistry and making abundant materials act like precious materials.”

The catalytic condenser device uses a combination of nanometer films to move and stabilize electrons at the surface of the catalyst. This design has the unique mechanism of combining metals and metal oxides with graphene to enable fast electron flow with surfaces that are tunable for chemistry.

“Using various thin-film technologies, we combined a nano-scale film of alumina made from low-cost abundant aluminum metal with graphene, which we were then able to tune to take on the properties of other materials,” Tzia Ming Onn, a post-doctoral researcher who fabricated and tested the catalytic condensers, said.

“The substantial ability to tune the catalytic and electronic properties of the catalyst exceeded our expectations.”

According to Dauenhauer and Onn, the catalytic condenser design has broad utility as a platform device for a range of manufacturing applications. This versatility comes from its nanometer fabrication that incorporates graphene as an enabling component of the active surface layer.

The scientists also explained that the power of the device to stabilize electrons (or the absence of electrons called “holes”) is tunable with varying compositions of a strongly insulating internal layer. The device’s active layer also can incorporate any base catalyst material with additional additives, that can then be tuned to achieve the properties of expensive catalytic materials.

“We view the catalytic condenser as a platform technology that can be implemented across a host of manufacturing applications,” co-author Dan Frisbie said. “The core design insights and novel components can be modified to almost any chemistry we can imagine.”

The team plans to continue their research on catalytic condensers by applying them to precious metals for some of the most important sustainability and environmental problems.

The company said that sustained warm weather in the past days led to rapid snow melt in mountains, which, together with heavy rainfall over the weekend, caused flooding of numerous rivers in the region where its mines are located.

The torrential rain has also triggered mudslides, which have damaged road and bridges. “This is likely to restrict access to the Stillwater mine for some period that will be better known in the next few days,” spokesman James Wellsted said in a statement.

Wellsted added that the East Boulder mine was less affected and access to it currently remains intact.

The impact of the floods on production is yet to be determined, the company said, noting that no injuries have been reported after the incident.

Sibanye-Stillwater’s Montana mines produced a combined 570,400 ounces of PGMs last year. These operations account for around 20% of the company’s earnings before interest, taxes, depreciation, and amortization, according to BMO analysts’ estimates.

The record flooding and rockslides forced Yellowstone National Park, which spans parts of Wyoming, Montana, and Idaho, to shut for the first time in 34 years.

It is uncertain how many visitors are stranded or have been forced to leave the park and how many people who live outside it have been rescued and evacuated.

The three metals are used in autocatalysts that reduce emissions from vehicle engines, with platinum also used in other industry and for jewellery and investment.

Tight supply of palladium and rhodium has driven prices to record highs in recent years, while ample supply of platinum has weighed on its price.

Johnson Matthey said it could not reliably estimate how much metal would reach the market from Russia, a major producer, and for that reason it did not give precise surplus or deficit numbers as it has done in previous reports.

Sanctions on Russia since it sent troops into Ukraine in February have not stopped its exports, but Johnson Matthey researcher Rupen Raithatha said it was possible that governments or companies may take further measures that could do so.

Matthey said low production of automobiles due to a semiconductor shortage would dampen demand in 2022 but that supply was also under pressure, with South African output expected to fall.

Platinum demand growth is being driven by its increased use in catalysts for heavy duty trucks and automakers saving money by replacing some palladium with platinum in catalysts for gasoline engines, Matthey said.

It said high prices of palladium and rhodium had caused significant thrifting by Chinese automakers.

Increased supply risk from Russia, the biggest palladium producer, was unlikely to speed up the substitution of palladium in the short term but could in the longer term, Raithatha said.

Automakers “can’t react that quickly on the amount of metal they use this year or even next year, but if the situation (in Ukraine) continues they may have some flexibility to substitute a little bit quicker than they had previously planned,” he said.

(By Peter Hobson; Editing by Barbara Lewis)

Related Article: Britain to increase tariffs on Russian platinum, palladium in new sanctions

The US undersecretary for economic growth, energy and the environment, Jose W. Fernandez, said any energy policy that warms our planet simply could not continue.

“We also know that moving to a clean energy transition will not happen overnight. In some cases where carbon-neutral options are unavailable, engagement on natural gas projects, abated to the fullest degree possible, may be necessary,” he said.

The US has singled out a more efficient electricity supply as one of its top foreign policy priorities for Africa. This goes in parallel with the continent navigating a just and inclusive clean energy transition, leading to economic growth and prosperity; building robust, sustainable, and transparent supply chains for critical minerals in support of the clean energy transition; and improving the financial and regulatory environment in the sector and promoting transparent and accountable natural resource management.

For this reason, the Obama-administration-era Power Africa program, administered by USAID, has supported the development of more than 5,700 megawatts of new generation capacity since 2013. According to USAID data, it’s targeting adding more than 30,000 megawatts of output by 2030, sufficient to power 60 million homes and businesses.

Among the projects Fernandez highlighted is the Mega Solar initiative in Namibia and Botswana, which will facilitate the procurement of as many as 5,000 MW of renewable energy, according to Fernandez.

Southern Africa’s most extensive solar power-generation program will power millions of homes and generate thousands of jobs while preventing an estimated 3.5 million tonnes of greenhouse gas emissions annually.

Power Africa has been ramping up activity. In April, it launched a new public and private partnership seeking to electrify an additional 10,000 health care facilities in sub-Saharan Africa within the next decade.

Fernandez also highlighted an initiative called Prosper Africa, which was announced by the Trump administration seeking to connect American and African businesses. The US government uses this initiative to push Africa toward cleaner energy.

It has helped facilitate a $2.1 billion solar project in Angola led by US developer Sun Africa, and a $3.5 billion refinery built by a consortium led by Quanten LLC. Fernandez said that the latter would produce 100,000 barrels of refined fuel products a day that conform to the Euro 5 emissions standard.

Fernandez also cautioned that government initiatives would probably be insufficient to address Africa’s energy needs, and the private sector would have to push progress forward.

‘Race to the top’

Regarding US foreign policy, Fernandez said the US was not opposed to China investing in Africa as long as the investments were centred on upholding human rights, democracy, and creating jobs for locals, he told a press briefing.

“Our policy is not to ask our partners to choose between the US and the People’s Republic of China. We’re not doing that.

“We believe that we offer an alternative vision for economic development that more sustainably promotes democratic governance, respect for human rights, and transparency. And we keep talking about the word ‘sustainable,’ meaning more sustainably serving the long-term interests of the people here in Africa,” he said.

“I’m here because African countries are important partners in pursuing shared global and regional priorities – from ending the covid-19 pandemic and building back to a more inclusive global economy to meeting the climate challenge and building resilience. We are encouraged by seeing many African countries creating opportunities in clean energy, advancing democracy, promoting respect for human rights, and working toward lasting peace and security,” he said.

Fernandez emphasized that the US was not “in a race to the bottom” to undercut China and other investors by sacrificing standards in quality, safety, and wages. “Here in Africa, we propose to do it by creating a race to the top in terms of environmental, social, and governance,” he said.

“What African governments want is for all investments, including Chinese investments, to respect local laws and local interests, to follow human rights, including worker rights, and protection for the environment,” he said.

The US government underlined that successful business relationships need predictable regulatory and legal environments, whether private or public. “Governments will need to enable investments through reforms, and companies will need to manage and pursue business plans that drive the energy transition while still taking on reasonable levels of risk themselves.”

Veracity Worldwide CEO Steven Fox told the conference that Russia’s invasion of Ukraine had triggered an increased focus on geopolitical factors that had once been the topic of polite conversation among corporate leaders.

“This is due to the rapid commodity market and global supply chain disruptions causing massive headaches for investors and businesses,” he told the audience in Cape Town, South Africa.

“It is also the consequence of dramatic national policy shifts and related pronouncements from stakeholders shaping public opinion,”said Fox. “The Russia-Ukraine war has already had tremendous consequences for countries far beyond the battlefield. This is also the first war of the ESG [environment, social and governance] era, and for companies and investors, we are only beginning to grasp its implications.”

Regardless of the war’s outcome, in Veracity’s view, one thing appears to be near certain: Russia’s invasion of Ukraine has fractured the world into different camps.

According to the New York-based executive, the war in Ukraine had already critically threatened the world’s energy supplies. Whereas the green energy transition was the top priority for many corporates and governments less than six months ago at COP26 in Glasgow, increased prices for fossil fuels have shifted the conversation, potentially benefitting oil and gas projects in Africa as importers scramble to diversify supply chains away from Russia.

“In the mad rush to fill supply gaps, it remains to be seen whether governments and businesses will be as attentive to ESG considerations as they may otherwise have been,” he noted.

Supply chains threatened

The war has also upended supply chains and caused significant price inflation. Commodity prices of critical exports from Russia and Ukraine have dramatically increased, affecting African countries that import or export these goods.

Specifically, Fox pointed out that the war had already brought several immediate impacts on the mining sector.

These include the disruption of entire industries, such as significant aerospace and defence consumers fretting over production targets because of expected material shortages. Before the war, for example, Russia supplied 20% of the titanium market.

Fox also noted the green transition is under threat, with essential commodities such as nickel, platinum, palladium, and titanium now in limited supply and only procured at a high cost.

Further, input costs for miners are skyrocketing due to higher energy prices, particularly related to transportation costs to move ore from mine sites.

Similarly, aluminum for commercial production also has been dramatically affected. In Guinea, for example, Russia’s Rusal has had its bauxite operations severely impacted. Before the war, half of its bauxite mined was sent to the Mykolaiv alumina refinery in southern Ukraine, which now sits on the war’s frontlines, Fox said.

Perhaps most concerning, Fox noted that plans for future supply chains were under review. “Substitution for commodities like nickel is being discussed in earnest, and manufacturers are considering upstream moves into mining operations,” he said.

“In the context of higher energy and input costs, nuclear power is set for a revival. Since Ukraine holds Europe’s most extensive uranium supplies, it will have great difficulty getting these supplies to market. In Africa, Niger and Namibia stand to benefit from increased uranium demand and more constrained global supply.

“At the same time, Russia’s ambitions to build nuclear power plants in Africa will be put on hold.”

Fox also pointed out that the diamond sector was set for disruption since Russia accounted for about one-third of global supply.

“Russia’s Alrosa, responsible for 27% of pre-war global diamond mining capacity, is the only Russian mining company to be broadly sanctioned thus far. At a time when the diamond sector was already battling a trend towards synthetic diamonds, younger consumers now associate Russian diamonds as ‘blood diamonds’ compared to lab-grown diamonds that claim to be more ethical,” said Fox.

By extension, he expects the diamond polishing industry to take a hit, given the uncertainty of provenance of many gems on the market, especially smaller carat diamonds. “While certain African countries seek to expand their presence in the natural diamond market, the real shift to watch is the market movement towards lab-grown diamonds rather than market share within the natural diamond space,” he said.

Political instability

Coupled with the deepening global supply chain woes on the back of the war is the threat of rising political instability across the continent, affecting mining operations.

According to Fox, the most notable driver of this concern is food and fertilizer prices have had a severe negative impact on some of Africa’s most vulnerable populations.

According to the United Nations’ latest data, global food prices increased 12% in March to reach their highest levels recorded by the index in 30 years. April numbers look to be even more dramatic, according to Fox.

“Africa imports 85% of its wheat, with one-third of this coming from Russia and Ukraine. Food prices have increased 34% this past year, with wheat prices increasing by 64% in Africa, and these trends are dramatically headed in the wrong direction,” he noted.

Fertilizer shortages will also impact Africa’s crop yields, given the fertilizer industry’s heavy reliance on Russian and Ukrainian supplies.

“Russia produces 23% of the world’s ammonia, 14% of urea, and 21% of the world’s potash, all key fertilizer ingredients. Surging food prices have already triggered protests and riots in Niger and Mozambique. Francophone countries such as Cameroon, Ivory Coast, and Senegal with heavily subsidized bread will likely see unrest,” said Fox.

Further, the spectre of long-lasting sanctions on various Russian entities in place for several years, if not much longer, could hold significant consequences for mining companies.

“Miners will need to dramatically adjust their supply chains, financial transactions, and expectations for certain end markets,” said Fox. “These changes will spawn a host of new challenges, not least the need for businesses to understand and manage the unique social dynamics, governance challenges, and stakeholder considerations at play in unfamiliar jurisdictions,” he said.

Meanwhile, China is closely watching the West’s response to the war in Ukraine. Fox believes it informs Xi Jinping’s calculus over Taiwan and the South China Sea.

“Beijing’s foreign policy apparatus has observed the staying power of the West’s diplomatic and financial commitments to Ukraine and their success in rallying many parts of the non-Western world,” he said.

“For now, Russia and China are drawn closer together by their shared strategic aim to shift the balance of power away from the US-led international order. Yet their ambitions aren’t fully aligned or identical. Beijing seeks a China-centric international order, while Russia had hoped to capitalize on what it perceived to be a lack of Western resolve,” said Fox.

“Geopolitics and ESG considerations related to the war are no ‘parlour game’ for side conversations at annual board retreats. These issues affect our lives and businesses. They must be seen as what they are: the top priority for business leaders to understand and account for as they build their approach to the current and subsequent strategic and risk management horizons.”

“This is where humanity is going to make it or break it,” he told the Investing in Africa Mining Indaba currently underway in Cape Town, South Africa.

He points out that the large copper mines in Latin America are aging and declining in grade, requiring increasing amounts of fossil-fuel-derived energy to process ever-increasing tonnages to keep up with historical production.

“They’re very low grade, and they produce a lot of global warming gas. They have a lot of work to do to make them green. It’s Africa where you have a young population where you have the possibility for introducing sustainable development,” he said during one of his usual ‘shock and awe’ bravado presentations.

According to Friedland, humanity has mined about 700 million tonnes of copper to date. The problem is the need to mine that same amount in the next 22 years to keep up with the deepening green energy transition.

“If we’re going to change and stop burning coal and stop burning oil, we can’t put Africa into poverty. We must maintain economic growth,” he said. “How do we have an energy transformation and not plunge the world into chaos?” he asked.

In terms of carbon dioxide emissions in the last 250 years, Europe generated 531 billion tonnes of carbon emissions, and the United States alone produced 416 billion tonnes of carbon emissions.

“That’s how London got built. That’s how Germany got built. That’s how New York got built; Los Angeles,” Friedland pointed out.

The relatively late bloomer China is catching up, creating 235 billion tonnes of emissions.

But in comparison, Africa has produced only about 47 billion tonnes. “Africa has produced almost no global warming, yet it has a total population larger than China’s. So, how do we get to a world without all that air pollution and with clean air while still being fair to the Africans? It’s a huge question,” he said.

Related: Africa’s accelerated energy transition should leave no-one behind 

The crux of the issue, in his view, is the urgent global need to reduce air pollution. According to the World Health Organization, air quality is the single most significant risk to health. Urbanization exacerbates this trend.

For this reason, the energy revolution is accelerating at an unprecedented cadence.

For example, Saudi Arabia wants to reduce their mineral imports and derive 50% of its energy from renewable energy. “When you look at renewable energy and want to reduce dependence on hydrocarbon, you need the mining industry. There’s just no escaping it,” he said.

The ‘electric-everything’ era

Friedland points out that the problem is that renewable technologies are “incredibly” energy and metals-intensive.

“We’re going to have a freakout as we try to change the world economy unless we develop a lot more mines,” said Friedland.

Solar and wind energy require between seven and 37 times more copper per unit of electrical energy produced than simply burning oil or having a nuclear power plant.

“The new giant windmills as tall as the Eiffel Tower – these are the next generation ones – they’re 12 megawatts each. That’s a lot of power per windmill. In the US, we will need 5.5 million tonnes of copper just in the next few years to put up these big General Electric windmills. Where is this copper going to come from?” he said.

Friedland continued to sketch a dire scenario where mining cannot keep up with the demands of the energy revolution.

Related: ‘Miner’s revenge’ is coming with electric cars, Friedland says

By 2030, 20 million EV charging points will need 250% more copper. By 2040 passenger EVs will require 3.7 million tonnes more copper per year. In contrast, internal combustion engine-driven vehicles need only about 1 million tonnes of incremental copper.

“We need eight new Kamoa-Kakula mines to supply the expected 9 million tonne copper supply gap by 2030,” he said.

At the world’s largest copper mine, Escondida, grades are falling. Its energy needs increased 16-fold to produce the same amount of copper. Meanwhile, social upheaval in South America against climate change and mining is ironically impeding their potential role in the emerging green economy.

Wood Mackenzie in 2021 said the world needs to invest $240 billion over the next five years to meet growing demand. “That’s a pretty big number. We put about $2.5 billion into the Democratic Republic of Congo (DRC). We’re probably halfway through our current expansion of about $5 to $6 billion of capital investment required. And this is the best development project on a planetary scale,” he said.

According to Friedland’s data, a single 1,000-pound electric vehicle battery requires 500,000 pounds of raw material. “So, to transition just the world’s passenger cars to electric, we have to mine more materials in the next 30 years that we mined throughout human history,” he said.

“Tesla expects a global battery minerals shortage. Maybe, therefore, Elon Musk was selling a few shares. He’s blaming it on a Twitter poll; remember that. But perhaps he realizes there won’t be enough metals around to satisfy these ambitious growths charts,” said Friedland.

And now Mercedes has come out with a 1,000 kilometres-range vehicle on a single charge. “Shouldn’t everybody in Africa have a car like that? Why not? But how do we get there from here? We must change the way we generate electrical energy. We have to change the way we transmit electrical energy, changing the way the whole supply chain is driven. We need orders of magnitude more responsible mining to achieve this,” said Friedland.

‘Hydrogen century’

With that, Friedland heralded the advent of the “hydrogen century” for South Africa.

He noted South Africa is home to the most significant platinum-palladium assets globally. No one has figured out how to use the most common element in the universe, hydrogen, without platinum.

“The hydrogen economy is opening soon at a theatre near you,” he said.

Friedland pointed to examples of the hydrogen economy already taking off.

Airbus is testing a hydrogen-powered engine on an Airbus 380 Jumbo. “The only thing coming out of those engines is water, water vapour. But you can’t do it without platinum metal. And the British want to convert every train to hydrogen fuel cells, eliminating all diesel engines on the trains,” he said.

According to Friedland, the hydrogen fuel cell technology entirely depends on South African platinum. “We’re not going to buy it from the Russian Tsar. He’s killing people with his cash flow. Until he stops that kind of behaviour, we will not buy his platinum. Certainly not in Europe, not in the United States and certainly not in civilized countries who think about the moral imperative of the supply chain,” he said.

Friedland is co-chairman of Ivanhoe Mines, a Canadian mining company with three main joint-venture projects in Southern Africa able to service emerging green technological sectors. It is developing several significant new, mechanized, underground mines at the Kamoa-Kakula copper discoveries in the DRC, and the Platreef palladium-rhodium-platinum-nickel-copper-gold discovery in South Africa; and the extensive redevelopment and upgrading of the historic Kipushi zinc-copper-germanium-silver mine, also in the DRC.

Kamoa-Kakula began producing copper concentrates in May 2021 and, through phased expansions, is positioned to become one of the world’s largest copper producers. Kamoa-Kakula and Kipushi will be powered by clean, renewable hydro-generated electricity and will be among the world’s lowest greenhouse gas emitters per unit of metal produced.

Ivanhoe has pledged to achieve net-zero operational greenhouse gas emissions (Scope 1 and 2) at the Kamoa-Kakula copper mine when large-scale electric, hydrogen and hybrid underground mining equipment become commercially available.

Ivanhoe also is exploring for new copper discoveries on its Western Foreland exploration licences in the DRC, near the Kamoa-Kakula project, where it has been reporting even higher-grade mineralization.

But to get there, several African leaders spoke of ongoing policy reforms to attract new investment and create new regional value chains to service the emerging green economy.

South Africa’s president, Cyril Ramaphosa, told the Indaba audience that policy reforms were at the core of what was required to lob mining back to being the critical driver of economic development that made Africa’s most industrialized economy in the first place.

“Despite the great prospects for South African mining, we face significant challenges. It is a great concern that South Africa has fallen into the bottom 10 of the [Canada-based] Fraser Institute’s investment attractiveness index ratings. We’re currently standing at 75th of 84,” he lamented.

The ranking underlines the fundamental reality that South Africa needs to move with a greater purpose to remove the various impediments, hurdles and constraints to the growth and development of the industry.

“We understand very clearly the need to fix the regulatory and administrative problems that have crept into the system. We need to clear the backlog of mining and prospecting rights and mineral rights transfer applications and implement a modern and much more efficient cadastral system and implement an effective exploration strategy,” said Ramaphosa.

“We understand very clearly the need to significantly improve the functioning of our railways, which have fallen into disrepair, our ports which are not performing at optimal levels, and the vital importance of ensuring a secure and reliable supply of affordable electricity. These tasks are at the forefront of our economic reconstruction,” said Ramaphosa.

He noted the South African government had made significant headway in driving a policy reform program.

RELATED: Robert Friedland: ‘World economy can’t change unless we develop a lot more mines’

An important area of progress is regulatory reform to facilitate new electricity generation by the mining and other sectors to meet the deficit that the country has been dealing with for the past decade.

“Regulations have been amended to allow companies to invest in new generation capacity, up to about 100 megawatts, without needing a licence. We are working further to cut red tape for the registration of projects to accelerate the environmental approvals and strengthen the capacity of our energy generation company Eskom and municipalities to link such projects to the grid,” said the president.

According to the Minerals Council, in South Africa, around 4,000 megawatts or ZAR65 billion of such electricity generation capacity investment was in the pipeline. “The unbundling of Eskom into separate entities for transmission for distribution and generation is on track and is set to be completed later this year,” he said.

Further, South Africa is working with the Department of Water and Sanitation to implement a turnaround plan to issue water use licences that the mining industry relies upon.

“We’re working towards a target of 80% of all applications being resolved within 90 days, and this will have moved from a process that took three years for a mining use licence or water use licence to be approved,” said Ramaphosa.

On Transnet, the national rail operator, Ramaphosa noted the recent publication of the white paper on national rail policy, outlining plans to revitalize rail infrastructure and enable third-party access to the freight rail network.

“We have heard the calls from industry for private operators to be allowed to operate the country’s dedicated coal, iron ore and manganese lines,” said Ramaphosa.

The South African president is keen to draw on the experiences of neighbouring countries to work together with the industry and other stakeholders to strengthen the capacity of security services and law enforcement agencies to tackle illegal mining, widespread cable theft and general damage to infrastructure.

“We’re setting up focus teams in the security establishment to deal with these challenges, and several successes are already being recorded,” he said.

New African value chains

Ramaphosa also committed to mobilizing the necessary resources and providing the required incentives for a new wave of exploration, particularly the minerals needed for the global energy transition. The recently released exploration strategy and implementation plan lays out South Africa’s ambition to focus on future strategic metals such as copper, which is in great abundance in Zambia and the Democratic Republic of Congo (DRC) and nickel cobalt and rare earths.

“We aim to not only become an important hub for the production and export of green hydrogen, but also of green ammonia, green iron and steel and sustainable aviation jet fuel. South Africa’s hydrogen strategy aims to stimulate and guide innovation along the value chain of hydrogen and fuel cell technologies. This will sustain demand for platinum group metals and position South Africa to derive benefits from supplying high value-added products,” said Ramaphosa.

This is a message other African leaders present at Indaba shared.

The Republic of Zambia’s president, Hakainde Hichilema, told the conference audience mining was the anchor of his fledgling government’s ‘New Dawn’ approach to reinvigorating the country’s economy.

“The DRC and Zambia hold more than 70% of the world’s copper resources. It cannot be ignored. We must use it to scale our people out of poverty,” said Hichilema.

That entails building downstream linkages and hammering on the manufacturing of goods and consumables, and services supporting the energy transition.

“We are committed to building a resilient, sustainable mining industry anchored on environmental social and governance standards and best practices because this is a bare minimum. If we can do it correctly, our determination to further industrialization will lead to sustainable job creation. The business opportunities are obvious,” Zambia’s president said.

“Zambia, just like South Africa, is open for business. We are putting in place factors that will catalyze this transition.”

Hichilema said his government had determined to respond to the high demand for copper, having set the ambitious goal to push copper output from 830 tonnes per year to more than 3 million tonnes per year.

“Between South Africa, Zimbabwe, Zambia, and the DRC, plus others, we need to find common ground to fix our railways and move goods by rail. We need this region to work together to establish a regional supply chain able to service the new green economy,” said Hichilema.

The DRC’s prime minister, Jean-Michel Sama Lukonde Kyenge, agreed. He underlined that the country boasted “incredible resource wealth,” yet only 19% of the country had been adequately explored.

“All this mining potential is very important. But it needs to be complementary to developing the value chain for battery production for EVs,” said Sama Lukonde Kyenge.

“But to do so, we need collaboration between all producing countries. We have cobalt and lithium, but we need to collaborate with other African countries like South Africa for nickel. Together we can create an African value chain geared towards the energy transition,” he said.

To this end, the governments of Zambia and the DRC last month signed a memorandum of understanding to facilitate the development of value chains in the electric battery and clean energy sector.

“We’ve agreed on an MoU with Zambia to cooperate on electric batteries. We want to extend the partnership to other countries too. It entails increased green energy production and distribution to ensure energy security and power our emerging manufacturing sector,” he said.

“There is a clear commitment by the heads of states here to support each other in the mining sector and ensure that we go towards a fairer world where we work together to fight climate change,” said Sama Lukonde Kyenge.

Botswana’s president, Mokgweetsi Masisi, said mining remained the most critical sector of the country’s economy. He implored investors to “seriously consider coming to Botswana to carry out exploration and mining projects,” as his government was completing a project that would bring geological mapping coverage for exploration to 90% nationwide.

The slow uptake of mineral beneficiation industries to diversify the economy had, according to Masisi, for years been “a thorn in the flesh.”

“Beneficiation will mean we are fully taking ownership of the value chain of our minerals across the spheres of upstream, midstream, and downstream mining economic activities instead of exporting these to other countries,” he said.

South African miners, including Anglo American Platinum Ltd. and Impala Platinum Holdings Ltd., are entering pivotal talks over a multiyear pay deal after announcing record dividends following a rally in palladium and rhodium prices. While unions are seeking a share of the windfall profits, producers have warned that any settlement with 163,000 platinum workers must not risk the long-term viability of a key export industry.

Sibanye Chief Executive Officer Neal Froneman said the unions were trying to show strength after rejecting the company’s latest offer to boost the wages of gold workers by 850 rand ($54) a month. That equates to an increase of 7.8% — compared with South Africa’s March inflation rate of 5.9% — but the unions are asking for 1,000 rand.

“If it was just about gold wages, there is no commercial logic for them not having accepted our offer,” Froneman said in an interview in Johannesburg. “We are not going to be coerced or bullied into increases that are above inflation.”

The strike, which started on March 10 at the company’s three gold mines, is taking its toll. Sibanye’s first-quarter gold output plunged 45% to about 137,000 ounces. The company said on Thursday that it had suspended output guidance for the operations.

Sibanye shares fell as much as 9.3% in Johannesburg trading, the most in two years.

The company said on Thursday that first-quarter earnings before interest, taxes, depreciation and amortization fell 31% to 13.7 billion rand amid operational challenges at its U.S. palladium and platinum mines.

The Association of Mineworkers and Construction Union and National Union of Mineworkers are consulting their members over whether to expand the strike to the company’s platinum operations, said NUM General Secretary William Mabapa. Sibanye’s gold and platinum mines employ about 77,000 workers.

While platinum wage deals have been settled fairly smoothly during recent negotiating rounds, in 2014 AMCU led South Africa’s longest ever strike in the industry. Sibanye’s gold mines were hit by a five-month strike over wages by AMCU members in 2019.

(By Felix Njini)

Copper prices again entered record territory, iron ore prices climbed to $150 a tonne after dipping to double digits late last year, and industrial metals including nickel, tin and zinc shot up.

The Ukraine war lit a fire under an already hot potash market, coal and uranium benefitted from the ongoing worldwide energy crunch, lithium soared and cobalt bolted.   Gold pierced $2,000 but couldn’t hold it and palladium hit a record only to pull back sharply.

Rising tide 

Investors made the most of the turmoil with the MINING.COM TOP 50* ranking of the world’s most valuable miners jumping by $335 billion in Q1, extending a trend that has seen valuations balloon nearly 150% since the lows of March-April 2020. 

From just over $700 billion at the depth of pandemic slump, the globe’s 50 most valuable mining companies now have a combined worth of $1.75 trillion, handily beating the previous record valuation set mid-2021.  

The index received a boost from the merger, closed in February, of constituents Agnico Eagle and Kirkland Lake Gold that created a $30 billion-plus company, but valuations moved sharply higher across the board. 

At the end of Q1 2020 a valuation of just over $3 billion secured a company a spot in the ranking while today, number 50 on the list, lithium and iron ore newcomer Mineral Resources, is valued at $8.5 billion. 

The mid-tier has also been swelling – a year ago 17 companies enjoyed a market valuation above $20 billion. Now investors have pushed 30 miners above that mark.  

Many of the counters – including big names such as Glencore, Anglo American and Newmont Goldcorp – are also trading close to 52-week highs. 

Rouble trouble 

The bottom did not fall out for Russia-based miners and, much like the rouble and the Moscow Stock Exchange, the country’s top companies have proved resilient. 

Were it not for the fact that Alrosa dropped out of the top 50 after its valuation slid to $8.2 billion, Russia’s combined representation in the ranking would’ve decreased by only 12%. 

Norilsk is placed outside the top 10 for the first time, but that is more of a function of soaring valuations among its peers – the nickel, palladium and copper producer only fell 16% in USD terms since the start of the year. 

The dollar market cap of Polyus has in fact climbed in 2022 – no doubt boosted by its significance as rouble hedge on the MCX.   

$100 billon club 

The Big 3 – BHP, Rio Tinto and Vale – dragged down the index last year, losing a combined $56 billion due to a pullback in iron ore prices and a cooling copper market in the latter part of 2021. 

But the first three months of 2022 saw combined gains just shy of $100 billion for the $100 billion market cap club. 

BHP peaked at a valuation of $206 billion mid-2021 and for a time was worth more than the oil major Shell, making it the most valuable stock on the LSE and marking a symbolic shift in the global resources sector.  On the ASX, the world’s number one miner is closing in on all-time highs after dropping its dual listing structure.

Rio Tinto’s USD market cap has grown 22% year to date, rebuilding after the reputational damage it suffered last year while Vale has come roaring back in 2022 topping $100 billion again after a 46% gain in US dollar terms on the Bovespa. 

After spending time outside the top 10 not that long ago, Glencore’s been thoroughly rerated and this week regained its 2011 IPO price in London for the first time. Unlike its peers, Glencore has not abandoned coal mining amid a spike in prices, and its trading arm is benefiting from sky high prices for energy. 

At the same time Anglo American, which six short years was in danger of suffocating under a pile of debt, is trading at all-time highs.  In January 2016 the market value of the company with a history going back more than a hundred years on the South African gold and diamond fields, fell to below $5 billion. Now it’s above $70 billion.  

Lively lithium

After quintupling in little over a year, some sanity may be returning to lithium prices and with it valuations of stocks in the sector. 

Ganfeng Lithium is included in the top 50 ranking for the first time as the Chinese battery manufacturer moves aggressively upstream making no less than nine investments in mines and projects over the past few years. Ganfeng’s long term goal is output of 600ktpa LCE or 20% of the market from spodumene, brine and clay sources. (See Notes below table for more on inclusion criteria.)

Nevertheless, the volatile stock has lost a fifth of its value so far this year, and has nearly halved from its peak in Hong Kong in August last year as early backers take profits.  

Albemarle has also been cut down from its high reached in November last year when the company was valued at $34 billion, but rival SQM has staged a massive comeback following a slump at the end of last year. 

Ever volatile Tianqi Lithium falls 13 places to no. 31 in the ranking after losing 24% year to date to a dollar value of $18.7 billion for the Shenzen-listed stock. Tianqi briefly fell out of the ranking altogether two years ago.  

Mineral Resources sneaks in at no. 50, bringing the number of lithium focused stocks in the ranking to five with a combined value of more than $100 billion. 

Nuclear option

Thanks to a rally a decade in the making since the Fukushima disaster,  uranium stocks rejoined the top 50 ranking for the first time in many years in 2021. 

Mineral Resources just edged out Kazatomprom for the final spot in the Q1 snapshot although there is little to separate the companies’ valuation on any given trading day. 

The uranium producer, which has expanded its listings well beyond Almaty over the last couple of years, joins Fresnillo, Alrosa and KGHM among big names just outside the top 50. 

Canadian uranium producer Cameco rejoins the ranking at no. 43 from 51st at the end of last year as predicted. The Saskatoon-based company has poured cold water on punters talking up the uranium market, but it did not halt the counter’s nearly 100% surge over the past year.

Gold holds

Denver-based Royal Gold enters the top 50 for the first time, swelling the ranks of precious metals royalty and streaming companies to three. Royal Gold just pipped Perth-based gold producer Northern Star, which has been bubbling under the ranking for years, missing out on inclusion mostly due to timing.

Gold mining companies have been underperforming relative to the bullion price for more than a decade but precious metals share of value in the top 50 has been remarkably stable at just under a fifth of the index despite the gyrations of the gold price.  

The exception was March 2020, when the sector represented 26% of the overall value after a heavy sell-off of industrial metals and mineral producers at the beginning of the pandemic. 

Click on table below for full-size image:

*NOTES:

Source: MINING.COM, Miningintelligence, Morningstar, GoogleFinance, company reports. Trading data from primary-listed exchange where applicable, currency cross-rates Apr 7, 2022. 

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

Market capitalization calculated at primary exchange, where applicable, from total shares outstanding, not only free-floating shares.

As with any ranking, criteria for inclusion are contentious issues. 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, Singapore-based trader Trafigura,  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 was another central consideration. 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.

Lithium and battery metals also pose a problem due to the booming market for electric vehicles and a trend towards vertical integration by battery manufacturers and mid-stream chemical companies.  Battery producer and refiner Ganfeng Lithium, for example, is included because it has moved aggressively downstream through acquisitions and joint ventures.   

Vertically integrated concerns like Alcoa and energy companies such as Shenhua Energy where power, ports and railways make up a large portion of revenues pose a problem as do diversified companies such as Anglo American with separately listed majority-owned subsidiaries. We’ve included Angloplat in the ranking as well as Kumba Iron Ore.

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.

Last year, State Farm paid $62.6 million for 32,265 catalytic converter theft claims nationally — a 1,173% increase from 2019. 

“It’s the metals in general that are valuable,” said Amy Harris, a State Farm spokeswoman, in a phone interview. “The owner comes out to their car, the car won’t start, and they eventually figure out that the catalytic converter has been removed.”

A catalytic converter is an emissions-control device that’s in the exhaust system under many gas-powered vehicles. State Farm doesn’t track which models are targeted most often, but thieves tend to hit smaller, lighter cars that are left unattended in parking lots. California, the nation’s largest auto market, accounted for more than a quarter of catalytic converter claims in 2021.

The problem may get worse as the war in Ukraine has sparked a surge in commodities prices. Russia produces almost 40% of mined palladium in the world, second behind South Africa, according to the U.S. Geological Survey.

(By Dana Hull, with assistance from Joe Deaux)

Impala, the third-largest producer of platinum group metals, was approached by Great Dyke Investments Ltd. which owns the Darwendale project, said two people familiar with the talks who asked not to be identified because they aren’t public. It wants more information about the government’s Kuvimba Mining House Ltd., which is 35% owned by private shareholders the state has yet to identify.

Kuvimba and Russian tycoon Vitaliy Machitskiy’s Vi Holding each own 50% of Great Dyke.

While Zimbabwe’s government says it controls Kuvimba, its assets are the same as those that were owned until at least late 2020 by Sotic International Ltd., a company linked to Kudakwashe Tagwirei, an adviser to Zimbabwean President Emmerson Mnangagwa. 

Tagwirei was sanctioned in 2020 by the U.S. Treasury, which alleged that he bribed government officials and used political influence to win lucrative state deals. Tagwirei hasn’t commented on the sanctions.

The opacity of Kuvimba’s ownership has effectively halted development of the Darwendale mine, 65 kilometers (40 miles) east of Zimbabwe’s capital, Harare, leaving the project that’s central to Zimbabwe’s economic recovery stagnant. A project by Eurasian Resources Group on land taken from Anglo American Platinum Ltd. has also stalled, as have Tharisa Plc’s plans for a new platinum mine.

The talks between Great Dyke and Impala unraveled after the Johannesburg-based mining company said its internal processes required that it conduct due diligence on the project and its ownership, the people said. Impala had contemplated taking a stake as well as processing its output, the people said.

Zimbabwe’s Ministry of Mines referred queries to the Ministry of Finance, which didn’t respond to questions. Tagwirei didn’t answer calls to his mobile or immediately respond to text messages. Impala declined to comment.  

Alex Ivanov, the chief executive officer of Great Dyke, didn’t respond to a request for comment. Igor Higer, Great Dyke’s vice chairman, confirmed the receipt of questions and said he would respond. He has yet to do so.

Simba Chinyemba, Kuvimba’s CEO, said by email that the mine plan is being remodeled and an open pit rather than underground mine may be developed. While open-pit mining is cheaper, one of the people said ultimately an underground mine would need to be dug to fully exploit the orebody and a partner would be needed to process the ore.

Chinyemba said the start of construction would depend on the study and declined to comment on the talks with Impala or the identity of Kuvimba’s shareholders.

Great Dyke needs a partner to help fund the mine, which could ultimately cost $2 billion and potentially produce 860,000 ounces of platinum group metals annually, and process its ore. Its been battling to raise $650 million to get the project underway with initial production originally scheduled for next year, the people said. 

Kuvimba has said that Tagwirei has nothing to do with the company but has not explained how it came to control the assets, which include gold and nickel operations.

Impala has a listing in the U.S. and assets in Canada, meaning that it will need to comply with any instructions regarding Tagwirei issued by the U.S. Treasury. Tagwirei has also been sanctioned by the U.K.

Bloomberg in May reported on a trove of emails, documents and WhatsApp messages that delineated the links between Tagwirei and Sotic and the Financial Times and The Sentry followed with reports giving details of the relationship. The documents and communication seen by Bloomberg showed his participation in company decision-making and demonstrated that he at least partially controlled Sotic.

An agreement with Impala would have made it easier for financiers led by Cairo-based African Export-Import Bank to raise the funding for the project, the people said. Afreximbank’s head of southern Africa, Humphrey Nwugo, declined to comment citing client confidentiality. 

Impala owned the land upon which the Darwendale project is based until 2006, when it ceded a substantial portion of its mining concessions in the country after pressure to do so from the government of former President Robert Mugabe. Zimbabwe has the world’s third-biggest reserves of platinum group metals.

(By Felix Njini and Godfrey Marawanyika)

The new list builds on the initial 2018 version, adding 15 new minerals to the list and removing four others.

Much of the increase in the new list results from splitting the rare earth elements and platinum group elements into individual entries rather than including them as ‘mineral groups.’ The 2022 list of critical minerals adds nickel and zinc while removing helium, potash, rhenium and strontium.

“Critical minerals play a significant role in our national security, economy, renewable energy development and infrastructure,” said Tanya Trujillo, assistant secretary of the interior for water and science. “USGS data collection and analysis scans the horizon for emerging issues in crucial supply chains, and every three years identifies the nation’s current vulnerabilities to potential disruptions.”

The new list was created based on directives from the Energy Act of 2020, which indicates that at least every three years, the interior department must review and update the list of critical minerals. The USGS is also tasked with updating the methodology used to identify potential critical minerals, take interagency feedback and public comment through the federal register, and ultimately finalize the list of critical minerals.

The USGS says the list is intended to be dynamic and is in no way final.

“Mineral criticality is not static but changes over time,” USGS national minerals information center director Steven Fortier in a media release.

“The 2022 list of critical minerals was created using the most recent available data for non-fuel mineral commodities. However, we’re always analyzing mineral markets and developing new methods to determine the various and evolving critical mineral supply chain risks.”

The USGS says the new critical mineral list will form the basis for ongoing research quantifying critical mineral potential within the US.

In president Biden’s bipartisan infrastructure law, the USGS received funding for its earth mapping resource initiative, which will update the nation’s mapping of these minerals, including those still in the ground and those present in mine wastes.

Amplats and its South African peers are reaping bumper earnings as automaker demand buoys the price of rhodium and palladium — metals produced alongside platinum that are used in devices to curb pollution from gasoline cars. The miner also processed more stockpiled metal last year. That’s delivering windfall payouts to Anglo American Plc, which owns about 79% of Amplats.

Growth in China and rebounding car output will support PGMs demand going forward, Chief Executive Officer Natascha Viljoen said. The threat to consumption posed by the increasing penetration of battery electric vehicles must be set against the potential of the nascent hydrogen industry, the CEO said.

“In the medium term, we will continue to see lucrative commodity prices,” Viljoen said in an interview. “If you consider the deficits we are forecasting in the next five years and balance that with increased loadings on heavy duty vehicles, you will probably see a softening but still strong prices until we see further penetration of battery electric vehicles.”

Palladium could be boosted should tensions over Ukraine impact supplies from Russia, the biggest producer of the metal. South African producers aren’t in a position to close a potential palladium supply shortfall, she said.

“To respond overnight at the rate the geopolitical events are developing, no, I don’t think so,” Viljoen said. “The only caveat to that would be if there is a big stock somewhere, which we don’t see.”

Moscow continues to deny it plans to invade Ukraine and says it is already pulling troops back from areas near the border, though the U.S. and its allies have disputed that. So far, Russian palladium supplies haven’t been disrupted.

Still, PGM prices this year won’t match the record levels seen in 2021, Viljoen said. 

Amplats shares fell 0.7% as of 1:34 p.m. in Johannesburg trading, paring this year’s gains to 7.2%.

Amplats is paying a dividend for 2021 that equates to 100% of headline earnings, which is profit stripping out some one-time items, the Johannesburg-based company said in a statement on Monday.

(By Felix Njini)