Nickel geology overview

Nickel deposits come in two forms: hard rock sulphide deposits, which consist of nickel-bearing minerals known as pentlandite and nickel laterite deposits.

Sulphide deposits are scattered worldwide, from northern Europe, South Africa, Canada and Western Australia.

We then have the laterites, which typically form in high-rainfall equatorial regions. As rain dissolves and removes minerals and elements from the soil it leaves behind immobile elements like nickel, iron and aluminium. That leads to a natural concentration of nickel in these regions.

There are outliers. Shifts in the global climate over geological history have enabled places like arid inland Australia to form laterite deposits. This region was once bathed in tropical rainfall and lush jungle.

But of the two sources of nickel, sulphides are far easier to process and refine into high-purity products, the ideal choice when it comes to EV battery material. For this reason, sulphide miners have retained a competitive edge.

However, that started to shift in 2018 when the world’s largest nickel producer, China’s Tsingshan Holding Group, announced a $700-million plan to produce battery-grade nickel from nickel laterites. Processing laterite ore into high-purity nickel uses a system known as High-Pressure Acid Leaching (HPAL). The innovation unlocked a swathe of new supply and Indonesia’s nickel output exploded after integrating HPAL technology in 2018.

Cloudy data in nickel outlook

In early March, the Macquarie Group’s nickel expert, Jim Lennon, claimed supply gluts could be overblown.

That assessment was based on a recent visit to China where Lennon claimed the demand for stainless steel and other nickel alloys is far higher than the official numbers report. According to Lennon, nickel inventories are also far lower than the stated figures. In other words, he believes the consensus forecast of a nickel oversupply is wrong.

It’s an interesting perspective. Chinese officials are known for under- or over-reporting figures to suit political motives.

But are Lennon’s observations, alone, enough for investors to move into this beleaguered market? Perhaps.

Resource stocks coming off a low base can result in large ‘recovery gains’ as sentiment creeps back into the market. It’s also worth noting that U.S. officials recently excluded Indonesian nickel from lucrative tax credits as part of its Inflation Reduction Act (IRA). That’s thanks to a tight interlink between Indonesian operators and Chinese investors.

So, where does that leave investors?

Everything is not what it seems in the nickel market and that’s where contrarian opportunities are born. Given that China plays a major role in supply and demand, this suggests there could be a lot more to this story. The data remains cloudy, meaning there could be more surprises in the months ahead.

A prime value opportunity may emerge with several nickel producers and explorers trading at multi-year lows.

I’ll explore that with my Diggers and Drillers readers over the coming months.

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

During a two-week meeting of the ISA’s policymaking Council that kicked off on Monday, Brazil’s delegate — speaking on behalf of 29 Latin American and Caribbean member nations — announced the candidacy of Brazilian oceanographer Leticia Carvalho for the position of secretary-general of the organization’s administrative arm, known as the Secretariat. The ISA’s 168 member nations and the European Union will decide on the next secretary-general at what is expected to be a pivotal meeting in July.

“I do believe that this is the most important year for the Authority,” said Olav Myklebust of Norway upon his election Thursday as the president of the ISA Council for 2024.

If elected, Carvalho would likely represent a marked change from the administration of current Secretary-General Michael Lodge, whose second four-year term ends in December. A UK lawyer, Lodge has disparaged environmental opposition to mining deep ocean ecosystems for valuable minerals and drawn criticism for his closeness to mining contractors the ISA regulates.

The choice of the next secretary-general could have significant economic and environmental consequences for deep sea mining, if regulations are ultimately approved. The ISA’s charter gives the person in that role authority over the Secretariat’s operations and its dealings with mining companies. Since member states usually only meet twice a year, the secretary-general would handle day-to-day decisions about how to respond to a mining accident, for example. The secretary-general also personally negotiates the terms of confidential contracts with mining companies.

Pressure is mounting on the ISA to finish its decade-long effort to enact regulations amid growing opposition to mining fragile and biodiverse deep sea habitats for cobalt, nickel and other metals. Lodge, who has worked at the ISA since its establishment in 1994, has not yet indicated whether he’ll seek re-election.

Carvalho runs the marine and freshwater branch of the UN Environment Programme in Nairobi and previously served as a Brazilian federal environmental official.

Greenpeace and other accredited ISA observers haven’t taken a position on Carvalho’s candidacy. “As the regulator of deep sea mining, the head of the ISA — as well as all its members — need to focus on what is threatening the oceans and take action to stop these threats,” Louisa Casson, a Greenpeace deep sea mining campaigner, said from ISA headquarters in Kingston, Jamaica.

The 36-member-state Council is meeting this month amid a flurry of recent developments around seabed mining. On the first day of the gathering, Denmark became the 25th ISA member nation to call for a pause or moratorium on mining due to a lack of scientific knowledge about seafloor ecosystems.

While the US only attends ISA meetings as an observer — it declined to ratify the 1982 UN treaty that gives the ISA jurisdiction over the seabed in international waters — US interest in deep sea mining is growing. The Metals Company (TMC), an ISA mining contractor, has been lobbying US politicians, some of whom are in turn framing deep sea mining as necessary to reduce reliance on China for critical minerals. China controls five ISA exploration contracts that allow it to prospect for minerals, the most of any nation.

There are already signs that the US may be keen to follow in the footsteps of countries like Norway, which in January approved seabed mining exploration in its territorial waters to lessen dependence on China, contravening the advice of government scientists. In the US, Congress included a provision in its most recent defense budget that requires the Pentagon to issue a report on the nation’s capacity to process seabed minerals.

In November, seven Republican congressmen from Texas wrote a letter to Assistant Secretary of Defense Laura Taylor-Kale expressing support for TMC’s proposal to build a seabed minerals facility in the state. A month later, 31 Republican representatives sent a letter urging Defense Secretary Lloyd Austin “to develop a plan to address the national security ramifications of the Chinese Communist Party’s (CCP) interest and investment in seabed mining.”

On March 11, more than 300 former political and military leaders, including Hillary Clinton and three former chairmen of the joint chiefs of staff, signed a letter to the Senate Committee on Foreign Relations urging ratification of the UN treaty that established the ISA so that “American businesses can harvest the strategic critical minerals of the deep ocean floor.” A day after that, two Republican congresspeople introduced the Responsible Use of Seafloor Resources Act of 2024, which would require the federal government to support domestic seabed minerals processing.

At the ISA’s meeting this month, tensions may flare with another accredited observer: Greenpeace, whose activists last year boarded and occupied a ship conducting scientific research for a TMC subsidiary in the Pacific Ocean. After that subsidiary sued Greenpeace, a Dutch judge ultimately ordered the activists to leave the vessel, but preserved their right to protest alongside it.

The incident underscores the role of the secretary-general in handling disputes. Lodge responded to the protest by ordering Greenpeace to stay 500 meters (1,640 feet) from the TMC vessel, but the Dutch judge ruled that the ISA lacked jurisdiction over Greenpeace. Lodge nonetheless doubled down on his claim of authority over protesters in the Pacific in a report to the Council ahead of this month’s meeting.

In a video message shown Tuesday at an ISA side event organized by Greenpeace, UN Rapporteur for Environmental Defenders Michel Forst said international law protects the right to protest seabed mining. “The ISA Secretary General seeking to prevent Greenpeace activists from protesting at sea is yet again another example of the ongoing crackdown on environmental defenders,” he said. “But what is even more shocking is that this happens in an international organization.”

The March Council meeting is the last ISA gathering before the organization’s annual meeting in July, at which the next secretary-general will be elected. At that gathering, all eyes will be on TMC, which has aggressively pushed for the completion of regulations and mounted a global campaign to gain support for deep sea mining.

If regulations are greenlit, TMC would likely be the first company to mine the seabed. One of the company’s ISA contracts is sponsored by the tiny Pacific island nation of Nauru, which in 2021 triggered a provision requiring the ISA to enact mining regulations by 2023. The ISA missed that deadline, and so must start accepting applications.

TMC has said it reserves the right to apply for a mining license after the July meeting, even in the absence of regulations. But any application will require analyzing enormous volumes of scientific data on potential environmental impacts. TMC only recently completed its latest scientific expedition to the area targeted for mining; processing all that data will take time.

“The real goal is to ensure that the mining code and final rules, regulations and procedures are in place before mining would begin,” Craig Shesky, TMC’s chief financial officer, said Tuesday during a company presentation.

(By Todd Woody)

The French government has been holding talks to salvage the South Pacific territory’s loss-making nickel industry and has drawn up a deal to continue providing support.

“I’m calling for the nickel pact to be signed by the end of March … as it was drafted,” Le Maire told journalists. “Let there be no ambiguities, there is no question of changes.”

New Caledonia President Louis Mapou has criticized the deal as being insufficient, but has nonetheless put it to the territory’s congress for a vote on March 28.

Under the proposed deal, the French state would in particular subsidize energy prices alongside local authorities up to 200 million euros a year and invest in electricity production benefiting local nickel plants.

With local producers facing cheaper competition from Indonesia, the state aid would help lower their production costs and allow them to become profitable, Le Maire said.

The nickel firms would also commit to supplying more of their output to Europe, Le Maire said, as the region tries to secure minerals such as nickel to make electric vehicle batteries.

New Caledonia has three nickel processors – KNS, Prony Resources and SLN – that have been on the verge of collapse due to high costs, political tensions and weak international prices linked to Indonesian competition.

Mining group Eramet, the majority shareholder of SLN, this month reached an agreement with Paris to remove from its balance sheet hundreds of million of euros of debt related to SLN.

Paris had been seeking to finalize a deal with the nickel companies and local authorities in January to overhaul the industry but an agreement has proved elusive, partly due to parallel negotiations over constitutional reform.

France has offered loans to help avert the collapse of the nickel processing firms. But Eramet has refused to inject more funds into SLN while KNS co-owner Glencore last month suspended output at the KNS processing plant while it seeks a buyer for its stake.

(By Gus Trompiz and Leigh Thomas; Editing by Alison Williams)

Australia’s Lucapa Diamond (ASX: LOM) has recovered a 203-carat diamond at its prolific Lulo mine in Angola, the fifth-largest ever found at the operation.

The diamond is also the third 100-carat-plus stone found at Lulo this year.

Lucapa said the high-quality, type IIa diamond was recovered during the processing of run-of-mine stockpiled ore and its recovery follows those of a 162 and a 116 carat diamonds on successive days last month.

The mine, which hosts the world’s highest dollar-per-carat alluvial diamonds, began commercial production in January 2015. Only a year later, it delivered the largest ever diamond recovered in Angola — a 404-carat white stone later named the “4th February Stone”.

Lucapa has a 40% stake in the Lulo mine. The rest is held by Angola’s national diamond company (Endiama) and Rosas & Petalas, a private entity.

Angola is the world’s fifth diamond producer by value and sixth by volume. Its industry, which began a century ago under Portuguese colonial rule, is successfully being liberalized.

The Swiss company totalled 432.8 million tonnes of carbon dioxide equivalent last year, compared with in 2022, reversing the downward trend of recent years.

In its 2024-2026 Climate Action Transition Plan (CATP), Glencore noted it was still “on track” to meet its 15% reduction of carbon dioxide equivalent emissions for its industrial assets from 2019 levels by the end of 2026, and of 50% by the end of 2035.

The rest of Glencore’s revised climate plan is much like a previous plan it released — but this time includes the interim 2030 target.

“[The new plan] reflects a wide range of inputs, including analysis of the evolving market landscape, new regulatory requirements, mining and energy peer approaches, the IEA’s latest modelling, stakeholder inputs, and emerging insights from the most recent United Nations Framework Convention on Climate Change (UNFCCC) dialogue,” chief executive officer Gary Nagle said in a statement.

“We have also undertaken extensive engagement with our shareholders and appreciate their time and support as we have developed this CATP,” Nagle noted.

Glencore, like most of the world’s biggest listed companies, published its first climate action plans in 2020 in a bid to help with reaching the 2015 Paris Agreement goal of capping temperatures within 1.5 degrees Celsius.

The Baar, Switzerland-based firm, one of the top global thermal coal exporters, has faced backlash for being one of the few top miners still involved in the extraction of the fossil fuel used to generate electricity.

After facing pressure from major investors and shareholders, Glencore committed to run down its coal mines by the mid-2040s, closing at least 12 by 2035.

“We recognize the different roles of thermal coal and steelmaking coal – and the different transition pathways for both,” Nagle said while presenting the new strategy.

The executive noted the company “remains committed” to the responsible phase-down of its coal portfolio and is not progressing any greenfield thermal coal investments. 

The company continues to produce and recycle commodities considered key for today’s cleaner transition technologies. Nagle said the speed and direction of Glencore’s decarbonization efforts are significantly shaped by geopolitics, policy decisions, and technological advancements.

Tackling Scope 3 emissions

Glencore plans to cut “Scope 3” emissions — those produced when customers burn or process a company’s raw materials — by 30% by 2035 and achieving net zero Scope 3 emissions by 2050.

The company did not include its marketing activities in the these goals. It justified the decision by saying that, by trading in the third party volumes, its activities do not generate additional Scope 3 emissions, “which in the ordinary course are associated with the transformation or use of the product by third parties”.

Glencore recently acquired a 77% interest in Teck’s (TSX: TECK.A, TECK.B)(NYSE: TECK) steelmaking coal business, Elk Valley Resources (EVR). The transaction remains subject to mandatory regulatory approvals and is expected to close by no later than Q3 2024.  

The company calls this project one of the world’s largest undeveloped copper projects.

An NI 43-101 report prepared by SRK Consulting late in 2016 for Era Resources (a private company) put the total measured and indicated resources at 728.6 million tonnes grading 0.33% copper, 0.01% molybdenum and 0.10 ppm gold. In terms of contained metal, that represents 6.2 million lb. of copper equivalent.

There is also an inferred resource of 230.6 million tonnes grading 0.29% copper, 0.01% molybdenum and 0.04 ppm gold.

The deposit is divided into oxide and non-oxide resources with roughly 90% falling in the non-oxide category.

The Yandera project was subjected to intensive drilling in the late 1960s and 1970s by a number of companies. Later, Era Resources spent over $100 million drilling 144,000 metres so that a resource estimate could be made. Freeport acquired the Yandera project in 2021, when it bought out Carpo, which controlled Era Resources.

The Yandera resource has a known 5-km strike length within a 17-km trend. The depth has been little investigated. Freeport has a plan for expanding the resources and developing an open pit mine. A mine life of at least 20 years is planned during which time a total of 540 million tonnes of ore will be mined.

The incident occurred on March 10. Processing operations at Kainantu were subsequently halted for three days, and have since resumed on the existing stockpiles.

Preliminary investigations by both the company and the Papua New Guinea police have led to the conclusion that the incident is a “non-industrial” in nature.

On March 13, the PNG authorities ordered a temporarily suspension of underground operations, pending the completion of action orders in relation to an independent safety audit and the installation of a collision avoidance system.

Work on these action orders is underway and were in process prior to the issuance of the action orders, the Canadian gold miner said in a news release.

Given the non-industrial nature of the incident, procedural, determination and jurisdictional breaches of the Mining (Safety) Act in issuing the action orders, the company said it filed an appeal on March 14 and expects this to be addressed shortly.

The incident marks another fatality reported at the Kainantu mine over the past year. In both May and June of 2023, two separate vehicular accidents occurred in or around the mining area, leading to the deaths of two workers in each instance.

The Kainantu project in PNG’s Eastern Highlands province was originally acquired from Barrick Gold in 2014, and it has now become K92’s flagship operation. The mine is now entering its next phase of expansion to ultimately become a Tier 1 operation with a per-annum run rate of up to 470,000 oz. gold equivalent.

Shares of K92 Mining were down 2.3% to C$6.20 when the market opened in Toronto. The company has a market capitalization of C$1.45 billion ($1.1bn).

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

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

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

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

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

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

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

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

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

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

According to the study, confidence in the world’s ability to achieve net zero by 2050 seems to be eroding as it becomes more difficult to ensure adequate investment returns and progress diverges in a fragmenting world. This view is consistent across most regions and is most strongly held among people working in the oil and gas sector.

Bain & Company surveyed over 600 industry executives in mining, oil and gas, utilities, chemicals and agribusinesses across the globe to better understand their views on the energy transition, new technologies, and investment opportunities, and where they see the greatest challenges for decarbonization.

“This year’s survey found that energy and natural resource companies have not dampened ambitions for their transition-oriented growth businesses. However, customers’ willingness to pay is a growing issue, as is the ability to generate adequate return on investment (ROI) in energy transition-oriented projects. As a result, companies are focusing on projects with a viable ROI path,” said Joe Scalise, head of Bain & Company’s energy and natural resource practice. “The longer the executives are at the front lines of the energy transition, the more sober they are getting about the transition’s practical realities.”

The survey points out that executives in the Middle East (61%), Asia-Pacific (55%), and Latin America (51%) are feeling more optimistic about the prospects of their transition-oriented growth such as renewables, hydrogen, bio-based products, and lithium and other transition commodities that will contribute to their company’s valuation and profits by 2030. Hence, they are maintaining or increasing green investments. Only 4%, 12% and 10%, respectively, of executives from the three regions expressed less optimism, while the remainder showed no significant change.

The survey revealed a more balanced picture in Europe where 30% of executives revealed more optimism vs. 27% who were less optimistic about their new energy growth business areas contributing to the bottom line.

In North America, 29% of executives were more positive compared to 17% who were less positive on their transition-related growth areas.

Returns to scale-up

“Like last year, executives say the greatest obstacle to scaling up their transition-oriented businesses is finding enough customers willing to pay higher prices (or having equivalent policy support) to create sufficient return on investment,” the report states. “In fact, the share of executives identifying this as a very significant roadblock jumped 14 percentage points from 2023 to 2024, to 70% of executives.”

The experts behind the study note that the direct impact of higher interest rates on the cost of transition projects is likely shaping executives’ perspective on the challenges associated with customer willingness to pay. 

Bain has found that higher rates put upward pressure on the effective cost of low-carbon projects and a 500-basis-point increase in the cost of capital can increase the total annual revenue required to finance a project by as much as 50%.

Trendy North America

The survey presents North America as an emerging leader for green investments as 79% of all executives view it as an attractive region for energy transition investments. The next most attractive region is Europe at 65%. 

Australia and New Zealand come in as second runner-ups at 43%. 

Even as increasing government subsidies make some regions, such as North America, more attractive for investment, executives have growing concerns about policy stability.

The US Inflation Reduction Act is a major factor in North America’s investment attractiveness, but factors such as the availability of relatively low-cost natural gas feedstock also influenced the result. 

“However, while almost two-thirds of US executives surveyed agree that the IRA’s subsidies target the right areas, less than one-quarter believe that the policy regime will remain stable over the next five to 10 years,” the dossier states. “Furthermore, 42% of US executives think the IRA’s subsidies are unclear and that the rules are not easy to follow.”

About 70% of executives worldwide say that reducing policy uncertainty would very significantly improve their ability to scale up transition-oriented businesses.

The Fast Track Approvals bill, which envisions a “one-stop shop” for resource consents and Resource Management Act permits, has just passed its first reading in Parliament.

Waihi North is a proposed underground mining project anchored by the Wharekirauponga development, located just north of OceanaGold’s existing Waihi mine operations. It is supplemented by the Gladstone open pit that lies directly to the west of the Waihi processing plant.

“The recently announced introduction of the Fast Track Approvals Bill signals a new focus by the New Zealand government to facilitate the delivery of significant development projects, including mining,” Gerard Bond, CEO of OceanaGold, stated in a news release.

“We look forward to learning more about the government’s criteria and process for fast-track approvals, given the potential for accelerated permitting of the Waihi North project, which includes Wharekirauponga,” he added.

The centre National Party won in New Zealand’s fall election, following a six-year term under Jacinda Ardern, a liberal. The country’s new prime minister is Christopher Luxon, a former Air New Zealand CEO. His party formed a governing coalition with the ACT and New Zealand First parties.

Since acquiring the Waihi operations in 2015, OceanaGold has committed to extending its mine life, which was kickstarted by the opening of the Martha underground mine. It also undertook extensive exploration in the area, leading to the discovery of a gold resource beneath Wharekirauponga and at Gladstone.

According to the company, Wharekirauponga has the potential to “create significant socio-economic contributions for the communities in the Coromandel region and for New Zealand.” It also envisages the development of a mine that aligns with its objective to reducing its carbon footprint.

On Thursday, the company also reported the results for 10 drill holes from the ongoing exploration and resource conversion program at Wharekirauponga. The best results include 61.9 g/t gold over 4 metres from 534.4 metres depth, 31 grams gold over 5.2 metres from 513.7 metres, and 58.5 grams gold over 2.5 metres from 474.7 metres.

All reported holes were completed subsequent to the cut-off date for the latest Waihi North resource estimate in December 2023, which outlined 1 million oz. at a grade of 15.9 grams gold per tonne in the indicated category and 350,000 oz. at 9 grams per tonne inferred.

Shares of OceanaGold moved 2.2% higher by 11:25 a.m. ET on the latest announcement. The British Columbia-based gold miner has a market capitalization of C$1.9 billion ($1.4bn).

Existing loans to SLN worth 320 million euros from the government ($347.42 million) plus intra-group debt of a further 325 million euros will be converted into a ‘quasi-equity’ instrument, the group said.

The government loans to SLN are currently consolidated in Eramet’s debt. As of end-December they represented about 40% of the group’s net debt of 614 million euros but since then the government has loaned another 60 million euros to SLN, taking its loans to the firm to 320 million euros.

The conversion of the intra-group debt, however, has no impact on the group’s consolidated accounts, Eramet added.

The conversion deal will free SLN indefinitely from payments related to the debt but will not alter the shareholder structure of either SLN or Eramet, a spokesperson added.

Eramet has a 56% stake in SLN, while the French state has a 27% stake in Eramet.

Confirming the agreement, France’s finance ministry said by email that this would reinforce Eramet’s balance sheet without additional financial support from the state.

SLN’s debt has been among issues addressed in negotiations to rescue New Caledonia’s struggling nickel industry.

Nickel processing in the French South Pacific territory has been sapped by high energy costs, political tensions and competition from cheaper Indonesian supply.

Eramet, which has refused to inject more funds into SLN, said it would continue to provide operational support to SLN “over time”, depending on potential financial support for SLN from the French government and New Caledonian authorities.

Paris had been seeking to finalise a deal in January to salvage New Caledonia’s three nickel processing firms, but talks are continuing.

SLN faces a deadline of April 10 to emerge from a separate court conciliation process aimed at overhauling its business.

France has offered loans to help avert the collapse of New Caledonia’s two other nickel processing companies, Koniambo Nickel SAS (KNS) and Prony Resources.

KNS co-owner Glencore, however, last month suspended output at the KNS processing plant while it seeks a buyer for its stake.

($1 = 0.9211 euros)

(By Gus Trompiz; Editing by Tassilo Hummel, Ros Russell and Sandra Maler)

According to the consultancy firm, this decline makes renewable energy increasingly competitive with conventional low-cost coal power, driven by a significant reduction in capital costs for renewable power. Renewable energy costs in 2023 were 13% cheaper than conventional coal and are expected to be 32% cheaper by 2030.  

“Utility PV solar has emerged in 2023 as the cheapest power source in the region, while onshore wind is expected to become cheaper than coal after 2025,” Alex Whitworth, VP – head of Asia Pacific power research at Wood Mackenzie, said in a media statement. “Renewables firmed with battery storage are becoming competitive with gas power today but will struggle to compete with coal before 2030.” 

Whitworth pointed out that China is leading the way in lowering the cost of renewables, with utility photovoltaics, onshore wind, and offshore wind being 40-70% cheaper compared to other Asia-Pacific markets. 

“China will maintain a 50% cost advantage for renewables out to 2050, allowing the country to maintain its lead in renewables deployments,” the report states.   

The dossier also notes that solar photovoltaic power costs saw a significant decline of 23% in 2023, marking the end of two years of supply chain disruptions and inflation. In fact, utility PV emerged as the cheapest power source in 11 out of 15 countries in the Asia Pacific.

The report states that the expectation is that new-build solar project costs will drop another 20% by 2030, driven by falling module prices and increasing oversupply from China. The decline in solar technology costs in 2023-24 has put pressure on coal and gas, with LCOE for utility PV dropping by an average of 23% across Asia Pacific in 2023, driven by a 29% decline in capital costs. 

Distributed solar, on the other hand, has shown an even greater decline in costs –a 26% decrease in 2023, and the technology is now 12% cheaper on average than residential power prices creating a large potential for more rooftop solar applications.   

“This trend has made distributed solar increasingly attractive for end-users in many markets in Asia-Pacific, with costs already 30% below rising residential tariffs in China and Australia. However, some markets like India with subsidized residential power tariffs will need to wait until 2030 or later to achieve competitive distributed solar prices,” said Sooraj Narayan, senior research analyst, APAC power & renewables at Wood Mackenzie. 

Wind and fossil fuels

While onshore wind costs were higher than solar by 38% in 2023, Wood Mackenzie forecasts a 30% drop by 2030 as cheaper Chinese turbines gain market share. 

“Markets such as Australia and Southeast Asia will benefit from the low-cost import of wind power equipment from China, while Japan and South Korea with more limited Chinese turbine uptake and focus on the local supply chain will observe onshore wind costs staying above US$80/MWh by 2030,” the dossier reads.

The report also highlights the increasing competitiveness of offshore wind with fossil fuel power in Asia-Pacific, with costs falling by 11% in 2023. 

“Offshore wind costs are now on par with coal power in coastal China and are expected to become cheaper than gas power in Japan and the Taiwan region by 2027 and 2028, respectively. Falling capital costs and technology improvements are opening up new markets for offshore wind in India, Southeast Asia, and Australia over the next 5-10 years.” 

Meanwhile, coal and gas generation costs have increased by 12% since 2020 and are projected to continue rising through 2050, primarily due to carbon pricing mechanisms. 

“Developed markets in Asia-Pacific are expected to experience a significant increase in carbon prices, reaching US$20-55/tonne by 2030, while the carbon prices in Southeast Asia and India are expected to remain low,” WoodMac’s document states. “Gas power costs remain above US$100/MWh on average out to 2050, meaning they gradually lose the battle on costs with offshore wind over the next decade.” 

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

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

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

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

‘Irreparable’ industry harm

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

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

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

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

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

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

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

Sovereign interference

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

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

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

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

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

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

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

Diamond market outlook

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

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

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

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

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

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

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

The company’s talks with the French authorities are part of wider negotiations to rescue the struggling nickel industry in New Caledonia.

Eramet, which has refused to inject more funds into SLN, aims to reach a deal in the coming weeks with France to remove 320 million euros ($345.82 million) of SLN’s debt from its own balance sheet, Chair and CEO Christel Bories told reporters on Wednesday, declining to give further details.

The debt included a new 60 million euro loan granted to SLN by the French government this month. The loan should enable SLN to continue operating at least until April, Bories said on a results call.

Beyond the debt discussions, Eramet remained open to different longer-term options for SLN, the CEO said.

A spokesperson for France’s finance ministry on Thursday said that SLN’s debt was among issues being discussed with Eramet and that talks were well advanced.

Eramet shares rose more than 4% by 1150 GMT, with analysts welcoming the prospect of its debt being reduced.

France has also offered loans to help to avert the collapse of New Caledonia’s two other nickel processing companies, Koniambo Nickel SAS (KNS) and Prony Resources.

KNS co-owner Glencore, however, this month halted output at the KNS processing plant while it seeks a buyer for its stake.

Eramet reported a sharp drop in annual earnings, reflecting weak metal prices. It recorded a 218 million euro asset impairment related to SLN.

SLN’s troubles have contrasted with profitable growth for Eramet’s nickel business in Indonesia, where it runs the Weda Bay mine with Chinese steel group Tsingshan.

Metal prices have remained weak so far this year in the face of low demand, notably in China, but a trend of production capacity being closed could support a recovery, Bories said.

In its shift towards battery minerals, Eramet would continue to look at potential investment in a project with German chemical group BASF to process ore from Weda Bay into nickel and cobalt feed for batteries, Bories said, declining to give a timeline.

($1 = 0.9253 euros)

(By Gus Trompiz; Editing by Benoit Van Overstraeten, Timothy Heritage and David Goodman)

If a screenwriter were writing a new film with an anti-environment villain, one of the easiest ways to establish the moral bankruptcy of the antagonist would be to make the character a corporate industrialist hell-bent on mining the deep ocean.

The average audience, after all, does not require even a single frame of film to imagine that deep sea mining might involve any number of ecological horrors. Most opponents of deep sea mining lean into such favorable preconceptions, vividly characterizing deep sea mining as a catastrophic act of ocean ecosystem vandalism, which any responsible citizen ought to categorically oppose with do-or-die fervor.

Thus it may come as a surprise that none other than James Cameron, passionate deep ocean explorer and director of the ocean-themed “Avatar: The Way of Water,” recently expressed feeling open-minded toward deep-sea mining as a “less wrong” alternative to conventional land-based mining.

A challenge is that seafloor mining immediately starts off at a reputational disadvantage, a product of what Cameron calls society’s “weird habit of blowing the wrong thing out of proportion.” This instinctive reaction leads many to overlook the potential for deep sea mining to offer a more just, lower-impact, and lower-carbon way to mine metals than conventional terrestrial mining – a proposition that evidence so far seems to suggest has real promise.

As an oceanographer by training, I endorse Cameron’s suggestion, as heretical as that may seem. Collecting metals from the seabed may well be a “more right” way for humanity to source some of its needs for new metals.

This opportunity to pioneer a new dramatically lower-impact form of mining highlights how important it is for environmentalists and ocean scientists to critically reexamine the automatic instinct to oppose any further alteration of our seas. In the face of forces like climate change and far more extensive human activities that have and will continue to keep changing the oceans, such aspirations are already futile.

Equally futile are superficial attempts to reject new mining both on land and at sea with impossible recycling math, thereby avoiding having to wrestle with the energy transition’s implacable trade-offs. With these factors in mind, it is well worth asking whether we ought to continue concentrating the impact of our metals production on land in service of a shining ideal of ocean conservation that is already unattainable.

What is deep sea mining, really?

While some have speculated about mining other potential ocean-based resources for many decades, collecting seafloor nodules is closest to commercial operations and at the focus of most of the ongoing debate. Other marine resources remain far more speculative, and would be subject to their own unique environmental assessments and regulatory restrictions. Indeed, no commercial-scale harvesting of seafloor metals has occurred yet, as governments and industry await the finalization of international regulations and environmental standards.

In certain regions of the abyssal seafloor between 3.5 and 6 kilometers in depth, natural chemical processes have formed vast fields of potato-sized concretions rich in manganese, nickel, copper, and cobalt. As coincidence would have it, manganese, nickel, and cobalt are the exact metals used to manufacture the nickel-manganese-cobalt lithium-ion battery packs found in many electric vehicle batteries and other electronic devices.

Nickel and manganese are also used extensively in many standard steel and aluminum alloys as well as in other clean energy technologies like hydrogen electrolysis cells, while copper is a crucial component for countless power grid infrastructure elements. Finally, supply chains for these metals exhibit a concerning degree of overconcentration, with around 70% of cobalt and nickel processing and 44% of copper refining currently based in China. Consequently, deep-sea nodules pose implications for the metal requirements of not just electric car batteries, but for the clean energy transition as a whole.

Prospectors propose using remotely-operated robots to simply vacuum up these nodules and pump them to motherships at the ocean’s surface. In contrast, mining these same metals on land would typically require clear-cutting forest and vegetation, then blasting and digging surface excavations or deep mine shafts to extract buried ore, exhuming the soil layer and many layers of rock in the process.

No form of mining is without environmental impacts, and the same is certainly true for seafloor nodule collection. Most of the robotic collector vehicles currently in testing use hydraulic jets to dislodge the nodules, sucking up the metal-rich rocks along with the top 5-10 centimeters of sediment. This will likely kill the majority of bottom-dwelling organisms caught in the collector’s path. The sediment ingested by the collector vehicle is subsequently ejected, creating a plume near the seafloor in the vehicle’s wake that could harm or bury seafloor life.

While being transported to the mothership at the ocean’s surface via pipe, the nodules may rattle within the pipe, generating loud underwater noise. Finally, return water and sediment carried to the mothership through these pipes must be brought back to the ocean floor which may affect local carbon and nutrient cycling and generate a relatively dilute, light sediment plume.

Let there be no doubt that harvesting deep-sea nodules would deteriorate local seafloor ecosystems to some extent. But the direct and more long-lasting seabed disturbance is limited to the path of the collector vehicles. The effects of the sediment plume near the seafloor depend on how much the sediment cloud rises and travels horizontally, and how much plumes affect bottom-dwelling organisms. The impact of noise from piping nodules to the surface depends on the equipment used and the sensitivity of nearby animals to that noise. Furthermore, impacts like noise and ejected sediment could cease immediately should mining companies pause or end operations.

Meanwhile, the one-third of Earth’s surface covered by land contains all of our paved concrete cities, all of our land-based mines, and all of our vast expanses of cropland and livestock pasture. To date, the burden of nearly the entirety of society’s current and historic demand for metals has fallen upon this minority of the planet’s surface area that we happen to live in closest proximity to. Nor should we forget that society also already carries out numerous ocean-based economic activities—fishing and whaling, marine shipping, the dredging of shipping channels, sand harvesting, offshore oil and gas drilling, and the construction of offshore wind turbines, undersea pipelines, and cable networks. Many of these operations produce similar impacts in terms of noise and local seafloor disturbance.

Sourcing metals from nodules could be preferable to conventional mining on land from a human perspective as well. Extracting metals from remote locations at sea that are literally uninhabitable may avoid many of the risks to human communities and sociopolitical conflicts that terrestrial mining can pose. The production of metals from nodules would also rely primarily on skilled labor in sectors with traditionally strong union representation like shorefront workers and metalworkers, avoiding risks like mine worker exploitation and poor safety standards that confront many global mineral supply chains today.

Humanity may also share the benefits of deep sea metals more broadly than has historically been the case in mining. The United Nations Convention on the Law of the Sea (UNCLOS) tasks the International Seabed Authority (ISA) with not only regulating seabed economic activities, but with collecting royalties on mining and redistributing them as benefits to countries globally, prioritizing developing countries in particular. The claims-based nature of seabed exploration under the ISA has also encouraged companies to partner with sponsor nations including small island developing states with few other economic opportunities that could themselves benefit from revenue and administrative fees associated with such agreements. As such, one wonders whether seafloor nodules might offer not just technical and environmental advantages relative to traditional mining, but also produce better social outcomes as well.

An incoherent debate

Ultimately, it is critical to distinguish between accurate claims about deep sea nodule collection and misleading assertions without basis.

Seafloor mining opponents claim nodule collection will pose an existential threat to marine life, driving rare seafloor species to extinction, or threatening fisheries at the scale of entire ocean basins. Activists have lobbied governments and potential industry customers like automakers to support moratoria on deep-sea mining, arguing that nodule collection is too dangerous to allow or consider—at least until scientists learn more about the risks.

But opponents of nodule collection are engaging in exaggeration, cherry-picking, and misleading messaging that clearly call into question their rhetorical commitments to let the science speak. Cases abound where activists have cited scientific research to claim catastrophic impacts of nodule harvesting that far exceed the actual findings in question.

For example, recent Greenpeace campaigns have widely smeared polymetallic nodules as “radioactive” and potentially harmful to workers, a claim that some reporting has uncritically repeated. Yet the actual scientific study that activists are citing concludes that nodules emit low amounts of relatively harmless alpha radiation, which cannot even penetrate human skin, and proposes that simply requiring workers to wear an N95 mask would provide effective protection.

Or there’s the case of exaggerated claims about the future of tuna. A recent study examining the overlap between Pacific tuna population patterns and the nodule-rich seafloor areas has motivated activists, journalists, and fishing industry representatives to label nodule collection as a threat to Pacific tuna on an ocean-wide scale. But it once again appears that nobody has read the underlying paper. The study only investigated the potential for tuna populations to migrate into one nodule-containing seafloor region in response to future climate change, and did not directly study the influence of nodule harvesting operations on tuna. This is a clear case of activists and reporters spawning scientific conclusions from their imagination to fit a desired narrative.

A broader look at activist campaigns against seafloor nodule collection suggests that opponents simply aren’t interested in scientific impact assessments to begin with. Anti-mining advocates represent environmental risks from nodule harvesting as though they are inherent and fundamental, ignoring the potential for regulations or technology to reduce impacts.

Scientific findings with any industry connection are dismissed on principle rather than refuted on their research methods or merits. Direct action activists call for decade-long bans on nodule exploration until scientific understanding improves, while obstructing small-scale expeditions intended to conduct some of that very science. And empty lip service in more formal proceedings notwithstanding, opponents’ public messaging remains noticeably disinterested in advancing any solutions to the risks they loudly emphasize.

On the other hand, it is true that deep sea nodules are not, strictly speaking, absolutely necessary for the energy transition. The quantities of metals required to manufacture electric vehicles at global scale over the next few decades would not come close to exhausting either land-based or seafloor nodule deposits.

As Table 1 shows, humanity could—without so much as touching deep-sea metals—produce nickel-manganese-cobalt (NMC) batteries for between 1.5 to 5 billion electric vehicles before encountering cobalt supply limitations. More importantly, with a rapidly-growing share of electric vehicles utilizing lithium-iron-phosphate (LFP) batteries that do not consume cobalt, nickel, or manganese, it appears increasingly likely that the future global electric vehicle fleet may not require as much of these three metals.

In pure quantitative resource terms, deep-sea metals are thus optional for net-zero pathways. But given how society is presently grappling with how to best expand and diversify battery metal production today, the insistence that ocean resources are off-limits risks ruling out a promising approach for accomplishing this more efficiently and sustainably.

In response, activists challenge the very idea that society requires any significant new mining at all, often by calling instead for improved recycling and a crusade against private automobile ownership. This car-hating recycling-based circular economy platform rather elegantly upholds traditional conservationist principles while dodging most acknowledgement that the global shift towards more sustainable societies might involve ecological tradeoffs. However, it is both incoherent and incorrect. Specific proposals for reducing car ownership are often unrealistically overoptimistic, while cold, hard math suggests that even a vastly smaller global car fleet would still require electric vehicle replacements on the order of at least several hundred million electric cars, relative to the 30 million or so that exist today. The quantitative case for new battery metal mining is unshakeable.

As such, climate hawks would do well to consider the environmental case for deep-sea metals. One particular advantage is adaptive management. Unlike a surface mine on land, where many significant ecological impacts occur all at once during the mine’s initial construction, the fingerprint of nodule collection on the seafloor is incremental with every unit of rocks collected.

If scientists conclude that it is important for collector vehicles to leave more nodules behind, operators can adjust accordingly even midway through harvesting an area. If regulators determine that underwater noise from nodule collection is more harmful than anticipated, they can require technology improvements that reduce impacts from that point forward. If collector vehicle technology improves in ways that further minimize environmental risks, regulators can compel all operators to adopt that technology.

At the most basic level, we can imagine forms of seafloor nodule collection that tread extremely lightly upon the seafloor. Regulators are working with scientists and aspiring operators to define initial precautionary thresholds for dissolved metals, noise, light, and turbidity that nodule collectors will in turn commit to meet. Across the conceivable spectrum of approaches one can envision robots that only disturb sediment to half the depth, that use dimmer onboard lights, or that eject sediment in a controlled manner to greatly reduce the size of the plume in their wake.

Advocacy by many opponents for seafloor mining bans that would foreclose any of these possibilities hints at a narrow-minded aversion that fixates more on the idea of collecting seabed metals than it does on the actual impacts.

Gatekeepers of the ocean

That ocean conservation activists and ocean researchers opposed to seafloor nodule collection should not be surprising. The average oceanographer chooses the field more out of a genuine love of the ocean and belief in the intrinsic value of oceanic knowledge, than out of any desire to invent world-changing technology or win a Nobel Prize. The same is true for many ocean advocates.

In such loving eyes, the ocean is at once pristine and untouchable, but also fragile and increasingly tainted. Yet such a worldview winds up paradoxically invoking humanity’s longstanding, deep interactions with the ocean to declare the oceans off-limits to new activities.

The idea that the ocean is better off the less humans interact with it too often neglects to consider how treating the seas as sacrosanct can itself come at societal and environmental costs. Fishing well in excess of fish population replenishment serves neither food security nor ocean life, but the seas can support even extensive fishing that spares large areas of land from farming.

Cargo ships and the concrete wharfs and dredged channels to support them impose harms on ecosystems, but enable global trade and link continents that would otherwise have to sustain themselves in isolation. Similarly, arguments opposing deep sea nodule harvesting cannot weigh only the costs or benefits to the ocean alone.

A common line of argument declares that humans clearly have not shown any ability to steward the environment on land, and therefore cannot by any means be trusted to extract resources from the ocean. But with nearly all human activities leaving some mark upon the land environment, would environmentalists ever really concede, at any point present or future, that humans have achieved sufficient redemption in their eyes to collect nodules at sea? Indeed environmentalists too often express similar fatalism towards seemingly any kind of human activity. Utopias do not exist, and demanding that humankind achieve utopia before attempting anything new is to effectively insist that society remain in an eternal purgatory of stasis.

The alternative, ecomodernist view is that sourcing metals from the ocean represents a part of the process itself of demonstrating better stewardship of our land ecosystems. The ocean certainly faces its share of problems, and turning to seabed nodules in order to reduce the known problem of mining impacts on land may create new problems—which humans can and will solve in turn. But humanity is already asking enough of the one-third of Earth’s land surface that it is well worth seeking an optimal balance by leveraging the watery two-thirds of the globe a little more. Arguments over the ecological diversity of seafloor nodule regions notwithstanding, it is patently obvious that the richness of biomass per unit area of land cleared for conventional mining is many orders of magnitude greater.

In the end, the better question to ask is not whether humanity should collect deep-sea metals, but rather how. Before claiming that the cost of collecting nodules from the ocean floor is too high, researchers, activists, regulators, and companies should explore the degree to which operators can reduce impacts and define what obligations to hold industry accountable to. As such, calling for immediate moratoriums on deep-sea mining is not only premature, but a circumvention of constructive dialogue and negotiation.

Much will depend on the final form of international seabed regulations, not to mention the formulation of promised mechanisms for collecting and distributing benefits globally from deep-sea activities in international territory. And given the precariousness of global supply chains for key metals, dragging such discussions out for many years would impose its own risks and costs.

But fundamentally, the debate over seabed mining would benefit from more open-minded curiosity and willingness to imagine the policy frameworks and technologies that could produce a new and better form of mining—one rooted from the very start in a more progressive vision of shared management of a global commons, for the collective benefit of all humanity.

(This article first appeared on the Breakthrough Institute)

Prony Resources is one of three nickel processors in the French territory of New Caledonia that face insolvency as high costs and political tensions have hit profitability while rising Indonesian supply has dented international prices.

The French government has approved the loan in addition to 40 million euros in annual energy subsidies for Prony proposed in a wider package for the industry that Paris aims to sign off this month, Sonia Backes, president of New Caledonia’s southern province, said on Thursday.

“This loan will give us time to find a buyer,” Backes told local broadcaster La 1ere Nouvelle Caledonie, adding the funds should allow Prony Resources to continue operating until 2026.

Prony Resources spokesperson Adelie Garaud Ballande said negotations were still underway on the terms and conditions of the loan.

“At this stage, nothing has been signed and sealed,” she said via email. “The amount of the emergency loan to be granted by the State will give us time to make every effort to attract an investor.”

France’s finance ministry said the proposed loan was subject to an overall agreement being reached on the New Caledonian industry.

The southern province where Prony’s operations are based is one of several shareholders in the company. Commodity merchant Trafigura also has a 19% stake.

Rothschild & Co has been mandated to find a new investor for Prony, Backes said. A spokesperson for Rothschild did not immediately respond to a request for comment.

Paris had offered similar aid to Koniambo Nickel SAS (KNS) but its co-owner Glencore said the support was insufficient, announcing this week it was halting output at KNS’ processing plant for six months while it sought a buyer for its stake.

New Caledonia’s third nickel processor is SLN, in which French miner Eramet has a majority stake. Eramet has said it will not provide further funding to cover losses at the business.

($1 = 0.9276 euros)

(By Gus Trompiz and Mathieu Rosemain; Editing by Jane Merriman and Edwina Gibbs)

The company said the milestone positions it as one of the few pure-play copper producers on the Australian Securities Exchange (ASX), with first revenues from copper concentrate sales expected this week.

The Kanmantoo underground mine, located around 55km (34m) from Adelaide, has been a site of substantial copper and gold production in the past. From 2010 to 2020, Hillgrove Resources operated a series of open pits at the site, which yielded nearly 137,000 tonnes of copper and 55,000 ounces of gold.

The company began exploring the potential for an underground operation in 2020, which led to the development of a single decline towards the base of one of the pits in mid-2023.

“First production (…) and the transition to cash flow generation, is a watershed moment for the company,” CEO Lachlan Wallace, said in the statement. “Over the next few months, the mine output and copper production are expected to ramp up as the planned additional work areas are established underground.”

The mine is now fully connected to the South Australian power grid, which is supplied by more than 70% renewable energy generation. This considerably reduces Kanmantoo’s carbon footprint, the company said.

Hillgrove believes there is a “considerable opportunity” to grow both the resource and mine life, based on recent drilling results. Exploration targets at the project this year sit at 60 million to 100 million tonnes at 0.9% to 1.2% copper and 0.1 g/t to 0.2 g/t gold, it said.

To leverage the miner’s position as a copper producer into the future, Hillgrove is actively seeking to grow both the mine life and annual production through exploration.

Shares in the company jumped after the announcement closing 1.32% higher at A$0.077 on Tuesday. This left Hillgrove with a market capitalization of A$139.86 million ($90m).

The Swiss miner and commodity trader said it would look for a new partner for the nickel mine and processing plant in the French territory, adding that it would leave the operation ready for a quick reopening if a new investor is found.

Glencore is also seeking to sell its 49% stake in the company, KNS said in a separate statement.

Prices for the metal used in stainless steel and electric-vehicle batteries have almost halved over the past year, seriously affecting producers. 

Wyloo Metals Pty Ltd., the nickel company owned by mining magnate Andrew Forrest, announced in January that it was closing its Western Australian mines. Other major players like BHP (ASX: BHP) and First Quantum Minerals (TSX: FM) are also suffering, while many smaller miners have stopped building or gone into administration.

“The pressures in the global nickel market are becoming increasingly apparent,” Colin Hamilton, managing director for commodities research at BMO Capital Markets, wrote in a note at the end of January.

“We have noted that further temporary or permanent capacity cuts were required to balance the nickel market following last year’s surplus, but it is yet to be seen whether sufficient adjustment has taken place,” Hamilton said.

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The French government, which has authority over New Caledonia, has been considering a rescue plan for the the islands’ nickel sector, including emergency loans. Paris has proposed to reduce the energy bills by around 200 million euros ($215 million) per year, but talks will continue until the end of February.

“For over ten years, Glencore has been the primary funder of KNS without ever realizing a profit,” Glencore said in the statement. “Even with the French government’s proposed assistance, high operating costs and current very weak nickel market conditions means KNS remains an unprofitable operation.”

According to Glencore, KNS has contributed $5.6 billion in economic benefits to New Caledonia since 2012 from construction ($1.7 billion) and operations ($3.9 billion), including $3 billion spent on goods and services and payment of $950 million in local salaries.

Glencore said last year it would stop financing Koniambo by the end of this month. The Baar, Switzerland- based mining giant, which originally planned to keep its stake in the operation, proposed mothballing the facility and shifting to nickel ore exports instead.

The move would make even more waves in the battered sector. Not only it would cost about 1,300 local jobs, but it would also increase Asia’s dominance over the nickel supply chain after the growth of processing capacity in China and Indonesia.

Glencore has committed to keep all KNS employees for a period of six months to aid in the transition.

The French-controlled Pacific territory has some of the world’s largest nickel reserves, but high costs have left its three processing plants on the verge of collapse.

Le Maire has previously estimated the short-term financing needs of the three nickel processing groups – SLN, KNS and Prony Resources – at 1.5 billion euros ($1.61 billion).

Commodities group Glencore, which co-owns KNS, has said it will provide funding only until the end of February. French miner Eramet has repeatedly said it will not provide more funding for SLN, in which it holds a majority stake.

Le Maire on Tuesday said that the government would provide 60 million euros ($64 million) through subsidised energy prices, 45 million euros in additional resources and a 100 million euro loan.

“Now it’s up to the shareholders to take their responsibilities. We will not go any further and we will not subsidise losses,” Le Maire told lawmakers in the lower house of parliament.

The French state, which has complicated relations with New Caledonia authorities over some parties’ pro-independence stance, also wants the territory’s northern province to participate in the rescue, Le Maire said.

His ministry on Monday said that the France would continue talks until the end of February to save New Caledonia’s nickel industry after last month’s failure reach a deal to meet its funding shortfall.

($1 = 0.9309 euros)

(By Leigh Thomas; Editing by GV De Clercq and David Goodman)

New Caledonia has some of the world’s largest nickel reserves but high costs and political tensions in the French-controlled Pacific territory have left its three processing plants on the verge of collapse.

The French government has held talks on nickel in parallel to wider political negotiations with pro-independence and loyalist political parties. Finance Minister Bruno Le Maire said in late November he wanted a nickel deal by the end of January.

“The talks will continue until the end of this month,” a finance ministry spokesperson said, adding: “Later than that is not possible because the financing needs are immediate.”

Le Maire has estimated at 1.5 billion euros ($1.61 billion) the short-term financing needs of New Caledonia’s three nickel processing groups – SLN, KNS and Prony Resources.

Commodities group Glencore, which co-owns KNS, has said it will only provide funding for the firm until the end of February, while French miner Eramet has repeatedly said it will not provide more funding for SLN, in which it holds a majority stake.

A working group of political and industry representatives that has led the negotiations said in a progress report last month that falling nickel prices meant measures proposed so far still left a significant funding gap for 2024.

It called on current shareholders to consider extra financing.

Prony Resources, meanwhile, said in a statement last month it was seeking “a core shareholder” to boost its financing.

Prony has a number of minority shareholders including commodity merchant Trafigura with a 19% stake.

Glencore, Eramet and Trafigura each declined to comment on the talks.

Discussions have sought to address the unprofitability of nickel processing in New Caledonia through plans to improve mining productivity and subsidise energy costs.

The French government’s representative in New Caledonia last week said an emergency loan for the processing firms was also under discussion.

($1 = 0.9314 euros)

(By Gus Trompiz, Clara Denina and Melanie Burton; Editing by David Gregorio)

The explorer entered voluntary administration in December, engaging in a formal restructuring. It’s now finalizing the audit of its 2023 financial accounts and is working towards resumption of trading on the Australian Stock Exchange in March this year, it said.

“The company’s balance sheet has been significantly restructured with all previous trade creditors and other payables agreeing to the settlement terms proposed in the deed of company arrangement presented on Jan. 19,” managing director and chief executive, Matt Shackleton, said in the statement.

Australian Potash noted it had also re-analyzed all previous results on the Lake Wells gold project and had identified walk up drill targets to target immediately. The explorer will also push forward with the requisite access and heritage agreements at the Nexus rare earths project in the West Arunta.

To mark the new phase, the company has appointed Jonathan Fisher to its board, while Natalia Streltsova and Rhett Brans have resigned their directorships.

South32 is requesting a 1.5% soil sample royalty payment on the gross revenue that IGO earned from December 2014 until September 2023, when it had a stake in the mine.

A 2002 deal between South32 and IGO gave the former the right to receive royalty payments if IGO found any minerals from the soil samples it collected under the exploration licences. This is the basis of South32’s claim, IGO said in the statement.

The embattled nickel and lithium miner said it considers South32’s allegations to be without merit.

Tropicana, about 300 kilometres north-east of Kalgoorlie, began operations in 2013 and is now owned by AngloGold Ashanti (JSE: ANG) (NYSE: AU) in partnership with Regis Resources (ASX: RRL). 

The open-pit, with a growing underground mining component, produced 437,000 ounces (100%) in 2022.

Regis, which bought its stake in Tropicana from IGO in 2021, went into a trading halt on Thursday before issuing a statement saying it was not a party to the legal action pursued by South32, but “would take appropriate action to defend its position”.

News of the lawsuit came on the heels of IGO announcing it had placed its Cosmos nickel project in Western Australia into care and maintenance due to low prices. The company also lowered its annual lithium production forecast.

The French territory, a remote archipelago in the South Pacific, was once seen as the future of nickel production and attracted billions of dollars of investment. But instead it became a byword for the sector’s exuberance, with projects beset by technical mishaps and high costs. Pressure on the local industry has rapidly increased over the past year as nickel prices plunged more than 40%.

The French government has been meeting with the key shareholders of three processing plants this month — Trafigura, rival miner and trader Glencore Plc, and France’s Eramet SA — seeking to hammer out a rescue deal for an industry that is the territory’s main employer.

As part of that effort, the French government asked Trafigura to contribute fresh capital to Prony Resources Nouvelle-Caledonie, which it part owns and which in turn owns the Goro mine. The trading house refused, and as a result Prony will need to seek a new investor if it is to secure a government bridging loan, according to people familiar with the matter.

Trafigura declined to comment. The French Finance Ministry confirmed talks with the firms while declining to comment further. A spokesperson for Prony declined to comment as discussions are ongoing.

A similar bridging loan is being prepared for Societe Le Nickel, where Eramet holds a majority stake, according to one of the people familiar with the matter.

French offer

The French government is offering about 200 million euros ($217 million) in relief on energy costs for the New Caledonian nickel industry, two of the people familiar with the matter said. Still, it’s not clear that will be enough: last November, French finance minister Bruno Le Maire put the total financing need of the territory’s three nickel companies at 1.5 billion euros.

The New Caledonia plants, which have long struggled due to high energy costs and social unrest, have had to contend with a wave of new supply from Indonesian smelters that’s caused nickel prices to plummet. The drop has already forced higher-cost operations in Australia to shutter, despite growing demand for the metal from the electric-vehicle sector.

Glencore is looking to remain a shareholder in Koniambo Nickel SAS, which owns nickel mines and a ferronickel plant in the territory. However, it has proposed mothballing the plant while continuing to export ore, which would affect as many as 1,000 jobs, one of the people said. The company said in September it would stop funding Koniambo Nickel, in which it has a 49% stake, at the end of February. The rest of the firm is owned by Societe Miniere Sud Pacifique, a semi-public company managed by local governments in New Caledonia.

Glencore and Eramet declined to comment. A spokesperson for SMSP said it was not discussing closing the plant and protecting as many jobs as possible remained a priority.

Trafigura holds 19% of Prony Resources Nouvelle-Caledonie, which runs the Goro mine and a plant which produces a specialized form of nickel for batteries. Eramet holds 56% of Societe Le Nickel, which owns mines and a ferronickel plant, and has also previously ruled out further bailouts for the subsidiary.

(By Eddie Spence, Irene García Pérez and Francois de Beaupuy)

Prony’s struggles highlight the troubles of the French Pacific island territory’s nickel industry, the fourth-biggest producer of nickel ore globally, as prices have plummeted 40% in the past year on surging Indonesian supply. After years of losses, France is trying to work out an agreement by the end of the month to bolster the producers through investments to help reduce costs.

Prony, which is backed by commodity trade house Trafigura, warned staff as early as August that it could run out of cash by year end, company spokeswoman Adelie Garaud Ballande said in an email on Tuesday.

“Unfortunately, at the end of 2023, our fears were confirmed, aggravated by a collapse in nickel prices on the markets and production below budget …. In the short term, the issue is to keep the cash flow going while waiting for support solutions,” she said.

Companies in other high-cost nickel-producing regions have announced restructurings and writedowns as prices have dropped. Demand for nickel, a key component of advanced electric batteries, has surged on the global transition to electric vehicles and Prony inked a supply agreement with Tesla in 2021.

In November, French Economy Minister Bruno Le Maire said New Caledonia’s three main producers, Eramet-backed SLN, Glencore’s Koniambo Nickel (KNS) and Prony, would need 1.5 billion euros ($1.63 billion) in short-term financing.

The French government would contribute to other projects, including an overhaul of New Caledonia’s energy system that has made local ore processing costly, but would not bail out the sector, he said.

Prony is 51%-owned by New Caledonia’s territorial authorities and other local interests, while Trafigura has a 19% stake and the rest is held by a joint venture between Prony and investment firm Agio Global.

Prony’s stakeholders bought the loss-making nickel operations in the French territory from Brazil’s Vale in 2021. It set out to double production to 44,000 tonnes in 2024 from 2021 levels.

($1 = 0.9210 euros)

(By Melanie Burton; Editing by Christian Schmollinger)

The A$385 million ($254 million) acquisition of the Sydney-based miner hands Codelco the Maricunga lithium project, located on the namesake salt flat, which is Chile’s second largest salt-encrusted field in terms of reserves of the battery metal.

The Maricunga project, located within the so-called lithium triangle in northern Chile, is estimated to contain about 1.9 million tonnes of lithium carbonate equivalent (LCE). 

The transaction, which now only needs the Federal Court of Australia’s backing, is expected to conclude on Feb. 23, Codelco said.

“With this purchase, Codelco moves forward with its mandate of becoming leaders in the production of critical minerals for the energy transition,” chairman Máximo Pacheco said in the statement.

Chile gave the copper giant a key role in the new public-private model for the sector, announced in April last year, which calls for public-private partnerships for future lithium projects.

The seamless nature of this deal contrasts with a recent string of failed Australian lithium juniors acquisitions. Local mining billionaires gatecrashed a series of deals in the latter half of 2023, including Albemarle’s (NYSE: ALB) A$6.6 billion attempt to buy Liontown Resources (ASX: LTR) and SQM’s bid for Azure Minerals (ASX: AZS).

Chile is already the world’s no. 2 producer of lithium after Australia and holds the world’s largest known deposits of the coveted battery metal.

Codelco entered in late December the first lithium business tie-up with SQM for the future development and production of the metal in the Atacama salt flat, the only area where lithium is currently extracted in Chile.

The production process at the company’s Doniambo plant in New Caledonia was disrupted by the breaking of several furnace cathodes, which in turn destabilised the power grid and caused a power cut of around two hours on Saturday, SLN said in a statement.

The facility, which makes ferronickel for use in stainless steel, was taken off the grid and connected directly to a floating power unit that SLN had hired in 2022 to bolster its power supply, the company said.

Production was continuing at a significantly reduced rate, an Eramet spokesperson said by phone, adding that the incident appeared to be due to multiple factors and it was too early to say when the situation would return to normal.

SLN and New Caledonia’s two other nickel processors are currently involved in negotiations to rescue the French Pacific territory’s loss-making nickel industry, in which energy supply is one of the main issues.

(By Gus Trompiz; Editing by Susan Fenton)

The Western Australia-based junior entered the ASX on the right foot, having raised A$15 million ($10m) on a heavily oversubscribed IPO through the issue of 60 million shares at A$0.25 each ($0.17).

Kali attracted interest from some of the local mining sector heavyweights, including Mineral Resources’ managing director Chris Ellison through his private company, Wabelo.

The success of the company, a spin off of Kalamazoo Resources’ (ASX: KZR) and Karora Resources’ (TSX: KRR) lithium assets, contrasts with the struggles of other Australian juniors. 

Core Lithium (ASX: CXO) had to halt operations at its Finniss complex last week due to what it called “tough” market conditions. Other small players have been at the centre of a battle for controlling sources of the coveted battery metal. Albemarle (NYSE: ALB), the world’s largest lithium producer, agreed last year to buy Liontown Resources (ASX: LTR) for $4.3 billion. The takeover was blocked by Gina Rinehart, Australia’s richest woman, who acquired a 19.9% stake in the target company. 

Rinehart also thwarted the takeover of Azure Minerals (ASX: AZS) by Chile’s SQM (NYSE: SQM) by buying an 18% blocking stake.

Australian lithium juniors are in a place of disadvantage compared to peers elsewhere, as several have high levels of Chinese ownership or processing. This would make them ineligible for US government subsidies, as the Biden Administration issued a draft guidance in early December that defined a “foreign entity of concern” as any company more than 25% owned by Chinese, North Korean, Iranian or Russian shareholders.

Ganfeng and Tianqi, two Chinese firms, were among the first foreign players to invest in Australia’s lithium sector. They still hold large stakes in major mines like Mt Marion and Greenbushes.

Kali Metals’ board comprises Sloan as MD, Kalamazoo chairperson and CEO Luke Reinehr as non-executive chairperson, supported by non-executive directors Paul Adams, John Leddy and Simon Coyle.

The stock closed up 74% at A$0.435 each, leaving Kali Metals with a market capitalization of A$33.2 million ($21.5m).

The company, Australia’s Northern Territory’s only lithium miner, had announced a review of its operations in December, suspending early works on its proposed second mine BP33, due to “tough” market conditions.

Core Lithium said on Friday that, as result of the review, it would revert to processing stockpiled ore and suspend operations at its Grants open pit mine, part of the multi-mine Finniss hard-rock lithium complex.

The producer said it had about 280,000 tonnes of ore stockpiled, which would allow its processing plant to continue operating until mid-2024 without any further mining.

The Grants mine is Australia’s newest lithium operation and the only one outside of Western Australia. It opened in October 2022, beginning production and sale of spodumene concentrate in February 2023.

More to follow

Lithium prices collapsed last year, defying even the most conservative forecast. According to analysts from Fastmarkets, spodumene concentrate is currently trading at $950 a tonne, compared with about $8,000 a tonne a year ago. Lithium carbonate is trading at $14,850 per tonne.

Experts predict that lithium carbonate prices in top consumer and producer China could fall by more than 30% this year from December 2023 levels, as increasing supply from all major producers is set to outpace the rise in demand from battery users.

The price rout will likely take its toll on high-cost lithium producers first, before reaching the world’s top miners of the battery metals, analysts said.

UBS expects global lithium supply to jump by 40% in 2024, 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, UBS said. Production 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 bank warned that lower lithium minerals prices will likely result in a potential halving in ASX lithium company profits in FY2025.

Gold had been in a cyclical low consolidation phase from April 2013 until June 2019, trading between US$1,200 and US$1,350 per oz. for most of that period. But prices have been on the rise since then.  

They rose to a record average of US$1,775.58 in 2020, up 37.2% from the annual average price the previous year. After that, there were incremental increases over the next three years. In 2021, gold averaged US$1,799.32, rising to an average of $1,804.36 last year. This year through October, the price averaged US$1,940 per oz., up 7.4%. 

That compares to a daily record US$2,058.40 per oz. on a daily settlement price basis in 2020. This year gold touched US$2,152.30 on an intraday basis on Dec. 3, after reaching a new record high settlement price US$2,089.70 on Dec. 1.  

For the full year 2023, CPM Group projects an average price of US$1,950 or higher, with prices likely to end the year above US$2,000 per ounce.  

CPM expects gold prices to average well above US$2,000 in 2024 and probably above US$2,100 per oz. in 2025.  

In the face of four consecutive years of record gold prices, it is strange that so many gold market investors, mining executives, and observers have continually wondered aloud why gold prices are so low. Clearly it is not a matter of gold prices being too low but rather that these folks have too great expectations for gold prices.  

Gold prices reflect (a) supply and demand fundamentals and realities, (b) the increasingly hostile political world, and (c) the state of the global economy, which has backed away some from severely gloomy expectations but still is shrouded in economic and financial system issues that could combine with those political risks to trigger severe economic, political, and social conditions. Each of these three sectors interact to determine the directions and levels of all commodity prices, including gold. Each warrants sober, unbiased analyses. 

The fundamentals still apply 

Mine production, secondary recovery of gold from scrap, fabrication demand, central bank buying and selling, and investment demand all influence gold prices.  

Of these, the most dynamic, the best financed, the most volatile and unpredictable sector is investment demand, and it has the most influence on gold prices.  

Investors bought on a net, collective basis, 16 million oz. of physical gold in 2018 and 17 million oz. in 2019. These are relatively low volumes of net investment demand, and this was reflected in the gold price.   

By July 2019, the economic and political environments were darkening and investors stepped up their gold buying. Then 2020 came, bringing with it the COVID-19 pandemic and global lockdown, an engineered deep recession globally, and massive government financial support programs around the world. In this environment, investors bought 40 million oz. of gold, close to their historically highest levels of net investment demand. This was in fact the fourth largest annual net investment buying spree in history, supporting strong gold prices.  

Over the next three years economic and political conditions remained difficult, even with the turbo-charged recovery in 2021 as the vaccines circulated, economies opened up, and stimulus money was spent.  

In this environment, investors were net buyers of 24-27 million oz. of gold bullion per year. This was strong enough to keep prices above US$1,625 per oz. for most of this period, but it was not the 40 million oz. of demand that had fuelled the 37% increase in annual gold prices in 2020. That said, it also was not the 16-17 million oz. annual levels that kept prices below US$1,350 per oz. in 2018 and the first half of 2019.  

Net investment demand is projected to top 30 million oz. next year, possibly approaching 40 million oz. in 2025. Such levels of demand would be fuelled by a combination of corrosive political and economic developments. Unlike in the period 2007-2011, CPM expects political concerns to play a more decisive role over the next two years than will economic conditions. But economic conditions and financial market instabilities certainly are expected to weigh on investors’ minds, helping convince them to buy historically large volumes of physical gold even at record high prices.  

Hand in glove with investors stocking up on gold will be central bank buying. Central banks have been buying around 10 million oz. per year on average since around 2009. They bought around 10.2 million oz. in 2022 and are on pace to buy around 13 million oz. this year. They should be expected to continue buying large volumes of gold for more than the next decade, but they may back off slightly over the next two years. (CPM projects gold supply, demand, investment demand, official transactions, and prices out 10 years.)  

Any dip in central bank buying over the next two years will be price related. As opposed to private sector investors who will chase prices higher, buying more metal as prices rise, central banks are much more price sensitive. They are value investors who prefer to buy during periods of less intense private investor demand. Thus, central banks were large buyers of around 17 million oz. per year in 2018 and 2019, but bought less than half of that when prices rose sharply in 2020.  

One example is the People’s Bank of China, perhaps the largest volume buyer in the past decade. It was regularly buying gold for its monetary reserves from domestic refined production through the first half of 2019. When gold prices shot up in July 2019, they stopped adding gold to their reserves. They only resumed buying in November 2022, once gold had fallen from US$2,043 per oz. earlier that year to US$1,623. Since then, the PBOC has bought more than 8 million oz. of gold from domestic sources. 

Strange theories 

While central banks as a group have been steadily adding gold to their monetary reserves, there has been an enormous explosion of strange comments and theories about what central banks plan to do with gold. There are no plans for the emerging BRICS group (including Brazil, Russia, India, China and South Africa) to establish a gold-based trading currency. (While Vladimir Putin has spoken of this, the governments and central banks of the BRICS countries have made it clear they have no interest in any such arrangements.) There are no plans to recall circulating currencies. The idea of returning to some sort of gold standard circulates only in the minds of people nostalgic for a stable economic past that in fact never existed.  

Central bankers and mainstream economists uniformly know that past gold standards led to massive economic problems, including repeated depressions, periods of super high inflation, and worse. They know that every past gold standard ended in disaster. None of this empirical evidence dissuades believers in magical gold standards. After all, to stop believing something because real-world evidence shows your beliefs are misplaced is blasphemy, a breach of faith.  

Such talk is an aside. Meanwhile, central banks seek to diversify their monetary reserves, with 60% of their foreign exchange holdings in U.S. dollars. The small relative size of the gold market limits the extent to which gold can diversify these holdings, while the relative lack of liquidity and much higher volatility of gold limit central banks’ interest in the metal.  

Stock demand – the purchases of gold for addition to gold bullion holdings by either investors or central banks – is the key driver of gold prices. Fabrication demand and supply are important factors, but less dynamic.  

Mine production for its part has stabilized over the past three years, after three years of declining output. Mine output appears likely to be relatively flat in 2024 compared to the 87.6 million oz. projected for 2023. Beyond next year mine production is expected to resume its decline for several years.  

Secondary supply is projected to rise sharply from 34.8 million oz. in 2023 over the next two years, as significantly higher record prices stimulate jewelry owners to sell old, broken, and unwanted pieces for gold. Beyond 2025 such sales would be expected to decline once more, assuming CPM’s longer-term projections of lower prices in later years proves accurate.  

Fabrication demand is projected to reach 92.6 million oz. this year. Most of this, around 77 million oz., went into jewelry and decorative objects. Gold is also used in electronics, chemicals, dental and medical applications, and other fabricated products.  

While some people reasonably expected the higher gold bullion prices would lead to reductions of gold jewelry sales, gold prices are only one factor that influences jewelry demand. Jewellers work hard to preserve the ‘price points’ or affordability of jewelry pieces, reducing the gold content per piece as prices rise. Jewelry demand also is heavily influenced by wealth factors, and the relative liquidity of many consumers due to the government stimuli programs of 2020 have keep jewelry demand buoyant over the past three years. That may dissipate over the next two years, however.  

Putting all of this together into a gold price outlook, it appears likely that the plethora of political, economic, financial, and social problems will continue to stimulate investor demand over the next couple of years, with additional demand from monetary authorities. This demand is likely to push gold prices higher, setting further records over the next two years, or until things improve. In the meantime, buckle up.  

Jeffrey M. Christian is managing partner with CPM Group.

The deal with E&D Fund, a financial entity managed by Waratah Capital Advisors, grants Pinnacle $500,000 as an offtake payment for rights to 25% of minerals extracted from the project.

“Partnering with Waratah Capital at this stage of the company’s journey is a strategic move and is expected to bolster Pinnacle’s growth,” Pinnacle Minerals Managing Director, Nic Matich, said in the statement.

The company, with a market capitalization of just A$3.77 million ($2.6m), said the funds will help it strengthen its balance sheet and boost project exploration in 2024.

In collaboration with IOS Geosciences, a Quebec-based team, Pinnacle has already initiated a ground reconnaissance program at Adina East, sampling various pegmatite outcrops.

The lithium project covers 72.7km² (7,274.4 ha.) and has a total of 147 claims. It’s adjacent to Loyal Lithium’s (ASX: LLI) Trieste project, where spodumene bearing dykes were identified less than 6km from the boundary of Project2 and is also by Winsome Resources’ Tilly project, where swarming pegmatites have been mapped and are interpreted to extend into the Adina East Project.

The permit comes at a time when prices for the radioactive material, needed in a world shifting away from fossil fuels, have rallied to hit almost 16-year highs. 

Morgan Stanley analysts last week said they were more bullish about uranium prices than any other mined commodity, as current supply can’t keep up with demand. They expect prices to reach $95 a pound by the second quarter of 2024.

Bannerman said receiving the mining licence has allowed the company to immediately award two key early works contracts with a combined value of $2 million. One is related to building a temporary construction water supply and the other one for setting a site access road.

“Etango is now fully permitted, enabling us to drive key project workstreams towards a final investment decision in parallel with the ongoing strengthening in uranium market fundamentals,” the Australian listed uranium developer said in the statement.

The Etango uranium project is located in the Erongo region of Namibia, 30 km south-east of Swakopmund. The asset holds a uranium mineral resource of 207 million pounds of contained triuranium octoxide (U3O8).

Only two of Namibia’s three mines currently produce the nuclear fuel, according to the Namibian Uranium Association — Rossing uranium mine and Husab uranium, which are controlled by Chinese investors. Australia’s Paladin Energy (ASX: PDN) plans to resume commercial production at its Langer Heinrich mine in early 2024.

TMC holds exploration and commercial rights to three areas in the Clarion Clipperton zone of the Pacific Ocean between Mexico and Hawaii. NORI is assessing the potential of mining nodules of critical minerals from the seafloor. So far about 3,000 tonnes of nodules have been collected.

During the period of nodule collection in 2022 NORI worked with DHI Water and Environment, experts on sedimentation modelling, to set up a plume monitoring study. Over 50 assets and marine sensors were deployed over the 4 x 2 km test field. They collected data on all aspects of plume dynamics, concentration, and dispersal from which DHI generated a verified plume model.

Based on laboratory predictions and field observations by other contractors, the evidence shows that the sediment plume at the seafloor is low-lying. The dispersal of the mud is influenced by gravity and the contours of the seafloor, not by ocean currents, TMC says.

“Models put forward by some activist groups claiming a vast area of impact are undermined by their lack of appreciation that the benthic plume forms a turbidity current spreading under its own weight away from the collector tracks, underlining the importance of investing in the science before engaging in speculation,” said NORI environmental manager Dr. Michael Clarke.

Seafloor mining is a much-debated topic. Environmental groups and NGOs are opposed. Greenpeace members recently occupied the NORI vessel until a Dutch court ordered them off.

The Metals Company is planning to begin deep sea mining by late-2025.

The Tuvatu gold project is located in the South Pacific island nation of Fiji. It is located near the country’s international airport and the second largest port. It is also only 35 km southeast of the Vatukoula gold mine, which has produced over 7 million oz. of gold over the last 87 years.

Lion One is intent on building Fiji’s second gold mine. The Tuvatu project has an indicated resource of 1 million tonnes grading 8.50 g/t gold containing 274,600 oz. plus an inferred resource of 1.3 million tonnes at 9.00 g/t gold containing 384,000 oz. of gold.

The original preliminary economic assessment for the project was made in 2015, but Lion One updated it in 2022. An underground mine is planned using longhole stoping with a small amount of jackleg stoping. The ore is amenable to gravity concentration and flotation followed by cyanidation. Based on metallurgical tests, gold recovery is expected to be about 87.5%.

The project made its first gold pour on Oct. 10, 2023. Mechanized mining will begin next year with zone 500 development beginning in 2025.

The renewal would allow Freeport to commence work on a definitive feasibility study for what it calls one of the world’s largest undeveloped copper resources. A final investment decision is expected to follow.

At the same time, the company said will also accelerate ongoing discussions with key international strategic investors and prospective partners for development of the Yandera project.

“This is a major milestone for the company. More than $200 million has been expended on the project since 2005, culminating in a comprehensive 2017 pre-feasibility study delineating one of the world’s largest undeveloped copper resources,” Freeport’s SVP of operations Dr. Nathan Chutas, said in a news release.

PNG copper asset

Located 95 km southwest of the city of Madan in the foothills of the Bismarck Mountain Range, the Yandera copper project is found within the same geological arc as some of the world’s largest copper-gold deposits, including Grasberg, Frieda River, Porgera, Lihir, Wafi-Golpu and Kainantu.

The Yandera project area was the subject of intensive, drill-based exploration programs during the late 1960s and 1970s by a number of companies.

The historic activity, which included 102 diamond drill holes totaling over 33,000 metres, culminated in the preparation of a mining study by BHP, identifying Yandera as containing one of the largest undeveloped porphyry copper systems in the world.

Era Resources, its former owner, spent over $100 million and drilled another 471 holes totaling over 144,000 metres. It was subsequently acquired privately held company, which in 2021 was taken over by Freeport.

The 2017 prefeasibility study prepared by Worley Parsons estimated a historical open-pit, measured and indicated resource of 728 million tonnes grading 0.39% copper equivalent, equating to 6.2 billion pounds of copper equivalent.

The resource area has a known 5-km strike length within a 17-km trend with limited tests at depth. This, according to Freeport, represents “tremendous exploration potential” for expansion.

The move by the miner, which was almost acquired by the world’s largest lithium producer Albemarle (NYSE: ALB) this year,  allows it to earn up to a 51% interest in the Mulwarrie and Mulline projects. First, Liontown will have to spend A$400,000 ($262,000) on exploration over a period of 12 months or can choose to withdraw from the joint venture completely.

“Olympio still retains significant exposure to any discovery success, as the company has the ability to contribute to funding and remain at 49% once the stage one farm-in is completed,” managing director Sean Delaney said in the statement.

Olympio said the Mulwarrie and Mulline prospects are considered prospective for lithium-caesium-tantalum pegmatite mineralization, with lithium mineralization identified in the region.

Once Liontown secures a majority stake in the Mulwarrie and Mulline prospects, following the completion of the stage one, Olympio can elect to end the farm-in agreement and form a joint venture with Liontown. In that case, the companies said that Liontown would become the joint venture’s manager.

Activists with Greenpeace International have been ordered to vacate a research vessel charted by The Metals Company (NASDAQ: TMC), a pioneer in seafloor polymetallic nodule exploration in the central-eastern Pacific between Hawaii and Mexico.The Nov. 30 ruling also imposes a €50,000 fine on the environmental organization for each day it defies the order, up to a maximum of €500,000. It does, however, allow Greenpeace to continue its protest, as long as it’s at a distance of at least 500 metres.

The vessel, engaged by TMC’s subsidiary, Nauru Ocean Resources (NORI) for environmental assessments, faced a week of disruptions from Nov. 23 by Greenpeace activities, which a Dutch court deemed unsafe and unlawful. NORI is obligated under an International Seabed Authority (ISA) contract to evaluate the deep ocean’s health after a nodule collection test last year.

“We respect the right to protest, but the safety of our legally sanctioned studies comes first,” stated TMC CEO Gerard Barron in an email to The Northern Miner. “Greenpeace’s compliance with the order is welcomed, as we continue our vital research for informed global decision-making.” A Dutch court held jurisdiction over the dispute because Greenpeace is headquartered in Amsterdam.

The confrontation brings to the fore the tension between environmental activism and the advancement of deep-sea exploration technology. With 168 ISA member states plus the EU emphasizing evidence-based decisions, TMC’s work exemplifies the delicate balance that must be found between economic interests and environmental protection in this emerging sector of mining.

The Greenpeace incident came to a head when, after five days of non-stop kayaking activity around the vessel, five activists boarded the MV Coco on Nov. 25 and disabled its A-frame hoist/crane. That caused delays to TMC’s research and NORI claims the protest has been costing it $1.5 million per day.

Despite being ordered to leave the vessel, Greenpeace hailed the court’s announcement as a victory for its right to protest and as a blow to the deep sea mining industry. “The Metals Company has never been interested in scrutiny, and they can’t stand that Greenpeace is watching and opposing them at every turn,” said Mads Christensen, executive director of Greenpeace International.

As a result of Greenpeace’s actions, TMC and NORI are considering seeking compensation for financial losses incurred. 

Greenpeace has openly criticized TMC’s work as “anti-scientific.” TMC counters that Greenpeace’s anti-science charge is hypocritical, citing its engagement of top marine scientists and collaborative data sharing with public institutions to transparently assess and potentially minimize the environmental footprint of nodule collection compared to traditional mining.

“Our work could redefine how we source battery metals, with potentially lesser impacts compared to traditional mining,” Barron said. “It’s vital that we base our environmental stewardship on solid evidence.”

Scientific research interrupted

Greenpeace has vowed to continue its protests every time TMC attempts to advance its mining application, aligning with the political calls for a moratorium from 24 countries.

TMC’s current work aims to assess ecosystem function and recovery on the seafloor one year after test mining. It’s been active at the project for 12 years.

NORI conducted a successful test last fall, collecting over 3,000 tonnes of polymetallic nodules. However, the company has been criticized for its environmental risk management practices after a leaked video late last year showed waste sediment being dumped into the ocean. An ISA investigation found no rule breach but criticized NORI’s ‘risk awareness,’ citing the company’s failure to follow its risk management procedures.

Environmental groups and some countries call for a halt or ban on deep-sea mining, warning of unacceptable risks to marine life and ecosystems. A recent report also suggests that the environmental costs of seabed mining could outweigh the benefits.

Using an array of equipment like remotely operated vehicles and marine sampling tools called box/multicores, academics from various marine research institutions aim to collect biological samples to assess whether there has been a significant change in the makeup of seafloor communities and how much they’ve been affected by the mining.

“Last year’s studies on the seafloor sediment plume have already highlighted that concerns by various non-governmental organizations grossly overstate how far this mud would spread from the direct mining area,” Barron said.

“This latest campaign will help determine if conjecture on the impacts on seafloor organisms is similarly overblown. I can only imagine that our putting to bed of this conjecture is why Greenpeace would seek to disrupt further scientific research.”

This research is not only a legal requirement by the ISA but also a collective effort to enrich the global repository of marine knowledge, the company argues.

Focus on transparency

In response to the boarding incident, TMC has reiterated its commitment to the safety of its crew and the activists involved. The company said it adheres to strict operational protocols, ensuring no harm came from Greenpeace’s unauthorized presence.

Barron said TMC’s exploration efforts, grounded in the United Nations Convention on the Law of the Sea principles, aim to pave a path for responsible resource use, promising a future where the environmental impacts are minimized and developing states benefit from oceanic resources.

The incident also highlights the broader conversation about the ocean’s role in the future of mining. As demand for battery metals soars, driven by the global push towards green energy, the industry must navigate the fine line between resource extraction and environmental conservation. Barron hopes that TMC’s approach, emphasizing open-source data and collaborative research, could set a new standard for responsible deep-sea mining.

The CEO says the company is aware that the world’s eyes are on them. “We are focused on a resource belonging to all humanity. Our approach emphasizes transparency, partnerships, and stakeholder engagement,” he said.

“We believe nodules could be a better alternative to land mining and are working across academia and industry to gather the data to assess whether this hypothesis holds true and sharing this and our plans with the world.”