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.

International Resources Holding recently told EMR Capital that it is interested in bidding for the private equity manager’s 80% stake in the Lubambe copper project, which is up for sale, a development that may complicate a sale process that’s already underway, two of the sources said.

The IHC unit’s interest in Lubambe, with potential to be among Zambia’s largest copper mines, comes after Shanghai-listed JCHX, a mine servicing and contracting firm, entered into a deal to buy EMR’s 80% stake in Lubambe in January.

The sale process requires approval from the Zambian government, which is pending and unclear at the moment, one of the sources said.

The Zambian government owns a 20% stake in Lubambe through state-firm ZCCM-IH.

The IHC unit’s interest is spurred by an aggressive push by cash-rich oil majors United Arab Emirates and Saudi Arabia to secure critical metal supply in Africa, as they bid to diversify their economies and engage with energy transition.

Middle East investors are pitted against Chinese companies in Africa, including state backed firms, also aggressively pursuing deals in Africa to strengthen China’s grip on minerals required to power a rapidly expanding domestic electric vehicle manufacturing sector.

EMR Capital’s binding deal agreed directly with JCHX technically precludes it from entertaining any new offers, one of the sources said. Still, EMR is aware that IRH is interested in buying the assets and that the UAE firm has officially informed the Zambian government and ZCCM-IH of its interest, two sources said.

While its interest is now widely known within the Zambian government circles, the UAE firm hasn’t presented a formal offer to EMR on the Lubambe stake, one source said.

EMR declined to comment. IRH and IHC didn’t immediately respond to emailed questions.

IRH has gatecrashed once before. It staged a last minute buyout of a 51% stake in Zambia’s Mopani Copper Mines last month, its first mining deal in Africa’s second-largest producer of the metal that is key to products from power lines and industrial machinery to electric vehicles.

The Abu Dhabi firm became the Zambian government’s preferred investor for Mopani mines ahead of Sibanye Stillwater and China’s Zijin Mining Group, which had been short listed for the assets after a protracted selection process.

Cashing out

EMR, which has owned the Lubambe mine since 2017, wants to exit the project as its funds mature, after Covid delayed its development, the sources said. It also sold a 51% stake in adjacent Mingomba copper project for a sizeable amount to California-based start up KoBold Metals.

EMR still holds a 28% stake Mingomba, alongside Zambia’s ZCCM.

Lubambe, previously owned by African Rainbow Minerals and Vale SA, produced about 15,000 tons of copper last year but needs to raise output to about 2,500 tons a month to become sustainable, it says on its website.

JCHX in January said it proposed to pay $1 for EMR’s 80% stake, and another $1 to take over the project’s $857 million debt.

JCHX did not respond to emailed questions.

Zambia’s ministry of mines did not immediately respond to emailed questions.

(By Felix Njini, Julian Luk, Clara Denina, Melanie Burton, Chris Mfula and Hadeel Al Sayegh; Editing by Veronica Brown and David Evans)

“Whatever report we have in front of us, we are not convinced by it,” said VL Kantha Rao, secretary at the Ministry of Mines, which administers Hindustan Zinc.

Last September, the company said it plans to create separate entities for its zinc, lead, silver and recycling businesses to unlock potential shareholder value.

But it did not consult the government, which has a 29.54% stake in the company, on the planned move, another government official told Reuters on the condition of anonymity.

The official also said the government was not convinced by Hindustan Zinc’s rationale for the split and that the Ministry of Mines has lodged its objection with the company.

Hindustan Zinc CEO Arun Misra told Reuters the company had received the ministry’s communication, which will be discussed with the board along with the management’s observations.

However, Misra said he believes demerging the company to create a separate silver and zinc entity will help improve its market capitalization, based on a report by a consultant.

A year back, the government had opposed Hindustan Zinc’s proposal to buy two entities of Vedanta — which has a 64.9% stake in Hindustan Zinc — and forced the company to drop the plan.

(By Neha Arora and Nikunj Ohri; Editing by Shounak Dasgupta and Savio D’Souza)

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 company also said that it has so far not applied for lithium blocks on a nomination basis from the Indian government.

In June last year, Reuters reported that NMDC’s unit Legacy Iron Ore had signed a lithium exploration pact with Australia’s Hancock Prospecting Pty Ltd.

NMDC shares were down 1.7% on Friday.

(By Neha Arora, Ashna Teresa Britto and Navamya Ganesh Acharya; Editing by Sonia Cheema)

Jindal officials are carrying out inspections at iron-ore plants of CVG Ferrominera Orinoco, according to two people familiar with the process, who asked not to be named as the information isn’t public. The company, which is controlled by state-owned conglomerate Corporacion Venezolana de Guayana, has five plants that produce iron-ore pellets and briquettes that serve as raw material for steelmaking.

Jindal aims to export 600,000 metric tons of the raw material per month by the end of the year, investing an initial $800,000 to upgrade existing equipment, according to one of the people. Terms of the deal aren’t clear since neither the Venezuelan government nor New Delhi-based Jindal have confirmed the arrangement.

Venezuela’s information ministry and Jindal didn’t respond to repeated requests for comment.

Venezuela’s partnership with Jindal is a departure from the government’s longstanding reluctance to involve private firms into its tightly held, impoverished mining industry.

In the mid-2000s the late president Hugo Chavez reversed a privatization process started by previous governments for state-owned gold, steel and cement companies. The measure saw the exit of Luxembourg’s Ternium SA, Switzerland’s Holcim AG, Mexico’s Cemex SAB and Canada’s Crystallex International Corp. among others.

After 18 years, Maduro now seeks to reinstate foreign partnerships.

Ferrominera has an annual installed capacity of 25,000 tons of iron ore and proven reserves of 4.2 million tons. Its plants have been running below capacity after years of lack of investment and a power crisis that in 2009 forced the company to cut production to save energy.

The company’s output has fallen over the years, from 15.6 million metric tons in 2001 to 5.7 million tons in 2017, according to the latest figures by the Venezuela Iron and Steel Institute.

The country’s metallurgy sector has suffered setbacks due to expropriations and underinvestment to the point that it has “practically disappeared,” according to a 2023 report by the Venezuela mine engineering association. Since 2000, the number of private companies in the sector has fallen from 1,200 to 70.

(By Fabiola Zerpa)

While China’s total coal imports over January and February surged 23% year-on-year to 74.5 million tons, Russia’s sales fell 22% to 11.5 million tons, according to the latest customs data. Import levies were restored at the start of the year, although other major suppliers like Indonesia and Australia aren’t affected due to free-trade agreements with Beijing.

The tariffs were removed in May 2022 to guard against supply risks after Moscow’s invasion of Ukraine roiled global energy markets. That helped pave the way for record imports last year, which included an increased portion of Russian coal shunned by other buyers. Now, policy has shifted to protecting China’s mining companies from the consequences of a glut after domestic output also rose to an all-time high.

Russia is still China’s No. 2 supplier after Indonesia, but the threat of trade actions could start to affect its eastward flows.

The US put sanctions on Russian coal exporters including Suek JSC, the nation’s biggest producer of the fuel, and Mechel PJSC in February. That’s curbing interest from buyers in China, worried about being hit by punishments that could involved restricting their access to shipping or banking services.

“Russian imports may stay at current levels, given the political uncertainties,” Feng Huamin, an analyst at the China Coal Transportation and Distribution Association, said at a media briefing on Wednesday.

The country produced over 99.8 million tonnes of coal in the period on the back of rising power demand.

India, the world’s second-largest coal user, generatedrecord-high coal-fired electricity in January as rising demand for air conditioning meant that power generation firms did not make big cuts to the use of coal and other fossil fuels.

Other minerals such as iron ore, a key raw material for steel, reported a nearly 41% year-on-year growth in sales value amid growing steel demand in the country. India produced 25.2 million tonnes of iron ore in the month.

The PIB release also showed that the production of minerals such as magnesite – used to make synthetic rubber – grew over 90%, and copper concentrate – used to make refined copper – grew over 34%.

India’s refined copper production is estimated at around 555,000 million tonnes per year in the coming fiscal year while domestic consumption is expected to come in at more than 750,000 metric tons.

(By Manvi Pant; Editing by Janane Venkatraman)

In its request for arbitration, LG Energy alleges that Sigma Lithium is in breach of certain provisions in connection to a lithium supply agreement entered in 2021.

“The claims are completely without merit and intends to defend its interests vigorously,” Sigma said in a statement.

US-listed shares of Sigma were down 1.6% at $12.35 in extended trade.

In 2021, Sigma and LG Energy had entered into a six-year offtake agreement for battery grade sustainable lithium concentrate scales from 60,000 tons per year in 2023 to 100,000 tons per year from 2024 to 2027.

(By Kabir Dweit and Arunima Kumar; Editing by Alan Barona)

Prateek Gupta was last year accused by commodities giant Trafigura Group of orchestrating a massive fraud against it. The company said that it had paid nearly $600 million for nickel, only to discover that the cargoes actually contained worthless rubble.

In December, a judge rejected Gupta’s attempt to lift a court freeze on his assets, saying that he had failed to present convincing evidence that Trafigura staff knew that there was no nickel in the cargoes it was buying. He was ordered to pay £330,000 on account toward Trafigura’s legal costs.

Gupta faced an initial deadline of late February to make the payment, and on Tuesday a judge ordered that around one-third of the overdue funds be paid by the end of next week.

Gupta’s lawyers argued that the London court should then wait for Gupta’s firms to sell steel sheet inventories rather than be required to liquidate his $71.7 million life insurance policies to pay the remaining amount.

“This is a short-term cash flow issue, and will not affect our ability to fight the case,” a spokesman for Gupta said in a statement. The businessman has significant illiquid assets, “which they are working hard to liquidate.”

While Trafigura says it paid nearly $600 million to companies linked to Gupta for cargoes that turned out not to contain nickel, it’s far from clear where those funds have gone.

Earlier this month, Trafigura’s lawyers said that several of Gupta’s companies had disclosed assets with only a “negligible face value,” as it successfully sought to force additional companies linked to Gupta to disclose information about their assets.

Several of Gupta’s companies have become insolvent since Trafigura first obtained the asset freeze last February. In December, TMT Metals Holdings Ltd., a UK holding company was wound up following a request by a broker. And UD Trading Group Holding Pte, a Singapore holding company, is also being wound up, according to filings.

Gupta’s lawyers said in court documents prepared for the hearing that the he and his companies were “experiencing a temporary period of impecuniosity.” They said his assets included zinc ingots, copper cathodes and steel sheets worth approximately $540,000, which he had sold to Noble Exim FZ LLC.

The lawyers said Gupta was able to point to potential assets that he controls including $191 million of funds that could be raised by selling the rights to “third party receivables” as well as settlement money from a court claim in Australia.

(By Jonathan Browning and Jack Farchy)

The existing partnership was established in August 2022, when Sumitomo adopted the MineHub’s blockchain-based platform for its copper concentrates business. Before that, the companies had been working to bring more efficiency, transparency and responsibility to industrial supply chains.

“By joining forces to drive commercial traction and integrating Sumitomo’s refined copper business onto our platform, we are poised to unlock new opportunities for growth and innovation in the metals industry,” MineHub CEO said in a news release.

“We believe that integrating our refined copper business onto the MineHub platform will not only streamline our operations, but also enhance our ability to serve our customers effectively,” Takeshi Ishimaru, general manager of Sumitomo’s non-ferrous metals and raw material unit, added.

The Japanese trading house expects to integrate its refined copper business onto the MineHub platform starting with key customers in the Asian market.

In a paper published in the journal Nature Communications, the UB scientists present a global atlas of unburnable oil. This map was designed with environmental and social criteria that warn which oil resources should not be exploited to meet the commitments of the Paris Agreement signed in 2015 to mitigate the effects of climate change.

The atlas reveals that to limit global warming to 1.5°C, it is essential to avoid the exploitation of oil resources in the most socio-environmentally sensitive areas of the planet, such as natural protected areas, priority areas for biodiversity conservation, areas of high endemic species richness, urban areas and the territories of Indigenous peoples in voluntary isolation.

It also warns that not extracting oil/coal resources in these vulnerable places would not be enough to keep global warming below 1.5°C as indicated in the Paris Agreement.

New roadmap

In this context, the unburnable oil atlas provides a new roadmap to complement the demands of international climate policy—based primarily on demand for fossil fuels—and to enhance socio-environmental safeguards in the exploitation of energy resources.

“Our study reveals which oil resources should be kept underground and not commercially exploited, with special attention to those deposits that overlap with areas of high endemic richness or coincide with outstanding socio-environmental values in different regions of the planet,” lead researcher Martí Orta-Martínez said in a media statement. “The results show that the exploitation of the selected resources and reserves is totally incompatible with the achievement of the Paris Agreement commitments.”

Orta-Martínez pointed out that there is now a broad consensus among the scientific community to limit global warming to 1.5°C to avoid reaching the tipping points of the earth’s climate system, such as melting permafrost, loss of Arctic sea ice and the Antarctic and Greenland ice sheets, and forest fires in boreal forests.

“If these thresholds are exceeded, this could lead to an abrupt release of carbon into the atmosphere – climate feedback – and amplify the effects of climate change and trigger a cascade of effects that commit the world to large-scale, irreversible changes,” he said.

Carbon budget nearly exhausted

To limit average global warming to 1.5°C, the total amount of CO2 emissions that must not be exceeded is known as the remaining carbon budget. In January 2023, the remaining carbon budget for the 50% chance of keeping warming to 1.5°C was about 250 gigatonnes of CO2 (GtCO2).

“This budget is steadily decreasing at current rates of human-induced emissions—about 42 GtCO2 per year—and will be completely used up by 2028,” Lorenzo Pellegrini, first author of the article, said.

Pellegrini noted that the combustion of the world’s known fossil fuel resources would result in the emission of about 10,000 GtCO2, 40 times more than the carbon budget of 1.5°C.

“In addition, the combustion of developed fossil fuel reserves – that is, those reserves of oil and gas fields and coal mines currently in production or under construction – will emit 936 GtCO2, four times more than the remaining carbon budget for a global warming of 1.5°C,” co-author Gorka Muñoa said. “The goal of no more than 1.5°C global warming requires a complete halt to exploration for new fossil fuel deposits, a halt to the licensing of new fossil fuel extraction, and the premature closure of a very significant share (75%) of oil, gas and coal extraction projects currently in production or already developed.”

With this prospect, the authors call for urgent action by governments, corporations, citizens and large investors such as pension funds to immediately halt any investment in the fossil fuel industry and infrastructure if socio-environmental criteria are not applied.

”Massive investment in clean energy sources is needed to secure global energy demand, enact and support suspensions and bans on fossil fuel exploration and extraction, and adhere to the fossil fuel non-proliferation treaty,” the team concluded.

Resource-rich Indonesia requires all miners to secure production quotas, known locally as RKAB, before they can start production, but they have faced delays this year amid changes in the approval process.

In total, the government has issued approvals for 191 miners, including for 107 nickel miners, 12 tin miners, two copper miners, among others, ministry director general Bambang Suswantono said.

Production quotas for 99.24 million tons of copper ore and 15.88 million tons of bauxite have also been handed out, he added.

These production quotas were allotted for 2024, Bambang said.

In 2023, Indonesia produced 193.5 million tons of nickel ore, and ore output this year was estimated to increase by 5% to 10% this year, an official said in January.

More than 500 production proposals for various minerals were still being processed.

Authorities are boosting efforts to accelerate the process, but are also pleading with miners to quickly fulfill the requirements needed to achieve approvals, he added.

Most miners who have not been granted RKAB had unpaid mining royalties, Bambang said.

“We were asked why the RKAB process is very slow, but we need to ask the miners, have they fulfilled their royalty payments,” he told members of parliament.

The backlog has disrupted exports in the first two months of 2024 and boosted prices of nickel and tin in global markets.

Meanwhile, the government has also approved coal production quota totalling 922.14 million tons this year, above the production target of 710 million tons.

(By Fransiska Nangoy and Bernadette Christina; Editing by Kanupriya Kapoor, Janane Venkatraman and Louise Heavens)

Prices of the circuit-board solder metal on the London Metal Exchange dropped 3.1% to $27,805 a ton at 0850 GMT following the news, on track for the first decline in five sessions.

Earlier this week, tin prices surged to their highest in seven months this week, partly due to disruption of Indonesian exports amid delays in approvals of mining companies’ annual work plans, known locally as RKAB.

The government has been working through the backlog and issued more output quotas, but around 500 production proposals for various minerals are still under review, a mining official said on Tuesday.

“While the resumption of production is welcome to international markets, further extended licensing delays indicate that exports may remain suppressed for some time,” International Tin Association (ITA) analyst Tom Langston said.

“In China, a feedstock squeeze due to the cessation of tin mining in Myanmar’s Wa State since Aug. 1, 2023 adds increased uncertainty when combined with the loss of Indonesian supply which accounted for 73% of China’s refined tin imports in 2023,” said Langston.

He said Indonesian firms PT Timah and PT Mitra Stania Prima received their export licenses and that trading resumed on the Jakarta Futures Exchange on March 5.

PT Timah exported around 1,600 tons of refined tin in early March, Abdullah said on Monday. It produced 15,300 tons last year, an annual drop of 23%, ITA data showed.

PT Timah does not have to fulfill the 30,000-ton volume in its export permit.

Indonesia produced 74,400 tons of refined tin last year, about a fifth of global output, and exported 57,317 tons, data from the World Bureau of Metal Statistics showed.

(By Bernadette Christina and Mai Nguyen; Editing by Kanupriya Kapoor, Mrigank Dhaniwala and Varun H K)

While earnings fell from 2022’s blockbuster records, profits across the sector still easily eclipsed prior highlights such as in 2008-2009, according to analysis from consultancy Oliver Wyman LLC.

“We saw pretty good margins overall and that is practically because things continue to be a little bit tight on the supply-demand side,” consultant Adam Perkins said in an interview.

Results for many players across the industry are not yet public, but profits at the biggest independent trading houses are expected to show an average drop of over 30% from 2022’s record levels, the report shows.

Still, disruptions and supply shortages of diesel and fuel oil offset lower Russia-related volatility in crude oil, while margins trading gas and power also remained relatively high.

The firms that buy, store and ship the world’s resources are coming out of what was the most profitable period in their history with a huge war chest to cement their role as strategic providers of energy, metals and food as the West continues a stuttering transition away from fossil fuels — demand for which continues to grow the world over.

They’ve already bought oil refineries, storage assets, power plants, and even other trading companies, while receiving large amounts of backing from countries like Italy, Germany, the US and Saudi Arabia to guarantee supplies of essential commodities like gas and copper.

“Traditionally this position in energy security wouldn’t have been held by an independent trader,” Perkins said, but they’re being “drawn into that role.”

Meanwhile, through share buybacks and dividend pay-outs, the executives who own shares or are partners in these mostly private companies, have also become multi-millionaires in the process. That’s helping accelerate a shift at the top of some of these firms’ as minted traders retire, passing management on to a new guard.

“I think it’s a great opportunity for those people who are coming in, it’s also a little bit nerve wracking – there’s an increased amount of scrutiny – everyone wants to continue the legacy,” said Perkins.

(By Archie Hunter)

The plant, named “SOA HPAL”, will be the company’s third such project to turn nickel ore into mixed hydroxide precipitate (MHP) – a material used to make electric vehicle batteries, according to presentation material shown by Indonesia’s Investment Minister Bahlil Lahadalia.

A Vale Indonesia spokesperson declined to comment.

The plant could have an annual output capacity of 60,000 metric tons of nickel in MHP, the ministry said, adding Vale Indonesia is completing its final stage of exploration and it will partner with automakers.

Vale Indonesia already has two HPAL plants under construction in Sulawesi Island, in Pomalaa and Sorowako. Both projects are in partnership with Zhejiang Huayou Cobalt.

US carmaker Ford is involved in the $4.5 billion Pomalaa plant.

Last month, Indonesia’s state mining company MIND ID agreed to acquire a 14% stake in Vale Indonesia from Vale Canada and Japan’s Sumitomo Metal Mining to become a top shareholder.

($1 = 15,685.0000 rupiah)

(By Stefanno Sulaiman; Editing by Louise Heavens)

Read More: Indonesia and China killed the nickel market

The acquiring entity, GEAR M Illawarra Met Coal, has mandated Grant Samuel as an adviser in its fundraising talks for the deal to acquire Illawarra Metallurgical Coal from Australia-based South32 Ltd., said the people who asked not to be identified as the talks are private.

Golden Energy, controlled by Indonesia’s Widjaja family, owns a 70% stake in GEAR M Illawarra Met Coal, while M Resources Pty Ltd. holds the remaining 30%.

If the deal proceeds with private funding, it will be the latest example of direct lenders stepping in to fill the spots left vacant by banks that are more tightly scrutinizing environmentally questionable projects.

GEAR M Illawarra Met Coal has yet to formally circulate an official request for proposal to lenders, the people said.

The proposed deal includes an upfront cash payment of $1.05 billion at the time of its completion, deferred cash payment of $250 million payable in 2030, and a contingent price-linked cash component of up to $350 million, according to a filing by South32 last month when the sale was announced.

The sale is expected to close in the first half of 2025, subject to regulatory approvals, it said.

Golden Energy didn’t immediately reply to a request for comment. M Resources declined to comment. Grant Samuel declined to comment.

Golden Energy is no stranger to the private credit market. Stanmore Resources Ltd., an Australian metallurgical company that Golden Energy controls, last year sought a $1.1 billion loan, including a $750 million private credit portion, to back its bid for BHP Group Ltd.’s Daunia coal mine.

Whitehaven Coal Ltd. eventually emerged as the winner for Daunia and another mine. To finance the deal, Whitehaven received a $1.1 billion loan from a group of lenders — including 17 private credit providers but only one bank.

(By Megawati Wijaya and Sharon Klyne)

Copper has surged 5% this week, ending a months-long spell of inertia, as investors hone in on risks to supply at mines and smelters. Tentatively, traders are also warming to the idea that the worst of a global downturn is in the past, particularly for metals like copper that are increasingly used in electric vehicles and renewables.

But signs of the headwinds in traditional industrial sectors are still plain to see in the iron ore market, where futures fell below $100 a ton for the first time in seven months on Friday. Investors are betting that China’s years-long property crisis will run through 2024, keeping a lid on demand.

The steelmaking ingredient has shed more than 30% since early January as hopes of a meaningful revival in construction activity faded. Loss-making steel mills are buying less ore, and stockpiles are piling up at Chinese ports.

[Click here for an interactive chart of copper prices]

Sentiment has soured since the recent National People’s Congress in Beijing, where policymakers set an ambitious 5% goal for economic growth, but offered few new measures that would boost infrastructure or other construction-intensive sectors. The latest drop will embolden those who believe that the effects of President Xi Jinping’s property crackdown still have significant room to run, and that last year’s rally in iron ore may have been a false dawn.

On Friday there were fresh signs that weakness in China’s industrial economy is hitting the copper market too, with stockpiles tracked by the Shanghai Futures Exchange surging to the highest level since the early days of the pandemic. The hope is that headwinds in traditional industrial areas will be offset by an ongoing surge in usage in electric vehicles and renewables.

Further afield, industrial conditions in Europe and the US still look soft, but there’s growing optimism about copper usage in India, where rising investment has helped fuel blowout growth rates of more than 8% — making it the fastest-growing major economy.

For now, the main catalyst fueling copper’s rally is an unexpected tightening in global mine supplies. That’s been driven mainly by last year’s closure of a giant mine in Panama, but there are also growing worries about output in Zambia, which is facing an El Niño-induced power crisis.

Prices spiked on huge volumes on Wednesday after smelters in China held a crisis meeting on how to cope with a sharp drop in processing fees following disruptions to supplies of mined ore. The group stopped short of coordinated production cuts, but pledged to re-arrange maintenance work, reduce runs and delay the startup of new projects.

In the coming weeks investors will be watching Shanghai exchange inventories closely to gauge both the strength of demand and the extent of any capacity curtailments.

“The increase in SHFE stockpiles has been bigger than we’d anticipated, but we expect to see them coming down over the next few weeks,” Colin Hamilton, managing director for commodities research at BMO Capital Markets, said by phone. “If the pace of the inventory builds doesn’t start to slow, investors will start to question whether smelters are actually cutting and whether the impact of weak construction activity is starting to weigh more heavily on the market.”

Copper jumped as much as 2% to $9,066.50 a ton on the London Metal Exchange on Friday, and was trading at $9,030 a ton as of 2:13 p.m. local time. Other metals were mixed, with aluminum gaining 0.6% and lead dropping 1.8%.

Iron ore futures in Singapore held below the key $100 level, trading at $98 a ton.

(By Mark Burton)

According to the Oslo-based business intelligence company, exploration efforts are underway in Australia, the US, Spain, France, Albania, Colombia, South Korea and Canada.

In its report, Rystad points out that one of the most promising elements of natural hydrogen – also called white or gold hydrogen – is its cost advantage over other forms of hydrogen due to its natural occurrence. 

Grey hydrogen, produced from fossil fuels, costs less than $2 per kilogram of hydrogen on average, while green hydrogen, produced using renewable electricity, is currently more than three times pricier. The cost of renewable hydrogen is expected to come down as electrolyzer pricing falls in the coming years, and yet, white hydrogen is still expected to be cheaper.

At present, Canada-based producer Hydroma extracts white hydrogen at an estimated cost of $0.5 per kg. Depending on the deposit’s depth and purity, projects in Spain and Australia aim for a cost of about $1 per kg, solidifying white hydrogen’s price competitiveness.

In addition to the cost advantage, white hydrogen can also have a low carbon intensity. At a hydrogen content of 85% and minimal methane contamination, the carbon intensity is around 0.4 kg carbon dioxide equivalent (CO2e) per kg hydrogen gas (H2) – including embodied emissions and hydrogen emissions. At 75% hydrogen and 22% methane, the intensity rises to 1.5 kg CO2e per kg H2.

“Although still in its infancy with lots of uncertainty, white hydrogen has the potential to be a game-changer for the clean hydrogen sector as an affordable, clean natural resource, thereby shifting the role of hydrogen from an energy carrier to part of the primary energy supply. However, the actual size of the reserves is still unclear, and the transportation and distribution challenges of hydrogen remain”, Minh Khoi Le, head of hydrogen research at Rystad, said in a media statement.

Through the US Inflation Reduction Act, companies are eligible to receive production tax credits (PTC) when the lifecycle carbon intensity is below 4 kg CO2e per kg H2. The highest PTC tier grants $3 per kg if hydrogen production meets the carbon intensity threshold of 0.45 kg CO2e per kg H2. As such, low-carbon white hydrogen production in the US could be eligible for the highest PTC, making it appealing for producers.

Not a new thing

Le explained that despite being accidentally discovered in Mali approximately 37 years ago, the accumulation of hydrogen underground was previously thought to be unlikely due to hydrogen’s ability to seep through rock layers. However, new equipment, such as hydrogen-sensing gas probes, are now available to detect dissolved hydrogen in rock formations at depths of up to 1,500 metres. These probes use spectrometers to measure and analyze dissolved gases in deep boreholes. Researchers are currently developing probes that can reach deeper depths, up to 3,000 meters underground.

White hydrogen is mainly produced through natural reactions, such as serpentinization, where water reacts with iron-rich minerals at elevated temperatures. Enhanced serpentinization using catalysts such as magnetite, could help to accelerate natural hydrogen-producing reactions.

Radiolysis of water is another source of natural hydrogen. This process involves radioactive elements within the earth’s crust splitting water due to ionizing radiation.

The word is spreading

Rystad Energy’s report notes that the South Australian government added hydrogen to its list of regulated substances in 2021. This led to many companies applying for exploration permits in the region, with Gold Hydrogen securing a five-year license to develop its Ramsay project. The company found high hydrogen concentrations of up to 86% during drilling in late 2023. Gold Hydrogen plans to conduct further drilling in 2024 and launch a pilot feasibility study.

The dossier also highlights the fact that governments in countries like France and the US have promised financial support to expedite the exploration and extraction of naturally occurring hydrogen projects. Currently, there is only one operational white hydrogen project in Bourakebougou, Mali, producing around 5 tonnes of hydrogen annually. This small-scale project has been in operation for a decade, providing power to a village. Other projects in various parts of the world are still at an early exploration stage, with the first European natural hydrogen production expected to start in 2029.

Prabowo, said by independent pollsters to have won the Feb. 14 election, has said he will pursue the effort to extract more value from Indonesia’s vast resource wealth by halting exports of key raw materials and developing domestic processing instead.

The policy drew investments of billions of dollars from smelting firms, most of them Chinese, and boosted Indonesia’s exports.

But it led to an oversupply of processed nickel that caused a drop of 45% in prices last year, squeezing producers in Australia and elsewhere, although they have since recovered to stand up about 12% in 2024.

Experts advising Prabowo are discussing ways to stem a further decline in prices while still generating more jobs and boosting value-addition, members of his campaign team said.

“We must control supply so prices can be underpinned,” Erwin Aksa, a campaign vice-chair, told Reuters, adding that current conditions are likely to drive investors to avoid new projects.

“If there is too much oversupply and those smelters stop their operations, that would impact the whole supply chain,” he added.

Prabowo himself has not publicly detailed his nickel strategy, but told a Feb. 6 rally, “We are determined to guard Indonesia’s wealth. We want to manage and control this wealth, so the value-add can be enjoyed by all Indonesian people.”

Indonesia produced about 1.4 million tons of primary nickel last year, or about 40% of global output, data from the International Nickel Study Group showed.

“Indonesia is flooding the nickel market with low-cost supply, and we don’t think it’s going to stop anytime soon,” said S&P Global Ratings, which predicts the country will add 300,000 metric tons of smelting capacity this year.

S&P Market Intelligence expects the oversupply to continue beyond 2025, as Indonesia has excess capacity for an intermediate product, nickel pig iron (NPI).

Taking stock?

Some of Prabowo’s advisers have called for a moratorium on new smelters, allowing time to take stock of reserves and improve governance.

Last year, a miners’ association warned that reserves of high-grade nickel ore could be depleted in about six years. Recently, a government official said overall nickel ore reserves were sufficient for 30 years.

No decision has been made on a possible moratorium, however, said Eddy Soeparno, another vice-chair of Prabowo’s campaign team, while adding, “It is good to take a pause and give the policy an overview.”

Prabowo will push for further processing of NPI, helping to ease oversupply, said another campaign official, Anggawira, who goes by one name.

The main challenge was building domestic industries to consume the nickel, he said.

“When the nickel is cheaper, that would make our industries more efficient,” added Anggawira, who also chairs the Association of Indonesian Energy, Mineral, and Coal Suppliers.

(By Fransiska Nangoy; Editing by Tony Munroe and Clarence Fernandez)

Read More: Wyloo says industry will turn from LME without green nickel

Forrest had told Australian media last month that the LME should classify its contracts into clean and dirty to give customers more choice. Wyloo is set in May to shutter two nickel mines in Australia that it bought last year for $504 million.

The LME said that low carbon nickel, which it classifies as producing 20 tonnes of carbon dioxide or less per tonne of nickel, could already be traded on its partner MetalsHub’s system.

“Wyloo has been contacted by several parties seeking to develop a green nickel premium, so there is clearly demand for greater transparency and differentiation between clean and dirty nickel,” Wyloo CEO Luca Giacovazzi told Reuters.

“As the world’s largest metals exchange, the LME should be leading in this area,” he said.

“If the LME is to continue to set the standard for ethical metal supply practices, it cannot afford to take no action, or the industry will look for an alternative marketplace.”

Calls for a nickel price that reflects strong environmental and governance standards have grown from high-cost producers such as Australia, where low prices have forced miners to shutter operations due to a flood of Indonesian supply, most of which is produced using coal.

(By Melanie Burton; Editing by Michael Perry)

Supply in both markets is dominated by Indonesia, where production and exports are being affected by delays in approving annual work permits.

This is a relatively new phenomenon for nickel. Indonesian production has exploded over the last few years to the point the country now accounts for more than half of global supply.

Tin has been here before. Indonesia has long been the world’s largest exporter and the flow of metal to world markets has been interrupted several times in the past when the government tightened production and export rules.

Tin’s misfortune, however, is that its supply chain is not just beholden to Indonesia’s resource nationalism but also to that of the Wa State in Myanmar.

Double trouble

Indonesian exported 78,000 metric tons of refined tin last year, equivalent to around a fifth of global demand.

Exports so far this year have slumped to just 55.4 tons, compared with 4,700 tons in January-February 2023.

The last time shipments ground to a complete halt was in August 2015, when the authorities introduced “clean and clear” rules on exports to enforce environmental standards.

This time it’s a change to the annual permitting system. It’s possible that tin may be coming under special scrutiny due to an unfolding illegal mining scandal.

The government has also made no secret of its intention to limit exports as a lever to push its tin sector further downstream.

It doesn’t seem to have worked out how to replicate its nickel strategy in the tin market yet. But the threat to the rest of the world’s tin supply is not going away.

Neither is that posed by the Wa State, the semi-autonomous region of Myanmar which controls the Man Maw mine, one of the world’s largest tin resources.

All mining was suspended in August last year to allow for an audit of reserves. The suspension has been partly lifted, opens new tab for some smaller operators, although they will pay more in export tax, according to the International Tin Association (ITA).

However, operations at Man Maw have yet to resume. The ITA suggests the delay may reflect a policy re-think around the need to replenish the Wa government’s strategic stockpile.

Amid the continuing uncertainty, one thing is clear. The ruling United Wa State Army aims to exert tighter control over the jewel in its mineral crown.

Myanmar and Indonesia are combining to squeeze global tin supply driven by the same resource nationalist impulse.

Surplus and stocks rebuild

The tin market can likely absorb the double hit over the short term.

The ITA estimates that global supply exceeded usage by 9,700 tons last year, attesting to the slump in demand from the electronics sector, where tin is used as circuit-board soldering.

Stocks registered with the LME and the Shanghai Futures Exchange (ShFE) more than doubled to 15,400 tons over the course of 2023.

Those on the LME have recently been sliding as the halt to Indonesian shipments drags on. Headline inventory has fallen by 31% to 5,300 tons since the start of January.

Shanghai stocks, by contrast, have continued growing over the Chinese New Year holiday period and at a current 11,072 tons are the highest they have been since ShFE launched its tin contract in 2015.

The flow of raw material from the Man Maw mine in Myanmar to Chinese smelters has dropped but not as much as feared after the authorities allowed the processing of surface stocks. Many Chinese operators also built up stocks of concentrate ahead of the August suspension.

China’s production of refined tin grew by 1.8% year-on-year to 169,000 tons, according to local data provider Shanghai Metal Market.

Tin users are lucky that the current supply disruption has come after a year of low demand and restocking of both raw material and metal.

Future fragility

The question worrying the tin market is how long it will be before normal supply service is resumed in both Myanmar and Indonesia.

LME three-month tin hit a seven-month high of $27,810 per ton on Friday and, currently trading around $27,460 per ton, is now up by 9.0% on the start of the year.

Even assuming a speedy resumption of Indonesian exports and mining in Myanmar, tin supply over the next few months looks challenging.

The longer-term threat is of future supply disruption as resource nationalism drives both governments further down the road of export controls.

Tin’s use as a circuit-board solder makes it a critical mineral both for the current generation of electronics and the coming internet of things.

Yet it is one with an incredibly fragile supply chain, beholden to the politics of Indonesia and the United Wa State Army.

This year’s supply squeeze may be just a taster of things to come for tin.

(The opinions expressed here are those of the author, Andy Home, a columnist for Reuters.)

(Editing by Louise Heavens)

The Porgera mine in the hills of the Pacific island country was under care and maintenance from April 2020 to December 2023 while Barrick and partner Zijin Mining renegotiated terms with the government. Hiring is going better than envisioned and the mine will ramp up this year, Bristow said in an exclusive interview with The Northern Miner last week.

“We poured our first bar of gold under the new company – we don’t make too much fuss about it,” Bristow said with a laugh in the Barrick headquarters in Toronto before turning more serious. “We’ve got some work to do re-erecting the power towers after people blew them up.”

Tribal conflicts and protests have downed power lines several times since Porgera started production in 1990 under Canada’s Placer Dome which Barrick acquired in 2006 and may continue even with the new agreement. Assaults on illegal miners and toxic waste claims dogged the operation, like at the Acacia mine in Tanzania.

But Bristow, who’s led the company since it merged in 2019 with the South African company he built, Randgold Resources, transformed Acacia after what he called “a great deal for a crippled organization.”

Barrick had 72% of Acacia but no management control when authorities shut it down forcing the company to take it private and renegotiate operations over several years. At the giant Reko Diq copper project in Pakistan, it took a decade to resolve arbitration in Barrick’s favour, and four years to sort out Papua New Guinea’s nationalization of Porgera.

Reko Diq

Now, Porgera has an ownership structure where locals control more than half the company and its profit, similar to how Barrick is developing Reko Diq with half split evenly between the central government and Baluchistan state, leaving Barrick with half. Operating in locations deemed risky is about building partnerships because without permissions, the mines shut, Bristow says.

“It’s all about licence to operate,” he said. “Mining rights are binary. You either have a mine or you don’t. You can’t sort of say ‘I’m in a tough jurisdiction, so I’m going to discount it by 20%.’ I mean, there’s no such thing.”

All gold miners have benefited from the metal achieving record prices this month – $2,177.10 per oz. on Monday – which Bristow ascribed to global risks such as slackening economic growth and rising geopolitical tensions.

But Barrick’s gold and copper production fell slightly in 2023. The company has had to contend with an 18-month delay to permits at the Goldrush project, part of its Nevada Gold Mines partnership with Newmont (NYSE: NEM; TSX: NGT), and a slow start to commissioning at the Pueblo Viejo mine expansion in the Dominican Republic.

Reported talks to acquire the shut Cobre Panama copper mine in Central America from First Quantum Minerals (TSX: FM), which Bristow again denied, saw no deal even though it would have suited the CEO’s penchant for expanding more into the energy transition metal and turning around troubled assets. Especially ones marred by poor relations with governments.

Site visits

Bristow, a hands-on CEO, visits each of the company’s roughly 20 sites at least three times a year, with the fourth round reserved for those that need attention or new initiatives.

“I don’t believe in offices,” the South African native said. “For mining to be successful and agile, the mine management should own their businesses. That calls for a better quality general manager on the mines and we look to more CEO-style people.”

Bristow has long stated his aversion to paying a premium for projects. Between China increasing its reach in the world economy more aggressively from about 2005, through a 2011 gold price peak and fall until it started rising again in 2019, the CEO figures the industry had to write off almost US$80 billion in value because of deals often sweetened with cash on top of premiums.

“There are moments when you will pay a premium, it depends how the market values the asset,” he said. “When you pay premiums on premiums, you’ve got to rely on the gold price to get yourself into the money. I’ve never done that.”

Bristow’s Randgold Resources brought African assets into the merger with Barrick, including the Loulo and Gounkoto mines in western Mali, Tongon in Ivory Coast and Kibali in the Democratic Republic of Congo where it doubled the gold reserve within two years to 10 million ounces. Kibali, Africa’s largest gold mine, still has 10 million oz. in reserves more than a decade after starting production.

Greenfields expansion

This year, Barrick is focused on Nevada, where the company is increasing greenfields exploration spending to replicate discoveries like Fourmile and Goldrush with a 20-million-oz. find that could boost Barrick’s gold production. It was 4.1 million oz. last year.

At Goldrush underground, where permits at last arrived in December, crews are preparing to install ventilation ducts allowing annual output to increase to 400,000 oz. by 2028 from 130,000 oz. this year, the CEO said. Permit delays had affected cash flow, he said.

While mining in the U.S. might be considered less risky than say, the remote northeast DRC home of Kibali, America has its own hazards, such as litigation by anti-mining groups and lengthy permits processes. During the pandemic, when many states suffered lack of revenue for services, Barrick and Newmont stepped up to pay their taxes in Nevada ahead of time.

“No matter how you own it, a mine is actually is a national asset,” he said. “When you invest in it to develop it, you should be investing in its people and its businesses, and people should benefit out of it and the economic benefits should be split. It should be shared.”

The world’s third-biggest coal miner after China and India undercounts methane emissions from production of the fuel by six to seven times, according to Ember, which cited independent estimates from scientists using satellites and mine-level data compiled by nonprofit Global Energy Monitor.

Indonesia neglected to include methane releases from underground reserves, Ember said. And though the country’s last official report to the United Nations used an approved approach that applies an emissions factor to each ton of coal extracted or produced, Ember said that given the nature of the country’s open-cut mines, a higher factor would have been more appropriate.

The Energy and Mineral Resources Ministry said the agency needs to review the findings, a spokesperson said Monday, a holiday in Indonesia.

The discrepancies could jeopardize Indonesia’s efforts to slash releases of the gas and meet emissions reductions commitments under the Global Methane Pledge. More than 150 nations have signed the agreement vowing to cut methane 30% by the end of this decade from 2020 levels.

Methane is the primary component of natural gas, but it can also leak during coal production when rock strata or coal seams are fractured and operators routinely vent methane into the atmosphere to reduce health and safety risks for workers. Few mines use available above-ground capture technology.

To improve accuracy Indonesia should collect data and analyze emissions from individual mines and distinguish between emissions from underground and surface mines when its reports the releases, according to Ember.

Estimates from satellites and independent analysis suggest that many countries underreport their methane emissions. In 2022, Australia revised its calculations for methane pollution from open-cut coal mines, a change that meant total national annual emissions were on average 0.3% higher than stated for more than 30 years.

Methane has more than 80 times the warming power of carbon dioxide during its first 20 years in the atmosphere, and clamping down on avoidable emissions from fossil fuels is one of the cheapest, fastest ways to avoid levels of climate change that scientists agree would be catastrophic.

(By Eddie Spence and Aaron Clark)

The most-traded May iron ore contract on China’s Dalian Commodity Exchange (DCE) ended daytime trade 5.41% lower at 831 yuan ($115.68) a metric ton, the lowest since Oct. 23, 2023.

The benchmark April iron ore on the Singapore Exchange slid 6.71% to $107.45 a ton, as of 0808 GMT, the lowest since Aug. 22.

A temporary supply glut as a result of better-than-expected shipments so far in the first quarter of the year and weaker-than-expected demand recovery has put intense downward pressure on prices, analysts said.

“The global ore shipments have climbed to a relatively high level. The recent ore price fall has not triggered a production reduction among non-mainstream suppliers,” analysts at Citic Futures said in a note.

“Some mills postponed again the timing of production resumption, curbing ore demand rise and destocking at ports,” they added.

Poor profitability among steelmakers dented their interest in ramping up output, and the weakness in the steel market permeated into the upstream raw materials market, weighing on ore prices, analysts at Everbright Futures said in a note.

Other steelmaking ingredients on the DCE lost ground, with coking coal and coke down 2.65% and 2.04%, respectively.

Steel benchmarks on the Shanghai Futures Exchange were similarly weaker. Rebar slipped 2.41%, hot-rolled coil shed 1.95%, wire rod fell 1.62% and stainless steel surrendered 1.34%.

The weakness in the ferrous market came despite Chinese regulators asking large banks to step up support for Vanke, a state-backed property developer.

Property market in China, the largest steel consumer, has been hit hard by a debt crisis and not yet shown obvious signs of improvement despite various measures introduced by Beijing to revive the sector.

($1 = 7.1838 Chinese yuan)

(By Amy Lv, Andrew Hayley and Zsastee Ia Villanueva; Editing by Mrigank Dhaniwala and Sohini Goswami)

Purchases are plummeting at the Gold Souk, according to salespeople at numerous shops, as bullion goes on a record run that’s now approaching $2,200 an ounce. Most locals are just browsing, leaving the majority of buying to tourists who are willing to pay more while they’re on vacation.

“They ask why it’s so high so they are buying less,” said Yemeni shopkeeper Abdelnaser Alyafie, who’s worked in the market for six years. “The price is very high so people think the small things are okay but if they want to buy the big stuff, more grams, they will think, let the price go down. Then they’re going to buy.”

The most affected were the gold brick shops, with workers at three locations saying sales are down by half. One seller who traded in bricks and jewelry said the latter was performing better as the crimp on demand was more notable for heavier items.

Mohammad Tariq manages one of about a dozen Kanz Jewels stores in the massive, open-air market. Business is down about 40% this week, with the makeup of the customers being noticeably different, he said.

“Tourists won’t think about the price, they come to Dubai and buy,” said Tariq, who’s been a gold salesman for 12 years. “They only have one chance to purchase the goods.”

Everyone else is holding back, he said. At some stores, people are selling back some pieces to cash in.

Gold has risen for eight straight trading sessions, and the speed of bullion’s ascent has taken many investors by surprise, with no clear catalyst for the rally beyond long-standing pillars of support. Speculation over the Federal Reserve’s pivot to looser monetary policy, geopolitical risks and buying by central banks, led by China, have helped spur momentum.

The traders working thousands of miles away at one of the oldest gold markets in the United Arab Emirates told a Bloomberg News reporter that they’re just as shocked.

“It’s unbelievable,” said a salesman who’s been working at the Souk for 22 years and asked not to be identified as he’s not authorized to speak for his employer. “Once they see the gold and they see the price, they run.”

Residents and locals, in particular, are showing less of an appetite because of the price surge, though tourist season has helped ease the drop. Visitors, many from the UK or US, said they knew this was their last chance to buy mementos that they wouldn’t be able to find back home.

Alyafie said much of the foot traffic is now window shoppers or people trying on jewelry and putting it back, and sales at his shops have fallen by about a third. Still he’s confident that customers will buy again.

If you have an upcoming wedding or you’re afraid of missing out on a piece or it’s your last day in Dubai, you’ll pay the price no matter how high, Alyafie said.

“Yellow metal is the only commodity people would fight over,” he said.

(By Leen Al-Rashdan)

It’s still small relative to the London Metal Exchange (LME), which isn’t going to lose its status as benchmark price-setter any time soon. Nor will the Shanghai Futures Exchange (ShFE) stop being the dominant futures price reference for China’s giant aluminum sector.

Rather, the significance of CME’s fast-growing aluminum contract is what it says about aluminum’s shifting dynamics.

The global market is becoming less globalized and the US is starting to drift away from everyone else thanks to the combination of import tariffs and penal duties on Russian metal and Chinese products.

The emergence of a North American pricing point is a logical evolution in this tectonic realignment of the market landscape.

Physical drift

The CME’s first aluminum contract was delisted in 2009 after the US exchange failed to lure users away from the dominant London market.

It was ironically the LME itself that opened the door again for its US rival a few years later.

Long load-out queues at LME warehouses in Detroit caused US physical premiums to surge. The LME price stayed low but buyers were paying ever more for their metal and were unable to hedge the pricing gap.

The CME launched a US Midwest premium contract in 2013 followed a couple of years later by European and Japanese premium contracts. Volume last year across the four contracts totalled almost four million tonnes.

The LME’s premium contracts, launched much later, notched up volumes of just 202,000 tonnes last year.

The Midwest premium briefly converged with the rest of the world before ballooning wider again when the Trump Administration imposed 10% import duties in 2018.

The Biden Administration’s policy of de-risking supply by closing the door on Russian imports has cemented the structural divergence with other regions.

US physical buyers are currently paying around $387 per metric ton over the futures price for metal. Those in Europe are paying around $250 and Japanese buyers just $120.

That futures price has until now been set on the LME. But maybe for not much longer.

Growth spurt

The CME tried again in 2014 with a futures contract to match its premium products but it lapsed into disuse late 2017 and didn’t trade at all until July 2019.

The trigger for the renewed interest was the CME’s decision to expand its delivery network from US locations to international ports, particularly those with physical arbitrage opportunities with the LME warehousing network.

Registered stocks were zero prior to June 2019. Today they stand at 45,905 tons, most of it in heavily-used LME locations such as Malaysia’s Port Klang and Gwangyang in South Korea.

With inventory has come trading volume. Activity in the aluminum contract nearly tripled last year to 30.6 million tons. That’s dwarfed by the 1.4 billion tons transacted on the LME, although the difference is accentuated by the LME’s unique trading system.

A more useful comparison is with the ShFE, which like the CME, offers a vanilla cash-settled futures contract.

CME volumes in the first two months of this year came to 9.3 million tonnes, compared with 44.0 million in Shanghai. And the US product is still growing fast.

So too are the number of users, over 600 last year compared with 357 in 2022, according to the exchange.

CME has also launched aluminum options, which just recorded their best volume month in February.

CME all-in aluminum

Although the CME’s rising aluminum fortunes have until now been linked via arbitrage with those of its competitor across the Atlantic, there are signs that the contract’s success is generating domestic traction.

A key development came in April last year, when price reporting agency Platts, part of S&P Global Commodity Insights, began publishing a CME-basis all-in price.

Whereas physical buyers would previously hedge their basis risk on the LME and their premium risk on the CME, the new pricing tool allows both components to be executed on the CME.

Domestic players such as PerenniAL Aluminum are now offering buyers a CME all-in price reference in this year’s term supply contracts, according to CEO Brian Hesse, quoted in a CME update on the contract.

Industrial users are being joined by investors.

United States Commodity Fund (USCF) announced the launch of the USCF Aluminum Strategy Fund in October. It will trade basis the CME contract, hoping to attract investors looking for exposure to aluminum as a critical energy transition metal.

Although included in all the major commodity indices, aluminum has to date failed to attract much retail speculative interest. CME, which offers investor friendly micro products in both precious metals and copper, would seem a good fit for smaller players unable to access the wholesale market in London.

CME is assembling the building blocks to become an aluminum price-setter for the North American market.

Regional splits

This is not necessarily bad news for either London or Shanghai. Three regional futures exchanges can be mutually beneficial thanks to increased arbitrage possibilities.

Copper, which has traded on US exchanges since the nineteenth century, is a good example of profitable co-existence.

But for aluminum, shifting from London dominance to regional price formation is a completely new development.

It is, though, no more than a reflection of geopolitical reality as what was a highly globalized supply chain drifts apart into trading blocs.

(The opinions expressed here are those of the author, Andy Home, a columnist for Reuters.)

(Editing by David Evans)

“Tesla will give you a giant contract for a long period of time,” the carmaker’s CEO said during a call with investors. That was July 2020.

Since then, use of the metal required to power electric vehicles has soared, rising 37% last year to 290,000 tonnes, according to research firm Adamas Intelligence.

Yet this year miners including BHP, Anglo American, Glencore, and Wyloo, owned by magnate Andrew Forrest, have been mothballing, writing down, or trying to sell their operations.

Blame the tumbling price of nickel, which by February had fallen below $16,000 a tonne on the London Metal Exchange, almost half its level a year earlier. That decline tipped half the world’s production of the commodity into the red, BHP calculates.

Despite a modest recovery to $17,700 a tonne in recent weeks, the ructions have lessons for the West’s energy-transition hopes.

Nickel increases the energy density of a battery, enabling it to store more power and add more range to electric vehicles than alternative chemistries like lithium iron phosphate. Up to 50 kilograms of the stuff goes into each power pack that uses it.

Supply has risen more than two-fifths over the past three years, almost entirely due to Indonesia. The archipelago increased its output of the metal tenfold over the past decade; most other countries flatlined or reduced production. Last year Indonesia accounted for 50% of the 3.6 million tonnes excavated globally.

Demand has proved less reliable. China last year appeared to use less nickel for steelmaking, which tends to account for around two-thirds of worldwide consumption. Production of electric-vehicle batteries, which scoop up a tenth of global output at best, is also hard to predict. Ford Motor, General Motors and other major carmakers have slowed their electric-vehicle plans.

Separately, power pack makers in the People’s Republic, like BYD and Contemporary Amperex Technology, met rising demand for their products in part by raiding their own stockpiled nickel, keeping the amount they bought to the same level as in 2022. Combined, that left global supply exceeding demand by as much as 10%, though new data suggests it may be nearer 4%, analysts at Macquarie argue.

The mismatch masks longer-term shifts.

Several years ago Indonesia’s government, eager to capture more value from the metal, ceased exporting the raw material and ramped up domestic processing. Incentives like 15-year tax holidays helped suck in investment from China, its main customer. Firms including Tsingshan and Lygend Resources & Technology built processing plants.

The two countries then developed and deployed a way to manufacture Class 1 nickel – defined as being at least 99.8% pure and the only type used in EV batteries – out of the lower-grade Class 2 supplies abundant in Indonesia.

That production came online around the time the LME experienced a spectacular squeeze in nickel in March 2022.

One of the problems worsening that crisis was a shortage of the metal in the bourse’s warehouses; the LME only trades and warehouses Class 1 nickel, which at the time did not include Indonesia’s innovation.

The LME last year started accepting some of it, which shifted pricing power to Indonesia, because the country can turn Class 2 into Class 1 nickel more cheaply than miners in developed countries can dig up the higher-quality metal.

All else being equal, these factors should have been manageable for miners from Australia to New Caledonia to Latin America.

Even at $16,000 a tonne the price was 20% higher than when Musk issued his 2020 plea. Inflation and other outlays, though, have pushed up expenses. The average cost of production Down Under is now $17,000 a tonne, 49% higher than in 2019 and 28% more than some Indonesian operations, calculates Mandala Partners in a report for The Chamber of Minerals and Energy of Western Australia.

Most solutions so far look piecemeal.

France this week agreed to swap into equity 320 million euros of loans to a New Caledonia operation held on French miner Eramet’s balance sheet. That, though, won’t do much to improve the profitability of the South Pacific territory’s nickel industry, which accounts for 6% of global supply. Glencore is mothballing its part-owned outfit there and wants to sell its stake.

Instead, governments and miners are coalescing around the idea of a green premium.

The concept is compelling. Turning lower-grade nickel into Class 1 material requires lots of energy, and Indonesian power relies heavily on burning coal. This means carbon emissions per tonne of Class 1 Indonesia nickel are up to six times higher than in Australia. Makers of electric cars – and their customers – might therefore pay more for batteries made with greener nickel.

Miners want the LME to take responsibility for the green premium by creating a separate contract for low-carbon nickel. Yet even if the exchange could define the parameters, the idea runs counter to a lesson of the 2022 squeeze: the nickel contract needed more liquidity.

Faced with sluggish EV sales and squeezed margins, carmakers want to minimize costs and secure supplies.

Indonesia is the only region that has markedly increased production in the past 10 years. That’s why Jakarta has successfully wooed auto and battery giants including Ford, LG Energy Solution, Volkswagen, Hyundai Motor Group and others to invest in the country’s nickel industry – often with Chinese partners.

On the one hand, that’s just business. But it’s also a consequence of leaving the supply of critical minerals at the mercy of the market.

Jakarta telegraphed its intention for years. Now the world’s car industry is dependent on a more carbon-intensive product with China’s fingerprints all over it – just as the US and Europe are trying to reduce their exposure to the People’s Republic.

Other materials used in EV batteries are also vulnerable. The price of lithium is down 80% in the past year, prompting some producers to slash output. Copper only declined around 15%, but Rio Tinto’s return on capital employed digging up the reddish-brown metal halved to just 3%, per LSEG data.

Meanwhile, more countries are following Indonesia’s lead: Ghana, Namibia, Tanzania and Zimbabwe are banning exports of raw lithium, while Chile, Bolivia and Mexico are at least partly nationalizing the industry.

Western governments could mimic Indonesia by granting tax holidays to critical minerals operations. Or perhaps overseas buyers will pressure Indonesia’s industry to be more environmentally conscious, pushing up costs. Musk may be the best hope for that: Tesla has unrivalled experience mapping its supply chain’s emissions.

Greening the archipelago’s operations is probably a years-long process, though. Even more reason for Australia, Canada, the Philippines and others to devise smart long-term strategies for critical minerals sooner rather than later.

(The author is a Reuters Breakingviews columnist, Antony Currie. The opinions expressed are his own.)

(Editing by Peter Thal Larsen and Katrina Hamlin)

Assessed by researchers at James Cook University, the automated approach to large-scale road mapping uses convolutional neural networks trained on road data.

According to the scientists, many roads in developing countries, both legal and illegal, are unmapped, with road-mapping studies in the Brazilian Amazon, Asia-Pacific and elsewhere regularly finding up to 13 times more road length than reported in government or road databases.

Previous studies, on the other hand, have shown that earth is experiencing an unprecedented wave of road building, with some 25 million kilometres of new paved roads expected by mid-century.

“Traditionally, road mapping meant tracing road features by hand, using satellite imagery. This is incredibly slow, making it almost impossible to stay on top of the global road tsunami,” Bill Laurance, senior author of the study published in the journal Remote Sensing, said in a media statement.

Laurance explained that he and his colleagues trained three machine-learning models to automatically map road features from high-resolution satellite imagery covering rural, generally remote and often forested areas of Papua New Guinea, Indonesia and Malaysia.

“This study shows the remarkable potential of AI for large-scale tasks like global road-mapping. We’re not there yet, but we’re making good progress,” he said. “Proliferating roads are probably the most important direct threat to tropical forests globally. In a few more years, AI might give us the means to map and monitor roads across the world’s most environmentally critical areas.”

Prices rose as much as 1.8% to $2,540 a ton, continuing a rebound that brokers say has been driven by investors closing short positions on the London Metal Exchange after they reached a record level in data going back to 2018. All base metals gained Thursday as Chinese data showed strong demand for raw materials like coal, crude oil and iron ore, while former central bank governor Yi Gang outlined a plan to revive the country’s ailing property sector.

Support has also come from a report this week that South Korea’s Young Poong Corp. cut refined zinc production at its Seokpo smelter, in a move that could rebalance spot market supply after a recent increase in exchange inventories.

“Short-covering has been the driver of recent gains,” Marex Group analyst Al Munro said by email. He added that the rally could run into resistance above $2,600, a level “above which exchange stock deliveries have emerged over the past year.”

Zinc smelters have faced a sharp reduction in the processing fees they charge to turn mined ore into finished metal, and analysts say there could be more cuts to come as miners struggle to boost output.

“Metal market participants have held perennially bearish views on zinc on expectations that mine supply increases would push the market into surplus,” Bank of America commodity strategist Michael Widmer said in a note this week. “But the anticipated glut has so far not materialized, because mined and refined production have consistently underperformed.”

Copper smelters have also faced a rapid decline in spot processing fees. Bloomberg reported on Thursday that at least 15 smelters have been invited to meet in Beijing next week to discuss measures to counter the decline, including a potential joint production cut.

Still, the president of Tongling Nonferrous Metals Group Holdings Co., one of the top producers, said this week that his company isn’t planning output cuts, as it prepares for strong demand growth in electric vehicles and other new-energy sectors.

Zinc was up 1.6% at $2,534.50 by 4 p.m. local time on the LME. Copper gained 0.8% to $8,648 a ton. Nickel and aluminum advanced more than 1%.

(By Mark Burton)

“Elevating our ties to a comprehensive strategic partnership today places Australia and Vietnam among each other’s significant partners,” Albanese told a news conference in Canberra.

The ties upgrade marks the latest success for Communist-ruled Vietnam’s “bamboo diplomacy”, after it boosted relations last year with the world’s top powers as it tries to navigate rising global tensions.

“Mutual political trust between the two countries has been elevated, reaching the highest-ever level,” the official Vietnam News Agency reported on Thursday.

The partnership will support expanded cooperation on a range of issues, including climate, environment and energy, defence and security, and economic engagement and education, a joint statement by the two countries said.

Albanese and Chinh on Thursday also witnessed the exchanges of 12 cooperation documents on areas including energy, minerals, agriculture, banking and finance, according to the Vietnamese government.

Australia is a major producer of critical minerals that are used in everything from smartphones to automobiles, while Vietnam has some of the largest untapped deposits in the world.

“An annual ministerial dialogue on energy and minerals will drive cooperation in our energy and resources sectors, including critical minerals supply chains,” the statement said.

The United States has already agreed to boost cooperation on rare earths with Vietnam, whose resources are seen as an alternative source of the minerals. China has the world’s largest deposits, with 44 million tons estimated, and dominates the extraction and processing of the critical minerals.

Vietnam, which is said to have the world’s second-largest deposits of around 22 million tons of rare earths oxide (REO) equivalent, has attracted miners from Australia.

Blackstone Minerals Ltd. had agreed to partner with Vietnam Rare Earth JSC (VTRE) to win concessions at the Vietnam’s biggest mine, Dong Pao in Lai Chau province, in a project that would amount to about $100 million if it wins the concession.

Australian Strategic Materials also signed a binding agreement in April 2023 with VTRE for the purchase of 100 tons of processed rare earths a year, and committed to negotiating a longer-term supply deal.

However, some rare earth deals have been left in limbo after Vietnamese police in October arrested the VTRE chairman and accused him of forging value added tax receipts and rare earth smuggling.

Australia has been a key coal supplier to Vietnam, which is heavily reliant on the fossil fuels for power generation. Coal shipments from Australia to Vietnam rose 17% last year to 20 million metric tons, accounting for 39% of Vietnam’s total coal imports.

Along with Australia, the Southeast Asian nation’s top partners now include the United States, China, India, South Korea, Japan and Russia.

(By Alasdair Pal and Khanh Vu; Editing by Christian Schmollinger, Michael Perry and Gerry Doyle)

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

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

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

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

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

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

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

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

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

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

Ready to start

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

Indonesia has rapidly emerged as the new powerhouse of global nickel production but until now has not produced the metal in the high-purity form traded on either the LME or the Shanghai Futures Exchange.

That will change if PT CNGR Ding Xing New Energy gets the official nod for its “DX-zwdx” brand of full-plate nickel cathode.

It is likely to do so since the LME is fast-tracking new nickel listings as part of its recovery plan after the market meltdown in 2022. The policy appears to be paying off for the exchange with stocks and trading volumes rising.

For many other nickel producers, however, it marks an ominous moment in the transformation of Indonesia’s growing production dominance into exchange pricing power.

The reaction is building in the form of growing calls for a premium “green” nickel contract.

Stocks booster

Ding Xing New Energy has the capacity to produce 50,000 metric tons a year of Class I refined nickel having mastered the technology of converting Indonesia’s relatively low-grade ore into pure metal form.

Many others, mostly Chinese operators, are now building out similar new processing capacity in both Indonesia and China.

The LME has already approved four new Chinese brands with another application pending. They bring a collective 91,600 metric tons of annual Class I metal capacity.

Rebuilding stocks liquidity is part of the LME’s pathway to restoring confidence in its nickel contract after the suspension of trading two years ago.

LME registered stocks have been trending upwards since the start of the year, hitting a near two-year high of 73,992 tons at the end of last week. The volume of Chinese metal in LME storage rose from zero in August to 7,884 tons at the end of January.

Rising inventory has been accompanied by greater trading activity on the LME contract. Volumes surged by 74% year-on-year over January and February. Open interest is also creeping back up towards levels seen before the market suspension.

The previous price divergence between Class I nickel and Class II products such as ferronickel has been closing as refiners like Ding Xing convert surplus in the Class II segment of the market into exchange-traded form.

But will the LME contract become a market defined by Indonesian metal, or in the case of the newly-listed Chinese brands, metal derived from Indonesian mines?

Princing power

Indonesia’s mined nickel production has jumped from under 800,000 tons in 2020 to 2.03 million tonnes in 2023, when it accounted for 55% of global output.

What happens in Indonesia already shapes nickel’s pricing landscape.

LME three-month nickel is on a bit of a roll right now, up by over 7% on the start of the year at a current $17,590 per ton.

Underpinning the rally is Indonesia’s backlog of new mine licence approvals, a bureaucratic logjam that threatens to curb smelter production.

But the price bounce comes after a year of sliding prices, which was also down to Indonesia’s supply surge.

Indonesian officials do not hide their ambition to convert that market influence into explicit pricing power.

A price of around $18,000 per ton is about right, opens new tab for Indonesia, according to Septian Hario Seto, deputy coordinating minister for the mining sector. It’s high enough to allow most local producers to make a healthy margin but low enough to keep nickel in the electric vehicle battery chemistry mix.

That price, however, isn’t right for many non-Indonesian producers. The last few months have brought a slew of closures and writedowns in the face of low prices. Class II producers have to date borne the brunt of Indonesian oversupply and have been particularly hard hit.

Fracturing the market

Australian iron ore magnate Andrew Forrest is the latest industry figure to call on the LME to introduce a “green” premium contract to complement its existing product.

Forrest’s Wyloo Metals will be shuttering its Australian nickel operations in May to low prices.

A “green” contract would be a way of differentiating Australian nickel from Indonesian nickel, which is cheaper but comes with a higher carbon footprint due to the processing route from ore to metal.

The LME today issued a notice to members saying that it has no current plans either to launch a new parallel contract or to change the specifications of the existing one.

It would risk fracturing the London market again just as it is showing signs of recovery. Moreover, “the LME believes the market for ‘green’ nickel is not yet large enough to support vibrant trading in a dedicated green futures contract.”

A green nickel market?

This cuts to the heart of the “green” premium debate.

Producers carrying the extra costs of tight environmental compliance should not be put out of business by those with lower thresholds. There is a strong case that such metal should be priced at a premium.

But there can be no premium if buyers aren’t prepared to pay one for “clean” metal, a choice that ends up with the ultimate buyer of a new electric vehicle.

Some big consumer brands pay up extra for low-carbon aluminium. Austrian copper producer Brixlegg charges a green premium, opens new tab on its recycled low-carbon metal.

But these are still outliers in the global aluminium and copper markets and nickel is some way behind the broader “green” premium debate.

Is there a market for green nickel? If there is, the LME thinks “it is most effectively conducted through digital spot trading platforms” such as LME partner Metalshub.

Metalshub has been operating a physical procurement metals trading platform since 2016 and already calculates a weekly European Duty Paid Nickel Briquette Premium.

The company will start reporting monthly on the number of transactions and market value of its Class I nickel trade, including a subset of brands with a registered carbon footprint lower than 20 tons of CO2 per tonne of metal.

The idea is that if there are enough transactions, Metalshub could calculate a “green” nickel index, which could then be the basis of a futures product.

It all depends, though, on how many buyers are prepared to pay up for low-carbon, high-ESG nickel.

(The opinions expressed here are those of the author, Andy Home, a columnist for Reuters.)

(Editing by Marguerita Choy)

Related: Indonesia and China killed the nickel market

The approval process for the quotas, known locally as RKAB, has been delayed this year, raising concerns from nickel smelters who are facing depleting ore stock.

Indonesia, a major producer of minerals such as nickel, tin, and copper, requires all mining companies to secure RKAB approvals periodically before they are allowed to conduct mining activities.

“RKAB approvals for minerals are still on progress and the plan is to complete them by the end of March,” said Irwandy Arif, special staff to the energy and mineral resources minister.

A total of 723 mineral mining companies applied for quota approvals, Irwandy said.

He did not provide the tonnage for the approved RKAB, nor the breakdown of each of the minerals. But he said the ministry has completed approvals for coal miners.

However, Indonesia Mining Association Executive Director Djoko Widajatno estimated that around 259 million wet metric tons of production quota for nickel have been approved, he said in a text message on Tuesday.

Last week, a director at the ministry said approvals have been issued for 145 million metric tons of nickel ore production this year, with approvals for more underway as authorities focused on processing requests for nickel and tin.

(By Fransiska Nangoy; Editing by Martin Petty and Christian Schmollinger)

“Market participants have expressed concern that there remains significant market debate as to how to define ‘green’,” a statement said.

“Further, that an LME contract representing a narrower sub-segment of the market would not attract sufficient stocks and trading volumes to be viable.”

There was also limited appetite for contracts for other segments of the nickel market such as nickel sulphate, matte and other so-called class 2 materials, it added.

The LME futures contract trades in class 1 refined nickel.

Last week, Australian iron ore magnate Andrew Forrest said the LME should classify its nickel contracts into “clean” and “dirty” to give customers more choice.

The comment by Forrest, chairman and founder of Fortescue Metals Group, is part of a push by miners and Australian lawmakers to save the country’s nickel industry after prices collapsed amid a jump in cheaper supplies from Indonesia.

The LME, the world’s oldest and largest market for industrial metals, said its partner Metalshub already offers a solution since nickel can be listed there with specific ESG credentials, including the carbon footprint.

The LME is owned by Hong Kong Exchanges and Clearing Ltd.

(By Eric Onstad; Editing by Jason Neely and Sharon Singleton)