US snapshot: Eight companies active across the nation

The US is host to a number of enviable mining jurisdictions, both in terms of geological endowment and investment attractiveness. Nevada is perhaps most well-known, with Alaska a close runner-up. Idaho is also emerging as a desirable destination for developers. We present eight companies exploring, developing and operating within the US.

Americas Gold and Silver

Sampling at Galena Complex, Idaho. Image by Americas Gold and Silver.

Americas Gold and Silver (TSX: USA; NYSE: USAS) is a precious metals producer operating in the Americas. The company’s producing mines include the Cosala operations in Sinaloa, Mexico as well as the Galena complex in Idaho. Other assets include the Relief Canyon development project in Nevada as well as the San Felipe property in Mexico. Americas Gold and Silver is working to substantially grow its metals production by next year.

Last year, company-wide production guidance was for 6.6 million oz. to 7 million oz. of silver-equivalent at all-in sustaining costs of $10 to $12 per oz. silver.

The Cosala complex is the main source of the company’s silver production. The 194-sq.-km property features a central processing facility, the San Rafael underground mine, El Cajon project as well as past-producing mines and mineralized showings. In the third quarter, the San Rafael mine produced 3.6 million silver-equivalent oz. In January, the company reported an illegal blockade by a minority of its unionized workers at Cosala. The company has filed legal motions with the Mexican government and temporarily stopped mining and processing operations at the site.

As of December, the 117-sq.-km Relief Canyon project was in the final stages of construction with initial crushed ore stacked on the heap leach pads and commercial production expected in the first half of the year.  A 2018 feasibility study for the project outlined an open pit producing 91,000 oz. of gold annually over a six-year mine life at all-in sustaining costs of $801 per ounce. Proven and probable reserves for this asset stand at 27.2 million tonnes grading 0.75 gram gold per tonne for a total of 653,000 ounces.

Americas Gold and Silver acquired the Relief Canyon and Galena assets as part of its Pershing Gold acquisition announced in September 2018.

In September 2019, the company announced a strategic 60-40 joint venture agreement with Eric Sprott for the Galena complex to recapitalize the operation through increasing production and lowering costs. Starting in October, Sprott invested $15 million for capital improvements with a further $5 million committed to fund the first year of operations to earn a 40% interest in the complex.

Americas Gold and Silver has a $308-million market capitalization.

Avidian Gold

The Amanita properties are located northeast of Fairbanks, Alaska, pictured here. Stock image.

Avidian Gold (TSXV: AVG) is an exploration company focused on its 106-sq.-km Golden Zone and 15-sq.-km Amanita properties in Alaska, a top-ranked mining jurisdiction.

The Amanita property is located 15 km northeast of Fairbanks and is contiguous with Kinross Gold’s (TSX: K, NYSE: KGC) Fort Knox mine. The company says the Tonsina structural corridor found at Fort Knox continues onto Amanita; historical drilling along this trend intercepted oxide gold mineralization from surface to a depth of over 150 metres.

Trenching within the 4-km long Tonsina corridor last year returned 94.5 metres of 3.04 grams gold per tonne as well as 27 metres of 4.22 grams gold per tonne.

The Golden Zone property is located 320 km north of Anchorage and features high-grade gold and base metal mineralization spatially related to shallow intrusions which extends over 15 km of strike. The property sits within the prolific Tintina gold belt with gold-dominated showings contained within three corridors. Avidian has identified a number of gold-copper exploration targets at the site.

The Breccia pipe deposit at Golden Zone features indicated resources of 4.2 million tonnes grading 1.99 grams gold per tonne for a total of 267,400 oz. with additional inferred resources of 1.4 million tonnes at 0.83 gram gold for a total of 35,900 ounces.

Last year’s exploration work at Golden Zone also extended the strike length of the JJ-J4 zone discovery to in excess of 750 metres while mapping and compilation work at the Copper King area increased its mineralized strike to over 1.5 km.

This year, Avidian plans to complete additional trenching at Amanita to continue extending the surface footprint of the mineralization, to be followed by drilling of these targets. At Golden zone, additional field work is planned to define future drill sites.

In addition, the company holds the Jungo project within Nevada’s Humboldt district as well as a 59% interest in High Tide Resources. High Tide Resources is a private company that has the option to earn a 100% interest in the Labrador West iron ore project, located 17 km west of Iron Ore Company of Canada’s Carol Lake mine and in the Black Raven gold asset in Newfoundland. High Tide also wholly owns the Strickland base metal property in Newfoundland and Labrador.

Avidian became a publicly listed company in December 2017. It was founded as a private entity in 2011.

Avidian Gold has a $13-million market capitalization.

NovaGold

Barrick shares bounce on final permits for giant Alaska gold mine
Donlin Gold camp, Alaska. (Image provided by NovaGold.)

NovaGold Resources (TSX, NYSE: NG) is focused on developing the Donlin gold project in Alaska. Donlin, a 50-50 partnership between Barrick Gold (TSX: ABX; NYSE: GOLD) and NovaGold, features total reserves of 504.8 million tonnes grading 2.09 grams gold per tonne for a total of 33.8 million ounces. The federally-permitted project is undergoing technical studies in advance of a construction decision.

In February, the company announced that it received final state approvals for a buried natural gas pipeline and transportation facilities at Donlin.

A 2011 feasibility study for the project suggested a 440,000 tonne per day open pit mine with a 53,500 tonne per day crusher, producing a refractory sulphur concentrate that would be treated in a pressure oxidation circuit before cyanidation. The resulting mine would produce an average of 1.1 million oz. of gold annually over a 27-year life with life of mine operating costs of $581 per ounce. The total estimated capital cost for the project was pegged at $6.7 billion, including contingency. Using a gold price of $1,200 per oz., the project’s net present value came in at $547 million, using a 5% discount rate.

Current reserves and resources at Donlin are contained within 3 km of an 8-km long mineralized trend; the company has identified additional targets within this trend.

As of the end of 2019, NovaGold had $149 million in cash with additional receivables pending. The company expects to receive $100 million over the next three years in deferred proceeds from the sale of the Galore Creek project with a further $75 million expected upon construction approval of this project, jointly owned between Newmont (TSX: NGT; NYSE: NEM) and Teck (TSX: TECK.B; NYSE: TECK).

This year, $20 million is planned for the Donlin project with 22,000 metres of drilling scheduled to test the extensions of high-grade gold zones. Additional work is ongoing to collect geotechnical data for engineering work on the proposed tailings facility and water diversion and retention structures, as required for the dam safety certification application to the state.

NovaGold has a $3-billion market capitalization.

NuLegacy Gold

A drill rig at NuLegacy Gold’s Red Hill gold project in Nevada. Credit: NuLegacy Gold.
A drill rig at NuLegacy Gold’s Red Hill gold project in Nevada. Credit: NuLegacy Gold.

A drill rig at NuLegacy Gold’s Red Hill gold project in Nevada. Credit: NuLegacy Gold.

NuLegacy Gold (TSXV: NUG; OTC: NULGF) is focused on gold exploration within Nevada’s Cortez trend. The company’s 108-sq.-km Red Hill project is located on strike with Barrick Gold’s (TSX: ABX, NYSE: GOLD) Cortez complex and Goldrush project.

Exploration work completed in 2017 and 2018 confirmed structural and stratigraphic connections between Red Hill and Barrick’s Goldrush and Fourmile projects. As a result, the company has identified multiple Carlin targets within a rift zone that is 6 km long and 4.5 km wide. Drilling in 2018 intercepted 22.1 metres of 6.59 grams gold per tonne within this area. There are additional epithermal and Carlin targets within the property.

Targets at Red Hill include the Avocado zone, a 2012 discovery that returned Carlin-style alteration, the Serena zone, host to Carlin-style mineralization, and the North zone, featuring near-surface oxide mineralization that could be linked to Serena.

Following the closing of a $7.5-million private placement in October 2019, NuLegacy re-started drilling at Red Hill later that month. The $4.7 million, 17-hole exploration program is expected to be completed in the spring and is targeting five zones.

Edward Cope, the company’s director of exploration and evaluations, previously led the team that generated substantial resource growth for Barrick’s Nevada division, and Charles Weakly, NuLegacy’s district geologist, contributed to the expansions of the Goldstrike and Goldrush discoveries.

The company’s shareholders include OceanaGold (TSX, ASX: OGC) with a 12.2% stake and Barrick with a 7.9% interest.

NuLegacy has a $20.4-million market capitalization.

Paramount Gold Nevada

Paramount Gold Nevada’s Grassy Mountain gold-silver property in Oregon. Credit: Paramount Gold Nevada.

Paramount Gold Nevada (NYSE: PZG) is focused on development of the Grassy Mountain project in Oregon. In January, the company announced that it had received the water permit required to operate the mine following the November submission of a consolidated permit application to the Oregon state agencies for the construction and operation of the Grassy Mountain mine.

Current measured and indicated resources at Grassy Mountain stand at 28 million tonnes grading 1.17 grams gold per tonne and 3.67 grams silver per tonne for a total of 1.06 million oz. of gold and 3.2 million oz. of silver. Ausenco is working on a feasibility study for the project and will receive payment in 1.1 million restricted common shares of the company, escrowed until it delivers a final feasibility, expected in mid-2020.

Paramount Gold Nevada’s Grassy Mountain gold-silver property in Oregon. Credit: Paramount Gold Nevada.

A 2018 pre-feasibility study for the project outlined an underground mine producing an average of 47,000 oz. of gold and 50,000 oz. of silver annually over a seven-year mine life at cash operating costs of US$528 per ounce. The resulting net present value estimate, at a 5% discount rate, came in at $87.8 million with a 27.6% internal rate of return. The total initial capital cost was pegged at $110 million for the 680 tonne per day mining and milling operation.

Paramount also holds the Sleeper project in northern Nevada, a past-producing open pit. A 2017 PEA for this project outlined a 30,000 tonne per day heap leach open pit operation producing an average of 92,400 oz. of gold and 91,800 oz. of silver annually for an after-tax net present value estimate, at a 5% discount rate, of US$126 million. Additional exploration, permitting and metallurgical testwork is ongoing.

On the exploration front, Paramount is planning to complete follow-up drilling of the North Spur, Dennis Folley and Wally/Wood targets, all of which are located within 3.2 km of the Grassy deposit. Additional targets include Crabgrass and Bluegrass: Crabgrass features a historic resource estimate whereas past drilling at Bluegrass intercepted shallow gold mineralization. The company acquired the Grassy Mountain project in 2016.

Paramount Gold has a $28-million market capitalization.

Premier Gold Mines

Premier pours first gold bar from El Niño mine
The El Niño mine is located at the company’s 40%-owned South Arturo property in Nevada. (Image courtesy of Premier Gold Mines).

Premier Gold Mines (TSX: PG) is a gold producer and developer with assets in Nevada, Mexico’s Sonora state and Ontario.

Last year, the company produced 67,427 oz. of gold and 192,829 oz. of silver, primarily from the Mercedes underground mine in Mexico.

In Nevada, Premier holds a 40% interest in the South Arturo project (60% held by Nevada Gold Mines, a joint venture between Barrick Gold (TSX: ABX; NYSE: GOLD) and Newmont (TSX: NGT; NYSE: NEM) in the Carlin trend. This property hosts the El Nino underground mine, which declared commercial production in the third quarter of last year, producing a total of 7,526 oz. gold last year.

The El Nino deposit is down-plunge of a past-producing open pit with ongoing pre-stripping for a second mine; an open pit is expected to start up in the second half of the year. Work is also underway on a potential heap leach facility with an additional open pit planned for the site. South Arturo reserves attributable to Premier stand at 2.8 million tonnes grading 3.01 grams gold per tonne for a total of 275,000 ounces. Underground exploration is ongoing to support long-term production.

Premier also holds the past-producing McCoy-Cove project in Nevada’s Battle Mountain trend. A carve-out in place with Barrick has the major earning a 60% interest in a portion of this property with Premier retaining a 100% interest in the high-grade Cove deposit. Premier’s share of measured and indicated gold resources stands at 950,000 tonnes grading 11.22 grams gold for 342,000 oz. with additional attributable inferred resources of 3.7 million tonnes grading 11.24 grams gold for a total of 1.3 million ounces. Additional exploration is underway in advance of a feasibility study and development decision.

In Mexico, Premier holds the Mercedes mine, 150 km northeast of Hermosillo, with underground operations targeting extraction of 2,000 tonnes per day. Last year, this mine generated 59,901 oz. of gold and 191,306 oz. of silver. Recent exploration successes include discoveries at the Lupita Extension and San Martin zones, with potential for resource growth along this structural trend. This year, the asset is expected to contribute 65,000 oz. to 75,000 oz. of gold at all-in sustaining costs of $1,125 to $1,275 per ounce.

Premier’s Ontario holdings include a 50% stake in the Greenstone property (50% Centerra Gold (TSX: CG)), 275 km northeast of Thunder Bay. Permitting is underway for this asset with measured and indicated open-pit mineral resources, updated last year, of 137.7 million tonnes at 1.33 grams gold for 5.9 million ounces. A 2016 feasibility study outlined a 27,000 tonne per day open-pit operation producing an average of 288,000 oz. gold annually with initial capex of $1.25 billion. At a gold price of $1,250 per oz., the resulting internal rate of return, on an after-tax basis, came in at 14.4%. In December 2019, the company announced that it had received a statement of claim from its joint venture partner claiming that a project update submitted last year should not be considered a feasibility study, as defined in a partnership agreement from March 2015. Additional engineering and financial modeling work is underway for Greenstone.

Premier Gold Mines has a $337-million market capitalization.

Revival Gold

Revival Gold announces 'substantial' resource increase at Beartrack-Arnett
Beartrack is a former producing gold mine located approximately 17 km northwest of Salmon, Idaho. Credit: Revival Gold

Revival Gold (TSXV: RVG) is developing the 54-sq.-km Beartrack-Arnett project in Idaho. In February, the company released an updated resource for the two deposits with 36.4 million tonnes of indicated resources grading 1.16 grams gold for a total of 1.4 million oz. with additional inferred resources of 47.2 million tonnes at 1.08 grams gold for a total of 1.6 million oz. This resource includes a total heap-leach component of 580,000 oz.; a further 1.9 million oz. across all categories are contained within open-pittable sulphides that would require milling. The resource also features an underground sulphide component at Beartrack.

Work on a preliminary economic assessment for Beartrack is underway to evaluate a re-start of heap leach operations at the site. Revival is targeting a 10,000 tonne per day to 15,000 tonne per day production rate for the preliminary economic assessment and currently envisions a future mill operation with a 20,000 tonne per day run rate.

Beartrack produced over 600,000 oz. of gold from heap leach operations in the 1990s and historic infrastructure remains at the site.

Revival plans to continue exploration efforts at the project to grow its resource inventory; mineralization at both deposits remains open for expansion. Beartrack features five known areas of mineralization within a five-kilometre stretch along the Panther Creek fault with further potential for over 5 km by the Coiner fault. At Arnett, there is a 2 km diameter, shallow magnetic high that underlies the Haidee area, which contains the current pit shell.

Last year, the company completed metallurgical test work on sulphide composites from Beartrack that suggest overall gold recoveries of 94% to 95% through flotation and pressure oxidation. Heap leach gold recoveries for Arnett are estimated at 75% based on bottle roll tests and analysis of historical data.

Revival wholly owns the Arnett project site and, in September 2017, entered into an option agreement with Yamana Gold (TSX: YRI, NYSE: AUY) to earn a 100% interest in Beartrack. Under the terms of the agreement, the company needs to spend $8 million on exploration over four years, $5.8 million of which was spent by the end of last year.

Revival Gold has a $40-million market capitalization.

Titan Mining

Empire State mine. Image by Titan mining.

Titan Mining (TSX: TI) is involved with zinc exploration and development in New York state. The company’s flagship Empire State mine (ESM) complex consists of the ESM #4 mine, which is in production, and six historic mines. Operations at ESM #4 were restarted in January 2018 with the first zinc concentrate produced in March of that year. The 324-sq.-km property includes a 4,536 tonne-per-day mill.

While Titan re-started the Empire State mine in November 2017, the company announced in February 2019 that it would be lowering throughputs at the operation to focus on underground development and exploration in the near-term. The company is working on a revised mine plan, which will incorporate the #2D zone in #2 mine, connected to the #4 shaft, as well as the New Fold zone in #4 mine.

In January, the company announced drill results from two new zones of near-surface mineralization: the Turnpike and Hoist House zones, within 1.6 km of the ESM mill. Turnpike returned 24.4 metres of 5.8% zinc, 2.8% lead and 28.2 grams silver per tonne, while Hoist House returned 6 metres of 7.3% zinc, 0.9% lead and 11.7 grams silver. According to the company, these zones are potential sources of near-term open-pit feed for the mill, which currently has excess capacity.

Both Hoist House and Turnpike are interpreted as extensions of deeper orebodies mined historically. There are additional exploration targets identified throughout the district-scale property from a re-analysis of historical data.

Current measured and indicated resources at the #4 mine stand at 2 million tonnes grading 13.27% zinc with additional inferred resources of 4.9 million tonnes at 12.5% zinc.

Titan has entered into a long-term zinc concentrate offtake agreement with Glencore (LSE: GLEN). The company acquired the Empire State complex in December 2016, completed its initial public offering in October 2017 and is part of the Augusta group of companies.

Titan Mining has a $32-million market capitalization.

(This article first appeared in The Northern Miner)

Take our Job Seeker Survey and enter to win an Apple Watch

Career prospects in the mining industry are looking bright, and competition for skilled workers is fierce. According to Mining Industry Human Resources Council (MiHR) research, the industry will need to hire about 79,000 workers by 2029 in Canada alone.

This imminent hiring spree due both to a wave of industry retirements and employment growth. Occupational categories most affected will be supervisors, coordinators, and foremen; support workers and trades occupations.

Production occupations are expected to have a big skills gap, with an estimated one-quarter of the total hiring requirement in the industry.

The use of innovative technology in mining means we can now access deeper, narrower, and more complex deposits. This in turn has increased the demand for mining workers with specialized science, technology, engineering and math (STEM) skills.

Being able to find a role that suits your skill set is important. That’s why we have created a quick 3-minute survey to learn more about your job search experience. As a thank you for your time, you’ll be entered into a draw to win a new Apple Watch Series 5.

Modest global growth for iron ore production – report

Global iron ore production will grow modestly over the years due to mine expansions in Brazil and increasing output from India, Fitch Solutions’ latest industry trend analysis found.  Meanwhile, analysts say output growth in China will decline on the back of falling ore grades and high costs of production. 

Global iron ore production will grow from 2,896mnt in 2019 to 3,147mnt by 2029, Fitch forecasts. This represents an average annual growth rate of 0.8% during 2020-2029, which is a significant slowdown from an average growth rate of 3.0% during 2010-2019.  

Fitch forecasts iron ore production in Australia to grow minimally over 2020-2029, averaging an annual 0.7% growth, compared with 8.7% growth over the previous 10-year period

Fitch forecasts iron ore production in Australia to grow minimally over 2020-2029, averaging an annual 0.7% growth, compared with 8.7% growth over the previous 10-year period. This is due to mothballing of mines from junior miners, while major players will stick to their production growth targets to crowd out high cost producers. 

Supply growth will be primarily driven by India and Brazil, where Vale is planning to expand output to 390-400mnt by 2022. Fitch says Vale’s supply will continue to dominate global output, but miners in China, which operate at the higher end of the iron ore cost curve, will be forced to cut output due to falling ore grades.  

Majors continue to decrease costs and increase production in the longer term. In June 2018 BHP approved the A$2.9 billion development of its South Flank iron ore project in Western Australia to replace existing mines. The world’s number one miner expects production to start in 2021 at the project.  

In the same month, Rio Tinto announced plans to start developing its Koodaideri iron ore mine in Western Australia’s Pilbara region in 2019, claiming it is one of the most technologically advanced in the world. The company will mine its first tonnes from the project in 2021. In May 2018, Fortescue Metals Group approved the development of a A$1.3 billion iron ore project, Eliwana, which will come online this year. 

Remaining cost-competitive will be a focus for iron ore miners in a long-term weak price environment, with top firms investing in technology to maintain an edge, Fitch maintains. 

Read the full report here.

Coronavirus could reduce China’s battery storage production by 10% in 2020

China’s battery storage production capacity could reduce by as much as 10% to 237 gigawatt-hour (GWh) in 2020 compared to the pre-coronavirus 2020 forecast, research firm Wood Mackenzie said in a note on Wednesday.  

Based on operational and announced capacity, this represents more than 26 GWh of production for 2020. More capacity could be affected if delays persist, WoodMac said.  

With the escalation of the coronavirus outbreak, the Chinese government took several measures to minimise human-to-human transmission, which have affected battery cell production. 

Affected provinces were expected to contribute 162 GWh of battery cell production in 2020 prior to the coronavirus outbreak, equivalent to 61% of China cell manufacturing capacity

 “The restriction of labour movement will hurt auto manufacturing in Hubei province, and heavy manufacturing industries in provinces such as Shandong, Jiangsu, Zhejiang, Fujian, Anhui and Guangdong,”  WoodMac’s senior research analyst Le Xu said. 

“These provinces were expected to contribute 162 GWh of battery cell production in 2020 prior to the coronavirus outbreak, equivalent to 61% of China cell manufacturing capacity, Xu added.  “In addition, battery cell factories were also suspended for the past two weeks, including Tesla’s Gigafactory in Shanghai, as a result of the extension of the Chinese New Year holidays as announced by the government.” 

 Tight battery cell supply could slow down the cost decline of EV manufacturing and energy storage systems. 

Australia and China were expected to grow an additional 1 GW capacity for storage deployments in 2020 pre-coronavirus outbreak. Utility-scale front-of-the-meter storage deployments drive both markets’ growth for renewables-plus-storage installations to reduce curtailment and ancillary services participation. Tight battery cell supply could cause delay risks to storage deployments, Woodmac said.  

“China’s BYD is a key supplier to UK storage markets, so its production loss in Q1 2020 could impact UK developers,” Xu added. “Also, Chinese lithium-iron phosphate batteries have received renewed attention in the U.S. market following supply chain tightening in South Korea in 2018. Developers who may have turned to the less-expensive technology may find their supply, unfortunately, affected again.” 

Trilogy Metals, South32 JV creates Ambler Metals

Trilogy Metals NYSE: TMQ) and South32 Limited (ASX, LSE, JSE: S32) completed on Wednesday the formation of a 50/50 joint venture to create a new company: Ambler Metals.  

The new partnership structure comes as the Australian major exercised an option acquired in 2017 to buy a 50% interest in Upper Kobuk Mineral Projects (UKMP), located in Alaska’s Ambler mining district. 

The UKMP projects have a combined resource of 8 billion pounds of copper, 3 billion pounds of zinc and 1 million ounces of gold equivalent

As part of the deal, Trilogy contributed all of its assets associated with the 172,675-hectare UKMP, including the Arctic and Bornite projects, while South32 contributed $145 million, resulting in each party owning a 50% interest in Ambler. The funds will be used to advance the Arctic and Bornite projects, along with exploration in the Ambler mining district. 

“Forming the UKMP Joint Venture will be another important milestone as we reshape and improve our portfolio, by adding high-quality copper and base metals development options,” South32’s CEO, Graham Kerr, said in December. 

The UKMP projects have a combined resource of 8 billion pounds of copper, 3 billion pounds of zinc and 1 million ounces of gold equivalent. 

On the Move newsletter launches

MINING.COM, in partnership with The Northern Miner and Canadian Mining Journal today launched the new On the Move newsletter.  

A complimentary service, this new monthly publication will track management and board appointments across Canada’s mining and mineral exploration industry. Each month, we’ll also highlight the achievements of companies and individuals in the sector in our “Awards and Accolades” section. 

Keep us up to date on your company’s latest appointments and achievements by emailing editor@canadianminingjournal.com

Register for the free newsletter here. 

2020 to be pivotal for coal miners — report

After a Jekyll and Hyde year in 2019, and a decade characterised by China’s disruption of the met coal trade, participants can be forgiven for being sick of change. But research firm Wood Mackenzie believes a shift toward consistency and stability is probably too much to ask for in 2020 as China continues to play powerbroker over the seaborne market and spot pricing. 

Woodmac says 2020 is likely to be a pivotal year for those miners who struggled through the second half of 2019.

Under the global microscope, coal suppliers looking to grow will continue to face creeping resistance, grappling with an unfriendly permitting environment, and a climate-induced shift in capital. But opportunities for growth will still exist this year, and we expect the emergence of some potentially game-changing technological developments to keep the market particularly interesting. 

 China crude steel production, hot metal, coke and coking coal demand 

If 2019 taught us anything about the inner workings of Chinese markets and policy, it is that controlling imports to a finite number is almost impossible. The 2019 import quota policy failed to suppress trade volumes. Coal imports breached 2018 levels by 11% as demand, lower prices, and trader risk appetite pushed imports higher, says the firm.  

For 2020, Woodmac assumes a repeat from 2019 with soft targets being just that – targets. With record steel production and peak hot metal demand forecast in 2020, Chinese coal imports will reach similar levels as 2019 – pushing coal up against any import restrictions.

Coal suppliers looking to grow will continue to face creeping resistance, grappling with an unfriendly permitting environment, and a climate-induced shift in capital

Imported coals from Australia, unofficially, faced increased customs scrutiny with clearances regularly pushing over 40 days. Woodmac anticipates the same treatment in 2020. The expectation is Chinese officials will continue this practice in an effort to balance domestic and import supply over the year. Despite these efforts, the large Chinese coastal mills require access to premium Australian HCC and will continue to trade heavily in 2020. Seaborne metallurgical coal traders can’t discount that China will remain a major source of price volatility with the various market instruments at its disposal. 

As the year progresses and quotas shrink, be on the lookout for ports actively beginning to restrict imports. Woodmac says the last quarter should see China tightening imports despite record steel production, but impromptu limits will probably occur throughout the year. The demand will be there although nothing spooks coal traders more than not being able to complete a transaction in a timely fashion. The situation in Q4 2020 will likely repeat 2019 as buyers will drive pricing necessary to incentivise trades on potentially riskier transactions. Expect import restrictions to suppress international spot pricing especially as the year comes to an end. 

Supply growth to become more challenging 

Like all miners, metallurgical coal producers face mounting pressure as the global lens continues to focus sharper on the industry. The spectre of new external threats highlighted by recent Australian bushfires, and growing water stress, will add to the challenges for those trying to bring new supply to market, Woodmac asserts. The risk of direct impacts from drought and fire on operating mines has also increased, although we expect mitigation measures to successfully minimize potential disruption. Water levels in southern Bowen basin dams are an area to watch, starting the year at very low levels, and placing greater pressure on groundwater sources. 

Vale hit the pause button at its Moatize HCC mine operations in late 2019, and they face a tough decision at an important operation. The company will use the first two quarters of 2020 to revamp the mine and coal processing circuit in a bid to increase flailing production and diminished coal quality. Pay attention to Vale as they look to bring the mine fully back on-line in the second half of 2020. The loss of Moatize tonnes will have considerable consequences for the premium hard coking coal market. 

Australian mine safety will be in the spotlight in 2020 as 2019 saw a rash of mine fatalities rock the industry – nine workers across the mining industry with five related to coal mines. Not even a month into the new year, a Queensland miner lost his life at the Curragh coal mine. Calls for increased regulations have not gone unheard. The Queensland government is set to introduce legislation in 2020 to make mining industrial manslaughter an offence. The government is near passing legislation to establish an independent resources health and safety authority. 

Projects face heightened Environmental, Social and Governance (ESG) expectations from all facets of society including investors. Environmental review delays are the new norm for mine applications as regulators ratchet up their scrutiny. Don’t be surprised if some large projects don’t meet their preferred milestones this year. And expect approval conditions to continue to tighten, as we saw last year in Australia, where development consent was given for the United Wambo mine on the condition that coal was sold only to countries that were signatories to the Paris climate agreement. Metallurgical coal projects looking for major approvals this year include Riversdale Resources’ Grassy Mountain, Olive Downs and Futura’s Wilton and Fairhill. 

World’s first widescale autonomous haulage fleet 

In a first for the coal industry and a sign of the future, BHP Mitsubishi Alliance (BMA) will introduce an autonomous haulage fleet at its Goonyella Riverside operation. The Queensland operation will see a total of 86 trucks commissioned over the next two years with the first set due in the first half of 2020. According to BMA, beyond safety, the autonomous fleet is expected to deliver more consistent cycle times while increasing haulage hours. 

All eyes in the mining world will be on the operation to leverage learnings and improvements as other companies consider the leap into the driver-less world. Woodmac expects the new fleet could offer up to 15-20% haulage savings over a traditional haulage fleet. 

  While new to coal, Komatsu has close to 150 trucks operating autonomously in 9 mine sites. Woodmac expects that Komatsu has “skin in the game” and will be keen to see their product succeed at BMA’s operation with the goal for future installs. Stay tuned to BMA as they roll out their new driver-less fleet in 2020. 

Over 79,000 jobs in Canadian mining industry need to be filled over next decade — report

Competition for skilled workers within the Canadian mining industry is already fierce, and with companies in other countries also actively recruiting Canadian graduates and workers, it creates a significant skills gap in the sector, according to The Mining Association of Canada’s latest report.  

Canada’s mining industry is worth C$47 billion, with C$29.6 billion concentrated in Ontario, Quebec and British Columbia, The State of Canada’s Mining Industry, Facts and Figures 2019 found.

The workforce shortage is compounded by the wave of the industry’s skilled core of workers who are retiring

The country has shown upward signs of recovery in exploration investment in recent years in the Yukon and the Northwest Territories, with a leveling out in Nunavut after some buoyant years: $91 million in the Northwest Territories, $99 million in Nunavut and $99 million in the Yukon.  

Together, the industry’s direct and indirect employment exceeds 626,000 jobs, accounting for one in every 30 jobs in Canada. The industry will need to hire 79,680 new workers over the next decade, and this workforce shortage is compounded by the wave of the industry’s skilled core of workers who are retiring. 

By 2030, the Mining Industry Human Resources Council (MiHR) forecasts that more than 57,000 employees will retire from the sector, which represents over 25% of the industry’s current workforce by MiHR definitions. 

The federal government has taken some steps to help address these problems, including through the expansion of the Youth Employment Strategy, the proposed Post-Secondary Industry Partnership and Co-operative Placement Initiative, and continued funding for the Indigenous Skills and Employment Training Strategy (ISETS). 

MiHR has also benefited from programmatic support, specifically in developing critical research to inform industry actions to address its human resources challenges and meet its employment needs. 

Read the full report here.  

US production of critical rare-earth minerals up 44% in 2019 — report

Molycorp stock collapses as it misses $32.5M interest payment
Mountain Pass rare earth mine in California. (Image courtesy of Molycorp).

The US Geological Survey (USGS) announced Thursday that US mines produced approximately $86.3 billion in minerals in 2019 –- more than $2 billion higher than revised 2018 production totals. 

US metal mine production in 2019 was estimated to be $28.1 billion, or almost $500 million higher than in 2018. The principal contributors to the total value of metal mine production in 2018 were gold (32%), copper (28%), iron ore (19%) and zinc (7%). 

The 43rd annual Mineral Commodity Summaries report from the USGS National Minerals Information Center is the earliest comprehensive source of 2019 world mineral production data for the world.  

US metal mine production in 2019 was estimated to be $28.1 billion, or almost $500 million higher than in 2018

“The data we are releasing today is vital to understanding which minerals are vulnerable to disruptions in America’s supply chains and provides the analytical foundation for President Trump’s broader strategy to make our economy and defense more secure,” said Jim Reilly, USGS Director in a media statement. 

The steel, aerospace and electronics industries processed nonfuel mineral materials creating an estimated $3.13 trillion in value-added products in 2019, which represents a 2.5% increase over 2018.   

The US continues to rely on foreign sources for some raw and processed mineral materials. In 2019, imports made up more than one-half of US apparent consumption for 46 nonfuel mineral commodities, and the US was 100% net import reliant for 17 of those. 

The domestic production of critical rare-earth mineral concentrates increased by 8,000 metric tons (over 44%) in 2019 to 26,000 metric tons, making the US the largest producer of rare-earth mineral concentrates outside of China. 

For 2019, critical minerals as defined by President Trump’s Executive Order 13817, comprised 14 of the 17 mineral commodities with 100% net import reliance and 17 additional critical mineral commodities had a net import reliance greater than 50% of apparent consumption. The largest number of nonfuel mineral commodities were supplied to the US from China, followed by Canada. 

The Trump administration released “A Federal Strategy to Ensure a Reliable Supply of Critical Minerals,” last year. The strategy directed the US Department of the Interior to locate domestic supplies of critical minerals, ensure access to information necessary for the study and production of minerals and expedite permitting for minerals projects.  

USGS said it will conduct at least one multi-commodity critical mineral resource assessment every two years, supplying the results to Federal land managers and the public. 

The $86.3 billion worth of nonfuel minerals produced by U.S. mines in 2019 comprised industrial minerals, which includes natural aggregates as well as ferrous and nonferrous metals. 

The estimated value of U.S. industrial minerals production in 2019 was $58.2 billion, about 3% more than that of 2018.

US production of 13 mineral commodities were valued at more than $1 billion each in 2019. These were, in decreasing order of value: crushed stone, cement, construction sand and gravel, gold, copper, industrial sand and gravel, iron ore, lime, salt, zinc, soda ash, phosphate rock and molybdenum concentrates. 

In 2019, 13 states each produced more than $2 billion worth of nonfuel mineral commodities. The states were, ranked in descending order of production value: Nevada, Arizona, Texas, Minnesota, California, Florida, Utah, Alaska, Missouri, Michigan, Wyoming, Georgia and Pennsylvania. 

The report found that vanadium was produced in Utah for the first time since 2013, and of the $36.1 billion of domestically recycled products, iron and steel scrap contributed $17.6 billion.  

Read the full report here.  

Canada’s C$97 billion mining sector at a tipping point – report

The Mining Association of Canada (MAC) released its annual Facts & Figures report on Tuesday, saying it is time is for the industry to fulfill its potential as a dominant mining nation. 

The resource-rich country ranks among the top five countries in the global production of 15 minerals and metals. The industry was valued at $105 billion in 2018, and mineral exports accounted for 19% of Canada’s total domestic exports, the report found.  

Facts & Figures reports that in 2018, Canada’s mining industry contributed C$97 billion, (US$73 billion) or 5%, to Canada’s total nominal GDP.  

Capital investment increased modestly – by 5% – to C$12.9 billion year-over-year, following five consecutive previous years of decline

The industry’s direct and indirect employment exceeds 620,000 jobs, accounting for one in every 30 job in Canada. Proportionally, the mining industry is the largest private sector employer of Indigenous peoples and provided over 16,600 jobs to community members in 2018, MAC found.  

MAC said that with this data comes the need to focus on where the industry still has room to improve and that while Canadian mining’s year-over-year competitiveness metrics have improved, they remain depressed in some areas: 

Capital investment increased modestly – by 5% – to C$12.9 billion year-over-year, following five consecutive previous years of decline. 

Canada’s global share of non-ferrous exploration investment was 15% in 2018 – up 1.3% from 13.7% – but well below the peak of 20.8% in 2008, MAC reported.  

While showing growth of 5% (or C$8 billion) year-over-year, NRCan’s 10-year projected value of mining projects planned and under construction remains 50% below 2014 levels, from $160 billion to $80 billion. 

But only five new mining projects were submitted for federal Environmental Assessment review in 2019 – well below average levels seen from 2012-2014. 

 “We feel energized by a number of recent commitments pertaining to mining, including in Prime Minister Trudeau’s most recent Mandate Letters to his Cabinet, the Canadian Minerals and Metals Plan and the new Canada–US Joint Action Plan on Critical Minerals Collaboration, all of which bode well for our industry,” said Pierre Gratton, MAC’s president and CEO.