Advancing employee engagement in mining — report

Employee engagement and soft skills have never been more important for the mining industry, the Global Mining Guidelines Group (GMG) outlines in a recent report focused on advancing employee engagement in mining.

GMG authored the paper to share industry insights with the global community, such as the Workforce of the Future Working Group, launching soon.

A number of converging factors are changing the industry such as advanced digital technologies, emerging generations with different priorities around work, and increased social and environmental awareness, GMG asserts.  

All of these changes affect the workforce, sometimes introducing new challenges, while also offering new opportunities around employee engagement.

Advancing Employee Engagement in Mining describes employee engagement and disengagement from the perspective of the individual, organization and community and offers ideas for how to foster engagement and address disengagement.

Source: Global Mining Guidelines Group

“The public, regulators and governments are becoming increasingly aware of social and environmental issues. It is more important than ever to have trust between society and industry, industry and community, and employees and employers, GMG says.

“Making sure mines are safe and healthy places to work, making sure workplaces are diverse and inclusive, and developing strong relationships with local communities are becoming key factors in maintaining the social license to operate. Employee engagement is a key factor in all of this.”

Read the full report here.

The global race to mine outer space

Both interest in, and financial commitments to space activities, in particular around the Moon by governments, space agencies, and the private sector have surged in recent years.

The asteroid mining market is already valued at up to trillions of dollars, but a single drill from earth has yet to make it to space.

While space mining is a concept still out of this world to some, it is real for the mining industry. After long being considered mostly science-fiction, governments are now implementing programs and legislation that allow them to join the race for mining in space.

Dr. Carlos Espejel is a mining industry veteran and current Space Resources Utilization Engineer at ispace, a private commercial lunar exploration company with offices in Luxembourg, the first European country to offer a legal framework ensuring private capitals their rights over resources they mine in space, and Tokyo. ispace builds the transportation technology needed to make it to the moon.

ispace was the managing company of team Hakuto, one of five finalists in the Google lunar Xprize competition, which called for privately funded teams to be the first to land a robotic spacecraft on the moon, travel 500 meters, and transmit hi-definition video and images back to earth.

Hakuto, Lunar rover. Image from ispace.

“We can actually land instruments and payloads on the lunar surface. We have the capabilities to travel and land on the Moon, Espejel told MINING.COM.

“We can transport and land instruments on the lunar surface. Our exploration technologies – rovers and landers – will carry instruments for the exploration of resources, like Lunar H2O and oxygen.”

Espejel said the moon is the first area the company has focused on in space. The second area is resource and reserves evaluation, as well as the acquisition of exploration data.

“From previous missions led by space agencies as NASA, JAXA, ESA, and ISRO, we have data and knowledge of certain elemental distributions on the lunar surface, and we know there are a lot of potential resources,” he said.

Mining the moon’s resources

ispace has two moon missions planned – the first for 2021, M1, putting a rove mixed latitudes, and in 2023 – a mission planned to the south pole.

For these missions – ispace has already booked and paid for the flights with Elon Musk- founded Space X.

“We know there is plenty of Aluminum, Calcium, Silicon, Iron, Magnesium, Thorium, Uranium, and abundance of Potassium, Rare Earth Elements and Phosphorous. One of the latest and most exciting human discoveries we have so far, however, is the H2O (water) or Hydroxides at the lunar poles – a lot of it, in the form of permafrost and/or ice,” Espejel said.

“We now know the locations of these water deposits on the poles of the moon. It has been estimated that there is anything from 3 to 10s of billion metrics tonnes of H2O.

“Right now, because of this knowledge, there is an outer space race between US, Russia, China and India – they are all going for these H2O deposits and strategic areas on the moon for permanent outposts.

“Right now, because of this knowledge, there is an outer space race between US, Russia, China and India – they are all going for these H2O deposits”

Dr. Carlos Espejel, Space Resources Utilization Engineer, ispace

Because it is like fuel… when splitting H2O into H and O hydrogen and oxygen can be used for energy purposes, as rocket fuel and fuel cells. This year, there are three missions to the moon. China will be landing on the moon this year in a purely robotic remote control mission to bring samples back to earth.

There is a current ambition from space agencies to build permanent bases on the lunar surface in the near future, mainly close to the south pole

“India will also be going to the south pole of the moon this year, for the second time in history,” Espejel said. “The mission is to confirm existence of water on the south pole among many other scientific goals, NASA, later next year will be taking its Orion spacecraft to lunar orbit for six days, as part of its Artemis program which envisions to take humans back to the Moon in 2024.”

There is a current ambition from space agencies to build permanent bases on the lunar surface in the near future, mainly close to the south pole.

Human missions getting closer

Espejel said the possibility of human missions getting closer, and NASA’s Artemis program is envisioning to send humans back to the Moon as early as 2024. Two robotic missions are happening this year. ispace works with space agencies as the Luxembourg Space Agency, the European Space Agency (ESA), the a Japanese Space Agency (JAXA), and currently competing for NASA payloads in the CLPS program as part of Team Draper.

The Mining industry has standard codes for the reporting and estimation of Mineral Resources and Reserves such as JORC, NI-43-101 and CRISCO.

“We are currently working with partners to establish the first standard code for space resources, (LORS), said Espejel, who co-authored the paper.

“The Hague is putting together building blocks for the use of space resources, based on United Nations (UN) definition of ownership [and] licenses. It will work like international waters. No ownership, but in safe zones with no interference.”

Espejel said building blocks will be used to amend the Moon Treaty, which is on the table at the UN.

“As soon as the UN sees the race to the moon’s south pole – it is going to speed up on the situation,” Espejel said.

NexGen Energy tees up $30m financing with Queen’s Road Capital

NexGen Energy (TSX: NXE; NYSE: NXE) has signed a $30 million financing agreement with Queen’s Road Capital Investment (TSXV: QRC) and plans to use the funds to advance work at its flagship Arrow deposit, part of the company’s Rook 1 project in Saskatchewan.

“Warren Gilman, chairman and chief executive officer of Queen’s Road Capital, is a long-time shareholder and supporter of NexGen and also joined our board in 2017,” Leigh Curyer, NexGen’s CEO, said in an interview.

“Warren came to us and wanted to invest in uranium, but only wanted to invest in world-class projects and world-class management teams. We met both those criteria.”

A leading financier to the global resource sector, Queen’s Road Capital Investment makes investments in privately held and publicly traded resource companies and acquires and holds securities for both long-term capital appreciation and short-term gains, says the company.

The financing consists of a $15 million private placement (11.6 million common shares at C$1.80 per share) and $15 million in unsecured convertible debentures

The financing consists of a $15 million private placement (11.6 million common shares at C$1.80 per share) and $15 million in unsecured convertible debentures. The debentures carry a 7.5% coupon over a five-year term and can be converted into about 8.9 million common shares at C$2.34 per share.

“This agreement is identical to our previous financing agreement for $110 million with CEF Holdings back in 2017,” Curyer said. “When you consider the pricing of both agreements at a 5% premium to the 20-day VWAP, I think it speaks very highly to overall financing for NexGen and also Queen’s Road Capital.”

News of the financing on May 11 sent the company’s shares up 3.6% to $2.04, which Curyer said is “a solid indication of the market’s appreciation of this financing agreement.”

The world-class core processing facility at Rook 1. Image from NexGen Energy.

NexGen Energy is now extremely well-funded with about $75 million in the treasury on the closure of the agreement, he added, “so, we are very well placed to complete the feasibility study for our Arrow deposit by the end of this year, subject to the business returning to normal after the coronavirus outbreak.”

The mining executive also pointed to the investor rights agreement in the transaction, which he said will provide for voting alignment, standstill and transfer restriction covenants for as long as Queen’s Road Capital holds at least 5% of NexGen’s shares on a partially diluted basis, or until there is a change of control.

“The rights agreement means that the investor and debenture holders will support management and the board in resolutions forwarded to the shareholders,” said Curyer, “which is very important for any hostile M&A attention we might receive.”

NexGen’s 100%-owned Arrow deposit has indicated mineral resource of 2.89 million tonnes grading 4.03% U3O8 for 256.6 million lbs. contained U3O8, including a high-grade core of 0.46 million tonnes grading 17.85% U3O8 for 181 million lbs. of U3O8. Inferred resources add 4.84 million tonnes grading 0.86% U3O8 for 91.7 million lbs of U3O8.

Colin Healey, a mining analyst at Haywood Securities said in a research note that NexGen is his top pick in the uranium sector “due to the disruptive potential of the Arrow deposit.”

“We continue to be very bullish on NexGen as we believe it controls one of the best undeveloped resources globally, in any commodity,” he stated in his note to clients.

Brian MacArthur of Raymond James increased his target price on NexGen following news of the financing from C$4.00 per share to C$4.25.

Tuesday afternoon, NexGen Energy was trading at $2.10 per share within a 52-week trading range of 76¢ and $2.31 on the TSX.

The company has around 355 million common shares outstanding for a C$756.53-million market capitalization.

(This article first appeared in The Northern Miner)

Round Top to establish US rare earths supply chain

A lesson to be learned from the US-China trade war and coronavirus-induced lockdown wreaking havoc on markets and hitting mining production outlooks hard – is that North America needs to establish more robust domestic supply chains.

The US responded to the covid-19 crisis by shutting its borders and contracting production, as operations at mines worldwide ground to a halt.

Shutdowns to manufacturing plants in Beijing that could potentially cut off US rare earths exports woke the nation up to the fact that it is reliant on China for all rare earths needs.

The US government has stepped up efforts to ensure the supply of critical minerals from outside China. As part of those initiatives, it recently signed a memorandum of understanding with Greenland to conduct a hyper-spectral survey to map the country’s geology.

The $14 billion-a-year rare earth magnet market is more than 60% controlled by China which, under Made in China 2025, is increasingly using rare earth magnets in finished and semi-finished products, as opposed to exporting the magnets

Demand for rare earth magnets is being driven mainly by electric vehicles, wind generators, medical devices, smart phones, and aerospace and defense applications.

The $14 billion-a-year rare earth magnet market is more than 60% controlled by China which, under Made in China 2025, is increasingly using rare earth magnets in finished and semi-finished products, as opposed to exporting the magnets, says USA Rare Earth, the funding and development partner of the Round Top heavy rare earth and critical minerals project in West Texas, and industry sources estimate the rare earth magnet market will nearly double by 2027.

USA Rare Earth is also purchasing the equipment necessary to build the only rare earth magnet production facility in the Americas.

The only active rare earths mine in the US is Mountain Pass in California. After a mothball period, it is back in production – but is now owned by MP Materials, which almost a tenth-owned by a Chinese investor.

When the US Geological survey does its annual report on mills and production – the US is technically producing zero rare earths oxides because what is coming out of Mountain Pass is being shipped to China, Dan McGroarty, head of government affairs for USA Rare Earth told MINING.COM.

McGroarty said while around 2015, the Obama administration designated two rare earths, tirbium and desposium an are on the rare earths list for acquisition into the defense stockpile.

“That was at a point where there was no tirbium and desposium production in the US. Those are the two largest, by volume, rare earths that we have at Round Top. In that respect, there’s a very strong alignment,” McGroarty said.  

Round Top is a heavy rare earth – dominant deposit, which is unique outside of China.  It also includes uranium, beryllium, gallium, hafnium and zirconium – all of which are on the US Government’s Critical Minerals List.

“The decision that the president made last summer, under the Defence Production Act (DPA) …to designate a whole supply chain for rare earths as an urgency material under the DPA, that’s what allows the funding in the rare earths space – and there is more coming,” he said. 

“We’ve got a very unique deposit in a number of respects – we have 16 of the 17 rare earths, with many in the rare earths categories that speak to a number of defense applications, and manufacturing. It is probably the largest heavy rare earths deposit in the world outside of China,” Pini Althaus, CEO of USA Rare Earth said.

Pini Althaus, CEO, USA Rare Earth.

“We also have a significant amount of lithium sulphides, so we have a very diversified project… with infrastructure in place.”

USA Rare Earth envisions a 130 year plus mine life on the project, but the PEA is focused on the first 20 years.

Althaus said they are able to heap leach the deposit, which is rare for most rare earths deposits.

“Between our capex and opex being low – we are able to compete with China on pricing,” Althaus said.

USA Rare Earth announced in December 2019 they are opening a pilot plant facility in Wheat Ridge, Colorado for the purpose of fully separating and purifying rare earth and other tech metals and critical minerals, leached from ore from the Round Top project.

The Colorado pilot plant will be the first processing facility outside of China with the ability to separate the full range of rare earths – lights, mids and heavies. 

Althaus said the plant will be moved to Texas, where they will begin mine construction.

The Wheat Ridge plant is the second piece of a 100% US-based rare earths oxide supply chain, drawing on feedstock from Round Top.

Construction on the Colorado facility is complete, and is slated to open in the next week, Althaus said.

Early in April, the company announced that that it has purchased the neodymium iron boron (NdFeB) permanent magnet manufacturing equipment formerly owned and operated in North Carolina by Hitachi Metals America.

Round Top has been part of a Department of Defense grant, as the DOD picks the rare earths it wants processed and purified

USA Rare Earth will warehouse the equipment pending a decision about where to locate the new magnet operation, with the priority being good access to the Round Top project.

The US Military is among possible investors – and Round Top is part of the solicitations.

There have been two solicitations that have come out of the Department of Defense (DOD). The first closed late 2019 around processing and is waiting on a response. On March 2, there was another solicitation around light rare earths.

Round Top has been part of a DOD grant, as the DOD picks the rare earths it wants processed and purified.

USA Rare Earth announced in March the appointment of retired Army General Paul J. Kern to its board of directors.

General Kern is a member of the Defense Science Board, established by federal law in 1956 to provide independent advice and recommendations on scientific, technical, manufacturing, acquisitions process and policies, and other matters of interest to the Department of Defense. 

USA Rare Earth aims to have Round Top in production within 30 months, but McGroarty said if they can expedite the timeline – they will.

“The decision that the president made last summer, under the Defence Production Act (DPA) …to designate a whole supply chain for rare earths as an urgency material under the DPA, that’s what allows the funding in the rare earths space – and there is more coming.”

“There will be a significant impact on the economy,” he added. We’re talking about a $500 billion to $1 trillion impact, in [terms of] job creation and manufacturing…everything to the electric vehicle sector,” said Althaus. 

“From a practical standpoint, one of the reasons a lot of companies have gone offshore, labour costs aside, the raw materials and processing capabilities are in China,” Althaus said.  “It’s a national security issue, its an economic issue, a manufacturing issue, its job creation, and the US … is trying to bring that back home,” said Althaus.

Alberta called out for energy war room secrecy

Premier Jason Kenney’s Alberta government is the 2019 recipient Code of Silence Award for Outstanding Achievement in Government Secrecy in the provincial category for the veil of secrecy over its secretive, so-called energy war room.

The Canadian Association of Journalists, Centre for Free Expression at Ryerson University, News Media Canada and Canadian Journalists for Free Expression decide a winner each year to expose governments, government departments and agencies that have gone the extra mile into denying the public its legal right of access to government information.

The creation of the war room – or Canadian Energy Centre (CEC) – was a $30 million, 2019 election promise by Premier Jason Kenney dedicated to fighting the perceived enemies of Alberta’s energy sector such as environmentalists.

But, said the media groups, the public cannot know what goes on inside the CEC or hold those operations to account, because Kenney’s government exempted it from requests under Alberta’s Freedom of Information and Protection of Privacy Act (FOIP).

The Canadian Energy Centre’s internal operations are not subject to FOIP

“That means the public will only find out what the Kenney government wants them to find out about the war room,” the groups said.

“George Orwell’s 1984 was written as a warning,” the award news release said. “But, increasingly, it seems Premier Jason Kenney’s government in Alberta is using it as a handbook.”

Alberta Energy Minister Sonya Savage’s press secretary Kava Bal said the CEC “abides by the Fiscal Planning and Transparency Act, works through a strict budgeting process with detailed business plans and reporting and is subject to a code of conduct policy, whistleblower policy and review by the auditor general.

“For over 10 years, there has been a coordinated campaign by foreign-funded special interests to discredit and attack Alberta’s energy industry,” Bal said.

“The CEC’s internal operations are not subject to FOIP – this would provide strategic advantage to the same special interests the CEC works to counter,” Bal said.

Calgary’s Mount Royal University journalism professor Sean Holman was one of the award judges.

He called the secrecy around the CEC “an anathema to democracy.”

He said having a taxpayer-funded organization working on behalf of the oil and gas industry“indefensible.”

“To have an organization whose mission is to propagandize on behalf of that industry is not the kind of decision making we would expect in an evidence-based democracy,” Holman said.

Holman didn’t have kind words for the former journalists who staff the CEC  – including CEO Tom Olsen, a former Calgary Herald reporter and editor.

These individuals should know better,” Holman said.“These individuals are betraying everything they previously stood for as members of the fourth estate.”

In creating the CEC, Kenney said, “I have a message to those foreign-funded special interests that have been leading a campaign of economic sabotage against this great province. To the Rockefeller Brothers Fund, to the Tides Foundation, to Leadnow, to the David Suzuki Foundation, and to all of the others, your days of pushing around Albertans with impunity just ended.”

The centre also planned to tout the benefits of the Trans Mountain pipeline expansion to all Canadians, particularly British Columbians.

The war room, however, left the battlefield at the end of March, surrendering to the COVID-19 pandemic, when its $30-million budget slashed by 90% to reflect pandemic needs. Savage said then most of the centre’s budget was earmarked for paid advertising campaigns that cannot proceed during the pandemic.

The CEC became a figure of mockery when it was discovered its logo was already in use elsewhere and when it’s the centre’s Twitter account saw some questionable comments about the New York Times. The tweets said the Times is “not the most dependable source,” has a “dodgy” track record, has been “called out for anti-Semitism countless times,” and is “routinely accused of bias.”

Alberta’s NDP has called the CEC “parade of errors” and called for its closure.

(This article first appeared in Business in Vancouver)

Investors increase scrutiny 
over ESG reporting

Among the many challenges facing the minerals exploration and mining industry, Environmental, Social and Governance (ESG) issues are receiving increased attention, with ESG programs now critical components of a company’s strategy and business planning.

The Prospectors and Developers Association of Canada (PDAC) convention in Toronto offered several ESG and sustainability-themed sessions focussed on helping companies understand ESG factors and disclosures and how they differ from Corporate Social Responsibility (CSR) reporting.

“Both have been around for some time,” Amy Freedman, CEO of Kingsdale Advisors, a strategic governance and communications advisory firm, told The Northern Miner in an interview at the conference. “However, whereas CSR looks at how companies are taking actions to bring about positive impacts, ESG measures these activities more precisely and reports them as financial metrics.”

ESG programs now critical components of a company’s strategy and business planning

Freedman was one of four experts on an ESG panel discussion at the conference.

The panel recognized that while there was some overlap between ESG and CSR, ESG focusses on a company’s ability to access capital in both the near- and long-term. The panel noted that a recent survey on responsible investing by RBC Global Asset Management reports that 97% of institutional investors say they evaluate companies’ ESG disclosures. The survey also confirmed that investors are adopting an ESG-based approach primarily because they view it as a way to enhance returns and mitigate risk.

“First, companies need to define what their ESG issues are,” Freedman said. “They then need to show how they are managing the financial risks from these issues and communicate this to investors.”

By nature, mining is complicated, with environmental risks among the highest across all sectors. There are also social risks that can arise from fears of pollution, conflicts over water-usage, and economic and landscape impacts on local communities, the panelists said.

Although there was general agreement among the panelists that they had seen signs of progress on ESG disclosures, they cautioned that many companies were still just making commitments. The panelist also noted that investors and other stakeholders were looking to see progress on these commitments and were becoming more “savvy” in terms of seeing through so-called ‘ESG-washing’ and that governance risks were driven primarily by a company’s risk culture, size and location of operations.

A tailings dam failure at BHP Billiton and Vale’s Samarco operation flooded regions homes in Bento Rodrigues district of Mariana, in the Central Region of Minas Gerais. Credit: Rogério Alves/TV Senado.

In addition, the panel discussed the role of external organizations, like mining industry bodies, which have introduced codes of practices and principles for ESG that help companies in their ESG disclosures. But the panel emphasized the critical role investors play in the dynamic, particularly large institutional investors with long-term investment horizons that are at the vanguard in pressing companies to develop robust and transparent ESG programs.

Freedman acknowledged how challenging it is for companies to qualify many of the ESG issues they face and said she believed that investors need to appreciate ESG risks from the company’s perspective to help them to understand their ESG risks.

Although there are many commonalities among mining companies in terms of measuring and managing their environmental risk, Freedman recognized that social issues are invariably complicated, nebulous, and often location-specific.

“Where the issue can be measured, companies should be measuring and reporting them”

Amy Freedman, CEO, Kingsdale Advisors

“Where the issue can be measured, companies should be measuring and reporting them,” said Freeman. “However, social factors are not quantitative per se, so it’s hard, for instance, to give it a score out of ten.”

For these issues, Freedman believes that “the management and boards of companies will need to develop appropriate metrics, evaluate how they are tracking against them and communicate those evaluations to investors.”

Moreover, mining companies often have operations in developing countries, which can be challenging investment environments, where risks include complex political and socio-economic issues, she said.

For instance, the panel discussed the involuntary resettlement of communities, which often accompany mining projects and can lead to economic and physical displacement. Human rights violations, particularly for indigenous people, who have strong links to the natural environment, especially with the land, was also a significant concern for the panel.

Although a company’s ESG-related impacts may be challenging to measure, ESG reports provide valuable insights into current and future environmental and social risks, the panelists agreed. They can have direct and indirect financial impacts on profits and return on investments.

With increasing awareness and understanding of ESG risks among the investment community, the pressure is now being placed on companies to improve disclosure.

The bottom line, the panelists agreed, is the need for companies to increasingly incorporate ESG risks into their business planning, operations and communication strategies.

“Over the past five years, companies have been much more active on specific governance and social issues of ESG-related risks,” said panelist Melanie Hennessey, vice president of corporate communications at NovaGold Resources (TSX: NG). “The data shows that over time companies that have developed and reported on ESG metrics perform better than those who don’t.”

(This article first appeared in The Northern Miner)


Gemfields ups security, human rights efforts

Gemfields is stepping up efforts to increase transparency and ensure security and human rights are protected at its operations.

The company, which owns the luxury Fabergé jewellery brand, is the world’s biggest coloured gems producer, mining emeralds and rubies in Zambia and Mozambique, announced Monday that it is the only gemstone company to be recognized as a corporate member by Voluntary Principles on Security and Human Rights (VPSHR).   

VPSHR was founded in 2000 for the extractive and energy sectors and is now a globally recognized initiative by governments, companies and NGOs to confront human rights abuses and violations.

VPSHR principles have become the common standard implemented to guide companies on how to conduct their security operations while respecting human rights

In the ethos of a wider ESG movement, VPSHR principles have become the common standard implemented to guide companies on how to conduct their security operations while respecting human rights.

“We are delighted that Gemfields has been acknowledged by the VPSHR members…The VPSHR represents an important space for governments, NGOs and corporates to share and challenge each other on how to improve security and human rights best practice,” Jack Cunningham, Gemfields’ sustainability, policy & risk director said in a media statement.

The news comes a year after Gemfields paid £5.8 million ($7.8m) to community members residing near its Montepuez ruby mine in Mozambique, in a “no admission of liability” move that settled a claim of human rights abuses brought against it by locals.

Leigh Day, the London-based law firm representing a group of 273 Mozambicans, argued in 2018 that security forces employed by the miner had shot, beat and subjected its workers to humiliating treatment.

Gemfields always maintained it was not liable for the alleged incidents, but took the view that the agreed settlement “best balances the interests of the assorted stakeholders” and avoids tainting the company’s relationship with sections of the local community, the company said in a statement at the time.

In February, Gemfields returned to trading on the AIM, the London Stock Exchange’s market for juniors, after delisting in 2017 following its acquisition by Pallinghurst Resources.

China’s long-term need for LNG still huge; short-term demand uncertain due to covid-19

The “30,000-foot-view,” in business parlance, describes getting to a high enough level to see the big picture. It’s also an apt phrase — both literally and figuratively — for describing the long-term need for Canadian LNG to displace the use of higher-carbon producing coal for power generation.

From the air, things can seem different, says Susannah Pierce, director of corporate affairs for LNG Canada.

Most Canadian cities enjoy fairly good air quality, but in other parts of the world, “flying over a city that relies on coal-fired power for electricity or industrial and residential heating offers another experience,” Pierce says.

China’s shift from coal is being driven primarily by its air pollution crisis, she notes.

According to the International Energy Agency’s latest World Energy Outlook, natural gas demand in China will triple by 2040

According to the International Energy Agency’s latest World Energy Outlook, natural gas demand in that country will triple by 2040. Natural gas is already being used to complement China’s emerging renewable energy sector, she notes, and is increasingly being used in Chinese factories and for district heating.

In addition, the IEA says 80% more natural gas will be required over the next 20 years in China, India and Southeast Asia in order to displace higher carbon-producing coal.

Pierce says that research conducted for LNG Canada — which is building the first train of a $40-billion LNG project near Kitimat, B.C. — indicates that the project’s own exports to China will emit approximately 35–55% fewer greenhouse gas (GHG) emissions than China’s domestic coal.

Moreover, the largest GHG reductions realized in China from Canadian LNG will come from displacing coal in residential heating (56%), followed by electricity generation (52%), and industrial heat generation (36%), Pierce says.

Immediate response to covid-19

In the short-term, all project developers — including those in Canada — are focused one thing: impacts from the coronavirus pandemic.

LNG Canada announced in mid-March a temporary reduction of 50% in its workforce of more than 1,000 construction workers in order to “flatten the curve” to deal with a possible outbreak on the site.

Local employees will be retained, with fly-in employees on temporary layoff.

Despite the substantial reduction in the workforce, the project is still slated to begin delivering Canadian gas to export markets by mid-decade.

“LNG Canada remains committed to delivering its first cargo by the middle of this decade,” Pierce said.

Covid-19 has already caused a delay in the construction of one new Canadian LNG plant, and the delay in a final investment decision (FID).

In late March, the backers of the $1.6-billion Woodfibre LNG project announced a one-year delay on construction of the facility, which was to start this summer.

The company said “work stoppages caused by covid-19,” including the shutdown of a fabrication yard in China that was making products for the facility in Squamish, B.C., forced a one-year delay in construction.

In addition, the company that Woodfibre had chosen to complete engineering, procurement and construction for the project has filed for Chapter 11 bankruptcy and needs to rearrange its financing.

Company president David Keane emphasized that “the Woodfibre LNG project is still moving ahead.”

“We are continuing to work with our Indigenous and commercial partners to meet all of our pre-construction commitments,” he said.

On the East Coast, Pieridae Energy Limited announced in mid-April that its FID for the Goldboro LNG project in Nova Scotia will be delayed beyond Sept. 30, 2020, as a result of a depressed market and covid-19 impacts.

A further announcement will be made once covid-19 conditions improve and markets stabilize, Pieridae said.

In addition, the company is in discussions with different levels of government on how its proposed project could benefit from infrastructure funding that might become available with the restart to the economy, says its chief executive officer.

“We believe our project fits very well with the criteria the government has put in place as our project affects multiple provinces … it’s an opportunity for government to have a win-win for them,” Alfred Sorensen said in a conference call to discuss Q4 and full-year 2019 results. “We get Canada into a new industry and at the same time we bring work back to parts of the country that have suffered because of the [covid-19] virus shutting down the majority of the economy.”

Current LNG market dynamics

At present, the world’s top buyers of LNG are seeking to defer shipments as the coronavirus pandemic cripples demand and forces more of the heating and power fuel into storage that is nearing capacity.

The move signals that efforts to contain the spread of the virus may impact energy consumption far into this year and possibly 2021, worsening an oversupply of natural gas and oil that’s punished prices, Bloomberg reported.

The world’s top buyers of LNG are seeking to defer shipments as the coronavirus pandemic cripples demand and forces more of the heating and power fuel into storage that is nearing capacity

Buyers in South Korea and Japan, including Korea Gas Corp. and Tokyo Gas Co., are in discussions with term suppliers to postpone cargoes slated for delivery as far out as October, according to people with knowledge of the matter. The delay requests vary from just a few days to as late as next year, said the people, who asked not to be identified as the discussions are private.

Earlier this year, buyers in China, where the virus first hit, declared force majeure on some cargoes.

In early April, however, it was reported that China’s buyers of LNG have become some of the most active in the market, signalling a turnaround from February and March, when the country’s top importers sought to delay or cancel shipments due to demand and logistical constraints caused by the coronavirus outbreak.

Gas demand during the pandemic

Amidst the carnage being experienced by oil and companies due to the COVID-19 pandemic and the recent price war, there is a bit of good news. We still need to heat our homes and keep the lights on.

“People may be working from home instead of offices, but they are still using natural gas to heat their homes and use their stoves and when they turn their lights on,” said Bill Gwozd, an energy analyst with Argo Consulting.

“I don’t think gas demand will change much, even if it [the business shutdown caused by the virus] lasts a year.”

Gwozd said about 85% of gas demand comes from the power sector and for home heating and other residential uses, which will just be shifted from offices to residences.

However, about 15% of gas used in North America is in the petrochemical and fertilizer industries, which will definitely be affected.

Globally, Gwozd sees the demand for gas, much of it being delivered now via LNG, remaining strong for the longer term.

“Long term the demand [for LNG and gas] will still be there because population growth doesn’t stop and one day Canadian gas reserves, which are huge, will be tapped to their full potential.”

Under the Paris Climate Accord, China essentially received a free pass to grow its power production in line with its economic growth for the balance of this decade

Mark Pinney, manager of markets and transportation with the Canadian Association of Petroleum Producers (CAPP), said one factor Gwozd isn’t considering is the impact on U.S. domestic gas availability as LNG exports are disrupted.

“[A] reduction in LNG exports from the United States to global markets, as a result of covid 19, will mean more U.S. production will be available to meet its domestic demand and will therefore have a short-term impact on Canadian natural gas production (approximately half) being exported to the U.S.,” he wrote in an email.

In the long-term, CAPP says China’s gas demand will grow from 23 bcf/d now to 65 bcf/d by 2040.

Cameron Gingrich, director of gas services with the Calgary office of consulting firm Solomon Associates, said short-term gas demand will be reduced, although he agrees with Gwozd that demand will move from offices to homes. However, gas demand will decline in the petrochemical, fertilizer and other manufacturing sectors.

Solomon sees gas production growing to 21 bcf/d by 2030 in Western Canada, despite the short term impact of the pandemic.

And it sees both trains of the LNG Canada plant being built, Woodfibre being online by then and some smaller projects going ahead, representing total gas consumption for LNG exports of four bcf/d by 2030.

Long term, if the regulatory and other barriers to LNG development in Canada can be minimized, Gingrich sees significant potential for LNG growth in the decade following 2030.

That’s because, under the Paris Climate Accord, China essentially received a free pass to grow its power production in line with its economic growth for the balance of this decade. That’s why it currently has 60 coal-fired plants under construction.

“After 2030, China will have a huge incentive to lower its carbon emissions,” he said.

(With files from Bloomberg and LNG Canada.)

(This article first appeared in JWN Energy)

Troilus hits 73 metres of 1.56 g/t gold-equivalent

Troilus Gold (TSE: TLG) has reported assay results from two holes completed at the Southwest zone, 3.5 km northeast of the existing deposit within the 160-sq.-km Troilus project, located northeast of the Val-d’Or district of Quebec.

The drill highlights include 73 metres of 1.56 g/t gold equivalent in hole TLG-ZSW20-189 and 6 metres of 1.23 g/t gold equivalent from this same hole as well as 14 metres of 1.02 g/t gold equivalent from hole TLG-ZSW20-185. The 73-metre long intercept starts at 193 metres down-hole.

These intersections also suggest geological similarities between the Southwest zone and the main Z87 deposit

“We believe that the results we are seeing from the Southwest zone provide further evidence that the Troilus property has the potential to host a large, regional scale gold mineralizing system and remains materially underexplored,” Justin Reid, the company’s CEO, said in a release.

According to the company, these intersections also suggest geological similarities between the Southwest zone and the main Z87 deposit.

“The Troilus team is excited to further expand our knowledge of this system by applying our evolving geological model to this area and the rest of the property.”

Reid added that the Southwest zone remains open – additional assays are pending. Results to date have traced this area of mineralization, first reported in January, over a 1 km trend.

The Z87 pit at the site produced almost 2 million oz. of gold in the past. Indicated resources at the project are at 159.1 million tonnes grading 0.92 g/t gold-equivalent for a total of 4.71 million gold-equivalent oz. with additional inferred resources of 52.7 million tonnes at 1.04 g/t gold-equivalent for a further 1.76 million oz. The resources include both an open pit and underground component and are contained within the Z87 and J zones.

The Troilus project is within the Frotet-Evans greenstone belt and is approximately 170 km north of Chibougamau.

(This article first appeared in the Canadian Mining Journal)

Exploration sector not eligible for wage top-up in Canada

Right about now, mineral exploration companies will be gearing up for a season of drilling and other exploration activities in British Columbia.

Last year, junior exploration companies spent C$329 million on exploration in the Canadian province, with 55% of that spent in the Golden Triangle area of Northwest BC, according to an annual report by the Association of Mineral Exploration of BC.

Because mining and exploration are deemed essential, junior exploration companies may not be affected by pandemic containment measures as much as some other sectors, although there are enhanced safety measures that they must abide by for things like remote work camps, and changes to the Workers Compensation Act.

And travel restrictions could put a crimp in their activities this summer, depending on how long they remain in place.

In a recent discussion with Preston Parsons, a lawyer at Overholt Law specializing in employment law, the AME recapped the provincial and federal measures to help businesses and workers, as it may apply to the mineral exploration sector.

One federal program they will not be eligible for is a 75% wage top-up.

While the program would apply to mining companies, which generate revenue, it won’t apply to most exploration companies, which by their very nature don’t generate revenue

The top-up from the federal government covers the period from March through May. It goes to employers, not employees. To qualify, companies must demonstrate that they had a 30% drop in revenue, compared to the same period in 2019.

So while that program would apply to mining companies, which generate revenue, it won’t apply to most exploration companies, which by their very nature don’t generate revenue. They are pre-commercial enterprises, with millions of dollars going into the ground, and nothing to show for it until their properties get acquired or developed into producing mines.

Rob Stevens, the AME’s vice president of regulatory and technical policy, said it’s not just the exploration sector that is affected by this, but other pre-commercial sectors, like biotech, as well.

Stevens said the association has raised the omission with the federal government.

“It’s not just our sector,” Stevens said. “There are others — biotech, the technology sector has raised this up. We know the government’s heard that. It was never an intention really to exclude these sectors.

“We expect they are going to be modifying those criteria as we go forward to make what they are referring to as pre-revenue companies, such as junior exploration…eligible.”

Provincially, mineral exploration companies will benefit from a number of tax deferrals. The new employer health tax (EHT), provincial sales tax (PST), municipal and regional district tax, motor fuel tax, and carbon tax are deferred until September 30.

The province is also granting extensions to mineral claims that are soon to expire to December 31, 2021.

“So anyone who owns a claim that was expiring this year but is not able to work is given some relief on that,” Stevens said.

It’s unclear just how much if an impact the COVID-19 pandemic and falling commodity prices may have on exploration activities in B.C. this year.

Their biggest challenge for junior exploration companies may still be the challenge it has always faced – accessing risk capital to finance exploration projects.

Independent contractors that don’t qualify for employment insurance may qualify for the Community Emergency Response benefit, if they are affected by covid-19 measures, like restrictions on travel.

This provides $2,000 a month. Those who are eligible for that program can begin applying this week, although application days are being staggered. Information on qualifying and applying can be found here.

(This article first appeared in Business in Vancouver)