Australia to lead in mining technology integration – report

While in 2020 most miners will focus on operational safety and the health of their employees through minimising risks of covid-19 spread in their mines, Fitch Solutions analysts point out that miners will once again focus on improving efficiency and cutting costs once the pandemic clears.

Australia will spearhead the global as well as Asian miners’ race to use technology to cut costs, enhance efficiency and increase mine safety due to the country’s availability of strong network connectivity, power, highly skilled labour and government support, Fitch said in its latest industry report.

The mining landscape is in the age of technological disruption today, where players are at the crossroads between a traditional past and a transformative future that is sustainable, Fitch said.

Starting from cloud computing, to new sensors, to drones, to ever more automation and now the rise of machine learning and artificial intelligence, state-of-the-art mines have all the latest technological innovations embedded in their operations.

Fitch named Rio Tinto the leader of technological integration, followed by FMG and BHP.

Read the full report here.  

Rio declares force majeure at Kennecott after quake

The world’s number two miner, Rio Tinto, (ASX:RIO) said it has invoked force majeure on contracts at its Kennecott copper operation near Salt Lake City, Utah following an earthquake last month.

Kennecott copper mine and smelter was shut down following a 5.7 magnitude earthquake close to the town of Magna on March 18. There were no injuries and Rio at the time said it identified limited damage to the operation or risk to the surrounding community.

Rio said in a statement to Reuters, “we are working to restart Kennecott’s smelter after the emergency shutdown in response to the earthquake.”

In December, Rio Tinto announced it is spending $1.5 billion to expand Kennecott and extend the life of the more-than 100-year-old open-pit mine through to 2032.

Kennecott produced 186,800 tonnes of copper last year from the iconic Bingham Canyon mine.

China EV slowdown to hit battery metals sector

The slowdown in China’s electric vehicle sector could have knock-on effects on the battery metals market in both the short and long run, commodities analysts at Argus Media in a new report.

A weaker economy and lower new energy vehicle (NEV) subsidies that were introduced in 2019 led to a drop in Chinese vehicle production and sales last year.

Overall, China produced 1.24 million NEVs during the year, down 2.3% from the 1.27 million produced in 2018, and significantly lower than the initial production target of 1.5 million NEVs. The country sold 1.21 million NEVs last year, a 4% drop from 1.26 million in 2018, Argus.

China currently represents almost 60% of global electric vehicle (EV) sales, according to data compiled by Argus, and a weaker industry in China has disproportionate effects on the global market.

The coronavirus outbreak has put further downward pressure on the sector at the start of 2020 and is expected to continue to weigh on China’s NEV market, with domestic production and sales forecast to fall in the first quarter.

Buying interest for NEVs is expected to weaken significantly in the short term as potential buyers have opted to stay at home to prevent infections, Argus analysts predicted.

January NEV sales were 44,000, down by 54% from a year earlier and by 73% from 163,000 in December

In January, China produced only 40,000 NEVs, down by 55% from a year earlier and by 74% from 149,000 units in December 2019. January sales were 44,000, down by 54% from a year earlier and by 73% from 163,000 in December.

Production plants in Hubei province, the source of the virus outbreak, account for around 8-9% of China’s automotive output, but plants country-wide have been affected by the crisis. Several manufacturers including the 40,000 units/yr NIO, 150,000 units/yr Xiaopeng and 300,000 units/yr Lixiang plants have postponed deliveries.

Source: Argus Media

The slowdown in China would also hinder the prospects for global growth, given the country’s lead in EV production and dominance in the global marketplace. Initial forecasts for global EV sales of over 2.5 million units for 2019 (a rise of over 25%) already proved to be over-optimistic, and predictions for sales in 2020 will have to be revised accordingly, said Argus.

The knock-on effect of this hiccup in the EV growth story is that the longer term forecast for EV sales could be over 20% lower by 2030 than originally estimated

Originally, Argus had forecasted global EV sales of almost 3.2 million units for 2020: 1.95 million in China and 1.24 million in the rest of the world. However, the firm expects China to struggle to match its EV sales in 2019 with the fraught start to the year, while sales in the rest of the world are unlikely to make up the shortfall.

As a result, Argus is now forecasting global EV sales of just under 2.1 million units in 2020, a 1.4% drop from 2019.

The knock-on effect of this hiccup in the EV growth story is that the longer term forecast for EV sales could be over 20% lower by 2030 than originally estimated, or as many as 5 million units lower in absolute terms, Argus analysts estimated.

Golden Minerals stock rises on promising PEA results

Colorado-based miner Golden Minerals (TSX: AUMN) has reported positive findings in a preliminary economic assessment (PEA) and updated mineral resource estimate for the Velardeña properties, its wholly owned silver and gold project located in Durango state, Mexico.

Tetra Tech, the engineering company responsible for preparing the PEA, assigned the project a pre-tax net present value of approximately $86 million and a possible internal rate of return of 138% after one year.

Total pre-production capital cost of the project is estimated at $10.2 million, with a pre-production development time of one year. The post-production sustaining capital needed will be nearly $16 million.

The PEA envisions a ten-year mine life for 188,000 ounces of gold and 12.3 million ounces of silver contained in the resource. Average gold grade achieved over life of mine is anticipated to be 5.15 g/t, while average silver grade is expected to be 337 g/t.

Additionally, the project has 33 million pounds of contained lead and 40 million pounds of contained zinc, grading 1.32% and 1.63% respectively.

Shares of Golden Minerals rose by 20% at Thursday’s market close following the latest PEA results. The company has a market capitalization of C$39.4 million.

Meanwhile, the company also stated that the oxide mill at Velardeña would continue to operate despite certain business restrictions being implemented in Mexico in response to the covid-19 situation.

Central bank gold demand edges higher

The latest data from the World Gold Council (WGC) shows that central banks’ monthly net gold purchases increased in both January and February, following December’s five-month low.

In February, central banks around the globe bought a net 36 tonnes (t) of gold, almost a third higher than January’s net purchases, but still 52% lower year-over-year. This brings year-to-date net purchases to 64.5t, down 44% compared to the 116.1t of net purchases over the first two months of 2019.

Breaking down February’s net total into its component gross purchases (39.1t) and sales (3.1t) shows that purchases remain healthy and sales remain low, the Council stated.

Of the central banks which have reported their gold reserves at the end of February, Turkey (24.8t), Russia (10.9t), Kazakhstan (1.8t) and Qatar (1.6t) were the only noteworthy buyers during the month. Meanwhile, Uzbekistan (3.1t) was the only significant seller.

So far this year, only five central banks have increased gold reserves by at least a tonne, compared with eight over the first two months of 2019. The five countries are Turkey (41t), Russia (19t), the United Arab Emirates (5.9t), Kazakhstan (2.8t) and Mongolia (1t).

“The past two months clearly suggest gold continues to be an important component of foreign reserves despite heightened levels of demand in recent years,” WGC market intelligence manager Krishan Gopaul stated.

However, he also warned that the recent market instability and uncertainty will still be at the forefront of central bankers’ mind for the rest of this year. Earlier this week, Russia’s central bank, the biggest buyer of recent years, announced it would stop buying gold starting April 1, 2020.

“Nonetheless, we will have to wait and see how this impacts their outlook in the coming months,” he added.

While the Council believes central banks will remain net buyers in 2020, there is a possibility that we may not see as much buying as we did over the past two years.

Central bank gold demand edges higher in February

Latest data from the World Gold Council (WGC) shows that central banks’ monthly net gold purchases increased in both January and February, following December’s five-month low.

In February, central banks around the globe bought a net 36 tonnes (t) of gold, almost a third higher than January’s net purchases, but still 52% lower year-over-year. This brings year-to-date net purchases to 64.5t, down 44% compared to the 116.1t of net purchases over the first two months of 2019.

Breaking down February’s net total into its component gross purchases (39.1t) and sales (3.1t) shows that purchases remain healthy and sales remain low, the Council stated.

Of the central banks which have reported their gold reserves at the end of February, Turkey (24.8t), Russia (10.9t), Kazakhstan (1.8t) and Qatar (1.6t) were the only noteworthy buyers during the month. Meanwhile, Uzbekistan (3.1t) was the only significant seller.

So far this year, only five central banks have increased gold reserves by at least a tonne, compared with eight over the first two months of 2019. The five countries are Turkey (41t), Russia (19t), the United Arab Emirates (5.9t), Kazakhstan (2.8t) and Mongolia (1t).

“The past two months clearly suggest gold continues to be an important component of foreign reserves despite heightened levels of demand in recent years,” WGC market intelligence manager Krishan Gopaul stated.

However, he also warned that the recent market instability and uncertainty will still be at the forefront of central bankers’ mind for the rest of this year. Earlier this week, Russia’s central bank, the biggest buyer of recent years, announced it would stop buying gold starting April 1, 2020.

“Nonetheless, we will have to wait and see how this impacts their outlook in the coming months,” he added.

While the Council believes central banks will remain net buyers in 2020, there is a possibility that we may not see as much buying as we did over the past two years.

2020 copper production forecast trimmed to 21mt

Global copper production in 2020 is impacted by the covid-19 outbreak, with data analytics firm GlobalData now forecasting output growth of 1.9% this year compared to the original forecast growth rate of 3.4%.

The initial forecast was based on an anticipated increase in production from Chile, China and Peru, but falling demand and ongoing disruption to mining activities due to lockdowns necessitated a revision to this forecast. However, GlobalData points out the ongoing disruptions will be offset by production from the Cobre Panama and Grasberg mines.

Total output for 2020 is now estimated at 21 million tonnes, slightly higher than the 20.6 million tonnes produced in 2019.

GlobalData senior mining analyst Vinneth Bajaj said production growth in China is forecast to be around 6%, down from the 9.6% forecasted before the virus outbreak, while production in Chile is forecast to grow by 0.3% and in Peru by 2% – compared with a 1.4% decline and 2.6% growth respectively in 2019. Lockdowns in China and Peru would reduce the output in two markets that currently account for around 40% of global supply.

There is also expected to be a slowdown in development of new projects, Bajaj added.

On the demand side, the construction sector, which accounts for 40-45% of the global demand, is likely to be heavily impacted by the covid-19 related restrictions and lockdowns.

Bajaj said that GlobalData’s latest expectations are for global construction output to grow by just 0.5% this year, down from its previous forecast of 3.1%.

“The direct impact on construction has been the halting of work – with labor unable to get to the construction sites – and disruption to supply chains with delays in the delivery of key materials and equipment, due to quarantines and travel restrictions,” Bajaj said.

Widespread postponement and cancellations of projects are also expected, he added.

Overall expectations are for copper demand to grow at 2.7% versus the 4.1% predicted before the outbreak. The lower growth rates are linked lower construction activity in China from mid-January 2020, although the situation is gradually improving with restrictions and lockdowns being eased, according to GlobaData.

However, GlobaData warned that there continues to be reduced activity globally as more countries moved to limit non-essential business operations.

“The current forecast assumes that the outbreak is contained across all major markets by the end of the second quarter – following which conditions would allow for a return to normalcy in terms of economic activity and freedom of movement in the second half of the year,” Bajaj said.

“There will be a lingering and potentially heavy impact on private investment due to the financial toll that is being inflicted upon businesses and investors across a range of sectors,” he added.

Barrick exec sells $50m stake

Barrick exec sells $50m  stake
Golden glow. John Thornton, executive chairman of Barrick Gold.

Barrick Gold (NYSE:GOLD, TSX:ABX) announced Wednesday that executive chairman John Thornton sold 2,632,153 shares in the company worth just shy of $50m.

According to the release the sale was based on “personal portfolio considerations” and that Thornton would “continue to retain and seek to build on what remains a meaningful equity stake” in the company, the world’s number two miner of the metal.

The shares represented approximately 50% of Thornton’s prior holding, and Thornton now holds 2,642,127 shares.

Barrick shares closed up 3% on the NYSE at $18.87 per share for a market valuation of $33.4 billion. Shares in the company has gained more than 40% over the last 12 months.

The virtues of virtual interaction

On a global scale, work is grinding to a halt and operations at mines are being temporarily suspended as majors and minors move to enact measures to protect against the spread of covid-19.

With governments from Africa to Latin America issuing lockdown orders, disruptions to operations and supply chains are affecting the way we work in the industry.

In these unprecedented times of mandatory social distance, the benefits of virtual interaction are amplified.

The world’s workforce has moved home, and that creates opportunities to improve industry knowledge and improve existing skillsets during this period of reduced activity.

“Online learning doesn’t just offer cheaper education for the masses. It improves the student learning experience across the spectrum by allowing students to learn at their own pace and on their own timetable,” said Steve Denning of Forbes.

Online learning also offers the opportunity for virtual interaction between instructors and students, which can help lessen the impact of social isolation.

Our Edumine division offers a range of virtual learning experiences and live webinars.

Find out more here.  

Newcrest earns 40% interest in Havieron

Australia’s largest gold producer, Newcrest Mining (ASX: NCM) confirmed Wednesday that it has now reached its Stage 2 farm-in milestone at the Havieron project.

Newcrest has earned a 40% interest in the project and gave notice to Greatland Gold that it is proceeding to Stage 3.

The Havieron Project is operated by Newcrest under a farm-in agreement with Greatland Gold. It is centred on a deep magnetic anomaly located 45km east of Telfer in the Paterson Province, Western Australia. The target is overlain by more than 420m of post-mineral cover.

Newcrest started drilling during the June 2019 quarter and has increased drilling activity such that eight drill rigs are now operational

Newcrest started drilling during the June 2019 quarter and has increased drilling activity such that eight drill rigs are now operational.  

Drilling at the Havieron Project continues to expand and demonstrate the continuity of high-grade mineralisation which extends over 450m, to vertical depths of 600m and remains open at depth to the northwest.

Drilling has also identified mineralised breccias proximal to high-grade mineralisation, Newcrest said. A further 20,000m are planned to be drilled to support the objective of delivering a maiden resource estimate in the second half of 2020.

Studies are also underway to investigate the potential for starting an exploration decline by the end of calendar year or early 2021 and achieving commercial production within two to three years from the commencement of the decline.

Newcrest said it has implemented measures to reduce and mitigate the risks of the covid-19 pandemic to its project workforce and key stakeholders.

 “Today’s announcement highlights the significant investment we are making into this project,” Newcrest CEO Sandeep Biswas said in a media release. “The results to date have been very positive and I believe that Havieron provides a great opportunity to improve the economics and extend the operating life of Telfer.”