Majority of British Columbians recognize importance of metals market – report

A public opinion poll conducted this past summer by Research Co. found that nearly two-thirds of residents of the resource-rich province of British Columbia (63%) believe mineral exploration and mining industries have a role to play in achieving the provincial government’s 2040 zero emissions target.

Two-thirds of the group reported that mineral exploration and mining industries ultimately provide the raw materials required to transition to low carbon technologies and other climate solutions

Respondents were also asked whether environmental protection or economic growth is more important to them. A majority of those who prioritize economic growth believe that mineral exploration and mining industries are key to reaching the zero-emissions target, with two-thirds of this group reported that mineral exploration and mining industries ultimately provide the raw materials required to transition to low carbon technologies and other climate solutions necessary for a sustainable future.

A majority of those who prioritize environmental protection over economic growth also reported that these industries will have a key role in reaching the zero-emissions target.

“What we found interesting about the views of British Columbians is that traditionally opposing viewpoints regarding resource development are essentially in agreement when it comes to mineral exploration and mining playing a vital role in reaching the target,” said Mario Canseco. President of Research Co.

“Building a sustainable future that preserves the environment while also being economically robust is important. That future requires new and innovative technologies that depend on the types of minerals and metals found in BC,” says Kendra Johnston, President and CEO of the Association for Mineral Exploration B.C. (AME).


“The poll findings reveal a significant opportunity to inform British Columbians about mineral exploration, and the vital importance minerals and metals play in building the green technologies of the future,” Johnston said.

Majority of British Columbians recognize importance of metals market – report

A public opinion poll conducted this past summer by Research Co. found that nearly two-thirds of residents of the resource-rich province of British Columbia (63%) believe mineral exploration and mining industries have a role to play in achieving the provincial government’s 2040 zero emissions target.

Two-thirds of the group reported that mineral exploration and mining industries ultimately provide the raw materials required to transition to low carbon technologies and other climate solutions

Respondents were also asked whether environmental protection or economic growth is more important to them. A majority of those who prioritize economic growth believe that mineral exploration and mining industries are key to reaching the zero-emissions target, with two-thirds of this group reported that mineral exploration and mining industries ultimately provide the raw materials required to transition to low carbon technologies and other climate solutions necessary for a sustainable future.

A majority of those who prioritize environmental protection over economic growth also reported that these industries will have a key role in reaching the zero-emissions target.

“What we found interesting about the views of British Columbians is that traditionally opposing viewpoints regarding resource development are essentially in agreement when it comes to mineral exploration and mining playing a vital role in reaching the target,” said Mario Canseco. President of Research Co.

“Building a sustainable future that preserves the environment while also being economically robust is important. That future requires new and innovative technologies that depend on the types of minerals and metals found in BC,” says Kendra Johnston, President and CEO of the Association for Mineral Exploration B.C. (AME).


“The poll findings reveal a significant opportunity to inform British Columbians about mineral exploration, and the vital importance minerals and metals play in building the green technologies of the future,” Johnston said.

Commentary: Is a diesel supply shock coming?

New ocean shipping regulations could have a big impact this year.

Under International Maritime Organization (IMO) rules that came into effect on Jan. 1, emissions from fuel used in ocean carriers cannot exceed a sulphur content of 0.5%.

With current sulphur content at about 3.5%, the coming switch to low-sulphur fuel is enormous, both as an undertaking and in its far-reaching effects. It is certainly unprecedented, and few understand what impacts are coming while many others are unaware that the switch is imminent. The diesel supply side will be exposed, the timeline is short, users and consumers are unaware and unprepared for the event, which may exaggerate the impact when it happens.

The conversion of ocean carriers from heavy or residual fuel oil (also known as bunker fuel) with a higher sulphur content to low-sulphur fuel could seriously impact the supply and/or the price of distillate fuels. The overall effects are unpredictable and knowledge of this change is primarily limited to the transportation industry. The mandate cannot be delayed because it was set by IMO treaty 10 years ago. However, Indonesia’s government announced in July that the country will not enforce the IMO low-sulphur standard for domestic fleets due to the high cost. It is the first country to abandon the IMO2020 mandate.

Emissions of sulphur and nitrogen oxides released into the atmosphere are known to adversely affect health. Goldman Sachs estimates that the 15 largest ocean vessels emit more sulphur from high-sulphur bunker fuel than all of the world’s gasoline or diesel fueled automobiles, combined.

According to the International Energy Agency (IEA), the global fuel demand for ocean shipping is small and amounts to just 4% of total global demand, about 4.3 million barrels per day. Bunker fuels represent 3% of total transportation energy use. About 80% of U.S. residual fuel is for marine bunker fuels mixed with distillate fuels. The question remains as to how large will be the impact outside ocean shippers. Because bunker fuels represent the sole important use of this product, to comply with the IMO 2020 sulphur limits will have major economic implications for the use of residual oils for marine fuels. The effects will reach other parties up and down the supply chain, from customers that sustain the market, to both the refineries and the producers that find and pump the crude. This includes the mining sector, as Capesize ships are commonly used in transportation of coal, iron ore and commodity raw materials.

Shipper options

Shippers can meet the new standard on Jan. 1, 2020, by adding scrubbers to reduce the sulphur from emissions of high-sulphur fuels, switch to low-sulphur diesel fuel, or convert engines to natural gas. DNV GL reports that at least 225 cruise lines and freight shippers have converted or ordered LNG conversions. RBEnergy.com contends the scrubber conversions may be more economical than purchasing the IMO2020-compliant fuel or the LNG conversions. Vessels failing to meet the standard will be declared “unseaworthy,” lose insurance coverage, and face steep penalties and fines. Freight contracts made in 2019 also cannot escape the low-sulphur fuel mandate.

Price and supply implications

According to trade publication Transport Topics, demand for maritime distillate fuel after the rule takes effect is anticipated to rise by 3 to 4 million gallons per day for ocean freight and cruise lines, and any tweaking of supply and demand by refiners would be limited. But fuel-switching, the change in refinery output from high-sulphur to low-sulphur fuels or distillates, combined with the transport and market of the compliant fuels, involves a much larger change because the high to low-sulphur fuel transition involves from 84 million to 168 million gallons/day.

Svelland Capital says it’s the largest-ever regulatory change in the oil industry and it will have massive effects that extend far outside of shipping, to trucking, railroads, farms, and industry users. Estimates of the IMO global impact range from $240 billion in total to more than $5 trillion over five years. Denmark’s Maersk and the Swiss MSC estimate added costs of fuels at $2 billion for each company. The impact is not limited to diesel, but the ruling will also impact the availability and cost of home heating fuel, jet fuel and gasoline as refiners devote more attention to the low-sulphur bunker fuel market, says Daniel Yergin, IHS Market vice-chairman.

Fuel use by ocean transport, a very large industry, uses more fuel than land transport, another factor that may exaggerate the impact, says Daniel Yergin in his address at the TPM 2019 shipping container conference. Yergin adds that the “change is big and will not go smoothly.” The “transformative” change creates risks, opportunities, winners, and losers, Yergin said, warning of an IMO scramble because “industries are not prepared.”

Small companies or low-volume users — farmers, airlines, truckers, mines and others — will be hit hardest and will not receive favoured terms compared with crude oil supertankers, containerships, Panamax or Capesize ships.

The big question is what will be the impact on availability and price to trucking, rail transport and the demand by industry that already uses low-sulphur diesel fuels. At this time, magnitude of the effect is impossible to predict.

Historic price shocks

A look back to the ultra-low-sulphur diesel mandate in 2005 may be helpful because the ultra-low sulphur diesel (ULSD) rule caused diesel prices to spike above those of gasoline. Before the ULSD phase-in, according to Forbes.com, gasoline traded at a premium to diesel, then diesel prices traded US4 cents above gasoline, but after implementing the ULSD standard, diesel prices surged to average 23 cents above the price of gasoline. Also, the purchase price of high-sulphur, or sour crude oils also fell (because it was less favored for refinery feedstock) compared to lower sulphur or sweet crude oil. Refineries which processed only sour crude oils have since closed, stranding some high-sulphur supplies but the Energy Information Administration (EIA) predicts some of these facilities may re-open in the future to satisfy demand under the new IMO rules.

Diesel prices rose in the 2006–2010 period after low-sulphur fuels were mandated in North America and Europe. Diesel prices rose to $4.25 per gallon on May 1, 2008. The increase cost truckers $140 billion for diesel in 2008, $30 billion more than in 2007. By election day, prices fell to $2.07 per gallon when Barack Obama was elected U.S. President.

Wider impacts of the IMO ruling

Although not directly involved in the transition, customers of traditional fuels for autos, home heating, truck and rail shipping will also feel the impact. This is because the overall rise in demand for distillate fuels will reach 88.2 billion gallons annually. Furthermore, because new blend specifications remain non-standard, no one knows what types of fuels will be available, or their supply and cost.

Logistics Management magazine says the fuel cost may double in a short time following the Jan. 1 deadline. Forecasts by McKinsey and International Energy Agency also expect distillate fuel costs like diesel and jet fuel to double but then soften after a period of adjustment. At the same time, the cost of motor gasoline will be unchanged but then eventually fall by 20 cents per gallon.

The IMO2020 rule will also impact sourcing of products and timing of shipments from overseas or ultimate sourcing from new or alternate sources. Slow-steaming was one strategy used by ocean ships to lower costs. Slowed ship speeds can save 10% on the cost of fuel, but delayed arrival time impacted logistical planning and customer’s lead times. Slowed arrival times and cost of fuel will require examination of near-shoring or on-shoring of suppliers versus goods shipped long distance by ocean ships.

It seems clear that the mandated change from high-sulphur to low-sulphur fuels by ocean shipping will impact ocean shipping. The impact on ocean shipping will be most marked, while the impact of the IMO ruling on fuel users outside ocean shipping are quite uncertain.

(By David Boleneus)

This article first appeared in our sister publication, Canadian Mining Journal. David Boleneus is a senior cost analyst/geologist with CostMine (costs.infomine.com), part of the Glacier Resource Innovation Group, based in Spokane, WA. 

Siemens under pressure over next week’s decision on coal mine contract

German engineering giant Siemens will decide by Monday on its involvement in the controversial Carmichael coal mine being built in Australia by India’s Adani, chief executive, Joe Kaeser, said on Friday.

Climate activists and mine opponents are asking the company not to provide a key piece of rail infrastructure to transport coal from the mine, in Queensland, to ports.

“While we understand why people focus on this one project, we follow a broader approach in order to fight climate change and supply people around the world with affordable and reliable electricity,” Siemens said in a statement announcing the deal on Dec. 11.

Source: @JoeKaeser.

The firm, however, yielded to pressure, delaying a final decision on its part on the 20 million euros ($22m) contract to provide a rail signalling system for the project to next week.

Speaking after meeting climate activist Luisa Neubauer in Berlin, Kaeser told journalists he had offered her a seat on the supervisory board of the group’s new Siemens Energy division, Reuters reported. Neubauer did not join the news conference.

Organized groups have called for demonstrations at Siemens sites across Germany on Friday, arguing that while Siemens “promises in Germany to take responsibility for the climate and become carbon-neutral by 2030, [it supports] a backward-looking project in Australia, as well as the destruction of our planet and our future.” 

The Carmichael mine, expected to produce 8-10 million tonnes of thermal coal a year, was approved by the state government in June 2019 after a near decade-long struggle with regulators and environmental protesters.

According to official estimations, Carmichael will contribute $2.97 billion each year to Queensland’s economy and will create 1,500 direct and 6,750 indirect jobs during ramp up and construction.

Thermal coal is one of the largest sources of greenhouse gas emissions. If burnt, output from Carmichael would release 700m tonnes of carbon dioxide into the atmosphere every year for more than 50 years.

Several projects are seen following in the Galilee if Adani builds infrastructure to connect it to the state’s rail network.

More to come…

South Africa has huge ‘green fuels’ potential. But it needs to act now

In this opinion piece, first published in The Conversation, professors David Walwyn and Rod Crompton make the case for South Africa to pay greater research and development attention to the production of green hydrogen using a combination of wind and solar power and electrolysers. In addition, they call for a combined government-Sasol effort to pilot the conversion of that green hydrogen into cleaner aviation fuels using Sasol’s installed Fischer Tropsch fleet. South Africa needs to seriously start thinking about shifting its energy focus. This is for two reasons.

Teck and Ridley Terminals up coal shipping capacity 50% from BC ports

Teck Resources Limited (TSX: TECK.A and TECK.B, NYSE: TECK) announced Wednesday an expanded commercial agreement with Ridley Terminals Inc. (RTI) for shipments of steelmaking coal from Teck’s British Columbia operations. 

The agreement runs from January 2021 to December 2027, and increases contracted capacity from 3 million tonnes per annum (Mtpa) to 6 Mtpa with an option for Teck to extend up to 9 Mtpa. This will enable Teck to increase its shipment volumes through the Ridley terminal to provide more flexibility and better performance within its overall steelmaking coal supply chain. 

The agreement runs from January 2021 to December 2027, and increases contracted capacity from 3 million tonnes per annum (Mtpa) to 6 Mtpa with an option for Teck to extend up to 9 Mtpa

“This agreement with Ridley Terminals, in combination with upgrades underway at our Neptune Terminal and our recent agreement with CN,” said Don Lindsay, President and CEO of Teck. “We are looking forward to building on our strong working relationship with RTI and new principal owners Riverstone-AMCI to safely and efficiently transport our product to customers.” 

The terms of the agreement are confidential, the companies said in the media release.   

BHP looks to India for coal growth as China demand declines

The world’s biggest miner, BHP (LON: BHP) is looking to India’s fast- growing economy and its accelerating steelmaking output as a way to help offset the declining Chinese coal demand in the new decade, the Syndey Morning Herald reported.  

China’s consumption of iron ore and coal – key steelmaking ingredients and Australia’s two top exports – led to a windfall in 2019 for the world’s top miners, and added a boost to the Australian  government’s federal budget.  

But Chinese demand is projected to ease in the face of lower margins, weakening  global growth and the ongoing US-China trade war. 

BHP projects Indian steelmaking is on course to grow by 7% per year over the next decade. 

India’s yearly output of over 100 million tonnes of steel has now surpassed Japan to become the world’s second-largest steelmaking country. 

A lot of other markets are big but mature,” BHP vice-president of market analysis Huw McKay told the Sydney Morning Herald.  

“India is big but it’s barely got started.” 

Australia takes crown as world’s top LNG exporter

Australia has officially become the world’s largest exporter of liquefied natural gas (LNG) on an annualized basis, overtaking the previous titleholder Qatar.

According to figures released by Australian-based energy consultancy EnergyQuest, the country shipped 77.5Mt of locally produced LNG in 2019 – an 11.4% increase over the previous calendar year.

EnergyQuest chief executive Graeme Bethune

“On an annualized basis, we have previously achieved the global title in some individual months, but 2019 is the first time Australia has topped global LNG export performance on a sustained annual basis,” EnergyQuest chief executive Dr. Graeme Bethune stated.

While final production figures for Qatar – now the second-largest exporter – are yet to be released, Australia’s operational capacity of 88Mt now substantially exceeds the 77Mt of its Middle Eastern rival, according to EnergyQuest’s analysis. Qatar’s LNG production forecast was 75Mt in 2019.

Australian LNG exports were also more than twice those of the United States, the world’s other fast-growing LNG producer. The US Energy Information Administration expects the nation to have exported 34.3 million tonnes last year.

Western Australia continued to dominate the country’s LNG output at 57% of the national total, with Queensland garnering 29% of those exports. The largest contributing project was the North West Shelf project operated by Woodside, followed by the Gorgon and Wheatstone projects operated by Chevron.

The largest percentage growth was the Ichthys project operated by Japan’s INPEX in the Northern Territory, producing 7.5Mt in 2019 – up 900% in a year from its commissioning volumes in 2018.

The country shipped 77.5Mt of locally produced LNG in 2019 – an 11.4% increase over the previous calendar year

Western Australia alone is now the world’s second largest LNG producer, with Queensland ranked at sixth. The new data also underpins the emergence of the Northern Territory as the third force in Australian LNG, producing 14% of its 2019 exports.

EnergyQuest analysts estimated that Australian LNG export revenue reached A$49.0 billion in 2019, up from A$43.3 billion in 2018 and A$9.4 billion a decade ago in 2010 at the start of the Australian LNG development boom.

Mexican president brags that his government hasn’t approved mining concessions

Mexican President Andrés Manuel López Obrador took pride in the fact that his administration hasn’t approved new mining concessions.

During a public event with Indigenous people in the central state of Puebla, López Obrador criticized the five administrations that preceded his for approving concessions that ceded 90 million hectares of land to mining companies. “[But] we have approved zero,” the left-wing politician said.

“We unveiled many rotten things. Politics are different now,” – AMLO

According to local media, the president -known by his initials AMLO- also said he is not going to betray his people and, therefore, he will not allow the use of fracking to extract oil and gas.  

The Mexican leader also announced that he will ask Calgary-based TC Energy (formerly TransCanada) to modify the route of its 287-kilometre long Tuxpan-Tula natural gas pipeline so that it doesn’t cut through the Cerro del Brujo (Sorcerer’s Hill), a mountain considered sacred by the northern Puebla First Nations. 

AMLO condemned that the contract signed with TC Energy stipulates that even if the pipeline is not being built, the Mexican state has to pay for it. Thus, he said it was important to renegotiate the deal so that the Canadian company continued building the duct, something that allowed his government to save $4.5 billion.

In response to the president’s speech, Gabino Hernández, representative of the Nahuátl people, asked for mining, hydro, and fracking projects to be banned in the region. According to Hernández, communities are worried about the possible impacts of such operations on the local fauna and water resources. 

Top 50 biggest mining companies

MINING.COM’s ranking of the world’s 50 largest mining companies based on market value show a revived industry entering the 2020s but with diverging fortunes for certain subsectors.

At the end of the 2019, the MINING.COM TOP 50 had a combined worth within shouting distance of $1 trillion after adding more than $150 billion in market capitalization over the course of the year.

MINING.COM Top 50 biggest mining companies
Source: MINING.COM, Mining Intelligence, Morningstar, GoogleFinance, company reports Trading data from primary-listed exchange where applicable and currency cross-rates at the date of publication.

The top 7 now make up more than half the value of the sector’s top tier as Swiss giant Glencore’s $10 billion annual drop in market cap is more than offset by the gains for the biggest benefactors of palladium’s record run – Norilsk and Anglo American.

Also boosted by nickel’s rally, the Russian company added a remarkable $15 billion on the Moscow exchange last year to become the fourth most valuable miner in the world.

Anglo’s turnaround over the past three years is astounding, going from less than $5 billion in January 2016 to over $40 billion at the end of last year, boosted not only by its stake in AngloPlat but also by iron ore’s resurgence through an interest in South Africa’s Kumba. Iron ore pure play Fortescue Metals was the year’s best performer, jumping 155%, just beating the world’s largest platinum miner.

Unsurprisingly gold producers had a good year and the precious metals miners and streaming companies in the ranking added a collective $58 billion in worth last year even when excluding soaring AngloPlat.

Lithium producers have struggled amid the battery metals rout with Chile’s SQM the biggest loser in percentage terms and only outdone by Glencore in dollar terms. If not for a late surge in Shenzen, Tianqi Lithium would have dropped out of the Top 50 altogether while Livent, FMC’s lithium spin-off sits outside the top 80.

MINING.COM Top 50 biggest mining companies
Source: MINING.COM, Mining Intelligence, Morningstar, GoogleFinance, company reports Trading data from primary-listed exchange where applicable and currency cross-rates at the date of publication.

China Molybdenum’s exposure to cobalt hasn’t helped its shares either and despite a solid performance in 2019, the stock could only manage position 28 in the ranking after peaking at no 10 in 2017.

Another Asian company experiencing a reversal of fortune is India’s Vedanta which ranked as high as no 12, but thanks to zinc’s woes lost another 22% in value last year.

If gold’s rally continues a bunch of gold miners could enter the MINING.COM TOP 50 including B2Gold at no 52 worth just over $4 billion at the end of last year, Zhaojin Mining (no 54), Yamana Gold (no 53) Detour Gold (no 56).

Other companies that could join or rejoin the ranking include Canada’s Cameco, the world’s number one public uranium miner which sits at no 55 with a market value of $3.5 billion, Peru’s Buenaventura ($4.1 billion) and Ivanhoe Mines, a platinum and copper explorer which rose 80% in value over the past year and is now worth $3.3 billion.

MINING.COM Top 50 biggest mining companies
Click on table for full size. Source: MINING.COM, Mining Intelligence, Morningstar, GoogleFinance, company reports Trading data from primary-listed exchange where applicable and currency cross-rates at the date of publication.

Notes:

As with any ranking, criteria for inclusion is a contentious issue. We decided to exclude unlisted and state-owned enterprises at the outset due to a lack of information. That of course excludes giants like Chile’s Codelco, Uzbekistan’s Navoi Mining which owns the world’s largest gold mine, Eurochem, a major potash firm, trader Trafigura, top uranium producer Kazatomprom and numerous entities in China and developing countries around the world.

Another central criterion was the depth of involvement in the industry before an enterprise can rightfully be called a mining company.

For instance, should smelter companies or commodity traders that own minority stakes in mining assets be included, especially if these investments have no operational component or not even warrant a seat on the board?

This is a common structure in Asia and excluding these types of companies removed well-known names like Japan’s Marubeni and Mitsui, Korea Zinc and Chile’s Copec. Levels of operational involvement and size of shareholding was another central consideration. Do streaming and royalty companies that receive metals from mining operations without shareholding qualify or are they just specialized financing vehicles? We included Franco Nevada, Royal Gold  and Wheaton Precious Metals.

What about diversified companies such as BHP Billiton or Teck with substantial oil and gas assets? Or oil sands companies that use conventional mining methods to extract bitumen for that matter? Vertically integrated concerns like Alcoa and energy companies such as Shenhua Energy where power, ports and railways make up a large portion of revenues pose a problem as does diversified companies such as Anglo American with separately listed majority owned subsidiaries. We’ve included Angloplat in the ranking as well as Kumba Iron Ore.

Chemical companies are also problematic – should Albemarle not be ranked because its potash and lithium operations are such a small part of its overall revenues? The same issue applied to FMC before it spun off its lithium business.  

Many steelmakers own and often operate iron ore and other metal mines, but in the interest of balance and diversity we excluded the steel industry, and with that many companies that have substantial mining assets including giants like ArcelorMittal, Magnitogorsk, Ternium, Baosteel and many others.

Head office refers to operational headquarters wherever applicable, for example BHP and Rio Tinto is shown as Melbourne, Australia but Antofagasta is the exception that proves the rule. We consider the company’s HQ to be in London where it has been listed since the late 1800s.

Trading data from primary listing exchange and currency cross-rates at the date of publication. Market capitalization calculated at primary exchange where applicable from total share outstanding, not only free floating shares.

Please let us know of any omissions, deletions or additions to the ranking or suggest a different methodology.