US coal-based generation to be outplayed by renewables in 2020: GlobalData

Coal-based electricity generation has fallen to its lowest level in the US, representing a 23.5% share in the generation mix. With the COVID-19 crisis in place, and climate concerns taking a bigger stage, renewable-based generation might cast a shadow over the coal-based generation this year, says GlobalData, a leading data and analytics company.

Somik Das, Power Analyst at GlobalData, comments: “Coal-based electricity dropped to a 42-year low in 2019, with the share falling by almost 16% in comparison to 2018. On the contrary, generation from renewables increased by 3.8% compared to 2018, where renewables accounted for 19.1% of the generation. The COVID-19 outbreak is expected to hurt coal-based generation further as electricity generators reduce coal-based electricity generation in response to reduced electricity demand.”

Utilities are looking at renewables over coal, committing to their goals of addressing climate change. This is expected to expedite the closures of coal-fired power plants since they are already challenged to compete with natural gas, wind and solar sources, which are all currently at par or cheaper sources of electricity generation than coal.

Das adds: “The COVID-19 outbreak has added further woes to the already troubled coal-based generation that was facing stiff competition from the cheaper sources of generation. With plunging electricity demand following the temporary shutdown of factories, offices and retailers; utilities chose other sources of energy over coal. While the operational cost of coal power plants (when compared to gas, solar, wind, or nuclear) is more expensive, with long-term power purchase agreements for coal-based power generation in place with multiple rural communities, industries and companies, it is less likely that the use of coal would completely end soon.

“The aging coal-based power infrastructure, a steep decline in cost of building renewable projects (especially wind and solar), and a low-cost natural gas scenario are likely to push coal-based power generation share in the minority in the generation mix.”

Das concludes: “Low gas prices and the COVID-19 pandemic has acted as a catalyst, initiating the move towards low carbon energy transition in the US. GlobalData estimates that by 2025, generation from coal will drop by another 22.1%, compared to 2020, representing 17.5% of the generation in the US power mix.”

Teck Named to 2020 Best 50 Corporate Citizens in Canada

Teck Resources Ltd. [TECK.A-TSX; TECK.B-TSX; TECK-NYSE] has been recognized as one of the top 50 companies in Canada for corporate citizenship, being named to the Best 50 Corporate Citizens in Canada ranking by Corporate Knights. This marks the 14th consecutive year Teck has been named to the Best 50.

“This recognition is made possible by our employees who ensure that sustainability is central to everything we do,” said Don Lindsay, President and CEO. “Teck is committed to being a positive corporate citizen and to responsibly producing the materials needed to build a better quality of life for people around the world.”

The Best 50 Corporate Citizens in Canada are each evaluated on a set of up to 21 environmental, social and governance indicators including resource efficiency, financial management, clean revenue and supplier performance.

The company said: “Our approach to responsible resource development is guided by our sustainability strategy, which sets out goals that stretch through to 2050 in eight strategic themes: Climate Change, Water, Tailings, Responsible Production, Biodiversity and Reclamation, Health & Safety, Our People, and Communities & Indigenous Peoples. We have set ambitious targets in sustainability, including being carbon neutral by 2050.”

Teck has also been named to the Dow Jones Sustainability World Index (DJSI) for 10 consecutive years and was the top-ranked mining company on both the World and North American Index for DJSI in 2019. Teck is also the top ranked mining company by Sustainalytics and is highly ranked by MSCI. Teck is included in the 2020 Global 100 Most Sustainable Corporations list by Corporate Knights and was named one of Canada’s Top 100 Employers for 2020.

Teck is a diversified resource company committed to responsible mining and mineral development with major business units focused on copper, steelmaking coal, zinc and energy.

Hudbay files appeal over construction halt of Rosemont Project

Hudbay Minerals Inc. [HBM-TSX, NYSE] has filed an initial brief with the U.S. Court of Appeals for the Ninth Circuit in relation to the U.S. District Court for the District of Arizona’s decision in July, 2019, which revoked the U.S. Forest Service’s issuance of the final record of decision (FROD) for the Rosemont project in Arizona.

The FROD was issued in June, 2017, after a thorough process involving 17 co-operating agencies at various levels of government. The filing of the Hudbay brief follows the U.S. federal government’s initial brief, which was filed last week. The briefs explain how both Hudbay and the government believe that the district court misinterpreted federal mining laws and Forest Service regulations as they apply to Rosemont.

“Today’s filing represents the next milestone in our efforts to correct what we believe is a misinterpretation by the district court of the current laws and regulations that govern mining operations on public lands,” said Peter Kukielski, President and CEO. “We believe, based on the arguments filed by Hudbay and the government, that the appellate court will reverse the district court’s decision, allowing us to move forward with constructing and operating the Rosemont project.”

Both briefs assert that current law broadly authorizes mining-related activities, such as ore processing and tailings storage, to be conducted on open Forest Service lands. The district court’s determination that the Forest Service’s mining regulations do not apply to mining activities unless those activities are conducted entirely on valid mining claims is contrary to plain language readings of the general mining law, as well as Forest Service regulations, which explicitly allow for mining-related activity to occur on lands not covered by any mining claim.

“All functions, work and activities in connection with prospecting, exploration, development, mining or processing of mineral resources […] (are authorized) regardless of whether said operations take place on or off mining claims.” — 36 Code of Federal Regulations, paragraphs 228.1 and 228.3.

The Hudbay brief states: “Prior to the district court’s decision, no court had ever held that a mining plan of operations may only be approved if all mining and mining-related operations will occur exclusively on valid mining claims. The district court imposed this novel requirement on the Forest Service after misreading both the relevant statutes, which provide a broad grant of free and open access to federal lands for mining and mining-related operations, and the relevant regulations, which authorize the Forest Service to approve those operations on or off of mining claims.”

Similarly, the government brief states: “The district court’s decision […] rested on a fundamental misinterpretation of the Mining Law and the regulatory scheme applicable to the (U.S. Forest) Service’s review of mining plans. That decision should be reversed.”

“We believe that the brief filed today thoroughly demonstrates that the district court misinterpreted federal mining laws and ignored more than 150 years of precedent,” said Andre Lauzon, vice-president of Hudbay’s Arizona business unit. “The brief also points out that this decision, if not reversed, will disrupt the long-standing policy of the U.S. federal government to promote mining on public lands, including within national forests.”

Hudbay anticipates a final decision in the appeal process in late 2021.

Once in production, Hudbay’s 100%-owned the Rosemont mine 50 km south of Tucson is expected to be one of the largest copper mines in the United States, stimulating billions in new economic activity, and creating thousands of new direct and indirect, high-paying jobs.

Solutions for DTC Eligibility

Headquartered in Calgary, Alberta, with an office in Vancouver, British Columbia, Olympia Trust Company provides a number of valuable services through its Corporate & Shareholder Services division for existing companies, entrepreneurs wishing to list their private company on a stock exchange, and individual investors.

As transfer agent, Olympia Trust maintains the shareholder register for both public and private companies and plays a key role in shareholder communication and corporate events, such as the annual general meeting, dividend payments, corporate reorganizations, and so on. Any communication from the company to its shareholders pertaining to these corporate matters are handled by the transfer agent and funneled out to the investors. In Canada, it is a requirement that any publicly listed company has a third-party transfer agent.

Olympia Trust recognizes that many exploration and mining companies wish to dual list in Canada and the United States. For companies wanting to list their shares on the U.S. OTC Markets venture type of platform, Olympia Trust has put in place a program that benefits the company by expediting the DTC eligibility process, reducing the time frame from months to weeks.

DTC is the largest securities depository in the world and holds over $35 trillion worth of securities on deposit. Without having DTC eligibility, an issuer’s shares cannot be transferred electronically between brokerage firms. The application process for eligibility can be quite complex. Issuers are required to have a DTC participant act as their eligibility sponsor and may be required to submit certain letters of representation, legal opinions and indemnity agreements.

Having seen first-hand the challenges that some issuers have faced when trying to obtain DTC eligibility, Olympia Trust has developed a solution to help streamline this process. Olympia Trust and their U.S. partner will work closely with issuers, their legal counsel and DTC to ensure applications for eligibility are submitted in good order. Olympia Trust is registered with the U.S. Securities and Exchange Commission, is an approved transfer agent of DTC, and is a member of the OTC Markets Transfer Agent Verified Shares Program, all of which make Olympia Trust well positioned to assist companies with this process.

Olympia Trust also has a Currency & Global Payments division that provides foreign exchange services. These services benefit companies that are domiciled in Canada that have exploration and/or mining projects in different countries and need to transfer funds globally for payroll, acquisitions, contractors and other money transfer needs. Being a trust company, any funds held with Olympia Trust are just as secure as funds held in a bank, while offering more competitive rates than the major Canadian banks.

Olympia Trust has been a leading provider of quality trustee and administration services for over 20 years, with a strong focus on providing superior service to the Canadian capital markets. For the near future, Olympia Trust is continuing to develop its in-house technology to allow for further growth and expansion of its services.

COVID-19 pandemic fuels gold ETF and coin demand

By Ellsworth Dickson

A new report by the World Gold Council – Gold Demand Trends Q1 2020 – pointed out that “As the scale of the pandemic – and its potential economic impact – started to emerge, investors sought safe-haven assets. Gold-backed ETFs (gold ETFs) attracted huge inflows (+298 tonnes), which pushed global holdings in these products to a new record high of 3,185 tonnes.”

Interestingly, the number of gold bar buyers dropped by 19% year-over-year while demand for gold coins was up 36% due to safe-haven buying by Western retail investors.

With stores closed and people locked down at home, “jewellery demand, unsurprisingly, was particularly hard hit by the effects of the outbreak; quarterly demand dropped 39% year-over-year to a record low for our series of 325.8 tonnes. The drop in jewellery demand was led by a 65% decline in China – the largest jewellery consumer and the first market to succumb to the outbreak. Technology demand also fell to a new low for our data series of 73.4 tonnes (-8% year-over-year).”

Central banks continued to buy gold in significant quantities, although at a lower rate than in Q1 2019: net purchases amounted to 145 tonnes (-8% year-over-year). The World Gold Council report remarked that “Russia announced that it would suspend its long-term buying program from April, signalling a sharp slowdown in global net buying.”

The virus also caused disruption to gold supply as some mines suspended operations while others operated at a diminished production rate. Mine production fell to a five-year low of 795.8 tonnes (-3% year-over-year).

Meanwhile, recycling ground to a near standstill towards the end of the quarter as consumers were confined to their homes.

The report noted that investment inflows helped push the US dollar gold price to an eight-year high. Consequently, global gold demand in value terms reached US $55 billion – the highest since Q2 2013. The price also reached new record highs in Indian rupees and Turkish lira, among others.

Exploration and Mining deemed an Essential Service

The Canadian Minister of Public Safety and Emergency Preparedness has deemed exploration and mining essential services during the current COVID-19 outbreak.

The list includes:

Businesses that ensure global continuity of supply of mining materials and products (e.g. metals such as copper, nickel and gold) and that support supply chains including:

  1. Mining operations, production and processing
  2. Mineral exploration and development, including sand, gravel and aggregates
  3. Mining supply and services that support supply chains in the mining industry including maintenance of operations, health and safety
  4. Smelters

At the same time, explorers, miners and those in related businesses need to be in compliance with local regulations with regard to health and safety practices in order to protect workers and others from the COVID-19 virus.

Numerous exploration and mining companies with operations around the world have already taken steps to protect their employees, contractors and local communities. These measures have included lockdowns, suspension of activities, lower throughput, working at home if possible and some layoffs.

For example, Canadian companies operating in Mexico are subject to that country’s new COVID-19 decree where the Mexican Ministry of Health issued an Executive Order calling for the immediate suspension of non-essential activities, including mining, until April 30, 2020.

Other countries have developed their own executive orders to deal with the outbreak.

Pan American execs taking 20% pay cut

Pan American Silver Corp. [PAAS-TSX, NASDAQ] said Thursday April 2 that it is suspending operations at two Mexican mines, reducing throughput in Canada, and implementing a 20% executive pay cut.

The move comes after Mexico’s Ministry of Health issued an Executive Order calling for the immediate suspension of non-essential activities, including mining, until April 30, 2020.

The government decree aims to stem the impact of the COVID-19 pandemic.

“Following an initiative of reducing the number of people on site to increase the physical distancing, Pan American will now expand this program in order to bring its La Colorada and Delores operations into compliance with the Executive Order,” Pan American said.

The company said it has also begun to voluntarily reduce throughput by approximately 10% to 20% at its Timmins operation in Canada in order to further enhance physical distancing throughout the operation, offices and personnel transport systems.

“We are carefully monitoring new developments regarding the pandemic, implementing the preventative measures recommended by health authorities and adapting our operations to government or company-led directives,” said Pan American President and CEO Michael Steinmann.

Pan American recently acquired Tahoe Resources Inc. in a US$1 billion transaction that created the world’s second largest primary silver producer. The company owns and operates mines in Mexico, Peru, Canada, Argentina and Bolivia. Its portfolio includes the Escobal Mine in Guatemala, which is not operating right now.

Last year, Pan American reported consolidated annual silver and gold production of 25.9 million ounces and 559,200 ounces respectively.

The company recently said its Timmins West and Bell Creek (together Timmins) operations are no longer up for sale.

As previously announced, Pan American has suspended normal operations at its mines in Peru, Argentina and Bolivia in order to comply with mandatory national quarantines. However, on Thursday the company said there are currently no confirmed cases of COVID-19 at any of Pan America’s operations.

Pan American shares advanced on the news, rising 5.6% or $1.17 to $21.88. The shares are currently trading in a 52-week range of $13.83 and $34.80.

“Pan American is in a strong financial position to manage the current business environment,” the company said in a press release on Thursday. “Cash and cash equivalents at December 31, 2019 totaled $120.6 million. In addition, Pan American has a credit facility in the amount of $500 million that matures on February 1, 2023,” the company said.

At the end of 2019, $275 million was drawn on the credit facility, of which $15 million was repaid in early 2020. In order to provide additional flexibility and liquidity, Pan American has deferred certain capital expenditures and exploration spending.

Pan American’s senior management team has voluntarily agreed to a salary reduction until the situation normalizes, including a 20% reduction for the executive management team.

Newmont suspends two Canadian mines, shelves forecasts

Newmont Goldcorp Corp. [NGT-TSX; NEM-NYSE] said Monday March 23 that it is withdrawing its full-year 2020 production forecasts and putting some operations temporarily into care and maintenance.

It said the move is part of an effort to protect the health and safety of its workforce, the families and neighbouring communities from the impact of the COVID-19 global pandemic.

Holding operations that result from Newmont Mining’s recent US$10 billion takeover of Canadian mining giant Goldcorp, Newmont Goldcorp now ranks as the world’s largest gold producer with assets across the Americas, Africa and Australia.

“We are also making sure that these short-term disruptions do not impact long-term business value while ensuring we are well positioned to safely and efficiently ramp-up operations in a timely manner once the worst of this global pandemic passes,” said Newmont Goldcorp President and CEO Tom Palmer.

The four suspended operations include Musselwhite (Opapamiskan Lake, Ont., Eleanore (James Bay, northern Quebec), Cerro Negro (Argentina) and Yanacocha (Peru), which together represent roughly 20% of the company’s 2020 production guidance.

In the first quarter of 2020, Newmont says it now expects to produce approximately 1.4 million attributable ounces of gold. So far this year, the company has produced 981,000 ounces.

On Monday, Newmont shares rose 8.3% or $4.82 to $62.57.  The shares are currently trading in a 52-week range of $70.42 and $40.01.

Newmont Goldcorp also noted that it is currently not experiencing any significant delays in shipping concentrate or transporting and refining doré bars. However, it warned that this may occur in the coming days/weeks if certain government shutdowns or border restrictions are required.

“We currently have no confirmed COVID-19 cases among our workforce and are taking significant, proactive measures including social distancing at all of our sites, removing substantial numbers of non-critical  workers from our operations, closing offices with employees working remotely, and stopping all non-essential business travel to ensure we don’t become a pathway for transmission to others,” Palmer said.

“These are unprecedented times for all industries, and while this pandemic brings a lot of uncertainty, Newmont is well positioned to safely and responsibly generate long-term value for all of our stakeholders,” he said.

At the Musselwhite operation, Newmont has decided to limit personnel on site to minimize fly-in/fly-out activity to prevent the possible transmission of the virus into communities, including nearby First Nations communities in northern Ontario. It said essential personnel will remain on site to maintain infrastructure, continue environmental management and provide security.

At Eleanore, the company said it has decided to limit personnel on site to comply with the Quebec government’s restrictions on non-essential travel within the province and to prevent the possible transmission of the virus into communities, including First Nations communities.

At Cerro Negro, Newmont said it will have to limit personnel on site due to the halt of all domestic flights and mass transportation in Argentina through March 31. Remaining on site will be essential personnel to maintain infrastructure, continue environmental management, and provide security and continue ground control activities.

At Yanacocha, as previously disclosed, mining operations were in the process of safely ramping down due to government travel restrictions in-country, while gold production from leach pads and critical safety, security and environmental management activities continue.

Teck issues rail line blockade warning

Teck Resources Ltd. [TECK.B-TSX, TECK.A-TSX, TECK-NYSE] shares were down by almost 15% Friday after the company reported weaker than expected fourth quarter results and disappointing coal production forecasts.

Teck reported adjusted earnings per share of 22 cents in the fourth quarter of 2019, which was well below the consensus estimate of 40 cents. The fourth quarter earnings before interest, tax, depreciation and amortization (EBITDA) of $649 million was 24% below consensus of $854 million.

Meanwhile, Teck said it expects to produce between 23.25 million tonnes of coal this year, marking a 7% reduction from 2019 production levels. The softer volume guidance is attributed to weak short-term demand and record high inventory levels due to rail and port constraints.

“Our first quarter 2020 steelmaking coal sales are being negatively affected by severe weather in British Columbia, causing rail and port terminal performance issues and by blockades on rail lines,” the company said in a press release. “The estimated impact on first quarter sales is expected to be in excess of 1.0 million tonnes.”

Teck’s Class B common shares fell 14.4% or $2.46 to $14.63 on Friday on volume of almost 4.7 million. The shares are currently trading in a 52-week range of $16.85 and $34.32.

On Friday, the Federal Government was looking for ways to end rail blockades led by Indigenous protestors that have being going on for more than two weeks.

Teck Resources is a diversified resource company with business units focused on steelmaking coal, copper, zinc and energy. The company currently has interests in 13 operating mines, a large metallurgical complex and several major development projects in the Americas.

Teck recently said it wants to be carbon neutral across all of its operations and activities by 2050.

The mining giant said the carbon neutrality plan demonstrates its support of the transition to a low-carbon economy and worldwide efforts to meet the goal of the Paris Agreement to limit global temperature increases. “It also aligns with commitments by Canada and Chile – which are home to the majority of Teck’s operations – to be carbon neutral by 2050,” the company said.

Teck is pledging its commitment to climate action following reports that the Canadian Federal Government is close to making a decision on an Alberta oilsands operation known as the Frontier Project. The project is owned by Teck.

Located between Fort McMurray and Fort Chipewyan in northeastern Alberta, Frontier is truly large. The $20 billion truck and shovel oil sands mine is expected to produce 260,000 barrels per day of bitumen, while delivering $55 billion in provincial royalties and taxes over a projected lifespan of 41 years. The project is also expected to generate $12 billion in federal income and capital taxes.