London Metal Exchange and Fastmarkets to set lithium price benchmark

The London Metal Exchange (LME) is partnering with Fastmarkets to develop the reference price for its planned lithium futures contract, which will help analysts and executives to get a full sense of the global market for the key ingredient in the making of the batteries that power electric vehicles (EVs).

Unlike for copper or other metals used in the making of EVs, there currently is no traded price for lithium.

“In recent years there has been unprecedented price volatility in the lithium market, driven particularly by explosive electric vehicle (EV) battery demand,” the exchange said.

Unlike for copper or other metals used in the making of electric vehicles, there is no traded price for lithium.

The move, it added, comes after industry players, including producers, end-users and several leading automotive firms, urged the LME to develop effective lithium price-risk management tools.

“This global strategic partnership will develop a definitive roadmap aimed at providing a pricing mechanism for lithium that can be utilized throughout the supply chain and will support the development of risk-management tools for the industry,” Fastmarkets said in a separate statement.

Last year, the LME asked companies that assess prices of battery-grade lithium to submit proposals to supply a reference for cash-settled contracts it planned to launch  in the fourth quarter of this year.

Today, however, the exchange only said it would continue “to gauge appropriate timing” for a launch.

Currently, producers negotiate contracts with buyers, but the terms of the deals are not made public.

The LME, the world’s oldest and largest market for industrial metals, said it selected Fastmarkets because their prices were used widely across the industry.

The agency already provides the global benchmark for the cobalt market — another key battery raw material.

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New Energy to acquire project near Codelco’s and BHP’s mines in Chile

Canada's New Energy Metals (TSXV: ENRG) announced that it entered into a letter of intent with certain arm’s length vendors to be granted the exclusive right and option to acquire an initial 70% royalty-free interest in and to certain exploration and exploitation mineral concessions known as the “Exploradora North project.”

The 84,750-hectare project is located in the II and III Regions of northern Chile along the prolific West Fissure fault system between the open-pit Escondida mine, the largest copper mine in the world which is owned by BHP and Rio Tinto, and Codelco’s El Salvador underground copper mine.

In a press release, New Energy explained that Exploradora North is also located immediately north and east of Codelco’s Exploradora deep drilling project, where near-surface resource reported 100 Mt of 0.3 Cu and 0.2 g/t gold.

According to New Energy, Minera Activa, a private Chilean company, recently announced positive results in the Exploradora district, and Brazil’s Vale is also actively drilling to the west of Exploradora North.

To move forward with the acquisition, New Energy Metals, through a wholly-owned Chilean subsidiary, will enter into a formal option to purchase agreement which contemplates that the Vancouver-based firm has to incur in exploration expenditures on the project of at least $15 million within 48 months of the effective date. The company will also have to pay $8.5 million an issue an aggregate of 11,500,000 common shares of New Energy Metals, all of which will be done in different installments or phases.

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Codelco leads $11 billion mining capital raising in 2019

Codelco leads $11 billion mining capital raising in 2019

Source: GlobalData Mining Intelligence Center

A new report by GlobalData shows the value of capital raising deals in the metals and mining sector increased from the final quarter last year to over $11 billion in Q1 2019 despite the number of agreements inked falling sharply.

GlobalData said overall, the total volume of completed capital raising deals decreased from 378 in Q4 2018 to 273 in Q1 2019, a 27.8% decline.

In contrast, however, during the same period, the number of announced deals increased from 226 to 268, an 18.6% rise noted Vinneth Bajaj, senior mining analyst at the independent analytics firm:

“The slowing Chinese economy alongside the ongoing China-US trade war has weighed on the completion rate of mining capital raising activities."

According to the report the largest of the completed deals during the first quarter 2019 was the $1.3B capital raised by Chilean state-owned copper giant Codelco which offered international bonds due in 2049. This was followed by India’s Tata Steel which raised $967m in a private placement of shares.

India, China, Chile, Canada, and Switzerland were the five largest countries globally in terms of deal value, accounting for over 81% or US$9.2bn of the global total.

Robust mining M&A

A recent report by GlobalData showed overall deal value of mergers and acquisition in the sector in Q1 2019 grew by 6.3% to $22.5B from $21.2B in the same period last year. Deal volume decreased by 8.7% from 358 in Q1 2018 to 327 deals in Q1 2019.

Among advisers CIBC topped the list, with the Canadian bank advising on two deals worth $18.7B edging out M. Klein & Company. Cravath Swaine & Moore and Davies Ward Phillips & Vineberg shared first place among M&A legal advisers.

The four firms worked together, advising Barrick Gold (which last year bought Randgold Resources) on its attempted takeover of Newmont Mining launched in February.

The all-share mega-merger did not materialize, but the two gold miners did combine their operations in Nevada to create the world’s largest gold mining complex with annual production of more than 4m ounces. Newmont's acquisition of Goldcorp closed in April.

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Worker killed at Codelco’s El Teniente mine

A worker at Codelco’s El Teniente operation was hit by a rock and died on Sunday, Chile’s state miner informed.

In a media statement, the world’s No.1 copper producer lamented the passing of 58-year-old Pedro Enrique Mena Bolvarán, who belonged to the company’s Mining Division.

According to Codelco, the causes that prompted the rock to fall down at the Pilar Norte mine are under investigation.

“As soon as the accident took place, activities in the area were halted and emergency protocols were activated. First aid personnel came to the rescue and practiced CPR for over 30 minutes. However, their efforts were unsuccessful and they ended up confirming the worker’s passing. Authorities were also informed about the incident,” the miner’s statement reads.

The company emphasized that it maintains its commitment to improving safety measures and occupational health standards in its different operations.

El Teniente is the world’s biggest underground copper mine and the sixth largest by reserve size. It is located 80 kilometres south of Santiago in the Andes mountain range.

At present, the facility is undergoing an extensive $3.4 billion-expansion project called El Teniente New Mine Level project to extend its productive life by 50 years.

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Workers at Codelco’s Chuquicamata mine to vote on strike action

Unionized workers at Codelco’s Chuquicamata operation rejected on Saturday the miner’s final contract negotiation offer and announced that on Tuesday and Wednesday they will be voting on a proposal to go on strike.

In a communiqué made public via social media, the union’s leadership said the proposal presented to them by the world’s No. 1 copper producer was a 'joke' aimed at suppressing workers’ legitimate aspirations.

“It is clear that the company didn’t take into consideration the four axes, which were the foundations of this process, where two of them implied zero cost for the company. With this [proposal], it was confirmed that the administration’s goal is to impoverish and divide workers and punish those that have fought for workers’ demands in a fiercely and committed fashion,” the statement reads.

The proposal made by Chile’s copper giant to its workers includes bonuses of about $14,150 per worker but eliminates the early signing bonus and maintains the idea -from a previously rejected scheme- of a 1.2% salary readjustment.

Given that this was Codelco's final proposal, employees say that the protest action is the logical next step. However, the plan to go on a strike has to be approved by more than half of the 3,200 workers that belong to the three unions operating at Chuquicamata, so union reps are asking employees to show up to the polls.

“We also hope that the administration reconsiders both its behaviour and the value it attaches to its workers because the future of this negotiation and of Chuquicamata itself depends on them,” the brief states.

Chuqui -as workers call Codelco’s flagship mine- together with the nearby Radomiro Tomic mine produced 653,000 tonnes of the company's total 1.8 million tonnes of output last year.

At present, the state-owned miner is seeking to transform the 100-year-old open-pit deposit at Chuquicamata into an underground mine by 2020, when mining at the open-pit ends.

The $5.6 billion-switch is part of Codelco’s 10-year, $39-billion overhaul of its core assets, and it is expected to extend the mine’s life by at least 40 years. Annual production after the transition has been completed is projected to be 320,000 tonnes of fine copper and 15,000 tonnes of molybdenum.

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Chile’s Codelco brushes off rumoured copper output drop

Chile’s Codelco, the world’s No. 1 copper producer, has dismissed reports of a predicted 40% drop in production over the next two years due to declining ore grades and the switch of its flagship Chuquicamata mine to underground from open pit.

Instead, the mining company says it’s following a detailed plan that will allow it to keep copper output at current levels of around 1.7 million tonnes a year over the next decade.

"Codelco's mine plan is based on existing mines and projects , which will progressively and systematically replace our current operations,” it said in a statement.

Media reports Thursday said production at Chuquicamata would drop to around 182,000 tonnes by 2021 from 459,000 tonnes this year.

State-owned miner says it’s following a detailed plan that will allow it to keep copper output at current levels of around 1.7 million tonnes a year over the next decade.

The fall would impact Codelco's total production by around 4%, the articles stated.

The state-owned copper miner said that since mining at the open-pit mine ends in 2020, which is when the underground section begins commercial operations, it will able to keep productive capacity unchanged.

The $5.6 billion-switch of Chuquicamata to underground cave mining from open pit, part of Codelco’s 10-year, $39 billion-overhaul of its core assets, is expected to extend the mine’s life by at least 40 years.

Annual production from “Chuqui” — as it’s often referred as — after it has fully transitioned to underground extraction is projected to be 320,000 tonnes of fine copper and 15,000 tonnes of molybdenum.

Codelco, which hands over all of its profits to the state, holds vast copper deposits, accounting for 10% of the world's known proven and probable reserves and about 11% of the global annual copper output with 1.8 million metric tonnes of production.

Chuquicamata and the nearby by Radomiro Tomic mines produced 653,000 tonnes of the company's total 1.8 million tonnes of output last year, which was almost 4% less than in 2017.

Production decline, together with lower copper prices and higher costs, saw the company's annual profits drop by a third last year to $2 billion, not counting paper losses worth almost $400 million, as it wrote down the value of its assets, including its Ventanas smelter and the open pit at its Salvador division.

Ugly trend

The world’s main copper producing nations have been showing output declines this year, according to the latest monthly bulletin from the International Copper Study Group (ICSG).

Global production declined 2.4% in February 2019, when compared to the same month last year, with 1,515kt (19,749ktpa) of contained copper produced globally.

Chile led the pack with output down 7.1 % y/y to 415.9kt (5,412ktpa) while Peru, the second main global producer, saw its output fall by 5.1% y/y to 176.1kt (2,296ktpa).

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