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In Search of Battery Metals, BHP (NYSE:BHP) Ready to Expand to New Jurisdictions

Mining companies often need to contend with adverse factors and environments. Mining requires a complex infrastructure of mining equipment, transportation,…

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This article was originally published by Mining Feed
Brazzaville, called Pont de Corniche, opened 2016, connected with the Route de la Corniche in the Democratic Republic of Congo.

Mining companies often need to contend with adverse factors and environments. Mining requires a complex infrastructure of mining equipment, transportation, and resource management. The last thing miners want to contend with is a dangerous or politically unstable jurisdiction. 

However, some companies are finding that the risk far outweighs the reward and are willing to work in jurisdictions often avoided by most companies. This includes countries that contain deposits of metals and minerals gaining in value and demand, making the investment and risk worth the effort.

BHP (NYSE:BHP) is one of those companies, as CEO Mike Henry recently said that BHP is prepared to shift out of its usual operational comfort zone of advanced economies to work in “tougher jurisdictions”. Why would BHP take on more risk in countries that have politically volatile environments? To gain exposure to commodities like copper, nickel, or cobalt, for which demand is booming as they are needed for the green energy transition underway. 

Investment in projects in these areas will require careful planning and understanding the political climate of areas typically avoided by mining companies. BHP’s scale and expertise will allow it to manage those risks to capitalize on the potential profits. 

Henry commented, “But of course, the size of the opportunity needs to be commensurate with the increased management effort that is going to be required to pursue opportunities in jurisdictions that we may not currently be operating in,” Henry said. 

Where and When? 

The Democratic Republic of Congo (DRC) is host to Ivanhoe Mines’s (TSX:IVN) Kamoa-Kakula mine, also known as Western Foreland. This mine has been profitable for the company, and BHP is now holding talks with Ivanhoe over an exploration site adjacent to Kamoa-Kakula. 

The DRC  has also made it clear that it wants to open it doors wide for foreign investment, particularly for its copper and cobalt deposits. This would exploring outside of many companies’ “comfort zones”, but would also put companies who invest in these countries at an advantage in the future.

Besides the growing demand for these metals and minerals, there is also the probability that politically volatile jurisdictions could transform rapidly into stable ones, making it even more attractive for mining companies. But the miners who are first into these countries will have more attractive terms and a lower overall cost as incentives are higher and competition is lower.

While BHP is prepared to move into new areas, the company will be exploring opportunities in the “areas we like” as well. That may mean higher costs as some projects become less accessible, but BHP is prepared to invest in the effort to maximise returns in countries it has operational experience.

Henry continued, “I want to be clear we don’t see exploration success as being confined to moving into new jurisdictions. We know there is more copper to be found in the areas we like but it is going to be harder to find and perhaps deeper, which is going to bring different technological and financial challenges,” he said.

The Democratic Republic of Congo’s First Mover Advantage

In an effort to court more foreign investment, the DRC has paved the way for simpler and smoother deals to be made with lower taxes and support from local communities. This has made it a new focus for some miners.

Murray Hitzman, a former US Geological Survey scientist who spent more than a decade touring the southern Congo and advising mining projects, said the region’s rich cobalt and copper deposits began life at the bottom of shallow, ancient seas eight hundred million years ago. Over time, sedimentary rocks were buried under gentle hills, and salty liquids containing metals seeped into the earth and mineralized the rock.

A quarter of the world’s gold, tin and tantalum reserves are produced by artisanal and small miners. The artisanal miners are particularly interested in copper and cobalt; cobalt is a major attraction due to its high value-weight ratio, but efficient copper mining requires large-scale operations. A handful of mines provide semi-formal access for artisanal miners as part of the site, but industrial mining companies are in the default position of refusing to cooperate with them.

Africa Moving Rapidly

In recent decades, African governments have lifted restrictions and privatized their mining industries, attracting significant foreign direct investment. As a result, these industries have been dominated by transnational corporations such as Glencore, AngloAmerican, and Barrick Gold. These companies operate outside the formal reach and control of African governments and sit next to artisanal and small-scale mining sectors.

At the peak of the commodity boom in 2007 when the Democratic Republic of Congo began implementation of the EITI, decades of conflict, political instability, corruption, looting, and mineral smuggling decimated the mining sector, once the country’s growth engine. In the last decade of civil war and conflict, flagship industrial mining has declined, while informal artisanal mining has expanded. Now that peace has returned to most parts of the country and a new democratically elected government is in place, the potential is excellent for mining to contribute to economic growth.

The Government of the Democratic Republic of Congo is also helping artisanal miners to earn a living by opening up new artisanal mining zones. The increasing global demand for battery minerals represents a unique opportunity to develop a model for socially responsible business. The benefits of this model can be applied to the estimated 40 million artisanal miners around the world who work to extract various minerals for a living.

Cobalt is an indispensable mineral used in batteries for electric cars, computers, and mobile phones. Demand for cobalt is rising as electric cars are sold in Europe, where governments encourage sales with generous environmental bonuses. Recent projections from the World Economic Forum and the Global Battery Alliance suggest that demand for cobalt to be used in batteries by 2030 will quadruple as a result of the boom in electric vehicles.

While the country has pledged approximately $6 billion to revamped infrastructure and expanding electricity and water access to new areas, infrastructure remains a major challenge. The Democratic Republic of Congo has one of the biggest minerals reserves in Africa, with copper reserves of 120 million tonnes and cobalt reserves among the largest in the world, over 45 million tonnes of lithium reserves, 31 million tonnes of niobium, zinc, and manganese, and over 7 million tonnes of gold reserves of 600 tonnes. To mine all those minerals takes a lot of energy. 

A 700 MW deficit exists in the former Katanga province in the mining sector, where there are no projects, resulting in 1 GW of energy imports from neighboring countries. However, with companies like BHP looking to possibly enter the country for new projects, all of that could change very quickly.

 

The above references an opinion and is for information purposes only. It is not intended to be investment advice. Seek a licensed professional for investment advice. The author is not an insider or shareholder of any of the companies mentioned above.

The post In Search of Battery Metals, BHP (NYSE:BHP) Ready to Expand to New Jurisdictions appeared first on MiningFeeds.











Author: Matthew Evanoff

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Base Metals

Monsters of Rock: Lithium shares flush with positive sentiment to dominate the gains

Lithium miners were the kings, queens, jacks and aces of the bourse on an avalanche of positive news around the … Read More
The post Monsters of Rock:…

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Lithium miners were the kings, queens, jacks and aces of the bourse on an avalanche of positive news around the sector.

The biggest trigger was probably the incredible rise in value for Tesla overnight, which soared beyond a US$1 trillion valuation on news Hertz would order US$4 billion worth of electric vehicles from the automaker.

As the leading electric vehicle maker in the western world, and with a big presence also in China and energy storage, Tesla is one of the biggest end users of lithium products globally.

Its boss Elon Musk, now the richest man ever, has a fair bit of sway on the market as well.

On top of that Pilbara Minerals (ASX:PLS), up 525% over the past 12 months since spodumene prices bottomed out at under US$400/t (it sold a batch for upwards of US$2000/t last month), gained 7.66% after formally announcing plans to develop a lithium chemical plant in a JV with South Korea’s POSCO.

Core Lithium (ASX:CXO) declared the start of construction on its Finniss Lithium Mine in the Northern Territory. That will be shipping concentrate from the end of 2022.

$550 million capped Neometals (ASX:NMT) was up 14% after announcing its battery recycling demonstration plant in Hilcenbach, Germany, had been fully commissioned.

The one time lithium miner is up 405% over the past year.

Vulcan Energy (ASX:VUL), Sayona (ASX:SYA), Liontown (ASX:LTR) and Orocobre (ASX:ORE) were among the lithium miners to dine out on the day’s news, while rare earths miner Lynas (ASX:LYC) was also up.

On the flippity flip, iron ore miners were weak with Fortescue (ASX:FMG) and Rio Tinto (ASX:RIO) cancelling out a gain from BHP (ASX:BHP), while Mineral Resources (ASX:MIN) cancelled out the gains it made with yesterday’s announcement the Wodgina lithium mine would be coming back online with news it ate a 48% price discount on iron ore sales in the September Quarter.

MinRes’ average realised prices fell from US$178/t to around US$78/t between the June and September Quarters.

The bright green is all lithium baby. Pic: Commsec

 

Base metals inventories falling, but can it be sustained?

Base metals were back up on Monday, with production cuts in energy starved China and Europe hitting primary supply.

Inventories held by the major exchanges are being chewed up.

While price moves among the miners was muted, nickel rose 3.2% to climb back over US$20,000/t overnight after hitting US$21,000/t briefly last week.

“Nickel rallied after Eramet disclosed a 19% drop in ferronickel production from its operations in New Caledonia,” ANZ analysts said in a note.

“The market is also showing signs of tightness, with cash contracts closing at their biggest premium to futures in two years. LME inventories are down nearly 50% since April.”

LME stockpiles for copper hit their lowest level since 1974 last week, but Commbank analyst Vivek Dhar says it is too early to say whether the market is as tight as it seems, or whether some traders are hoarding to capitalise on high prices.

The market is expected to be in a small deficit at the end of this year to a 328,000t surplus in 2022 on rising supply (about 1.3% of global demand).

Mined supply is expected to increase 2.1% this year and 3.9% in 2022, but Dhar warned copper miners had a history of underwhelming.

“The rising forecasts for copper mine production reflect 5 major copper projects due to arrive by the end of 2022,” Dhar said.

“That compares with just two major copper projects in the last 4 years.

“Given the track record of mine disruptions (i.e. labour strikes, power and water scarcity and geopolitics) and the decline in copper grades, elevated copper mine production growth forecasts don’t tend to last long.

“We think it’s worth considering that new mine supply may take longer than currently expected to hit the market.”

The post Monsters of Rock: Lithium shares flush with positive sentiment to dominate the gains appeared first on Stockhead.







Author: Josh Chiat

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Energy & Critical Metals

Chart of the Day: Plenty of immediate upside targets for Ionic Rare Earths

Let’s get into it. Iconic Rare Earthss (ASX:IXR) is a bullish set up from a technical perspective. It’s in an … Read More
The post Chart of the Day:…

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Let’s get into it.

Iconic Rare Earthss (ASX:IXR) is a bullish set up from a technical perspective.

It’s in an uptrend. The moving averages are sloping up.

It’s shown us that when it wants to the market can get a hold of it – as evidenced by the fierce run from 1.5c to 6c at the start of this year.

 

Chart of the Day: Ionic Rare Earths (ASX:IXR)

There are no immediate gaps on the chart to worry about that need to be filled.

The company surpassed 4c resistance yesterday on increasing volume, which was a positive sign. However, after touching 4.5c in intra-day trade, it has now settled back to close at 4.2c, leaving a daily selling candle.

That infers that a test of 3.8 – 4c may be on the cards.

In our view that would make attractive buying.

Given the negative response to the scoping study in late April, there are plenty of immediate upside targets, the most immediate being 4.7c, with further potential to those March highs above 6c.

Back the other way, and we don’t need to hold this below 3.5c.

The company is well funded – reporting over $11m on balance sheet at their last quarterly – with an updated quarterly anticipated before the end of the month.

We are long as of yesterday, and will manage the trade to the above risk, looking for 4.7c first, with potential to above 6c if things go their way.

Steve Collette of Collette Capital Pty Ltd (ABN 56645766507) is a Corporate Authorised Representative (No. 1284431) of Sanlam Private Wealth (AFS License No. 337927), which only provides general advice.

Collette Capital only makes services available to professional and sophisticated investors as defined by the Corporations Act, Section (s)708(8)C and 761G(7)C.

The Collette Capital Wholesale IMA Strategy has returned +24.83% p.a. net of all fees as at the end of September 2021 since inception in January 2015 (using the Time Weighted Return method of calculating returns).

Learn more at www.collette.capital

The post Chart of the Day: Plenty of immediate upside targets for Ionic Rare Earths appeared first on Stockhead.


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Energy & Critical Metals

Hastings could be next in line to produce rare earths in Australia with plant approval in Onslow

Rare earths player Hastings Technology Metals (ASX:HAS) has just secured environmental approval for construction of the downstream processing plant at…

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Rare earths player Hastings Technology Metals (ASX:HAS) has just secured environmental approval for construction of the downstream processing plant at its Yangibana rare earths project in Onslow in WA.

It’s a solid step on the path to production, with the plant set to perform hydrometallurgical processing of rare earths oxide concentrate from Yangibana into mixed rare earth carbonate (MREC) containing high levels of neodymium and praseodymium concentrate (NdPr).

NdPr are vital components used to manufacture permanent magnets that are required in advanced technology products ranging from electric vehicles to wind turbines, robotics, medical applications and digital devices.

And Yangibana contains one of the most highly valued NdPr deposits in the world, with NdPr:TREO ratios of up to 52%.

Australia’s next rare earths producer?

The Department of Agriculture, Water and the Environment (DAWE) approval follows DevelopmentWA Board sign-off last month for the company to enter discussions for an option to lease Ashburton North Strategic Industrial Area (ANSIA) Lot 600.

“This is a significant milestone for our Yangibana Rare Earths Project and further endorses Hastings’ decision last year to decouple the processing plant from the Yangibana mine site,” executive chairman Charles Lew said.

“The Commonwealth environmental approval will allow Hastings to construct the Onslow Rare Earths Plant for a full production rate of 15,000 tonnes of MREC per annum, unlocking the high-quality and NdPr-rich rare earths carbonate that we will produce at Yangibana.”

“Importantly, the Commonwealth approval is another positive step in Hastings’ journey to become Australia’s next rare earth producer.”

“Debt financing talks are advancing well and scheduled for conclusion before the end of this year and early stage civil works at the Yangibana mine site are in progress.”

Pic: Location of ANSIA highlighting the site chosen for the Onslow rare earths plant.

Plant construction kicks off in 2022

The company says that building the plant at ANSIA – which is around 15kms south-west of Onslow – is key to its downstream processing program because it offers access to piped natural gas, a plentiful supply of water and grid power.

Plus, the ANSIA location reduced the volumes of consumables and reagents needed to be transported to the Yangibana mine site by up to 80%.

Construction of the plant is due to begin in 2022, after the completion of early works at Yangibana mine site – and in line with Hastings’ target to produce its first MREC in early 2024.

The post Hastings could be next in line to produce rare earths in Australia with plant approval in Onslow appeared first on Stockhead.




Author: Emma Davies

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