Opinion https://www.afr.com/companies/mining/rio-ceo-s-five-lessons-from-boom-time-excess-20191028-p534zx Rio CEO's five lessons from boom time excess Big mining's next frontier is the digital world, and growing risk aversion means that shareholders should continue to earn an overweight share of the sector's wealth creation, says Jean-Sebastien Jacques Matthew StevensColumnist Oct 28, 2019 — 11.00pm Now there is a number to warm the cockles of Evy Hambro’s wealth-managing heart. According to Rio Tinto chief executive Jean-Sebastien Jacques, the top 40 mining houses have returned $US400 billion to shareholders over the past decade. In a keynote address that opened the festival of mining that is LME Week in London, Jacques contrasted this massive transfer of wealth with the shareholder value that was burned through the misjudgment released through the opening decade of China’s immersion in seaborne commodities markets. Over the decade to 2010, the top 40 mining cohort spent $US300 billion on capital works as it tried to catch up to China’s shift to import dependence while throwing a further $US600 billion at mergers and acquisitions. The result was a sustained retreat in shareholder returns ($US140 billion between 2000-10) and an erosion of confidence within and without an industry whose race for additional capacity triggered sloppiness enough to force $US250 billion of impairments. Brackrock’s Hambro became one of the voices in the investor wilderness who pushed loudly for a more prudent approach to capital allocation and one that preferably delivered shareholders with a greater share of boom time wealth. Wishful thinking From 2013 or so, Hambro’s wishful thinking became sectoral orthodoxy and shareholders now sit rewardingly embedded as senior priorities in a host of capital allocation strategies that differ in name more than detail. As we have noted here often enough, China’s arrival in seaborne raw materials markets required an unprecedented re-basing of mining sector capacity. Fuelled by record prices, the miners responded rapidly to market signals and invested heavily. And yes, mistakes were made and shareholder wealth was occasionally wasted. But not all was lost through in that era of excessive exuberance. The boom also built a bigger base of supply that will be harvested ever more efficiently over coming generations, making shareholders and nations richer. And that, in the end, is why the miners have been able to afford the $US400 million of capital returns made mostly through the latter half of this decade. In his keynote address, Jacques offered his five big lessons from the resources sector’s tumultuous opening to the 21st century. The first and most important is that “volume growth for the sale of it and mega M&A do not equal value creation”, and there is “real strength in discipline”. Jean-Sebastien Jacques says miners of the future 'will face greater regulation and scrutiny'. Bloomberg “With slow global economic growth likely, at least in the years ahead, the appetite for risk-taking in our industry will be low and non-organic growth will be harder to come by,” he forecast. “All-in-all, I think a different way of looking at ‘growth’ will be needed.'' Jacques offered a three-tiered template for the industry and its investors to measure growth: growth in free cash flow for share, growth through development of new resources, and growth in new profit pools born of innovation. This risk aversion is likely to demand a new approach to the mega-projects that are such a feature of the resources sector. But when they are necessary they “may need the United Nations of investors to reduce risk and leverage different capabilities,” Jacques said. The Book of JS All of that leads neatly to the second big lesson in the Book of JS: China is not just a customer, "It is a major developer, potential partner and competitor''. “In some ways, we underestimate China as a new entrant in the industry, as a developer and an owner of mines. Who knows who may enter our industry next? Tesla? Google? Alibaba?” It is worth noting that this idea of sectoral disruption from seemingly unexpected corners of the global economy is a theme that Jacques continues to ponder publicly. There is familiarity too with the third lesson of our mining times, which is that “big might not necessarily be beautiful”, before offering up the Winu copper discovery in Western Australia’s north-west as a project that might benefit from a more agile approach to project planning. “In terms of resource development, maybe the majors also need to think more like fast moving juniors,” he said. “Instead of looking for the big bang, maximum NPV (net present value) development options, perhaps we should look to stage-gate investments, starting smaller mines, which can be built quickly and safely with embedded optionality for growth. “Shorter build means quicker cash flows to shareholders, communities and governments, de-risking additional investment decisions,” he said, before admitting to a level of frustration at the difficulties of forcing evolutionary change on a 146-year-old business. Lesson four, according to Jacques, is that the industry is going to be defined and redefined by its partnerships and its ability to thrive in a “new sustainability age”. He later nominated broad partnerships as the only effective pathway to climate change mitigation. “And lastly, we must be better tuned-in to the changing world around us. We must adapt as we have been doing for a century or more, but we need to do it quicker than ever before to stay on the front foot.” The future will be.... So what does the future of mining look like? Well, Jacques sees it as an ever more complex place. “There is absolutely no doubt in my mind we will face greater regulation and scrutiny, a war for talent and new competitors,” he said. “So 2003-2013 were about excess, the late 2010s about discipline, perhaps the 2020s will be more about strength and resilience,” he said, before recommending that the industry “needs to drive its own agenda”. Interestingly, the man that is building the world’s first thinking mine, that is deploying new bulk mining technologies in Mongolia and that imagines a remotely operated future for a copper mine two kilometres deep below the surface of an Arizona desert said that ”truly transformative” technological change has proven scarce in the mining business. For the historians out there, Jacques nominated the mechanisation of mining between 1890-1910 and the breakthroughs in aluminium and copper processing through the 1950s as rare examples of tech game-changers. Until recently, since then it was all about getting bigger and moving ever more tonnes. But the mining world is being tilted on its axis by new technologies and new ways of thinking. Jacques cited automation and China’s low capital model as steps forward, before recommending that “digital platforms” will bring mining to its next frontier. Scaling down With that Jacques offered what we can only assume is informed speculation about the way technology will allow Rio Tinto’s Pilbara iron ore business to prosper beyond peak demand in China. “As demand for some materials remains flat or declines and the circular economy (a new-fangled way of saying recycling) takes hold, the push for scale will change,” he started. “Technology and innovation will play a key role. We are likely to see smaller electric trucks using GPS and AI to move to the right areas of the pit, reducing payloads but potentially increasing speed. “Rail locos may be replaced by autonomous rail-cars and we can radically reshape the blending we do today and change the way the industry has thought about cut-off grades. This could potentially unlock billions of tonnes of previously uneconomic resources and lead to the mining of waste and tailings.” As we noted with Rio Tinto’s announcement of a “eureka” moment that might see it mine lithium from the waste dumps created by 100 years of boron mining on California’s Mojave Desert, this would be history repeating itself. To refresh, Rio Tinto’s Australian history started with new technology that allowed the extraction of zinc from waste dumps in Broken Hill. Future mining will also be a place more attuned to relentless expectations of shareholders, communities and governments. Miners must be seen as “part of the solution”, but the sector’s approach “needs to be based on a pragmatic kind of sustainability” that retains “profitability at its heart”. “Society expects more of our industry which in turn brings with it a sea change in shareholder expectations and more and more questions on our business model,” Jacques said. “It is already starting to happen. There is absolutely no doubt we must play our part in reducing emissions for future generations. This requirement is already driving structural changes across our industry, limiting investment in commodities such as thermal coal, or investment in companies who mine coal.''
The following is a combination of economics, mining, environmental polution and gas. https://www.afr.com/companies/energy/bhp-s-plan-to-turn-shipping-green-20191029-p535f5 Opinion BHP's plan to turn shipping green If shipping were a country it would be the sixth largest emitter of CO2 in the world, according to BHP which is about to announce its first LNG-powered ship. Matthew StevensColumnist Oct 30, 2019 — 12.00am It often amazes how long it can take big business to translate a quality intangible like a very good idea into practical, money-making reality. It is coming up to three years now since Woodside Petroleum boss Peter Coleman revealed that Australia’s regional gas champion wanted to kick-start efforts to promote a domestic liquid natural gas market by committing to a break-bulk facility at its Pluto project in Karratha in Western Australia’s north-west. This was a Field of Dreams moment. Woodside would build in the hope that a new generation of LNG-fuelled mining transport would come. So far, it hasn't, and that is good because the bunkering facility at Pluto is not expected to be ready until some time early next year. But broader fulfilment of Coleman’s vision might be at hand. In July, Sheffield Resource, whose minerals sands project in the Kimberley has earned the backing of the federal government’s Northern Australian Infrastructure Facility, became the foundation customer of Woodside’s venture in transport fuel bunkering. Also in July, BHP put out the world’s first tender for LNG-powered shipping, enough to carry 27 million tonnes of iron ore from Port Hedland to the miner’s regional markets. That tender is said to have earned a strong set of responses that are now wending their way through the grinder of BHP process. The Green corridor The tender was a world first, as will be the contract, which is expected to be awarded in three to six months. The first thing to appreciate here is that 27mt is a whole lot of iron ore, equivalent to just less than 10 per cent of BHP’s annual shipments. The second is that BHP’s initiative is the most meaningful product so far of The Green Corridor joint venture that has seen Woodside, BHP, Rio Tinto and Fortescue Metals working in partnership to develop a design for LNG-fuelled bulk carriers capable of running iron ore to Asia. Green Corridor is an initiative in emissions mitigation made compelling by the International Maritime Organisation’s decision in 2016 to set a January 2020 date for a requirement that global shipping either move to lower-sulphur fuels or invest a bigger fortune in scrubbing technologies to contain exhaust fumes. On Monday, BHP’s head of procurement, Sandeep Singh, reminded an audience at the IMARC conference in Melbourne of the weight of shipping’s contribution to global greenhouse emissions. “If shipping were a country it would be the sixth largest emitter of CO2 in the world, with more emissions than Germany or Canada,” he said, reiterating BHP’s commitment to find LNG-powered ships enough to carry 27mt per annum of iron ore northwards. With a detail that only a procurement guru might acquire, Singh captured the quality of shipping's contribution to BHP's emissions dilemma. “Ocean freight is one area at the very end of our industry’s supply chain that hasn’t traditionally been a focus from a sustainability perspective that is vital to our success as a reliable global supplier,” he said. "The combined distance these ships travel is the equivalent of 29 trips to the moon!” “BHP is one of the largest dry bulk charterers in the world. The Commercial Maritime team procure freight for a quarter of a billion tonnes of iron ore, coal and copper and over 1500 voyages each year. The combined distance these ships travel is the equivalent of 29 trips to the moon!” Singh said LNG-fuelled boats eliminate the nitrogen and sulphur emissions released by burning traditional bunker fuels and would significantly reduce carbon dioxide emissions. Presently, those emissions land in BHP's scope 3 account. Needless to say then, this tender was a practical anticipation of the commitments that chief executive Andrew Mackenzie made in August to actively assist customers seeking solutions to the greenhouse emissions release when they use BHP’s products. Blindingly obvious Back in July, just after news of BHP’s tender, Woodside’s chief operating officer, Meg O’Neill, quantified what the ultimate success of the Green Corridor initiative might look like, proclaiming the potential of LNG as a transport fuel was vast, while assessing it “blindingly obvious” this was a new market that ought be owned by Western Australia. “If all shipping from the Pilbara transitioned to LNG, it would be around 4 million tonnes [annually] of LNG fuelling,” O’Neill said. To put that into context, that is equal to the low end of the targeted production for the new LNG train that Woodside has planned to add to its Pluto project. “I have been asked recently if our Burrup Hub growth strategy is contingent on the market for LNG fuels taking off,” O’Neill continued. “It is not,” she assured, before nominating a material future in transport fuel as a “cherry on top”. “And it’s a blindingly obvious market for WA to try to capture with the potential for a whole new industry and the jobs and investment that brings. And now is the time to be going after that opportunity.” AIE delivers as promised Mind you, the geography of that opportunity is not limited to the west. The future needs of LNG-powered bulk carriers is one of the add-on opportunities identified by proposed east coast LNG importer, Australian Industrial Energy (AIE). AIE is, of course, half-owned by Fortescue’s founder, major owner and chairman, Andrew Forrest. I make that point only because, for the moment, AIE seems more interested in the potential of LNG ships than its owner. In response to a question at Tuesday’s Fortescue annual general meeting on whether LNG was a fuel of choice for a cleaner bulk carrier future, the great man said: “If we had a choice it would be low sulphur fuel, then gas. But ultimately we want to get to hydrogen fuel.” Just on the subject of AIE, it has made good on a report carried first in The Australian Financial Review that it wanted to nearly double the capacity of the LNG regasification facility it wants to park in Port Kembla’s inner harbour. The wannabe gas importers have lodged an application with the NSW government seeking to lift the ceiling in shipments from 26 shipments annually to 46. According to my calculator, that implies an increase in annualised capacity from 100 petajoules to nearly 180/PJ. Thankfully, it appears that AIE’s request for modification of the consent offered earlier this year will again avoid the maze-turned-quagmire that is the state’s Independent Planning Commission. Because AIE’s project was deemed Critical State Significant Infrastructure (CSSI), a decision on its progress can only be made by the Minister for Planning. And that means requests for modifications to a consent already made must also be approved by the minister. Australia's grumpiest gas customer Now, we cannot leave the subject of gas without observing that Incitec Pivot and Central Petroleum have pushed the accelerator in plans to turn Australia’s grumpiest gas customer into a producer. In March last year the pair, who already have a long history of productive symbiosis in gas, were gifted an unreleased sweet spot in the heartland of Queensland’s coal seam gas by a state government determined to invite competition and new supply to the east coast gas market. A four-well drill program conducted in July and August delivered a contingent gas resource of 270/PJ, and Central confirmed on Tuesday that the joint venture would proceed immediately to an appraisal pilot program and that they were working to accelerate their way to a final investment decision. That acceleration could see early orders made for long-lead time items ahead of FID and in parallel with pre-FID work, which includes securing approvals and completing environmental studies. Central says it is now targeting first gas in 2022. As things stand, half of any production is available for contest by east coast gas consumers, while the balance will be directed to Incitec at a price equivalent to the project’s cost of production. And that prospect should come as an enormous relief to a gas sector that would gladly never again have to entertain a contract negotiation with Incitec’s hard-charging boss, Jeanne Johns.
US coal giant Murray Energy files for bankruptcy Taylor Telford and Dino Grandoni Oct 30, 2019 — 4.40am Murray Energy, the private coal giant whose founder pushed the Trump administration for an overhaul of what it called "anti-coal" environmental policy, has filed for Chapter 11 bankruptcy protection, the company announced. It's the fifth coal company to go bankrupt this year, in a rapidly shrinking industry that's being pushed out of the US power market by cheaper and greener energy resources like natural gas and renewables. And though restoring coal has been one of President Donald Trump's central promises since his first campaign, his administration's efforts to subsidise ailing coal and nuclear power plants failed. Coal once fuelled about half of all US electricity; now it powers less than a quarter. Murray Energy operates more than a dozen mines throughout Ohio, Kentucky, West Virginia, Illinois and Utah and produced 76 million tonnes of coal annually. Bloomberg "Murray Energy's bankruptcy filing is another sign of the significant stress on the coal industry today," said Benjamin Nelson, a Moody's vice president and coal analyst. "While the demand for thermal coal has been declining for about a decade, healthy export prices helped the industry generate stronger cash flows in 2017 and 2018. A sharp reduction in export prices shines light on poor underlying demand fundamentals for thermal coal in the domestic market." The St. Clairsville, Ohio-based Murray Energy has reached a restructuring agreement with its creditors and will finance its operations with cash on hand and a $US350 million ($510 million) debtor-in-possession financing facility, the company said in a statement. Robert Murray, who founded the company with a single Ohio mine in 1988, will step down as chief executive and become chairman of the board. He'll be replaced by Robert Moore, who has served as the company's executive vice president, chief operating officer and chief financial officer, according to the reorganisation plan. Murray, who started working in coal mines at 16 to support his family, has long been a Trump ally, donating generously and hosting a fundraiser in West Virginia for the president this summer. In 2017, Murray met with White House energy officials to offer an "action plan" calling for deep cuts in the Environmental Protection Agency's staff, withdrawal from the Paris Climate Agreement, a rollback of safety and pollution regulations and the repeal of President Barack Obama's Clean Power Plan. Within a year, the administration followed through by pledging to withdraw from the Paris accord, delivering cuts at the EPA and beginning to repeal and replace the Obama-era plan to curb climate-warming emissions from coal-fired power plants. Yet at other times Murray's efforts to have the federal government throw a lifeline to the sinking US coal industry were spurned by independent agencies despite support from Trump and his deputies. Last year, regulators on the Federal Energy Regulatory Commission, including four selected by Trump, unanimously rejected a proposal from Energy Secretary Rick Perry widely seen as a way of propping up ailing coal and nuclear plants. And in February, Trump tried to intervene with the Tennessee Valley Authority to keep open two coal plants that bought most of their coal from Murray. But the independent agency defied Trump and voted to close the plants anyway. The always outspoken Murray has blasted FERC as "feckless" for failing to protect coal plants and said he is "extremely disappointed" in the TVA's decision. But Murray reserved his sharpest criticism for Obama, who he once called "the greatest enemy I've ever had in my life" for issuing regulations he saw as destructive to the industry in which he had spent his entire working life. Murray Energy operates more than a dozen mines throughout Ohio, Kentucky, West Virginia, Illinois and Utah and produced 76 million tonnes of coal annually. The company employs 7000 people, according to its website, and counts billions in unfunded retirement benefits and workers' compensation among its liabilities, the Wall Street Journal reported. "Now comes the part where workers and their families pay the price for corporate decision-making and governmental actions," the United Mine Workers of America, which represents a large chunk of Murray Energy's full time employees, said in a statement Tuesday. "Murray will file a motion in bankruptcy court to throw out its collective bargaining agreement with the union. It will seek to be relieved of its obligations to retirees, their dependents and widows. We have seen this sad act too many times before." Washington Post https://www.afr.com/markets/commodi...y-energy-files-for-bankruptcy-20191030-p535jo
The next mining boom? Rare earths and the rise of Australia's 'other' minerals Lithium, cobalt, titanium, rare earths – expect to hear more about them as we transition to green technologies. But what are they, actually? And what are they for? By Nick Toscano, December 13, 2019 https://www.smh.com.au/business/the...stralia-s-other-minerals-20191119-p53c48.html Coal and iron ore are the heavy hitters of minerals in Australia. They're our two top mining commodities by far, together accounting for 30 per cent of national exports. But a handful of other minerals have become rather fashionable in recent times. They account for a small fraction of our export earnings and it's mostly small operators that dig them out of the ground, with just a couple of big names in the mix. Yet they are rapidly becoming more important and edging their way into common parlance as result. The sci-fi-sounding rare earths is one. Titanium is another. “He’s a man of titanium,” US President Donald Trump declared of our Prime Minister, Scott Morrison, this year, adding a zeitgeisty, if incomplete, fast fact: "You know, titanium’s much tougher than steel.” And no conversation about the future of energy would be complete without a knowing nod to lithium, nickel and cobalt. The resources sector has found itself the target of growing pressure as activists and climate-conscious investors push for the reduction in emissions necessary to avoid the most dire and immediate effects of climate change. But behind the heightened profile of these “other” Australian minerals is a simple fact: they are essential in many green technologies, from solar panels and wind turbines to electric vehicles and large-scale batteries. So what are rare earths, titanium, lithium, cobalt and nickel? How much of the world's supply of each do we contribute? Who buys these minerals from us and what do they do with them? Two years is a long time in the volatile global commodities market. Long enough for the world's biggest miner, BHP, to go from plans to sell off its Western Australian nickel assets to declaring instead that the lustrous silvery-white metal had now become one of its core businesses. The decision to put its sale plans into reverse came after BHP conducted a routine analysis testing itself against “many divergent scenarios” for how the world might look in the future. In this instance, BHP was testing its assets against the electrification of the transport sector in a carbon-constrained world and the forecast boom in electric vehicles. “Developments such as climate change and dramatic shifts in technology present both challenges and opportunities,” said BHP chief executive Andrew Mackenzie at a conference in Spain in May. Due to the expected surge in demand for battery ingredients such as nickel, and the relative scarcity of nickel-sulphide supply, BHP determined its Nickel West assets in WA offered “high return potential” as a future growth option. It built a plant to begin processing the nickel into the turquoise-coloured nickel sulphate for use in batteries – a process currently carried out in Asia – and invested $50 million into nickel exploration activities across the state. Nickel is used in lithium-ion batteries in the cathode – one of the pair of electrodes inside a cell through which current flows. When lithium-ion batteries have more nickel, they have greater storage capacity and therefore allow electric vehicles to travel longer on a single charge. As of 2019, BHP now sells more than 75 per cent of its nickel production to the electric vehicle battery materials industry. And, according to BHP's estimates, nearly half of all light vehicles could be electric by 2050. The promising outlook for nickel has also lifted the fortunes of other Australian nickel operations, even bringing some mines back from the brink. Canadian miner First Quantum Minerals had suspended mining at its WA Ravensthorpe mine in October 2017. But after the nickel price rebounded sharply in the first half of the year, the company now says preparations for a restart are underway. The price of nickel surged in September to its highest point in five years after Indonesia, the world's biggest nickel producer, announced a ban on exports would take effect from the beginning of 2020. There are two main types of nickel deposits: laterite, found close to the surface but with a low nickel content, and sulphide, found deep below the ground and easier to extract profitably. BHP's nickel sulphide ore is mined in open-cut and underground mines in the Northern Goldfields before being crushed, concentrated, dried and railed to the Kalgoorlie nickel smelter, where it is processed into a granulated matte product. It's then sent by train to the Kwinana nickel refinery and converted into nickel metal before being exported overseas. Two-thirds of Australia's nickel goes to Malaysia, Taiwan and China, according to WA's mining department. Australia's "silver" coins are made up of 25 per cent nickel (and 75 per cent copper). But, more broadly, more than two-thirds of the world's total nickel production is used to make stainless steel; nickel is what makes stainless steel so durable. In the mid-1800s, a new name for petroleum came into use. Black gold, they called it black because of its colour when it came out of the ground and gold due to the fact it rapidly became the dominant fuel of the 20th century, making everyone who discovered it profoundly rich. These days, many in the mining industry think the next rush could be about to begin: for “white gold” or lithium. And Australia is the world’s number one producer, accounting for 47 per cent of global lithium output. Mined from hard-rock mineral deposits and brine beneath salt flats, lithium is soft, silvery-white and the lightest metal on the periodic table. It has traditionally been used in the manufacture of ceramics, glass and lubricants, and as a treatment for mental health disorders, but nowadays is best known as a component in rechargeable batteries used in mobile phones, laptops, electric cars and renewable energy storage. The world's appetite for lithium has been soaring alongside the accelerating take-up of electric vehicles. Since 2010, its value has tripled. “Australia is well-positioned to capitalise on the significant opportunities presented by the lithium-ion battery era,” Austrade said in a report in 2019. “Australia has the world’s third-largest reserves of lithium and is the largest producer of hard-rock lithium spodumene.” Lithium resources occur in two distinct categories: lithium minerals, which come mainly from the lithium-rich hard-rock spodumene, and lithium from salts, largely brines in salt lakes. All of Australia’s lithium resources and production are from minerals, with several mines in WA, including Greenbushes, Wodgina, Mount Marion, Mount Cattlin, Pilgangoora and Bald Hill, with much of it sent to China as well as Japan and Korea. But while the electric vehicle revolution is coming, for some lithium producers it isn’t soon enough. Timing is everything in this business: in China, which is the world's biggest electric car market, electric vehicle sales fell nearly a third in September, the third consecutive monthly decline. The concern that new producers have added too much volume too quickly has undermined lithium demand and sent the price of lithium derived from Australian hard rock plunging more than 40 per cent over the past year. While few dispute the long-term appetite for lithium, this year Bald Hill has been placed in the hands of administrators, and many other operators have scaled back production dramatically. “Just a big demand signal is not enough to know that you will durably make a lot of money over the life of an asset,” explains BHP vice-president of market analysis and economics Huw McKay. Many battery raw materials including lithium, he says, are much smaller markets compared to nickel, which is difficult to find and less vulnerable to market changes due to its end use in stainless steel. “They will be able to sell everything they produce, sure – but it could be very 'whippy' in terms of the actual price at which they can sell,” says McKay. “There is no guarantee they will make a decent return on their capital.” Rare earths are not that rare. A family of 17 obscure minerals found near the bottom of the periodic table, they occur everywhere in the Earth’s crust and in greater amounts than many other elements. Even the rarest of rare earth minerals, thulium, is more plentiful than gold. Rare earths are rare in the sense they are sprinkled all over the planet in very small concentrations. And because they are fused with other metals, refining and extracting them is an onerous and expensive process. Cerium, dysprosium, erbium, neodymium, praseodymium … all fly under the radar even though they form many of the vital components that power our modern world, via a catalogue of high-tech products we could barely live without. Neodymium, for instance, is used to make powerful magnets for products such as computers and loudspeakers, as well as wind turbines and hybrid cars. Scandium is used in metal alloys for the aerospace industry. Compounds of cerium, lanthanum and lutetium are used in glass polishing or to manufacture telescope lenses and special screens such as those used on smartphones and cameras. A neodymium magnet Credit:Getty Australia has some of the world's largest recoverable deposits of critical minerals and is the world's second-largest producer of rare-earth elements including neodymium and praseodymium – a position that could prove decidedly advantageous in the context of the simmering geopolitical tension between the United States and China. China, according to some estimates, is believed to hold up to 50 per cent of known global resources and accounts for 80 per cent of their production. This dominance has recently prompted growing alarm in Washington following warnings that Beijing may move to restrict shipments due to its trade war with America. Rare earths are used in magnets that are components in wind turbines. Credit:Getty So, as the US seeks to loosen its reliance on China, federal Resources Minister Matt Canavan has been promoting the potential for the Australian rare earths industry to ramp up export ties with the US. Australia’s Lynas Corp, for example, is the biggest rare earths producer outside of China. Other Australian rare earths companies include Northern Minerals, Arafura and Alkana Resources. The Minerals Council of Australia is excited about the “enormous potential” to grow national trade and investment through rare earths. “Australia is well-positioned to extract and export the critical minerals the world needs for faster, smaller and more powerful technology,” says Minerals Council chief executive Tania Constable. When miners in 16th-century Saxony were searching for precious metals such as gold and silver, they found cobalt instead. It looked like silver and they tried to smelt it but it emitted arsenic-containing fumes, hence the origins of the name, from the German kobold, meaning goblin or evil spirit. Cobalt, usually a by-product of copper and nickel ore processing, is just one of five elements on the periodic table that is ferromagnetic, meaning it can be magnetised and retains a permanent charge. Today, it is the main power source for mobile phones and electric vehicles. Cobalt is a key ingredient in lithium-ion rechargeable batteries – specifically, in the cathode, which is the positively charged electrode. It provides the stability and high-energy density that allows batteries to operate safely and for longer periods. While the fast-growing electric vehicle market has led to a surge in cobalt exploration, its price has been rocketing in recent years before flattening in 2019 due to the same problem facing other battery raw materials – too much global supply too quickly. A car-charging station at Tesla's wind and solar battery plant outside of Jamestown, South Australia.Credit:AAP Although the ninth-largest producer of cobalt, Australia has the second-largest reserves of it in the world. About 45 per cent of the world’s deposits come from the Democratic Republic of Congo, according to consultancy giant KPMG. Reports of child labour and human rights abuses connected to cobalt mining in the African nation are common and have raised concerns for customers, including some of the world’s biggest automakers, about the conditions in which the mineral is being mined. In Australia, Cobalt has been produced by mines in Western Australia and South Australia. Cobalt’s use dates back to ancient Egypt, in the rich, blue pigment decorating ceramics and glassware. But cobalt is also essential in the structure of vitamin B12, and it has been illicitly used to enhance endurance in athletes. Research in the 1940s and 1950s showed mice produce more red blood cells and haemoglobin when given cobalt. The more red blood cells generated, the greater the ability to carry oxygen and this allows peak performance levels to be maintained longer. Cobalt naturally appears in horses but racing authorities across the world set a threshold when stewards found cases of trainers upping the level of cobalt in their horses to enhance performance. In the 1960s, beer brewers added a cobalt compound to beers to maintain the head on a beer for longer. But, after a rash of heart disease and deaths in heavy beer drinkers, the US Food and Drug Administration banned the substance after evidence showed cobalt was causing “cobalt-beer cardiomyopathy”. As strong as steel but 45 per cent lighter, titanium is the ninth-most abundant element in the Earth’s crust. It occurs in what’s known as “mineral sands” deposits, particularly ilmenite and rutile, of which Australia is the world’s biggest producer. Named after the Titans of Greek mythology, titanium is a relatively modern metal when compared to iron and copper, which have been around for thousands of years. First commercially produced in the 1940s, its strength, corrosion resistance and extremely high melting point make it ideal for use in aeroplanes, spacecraft, missiles, sports equipment and bike frames. Most beach sands consist of the grains of the mineral quartz. Mineral sands, however, are old beach, river or dune sands, explains Geoscience Australia, that contain concentrations of rutile and ilmenite, zircon and monazite. These heavy minerals are heavier than common sand minerals. In Australia, mineral sands deposits containing rutile and ilmenite are found mostly on the eastern, western and southern coastlines. Large deposits from old beaches, known as relic deposits, lie as far inland as Ouyen in Victoria (Wemen, Bondi, Kulwin deposits) and in south-western New South Wales (Ginkgo, Snapper deposits), according to Geoscience Australia. Deposits also exist in the Eucla Basin around the Great Australian Bight. In WA, deposits are distributed from the southern tip of the state to Geraldton, at the present coastline or at old beaches up to 35 kilometres inland. Titanium dioxide is one of the whitest and brightest substances known and is often used as a pigment in paints, paper and toothpaste. Architect Frank Gehry also recognised titanium's appeal: his Guggenheim Museum in Bilbao in Spain is covered in 33,000 wafer-thin titanium sheets. The facade of the Guggenheim museum in Bilbao, Spain, is covered in titanium. Credit:Getty
May 2, 2022 Fertilizer sector set for biggest profits in years on Russia-Ukraine conflict By Ruhi Soni https://www.reuters.com/business/fertilizer-sector-set-biggest-profits-years-russia-ukraine-conflict-2022-05-02/ An interior view of the storage warehouse is seen at Nutrien's Cory potash mine near Saskatoon, Saskatchewan, Canada August 12, 2019. REUTERS/Nayan Sthankiya/File Photo May 2 (Reuters) - Fertilizer makers are set to post their biggest quarterly profits in years, following a supply squeeze of essential crop nutrients due to the Ukraine crisis, according to analysts. Top fertilizer makers Nutrien Ltd (NTR.TO), Mosaic Co (MOS.N) and CF Industries (CF.N) are expected to benefit as sanctions on Russia and Belarus, the world's No. 2 and 3 producers of potash, sent prices of the key fertilizer nutrient to levels not seen since the 2008 food crisis. "Nutrien, for sure, is going to raise their (earnings) guidance. I'd be shocked if they don't," said Joel Jackson, senior analyst at BMO Capital Markets Equity Research. Reuters Graphics Prices of potash were already soaring last year on tight supplies after international sanctions on Belarus' state-owned producer Belaruskali in response to President Alexander Lukashenko's crackdown against political opponents. However, events in Ukraine have pushed prices to new highs as Russia is one of the top suppliers of potash and other crop nutrients such as nitrogen, phosphate, urea and ammonia. Nutrien, the world's biggest fertilizer maker, said in March it would ramp up its annual potash output by 1 million tonnes to nearly 15 million tonnes in response to the uncertainty of supply from Eastern Europe. read more Reuters Graphics Nutrien may face challenges in finding the labor to ramp up its capacity, Jackson warned. High fertilizer prices may eventually be partially offset by soaring natural gas prices, particularly for nitrogen-based fertilizer makers such as CF Industries, Morningstar equity analyst Seth Goldstein said. "For companies like Mosaic and Nutrien that are vertically integrated and mining their own potash, they should feel the cost inflation less than perhaps a CF who still needs to buy U.S. natural gas to make nitrogen." Analysts will also look out for comments on demand getting hit due to higher prices. Farmers are already reacting by skimping on fertilizer use, stockpiling for a few years, or switching to manure. European fertilizer makers this month wowed investors, with Germany's K+S AG (SDFGn.DE) raising its full-year core profit forecast by 40%, while Norway's Yara International ASA (YAR.OL) posted a stronger-than-expected core profit even as it flagged higher natural gas costs.
https://www.businesstimes.com.sg/en...e-eyeing-canada-to-fill-global-potash-deficit Fertiliser buyers are eyeing Canada to fill global potash deficit Tue, May 03, 2022 CANADA'S ample potash deposits are drawing “high levels” of interest around the world since sanctions upended global fertiliser markets. PHOTO: REUTERS CANADA'S ample potash deposits are drawing “high levels” of interest around the world since sanctions upended global fertiliser markets. Saskatchewan is capturing “renewed interest” in its potash resources due to disrupted supplies of the key fertiliser from Belarus and Russia, according to Bronwyn Eyre, energy and resources minister for the western Canadian province. Saskatchewan has the world’s largest potash deposits and Eyre said the provincial government is working with companies to encourage more production of the mineral and expects to see “a growing demand for new projects” in the coming years. “We are a critical-minerals powerhouse and we can be a bigger one,” Eyre said in a phone interview. Fertiliser markets have been in disarray since the US imposed sanctions on Belarus, and from economic measures taken against Russia following its invasion of Ukraine in February. Russia and Belarus account for about 40 per cent of global potash production and exports, according to Saskatoon-based Nutrien, while Canada is the other major source for the commonly used fertiliser that contains potassium. Saskatchewan has roughly 1.1 billion metric tons of potassium oxide, enough to supply the world for several hundred years, according to the province’s energy ministry. Only a small fraction of that is in production, with 10 mines in the province operated by K+S Potash Canada, Nutrien and Mosaic. Saskatchewan produced a record 14.2 million tons of potash last year. BHP Group has a US$5.7 billion project to build what will be the world’s largest potash mine in the province. Saskatchewan expects an uptick in exploration and mining projects, though it takes awhile for new mines to get up and running, Eyre said. “It’s a case of supply meeting demand right now,” Eyre said. “That does take some time.” BLOOMBERG
The Pilbara is a powerhouse of the Australian economy, so why have its major towns not thrived as well? ABC Pilbara / By Verity Gorman Posted 3 hours ago https://www.abc.net.au/news/2022-05...nd-growth-pilbara-economy-fifo-jobs/101016816 A large cargo ship moored in Port Hedland.(ABC: Alex Hyman) The vast Pilbara region in WA's north has an annual economic output of more than $100 billion but in the coastal town of Port Hedland locals complain it's a struggle to find a decent venue for dinner. "You can't get a cup of coffee after 2pm," says the president of Port Hedland's Ratepayers Association, Arnold Carter. "There are just no facilities. "When it comes to getting an evening meal it's slim pickings." Mr Carter said the lack of amenity was "absurd" given how much Port Hedland contributed to WA and the national economy. It's an irony that has led many, including Deputy Prime Minister Barnaby Joyce, to ask why such a lucrative region is home to so few people and so few amenities. Deputy Prime Minister Barnaby Joyce wants to see Port Hedland grow.(ABC News: Xavier Martin) "We believe it's untenable that in the 4,000 kilometres between Perth and Darwin we don't have a city of 100,000 people," Barnaby Joyce told parliament this year. "We are investing in Port Hedland which, by tonnage is the biggest export port in the world ... Port Hedland, though, has a population of merely 15,000 people. "We need areas such as this to become the Gladstones and the Newcastles of our north-west." Professor Fiona Haslam McKenzie, director of University of Western Australia's Centre for Regional Development, said a lot would have to change for Mr Joyce's ambitions to be realised. "Certainly you would need to have a very clear regional plan," she said. "Where are people going to be employed and what plans are there for a diversified industry base? "Karratha has two major industries, gas and iron ore, but Port Hedland is very much an iron ore town, which makes things difficult." Director of UWA's Centre for Regional Development Fiona Haslam McKenzie.(ABC News: Eliza Borrello) Professor Haslam McKenzie has spent years researching why mining towns haven't grown in line with the importance of the industry to the Australian economy and has used Port Hedland as a case study. She said a range of factors contributed to Port Hedland's constrained growth, including the topography, previous poor leadership and the entrenched practice of fly-in, fly-out workers. "Topographically it's very flat, it's prone to flooding, it's prone to cyclones, it's a hot place, it's got the wind factor and the fact that red dust flows across the port onto the flat land," she said. "It's much cheaper to fly a worker to a site and provide them with bespoke accommodation than actually underwrite the cost of a family living in a house in the community. "Then you have the difficulties that Port Hedland's had with leadership, they've had some less than fabulous leadership issues in the replacement of the council." Dome Cafe. Dust is an ongoing issue in the Town of Port Hedland. (ABC: Alex Hyman) Professor Haslam McKenzie said while it was surprising that the Town of Port Hedland hasn't kept up with the growth of industry in the region, she questioned Mr Joyce's idea of turning it into a major city. "If he's holding Gladstone and Newcastle out as the benchmark, I wouldn't want to change," she said. "Gladstone and Newcastle certainly have their own problems, not least FIFO around the Bowen Basin." "What underpins a population of 100,000 is it's got to be livable. You've got to have sustainable jobs and it's got to be a place that people want to live in." She said regional development was also a state government responsibility. "It's kind of convenient for a Nationals federal member to make those noises but it's all care and no responsibility — they don't invest a great deal in terms of strategic planning." The town of Port Hedland on the Pilbara coast is home to Australia's biggest iron ore export terminal.(Supplied: Pilbara Ports Authority) Professor Haslam McKenzie said long-term thinking had to be applied to growing places like Karratha and Port Hedland. "It would be (a useful investment) if there is some sort of longevity to the investment, I think that's still to be proven," she said. "That's not to say that iron ore is not going to be a very important commodity for a very long time, but what happens if we do have a dust up with China, or COVID-19 really decimates the workforce. "It doesn't take much to disrupt the market." Challenge to change perceptions Port Hedland Mayor Peter Carter.(ABC Kimberley: Hinako Shiraishi) Port Hedland Mayor Peter Carter said while he'd like to see the town grow, a lot of work was needed to change people's perception of the town. "At the moment people ... fly in fly out and we need to change that model because it's a broken model," he said. "You need to change perceptions of Port Hedland and the infrastructure of Port Hedland. "The way you do that is education and if you get education right, everything else will follow."
Port Hedland, dirty, dusty, unattractive, hot, dry, high wages, steep accomodation costs, remote, highly industrial, lack of women, lack of shopping, lack of ammenities. Crew fly in for a few weeks, work long hours, typically work 4 weeks without a break, live in camp type accommodation, get fed etc on site, fly out after their shift, spend no money.
The Pilbara was on Aussie Gold Hunters last night. It looks like one of the most inhospitable regions of Oz.
European Union looks to Australia over Russia for critical materials By Rachel Clun June 30, 2022 https://www.smh.com.au/politics/fed...a-for-critical-materials-20220629-p5axmi.html The European Union wants to turn to Australia for the supply of critical raw materials including lithium and iron ore and move away from relying on Russia, as negotiations resume on a free trade agreement. Head of trade and economics at the EU Delegation in Australia Cornelis Keijzer said the war in Ukraine and Australia’s sanctions on Russia due to that conflict have brought Australia and the EU closer together. Pilbara Minerals Pilgangoora lithium mine. At the same time, he said the EU is looking to move away from relying on Russia for energy and raw materials and find other sources. “We’re looking for new sources. So that is what we’re looking for, from Australia: the possibility to source those raw materials now from Australia,” he told The Age and The Sydney Morning Herald. “Things like lithium, cobalt, critical materials, but also iron ore. We want to buy from Australia, no longer from Russia.” Trade Minister Don Farrell said Australia would be very keen to supply critical minerals to the EU as part of the agreement. “One of the things that I think we’ve learned over the last few years is that by having all your eggs in one basket, you put yourself in a precarious position,” he said. Formal negotiations on a free trade deal between the EU and Australia began in 2018, but were stalled in part by the surprise axing of the French submarine contract. Farrell, who recently spoke with European counterparts at the World Trade Organisation meeting in Geneva, said he was optimistic negotiations were heading in the right direction. “Certainly the vibe coming from the Europeans is that they want to do this deal,” he said. “The obstacles seem to have been removed: the climate change issue and the Naval [submarine] issue, that seems to have been put to one side. So I can’t see a reason why we can’t move full speed ahead on this.” Keijzer said the EU also hopes for “decisive progress” on the deal by early 2023, but there is no set deadline. “We are working on this very hard and hope to conclude a deal as soon as we can,” he said. In the agreement, the EU is very keen to see Australian customs tariffs removed. Keijzer said EU products are the only ones subject to those tariffs out of Australia’s important trading partners, and they affect two-thirds of what the EU exports. “That is still quite a commercial disadvantage compared to other trading partners that have such an agreement,” he said. Farrell said that as well as essential raw materials Australia would like to export more meat and agricultural products to Europe, including beef and almonds. While the EU is Australia’s second-largest trading partner, Australia just squeaks into the EU’s top 20. But Keijzer said Australia is still a crucial trading partner. “In terms of a provider of some of these very strategic raw materials, [Australia] is important,” he said. “Australia is also important as a customer; we do sell a lot of goods in Australia. So there’s an interesting trading relation that can still be more developed, we think, especially as the Australian economy has a need for more diversified customers.” Following a meeting between Albanese and his Spanish counterpart, planning is under way for Spain’s trade minister to visit Australia in July. EU parliamentarians will also travel to Australia in September, and Farrell said the UK’s Trade Minister Anne-Marie Trevelyan is also planning a trip, which might include a stop at Farrell’s South Australian vineyard. Farrell said finalising the UK trade deal is a top priority for when parliament returns at the end of July. “It’s a good agreement, it will be good for both countries,” he said.