23

January

2019

ERG to pilot blockchain-based solution to trace cobalt in DRC

Eurasian Resources Group (ERG) will pilot a blockchain-based solution to trace cobalt originating from the Democratic Republic of the Congo (DRC), which is developed on the IBM Blockchain Platform.

Initially, the solution will be deployed at the group’s Metalkol RTR operation in the country, which will aid the company in tracing the movement of cobalt across the supply chain.

The demand for metals such as cobalt, copper and lithium is expected to grow due to increasing demand for batteries. However, issues such as use of child labour in the extraction of the minerals and pollution produced by mining operations pose a threat to local regions.

The blockchain-based solution is expected to ensure the metals are traceable.

This solution supports ERG’s Clean Cobalt Framework at Metalkol RTR, a reprocessing plant for historic copper and cobalt tailings.

The plant, which is nearing operation, will supply 24,000t of cobalt a year to the global market, once it reaches full capacity. The volumes supplied from the plant to the market will be enough to power more than three million electric vehicles per year.

IBM Global Business Services executive partner Niels de Jongh said: “ERG’s initiative to implement a blockchain solution to bring together stakeholders across the cobalt supply chain can help transform entire business processes in the mining industry and help bring new levels of trust. Leveraging IBM’s digital capabilities enables parties to develop the solution through an interactive approach with clear business focus.”

Eurasian Resources Group CEO and Global Battery Alliance co-chair Benedikt Sobotka said: “This blockchain-based solution will aim to enable manufacturers to confirm that the cobalt was sourced at Metalkol RTR by aggregating the necessary data and information on the raw material.”

By using IBM’s blockchain platform and expertise, the platform can track the provenance of cobalt and its journey throughout the supply chain, right from extraction to production.

By using blockchain, it is possible to track the origin of cobalt across the supply chain, and it is possible to efficiently share information, track and provide transparency to the entire process at reduced costs.

Sobotka added: “As a founding member of the World Economic Forum’s Global Battery Alliance, ERG aims to create new standards in the industry. We are therefore pleased to be piloting this innovative blockchain-based solution on the IBM platform. This way we can guarantee with certainty that the material that customers buy is not tainted with artisanally produced material.”

22

January

2019

Barrick Gold weighs options for Lumwana copper mine in Zambia

Barrick Gold is weighing all options regarding the future of its Lumwana copper mine in Zambia in the wake of proposed changes to the country’s tax regime.

The company stated that it is continuing to engage with the Zambian Government and community stakeholders for a “mutually beneficial way forward for the operation” of the copper mine.

Barrick Gold stated: “Given the challenging conditions the mine was facing, all options would have to be considered.”

Barrick chief operating officer for Africa and the Middle East Willem Jacobs said: “The proposed changes to taxes and royalties would imperil the mine’s ability to sustain returns to all stakeholders, such as the significant contribution of more than $3.3bn it has already made to the Zambian economy over the past ten years.”

The company made proposals to the government about a partnership approach that would offer the state an improved share in the mine’s economics without overburdening the property.

Jacobs added: “Finding a win-win solution between the industry and government would without doubt increase investor confidence in Zambia and safeguard the long-term prospects of its mining industry.”

Jacobs also clarified that media reports claiming that Barrick had sold Lumwana were untrue.

In September 2018, Africa’s leading copper producer, which is struggling with mounting debt, included in its annual budget a plan to increase mineral royalty rates by 1.5% from 2019.

The budget also featured a fourth tier rate at 10% if the copper price touches more than $7,500 per tonne, and made minerals royalties non-deductible for tax purposes. It also plans to replace value-added tax with sales tax by April.

In December 2018, the Chamber of Mines stated that due to the new framework, over 58% of the copper producers in the country would run into losses at current prices, which would put 27,900 jobs at risk. However, individual companies have failed to support this claim.

22

January

2019

BHP flags $600m loss in production due to unplanned disruptions

Anglo-Australian miner BHP has revealed a $600m loss to its productivity in the half year ended 31 December 2018 due to a freight train derailment in Western Australia, an unplanned outage at an acid plant in the Olympic Dam operation in South Australia, and a fire at the Spence copper mine in Chile.

In an operational review for the half year, BHP stated these disruptions affected volumes by 45,000t in South Australia, 25,000t in Chile and four million tonnes (Mt) in Western Australia, leading to ‘lower than expected volumes’.

Although the train derailment did not result in any injuries, it was a major setback for the company, as its Western Australian iron ore mining operations serve as an important income source.

The company’s iron ore production dropped 6% in the final quarter of 2018 to 57.83Mt. However, its half-year production was up 2% year on year to touch 119.2Mt.

BHP posted record production at the Jimblebar mine and reached complete production capacity at the Mount Whaleback mine, which was impacted by a fire in June 2017.

The mining major informed shareholders that it was on track to achieve its annual production forecasts across all important commodities, despite experiencing a series of production disruptions in the last six months.

Production guidance was the same for petroleum, iron ore, metallurgical coal and energy coal. BHP, however, increased its copper production forecast for 2019 to between 1.6Mt and 1.7Mt due to its decision not to offload Cerro Colorado copper mine in Chile to private equity house EMR Capital.

The company’s full-year productivity guidance is under review due to the unplanned disruptions. BHP stated: “Revised guidance will be provided in the December 2018 half-year financial results.”

21

January

2019

Glencore appoints new executives to operate Katanga Mining

Commodity trader Glencore has tightened its control on Katanga Mining with the appointment of new executives and the signing of a management services contract to operate its troubled copper and cobalt business in the Democratic Republic of Congo (DRC).

Glencore International head of African copper Danny Callow has been appointed CEO of Katanga and its head of strategy Paul Smith has been hired as Katanga’s chief financial officer.

Katanga chairperson Hugh Stoyell said that the management services agreement with Glencore International, which is a subsidiary of Glencore, will enable Katanga to focus on completing operational enhancements in the DRC.

In December 2018, the firm announced its intention to assume greater control of the African unit after Canada’s Ontario Securities Commission imposed a fine and banned several executives from the company for misreporting the amount of copper and cobalt it sourced.

Among the executives who were banned included Glencore’s former head of copper trading Aristotelis Mistakidis.

Katanga’s CEO Johnny Blizzard also resigned from the firm as per the earlier settlement agreement with the Ontario Securities Commission.

The latest changes come in the wake of greater scrutiny on Glencore’s operations in the DRC. The US Department of Justice is reportedly monitoring the company’s activities in the African country.

The Katanga mine is 86% owned by Glencore and is listed in Canada.

The management agreement is expected to improve the project’s performance on compliance and operations.

18

January

2018

International project launched to use blockchain to track DRC cobalt

Ford, IBM, LG Chem and Huayou Cobalt have teamed up to launch a blockchain project to track cobalt supplies from the Democratic Republic of Congo (DRC).

Overseen by sourcing group RCS Global, the project aims to aid manufacturers in ensuring that the cobalt used in lithium-ion batteries, a key component in electric vehicles, is free of human rights abuses, and that financial resources are not used to further conflict in the politically volatile region.

Consumers and investors are putting pressure on companies to ensure that the minerals sourced are free of human rights abuses. Blockchain offers a shared data that lies with a network of individual computers rather than with a single party.

As minerals are usually combined with metals when they are smelted, it can be difficult for companies to trace their origins.

This project aims to implement best practices and its guidelines are drawn from the Organisation for Economic Cooperation and Development.

The project has been underway since December and is expected to be completed by the middle of 2019.

It will track the journey of cobalt from the mine and smelter in the DRC to LG Chem’s cathode and battery facility in South Korea and from there on to a Ford facility in the US, reported Reuters.

According to RCS, the IBM blockchain platform could later be used to track other minerals. Artisanal miners will also be encouraged to join the network so that they can participate in ethical sourcing.

IBM is also looking at the potential of tapping artificial intelligence for chemical analysis to track the origin of the mineral. This will ensure clean cobalt is not smelted with minerals that have not been ethically sourced.

IBM’s mining and industrial sector business general manager Manish Chawla told Reuters: “There is no fool-proof method, but you have to keep the ball moving forward, to keep raising the level of accuracy. Blockchain has been proven to be a very effective technology in raising the bar.”

With demand for electric vehicles and electronic devices set to increase, demand for cobalt is expected to rise too.

The DRC is the world’s largest producer of cobalt, producing 64,000t in 2017.

18

January

2018

Rio Tinto reports 2% increase in iron ore shipments from Pilbara

Anglo-Australian mining major Rio Tinto has reported a 2% year-on-year increase in its iron ore shipments to 338 million tonnes in 2018 from the Pilbara region of Western Australia.

According to the world’s leading exporter of iron ore, this is in line with its forecasts of between 330 and 340 million tonnes. The company expects demand to increase this year from the steel-making industry.

The firm reported growth in iron ore production due to its investment in production improvements, and minimal disruptions from weather.

Its 2019 projection for Pilbara shipments ranges between 338 and 350 million tonnes.

The production of iron ore has also been strengthened with its deployment of the first driverless train network AutoHaul.

Rio Tinto is also working on developing its $2.6bn Koodaideri iron ore mine in Pilbara region. This project, which was approved in 2018, will boost production of its Pilbara Blend iron ore from late 2021.

Rio’s copper production surged by 20% to 177,800t in the December quarter compared to the corresponding period in 2017. Its full year copper production grew by 33% to 633,500t.

This robust performance was due to production increases at Kennecott operations in Utah, US and the Escondida mine in Chile.

Escondida, which is the world’s leading copper mine, is managed by BHP. Rio Tinto owns 30% interest in the mine.

17

January

2018

Vale opens artificial intelligence centre in Brazil

International miner Vale has opened an artificial intelligence (AI) centre in the Brazilian state of Espírito Santo, which aims to develop AI systems capable of managing a number of logistical operations within the company.

Vale has already invested heavily in innovative technologies, including 3D simulators to train workers in the operation of large machinery. The new centre will be responsible for managing the company’s existing AI projects, including computer-controlled processing plant management, and using the technology to improve health and safety controls.

Vale estimates that its existing AI projects have saved the company more than $20m in annual savings, and expects the initiatives to generate a further $37m in benefits.

“The AI centre will intensify the integration and collaboration among those responsible for different projects,” said IT innovation executive manager Hélio Mosquim. “Also, this initiative will promote the exchange of experiences and knowledge, increasing synergy among teams and generating results on a global scale. Most features developed for one project can be applied to others.”

The company is currently working on six new initiatives at the centre, covering equipment maintenance, management of mine assets, fuel optimisation and analysis of health and safety data.

The programme focusing on asset maintenance has generated savings of $8m by analysing the route data of trucks, and has extended the life of vehicle tyres by 30% by optimising these routes.

A similar programme uses AI systems to detect operational failures in off-highway trucks ahead of time, helping eliminate delays and ensure vehicles can be repaired before they break down. This is one of the company’s larger projects, involving 15 operations across Brazil, Canada and Mozambique, and has been implemented by 60% of the company’s off-highway trucks.

The centre is based in the state capital Vitória and has access to one of the company’s railroads, four port terminals and eight pellet-processing plants. Around 50 people have been employed at the centre, and are “exclusively dedicated to Vale’s artificial intelligence projects,” according to the company.

“Artificial intelligence has the potential to generate value for all business areas of the company,” said Afzal Jessa, the company’s digital transformation director. “We’re taking another important step towards digital transformation to increase productivity and operational efficiency, achieve the highest levels of health and safety, improve our financial performance and drive innovation.”

17

January

2018

India and Australia sign mining safety agreement

The Indian Government has signed a memorandum of understanding with the Australian state of Queensland to improve mining safety in both countries.

The agreement will establish a partnership between the Directorate General of Mines Safety (DGMS), the department of the Indian Government responsible for granting mining permits and enforcing safety legislation, and the Safety in Mines, Testing and Research Station (SIMTARS), an Australian research group that works to improve the conditions of mines and provide safety training to workers.

The two groups will work together to establish a safety management system, train employees in best safety practices, and organise a number of meetings, including conferences and seminars.

SIMTARS will also be responsible for improving and modernising the research and development facilities of the DGMS. The Indian Government said that SIMTARS’ expertise in these areas will be of great benefit to its own mining operations.

“Mining accident rates in Australia [are] the lowest in the world,” said the Indian Government. “Australia has pioneered in conceptualising and implementing risk based safety management plans for the mining sector using the technique of hazard identification and risk assessment. SIMTARS is known to have exclusive expertise in mines safety management systems.”

The agreement came into effect immediately on its signing on Wednesday, and will remain in place for three years. The memorandum follows years of high fatalities in the Indian mining sector, with 377 workers deaths between 2015 and 2017.

India’s safety record has come under further scrutiny recently following an accident at an illegal coal mine in the state of Meghalaya on 13 December last year, where 15 miners were trapped when water from the nearby Lytein River flooded into the mine’s network of tunnels.

The body of one miner was discovered on Thursday; however, none of the other trapped workers have been seen since the accident.

The operation involves rat-hole mining, a process outlawed by the Indian Supreme Court, which features miners digging narrow holes into the ground to reach mineral deposits. Despite the 2014 ruling, the national government has struggled to enforce the ban, and illegal operations such as the one at Meghalaya are not uncommon.