17

September

2018

Mercuria to invest $650m in Mesabi iron ore project

Swiss commodity trading firm Mercuria Energy has signed a memorandum of understanding (MoU) to provide a $650m financing package for US-based iron ore producer Mesabi Metallics Company.

The financing packaging will fund the completion of Mesabi’s 7mtpa mine-to-plant pelletisation project in Minnesota and support job creation and economic growth in Nashwauk, Itasca County and Minnesota’s Iron Range.

The injection of funds will help accelerate the engineering, procurement and construction of the project.

In exchange for the investment, Mercuria will acquire a majority stake in Mesabi, which is a wholly-owned subsidiary of Chippewa Capital Partners (CCP).

Mesabi’s mineral lease rights were reinstated in July after meeting key milestones.

Mercuria Energy CEO Marco Dunand said: “Today’s announcement is part of Mercuria’s ambition to further expand and invest in the US, playing a greater role in increasing American production capacity, and indirectly supporting the strategic steel sector, which is resurging as the US economy is showing even more robust growth.

“Pursuant to this investment, Mercuria plans to employ the highly-skilled workforce in Minnesota, as we do elsewhere in America and internationally in all the ventures that Mercuria operates and bring more efficiency to markets and create reliable alternative physical supply solutions to clients.

“Specifically, the Mesabi investment demonstrates our confidence that – with greater financial strength and stability – Mesabi Metallics can re-emerge as a significant player in the North American pellet and value-added product market segment.”

The company is planning to complete the proposed investment following the closure of the acquisition in the fourth quarter of this year.

14

September

2018

Dow Jones sustainability index names Newmont world’s leading miner

The Dow Jones Sustainability World Index (DJSI) has named Newmont Mining as the leader of the global metals and mining industry for the fourth consecutive year.

The DJSI evaluates around 2,100 mining companies and ranks them based on their performances across a range of categories, including economic performance, environmental policies and social responsibility. Dow Jones has included Newmont among its North American companies every year since 2006; the company was the first gold miner to be named on the index, back in 2007.

“Our focus is on the long-term success of our company, and doing that requires integrating sustainability into all aspects of our business,” said Newmont president and CEO Gary Goldberg. “Employees at our sites around the globe know that leading in profitability and responsibility go hand-in-hand, and that their day-to-day work can have positive and lasting impacts on local communities.”

In the second quarter of 2018, Newmont saw its share dividend increase 87% compared to the same period in 2017, reaching $0.14 per share. The company’s net income also increased by $84m from the previous year, to a peak of $274m, thanks to lower income taxes and the sale of a royalty portfolio in June.

The DJSI named South African mining company Gold Fields as the African nation’s top miner, the fourth-best mining company among the 60 names on the index, and the world’s third-best gold miner.

“Our continued strong performance on the DJSI shows us that we are on the right track in terms of fully integrating sustainability into our business,” said Gold Fields CEO Nick Holland. “But there always will be areas of improvement, particularly in further strengthening our relations with impacted host communities.

“It is essential that the industry’s sustainable business practices incorporate high standards of safety and health practices, sound environmental stewardship and pro-active community engagement, including shared value creation with communities,” said Holland.

While Gold Fields’ net balance increased by $90m to $1.39bn at the end of the 2017 financial year, the company has struggled in recent months. Profits from operations fell by $35m to $43m in June, with the company’s share price losing half its value this year, compared to 2017.

14

September

2018

De Beers concludes acquisition of Canadian explorer Peregrine Diamonds

Rough diamonds exploration and mining firm De Beers Canada has acquired all of the outstanding securities of Peregrine Diamonds through a plan of arrangement.

The transaction, which was announced in July, was sealed at C$0.24 per share, for a total consideration of C$107m ($80.87m).

Through the deal, De Beers will have access to the Chidliak diamond resource located in Canada’s Nunavut Territory and other properties elsewhere in Nunavut and the Northwest Territories.

The completion of the transaction comes after an approval by Peregrine’s security holders on 31 August and the Supreme Court of British Columbia in September.

De Beers Group CEO Bruce Cleaver said: “We are very pleased to complete the addition of the Chidliak resource to De Beers Group’s world-leading diamond resource portfolio, and to extend our presence in Canada.

“We look forward to developing the resource further and are excited about its potential for contributing to our future diamond production.”

Situated 120km northeast of Iqaluit on Baffin Island, the Chidliak resource contains a total of 74 kimberlite pipes, including the CH-6 and CH-7 pipes.

Peregrine’s Chidliak Phase One Diamond Development programme, which is currently focused on the CH-6 and CH-7 pipes, has a total inferred mineral resource of more than 22 million carats.

De Beers Canada CEO Kim Truter said: “We are very excited about the Chidliak cluster, an asset with very strong development potential. Having built and operated three diamond mines in Arctic-like conditions in the past 15 years, our expertise in bringing projects of this nature to fruition is unparalleled.”

13

September

2018

Coal India to close unsafe or underground coal mines

Indian state-owned mining company Coal India plans to close 53 of its 174 underground coal mines by the end of the year as many of its operations have become unsafe or unprofitable.

Coal India is the largest coal-producing company in the world; its 369 mines contribute to 84% of total coal production in India.

However, production at some of its mines has faltered in 2017-2018, underground operations produced 30 million tonnes, equal to just 5% of the company’s total production for the financial year – and the company is looking to streamline its operations.

“We inherited around 700 underground mines at the time of nationalisation,” said chairman Anil Kumar Jha. “Now we are trying to rationalise mines that are very small and are not financially viable.”

There have also been safety concerns at many mines operated by Coal India and its subsidiaries.

A total of 65 workers died in in the first six months of 2016, with 18 people killed at the Lalmatia coal mine, owned by Coal India subsidiary Eastern Coalfields, in late 2016. A further 122 people were reported to have suffered serious accidents during this period, equating to a severe accident every one and a half days.

Beyond coal, accidents at the other state-owned companies – such as a collapse at the Turamdih uranium mine in 2016, which killed three workers – has cast doubts over the ability of the Indian Government to deliver safe mining operations.

Coal India plans to rationalise its operations by combining several smaller mines into a single, larger operation, or convert underground operations to open-cast mines, where possible.

The company has appointed the Indian School of Mines to examine how the country’s mines could be rationalised, and is expected to provide a report outlining its recommendations within six months.

India plans to reach new heights of coal production this year, targeting 652 million tonnes in 2018-2019, which would represent a 15% increase over the 567.36 million tonnes produced in 2017-2018.

“A total of 11 coal blocks have been allotted to Eastern Coalfields, Bharat Coking Coal and Western Coalfields put together,” Jha said. “These new blocks will help these subsidiaries produce more than 100 million tonnes of coal per annum in the near future.”

13

September

2018

Vale to automate iron ore mine to improve safety and production

The world’s largest iron ore miner Vale plans to operate its Brucutu iron ore mine in Brazil with a fully autonomous fleet of vehicles next year, following a successful trial of driverless technology, to improve production and safety at the operation.

The trial involved the deployment of seven Caterpillar 793F CMD fully-autonomous trucks at the mine for a month, following six years of research and development. The project cost $62m and the site saw a 26% increase in the volume of ore transported during the trial, results that the company’s ferrous planning and development director Lúcio Cavalli called ‘promising’.

“The use of this type of technology is increasing in the world market, not only in the mining area. The use of autonomous equipment will bring gains in productivity and competitiveness for Vale and the Brazilian industry”, said Cavalli.

The company hopes that increasing the level of automation at its projects will improve safety. The same technology that enables the trucks to plot routes enables them to detect and avoid obstacles in close proximity, which can range from large rocks and vehicles to individual humans. More automated systems also means that fewer human workers, especially drivers, will need to be employed at the site, reducing the likelihood of an accident or collision with a person.

Vale plans to add another six Caterpillar vehicles to the site, making transport at the mine fully autonomous. The company estimates that this will reduce fuel consumption and maintenance costs by 10% each, and reduce wear on off-road truck tyres by 25%, as the vehicles are able to plot more efficient routes than human operators.

The mine was the largest in the world in terms of production capacity upon its opening in 2006, and produces around 21.9 million tonnes of iron ore per year. The operation currently employs around 1,700, and is now the second-largest mine in Brazil, behind the Carajás iron ore mine in Pará.

13

September

2018

South32 begins sale of South African thermal coal operations

Australia-based miner South32 has reportedly started the divestment process for its South African thermal coal operations.

Unnamed sources were cited by Bloomberg as saying that Exxaro Resources and Seriti Resources have shown interest in bidding for South32’s South African thermal coal operations, which have been valued at around $800m.

In addition, MTN Group chairman Phuthuma Nhleko’s Phembani Group is considering bidding for South32’s South Africa Energy Coal (SAEC) unit, the publication reported.

South32 chief executive Graham Kerr has reportedly told The Financial Times that the company would hold negotiations with potential buyers over the next five weeks.

The company is assisted by Macquarie Group in the sale process.

In April, SAEC became a standalone business to allow the group to simplify the management of its global portfolio.

SAEC comprises four coal mining operations – Khutala Colliery, Klipspruit Colliery, Middelburg Colliery and the Wolvekrans Colliery – as well as three processing plants.

South32 owns a 92% interest in the unit, while a black economic empowerment group led by Phembani Holdings owns the remaining 8%.

The South African Government has been focusing on overhauling the ownership of mines in the country to reverse decades of exclusion of black population.

In June, the government released a new charter that requires permit-holding mining companies to raise black ownership from 26% to 30% within five years after a previous version was criticised by the industry as a threat to investment in the country.

12

September

2018

Report suggests renewable energy will become vital to mining companies

A report from Fitch Solutions has found that wind and solar power will become integral to powering mining operations, as the cost of renewable energy falls.

The report also claims that carbon pricing programmes will force mining companies to adopt renewable sources of energy. While there are fears this could undermine the profits of companies based in countries with severe financial penalties for using carbon, many companies are already investing in renewable energy sources to avoid penalties.

Chile has introduced a carbon pricing scheme of $5 per tonne, and up to nine mining companies in the country have introduced wind or solar plants at their operations. Copper miner Antofagasta Minerals already generates 191.5MW of solar photovoltaic energy at its mines, the largest output from wind or solar sources of any company featured in the report.

Behind Antofagasta, Chilean companies CAP and Collahuasi have the next-highest renewable energy output, with 101MW and 25MW respectively.

“Presently, the majority of mining operations globally continue to rely on traditional power sources, mainly fossil fuel-based grid power or off-grid diesel-generated power, while accounting for up to 11% of global energy consumption,” said Marija Maisch in PV Magazine. “But, with 1GW of renewables already built at mining sites across the world, and another 1GW in the pipeline, the transition appears to be well underway.”

Consultancy firm Navigant estimates that investment in renewable energy in the mining industry will grow dramatically over the next five years. According to the 2013 report ‘Renewable Energy in the Mining Industry’, Asia-Pacific and Latin America will see the most significant increases in renewable investment, from $51m and $37m respectively in 2013, to estimated figures of $1.3bn and $1bn by 2022.

The Fitch report awards countries two separate scores out of 100, based on the value of their mining industry and effectiveness of their programmes rewarding companies for using renewable energy. Higher scores indicate a more attractive market and greater financial rewards, respectively.

Of the 13 countries with the highest industry value score, only three – Russia, the Democratic Republic of the Congo and Ghana – have a renewable industry reward score of 50 or lower.

Argentina is also unique among the 13 countries, being the only one to receive a renewable reward score higher than its industry value score.

Last year, climate research organisation CDP published a report titled ‘Digging Deep’, which found that the world’s 12 largest mining companies alone produced the same level of carbon emissions as the whole of India. The report also claimed that the application of a carbon price of $7 per tonne would cost the global mining industry $16bn.

11

September

2018

Queensland reports decrease in harmful dust pollution

Queensland’s Department of Natural Resources, Mines and Energy has reported that levels of breathable dust in the atmosphere across the state has dropped considerably after calls for improvement in the wake of a death of a miner from the lung disease silicosis caused by the inhalation of silica dust.

The Australian department reported that just 0.9% of dust samples in the state’s coal mines exceeded the legislated occupational exposure limit (OEL) in 2017, a considerable improvement over 2016, when 3.9% of samples were over the limit.

Queensland’s air quality also improved over the course of the year; during a one-hour period on 10 September, 63% of all recorded areas reported ‘very good’ air quality, compared to 61% over an hour on 1 January. The lowest recorded concentration of particulate matter in these hours also dropped from 4.4ug/m³ of fine particulate matter, known as PM2.5, at the start of the year to a concentration of 2ug/m³by September.

Mine safety and health commissioner Kate du Preez said: “The average respirable coal dust and respirable crystalline silica concentrations were less than 50% of the OEL, [which is] 3mg/m³ for coal dust and 0.1mg/m³ for silica dust.”

Queensland mines have been required to monitor and report breathable dust levels at their operations, including any results where levels exceed the OEL. The state was encouraged to act by the re-emergence of respiratory diseases at mine sites, with the death of 69-year-old miner Tyrone Buckton from silicosis in June drawing greater attention to the dangers of dust at operations.

Buckton had never worked underground at the BHP-owned Goonyella Riverside coal mine over a 30-year-long career, but was affected by silica dust kicked up at surface operations. This dust can be up to 20 times more toxic than coal dust, according to the Construction, Forestry, Maritime, Mining and Energy Union.

Du Preez claimed that all of Queensland’s 34,000 coal miners are now working under safer conditions, in part due to an increased awareness and reporting of dust pollution.

“While I am pleased with these results, I urge the industry to maintain its vigilance and awareness of the hazards posed by respirable dust and continue to seek ways to minimise dust levels and improve risk reduction strategies for workers,” she said.