BHP joins hunt for Serbian copper
BHP, the largest Australian miner, has struck a new deal to explore for copper in Serbia as it accelerates efforts to boost its exposure to metals that will be vital to building electric cars and green energy technology.
The Melbourne-based mining giant’s agreement with Canada’s Mundoro Capital gives it the option to take a stake in three exploration areas that Mundoro holds in the Timok region of eastern Serbia. Copper is considered one of the key building blocks of the clean energy revolution, used in electric vehicles, wind turbines and power grids’ transmission lines.
“Mundoro welcomes BHP as an exploration partner that recognises the potential of further exploration in the western Tethyan Belt,” Mundoro chief executive Teo Dechev said.
Top mining companies across the world, including BHP and rival Rio Tinto, have been ramping up efforts to diversify into so-called “future-facing” commodities, those standing to benefit from global trends towards decarbonisation.
BHP, which derives most of its earnings from the steel-making material iron ore, is targeting growth in copper and nickel, two minerals the world needs much more of in coming years as countries race to electrify transport and hit “net-zero” emissions targets. Electric cars consume up to four times as much copper as internal combustion-engine vehicles, BHP says, while nickel is a necessary ingredient in lithium-ion batteries.
Last month, BHP signed a binding $9.6 billion takeover offer to acquire Adelaide-based copper and nickel producer Oz Minerals, which has two copper and gold mines in South Australia, located either side of BHP’s vast Olympic Dam mining hub.
The Oz Minerals deal, if it succeeds, will mark BHP’s biggest acquisition since it paid $US12 billion for US shale gas producer Petrohawk in 2011.
BHP last year sold off its global oil and gas division, partly to free up its ability to spend on more copper and nickel. However, the company remains a significant producer of carbon-intensive fossil fuels with several coal mines across Australia, most of which produce coking coal for the steel-making sector.
Rio Tinto has also looked to Serbia in its quest for “future-facing” minerals copper and lithium. However, its plans to develop the $3 billion Jadar lithium mine in western Serbia, which would have been the largest in Europe, suffered a significant setback last year when the Balkan nation’s government tore up its permits in response to escalating community protests over its potential impact on the environment.
The future of Rio Tinto’s Serbian project remains in limbo, but the company has not given up hope that it may eventually proceed.
Meanwhile, in December, Rio Tinto finalised a multibillion-dollar deal to buy the shares it did not already own in Toronto-listed Turquoise Hill Resources to lift its exposure to the giant Oyu Tolgoi copper and gold mine in Mongolia. It has also recently acquired the undeveloped Rincon lithium brine project sitting within the so-called “lithium triangle” of South America.
Copper presently accounts for about 20 per cent of BHP’s underlying earnings, while iron ore makes up more than 50 per cent. Based on long-term price forecasts, copper could make up more than 40 per cent of earnings by 2030, according to analysts. “This would support the strategy to have about 50 per cent of the portfolio, longer term, made up from copper, nickel and potash,” investment bank JPMorgan said, SMH writes.
Can Finland and Sweden help decarbonize EU economies?
Demand for key metals is booming. Geopolitical realities and pandemic-related supply chain issues are increasing the pressure on EU countries to proceed with mining activities of their own to decarbonize their economies.
The European Union wants to decrease its dependency on Russian fossil fuels while accelerating its decarbonization effort. Metals and critical raw materials will play a pivotal role. Minerals, especially lithium, are most needed for clean-energy technologies. Relevant mining activities are concentrated in Asia, Oceania and South America.
Finland and Sweden, the two European countries currently applying for NATO membership, have a long mining tradition and could help solve the EU’s deficit, but question marks remain.
“We are the most important mining countries in the EU. Sweden alone produces over 90% of all the iron ore produced in the EU, Maria Suner, CEO of the Swedish Association of Mines, Mineral and Metal Producers (Svemin), told DW. However, that’s just a little over a quarter of what the bloc needs, meaning that the EU still has to import 70% of its iron ore, she added.
Finland and Sweden also share the mineral-rich Fennoscandian bedrock. According to Suner, the solid rock beneath the Scandinavian and Kola peninsulas has the potential to provide everything that’s on the EU list of critical raw materials.
The European Commission compiled a list of critical raw materials (CRMs) in 2011. Economic value and supply risk are the two criteria used to determine the importance of the materials. The list is getting longer.
Russia and supply security
Russia’s invasion of Ukraine is the major reason for Finland and Sweden to apply for NATO membership, and arguably, to step up mining in the medium term.
Svemin’s CEO says the focus on mining increased due to the COVID pandemic and ensuing supply chain disruptions, but more so after Russia invaded Ukraine. It has added to the increase in demand, pushing raw materials prices to a new high.
China is the top producer of graphite and rare earth materials. According to data from the International Energy Agency, it also refines 87% of the rare earths, 65% of cobalt, 58% of lithium, and 35% of nickel. Russia is the second-most-important country in the world for nickel extraction and the third-most-important for cobalt extraction.
“If there’s more support for mining activities in Europe, I don’t see that as a result of Russian hostilities. It’s more a question of whether Europe has woken up to the fact that it lacks metals,” Pekka Suomela, executive director of the Finnish Mining Association (FinnMin), told DW.
Land competition is always an issue in Nordic regions with a focus on forestry. Increased mining is opposed by many environmentalists citing the need to protect biodiversity.
In March, when the Swedish government allowed the exploitation of the Scandinavian country’s largest unexploited iron ore deposit, Swedish climate protection activist Greta Thunberg and the Fridays for Future movement said Sweden was “waging a war on nature.”
Finland, Norway, and Sweden are the least densely populated countries in Europe, which might theoretically be a plus for mining activities. Nonetheless, many scarcely populated areas are protected.
“Almost half of the Swedish territory is reindeer herding area for the Sami people, the only Indigenous people in Europe,” said Suner. “But the area needed for mining is very limited and we know how to minimize the impact.”
In the EU, it can take up to 25 years from the exploration phase to the start of commercial mining. Svemin has proposed 27 reforms, including shortening the permission procedures. Worries about the medium-term environmental impact often clash with long-term decarbonization efforts.
While EU member states are responsible for mining legislation, Brussels deals with aspects related to health, water and land usage.
The current geopolitical situation might increase social acceptance, but caution is needed. According to Suomela, the European Union must be careful not to put too much pressure on any single country to avoid local resistance that could easily shift public opinion.
Another possible future obstacle has to do with energy prices. They remain fairly moderate in northern Sweden and Finland, well below the levels reached in central Europe. But an increase in mining activities requires coherent investments in energy assets.
“The mineral and mining sector is planning for a tenfold increase in electricity use by 2050,” Suner commented. “Additionally, we have other projects for battery production and fossil-free steelmaking. Such projects are not covered by the electricity production we have in Sweden today.”
Estonia, another country bordering Russia, is active in the cleantech supply chain, hosting the only commercial rare earth processing facility in Europe. The facility is owned by Toronto-based rare earth materials technology company Neo Performance Materials. The company launched an initiative in 2020 to expand the supply of rare earth feedstock to their Sillamae processing facility near the Gulf of Finland.
Constantine Karayannopoulos, Neo’s president and CEO, told DW that the war in Ukraine caused refining companies to look more closely at their global supply chains. “Neo is no exception,” he explained, recalling that its supplier in Kola, the Russian peninsula, had been a reliable supplier for over 40 years.
“Geopolitical considerations are always a factor, but our primary driver remains customer demand,” said Karayannopoulos.
Right now, it looks like demand will increase. According to the European Association of Metals (Eurometaux), lithium usage in clean technologies could increase by a staggering 2,109% by 2050. Demand for dysprosium, tellurium and scandium is expected to more than double over the next 30 years, DW writes.
Global Special Opportunities Ltd is expanding its ferronickel business in North Macedonia
As denoted by Marcos Camhis, the GSOL fund aims to boost its output of 50,000 tonnes a year of ferronickel both by expanding its current two operations and potential new takeovers.
The private equity fund GSOL has grown in five years to be the world’s second biggest producer of stainless steel ingredient ferronickel, and it is holding talks about further potential acquisitions.
“We are in the quest for additional projects in the nickel space, both in terms of ferronickel industrial assets, and also in terms of undeveloped greenfield projects in mining,” stated Camhis, the director of GSOL.
“Active discussions are in place, with four or five different projects, some very preliminary others more advanced,” Camhis said, adding that all of the assets were still under consideration.
Since 2015, GSOL has revived the Falcondo operation in the Dominican Republic, which it bought from Glencore, and reopened the ferronickel plant in North Macedonia.
At Falcondo, where output had been suspended by Glencore, GSOL-backed Americano Nickel restarted one production line in 2016 and a second in 2018 and has now ramped up to around 30,000 tonnes a year of nickel contained in ferronickel.
The other operation, named Euronickel Industries, is now producing around 20,000 tonnes, after GSOL acquired it last year and invested 100 million euros ($111 million).
“Euronickel has completed one of the largest foreign investments in North Macedonia, on time and within budget, during what has been a transformative year. Euronickel has secured the jobs of over 1,000 people from the region around the plant. As a result of the investments made by GSOL, Euronickel is both a European leader and a meaningful producer in the global ferronickel market”, Camhis told local media.
“There’s certainly room to grow our existing assets with further capex to reduce costs and increase production”, Camhis said.
Greek lawmakers approved a restructuring plan for nickel producer Larco
The European Commission said it was taking Greece to the European Court of Justice (ECJ) over its failure to recover €135.8-million of illegal state aid to Larco which is struggling under heavy debt.
Larco, which is 55% owned by the state, is floundering under half a billion euros in debt owed to suppliers, contractors, banks and pension funds, including €350-million in arrears to power utility Public Power Corp.
The Greek parliament cleared an amendment which stipulates the appointment of an administrator in March to liquidate Larco, cut wage costs by an average 25% and push ahead with a fast-track tender to sell a smelting plant and some of its mines.
“This plan is Larco’s last chance,” Energy Minister Kostis Hatzidakis told lawmakers who debated the law. “I hope this effort succeeds and a reliable investor is found.”
If the administrator fails to sell 75% of Larco assets within 12 months from appointment, Larco will have to file an application for bankruptcy, according to the new legislation.
Industry sources have said private equity fund Global Special Opportunities might be interested in Larco, which employs about 1 000 people in Greece.
Vast Resources to soon start initial trial production at Baita Plai mine in Romania
UK-based Vast Resources said that it will shortly start initial trial production at its Baita Plai polymetallic mine in central Romania.
The current cold commissioned capacity is up to 7,000 metric tonnes per month and will be progressively increase to 14,000 metric tonnes per month following the arrival of the new equipment from China in January, Vast Resources said in a statement.
Over the past year, since the association licence was granted, Vast Resources has either upgraded, refurbished or replaced the mine’s infrastructure required for the cold commissioning.
In October, Vast Resources signed a binding conditional bond issue deed for a facility of up to $15 million (13.5 million euro) through an issuance of secured convertible bonds to UK-based fund Atlas Capital Markets for the purpose of bringing projects in Romania and Zimbabwe into production.
In April, Vast announced it has received a draft proposal for a loan of up to $10 million from a Swiss bank to finance its Romanian mining projects.
Vast Resources, formerly known as African Consolidated Resources Plc, is an emerging mid-tier, multi-commodity, multi-jurisdictional development and mining company with a project portfolio covering gold, nickel, copper, phosphate and diamonds. It also owns a gold mine in Zimbabwe.