Region, What next for the big miners?
As 2022 looks to be this bull market’s peak for earnings and dividends, opinions are split about what comes next for major miners
It goes without saying that commodity cycles are tricky to time right. Even picking an indicator is tough – does a dip in copper or iron ore prices mean the worm has turned, or do low inventories in Chinese ports mean sales at Rio Tinto (RIO) and BHP (BHP) will be protected? These are blue-chip companies that will likely be buy-and-hold shares for most investors, but being clear on what is coming next is important.
The pressures on these companies are clear: rising costs and an uncertain macroeconomic landscape. And uncertainty here does mean a lack of clarity on the near-term future rather than just another way to describe a negative sentiment. China has remained committed to keeping Covid-19 cases low, with lockdowns still a fact of life for many people in the country. There were whispers of a step down in the harsh pandemic policies earlier this month, but so far it looks as though these will continue.
For the miners, this means lower demand from China, the key global industrial metals buyer. Rio and BHP are the most exposed, given their reliance on iron ore, while Anglo American (AAL) and Glencore (GLEN) have more varied portfolios, with proportionally more copper as well as other base metals like zinc and lead, Investors Chronicle writes.
Europe is looking to enter the race for lithium
Lithium is the essential resource for developing a sustainable electric vehicle industry in Europe. Until now, this resource has mainly been produced in Australia, Chile, and China. Europe is looking to enter the race for this white gold and is betting on several deposits in its soil. We’ve put together a list below of the 6 main European mines that will be exploited in the coming years.
Lithium is a white powder that is essential for the manufacture of electric car batteries. In 2021, according to the US Geological Survey (USGS), global production is close to 100,000 metric tons, a figure 20% higher than in 2020. Global consumption in 2021 is estimated to be 93,000 metric tons. This is due to strong growth in global demand, particularly because of the accelerated production of EV batteries required for the energy transition.
This alkaline metal allows electrons to flow between a positive and a negative electrode, both of which are immersed in an ionic conducting liquid (the electrolyte).
When a lithium-ion battery is used, for example to power an electric car, the electrons accumulated in the negative electrode are released and reach the positive electrode. The opposite happens when the battery is being charged. Without lithium, batteries could not power a device and then recharge.
There are two types of lithium that can be used in batteries: lithium carbonate and lithium hydroxide. Currently, the demand for lithium hydroxide for batteries is increasing and could exceed the demand for lithium carbonate by 2030. Lithium hydroxide is currently priced at around US$35,000 a metric ton. Lithium carbonate is around US$ 59,900 a metric ton.
The problem with this precious metal is that it is found in a few places on earth. The main producers are Australia (55%), Chile (26%), China (14%), and Argentina (6%). China is the leading lithium refiner.
Reducing Europe’s Dependence
This means that Europe has no choice today but to import almost all the lithium it consumes. According to forecasts, at least 30 million zero-emission electric vehicles will be on the roads of the EU by 2030. Thermal vehicles will be banned in Europe in 2035. By 2030, Europe aims to produce 25% of the world’s batteries (compared to 3% in 2020) in its numerous production plants currently under construction.
The EU should therefore see its lithium consumption explode in the coming years. Some estimates predict a 20-fold increase between 2020 and 2030.
In a tweet, Ursula von der Leyen warned that Europe must get rid of its dependence on the outside world, especially China. She believes the continent must put in place an industrial strategy not only for lithium but for all the other rare earth elements found in batteries such as nickel, cobalt, or graphite.
Europe has already entered the race for the new white gold and is seeking to develop its own lithium mining industry. The USGS estimates probable European resources at 7% of the world total. The number of mining projects has increased in recent years in several European countries.
Here is a tour of Europe’s main projects and the companies behind them. These projects could eventually cover 80% of European battery needs.
The Barroso Project, Savannah Resources
Portugal has the largest reserve of lithium in Europe with around 60,000 metric tons of known reserves, according to the USGS. But until now, Portuguese lithium has mainly been used in the ceramics industry to make glassware. The country is just now entering the race for the new white gold.
British company Savannah Resources has ambitions to exploit the Barroso mine in the north of the country, which is rich in spodumene, a form of hard rock lithium.
According to Savannah Resources, the mine could contain 27 million metric tons of lithium, including over 285,900 metric tons of lithium oxide. According to the company, this is enough to meet the demand in Europe over the next few decades.
The group is waiting for the green light from the Portuguese authorities to start production as the project is facing strong local opposition. If opened in 2023, the Mina do Barroso open-pit mine will become the first major producer of lithium in Europe.
The Vulcan Project, Vulcan Energy
Australian company Vulcan Energy is currently working on a pilot project in the Upper Rhine Valley in Germany. The idea is to produce “zero-carbon” green lithium by using geothermal energy to extract lithium-rich brine from the Upper Rhine. The final lithium hydroxide will then be created by electrolysis.
The company says they were able to produce 57.1% lithium hydroxide, surpassing the 56.5% battery grade specifications usually required.
The Vulcan pilot plant in Germany has been operating since April 2021 and is expected to launch commercial production in 2025.
The EMILI Project, Imerys
French company Imerys recently announced that it will start mining a lithium deposit in the Massif Central (in the Allier department) in 2028.
Since the second half of the 19th century, the site has been home to a quarry producing 30,000 metric tons of kaolin per year for tile production.
According to Alessandro Dazza, CEO of Imerys, the deposit contains one million metric tons of lithium oxide. This would be enough to produce, according to the company, “34,000 metric tons of lithium hydroxide per year from 2028 over 25 years.” This would enable approximately 700,000 electric vehicles to be equipped with lithium-ion batteries.
4/ Czech Republic
The Cinovec Project, European Metals Holding
The Cinovec project, located 100 km from Prague in the Czech Republic, is being carried out by European Metals Holding. It aims to produce nearly 30,000 metric tons of battery-grade lithium per year over a period of 25 years.
According to European Metals’ 2022 pre-feasibility study, Cinovec has the potential to become the producer of the lowest-cost hard rock lithium in the world. The mine could produce at a cost of US$5,000 to US$6,000 per metric ton.
The Wolfsberg Project, European Lithium
European Lithium is developing the Wolfsberg Project in Carinthia, 270 km south of Vienna, in Austria. Located in the heart of Europe, this mine project plans to extract 10,000 metric tons of lithium hydroxide per year.
According to the company, this will equip the batteries of approximately 200,000 electric vehicles. They hope to achieve an operating rate of 800,000 metric tons per year with a mine life of over ten years.
The company expects to begin production in 2025.
The Keliber Project, Keliber Oy
Finnish company Keliber Oy, specializing in mining and battery chemicals, is currently running a project in western Finland with the objective of reaching the production of 15,000 metric tons of lithium hydroxide per year beginning in 2025.
The company is also aiming for sustainable production. The lithium they plan to extract will, they say, have a smaller carbon footprint than the competition. This is because the refinery plant is located 70 km from the mine. In addition to this, more than half of the electricity in the Finnish national grid is generated from renewable energy sources. As a result, the refining process will be more environmentally friendly.
The Finnish potential has attracted the attention of investors. South African mining giant Sibanye-Stillwater intends to acquire a majority stake in Keliber Oy.
The enthusiasm for lithium mining in Europe is not unanimous, however. In Serbia, the Anglo-Australian company Rio Tinto stopped its project in the southwest of the country due to local opposition.
In the future, the most important challenge for Europe will be to find ways to accommodate mining projects and environmental and social standards. As can be seen, the European lithium extraction projects that are listed above will not be operational until 2025. But the demand for gigafactories is already here. Swedish company Northvolt has already opened Europe’s first battery gigafactory, Direct Industry writes.
Newmont is expanding its business to Europe
American miner Newmont, the world’s number one by production, has formed an exploration alliance with Britain’s Ariana Resources, which owns several gold mining concessions in Europe. The goal is to discover new gold and copper exploitations in one of the least explored regions in the world.
American miner Newmont formed Exploration Alliance with the British company Ariana Resources different owner Mining interests in European countries.
The aim of this alliance is to focus on exploring new copper and gold deposits in countries such as Bosnia and HerzegovinaAnd the Bulgaria And the GreeceAnd the Kosovo And the North Macedonia s Serbian Using the company’s specialized equipment Western Tithian Resources Properties 75% From Ariana Resources.
Representatives of this company have indicated that Southeast Europe is one of the least explored and promising mining regions in the world. your spokesperson, Mentor Demi sign to “With our extensive experience in the area and Newmont’s large exploration capacity, database and technology, we are confident that we will be successful in discovering new deposits of copper and gold.”
As per the information provided by the company, Newmont invests $2.5 million in Ariana To finance exploration activity, as well as facilitate access to the mining company’s regional database.
alliance between Newmont, Ariana and Western Tethian Resources Has the expected initial duration of Five years, which can be extended at the request of both partiesat the expense of new investments by Newmont, which also retains the option to enter Ariana Resources’ equity capital.
Vitality arrived Kareem Sener, Ariana’s managerAnd the “We are pleased to partner with Newmont, via Western Tethyan Resources, for Exploration of new large-scale gold and copper deposits in the southeastern region of Europe. This was the area It was explored during the 80’s and 90’s By companies that were later absorbed by the Newmont Group, such as Normandy Mining. Therefore, the alliance will benefit from Important historical data collected by Newmont. Thanks to this, we can develop a complete exploration of the area. Newmont will also contribute its expertise and knowledge to exploration activity, including the potential deployment of various proprietary technologies”, Sunday Vision writes.