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Bifurcation a Big Test of Miners’ Mettle
‘Various companies, governments and investors have been grappling with the question of how to shorten timelines to production’
“Teslas don’t grow on trees”, Reuters journalist Ernest Scheyder wrote in The War Below, highlighting conflict between government mandates on electric vehicles and public policies hampering new metal flows into EV supply chains. The conundrum at the heart of American author Scheyder’s book is the same one executives at the world’s major miners, and many investors in the industry, are grappling with.
“This is the schizophrenia we’re seeing in the world,” says the chair of US-based Clareo, Peter Bryant.
“You’ve got this energy transition that’s going from fossil fuels to a minerals-dependent system. The same people that are pushing that are largely anti-mining.
“Against this backdrop, I [new mine developer] need to speed up and go from a 20-year nightmare to five years, or whatever it is, which also involves changing how we do mining as well.
“But governments issuing new mine approvals are being heavily influenced by a very heavy anti-mining lobby, or ecosystem.
“So these two things are totally at odds with each other. And somehow that’s got to be a reconciled.”
Bryant, an advisor to mining and energy majors, and governments, through Clareo, returns to IMARC in Sydney in October to talk about where mining and metals really fit in the world’s energy transition, shifting energy, transport and infrastructure supply chains, and a future circular economy.
These are conversations that seem to become more nuanced with each passing month.
Bryant says miners need to innovate and find ways to become integral parts of circular economic systems. They need to “lean into” recycling and evolve into materials solution providers. They also have to advance traditional project development models.
“I think the age of major, $10 billion or $20 billion massive mines, outside of iron ore and coal, is in the past,” Bryant says.
“I just don't think you can do them anymore. The main reason is, yes, there is increased demand coming, but how big is it? And when is it? I can’t build a 50- year mine to meet a 10-year demand peak, and then it drops off.”
In that context, the “20-year nightmare” of resource discovery, permitting and development, to production, is “just not sustainable anymore”.
“It’s a huge challenge for the industry.”
Nick Bell, global sector lead, mining, minerals and metals with global engineering group, Worley, agrees the industry is “entering a critical phase where retaining trust in the business case of mining projects will be challenging”.
“The next few years will be tricky for several reasons, including higher costs resulting from the scale and complexity of mines, extended infrastructure and decarbonisation requirements of assets, geological challenges, and supply chain price volatility,” Bell says.
“That’s why we’ll see a two or three speed economy evolve … as a select few miners power ahead to build additional production capacity in future facing commodities.”
Bell says bigger miners harvesting robust cash flows from iron ore, gold and copper assets, and sitting on strong cash reserves, can pivot capital towards copper and other energy transition metals.
He says: “All miners now deploy capital with appropriate rigor. The middle speed, however, is made up of mostly mid-tier miners who will be obliged to adopt a particularly cautious approach to capital deployment. This may delay their pivot, widening the gap to the mining majors.”
Bell believes all operators will need to demonstrate the “integrity of their approach” from an environmental, social and governance (ESG) standpoint. He says miners of all sizes face common ESG challenges.
“It’s difficult to deliver minerals and metals to the market quickly,” he says.
“One reason for this is a lack of trust within the investment community and stakeholders in mining projects.”
Global sustainability advisory firm ERM’s analysis of more than 100 critical minerals projects indicated that between 2017 and 2023 nearly 60% of operators reported pre-production delays ranging from a few months to several years. Permitting issues (39% of projects), technical challenges (36%) and commercial issues (26%) topped the list of headwinds, but ERM found environmental concerns (24%) and stakeholder opposition (17%) contributed to delays.
“With mining projects regularly taking up to 20 years to reach production, we could well see critical minerals shortages before 2030 which could significantly hinder the global energy transition,” ERM’s Henry Hall says.
Impacts and benefits in different places
Hall, who heads the firm’s EMEA socio-political team, says mining companies are “struggling to decide what commodities to prioritise, what capital investments will derisk their operating assets from an ESG perspective, and which of their investors’, customers’ and stakeholders’ preferences to pay most attention to”.
“This is exacerbated by the interrelated nature of ESG risks which seem either too expensive to mitigate, difficult to measure, uncertain to predict, or to trade off against each other, forcing companies into ESG whack-a-mole, where solving one issue often exacerbates another.
“What’s more, the uncertain and rapidly evolving nature of societal expectations and technological capabilities mean that what solution looks best right now may well become defunct in future.
“Various companies, governments and investors have been grappling with the question of how to shorten timelines to production while also raising the bar on best practice management of environmental and social issues.
“In basic terms, in order to be successful, mining projects must be able to effectively demonstrate that they will minimise any negative impacts, and that the benefits that the project will deliver will be far outweighed any impacts that remain.
“Often the challenge is that the impacts and benefits are not felt in the same place – most often the negative impacts being felt locally and the positive more at the national level – and that companies underestimate the political nature of the process, concentrating more on the technical and scientific solutions that regulators demand than on perceptions of, and engagement with, impacted communities and influencers.”
Rohitesh Dhawan, CEO of the International Council on Mining and Metals ICMM, picked up this theme while in Australia this month.
“The industry has done arguably a good job with messaging around providing the materials that are needed for a clean energy transition … however, that messaging still doesn't seem in many parts of the world to be resonating with the local communities who are the ones who have the daily impact of a mine in their neighbourhood,” he said.
“While the benefits of mining are local, they are regional and they are global, any impacts from mining are always local. We have sometimes, I think, given the impression that that’s okay because the world benefits from the stuff we do, and we’ve just got to rebalance that a bit to make sure that nobody feels like they have to be collateral damage in the world’s rush to produce these critical minerals, essential as they are.
“That means focusing as much on how we mine as what our products are used for.”
ERM critical minerals director Toby Whincup says de-risking feasibility stage projects will be crucial to the smooth and efficient progression of mining projects.
“To prevent permitting delays or stakeholder opposition, developers need to work to decouple projects from stakeholders’ negative preconceptions of mining by taking the time to build trust early through open and equal dialogue,” he says.
“ERM’s sustainability model for mining, The Mine We All Want to See, outlines a more forward-looking approach for miners, based on hard wiring positive environmental and social outcomes, defined through stakeholder collaboration, into project design from inception.”
International private equity investor in emerging mining companies, Resource Capital Funds (RCF), says heightened investor and societal ESG expectations plus the proliferation of ESG frameworks and standards mean navigating the ESG landscape is increasingly complex.
“We're risk and opportunity focused,” says RCF principal Lauren McGregor.
“What are the material risks to the project and to the returns that we want? That's a consistent approach that we've taken.
“We’re a fundamental investor. We’ve got technical expertise, which we use to assess the ESG risks and opportunities in-depth, often in close consultation with our portfolio companies. I think for generalist investors it's often a lot harder to step beyond ESG scoring mechanisms and establish exactly what it is that they're looking for when they're making investments in mining companies.
“For specialist mining investors like RCF that focus on ESG as a core component of value and have deep, internal expertise and experience managing these issues, it has stayed pretty consistent.
“But I think across the board, the expectations of mining companies and making sure that they are managing their environmental risks appropriately, that they’re making a positive contribution socially, that is going to continue to become more and more important.
“Certainly we’re seeing permitting processes become more lengthy, in some cases because companies are doing more work on understanding and adapting projects to manage environmental or social impacts, but in others it’s simply due to bureaucracy and duplication.
“Permitting delays, unpredictability and increasing costs are a huge barrier to investment in the mining industry
“In terms of the social side of things we are definitely seeing companies need to engage at an earlier stage. We like to see that companies have engaged with the local communities and stakeholders at an earlier stage. We don’t want to see transactional and reactive behaviours.
“We're seeing the most success in projects that have really good communication channels with the local stakeholders, and they’re actually listening and responding and being able to demonstrate how they responded to feedback from the community.
“It does take longer to do it that way. But I think ultimately those are the projects that we think will be most successful over the long term.”
While a new $1 billion gold mine in Australia is not going to add to the world’s critical mineral stocks, this month’s bizarre federal intervention in the McPhillamys project approval process on ESG grounds has added to industry concerns about political interference in otherwise transparent mine development paths.
Sam Berridge, portfolio manager at small-company investment firm Perennial Partners, says access to land and permitting are becoming more significant hurdles for the industry.
“Just recently we’ve seen the [federal] environment minister, Tanya Plibersek, kibosh a gold project which had all state and traditional owner approvals already in place in New South Wales,” Berridge says.“That sort of thing really is a kick in the guts for the mining industry
- “The industry spends millions of dollars on going through these approval processes, doing the environmental surveys, doing the engineering, doing the consulting with communities and what-not.
“I think that the major mining houses would like to invest in new projects but the problem is getting a new greenfields project up and running these days takes 12 to 15 years. So even if you found a good one, which is a challenge in itself, the returns from that project are going to the next generation of investors rather than current ones.
“So for that reason, M&A is looking much more appealing than new projects.
Meanwhile, Perennial’s Ewan Galloway says copper is emblematic of the industry’s so-called technical challenges.
He says even though large mines such as Cobre Panama, Kamoa-Kakula and Oyu Tolgoi have begun production in recent years, “it has been a rocky road characterised by multiple delays, capex overruns and fractious negotiations with governments”.
“In the meantime, mine grades have continued to decline, and large-scale production remains dominated by mines that started production before 2000.”
Galloway says the capital intensity of new projects continues to escalate.
“Twenty years ago you would have been looking at US$4000-to-$5000 [per tonne of installed capacity].
“Maybe a decade ago, $10,000-to-$15,000.
“And now, when you look at some of the recent projects coming through, you’re probably looking at closer to $25,000-to-$30,000, if you're lucky. Some of the recent ones, like Cobre Panama, for example, which is now basically in care maintenance, was closer to $40,000-odd.
“And what's driving a lot of that, when you sit there and talk to BHP, Rio and all the large copper names, is that the tier one jurisdictions and tier one mining locations have by and large been exhausted. So instead you are having to go further afield.
“That initial capital expenditure is rising as you’re having to work in areas where there’s not necessarily the infrastructure and there’s ongoing inflation around wages and other inputs.
“So we’re expecting to see that [capital intensity] continue to grow.
“I think that’s making it pretty unsustainable at the moment when you look at the incentive prices currently for copper.”
*ESG in Mine and Project Development at IMARC 2024 will canvass the industry’s sustainable mine and project development challenges and opportunities and also look at these through an investor lens. International experts will examine the Role of Mining and Metals in the Circular Economy, and review the evolving mining standards landscap
Hear more from
Peter Bryant
Chair, Clareo & ChairDevelopment Partner Institute
Development Partner Institute
Nick Bell
Global Sector Lead Mining, Minerals and Metals
Worley
Toby Whincup
Global Director - Critical Minerals
ERM
Lauren McGregor
Principal – Credit Funds
ResourceCapital Funds
Maximus Hits 19m @ 3.21 g/t Gold at Hilditch as Development Activities Advance
Maximus Resources Limited (‘Maximus’ or the ‘Company’, ASX:MXR) is pleased to update shareholders on assay results received from a completed Reverse Circulation (RC) drill program at the Hilditch gold deposit (Hilditch) (90Å Maximus, 10Å Bullabulling Pty Ltd) located on a granted mining tenement 25km from Kambalda, Western Australia
- Assay results from a Reverse Circulation (RC) drill program at the Hilditch gold deposit return multiple shallow high-grade intersections, including:
- 19m @ 3.21g/t Au from 16m incl. 6m @ 5.64g/t Au from 18m and 5m @ 3.28g/t Au from 30m (HGRC065)
- 9m @ 3.11g/t Au from 63m incl. 4m @ 4.84g/t Au from 63m (HGRC068)
- 15m @ 1.12g/t Au from 24m incl. 1m @ 2.85g/t Au from 25m and 4m @ 2.12g/t Au from 35m (HGRC067)
- 5m @ 1.61g/t Au from 48m incl. 1m @ 2.02g/t Au from 48m and 1m @ 2.0g/t Au from 51m (HGRC065)
- Representative minable ore-grade intervals have been submitted for metallurgical test work under real-world toll milling protocols with results expected to be received in October. Initial results up to 95.8Å recovery of gold.
- Updated Mineral Resource Estimate (MRE) for Hilditch gold deposit targeted for October 2024.
- Development studies including geotechnical, environmental, infrastructure, surface water and hydrogeology assessments necessary for the mine approval process are advancing.
- The Hilditch gold project is situated on granted mining tenements, with excellent access to infrastructure, service providers and several toll-treating options within a 60km haulage.
- The Company is in active discussions with potential mining and toll-milling partners.
Eleven RC holes (722m) were drilled at Hilditch to investigate recent intersected high-grade zones. The Company has commenced updating the Hilditch Mineral Resource Estimate (MRE) to finalise optimised open-pit designs, aiming to secure mine approvals and advance discussions with potential mining and toll milling partners.
Maximus’ Managing Director, Tim Wither, commented, “The recent drilling results, including 19m @ 3.21g/t Au from 16m, fall within optimised open pit shells and support the MRE update prior to completing open pit designs. Hilditch offers a promising near-term gold production prospect for Maximus, situated on an approved mining tenement near the Coolgardie-Norseman highway, and within close proximity to multiple regional gold processing facilities.
“These new drilling results successfully expand the high-grade mineralised zones, and significantly improve the economic outlook for Hilditch, with efforts concentrated on advancing open pit development to generate cash flow for the Company, capitalising on the rising gold price environment.”
Hilditch Gold Deposit
Hilditch is located on a granted mining tenement adjacent to the Coolgardie-Norseman highway and is proximal to several toll-treating processing plants. The existing 19,500 oz Au @ 1.3 g/t Au mineral resource is shallow, with mineralisation commencing at the surface over a 200m strike length and remains open at depth with significant strike extension to be tested (ASX announcement 19 December 2023). The completed RC drill program was aimed at infill and resource extension to upgrade material classification into the indicated category, before updating the Hilditch MRE.
Gold mineralisation at Hilditch is interpreted to be associated with east-dipping structurally controlled contacts between mafic/ultramafic and volcaniclastic units. Minor interflow sediments are observed within the mafic and ultramafic sequence, similar to that prevalent at the Company’s Wattle Dam Gold Project. In the Hilditch region, the rocks show extensive weathering, reaching an average depth of 20 metres below the surface, indicative of full oxidation. From 20 to 40 metres, there exists a transitional zone, and beyond 40 metres, the rock is unweathered and contains primary mineralisation.
Preliminary metallurgical test work indicative of the Hilditch open-pit gold resource is free milling (non-refractory) with exceptional gold recoveries between 91.4Å and 95.8Å, indicating that the mineable ore is very amenable to conventional Carbon in Leach (CIL) gold processing found throughout Western Australia’s Eastern Goldfields. Completed metallurgical tests covered various gold grades and oxidation stages, ensuring representative sampling across expected mining depths (ASX announcement 3 July 2024). Further tests are underway to represent real- world toll milling protocols (Figure 2).
Figure 1 – Hilditch gold deposit significant drill results from recent drilling (gram x metres).
Drilling Results
The latest round of drilling expanded upon previous high-grade intersections near hole HGRC038, which had reported 4m @ 12.44g/t Au from 47m, including 1m @ 25.93g/t Au from 47m (Figure 1) (ASX announcement 15 August 2024).
Five RC holes were drilled in proximity to HGRC038. Notably, hole HGRC065, located 25m north of HGRC038, intersected 19m @ 3.21g/t Au from 16m, including 6m @ 5.64g/t Au from 18m and 5m @ 3.28g/t Au from 30m, effectively extending the high-grade zone to the north.
Additionally, hole HGRC068, situated 15m down-dip of HGRC038, intercepted 9m @ 3.11g/t Au from 63m, including 4m @ 4.84g/t Au from 63m. HGRC067 drilled 15m up-dip of HGRC038 returned 15m @ 1.12g/t Au from 24m, with notable intervals of 1m @ 2.85g/t Au from 25m and 4m @ 2.12g/t Au from 35m (Figure 3). These results confirm a well-defined, high-grade gold zone within the central part of the deposit, bolstering geological confidence and continuity of high-grade mineralisation.
At the northern limit of the deposit, several drill holes were positioned to the north of previously reported hole HGRC019, which intersected 7m @ 7.9 g/t Au from 51m, including 2m @ 16.9 g/t Au from 52m (ASX announcement 14 June 2022), in an effort to extend the resource along strike. However, drill holes HGRC059 to HGRC061 failed to return significant results, confirming that the mineralisation is closed off along strike to the north.
Click here for the full ASX Release
This article includes content from Maximus Resources Limited, licensed for the purpose of publishing on Investing News Australia. This article does not constitute financial product advice. It is your responsibility to perform proper due diligence before acting upon any information provided here. Please refer to our full disclaimer here.
190 Metre Antimony Copper Intercept at Bulla Park
West Cobar Metals Limited (“West Cobar”, ASX:WC1) is pleased to advise that assays from the latest drilling of its 100%-owned Bulla Park Copper - Antimony Project (Figure 1), located 110km west of Cobar in New South Wales have shown drill intersections of broad and consistent copper and antimony mineralisation.
Highlights
- Recent diamond drilling confirms a thick zone of antimony copper mineralisation at Bulla Park with structural control from a major WSW trending fault
- Provides further confidence of a large antimony copper system at Bulla Park supporting previous drilling results - 33m at 0.47% Cu and 0.15% Sb (19CA002, 229m to 262m)1
- BPD09 encountered copper - antimony grades up to 1m at 1.04% Cu, 0.55% Sb (204m to 205m)
- Broad intercepts from BPD09 include 190m at 0.23% Cu and 0.08% Sb from 128m
- Selected intersections from BPD09 include 66m at 0.34% Cu and 0.13% Sb, 7g/t Ag from 200m. Also:
- 4m at 0.44% Cu, 0.20% Sb and 7g/t Ag from 131m
- 10m at 0.47% Cu, 0.23% Sb and 9g/t Ag from 200m
- 4m at 0.53% Cu, 0.21% Sb and 10g/t Ag from 223m
- 13m at 0.45% Cu, 0.17% Sb and 7g/t Ag from 239m
- Gravity and aeromagnetic surveys indicate there is potential mineralisation along at least 1.8km of strike, over 350m of horizontal width and drill intersected thicknesses of approximately 60m
- Strong macroeconomic factors for antimony (prices are approx. US$22,700/t) and copper (prices are approx. US$9,300/t)*
- Antimony is on the critical mineral lists of both Australia and the US
- In addition, potential for stratiform massive sulphide silver – zinc - lead mineralisation exists south of the copper - antimony mineralisation
- Additional drilling planned to enable maiden antimony copper mineral resource estimate
West Cobar Metals’ Managing Director, Matt Szwedzicki, commented: “The Bulla Park project is shaping up to have potential for a major copper – antimony – silver deposit. The antimony content is exceptional and with the global prices of antimony trading at nearly 2.5 times the price of copper, it is a good time to have drilled through a major intercept of antimony mineralisation.
We are now planning the next drill program to follow the deposit along strike.”
Figure 1 - West Cobar’s Bulla Park Project exploration licences, interpreted geology and outline limits of aeromagnetic surveys flown.
Mineralisation is dominantly tetrahedrite (copper - antimony sulphide) and minor chalcopyrite and stibnite (antimony sulphide). Antimony grades in all drill hole intercepts are approximately 30% to 35% of the copper grade, reflecting the theoretical composition of tetrahedrite (Cu12Sb4S13).
The mineralisation has developed over several stages. Syn-depositional siderite alteration of Lower Devonian (Winduck Group) silty fossiliferous sandstones is accompanied by chalcopyrite and tetrahedrite. Synsedimentary microfaults and dewatering structures are common indicating a tectonically active depositional and mineralising environment. When subsequently lithified, brittle faulting and fracturing has resulted in siderite-barite stockwork veining and hydrothermal breccias with tetrahedrite as the main copper-antimony mineral. Later faulting is associated with tectonic breccias, massive siderite-barite veins up to 20m thick and tetrahedrite and stibnite crystals filling vughs and veins (Figures 2 and 3).
Click here for the full ASX Release
This article includes content from West Cobar Metals Limited, licensed for the purpose of publishing on Investing News Australia. This article does not constitute financial product advice. It is your responsibility to perform proper due diligence before acting upon any information provided here. Please refer to our full disclaimer here.
Gold Potential Builds at Black Swan
Poseidon Nickel (ASX: POS, the Company) is pleased to provide an update on the gold exploration programs at Black Swan.
- Reconnaissance soils sampling has identified several gold anomalies
- Anomalies extend over multiple soil traverses (between 400m to 800m) along the interpreted gold bearing structures
- Wilson’s Prospect – several positive coincident attributes established
- A coherent gold anomaly defined (up to 54ppb Au) that is 1.4km by 1km in size and remains open to the south
- The gold anomaly extents capture the locations of the previously announced gold nuggets and anomalous rock chip samples that graded up to 1.25g/t Au in gossanous quartz veins1,2
- Several historical gold drill intersections with assay results >1g/t Au, including 0.4m @ 6.41 g/t Au2, are also located within the anomaly area, despite only 5% of all historical drillhole samples being assayed for gold
- The layered indicators for gold potential at Wilson’s Prospect point to a highly prospective exploration target as evaluation programs continue
- Gold exploration programs underway
- High priority infill soil and further grab sampling programs are underway to better define soil trends at Black Swan. Infill results will be used to optimise drill targets
- At Lake Johnston, maiden reconnaissance soil surveys have been completed across the newly acquired Mantis tenement and submitted for analysis - results awaiting
CEO, Brendan Shalders, commented, “During August 2024 the Company completed a wide spaced reconnaissance soil sampling program across the entire landholding at Black Swan which was assayed for the full suite of elements.
Soil sample assay results have noted four promising gold in soil anomalies. The extents of the anomalies and morphology appear to be tracing the prospective gold bearing structures throughout the geological sequence at Black Swan which have never been systematically tested for gold.
There is little outcrop at Black Swan thus reconnaissance surface geochemical surveys are considered a cost-effective exploration technique to quickly identify areas of gold anomalism. Due to the significant dilution of the soil profile as it is mainly comprised of sands and clays, the gold values recorded are usually only at low levels (ppb). The importance of a gold in soil anomaly is it often presents a vector to a prospective gold system below, and in its original undiluted setting, maybe at much higher grades, hence drilling is required to effectively test the target.
We are particularly excited about the gold targets that are presenting at the Wilson’s Prospect. Results of the separate work programs to date are showing several positive coincident attributes underpinning the prospectivity for the targets. These include the establishment of a large coherent gold in soil anomaly with a footprint that captures the locations of the previously reported gold nuggets, anomalous rock chip samples and historical drilling intersections grading up to 6.41g/t Au.
Despite the historical gold intersections, only 5% of all drillhole samples at Black Swan were assayed for gold. Given the lack of gold assays and the historical focus on nickel, the gold potential at Black Swan has been somewhat overlooked.
High priority infill soil sampling programs are underway to better define drill targets and progress the planning for low-cost shallow drilling programs.
We are also awaiting the results from the Lake Johnston soil programs completed in early September 2024. Once received and interpreted the company plans to continue to undertake additional programs to progress and established any newly identified gold targets within the portfolio.”
Gold in Soil Anomalies at Black Swan
During August 2024 the Company collected 362 soil samples from a wide spaced reconnaissance soil sampling program over the entire Black Swan tenement package on 800m and 400m space traverses with sampling intervals of between 80m and 160m. The soil samples were tested using the UltraFine+ technique identifying four coherent anomalies across the program (refer Figure 1).
Figure 1: Black Swan gold in soil anomalies
Gold assay results from the soil sampling, tabled in Appendix 1, grade up to 54ppb and present four distinct gold in soil anomalies spread across the Black Swan tenements. Importantly these anomalies correlate to the interpreted secondary structural corridors emanating NNE off the larger north striking Mt Monger Fault (see Figure 2 for interpreted location of Mt Monger Fault).
The Black Swan project is situated within the Boorara Geological Domain which hosts a number of gold mines including the nearby Kanowna Belle, Mungarra and Gordon Sirdar projects, as recently announced in ASX announcement “Gold Prospectivity Enhanced at Black Swan and Lake Johnston” re- released 16 August 2024.
Click here for the full ASX Release
This article includes content from Poseidon Nickel Limited, licensed for the purpose of publishing on Investing News Australia. This article does not constitute financial product advice. It is your responsibility to perform proper due diligence before acting upon any information provided here. Please refer to our full disclaimer here.
MAC President Calls for Renewed Investment, Streamlined Approvals to Move Mining Sector Forward
Pierre Gratton, president and CEO of the Mining Association of Canada, gave his annual address in front of members of the association and the Greater Vancouver Board of Trade on September 17.
He spoke about the opportunities and challenges facing the country's mining industry, saying that while there are areas to improve, he's encouraged to see Canada's federal and provincial governments stepping up to support the sector.
Read on for highlights from Gratton's talk on the state of mining in Canada.
Canada's mineral reserves in decline
Gratton indicated that the challenges faced by the mining industry in recent years have been manyfold, dominated by economic and geopolitical uncertainty, global conflict, fear of climate change and disrupted trade.
Looking at Canada, while inflation and interest rates have come down in recent months, the nation's economy is still weak — Gratton said unemployment is rising, while families are focused on paying down debt.
He also called attention to declining economic growth in Canada, noting that in 2000 the country's productivity was on par with that of Australia; however, today the average Australian is 10 percent more productive. This has caused the Australian economy to grow 50 percent faster than Canada’s in the past 25 years.
Gratton blames a lack of investment in Canada for these declines.
“(There's been) a shortfall in investment principally leading to deindustrialization in many parts of the country, which has cut into the country’s overall prosperity. Manufacturing is half what it was to the economy in 2000. A cornerstone of the Canadian economy, the auto sector and its inputs, aluminum and steel, are at risk,” he said.
Against that backdrop, Canada has shifted from being a leading producer of minerals like copper, nickel and zinc to now lagging. Between 1997 and 2022, the country's copper reserves fell by 9 percent, nickel by 57 percent and zinc by 91 percent. During that time, gold was the only mineral that saw its reserves grow, gaining 110 percent.
“In my time in the sector, I’ve seen several smelters and refineries close and only one open. We’ve lost some head offices. We’ve fallen in our ranking in the production of many minerals and metals, and it leaves us and our allies, including the US and Europe, increasingly dependent on other countries, notably China, for supply,” Gratton said.
He added that according to RBC (TSX:RY,NYSE:RY), it's regulatory uncertainty and taxes that are hindering investment in Canadian mining. Gratton told the audience that these issues persist despite years of promises from the government to improve efficiencies within the permitting system and shorten timelines.
Federal and provincial governments stepping up
Gratton pointed to Canada’s critical minerals strategy as a bright spot for boosting mining sector investment.
The primary component of the initiative involves the implementation a policy that would provide targeted investments and tax incentives while streamlining the regulatory process for critical minerals projects.
While he acknowledged that spending in the mining sector has been rebounding over the past few years, reaching C$13.1 billion in 2022, it's still off from 2012, when the expenditures in the industry reached C$17 billion.
Gratton said the effects of the critical minerals strategy are unlikely to have made their way into the market yet, but conceded that support for the mining sector from federal and provincial governments is unprecedented in his lifetime.
“Mining is now a common topic of policy conversation in Ottawa and provincial capitals in a way that it has never been before. Above all, it’s because I think governments finally understand mining’s unique value proposition as a creator of good jobs and Indigenous employment opportunities, and as a driver of social and economic development in northern and remote regions,” Gratton explained during his speech.
He added that mining is the foundation of the clean energy transition, while also supplying important inputs to the Canadian economy and aiding in the country's national security efforts.
More specifically, Gratton noted that the last three federal budgets have included funding for regulatory measures, streamlining efforts and tax incentives; this came after extensive consultation with the mining sector.
“I will give them credit — the government listened to our concerns and our advice,” Gratton said.
He was pleased to see a joint investment of C$195 million from the BC and federal governments to fund upgrades to highway infrastructure in Northwestern BC that will ultimately support critical minerals development.
What's the future of Canada's mining industry?
Gratton sees a great deal of potential for mining in Canada, but it doesn’t come without challenges.
He mentioned a C$46 billion initiative to fund electric vehicle and battery production and supply chains in the country, including four new battery manufacturing facilities. While he acknowledged that these will be a boon to the Canadian economy, the raw materials demand for the new factories will require 15 new mines.
This will require an investment of C$16.1 billion in mining and an additional C$16.1 billion in midstream processing.
“That’s only speaking from the standpoint of the four battery factories, to say nothing about all of the other needs that our economy requires, or that the US requires, including its defense industries. Unless we achieve the above, and this is the irony, our reliance on foreign sources for minerals and metals is only going to increase,” Gratton said.
He suggested that Canada is too focused on downstream development, and isn’t working to build support for upstream projects that will ultimately provide safe supply of the materials needed.
Additionally, the mining industry is facing a potentially bigger challenge — a lack of workers.
Gratton said unemployment within the mining sector is less than half the national average, and companies can’t find people fast enough. New mining operations will only increase the challenge of finding workers.
He doesn’t want to see a situation where mines are unable to operate because they can’t find enough staff.
Part of the problem is urbanization. Gratton pointed to youth leaving smaller communities and not returning, and an overall lack of excitement about the mining industry at the moment. He said the Mining Association of Canada is going to work with Canada's Human Resources Council over the next few years to develop a strategy designed to increase interest in the mining sector and work with universities, colleges and high schools.
He wants more people to recognize the value of the high-paid, high-tech jobs in Canada’s mining sector.
Overall, Gratton remains positive about mining’s future in Canada. He sees challenges ahead over a changing political landscape, but also recognizes that many issues in the mining sector have become bipartisan.
Moreover, support for the industry is at an all-time high, with 80 percent of Canadians polled by the Mining Association of Canada supporting the industry. With that in mind, Gratton believes that even if there is a change in government, investment and growth in the mining market are gaining momentum.
Don't forget to follow us @INN_Resource for real-time updates!
Securities Disclosure: I, Dean Belder, hold no direct investment interest in any company mentioned in this article.
MCA announces Women in Resources award winners
‘Vital to promote diversity and attract the next generation of inspirational leaders’
A former mining opponent, a brilliant materials engineer and a respected leader in the male-dominated offshore drilling space are among the winners of Australia’s 2024 Women in Resources National Awards announced in the nation’s capital this week.
Queensland University of Technology PhD student and BHP portfolio lead Ashara Moore followed up her Exceptional Young Woman in Queensland Resources award earlier this year by taking out the national award.
Group manager of materials and innovation at Western Australia-based Callidus Process Solutions, Dr Evelyn Ng, took out the Maptek Woman in Resources Technological Innovation award.
Head of energy group Woodside Energy’s global wells and seismic arm, Josie Fourie, received the Dyno Nobel Exceptional Woman in Australian Resources award. The winner of the 2024 WA Outstanding Woman in Resources award is a chemical engineer who has spent 25 years in the upstream energy sector, becoming the most senior woman in offshore drilling in Australia.
Moore, Ng and Fourie were among 29 women and four organisations nominated for six awards at the 11th annual Women in Resources National Awards in Canberra, hosted by the Minerals Council of Australia in partnership with the New South Wales Minerals Council, the Queensland Resources Council, the Chamber of Minerals and Energy WA, the Tasmanian Minerals, Manufacturing and Energy Council and the South Australian Chamber of Mines and Energy.
The awards are supported by Women in Mining Network state branches.
Queensland-based Kanae Dyas, workplace support manager at Anglo American, took out the Rio Tinto Inclusion and Diversity Champion in Australian Resources Award.
Nadine Hill, an openpit supervisor at Evolution Mining’s Cowal gold operation in NSW, won The Bloomfield Group Outstanding Tradeswoman/Operator/Technician Award.
Major mining services group Thiess headed four groups who were vying for the Mitsubishi Corporation Development Diversity Programs and Performance Award with its Mt Arthur South Indigenous/Inclusive Trainee Employment nomination.
WA Chamber of Minerals and Energy CEO Rebecca Tomkinson said Fourie and Ng were shining examples of the growing pool of talented women breaking new ground in the resources industry.
“Women comprise a growing proportion of the sector’s work force and they’re not just making up the numbers. In so many instances they are highly respected leaders driving innovation in their fields,” Tomkinson said.
“The industry has a long-standing focus on improving diversity. The benefits of that approach are on full display through the field of hugely impressive finalists selected for the 2024 awards.
“While much work has already been done, boosting female participation – from mine sites and laboratories through to the boardroom – remains a priority for the sector.
“Highlighting the achievements of exceptional women like Josie Fourie and Dr Evelyn Ng is a vital part of continuing to promote diversity and attracting the next generation of inspirational leaders.”
Ng, who started her career with First Quantum Minerals at Africa’s largest copper mine in Zambia, has worked on five continents and in her current role at Perth-based Callidus is said to be the only materials engineer among more than two dozen mechanical engineers in a company with over 300 employees.
Ng leads forensic investigations of plant and machine failures, developing quality assurance specifications, as well as overseeing the group’s R&D and intellectual property.
Two recent Callidus patents – one for a bi-metallic coating system and another involving titanium-nitride surface hardening – are seen to have potential to be game-changers in the mining industry.
Ashara Moore, who wants to change tailings management in mining, admitted in an interview after she won a 2023 Women in Industry Award in Queensland she had gone into a work experience interview with Rio Tinto “morally opposed” to the industry.
She said after early exposure to the industry and then starting her career she came to see it “was trying to do and be better [and] it was a sector that I thought I could make a positive difference within”.
Through her QUT PhD study Moore wants to develop a new carbon reduction technology (CRT) that can help mines cut emissions and positively impact future management of tailings.
“I am pro finding solutions to ensuring that our sector can peacefully co-exist with our environment,” Moore has said.
“Tailings management … is the avenue in which I wish to play my part.
“My PhD study is just one very small, very niche segue toward achieving that goal.
“By targeting mining waste, one of the most substantial potential environmental impactors within industry, and hopefully finding more sustainable and responsible ways of managing this waste, I hope to contribute to the ESG agenda gaining momentum in the sector.
“I am hoping to achieve a new normal about the way we think about tailings waste.”
Last August she presented her preliminary findings to the World Chemistry Conference in the Hague, Netherlands.
IMARC applauds winners of this year’s 2024 Women in Resources National Awards.
So far, more than 130 confirmed speakers at this year’s International Mining and Resources Conference in Sydney are women, ranging in roles from the C-suite through to undergraduate students. IMARC's Balance for Better commitment also includes the working partnerships with industry groups IWIMRA, WISER, WIMnet NSW, WIMARA, to name a few.
IMARC chief operating officer Anita Richards says the large contingent of female speakers reflects the event’s “unwavering commitment to balance for better, an initiative dedicated to promoting equality, diversity, and inclusion throughout the mining sector”.
Copper caught in ‘materials trilemma’
‘The lead time of a normal copper project is already longer than the 11 years we have left until 2035’
Copper is the metal seemingly most stuck in the “materials trilemma” outlined by McKinsey & Company experts as they launched the firm’s first Global Materials Perspective this week.
Facing real challenges on the availability, affordability and sustainability fronts McKinsey senior partner Michel Von Hoey said were shifting uncomfortably for many mining and metals companies, traditional copper production leaders faced acute pressures on their business-as-usual models as they grasped at clear growth opportunities presented by the world’s nascent mobility and energy transitions.
“We still project supply shortages across a number of critical materials if we take a 2035 horizon,” Von Hoey said from Luxembourg.
“We have actually over the last year been stunned by the unexpectedly rapid ramp up of supply of especially lithium and nickel and the rapidly changing battery chemistry mix.
“But demand growth remains very high for some materials and we still expect shortages, notably in copper, lithium, sulphur and rare earths, of somewhere in the neighbourhood of 10-to-50% of demand by 2035.”
Among the few minerals to lag behind 2020-2023 production growth forecasts, the world’s circa-US$200 billion copper sector faced structural supply problems that wouldn’t necessarily be alleviated by new supply from Africa.
A McKinsey Global Materials Perspective webinar heard that while financing capacity in the $4 trillion mining and metals industry was “theoretically sufficient” to support the scale-up to keep 2024-2035 supply in line with projected demand for key commodities, capital deployment remained heavily contingent upon availability of “a sufficient number of profitable and attractive projects” and “investments need to be connected with the right regions, the right players and the right projects”.
“At a global level we estimate that $5.4 trillion of capex will be needed for supply to match current demand outlooks by 2035, or an estimated 10% increase compared to the previous decade,” McKinsey senior metals expert Patricia Bingoto said.
Copper mining and processing capex presents as a $780 billion bucket of that estimated 2024-2035 capex – interestingly about the same as that forecast for thermal coal – behind only the steel (including iron and metallurgical coal) sector.
“We still anticipate shortages for several materials that are key to the energy transition compared to the demand expectations, in particular rare earth elements, lithium, sulphur, uranium, iridium and copper,” Bingoto said.
“We can broadly categorise these materials in two into spaces when it comes to supply-demand balance.
“For materials where timelines for project development are fairly limited the supply demand gap is likely to be closed by further scaling up of supply once the demand signals become strong enough.
“The other broad category is materials for which the supply demand gap is less likely to close through an acceleration of supply scale-up because of long project timelines or limited high-quality reserves and projects.
“In such cases demand adaptation or reduction is expected to take place in order to balance the market.
“Copper fits in this category.”
Metals specialist Gustav Hedengren said higher prices were needed to incentivise new copper, nickel and lithium production to meet anticipated demand, but these were not necessarily going to be enough to stimulate more supply.
“For copper, an approximate 20% percent increase from current prices will likely be required to incentivise sufficient supply to come online,” he said.
“This is only accounting for supply which is announced today.
“There is an opportunity for projects to be announced next year [to deliver production] before 2035.
“But the lead time of a normal copper project is already longer than the 11 years we have left until 2035, so it’s not very likely that you will have a massive announcement of supply over the next couple of years which will be online in 2035.”
The McKinsey webinar heard the increasing capital and emissions-intensity of copper were weights on new supply of the red metal.
“While these materials [metals including copper] are absolute critical enablers [of] the energy transition and the mobility transition, production does give rise to high emissions,” Hedengren said.
“We find that over the next decade these emissions do not decrease by more than a modest 15% in a business-as-usual scenario.”
Von Hoey said cost and capital expenditure efficiency would become more pivotal in the metals and mining space in securing long-term “affordability and competitiveness”.
McKinsey associate partner Michel Foucart said the volume of material to be moved to extract 25 million tonnes of copper was “roughly the same as the amount of material that needs to be moved in the entire iron ore industry, which is a 2 billion tonne market”.
“This is important because what it tells is that the ore grades of energy transition materials [are] typically lower compared to thermal coal or iron ore,” he said.
“You need to put in more energy to actually extract the material.
“This is one of the main reasons why the price levels for these energy transition materials [needs] to be higher.
“The capex intensity of projects tends to increase as ore grades are going down.
“A global average head grade for copper mines went down from 1.8% in the 1970s to around 0.7% in 2022. So the lower ore grade, typically, the higher the capex investment you need for the same amount of output.”
Von Hoey said deeper collaboration between mining and metals companies and their customers, suppliers and stakeholders, including regulators, was needed in an environment in which end markets were evolving fast and a highly capital-intensive industry had to “decarbonise in a context where the business case for decarbonisation is very unclear”.
“Given the uncertainty on demand shifts and technology evolutions, cost and capital efficiency will remain a top priority,” he said.
McKinsey & Company is the Headline Sponsor of IMARC 2024.
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