Australia has surpassed China as the largest gold producer for the first half of the year due to higher output from the country’s major miners, according to Surbiton Associates.
As the mining industry’s smaller players future-proof operations, FLANDERS is at the forefront of providing automated drill solutions.
Boadicea Resources has completed its application for the Mt Carmel gold exploration tenement in the Drummond Basin, Queensland.
The iron ore price has continued to falter in August after dropping to below $US130 ($180) per tonne last Thursday.
By Jonathan Barnes, Principal Analyst Copper, Roskill: A Wood Mackenzie Business
The global refined copper market has been in a statistical deficit for the past six years, cumulating to a total deficit of 1.8 million tonnes (Mt).
In 2020, the market deficit was just short of 0.5Mt. In hindsight, the spectacular recovery in London Metal Exchange (LME) cash prices last year – in complete defiance of the pandemic – can be attributed more to genuine physical market tightness than to speculation.
In truth, the copper industry has largely escaped unscathed from the impact of COVID-19 crisis.
This was due to the unique interplay of internal and external forces that resulted in a drawdown in the industry’s visible refined copper inventories.
Not the least among these were conditions in the scrap industry, the so-called ‘unseen hand’ of the market.
Through its vital contribution to both supply and demand, recycled materials significantly represent 10Mt, or one third of the global market.
The principal interacting forces at work were:
• The Chinese copper supply chain was completely destocked following the 2019 trade war
• China’s economy experienced a strong sequential recovery from March 2020
• Strong Chinese Government investment in new renewable energy generation projects
• China enforced import quotas on copper scrap at 50 per cent of 2019 levels until November 2020
• World scrap generation, collection, recovery and trade was badly affected by the crisis
• COVID-19 restrictions impacted mine supply, especially in South America
• China commissioned multiple new large scale semis plants during 2020 that were already well under construction when the pandemic hit, widening the consuming industry base
• Fabricators in China and elsewhere had to buy extra refined metal to replace missing scrap
• China’s State Reserve Bureau imported copper cathodes to build its strategic stockpile.
Disruptions to primary mine supply and scrap availability due to COVID-19 effects, falling prices (initially), and Chinese scrap quotas (to meet previously announced environmental targets), as well as logistical port and shipping difficulties, resulted in a drop in total supply.
Consumption fell sharply in China but then rebounded strongly, creating a supply shortfall across southern China that was at its peak from March to August.
In the rest of the world, the slump in demand was deeper and more protracted, and was at its worst in the second quarter before gradually improving thereafter.
Demand for refined copper in the rest of the world probably fell by 8-9 per cent last year, but this was almost completely offset by the rebound in total Chinese demand in 2020, which significantly outperformed GDP (gross domestic product) growth.
Several new wire rod mills were opened in 2020, which were already being built before COVID struck.
This added to the industrial base of Chinese consumers. Also, fabricators had to purchase extra cathode to replace scrap in their feedstock, due to the self-imposed import restrictions.
Moreover, the secretive Chinese SRB made speculative undisclosed volumes of purchases from foreign producers and trading houses to bolster its strategic stockpiles, taking advantage of bargain international prices and weak industrial demand in the rest of the world.
As a result, total visible stocks (Exchanges + Chinese bonded warehouses) dropped from 955,000 tonnes at end-March 2020 to under 620,000 tonnes by the end of the year.
The impact of the global pandemic might have been novel and unprecedented, but China reacted in the same way as it did during the Global Financial Crisis.
Those around at that time had seen this all before. History may not repeat itself, but it does rhyme.
There has been a similarly confused market picture so far in 2021. LME prices hit a nominal peak in March, spurred on by speculative influences and healthy Chinese demand.
However, Chinese consumers have been very resistant to paying higher prices and refined demand has subsequently slumped in the second quarter compared to the strongest quarter for demand last year.
Recently initiated sales of SRB cathodes aimed to cool commodity price inflation in China, though admitted only at a rate of 20,000 tonnes per month, have dampened market sentiment particularly that of the speculators.
Chinese refined consumption will likely decline again in the third quarter but may improve by the fourth quarter.
The baton for recovery consumption has been firmly passed from China to the rest of the world. Demand in North America is exceptionally strong, driven by a buoyant construction market.
Europe is not far behind, and other Asian markets such as South Korea, Vietnam and Thailand are also rebounding, though Taiwan and Japan are still struggling. In South America, the Peruvian Presidential Election, and the issue of higher mining royalties in Chile and the New Constitution are all deterring new investment.
Brownfield and greenfield projects are proceeding but have been delayed by the pandemic, perhaps by six months.
Meanwhile, Ivanhoe Mining’s Kamoa-Kakula mine in the Democratic Republic of Congo is now shipping its first concentrate, in the biggest new mine project the industry has seen for many years.
While on the secondary side, world scrap flows are improving but are not yet back to pre-pandemic levels.
Roskill believes copper prices will largely trade sideways during the second half of this year. Demand growth in China is capped by higher prices, but consumption in the rest of the world (though not everywhere) is rebounding strongly.
We see these two influences, plus future supply uncertainties in South America, cancelling each other out, with prices generally trading in the $US9000 ($12,170)-$US9500/tonne range during the second half of 2021.
In the medium term, copper demand in electric vehicles, wind power and solar power will only increase to meet global decarbonisation targets.
If primary supply cannot steadily improve and better scrap recovery does not provide the extra units required, then the price sooner or later is only heading one way, and that is back up.
In 2020, Australia produced 885,000 tonnes of mined copper (4.3 per cent of world supply) and 427,000 of refined copper (1.8 per cent of world production).
The world will need more and more of Australia’s copper reserves and resources to achieve the energy transition over future decades.
Impressive turnaround for some stocks but much ground to make up. By Tony Featherstone.
Boadicea Resources is planning an airborne geophysical program at the Clarke Reward gold project in Queensland after the company discovered five target zones for mineralisation. Read more
Evolution Mining has cashed out a record profit of $345.3 million for the 2020-21 financial year following historic high copper revenue for the company.
Following successful Lithium and Battery Metals Conferences in 2018, 2019 and 2020, AusIMM will host another future-focused event over two days to showcase the latest industry efforts to expand lithium’s market presence.
Perth’s Murdoch University will see over 200 industry professionals come together to discuss the potential for lithium and associated metals to advance the global electrification process, and the impact of COVID-19 on global commodities.
Keynote speakers will include Ken Brinsden from Pilbara Minerals, which continues to run the Pilgangoora lithium operation to its peak; Matt Dusci from IGO, which recently joined the Electric Mine Consortium; and chief executive officer at the Minerals Research Institute of Western Australia, Nicole Roocke.
The Lithium Battery and Energy Metals Conference 2021 will take place from September 1-2.
IGO is looking to expand its footprint of nickel operations in Western Australia, today confirming it is in preliminary discussions about a potential takeover of Western Areas.