Listen to our latest Investing Matters Podcast episode 'Uncovering opportunities with investment trusts' with The AIC's Richard Stone here.
Might Glencore introduce Nippon Steel to Zanaga? NS are on the hunt for another 10mtpa of iron ore, and are already invested alongside Glencore in Teck Resources producing coking coal. This from Nov 23:
'Nippon Steel, the world’s No.4 steelmaker, will keep on hunting for stakes in coking coal and iron ore mines to ensure a stable supply of essential raw materials and mitigate the potential impact of price volatility, its executive said.
A Glencore-led consortium, including Nippon Steel, sealed one of the mining sector’s biggest deals in years this month, agreeing to buy Canadian miner Teck Resources’ steelmaking coal unit for $9 billion. The Japanese company will pay around $1.34 billion for a 20% stake. ( )
About 60% of Nippon Steel’s products are sold for term customers with a mechanism that adjusts selling prices to raw materials costs, but 40% are commodity products that are affected by steel market fluctuation.
“We would like to raise the self-sufficiency ratio to around 40% in order to neutralize the impact of raw material prices on market products,” he said, referring to both coal and iron ore.
It now procures 20% of its 50 million tons of iron ore imports from its equity holdings.'
https://www.mining.com/web/nippon-steel-to-hunt-for-more-coking-coal-iron-ore-assets/
Some more:
UNLOCKING POTENTIAL THROUGH STRATEGIC PARTNERSHIPS
Conversely, one of the key objectives of the forum is to encourage partnerships between Saudi businesses and global entities. These collaborations are expected to unlock new opportunities, drive innovation, and contribute significantly to the Kingdom’s economic growth. The PIF, with its extensive portfolio and international partnerships, plays a pivotal role in facilitating these connections.
https://www.leaders-mena.com/saudis-pif-to-host-private-sector-forum-this-february/
'STRATEGIC PARTNERSHIPS'
Clifford Elphich, September 2023:
Clifford Elphick, Non-Executive Chairman of ZIOC, commented:
"... we are now engaging with STRATEGIC entities interested in participating in the Zanaga Project, and intend on securing a SELECTED PARTNER by the end of Q1 2024"
Feb 6th-7th dates for the PIF's Private Sector Forum in Riyadh dovetail nicely with ZIOC's milestone timescales:
o Strategic partner initiative - Q1 2024 (Memorandum of Understanding)
o Port partnership - Q1 2024 (Memorandum of Understanding)
· CHINESE EPC PARTNER FS UPDATE PROGRESS
o The initial review and re-costing phase of the 2014 Feasibility Study ("2014 FS") has been completed, indicating potential cost reductions versus the 2014 FS.
o The market enquiry and financial modelling phase 2 is underway and will now be extended into Q1 2024 given the comprehensive nature of the update.
...and, as Clifford Elphick, Non-Executive Chairman of ZIOC, commented:
'"..Following the acquisition of full ownership and control of the Zanaga Project we are now engaging with strategic entities interested in participating in the Zanaga Project, and".'
>> INTEND ON SECURING A SELECTED PARTNER BY THE END OF Q1 2024
Awesome find, alwayshoping!
The forum will also unveil key PIF programs, reinforcing the wealth fund’s commitment to growing collaboration.
Major partnerships between the private sector and PIF, along with its portfolio companies, will be announced, showcasing tangible progress in collaborative efforts for the Kingdom’s economic development.
https://www.arabnews.com/node/2441461/business-economy
> February 6th-7th upcoming.
Reading back to Bob Wilt's comments at the FMF last week:
“We envision Manara having a trading arm,” Manara Acting CEO Robert Wilt told Reuters in an interview on the sidelines of the Future Minerals Forum (FMF) mining gathering in Riyadh. “Our fist phase of setting up the company is get the investment rolling, but all of these investments are predicated on an offtake… so there is going to be some level of trading to manage the books of offtake minerals we have,” he added. In an offtake deal, a buyer usually agrees to buy a portion of the producer’s future output. “We are not envisioning going into competition with Glencore or Trafigura, our vision is just to manage our own book,” Wilt said.
I notice that Glencore's Gary Eagle was indeed slated to speak at the Forum. FromOctober:
'The current edition of the conference is based on four main axes: developing a global critical mineral strategy, incorporating centers of excellence into regional strategies, establishing an international transparent standard for mineral supply, and creating green metal value chains by applying new technologies.
Top speakers at the event include several CEOs from major mining companies around the world, such as first-time participants in the conference, such as Glencore CEO Gary Nagle, Vale CEO Eduardo Bartolomeo, Codelco Chairman Maximo Pacheco, and the Global Head of Thematic and Sector Based Investing and Team Leader for the Natural Resources team at BlackRock Evy Hambro.'
https://english.aawsat.com/business/4778286-future-minerals-forum-unites-global-leaders-saudi-arabia-shape-future-industry
Vale Base Metals' chief, Mark Cutifani, appears to have also been in negotiations with Glencore at the Forum:
VALE Base Metals (VBM) is prioritising a decision on whether to combine its nickel operations in Canada’s Sudbury basin with those of Glencore this year, a move that could reduce costs for both companies, said Reuters citing VBM chairperson Mark Cutifani.
“We’ve got some interesting thoughts on what is possible, (including) tailings (waste) and some of the old areas that could be redone and we are working through that,” Cutifani told Reuters in an interview on the sidelines of the Future Minerals Forum mining gathering in Riyadh.
https://www.miningmx.com/trending/55429-cutifani-says-glencore-tie-up-a-priority-for-vale-base-metals/
> One way or another it does seem that Glencore were present, albeit a very low 'no comment' presence. Thus Bob Wilt's off take comments could well have derived from detailed negotiations with GLEN over any surplus Zanaga off take...We shall see, of course.
Some more thoughts on Vale.
While the FMF saw Vale and the Saudis sign a MoU for Vale to build a briquette plant at the green steel hub at Ras al Khair, of note is that they are only slated to build and manage it - the issue of feedstock supply remains up in the air. It is central to Saudi's Vision2030 proposition, and hence the formation of Manara Minerals, that Saudi Arabia secures their own supplies of (high grade) iron ore. This makes complete sense in that, and for example, Zanaga might be able to deliver DRI-grade to KSA for less than $38/t (EPC recostings dependent), whereas the same grade on the spot market is north of $150/t. Capturing this difference, plus security of supply, is the whole raison d'être of Manara.
So what other parts might Vale play? It is worth recalling what Brazil's President Lula said in Paris on June 23rd 2023 when he met Big Den in Paris. He said that 'Brazil's reconquest of Africa passes through Sassou Nguesso'. This could be a direct rekindling of Brazil's and Vale's ambitions following their Simandou débâcle- (1).
Vale are experts in mining Zanaga-style deposits. The Brazilian and W African deposits are part of the same geological system, sundered by continental drift. Vale are also experts in long distance ore conveyors, essential for an elongated deposit such as Zanaga (c.50km in length and just a few wide).
> Thus I wouldn't be surprised to see Vale mine Zanaga under contract for supply to their briquette plant in KSA (plus similarly to the plants in UAE and Oman).
PSEI are the likely ore processors and pipeline builders to any new port, built out by AD Ports most likely. The ore then has to get to the Gulf.
This is where it gets interesting for Vale again. In May 2023 Vale and AD Ports signed a MoU to the effect that, 'The agreement also includes a maritime collaboration to explore opportunities related to management and operation of very large ore carriers (VLOCs) as well as other possible avenues of partnership.' - (2)
> So, under this MoU, AD Ports and Vale could ship Zanaga ore from PN to the Gulf using VLOCs - (as Vale already do ex-Brazil).
1. https://www.jeuneafrique.com/1457305/politique/pour-lula-la-reconquete-de-lafrique-passe-par-sassou-nguesso/
2. https://www.adportsgroup.com/en/news-and-media/2023/05/24/ad-ports-group-and-vale-to-jointly-develop-low-carbon-mega-hubs-for-steel-industry
If these dots do in fact all join up, Vale get to contract mine Zanaga, ship the ore to the Gulf, and then briquette it.
It does all fit.
Thinking (and extrapolating a little!) over yesterday's off take and trading insights from Bob Wilt (MM CEO):
If indeed he was referencing Zanaga (and there's no reason to think not) then his comments do imply that negotiations have advanced considerably. (Recall that ZIOC intend to select their strategic partner/s this quarter).
This in itself would have 2 positive implications:
The first that they are down to the fine detail (and note that AT said at the FMF that 'we will return (to Saudi Arabia) next month'), and
Secondly that Glencore feel empowered to stand their ground. That would directly imply that it is a seller's market, i.e. that Glencore (and ZIOC) do not have to passively accept deal terms - and that would include from Manara Minerals, majority owned by the Saudi SWF, the PIF.
Thinking some more about this from Bob Wilt (Manara Minerals CEO), from today at FMF:
“Our fist phase of setting up the company is get the investment rolling, but all of these investments are predicated on an offtake… so there is going to be some level of trading to manage the books of offtake minerals we have,” he added. "We are not envisioning going into competition with Glencore or Trafigura, our vision is just to manage our own book,” Wilt said.
> This sounds very much as if MM are looking ahead to scenarios should Zanaga be rapidly developed over 30mtpa, perhaps as much as 60mtpa. Might MM's share of Zanaga produce a surplus off take, for example? That being the case would Glencore manage it through their trading arm?
>> If so then we could be at the nitty gritty of a deal.....
Sounds very much as if Manara Minerals have been discussing iron ore off take vis-a-vis Glencore's arrangement at Zanaga.
Manara Minerals boss Bob Wilt today at FMF:
“We envision Manara having a trading arm,” Manara Acting CEO Robert Wilt told Reuters in an interview on the sidelines of the Future Minerals Forum (FMF) mining gathering in Riyadh.
“Our fist phase of setting up the company is get the investment rolling, but all of these investments are predicated on an offtake… so there is going to be some level of trading to manage the books of offtake minerals we have,” he added.
In an offtake deal, a buyer usually agrees to buy a portion of the producer’s future output.
“We are not envisioning going into competition with Glencore or Trafigura, our vision is just to manage our own book,” Wilt said.
Miner Glencore’s trading division, which includes coal, oil, liquefied natural gas and related products, as well as metals, saw record profits of $6.4 billion in 2022.
Manara’s first major foray abroad was a deal to become a 10% shareholder in Vale’s $26 billion copper and nickel spin-off Vale Base Metals last July.
Wilt, who is also the CEO of Ma’aden, said that the fund has a strict mandate to source iron ore, lithium, copper and nickel as part of Saudi Arabia’s plan to become a metals processing hub.
https://www.mining.com/web/saudi-arabias-manara-minerals-fund-plans-metals-trading-arm/
> Manara Minerals CEO restates that they have a strict mandate to go after iron ore and that “Manara is evaluating a host of opportunities....'
>> Intriguing there was also this on running a trading book for off take minerals:
“We are not envisioning going into competition with Glencore or Trafigura, our vision is just to manage our own book,” Wilt said.
Well, Vale’s average grades out of Brazil don’t make the cut, and they themselves project a 70mtpa deficit on DRI by 2030. Thus the overall provenance of the ore for the Gulf green steel mega hubs remains a mystery.
VALE AT FUTURE MINERALS FORUM KSA
RIYADH, UAE, Jan. 11, 2024 /PRNewswire/ -- Vale, a global leader in sustainable mining, recently showcased its ambitious plans in the Middle East during its participation in the Future Minerals Forum (FMF) in the Kingdom of Saudi Arabia. The event marked an integral milestone in Vale's journey in the region, spotlighting the upcoming state-of-the-art Mega Hub project in the Kingdom as a crucial part of its strategy to decarbonize the steelmaking industry.
An MoU between Vale and the Royal Commission for Jubail and Yanbu was also signed during the Forum, taking one step closer towards the realization of Vale's Iron Ore Briquettes Project in the Kingdom.
Eduardo Bartolomeo, CEO of Vale took part in a senior panel discussion on "Making Africa, Western & Central Asia processing and manufacturing hubs" where he detailed the technological innovations and advancements planned within the Mega Hub in Ras Al-Khair Industrial City. The large industrial complex that which will include a briquetting plant, operated by Vale, will produce high-quality agglomerated products to feed the production of HBI, significantly reducing CO2 emissions by 60% to supply both local clients and international markets around the world.
(and)
Vale's participation in the FMF underscores its pivotal role in the region's sustainable mining sector. Emphasizing its Mega Hub project and commitment to net-zero emissions, Vale demonstrated a strong alignment with Saudi Arabia's Vision 2030. Their innovative approach and significant regional investments mark a new era of eco-friendly steel production in the Kingdom, reinforcing their mutual dedication to a sustainable future.
https://www.prnewswire.com/news-releases/vale-pioneering-sustainable-mining-innovations-at-the-future-minerals-forum-in-saudi-arabia-302031742.html
> And still the elephant in the room, from where will come the high grade necessary for this whole green steel value chain...?
News yesterday that GenMin's Baniaka deposit in Gabon go further go aheads. Baniaka lies just across the border from Zanaga and on the road to Libreville, and then rail to the coast at Franceville . Baniaka development means the infrastructure is being put in place that could or should facilitate a Zanaga EPP for DSO - if ZIOC saw fit to use the route.
Emerging African iron ore producer, Genmin Limited, has announced that a large-scale, twenty-year mining permit has now been issued for its 100% owned Baniaka iron ore project located in Gabon, west Central Africa.
https://www.globalminingreview.com/mining/10012024/genmin-receives-gabon-iron-ore-mining-permit/
No matter the supply (and I still have no clue as to where from) there is always more demand.
A 300,000 purchase at 9.50p (the high of day) was reported after the bell.
Somebody, somewhere just wants IN.
....and who can blame them?
Bandar Al-Khorayef, 9th January:
As part of its push to diversify away from fossil fuels, Saudi Arabia has also established investment fund Manara Minerals, a joint venture between Ma'aden and the Public Investment Fund (PIF), to buy assets overseas.
Its first major foray abroad was a deal to become a 10% shareholder in Vale's (VALE3.SA) $26 billion copper and nickel unit last July.
"Manara's ...management are looking around, finding different assets to buy or to partner with different countries."
https://www.reuters.com/world/middle-east/saudi-arabia-ups-mineral-resource-estimates-25-trillion-minister-2024-01-09/
Forum proper under way..
#FutureMineralsForum kicks off in #Riyadh, featuring discussions on strategies to strengthen global cooperation for unlocking #mining opportunities in the region.
https://twitter.com/EKHNews_EN/status/1744976698322342119
One would have thought that with Marty Knauth, Jonny Velloza and AT all at the the Forum then would might travel that ZIOC is under orders....eyes out for informed buying if so.
HI again 99icecream. There is also a potential kicker. ZIOC have emphasised the Chinese EPC's proprietary processing technology (which PSEI detailed on the YouTube video that you found). It is possible that grades and purities will now vary (hopefully upwards) from what was reported back in 2014.
For more clarity the March 2019 Presentation is helpful.
Essentially Zanaga is haematite overlying magnetite.
The haematite is 66%, the magnetite 68.5%, the blended product at 67.5%.
The final product grade would vary between the two depending on the sequence at which Zanaga is developed.
Pages 19, 27 and 30 are most relevant:
https://www.zanagairon.com/wp-content/uploads/2019/06/ZIOC-IP-28.03.19.pdf
Thank you 99icecream. That is as I understand it too, though I abbreviate a little for ease of posting. That would be a little long winded each time.
One whole year ago now, at FMF23, SABIC (Saudi Basic Industries) laid out the ingredients for 'green steel', essentially high grade iron ore, pellets and hydrogen from renewable energy. Only grades like Zanaga's (66%-68.5%, av. blend 67.5%) and higher will do:
'..The industrial giant showcased its latest solutions in the mineral and metals industry at the forum hosted by the Saudi Ministry of Industry and Mineral Resources in Riyadh from January 11 to 12.
SABIC also conducted a workshop on the second day of the forum, which touched on the topics related to iron journey from mining, beneficiation, and pelletizing to steelmaking.
The workshop also talked about the steel industry’s current status with regards to carbon neutrality and how it’s moving forward to minimize the emissions in the upcoming decades, the different types of hydrogen and what constitutes a “green steel” product.
https://www.sabic.com/en/news/38467-sabic-participates-in-future-minerals-forum-as-a-founding-partner-for-2nd-consecutive-year
Also at FMF23 Manara Minerals was formed, a JV between PIF and Ma'aden. MM are specifically tasked with securing the requisite iron ore to feed the Saudi green steel roll out, itself a central pillar of Vison2030.
During 2023 the PIF then bought SABIC's steel operation - Hadeed - for $3.3bn:
DUBAI, Sept 3 (Reuters) - Saudi Basic Industries Corp (2010.SE) said on Sunday it had agreed to sell subsidiary Saudi Iron and Steel Company (Hadeed) to the Public Investment Fund (PIF) for an enterprise value of 12.5 billion riyals ($3.33 billion).
The transaction is expected to close before the end of the first quarter of 2024, and proceeds from the sale will be used to support SABIC's growth in the chemicals industry, according to a company statement to the stock exchange.
https://www.reuters.com/markets/deals/saudis-sabic-sell-steel-unit-hadeed-pif-33-bln-statement-2023-09-03/
> So SABIC laid out the formula and key ingredients for green steel, and hence Hadeed,
>> PIF the bought Hadeed,
>>> PIF now has double demand for high grade iron ore for green steel; first via Manara Minerals and, second, via their ownership of Hadeed.
> A year has now passed, and the Saudis have not secured a single ton of captive high grade, and the clock is ticking on Vision2030.....