Roundtable Discussion; The Future of Mineral Sands. Watch the video here.
Or perhaps again with high grade iron ore.......
IRON ORE BOOM OF THE 2000S REPEATING – THIS TIME WITH CRITICAL METALS
A headline published in The Age back in July 2003 reads: “[Andrew] Forrest has a grand $1.2bn plan for tiny Perth mining company.”
That company was called Allied Mining and Processing and you’ve probably never heard of it. But from small roots this tiny outfit grew into one of Australia’s largest listed companies with a market cap exceeding A$88 billion.
Twenty years ago, Andrew (Twiggy) Forrest renamed this micro-cap stock to Fortescue Metals Group (ASX: FMG). The rest is history, but it was quite the story behind Twiggy’s road to immense wealth.
Fortescue was perhaps the single biggest success story from the last mining boom. A stock that grew from a measly A2¢ per share back in 2003 to more than $10 a share just five years later.
It seems absurd, but that’s around a 50,000% return.
Junior iron ore miners were the poster child from the early 2000s China-led commodity rush.
https://www.mining.com/iron-ore-boom-of-the-2000s-repeating-this-time-with-critical-metals/
Elliott Management is setting up a company to invest at least $1bn to buy mining assets globally, as it seeks to take advantage of the depressed valuation of groups operating in the sector, people familiar with the matter said.
The New York investment firm’s new venture, Hyperion, will be led by Sandeep Biswas, the former chief executive of gold mining group Newcrest Mining and a veteran dealmaker and operator in the sector, those people added.
The mandate is to buy across all assets, including base metals and precious metals in addition to commodities in demand for electric vehicle production. Elliott’s move comes when metal prices have pulled back because of macroeconomic weakness but are expected to rise rapidly on a surge in demand, particularly for electric vehicle batteries, renewable energy and power grids, as supply struggles to keep pace. However, valuations of mining companies have been hit by investor concerns over environmental, social and governance risks as well as geopolitical volatility and the boom-bust nature of commodity markets, leading institutional shareholders to reduce their exposure to the sector.
Elliott, headed by Paul Singer, joins a nascent wave of private equity groups such as Orion Resource Finance and Appian Capital that focus on mining, as they attempt to provide capital to a sector that needs to spend trillions of dollars to meet surging global demand for metals.
Sovereign wealth has also emerged as a force of capital to help the sector boost the supply of minerals needed for the energy transition and push up valuations, most notably Saudi Arabia’s establishment of the Manara Minerals joint venture last year.
https://www.ft.com/content/6430d8db-a9cb-45cb-8ce9-5686a462152a
It's no contest with Zanaga. Simandou doesn't make the DRI-grade.
Yesterday, in Rio's Annual Report, they were obliged to declare Simandou's grades:
SIMANDOU - ORE RESERVES
Simandou Ore Reserves referenced on slide 54 are based on the Ore Reserves as reported in Rio Tinto’s 2023 Annual Report released to the Australian Securities Exchange (ASX) on 21 February 2023 and available at http://riotinto.com.
The Simandou Ore Reserves comprise 0.3 Bt @ 66.4% Fe of Proved Ore Reserves and 1.2 Bt @ 65.0% Fe of Probable Ore Reserves.
The Competent Person responsible for the information in the 2023 Annual Report that relates to Simandou Ore Reserves is Michael Apfel, who is a Member of the Australasian Institute of Mining and Metallurgy (MAusIMM).
https://www.riotinto.com/en/invest/reports/annual-report
In all likelihood Rio will have to use Simandou's 65% to blend up their Pilbara junk (which has fallen to a 61.4% average) in order to maintain the benchmark 62% Pilbara Blend.
> All of which means that there's no new supply for DRI and green steel
>> Zanaga is set to produce 66% in Stage 1, and 69%+ in Stage 2 for a blended average of 67.5%.
...many developments are bubbling, if you know where to look.
Rio Tinto CEO Jakob Stausholm announced on Wednesday that the company’s board has given the green light to the Simandou mining project in West Africa.
Stausholm told the Financial Times that the company aims to commence iron ore production from the $20 billion development as early as 2025.
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Rio Tinto plans to invest $6.2 billion in the mine, rail, and port project in the Republic of Guinea, in collaboration with other companies, including five from China.
“The board yesterday approved the largest mining project in the world,” Stausholm informed the Financial Times.
HOWEVER, FINAL INVESTMENT APPROVAL FROM RIO’S STATE-OWNED CHINESE PARTNERS, INCLUDING CHINALCO AND BAOWU, IS STILL PENDING. Nonetheless, Stausholm expressed confidence that this approval would be granted soon.
In January, Baowu raised $1.4 billion from a bond issue in China intended to support the project, said Rio’s CEO.
https://www.mining.com/rio-tintos-board-gives-green-light-to-simandou/
Lula has already detailed how Brazil's 'reconquest' of Africa (after the ill-fated Vale/Simandou escapade that was both a company and national endeavour) will go via N'Guesso. The major synergies are the rainforests and iron ore deposits...
This from June just gone.
June 2023: Pour Lula, la reconquête de l’Afrique passe par Sassou Nguesso
https://www.jeuneafrique.com/1457305/politique/pour-lula-la-reconquete-de-lafrique-passe-par-sassou-nguesso/
8.35p, +10%
No news but does someone know something?
I have had some email correspondence with the IEEFA authors and they are well aware of Zanaga and its potential.
The sole issue at present is that it remains 'potential' until the point of hard development news....the potential of which they are also cognisant. The moment we have our strategic partner revealed then the media coverage will begin, and we will be mentioned in the same breath as Simandou.
Well, I didn't appreciate this. While Rio's execs are calling Simandou's ore 'caviar' in fact it's more lumpfish roe:
Blocks 3 and 4 are 65.5% FE, whilst Blocks 1 and 2 are just 63.5%, as per Portergeo below.
The IEEFA then comment that Simandou is good for 'early stage steel decarbonisation' but it's essentially just for the blast furnaces.
Published Mineral Resources for Simandou South (Blocks 3 and 4 which include Pic de Fon and Ouéléba) at 31 December, 2019 (Rio Tinto Annual Report, 2019) were: Measured + Indicated + Inferred Mineral Resource: 2.757 Gt @ 65.5% Fe
Simandou North, Blocks 1 and 2 with resources additional to those quoted above was held as of January 2020, by The Société Minière de Boké-Winning (SMB-Winning) consortium. Blocks 1 and 2 are estimated to contain an additional ~2 Gt @ 63.5% Fe.
https://portergeo.com.au/database/mineinfo.asp?mineid=mn1247
IRON ORE QUALITY A POTENTIAL HEADWIND TO GREEN STEELMAKING
However, although some of Simandou output would be suitable for DRI – “the vast majority would only make the cut as premium BF-grade feed”. (50 Fastmarkets. Understanding the high-grade iron ore market. March 2021.)
This would meanthat Simandou would mostly assist early-stage steel industry decarbonisation efforts (blast furnace optimisation) rather than later-stage zero-carbon steelmaking.
https://ieefa.org/sites/default/files/2022-06/Iron%20Ore%20Quality%20a%20Potential%20Headwind%20to%20Green%20Steelmaking_June%202022.pdf
Ticking higher on larger volume yet with no apparent news.
When have we seen that before?
Oh my! - he's done it again.
RACE TO GREEN STEEL: NEW CAMPAIGN URGES CARMAKERS TO SWITCH TO LOW CARBON STEEL
https://www.businessgreen.com/news/4173735/race-green-steel-campaign-urges-carmakers-switch-low-carbon-steel
Automotive makers and other industrialists agree to 20-30% green steel premium from H2GS
https://pemedianetwork.com/hydrogen-economist/articles/strategies-trends/2024/h2-green-steel-banks-30-premium/
and the stick:
POTENTIAL FOR $102 TO $190 PER TON TAX CHARGES ON INDIAN STEEL EXPORTS TO EUROPE, SAYS GOLDMAN SACHS.
Steel producers in India are most at risk from Europe’s new carbon tax on imports due to their high sales to the region and mills’ elevated emissions intensity, according to Goldman Sachs Group Inc.
https://www.hindustantimes.com/business/indian-steel-exports-at-high-risk-from-europes-new-carbon-tax-goldman-sachs-101707903529718-amp.html
Consider this. As I type:
HE1 MCap of £64m
EEE MCap of £60m
but
ZIOC MCap of £44m
Only 1 has a JORC Resource, ZIOC at 6.9bn tonnes of in-ground, high grade worth $350bn+ at steel mills.
....and ZIOC's ultimate Resource could be several times that size.
It's frustrating, V10, that's for sure.
However there are some very interesting developments in the background and some eye-opening tell tales to be found.
From these I reckon we get big news within the next couple of weeks, incl. the port MoU.
Very significant if you appreciate how the dots are lined up.....
Présidence de la République du Congo - Officiel
@PR_Congo
#Cooperation|
Le Président de la République, Son Excellence Monsieur @SassouNGuesso_
, a eu des échanges, en tête à tête, avec Son Excellence Monsieur Mohamed bin Zayed Al Nahyan, Président des Émirats Arabes Unis à Abu Dhabi, ce Lundi 12 février 2024, sur des questions bilatérales et multilatérales.
#Cooperation |
The President of the Republic, His Excellency Mr. @SassouNGuesso_, had face-to-face discussions with His Excellency Mr. Mohamed bin Zayed Al Nahyan, President of the United Arab Emirates in Abu Dhabi, this Monday, February 12, 2024, on bilateral and multilateral issues.
https://twitter.com/PR_Congo/status/1757313392677646369
Bring it on
99 - Your continue to deny/ignore reams of current research that is readily available. I think you need to read it.
99icecream. I cannot see the analogy to the EV market.
Whilst any car maker could produce an EV, if they so wished, no amount of wishful thinking would enable a Pilbara mine to upgrade their hematite-goethite dross to DR grade. None. There *MAY BE* a technological breakthrough in ore smelting (where research efforts are currently focused) however the big boys have been trying for almost a decade now with no success. Hence the interest in West African high grade.
Here's another piece from December that spells out their problem. The Pilbara is struggling to make benchmark 62%...
26 December 2023
THE AUSTRALIAN IRON ORE INDUSTRY MUST DECIDE HOW TO REPLACE ITS AGEING PILBARA MEGA-MINES IN THE FACE OF THE UNCERTAIN SHIFT TO GREEN IRON AND STEEL PRODUCTION.
The standard 62pc Fe direct-shipped iron ore produced in the Pilbara region of Western Australia (WA) is not very suitable for existing processes to produce low-carbon or green iron and steel, and the lower-grade ores that have grown in volume in the past decade are even less so. Yet Australian mining firms BHP, Rio Tinto and Fortescue are all working on multi-billion dollar plans to replace depleting mines.
The question for these firms that have worked hard to build reputations for having high-investment hurdles to ensure that only the best projects are undertaken, is whether Pilbara hematite will be able to compete globally in a low-carbon future.
Rio Tinto and Fortescue are already hedging their bets with developments in Africa, and in Fortescue's case, with producing higher-grade magnetite concentrate in the Pilbara. BHP has maintained its focus on pushing down costs and incrementally improving the grade of its existing Pilbara operations back towards 62pc Fe.
https://www.argusmedia.com/en/news/2522387-viewpoint-australias-green-steel-future-uncertain
99icecream - Care to explain why the Big 3 are going to so much time and trouble to try (repeat try) to convert their rust and rubble to DR grade? Why have BHP and Rio publicly joined forces to try and find a technological solution? Why are they so desperate?
Why are Rio and Fortescue seeking out DR grades in Africa, if they could up their Pilbara grades, as you claim? Is it because they realise that the there isn't likely to be a techno breakthrough?
If they could raise the grades of their Pilbara junk then *NONE* of the above would be necessary.
Yet that is *EXACTLY* what is happening.
Why are the media and analysts uniformly detailing their predicament? Are they all wrong?
Please enlighten....
Further confirmation today from the IEEFA that the Pilbara cannot produce any (meaningful amount) of DR-grade iron ore - (1). The reason being is that the predominant hematite-goethite rubble *CANNOT* be beneficiated - (2). This leaves the Australian Big 3 up the proverbial creek. Here's the IEEFA on their workarounds. Note the key phrase, 'Rio Tinto and Fortescue are planning major projects in Africa to increase their production of high-grade iron ore.'
CARBON CAPTURE FALLS EVEN FURTHER BEHIND AS BHP, RIO AND BLUESCOPE COLLABORATION ACCELERATES GREEN STEEL TRANSITION
February 12, 2024
However, DRI-EAF requires a higher grade of iron ore than the great majority of production in the Pilbara, Western Australia. A shift away from coal-consuming blast furnaces to DRI is therefore a major long-term challenge to Australia’s biggest export.
Three of the Big Four iron ore minors are consequently planning to increase production of higher, direct reduction-grade (DR-grade) ore.
Vale – already the world’s largest producer of DR-grade ore – is planning to increase production in an attempt to fill the 70 million tonnes per annum (Mtpa) DR-grade ore supply gap it sees emerging by 2030 as DRI-based steel production grows.
Rio Tinto and Fortescue are planning major projects in Africa to increase their production of high-grade iron ore. Fortescue has already begun production at Iron Bridge in the Pilbara, where output meets DR-grade.
The outlier among the Big Four is BHP, which is not targeting high-grade ore and is instead leaning more heavily on unproven carbon capture solutions that would allow the continued use of its metallurgical coal.
(1) - https://ieefa.org/resources/carbon-capture-falls-even-further-behind-bhp-rio-and-bluescope-collaboration-accelerates
May 2023; WHY MAGNETITE WILL BE CRUCIAL TO AUSTRALIA’S GREEN STEEL TRANSITION
With available technologies, the steel industry’s transition towards DRI requires a significant supply of high-grade iron ore, but the typical hematite-goethite ores found in the Pilbara region are not suitable for beneficiation to higher grades.
(2) - https://reneweconomy.com.au/why-magnetite-will-be-crucial-to-australias-green-steel-transition/