The rather hopefully named Beijing “bazooka” was expected to be followed up by another stimulus blitz the following week, this time focused more on fiscal policy and infrastructure investment, but the latter turned out to be a damp squib, with prices down 9% since then. 

Next week could be another make or break moment for the copper price in a highly anticipated meeting of the Standing Committee of China’s National People’s Congress, the country’s highest lawmaking body, scheduled for 4–8 November. 

Copper markets will be hoping for more detail of the scale and nature of Beijing’s stimulus measures, but in a note the copper service of Benchmark Mineral Intelligence points out that the announcement did not mention debt or fiscal policy on the agenda, so it remains to be seen how forthcoming policymakers are with details: 

“If the meeting fails to shine further light on the scale of fiscal stimulus, we expect copper prices to come under renewed pressure. We note that copper prices have trended significantly above their implied relationship with the USD index since the announcement of China’s stimulus ‘blitz’ in late September. 

“If Chinese authorities follow through on the market’s expectations, we could see a permanent step-change in this relationship (just like we did post-COVID). Conversely, if the market loses faith in China’s stimulus efforts and deems them inadequate or superficial, our regression analysis suggests that copper stands to drop by close to $1,000 per tonne.”

The total stock market valuation of the world’s biggest mining companies is up a fairly modest 8% year to end-September and despite the good run is still $240 billion below the peak hit in the second quarter of 2022. And judging by the performance of the top tier in the final quarter (BHP down 8% QTD, Rio Tinto –5%, Vale –3%, Glencore –5%, Newmont –9%, Zijin –5%, Freeport –7%) the gap won’t be closing anytime soon.

In contrast, Nvidia — the maker of chips highly prized for artificial intelligence (AI) computing — is up nearly 200% so far this year (and 2,600% over five). When comparing the graphics card maker’s stock valuation to the mining industry’s collective worth, it’s difficult not to wonder if something is not awry with how global investors appraise the industrial economy.  

Should Nvidia (or Microsoft or Apple for that matter) be worth more than twice the top 50 miners? Outside the top 50 the average market cap quickly shrinks to the low teens so Nvidia is in fact worth more than the entire listed mining industry. 

Even when extending the top 50 into metals and energy –  steel, aluminium and electricity companies often operate their own mines – Nvidia can still throw shade. BHP does not even crack the top 100 most valuable companies in the world and is worth less than Booking.com, and Temu and Zara’s owners, none of which can exactly be called the building blocks of the global economy. 

Nvidia briefly surpassed Apple on Friday to become the world’s most valuable company. Its market capitalization is approximately $3.5 trillion, just below Apple’s, which remains the highest-valued firm globally.

In combined battery capacity deployed – a better indicator of battery materials demand than unit sales alone – the global electric car market expanded by 22% so far this year. 

In total, 505.6 GWh of fresh battery power hit the globe’s roads from January through August, according to data from Toronto-based EV supply chain research firm Adamas Intelligence.

The robust growth rate also comes despite a noticeable swing towards hybrid vehicles, which have inherently smaller batteries and therefore contained metal. 

The combined battery capacity of plug-in hybrid vehicles steered onto roads globally for the first time this year is up 70% versus a must more sedate pace for full electric passenger vehicles of 15%. At the same time the average battery capacity of plug-ins is also rising, up 14% this year to 23kWh, more than a third of the average full electric vehicle.

For miners supplying the EV battery industry, the news remain negative: when pairing metals demand with prices in the supply chain, declines this year are brutal. 

The latest data based on EV registrations in over 110 countries show the sales weighted average monthly dollar value of the lithium, nickel, cobalt, manganese and graphite contained in the batteries​​ of the average EV based on global end-user registrations, battery capacity and chemistries.

Put it all together and the raw materials bill for the average EV is now down to $537 compared to $1,342 in August 2023 and a monthly peak of more than $1,900 at the beginning of last year, according to Adamas Intelligence analysis.      

The downtrend is led by lithium where the sales weighted average value per EV is down 75% over the past year to $236 and cobalt, which at little over $46 is 42% below the value reached in August 2023. Manganese is the only battery raw material in positive territory this year, up 3% but the raw material is also down 8% compare to the same month last year. For anode material, graphite loadings and values have held mostly steady at just under $26 per average EV.

The value of nickel in the average EV battery is down 26% as LFP battery chemistries continue to take global markets. LFP batteries represented 42% of the global total in terms of capacity deployed in GWh in August.

That compares to a 32% share during the same month last year, more than offsetting the long-running trend towards high-nickel cathodes, and the growing popularity of NCM batteries for larger plug-in and range-extending hybrids, where the energy density of nickel-based cathodes makes more sense given the weight of these vehicles. 

For a fuller analysis of the battery metals market check out the latest Northern Miner print and digital editions. 

* Frik Els is Editor at Large for MINING.COM and Head of Adamas Inside, providing news and analysis based on Adamas Intelligence data.

Rare earth mining in Myanmar is concentrated in Kachin state around the towns of Panwa and Chipwe, adjacent to southwestern China’s Yunnan province. The region also hosts a number of gem mining sites and is a key trade route into Myitkyina (Kachin state’s capital) and north into China.

A KIA spokesperson told Reuters on Tuesday the group wrested control of the area from the militia group NDA-K over the weekend but did not elaborate on its plans on mining in the region. The NDA-K is allied with the ruling junta and has been working with Chinese companies involved in mining.

In a note on Tuesday, Adamas Intelligence, a Toronto-based rare earth and battery metals research consultancy, said rebel control of these mining sites could potentially disrupt rare earth concentrate shipments into China, which have declined for four months straight owing to the monsoon season and other challenges. 

In June, a landslide at a rare earth mining site in Ngilot village in Panwa region claimed 10 lives and left at least 30 people missing.

Adamas says with Myanmar responsible for 57% of global dysprosium and terbium mine supply last year, a prolonged disruption would strain availability of feedstock supplies for magnet makers during what is typically a seasonally strong quarter. 

More than 90% of electric vehicles feature at least one permanent magnet motor and rising production from Myanmar and low prices have made it easy for automakers “to turn a blind eye to the environmental destruction and social upheaval that rare earth mining fuels in the country,” according to Adamas.

“Should the recent border seizure and expected capture of rare earth mines this week result in a disruption of rare earth concentrate flows to China from Myanmar, importers of Chinese rare earths and magnets may soon have to pay, literally and figuratively, for failing to support and secure alternative sources of supply in time.”

At the end of the third quarter of 2024, the MINING.COM TOP 50* ranking of the world’s most valuable miners had a combined market capitalization of $1.51 trillion, up just under $76 billion from end-June, largely on the back of gold and royalty stocks.

The total stock market valuation of the world’s biggest mining companies is up a fairly modest 8% year to end-September and despite the good run is still $240 billion below the peak hit in the second quarter of 2022.  

Ranks, value of gold stocks swell

The value of precious metals and royalty companies climbed by a combined $42 billion, or 16% during the quarter and gold counters dominate the best performing ranks. 

Were it not for the limited tradability of stock in Russia’s Polyus, which lost some ground over the last three months despite gold’s stellar performance, bullion’s effect on the Top 50 would have been even more pronounced. 

Canada’s Alamos Gold joins the top 50 for the first time with a more than 31% jump in value, lifting it six places to number 48 with a valuation of $8.2 billion at the end of the quarter while the second quarter’s newcomer Pan American Silver (following its absorption of Yamana Gold) hangs on at no 50.

Alamos Gold last month raised its production guidance by over 20% for 2025-2026 with the inclusion of the Magino mine and its integration with its Island Gold operation in Ontario. The Toronto- based miner has long term ambitions to grow its production base to 900,000 ounces per year.

Uzbekistan is readying an IPO for Navoi Mining and Metallurgy Combinat – the world’s fourth largest gold mining company and significant uranium producer in 2025. NMMC debuted a $1 billion bond offering last week, marking the first global debt market issuance from a gold mining company since June 2023.

Navoi should easily join the ranks of gold producers in the top 50 thanks to ownership of the world’s largest gold mine, Muruntau, and annual production of 2.9 million ounces at grades and per ounce extraction costs the envy of the sector.  

The Muruntau open pit mine southwest of the Kyzylkum desert, originally developed during the Soviet era as a source of uranium, has estimated reserves of around 130 million ounces of gold. 

Goldilocks copper

Copper specialists, and those with fat gold credits, have gained a combined 36% year to date as the copper price continues to flirt with the $10,000 a tonne level, but momentum slowed dramatically during Q3 with the group contributing only $7.2 billion in added market worth during the quarter. 

Amman Mineral’s fierce rally also came to an abrupt halt during the quarter with the counter losing 18% over the three months and coming close to falling out of the top 10.

Investors who bought Amman, owner of the world’s third largest mine worldwide in terms of copper equivalent, at the IPO price in Jakarta a year ago, are still enjoying 400% gains since then, however. 

Southern Copper’s position as the world’s third most valuable mining stock seems entrenched after a double digit percentage gain in Q3 compared to a much more sedate performance by Freeport-McMoRan, which now has to gain a full $20 billion in market cap to haul in its Mexico City-based rival.

Light on lithium 

Rio Tinto’s vote of confidence in the long term future of the lithium sector (and its own ability to make M&A work) dominated the news at the start of the December-quarter but it’s worth noting that Arcadium’s more than 90% surge since the all-cash offer was first announced is not enough for the stock to enter the rankings.

Three lithium counters exited the rankings this year, Australia’s Pilbara Minerals and Mineral Resources and China’s Tianqi Lithium as the deep slump in prices for the battery metal continues to take its toll.  

Last quarter’s no 50, Ganfeng Lithium jumps six places after being swept up in the stimulus-induced rally on Chinese stock markets at the end of the quarter, while Tianqi’s performance so far in October should see it reenter the Top 50 in due course. 

Ganfeng was barely holding on at position 50 at end-June and with gold price momentum continuing and two gold mining companies waiting in the winds – Yintai and Alamos – only three lithium counters in the top 50 may be a reality for some time to come. 

After peaking in the second quarter of 2022 with a combined value of nearly $120 billion, the remaining lithium stocks’ market value has now shrunk to $34 billion.  

Iron ore ground down

Despite a modest improvement during the quarter, the mining industry’s traditional big 5 – BHP, Rio Tinto, Glencore, Vale and Anglo American – remain in the red for 2024, losing $24 billion since the start of the year. 

The big 5 diversifieds now make up 29% of the total index, down from a height of 38% at the end of 2022.  

Iron ore’s less than rosy outlook – the late boost China’s recent stimulus package notwithstanding – saw Fortescue once again feature on the biggest losers list and Cleveland Cliffs exit the ranking with the US iron ore miner’s 37% decline this year exacerbated by its inability to capitalize on the blocking of the Nippon-US Steel tie up. 

Iron ore’s representation in the top 50 have diminished in the last couple of years – Brazil’s CSN Mineração dropped out during Q1 this year while Anglo-controlled and separately-listed Kumba Iron Ore has lost touch with the top tier after a 40% fall year to date.

Click on image for full size table.

NOTES:

Source: MINING.COM, stock exchange data, company reports. Share data from primary-listed exchange at close Oct 4, 2024 close of trading converted to US$ where applicable. Percentage change based on US$ market cap difference, not share price change in local currency.  

As with any ranking, criteria for inclusion are contentious. We decided to exclude unlisted and state-owned enterprises at the outset due to a lack of information. That, of course, excludes giants like Chile’s Codelco, Uzbekistan’s Navoi Mining (the gold and uranium giant may list later this year), Eurochem, a major potash firm, and a number of entities in China and developing countries around the world.

Another central criterion was the depth of involvement in the industry before an enterprise can rightfully be called a mining company.

For instance, should smelter companies or commodity traders that own minority stakes in mining assets be included, especially if these investments have no operational component or warrant a seat on the board?

This is a common structure in Asia and excluding these types of companies removed well-known names like Japan’s Marubeni and Mitsui, Korea Zinc and Chile’s Copec. 

Levels of operational or strategic involvement and size of shareholding were other central considerations. Do streaming and royalty companies that receive metals from mining operations without shareholding qualify or are they just specialised financing vehicles? We included Franco Nevada, Royal Gold and Wheaton Precious Metals on the basis of their deep involvement in the industry.

Vertically integrated concerns like Alcoa and energy companies such as Shenhua Energy or Bayan Resources where power, ports and railways make up a large portion of revenues pose a problem. The revenue mix also tends to change alongside volatile coal prices. Same goes for battery makers like China’s CATL which is increasingly moving upstream, but where mining will continue to represent a small portion of its valuation.  

Another consideration is diversified companies such as Anglo American with separately listed majority-owned subsidiaries. We’ve included Angloplat in the ranking but excluded Kumba Iron Ore in which Anglo has a 70% stake to avoid double counting. Similarly we excluded Hindustan Zinc which is listed separately but majority owned by Vedanta.

Many steelmakers own and often operate iron ore and other metal mines, but in the interest of balance and diversity we excluded the steel industry, and with that many companies that have substantial mining assets including giants like ArcelorMittal, Magnitogorsk, Ternium, Baosteel and many others.

Head office refers to operational headquarters wherever applicable, for example BHP and Rio Tinto are shown as Melbourne, Australia, but Antofagasta is the exception that proves the rule. We consider the company’s HQ to be in London, where it has been listed since the late 1800s.

Please let us know of any errors, omissions, deletions or additions to the ranking or suggest a different methodology.

Rio Tinto will acquire the United States-based lithium producer for $5.85 per share, it said. The deal represents a premium of 90% to Arcadium’s closing price of $3.08 per share on October 4 and is expected to close mid-2025.

The move would position Rio Tinto as one of the world’s largest lithium miners, behind only US-based Albemarle (NYSE: ALB) and Chile’s SQM (NYSE: SQM).

The acquisition would hand Rio lithium mines in Argentina and Australia, as well as processing facilities in the US, China, Japan and the UK. Its customer base would include major names, such as Tesla, BMW and General Motors.

The falling market prompted Rio to act, chief executive officer Jakob Stausholm told Reuters, seeing the downturn as an opportunity to pick up top quality assets at the right price.

“We really want battery-grade lithium, i.e. the processing as well. And then, of course, we like to be an operator, and if you take those criteria, you very quickly come to Arcadium,” he said.

“The way you should think about it is kind of a reverse takeover. This is not a case about cutting costs. This is a case about building faster and better,” Stausholm told Reuters.

Price slump

The spot price for lithium carbonate in China is down more than 85% from a peak in 2022 as supply overwhelmed demand from the electric vehicle sector where growth has cooled at the same time.

Arcadium Chairman Peter Coleman said Rio would be able to bring its expertise in execution and a strong balance sheet to help develop Arcadium’s assets. 

“They are not capital constrained … For us, we know that growth plans still relied on an improvement in price over the next two to three years, which is quite a significant improvement over where we are now,” he told Reuters.

Bolt-on

“The reality is that Rio really hasn’t grown in a decade, but now we’re back,” Stausholm told Bloomberg in a phone interview.

The miner began more seriously considering options at the start of the year, looking at “basically all of the lithium projects around the world,” Stausholm said.

For Rio, with a market capitalization of $112 billion, Arcadium is seen as a bolt-on deal. It’s still a test of the miner’s deal-making mettle in a new era of constrained spending, as the biggest acquisition since Rio’s $38 billion all-cash acquisition of Alcan Inc. in 2007. That purchase, after a bidding war, ultimately left Rio with $29 billion in charges.

“Alcan, in hindsight, was bought at the top of the cycle,” Stausholm said. “We feel quite comfortable that we have not bought a lithium company at the top of the cycle right now. We had to pay a fair price, and that’s what we’re paying.”

DLE

“It was a huge piece of work, but what became very clear to us was we would like to have exposure to brines,” Stausholm told Bloomberg, adding Arcadium produces battery-grade lithium from direct extraction.

Vulcan Energy’s (ASX: VUL) founder and executive chair, Francis Wedin, said the company views the development as a favourable one for the broader lithium market, particularly because it shines a spotlight on adsorption-type direct lithium extraction (A-DLE) production, used by Arcadium since 1996 next door to Rio’s own A-DLE project in Rincon. 

“The fact that Rio is joining Exxon and Equinor by focusing on A-DLE is a further indication of how the third wave of lithium’s growth is developing,” he said in an emailed statement. 

Rumours swirled

Arcadium was created in January from the merger of Philadelphia-based Livent and Australia’s Allkem. Its shares have fallen since, dragged by declining lithium prices, which in turn are a result of weaker demand from electric vehicle (EV) makers and Chinese oversupply.

BMO Capital Markets said in a note the transaction provides Rio a producing foothold at a price that it can easily afford.

“However, our initial take suggests a premium multiple paid, unless Rio Tinto can demonstrate meaningful synergies and/or expectations of significantly higher future lithium prices.”

Ahead of the confirmation of the deal BMO Capital Markets noted a potential takeover has been part of market rumours for years.

“Many investors believe that Arcadium (i.e., the Allkem/Livent merger) was completed to shake out interest from suitors like Rio.”

Battery ambitions

Over the past six years, Rio has been expanding its footprint in the battery market. In 2018, it attempted to buy a $5bn stake in Chile’s SQM, the world’s second largest lithium producer. 

In April 2021, the world’s second largest miner kicked off lithium production from waste rock at a demonstration plant located at a borates mine it controls in California. 

Rio took another key step into the lithium market in 2022, completing the acquisition of the Rincon lithium project in Argentina, which has reserves of almost two million tonnes of contained lithium carbonate equivalent, sufficient for a 40-year mine life. 

The company plans to develop a battery-grade lithium carbonate plant at Rincon with an annual capacity of 3,000 tonnes and has earmarked $350 million to invest in the project, with first production expected later this year.

It is also trying to revive one of its biggest lithium projects, the proposed $2.4 billion Jadar mine in Serbia. Rio had its mining licence revoked in 2022, following widespread protests against the proposed mine on environmental concerns.

The mining giant won a small, but key battle in July, as Serbia reinstated Rio Tinto’s licence to develop it, but the company will have to secure approvals to move towards production at the site. On Monday, however, the country’s parliament began debating a proposal to ban lithium and borate mining and exploration. If passed into a law, this would effectively put an end to the contested Jadar project.

With projected production of 58,000 tonnes of refined battery-grade lithium carbonate per year, Jadar would be Europe’s biggest lithium mine.

(With files from Reuters and Bloomberg)

RELATED: Timeline: Owners of Arcadium’s lithium assets through the years

At the end of September copper comfortably scaled the $10,000 a tonne level after Beijing announced a raft of mostly monetary measures to stimulate the country’s slowing economy and in particular its besieged property sector.

The rather hopefully named Beijing “bazooka” was expected to be followed up by another stimulus blitz on Tuesday, this time from China’s National Development and Reform Commission focused more on fiscal policy, infrastructure investment and the energy transition. 

Traders sold off copper after Tuesday’s briefing turned into a damp squib with losses for the copper price after the run up now going beyond 7%.  

Moreover, hopes of market conditions forming similar to that of May when copper hit a record high of $5.20 a pound, or nearly $11,500 a tonne, are now looking less likely.

Benchmark Mineral Intelligence points out that the persistent contango on the LME throughout the recent rally added to the sense of caution over copper prices running ahead of fundamentals, with some drawing parallels with the fund-fuelled price rally in the second quarter: 

“Indeed, last week’s Commitment of Traders report from the COMEX indicated a strong return of funds into the copper space, with non-commercial net positions increasing to the highest level since July, supported by a strong build in long positions for three consecutive weeks. 

“As a result, the arbitrage between the LME and the COMEX once again blew up, reminiscent of the situation in Q2. However, any extreme run-up should be somewhat buffered by the higher level of stocks on the COMEX, which stood at 71kt as of last Friday, compared to just 20kt at the peak of the arbitrage blow-out in May.”

Nevertheless, says McKinsey, the industry is in healthier financial shape compared to historical averages. 

From 2000 to 2023, metals and mining revenues grew by $1.7 trillion, a jump of roughly 75% and affording the industry a 70% slice of the overall materials business which also includes plastics, pulp, and building materials. As a whole, materials represent some 7% of the global GDP.  

Profits in the industry have also been robust with mining, refining and metal fabrication EBITDA nearly doubling over the almost quarter century going from $500 billion to $900 billion. 

Moreover, Mckinsey points out, mining and metal companies’ debt burden has decreased with net debt over EBITDA ratios of 1.3 times, well below the through-cycle average of 1.8 times. 

“However, 2024 has already proven to be a more challenging year for the industry as overall economic growth slows down and the shift toward low-carbon technologies unfolds more slowly than expected, both of which are putting downward pressure on price levels, especially for battery materials, such as nickel and lithium,” McKinsey says.

Not only are battery and other metals associated with decarbonisation facing headwinds, the sector – even when lumping in bellwether copper – hardly makes up 15% of global metals and mining revenues. Until such time the copper price reaches the levels predicted by more outlandish scenarios, the share is not likely to grow much.  

For instance, the market size of rare earths mining, and metal and alloy production (included in the other section of the graph) which is used in defence applications and many energy transition applications including wind turbines and motors for electric vehicles, is below $20 billion.

Thermal coal and steel account for around 60%–70% of revenues and production volumes of 7 billion tonnes and 2 billion tonnes respectively are more than 30 times higher than all other metals and minerals combined. Output by the largest among the latter, aluminum, at roughly 100 million tonnes, does not make much of a dent in the overall total.

The bulk of mining and metals activity and revenues remains subjected to the ups and downs of the global economy, particularly the outlook for China where the signs are not great.  

While the green energy transition may rightfully represent a new dawn for mining, it’s still very early in the morning.

Canada’s Teck Resources owns an indirect 60% interest in QB2 while Sumitomo Metal Mining has a 30% stake. Enami’s share in the mine was non-funding and Codelco will be also protected from dilution in any future capital raisings. 

Quebrada Blanca’s expansion – QB2 – is ramping up with a target set by Teck of 285,000 – 315,000 tonnes of annual production by 2026. QB2 reached production of 51,300 tonnes in the second quarter this year, up more than 18% from Q1. 

Last year Codelco’s output fell to its lowest lowest level in a quarter century at 1.32 million tonnes. The company has vowed to lift production over the next few years, but so far it has fallen short of its targets.  

Codelco’s acquisition of QB2 may not be enough to stave off BHP’s ambitions to become the world’s number one copper producer. 

Last week, BHP unveiled plans to increase copper production organically at its South Australia operations, which include Olympic Dam, a 218,000 tonnes per year mine, and two smaller operations: Prominent Hill and Carrapateena. 

Together with the Oak Dam project, which is currently in the exploration phase, Melbourne-based BHP expects to raise output in the region to 650,000 tonnes by the middle of the next decade, doubling the 2023 tally of 326,000 tonnes.

BHP’s growth comes amid declining output in Australia over the last decade from 1 million tonnes in 2013 to 788,000 tonnes last year, due to aging mines and depleting reserves, Benchmark Mineral Intelligence reports: 

“The outlook worsens with Glencore’s planned closure of the Mount Isa copper mine (70ktpa) by 2025 and the possible shutdown of the Mount Isa smelter (300ktpa anode capacity) by 2030, further challenging the nation’s copper outlook.

“BHP’s ambitious goal hinges on two key exploration projects: Olympic Dam Deeps (OD Deeps), where recent drilling has shown promising copper intercepts, and Oak Dam, which has announced inferred resources of 1,340Mt of ore with a copper grade of 0.66%. BHP’s CEO is confident that these exploration efforts will support the company’s long-term production targets”.

The price of tin ended August at $32,500/t and so far this year is averaging just under $30,000 after the Man Maw mine, accounting for almost all of Myanmar’s tin supply, failed to restart operations despite the August 2023 ban instituted by the Wa militia controlling the area being lifted for all other mining operations at the beginning of the year. 

Tin was also boosted by significant disruption to Indonesian exports during the first half of the year, after delays in government approvals of mining companies’ annual work plans. Refined tin exports from Indonesia were down 54% year on year in H1 2024. 

Myanmar is the world’s no. 3 tin producer while Indonesia is the largest exporter of the metal. BMI expects the situation to stabilise and Indonesia’s tin exports to get back on track over the coming months.

On the demand side things are also picking up. BMI points out a pickup in global semiconductor sales from Taiwan, continued Chinese investment in its chip manufacturing capacity and renewed focus in Japan to bolster the country’s domestic manufacturing. Falling exchange inventories also favour a rosy outlook.

Further out, BMI expects tin prices “to remain on a firm uptrend in the coming decade” reaching $45,000 by 2033, a level more than double the 2016 to 2020 average of $18,729. BMI expects the market will enter a deficit from 2028 onwards: 

“On the supply side, a thin pipeline of tin mining projects will tighten the tin concentrate market, leading to increased competition among smelters and constrained ore feed for refined output growth. 

“On the demand side, the global use of tin will increase rapidly through the metal’s use in electronics (especially as electric vehicles increasingly contain greater amounts of electronics in their body) and solar panels (in photovoltaic cells), cementing tin’s status as a commodity of the future.”

Some analysts put the copper need from global investment in electric grids, renewable energy and electric vehicles at as much as 12 million tonnes per year by the end of decade – double current levels. The scale up in supply is startling considering total global primary copper production in 2023 was estimated at 22 million tonnes.   

Where that extra six million tonnes will come from is the subject of much debate, but it won’t happen without investment in Peruvian copper.  

“Tia Maria, despite being one of the smaller projects in the pipeline, has become emblematic of the challenges posed by social resistance, with construction stopped midway in 2019.”

Peru was until last year the world’s second largest copper miner before it was overtaken by Congo (thanks in no small part to the ramp up to 600kt per year at Ivanhoe Mines’ Kamoa-Kakula). 

Peru has been struggling to maintain output amid community protests, political turmoil and an unpredictable regulatory regime. 

A new report by the copper service of Benchmark Mineral Intelligence cites an interview with energy and mining minister Romulo Mucho last week as a sign Peru’s copper industry is coming back on track.

Mucho, who took office in February, has been working hard to lure investors back to Peru and pointed to the Tia Maria project, which was revived by owners Southern Copper in June.

Mucho said construction of Tia Maria will signal to others it’s safe to recommit to mining in the country, including to backers of La Granja, which after Kamoa-Kakula would be the largest copper project to come on line in decades.

Peru’s copper production, which reached 2.75 million tonnes in 2023, is expected to stagnate during 2024 for the first time since 2020, according to Benchmark: 

“Despite these challenges, Peru’s copper potential remains substantial, with 2.6Mtpa of potential capacity in advanced projects. However, social opposition continues to pose a significant barrier. Projects like FQM’s 200ktpa Haquira have struggled with noticeable community resistance for over a decade, impeding growth. 

“On the other hand, Peru’s mining climate is gradually becoming more favourable, as evidenced by the recent approval of the 120ktpa Tia Maria project, signalling a shift towards a more pro-mining stance by the government. 

“Tia Maria, despite being one of the smaller projects in the pipeline, has become emblematic of the challenges posed by social resistance, with construction stopped midway in 2019. Completion of this project can send a strong signal to other miners with projects in the country that Peru is again open for business.” 

In 2014, Melbourne-based BHP excluded Nickel West from its South32 spin-off, created to house the company’s non-core assets. Today South32 is worth $9.5 billion, 50% more than on its debut, and senior management in Perth may well feel that in the end that was a blessing. 

Later that year the world’s top mining company, more than $30 billion clear of its nearest rival, also waved away bidders for Nickel West, said to be Glencore and Chinese nickel group Jinchuan, in a sale put as high as $1 billion.   

Three years later, hoping to capitalize on the rosy view of nickel’s role in the electric car story, BHP decided rather than close down the division, to build a sulfate plant to turn Nickel West into a “mine-to-market” operation. 

In July this year, BHP admitted defeat. Not for a lack of trying. BHP says it spent $3 billion to sustain and expand the division since 2020 which now included the Kwinana nickel refinery, Kalgoorlie nickel smelter, Mt Keith and Leinster mines and the West Musgrave project it inherited from last year’s $6.4 billion Oz Minerals takeover. 

BHP is still calling it a “temporary suspension” but judging by the company’s outlook accompanying its year-end results released this week temporary may turn out to be a long time.

While the long term benefits of the energy transition remains positive for nickel, the “demand signposts” from the stainless steel and EV markets BHP said it has observed since the February announcement of the review were all negative while the supply response has not been enough.   

“On the supply side of the industry, we observed additional curtailments and project suspensions being publicly announced, slower than expected mining approvals in Indonesia both pre-and-post the presidential election, the LME suspending Russian metal deliveries in response to US and UK sanctions, and civil unrest in New Caledonia (~6% of global nickel mined supply). 

“The net impact of these fundamental signposts was not enough to alter our view that the nickel industry is likely in an extended run of annual surpluses stretching into the decade’s final third.” 

Nickel prices recovered from six month lows this week, scaling the $17,000 a tonne level, but remains firmly in a bear market, trading down more than 20% from highs reached only three months ago.

While sales growth has certainly slowed down from the torrid pace of the last few years, in part due to base effects, the global EV market, including plug-in and conventional hybrids, should easily top 20 million units this year.

In combined battery capacity deployed – a better indicator of battery materials demand than unit sales alone – the global electric car market expanded by 23% during the first half of the year. 

In total, 365.5 GWh of fresh battery power hit the globe’s roads from January through June, according to data from Adamas Intelligence. The robust growth rate also comes despite a noticeable swing towards hybrid vehicles which have inherently smaller batteries. 

However, when pairing metals demand with prices in the EV battery supply chain the picture looks very different. 

The graphs from Toronto-based EV supply chain research firm Adamas Intelligence show the sales weighted average monthly dollar value of the lithium, nickel, cobalt, manganese and graphite contained in the batteries​​ of the average EV based on global end-user registrations, battery capacity and chemistries.

Put it all together and the raw materials bill for the average EV is down to $655 so far this year from $1,674 over the same period in 2023 and a monthly peak of more than $1,900 at the beginning of last year, according to Adamas Intelligence analysis.      

While the year on year comparisons are brutal, nickel, manganese and graphite have been on a noticeable upswing since the start of 2024. The sales weighted average value of nickel per EV is up 32% since January. 

Nickel is being boosted by the slow rollout of LFP battery chemistries outside China, a long-running trend towards high-nickel cathodes, and the growing popularity of NCM batteries for larger plug-in and range-extending hybrids where the energy density of nickel-based cathodes makes more sense given the weight of these vehicles. 

The price falls are great news for automakers struggling to bring prices for their EV offerings in line with internal combustion engine vehicles and should provide fresh impetus for consumer adoption.

For battery metals miners however, healthy demand growth from the EV sector is now entirely overshadowed by fears of a prolonged slump in prices.

Judging by the positive trends on a monthly basis since the start of the year, some of those fears can be allayed.   

For a fuller analysis of the battery metals market check out the Northern Miner print and digital editions. 

* Frik Els is Editor at Large for MINING.COM and Head of Adamas Inside, Toronto-based provider of battery metal and EV supply chain analysis.  

The precious metal has gained more than 20% year to date with the latest gap up coming on the back of bad-news-is-good-news news from the US last week. 

Disappointing economic numbers raised hopes of rapid and deeper cuts by the Fed, while the dollar continued its losing streak.

Gold and the greenback often move in opposite directions and lower interest rates also bolsters gold’s prospects because the metal offers no yield and investors have to rely on price gains for returns. 

All eyes are now on Fed chair Powell’s speech in Jackson Hole this week, although judging by this analysis, Jackson Hole is usually not a gold-friendly event.

Global average daily trading volumes in gold exceeds $160 billion, more than T-bills, so days like Friday gives everyone a chance to shine. 

The champagne corks must be popping in Perth, Denver, Vancouver and Toronto, right? Mumm maybe. Dom, not likely. 

Because as in so many markets, grass roots operations and financial markets have lost touch altogether. 

Just under $1.1 billion disappeared from gold exploration budgets last year. 36% fewer gold holes were drilled. Junior mining financings are the lowest since 2019 after dropping by 23% last year.

Barrick CEO Mark Bristow likes to say “value creation is through the drill bit”.  

That may be, but even if you strike gold, the wait for that value takes an awfully long time. 

A recent Allianz Trade report shows just how long, and lays the blame on the usual suspects: 

“Extended exploration and authorization phases, and the complexities associated with securing financing and building permits. Regulations have become stricter, requiring extensive environmental and social impact assessments that increase red tape. The time required to secure financing and obtain the necessary building permits has also been increasing. 

“Furthermore, as accessible high-grade deposits become rare, mining companies are increasingly targeting deeper or lower-grade deposits, which require more sophisticated, hazardous and costly extraction techniques. This technical complexity adds to the exploration and development phases, further extending the timeline to production.”

Gold miners still have it relatively good compared to the likes of nickel and copper. 

From discovery to flowing ounces takes almost 16 years. 

What the world will look like in 2040 is anyone’s guess. 

If AI pundits are to be believed, the technology would have progressed enough to spin straw into gold. 

The price of the bellwether metal is still down more than 20% from its intra-day peak struck mid-May following a short squeeze, primarily played out in US markets. Year to date gains are all but wiped out. 

Copper’s fall since the squeeze was squoze compares to bandwagoners eager to jump on the next big thing calling for $15,000 early next year and $40,000 a tonne in the “not too distant future”.  

Those who caught copper fever added demand from artificial intelligence data centers and military spending to the often trotted out energy transition. 

Fair enough, but before the mining industry finally enters copper nirvana, the next few years are likely going to be brutal. 

A new note from Capital Economics reminds industry watchers that copper’s fortunes hang on China. 

More specifically, the country’s construction sector and its smelters (talk of output cuts was the spark that first lit up the market).  

The London-based researcher says rather than a slowdown in the US, the “slow-moving crisis” in the property market in China and ongoing overcapacity will drive copper prices lower. 

Output from China’s smelters responsible for more than half global output will remain high and ample exchange inventories will see the country’s copper export prices drop, dragging down prices on global exchanges.

While base metals should get a lift towards the end of the year as China steps up government borrowing and infrastructure spending over the last few months of 2024, by the end of next year copper will be back below today’s levels. 

So not $15,000 then.

Recall when Glencore heralded a new dawn for mining thanks to EVs – telling the audience at its 2017 investors day that “as early as 2020, when electric vehicles would still make up only 2% of new vehicle sales, related metal demand already becomes significant.”

That prediction proved conservative – global penetration reached over 5% in 2020. The data is still trickling in, but the second quarter of this year is on course to set a new record for the electrification of the global car parc with 26% of passenger vehicle sales either full electric, plug-in or conventional hybrids. 

Traditional hybrids remain a meaningful source of battery metals demand (thanks to large volumes and the widespread use of nickel metal hydride batteries) and even when stripping out Priuses (Pria?) with new owners, nearly one in five vehicles sold worldwide in Q2 was electrified.     

Yet, when pairing robust metals demand with often volatile prices in the EV battery supply chain the picture looks very different. 

The graph from Adamas Intelligence below shows the monthly dollar value of lithium, nickel, cobalt, manganese and graphite contained in the batteries​​ of EVs based on global end-user EV registrations, battery capacity and chemistries.

When looking at a streamgraph you don’t want the bulge to be at the start, but a chart that looks like an ink blot Rorschach test like the one below is hardly better. 

December 2022 saw a record $4.2 billion worth of battery metals business done. 

December is usually a blowout month for the global EV industry and the final month of 2023 was no exception. During December 2023 battery metals consumption was up another 20% year-over-year to a combined 140,000 tonnes on the back of a 23% increase in total giga-watt hours of battery capacity hitting the world’s roads that month. 

However, more than $2.8 billion had disappeared from the value chain as metal prices capitulated. 

During calendar 2022, the monthly value of combined battery metals deployment averaged $2.6 billion. In 2023, that number was $2.1 billion. So far this year? Down to $1.5 billion. 

In the analysis below, materials deployed constitute installed terminal tonnes and do not take into account yield losses during conversion, refining and manufacturing processes, or production scrap.

This means that at the mine mouth the required tonnes (and values) to feed the supply chain are considerably higher. 

Also, with 2023’s slump still in the rearview mirror, there is growing consensus that battery metals prices have bottomed out.

And combined with still healthy, albeit slowing EV sales growth should provide battery metals miners some comfort. But right now, that’s mostly cold comfort. 

Never has this old business school adage been truer than for NVIDIA. The California-based company’s market worth has skyrocketed as companies rush to buy its graphics processors to power artificial intelligence projects. 

Nevertheless, it’s jarring to see the companies doing the actual shovelling be appraised by the market in such a contrasting way.

The MINING.COM ranking of the 50 most valuable mining companies shows a combined value of $1.4 trillion at the end of the second quarter, not even half that of NVIDIA.    

There is another maxim from the mining industry: If it can’t be grown it has to be mined. 

Looking at this chart, that’s clearly not something often mentioned in investment circles.

Gold and copper’s historic runs to new all-time highs in May arguably should have sparked a bigger rally during the quarter and year-to-date but mining’s top tier is only worth little over 2% more than at the end of last year and an equally uninspiring 6% gain from this time last year.

Diversified drubbing

Copper specialists have gained a combined 33% year to date but the industry’s traditional big 5 – BHP, Rio Tinto, Glencore, Vale and Anglo American – have lost a collective $59 billion since the start of the year. 

The boost from copper was also not enough to counter iron ore’s descent into bear territory from dragging down the group, which now make up 29% of the total index, down from a height of 38% at the end of 2022.  The steelmaking ingredient’s less than rosy outlook also sees two specialists – Cleveland Cliffs and Fortescue – appear in the worst performer list.

Were it not for Glencore’s lack of exposure to iron ore other than through trading, steadying the Swiss giant’s share price, and Anglo American’s 25% jump during the quarter on the back of BHP’s unsuccessful takeover bid, mining’s traditional heavyweights would be an even more diminished grouping.   

Investors in Anglo, with a history going back more than a hundred years on the South African gold and diamond fields, have had a particularly wild ride over the last few years. In January 2016, Anglo’s market cap fell below $5 billion and even after the stock’s Q2 bump, is still only worth half its peak valuation hit in 2022.

While the BHP takeover is unlikely to be revived, M&A among the top of the mining industry seems inevitable, particularly when copper is involved, given the billions of dollars of capital expenditure needed for expansion and just to keep operating mines ticking over, to meet demand for the metal through the next decade.   

Light on lithium 

Three counters dropped out of the top 50 during the first quarter – Brazil’s CSN Mineração, an iron ore miner, China’s Huayou Cobalt and Australian lithium producer Pilbara Minerals. 

At the end of Q2, two more lithium stocks – Perth-based Mineral Resources and China’s Tianqi Lithium – exited the top 50 as the deep slump in prices for the battery metal continues to take its toll.  

Mineral Resources was only just pipped by Ganfeng Lithium and based on its performance so far in July, the Australian hard rock lithium miner may well return to the fold.

Ganfeng was barely holding on at position 50 at end-June and with gold price momentum continuing and two gold mining companies waiting in the winds – Yintai and Alamos – only three lithium counters in the top 50 may be a reality for some time to come. 

After peaking in the second quarter of 2022 with a combined value of nearly $120 billion, the remaining lithium stocks’ market value now barely exceeds $30 billion.  

Can’t top copper  

Copper, gold producers and royalty companies made up 40% of the index at the end of Q2 on par with diversified miners as Pan American Silver, following its absorption of Yamana Gold enters the ranking for the first time and Polish copper giant KGM returns after adding 17% to its market cap during the quarter. 

Talks of a possible reopening of its Panama mine saw First Quantum Minerals’ market valuation nearly doubling in US dollar terms from its low at the end of last year, and the Vancouver-based company is now firmly back in the ranking at #34 after dropping out at the end of last year. 

Amman Mineral continues its run up, piercing the top 10 for the first time after gaining 67% year to date, and 580% since its debut in Jakarta a year ago, lifting the copper-gold company’s market cap to over $50 billion. 

Amman’s Batu Hijau is the third largest mine worldwide in terms of copper equivalent output and has been in production since the turn of the millennium. Amman is also developing the adjacent Elang project on the island of Sumbawa. 

Radiant uranium

While spot uranium prices have retreated back below the triple digit prices hit in January, the combined market cap of the sector is still up 42% from last year this time and together now surpasses that of the lithium counters in the ranking. 

The world’s largest uranium producers – Cameco and Kazatomprom – only made the top 50 in 2021 with the Saskatoon-based company and state-owned Kazakh producer spending years in the wilderness post the Fukushima disaster in Japan. 

None of the smaller uranium companies led by Canada’s Nexgen Energy, valued at a shade over $4 billion, is likely to make it into the top 50 by themselves, but combinations among the rank and file may well be in the offing as interest in the sector and mining M&A in general grows.

Kazatomprom dual-listed in London and Astana in 2018 and Uzbekistan is readying an IPO for Navoi Mining and Metallurgy Combinat – the world’s fourth largest gold mining company and significant uranium producer later this year. 

Navoi would join the ranks of gold producers in the top 50 thanks to ownership of the world’s largest gold mine, Muruntau, and annual production of 2.9 million ounces at grades the envy of the sector.  Navoi will also bring to five the number of companies with exposure to the nuclear fuel in the ranking.

Notes:

Source: MINING.COM, stock exchange data, company reports. Share data from primary-listed exchange at close July 1, 2024 close of trading converted to US$ where applicable. Percentage change based on US$ market cap difference, not share price change in local currency.  

As with any ranking, criteria for inclusion are contentious. We decided to exclude unlisted and state-owned enterprises at the outset due to a lack of information. That, of course, excludes giants like Chile’s Codelco, Uzbekistan’s Navoi Mining (the gold and uranium giant may list later this year), Eurochem, a major potash firm, and a number of entities in China and developing countries around the world.

Another central criterion was the depth of involvement in the industry before an enterprise can rightfully be called a mining company.

For instance, should smelter companies or commodity traders that own minority stakes in mining assets be included, especially if these investments have no operational component or warrant a seat on the board?

This is a common structure in Asia and excluding these types of companies removed well-known names like Japan’s Marubeni and Mitsui, Korea Zinc and Chile’s Copec. 

Levels of operational or strategic involvement and size of shareholding were other central considerations. Do streaming and royalty companies that receive metals from mining operations without shareholding qualify or are they just specialised financing vehicles? We included Franco Nevada, Royal Gold and Wheaton Precious Metals on the basis of their deep involvement in the industry.

Vertically integrated concerns like Alcoa and energy companies such as Shenhua Energy or Bayan Resources where power, ports and railways make up a large portion of revenues pose a problem. The revenue mix also tends to change alongside volatile coal prices. Same goes for battery makers like China’s CATL which is increasingly moving upstream, but where mining will continue to represent a small portion of its valuation.  

Another consideration is diversified companies such as Anglo American with separately listed majority-owned subsidiaries. We’ve included Angloplat in the ranking but excluded Kumba Iron Ore in which Anglo has a 70% stake to avoid double counting. Similarly we excluded Hindustan Zinc which is listed separately but majority owned by Vedanta.

Many steelmakers own and often operate iron ore and other metal mines, but in the interest of balance and diversity we excluded the steel industry, and with that many companies that have substantial mining assets including giants like ArcelorMittal, Magnitogorsk, Ternium, Baosteel and many others.

Head office refers to operational headquarters wherever applicable, for example BHP and Rio Tinto are shown as Melbourne, Australia, but Antofagasta is the exception that proves the rule. We consider the company’s HQ to be in London, where it has been listed since the late 1800s.

Please let us know of any errors, omissions, deletions or additions to the ranking or suggest a different methodology.

Startups like Juicero, famous for $700 a pop “smart” chopped fruit squeezers and being one of Silicon Valley’s dumbest moments, Wag! (oh? you have a dog walking app that sends updates on the frequency and consistency of pet number 2s? – here’s $300 million) and In-Real-Life or IRL, a chat app made for bot to bot communication.

The official definition of a unicorn is a startup with a $1 billion valuation while still a private company. There are more than 1,500 unicorns globally and a variety of investment products that track them.              

Your humble correspondent felt that the mining industry deserves a similar category of company. 

Mining has been starved of cash for years and telling unicorn chasers you are “literally sitting on a gold mine” appears to be a less compelling story to the minds of smart money than saying “we’re going to create an exchange where the shitcoin company A is mining can be swopped for the shitcoin company B to Z is mining” – and call it effective altruism.  

This year copper grabbed the mainstream imagination and became the next big investment thing for a short but glorious moment. It seemed apt that the first MINING.COM list of unicorns should be based on the bellwether metal.

It’s nothing like the Silicon Valley unicorn index because copper is not created out of thin air like Bored Ape Yacht Club NFTs, hot air like Nvidia’s current valuation or by charging cleaning fees like AirBnB.

The MINING.COM Unicorn Index does not compare mining apples with tech apples, or for that matter Juicero’s Sweet Roots (carrot, beet, orange, lemon and apple) with Spicy Greens (pineapple, romaine, celery, cucumber, spinach, parsley and jalapeño).   

Neither is the MDC.CUI there to show that the money invested in startups like Yik Yak, a mobile app for college students to chat with others within a five mile radius that eliminates needless face to face campus interactions, is a waste of money compared to keeping the globe’s lights on.

Or to say that the $1.7 billion Quibi burned through to prove short form videos featuring expensive Hollywood actors had zero chance of going viral is less of a worthy endeavour than building a copper mine that transforms the fortunes of an entire country.   

Or that the $189 million splashed on Quirky, a crowdsourcing platform for new product inventions like the Stem that sprays juice directly from citrus fruit, could have been better spent on the key ingredient for decarbonisation. 

The MDC.CUI was created to say, and let’s stick to the theme, investing in copper makes the juice worth the squeeze even after the squeeze has been squoze. 

Or put another way, investing in copper is what made every aspect of modern life possible (including robot pizza delivery by Zume worth $2.3 billion before going bust). 

The MDC.CUI is a ranking of miners that produce more than $1 billion worth of copper each year. 

At today’s price of $4.41 per pound, or $9,730 a tonne there are 23 and only 23 companies that make the list, producing 12.1 million tonnes annually, or more than half the world’s copper. When copper was hitting all time highs in May the ranking had all of 26 entrants. 

In a world where a graphics card maker’s market cap is not more than twice that of the 100 hundred most valuable mining companies and the yearly money spent on crypto startups (yes, even after FTX, Celsius, BlockFi, the list is long) are not factors more than budgets for copper exploration, the MDC.CUI index would feature 100s of companies.

To be fair there is already a copper unicorn involved in mining. Chaired by a former chancellor of the exchequer UK-based Copper “was created to offer institutional investors a safe entrance into the world of digital assets.” 

And they say irony is dead. 

Copper trading enjoyed blow-out volumes on the way up with the paper equivalent of more than 10m tonnes, worth nearly $115 billion, traded in the most active contract in one 24 hour period on the CME mid-May. That’s more than twice the Dow’s average daily volume in dollars and three times German bunds. 

The shorts squeeze, more of a feature of US trading than elsewhere, is now in danger of turning into a longs bear hug.

With cargoes from Chile and Peru being diverted to North America after the Chinese import arbitrage, another reliable source of volatility and tradeability, evaporated copper futures volumes are back to pre-craze days. Imagine it was fun while it lasted.

A new report by Australian bank Macquarie titled Panama hold’em suggests the copper corrections will continue and forecasts average prices in the September quarter of $9,800. 

Towards the end of the year the copper price should go back above $10,000, says the London-based commodities strategist Alice Fox and analysts from Macquarie’s London, Singapore, Shanghai and Delhi desks.

Not exactly the torment the devil’s copper visited on shorts and longs in 2022 and 2023 then. 

However. 

For prognosticators who believe copper entered a gravity defying phase in April/May and the next stop was $15,000 before going to $40,000 by the end of the decade because of – what else – AI, Fox and Friends have worse news.

(Lest we be accused of double standards, MINING.COM is not afraid to talk our book, but at least the most ambitious copper price prediction quoted on this site was based on the log-normal shape of the grade-tonnage plot of porphyrys. Not data centers and the other recent and equally underwhelming explanations for the new bronze age – more bullets. Or as WSJ had it a year ago – Democrats and the debt ceiling.) 

Even after an upward adjustment in the note, Macquarie sees the long term price at $9,000 ($4.08) in today’s money. 

For the Robinhoods who thought trading copper futures is as much fun as movie theater or gaming stonks, Macquarie’s report at least gives them something to aim at (their emphasis):

“In essence, this [$9,000/t] is an equilibrium price and, given the fact that the copper market is very rarely in equilibrium, we would expect it to, potentially very significantly, overshoot during periods of tightness and undershoot during periods of weakness.”

Macquarie does say the uncertainty surrounding the future of Cobre Panama (hence the title of the note) could have a major impact on market balance and a restart, which the bank has sketched in for late next year, pulls forward predicted surpluses. 

But with or without AI, military demand and Cobre Panama, over a longer horizon Macquarie’s outlook for copper is anything but supercycle-y: 

“To be clear, we do not think a real-terms price higher than this will be needed for supply, including scrap, to play its role in rebalancing the market, nor needed to incentivise more demand destruction through thrifting and substitution. This is in the context of trend demand growth that we project to be very similar to that of the past 20 years, i.e. ~2.5%.

“The energy transition is taking over from China’s urbanisation and industrialisation as the major driver of global demand growth but, in our view, will not necessarily result in an overall acceleration.”

Oof. 

Hat tip: JP

In heavy volume on Monday copper for delivery in July hit a record intra-day level of $5.1990 a pound, or $11,460 a tonne. 

After the equivalent of $68 billion worth of copper lots exchanged hands in 24 hours, the brown metal is up 35% so far in 2024 with most of the gains in the last few weeks. 

Jeff Currie, ex Goldman Sachs and more recently Chief Strategy Officer of Energy Pathways at asset manager Carlyle, told Bloomberg in an interview headlined Copper is the New Oil (not it’s not) that copper “is the highest conviction trade I have ever seen”.  

Goldman had been calling copper at today’s prices for at least three years, but Currie’s reading of the energy pathways now sees copper going to $15,000 ($6.80 a pound). 

MINING.COM has been banging the same copper drum based on the metal’s position at the nexus of the green energy transition, but Currie adds two other tailwinds to green capex demand to get copper to $15k: 

1. Green energy transition
2. AI data centers
3. Military demand.  

Add the long lead times to build new mines (just ask Rio Tinto), tight inventories and Currie says the 2021 call is finally paying off:

“You can’t come up with a better story [..] I’m confident that this time it is liftoff.”  

Currie also points out that only at $15,000 would copper match its inflation adjusted all-time peak reached in 1968 which came on the back of a housing boom in the US. 

Copper peaked at $0.72 in February of 1968 and as it happens, during that tumultuous year McDonald’s first introduced the Big Mac to America. 

The Big Mac, everyone’s favourite deflator, was priced at $0.49 in 1968. Today the Big Mac is a cool $5.99.   

Says Currie: “If you go back to the 2000s and I was as bullish on oil then as I am copper today. You know oil ended up going up from $20 to $140 seven times. The upside on copper here is very significant.”

Not sure exactly where on the 20-140 spectrum copper is trading today but if this is the argument that copper is the new oil, MINING.COM will take it.  

In US trading on Friday copper for delivery in May hit an intra-day high of $4.51 a pound or $9,942 a tonne, up more than 16% so far in 2024 (most of that coming in April) and the highest since the beginning of June 2022. 

The spectacular upward move over the last couple of weeks comes as so-called managed money build long positions – bets on higher prices in future – to the equivalent of more than 2 million tonnes on the London Metal Exchange, a new record. Likewise, long positions on Chicago’s CME copper futures contracts are at levels last seen in January 2018.

BMO Capital Markets in a Friday research note on CESCO Copper Week in Santiago summed up the mood at the conference as “Buoyant but not bullish”.

There was widespread agreement at the conference that, while most market participants were happy with the higher copper price seen over the past month, the recent run has been slightly ahead of fundamentals. 

“In our view, this reflects the heavy inflows towards copper, and commodities as an asset class, a dynamic that many producers were keen to understand more about,” BMO said. “There is some confidence demand can improve further to backstop current price levels, but without this emerging soon the recent rally may prove vulnerable.”

Copper closed regular trading hours Monday at $4.38 a pound or $9,656 a tonne, up 2% on the day bringing year to date gains to more than 12%. Copper is now trading at levels last seen early June 2022. 

The run up over the past few weeks was sparked by pledges from Chinese smelters to cut output by 5%-10% in the face of tighter-than-expected concentrate supply and overcapacity after years of relentless expansion.

New satellite data appears to show China’s so-called Copper Smelter Purchase Team is making good on those promises. 

Latest data from high frequency data provider Earth-i global copper monitoring index shows smelter inactivity in China rose to an average of 8.5%, compared with 4.1% in the first quarter of 2023 and 4% in the same quarter the year before. 

In March inactivity levels in China reached 9%, lifting the gauge to nearly 18% on a global basis. Earth-i points out that inactivity in China jumped sharply in the final days of March indicating the possible impact of CSPT members’ actions, ending the month at 12.8%, according to the UK-based company: 

“Significantly, we are now entering a period of several scheduled maintenance closures, and this is expected to help ease the tight concentrate supply situation which has helped to depress smelter treatment charges (TCs) and by extension smelter profitability.”

Evidence of how desperate Chinese refiners are to source raw material was a recent report that BHP sold concentrate cargoes from Escondida, the world’s largest copper mine, at treatment charges as low as $3 per tonne and refining charges of 0.3 cents a pound to at least one Chinese smelter. 

When prices declined to below $8,000 a tonne in 2023, treatment and refining charges – paid by miners to refiners to convert concentrate into metal – were north of $90 a tonne. 

Shanghai stockpile

Separately Shanghai Metals Markets estimates China produced an annualised 26 million tonnes of semi-wrought copper and copper alloys in March but producers’ operating rate declined to 69.8%, down nearly 7% compared to March 2023 with the rise in copper prices impacting downstream consumption, according to the market data firm.

China was responsible for more than half the world’s 2023 refined copper output of 27 million tonnes and customs data showed strong numbers for unwrought copper and copper concentrate imports in March.   

China imported 1.38 million tons of unwrought copper in the first quarter, up 6.9% from the same period in 2023 while imports of copper concentrate came in at 2.3 million tonnes for March, up 15.3% over March 2023 lifting Q1 cargoes to a shade under 7 million tonnes, up a more modest 5.1% year on year.

Other indicators coming out of China have not been an unalloyed good for the global copper market however. Shanghai Futures Exchange inventory data shows copper stocks continuing to rise with a 2.7% gain over the past week to around 300,000 tonnes. 

BMO Capital Markets cautions bulls saying given the counter-seasonal increase in stockpiles in China the investment bank “feels spot copper prices have moved a little above current fundamentals” and it “would want to see more evidence of underlying Chinese demand to backstop price gains.” 

The historic gold run and copper’s comeback, up 14% and 12% so far in 2024, only kicked into a higher gear after the end of the March quarter, but copper and gold counters nevertheless dominate the best performer list for Q1.  

The lacklustre combined performance of the sector’s majors came despite the revival in the bellwether metals, but the broader market has  been a mixed bag in 2024.  

Aluminium is trading not far off 52-week highs, but zinc seems unlikely to breach $3,000 a tonne any time soon and cobalt is bobbing along historic lows below $30,000 a tonne.

Nickel has been bumped up after lows in the mid-$15,000s last year, but remains firmly stuck in bear territory and lithium’s 2024 good fortune also looks in danger of petering out.

Sentiment towards PGMs has hardly improved with both platinum and palladium drifting lower in 2024. Even iron ore prices back above $100 a tonne – the bread and butter of the diversified majors – was not enough for investors to jump back into the sector.

Gold, copper boost 

First Quantum Minerals with market valuation up 58% in US dollar terms, made a welcome return at position 44 after dropping out at the end of last year following the closure of its Cobre Panama mine. 

Amman Mineral continued its astounding run – the Indonesian copper and gold miner has added 380% in value since its July listing and could soon vie for a place in the top 10. 

Lundin Mining joins the top 50 for the first time, jumping five places to 48 and is already climbing thanks to the red metal approaching 14-month highs.  Lundin’s 25% rise in 2024 also restores Vancouver as the number one location among top 50 headquarters after Pilbara Minerals’ exit this quarter. 

Anglogold Ashanti’s re-entry boosts the number of precious metals miners in the top tier to 10 and their collective value to $183 billion. 

China’s Yintai Gold, which in February picked up Canada’s Osino Resources, could also challenge for a position in the upper echelon from its current 54th position should gold continue to rally, but long term top 50 participant KGHM has a hill to climb to make it back despite shares in the Polish mining company rising 15% year to date.    

Pan American Silver, like its primary metal, could ride gold’s coattails to become the only silver-focused miner in the top 50 following Fresnillo’s exit more than a year ago.  Silver is now the best performing metal year to date, up more than 18%.  

Diversified drubbing 

While the top 50 mining companies as a whole drifted sideways during the quarter, the largest diversified companies faced headwinds going into 2024, and uncharacteristically some of the biggest names in mining feature on the worst performers list for the quarter.  

The only $100bn companies in the ranking – BHP and Rio Tinto – were both down by double digits at the end of Q1 and Glencore’s rerating over the past couple of years went into reverse with declines of 9% in 2024.

Vale’s pullback from its valuation at the end of 2023 places the stock firmly in bear territory with losses of nearly 24% in US dollar terms. The Brazilian giant sold 13% of its base metals unit for $3.4bn to amongst others, the Saudi Arabia’s sovereign wealth fund, but given the performance of nickel a separate listing seems off the table for now.

Anglo American stock had a fairly uneventful Q1 2024 after the sharp H2 2023 sell-off sparked by copper guidance,  PGM and South African power woes, and despite the bad news from its Woodsmith fertiliser project in England. 

Nevertheless, the counter has dropped  below a $30 billion market cap for the first time since the outset of the pandemic and losses for the past 12 months top 30%. Rumours that Glencore may be interested after the Swiss behemoth’s bid for all of Teck Resources fell through have died down, probably for the right reasons. 

The ranking remains top heavy, but as a group the historic top five diversified mining companies’ share of the MINING.COM Top 50’s overall valuation fell to a new low of 29%, down from 36% at the end of 2022.  

China cheer

The historic top 5 diversifieds should in fairness be expanded to seven and include Saudi Arabia’s Ma’aden and Zijin Mining, the highly acquisitive Chinese firm is up over 30% so far this year and appears to be well ensconced in the top 10.

Xiamen-based Zijing at the end of Q1 fell just short of a $60bn market worth (indeed gold and copper’s run in the first week of Q2 has now lifted the stock above that milestone). 

On the best performer list for the quarter, Zijin sits just behind CMOC Group, formerly China Molybdenum and for years before being overtaken by Zijin the most valuable middle kingdom mining stock, and ahead of Jiangxi Copper, which jumps 9 places to 41 in Q1. 

The 10 Chinese companies in the ranking collectively are worth $192bn or 14% of the overall value, up from 8 companies valued at $115bn and 9% of three years ago. 

Lithium loss 

Three counters dropped out of the top 50 during the first quarter.  Brazil’s CSN Mineração, an iron ore miner, China’s Huayou Cobalt and Australian lithium producer Pilbara Minerals.

Pilbara Minerals only just lost out to Kinross Gold for the last spot as at end-March and lithium prices have recovered somewhat this year, but probably not enough for the lithium sector to outperform gold stocks in Q2. 

The merger of Livent and Allkem to form Arcadium Lithium also did not result in an increase in lithium mining’s representation in the ranking.  Arcadium Lithium has been hammered down to below a $5bn valuation this year. 

From its height of a collective $119bn valuation at the end of the second quarter of 2022, the combined value of the lithium stocks in the top 50 has now fallen to $59 billion.

Click on the table below for a full-size image.

*NOTES:

Source: MINING.COM,  GoogleFinance, stock exchange data, company reports. Share data from primary-listed exchange at March 28, 2024 – March 29, 2024 close of trading converted to US$ at cross-rates March 29, 2024. 

Percentage change based on US$ market cap difference, not share price change on exchange in local currency.  

As with any ranking, criteria for inclusion are contentious. We decided to exclude unlisted and state-owned enterprises at the outset due to a lack of information. That, of course, excludes giants like Chile’s Codelco, Uzbekistan’s Navoi Mining, which owns the world’s largest gold mine, Eurochem, a major potash firm, and a number of entities in China and developing countries around the world.

Another central criterion was the depth of involvement in the industry before an enterprise can rightfully be called a mining company.

For instance, should smelter companies or commodity traders that own minority stakes in mining assets be included, especially if these investments have no operational component or warrant a seat on the board?

This is a common structure in Asia and excluding these types of companies removed well-known names like Japan’s Marubeni and Mitsui, Korea Zinc and Chile’s Copec. 

Levels of operational or strategic involvement and size of shareholding were other central considerations. Do streaming and royalty companies that receive metals from mining operations without shareholding qualify or are they just specialised financing vehicles? We included Franco Nevada, Royal Gold and Wheaton Precious Metals on the basis of their deep involvement in the industry.

Vertically integrated concerns like Alcoa and energy companies such as Shenhua Energy or Bayan Resources where power, ports and railways make up a large portion of revenues pose a problem. The revenue mix also tends to change alongside volatile coal prices. Same goes for battery makers like CATL which is increasingly moving upstream, but where mining still makes up a small portion of its valuation.  

Another consideration is diversified companies such as Anglo American with separately listed majority-owned subsidiaries. We’ve included Angloplat in the ranking but excluded Kumba Iron Ore in which Anglo has a 70% stake to avoid double counting. Similarly we excluded Hindustan Zinc which is listed separately but majority owned by Vedanta.

Many steelmakers own and often operate iron ore and other metal mines, but in the interest of balance and diversity we excluded the steel industry, and with that many companies that have substantial mining assets including giants like ArcelorMittal, Magnitogorsk, Ternium, Baosteel and many others.

Head office refers to operational headquarters wherever applicable, for example BHP and Rio Tinto are shown as Melbourne, Australia, but Antofagasta is the exception that proves the rule. We consider the company’s HQ to be in London, where it has been listed since the late 1800s.

Please let us know of any errors, omissions, deletions or additions to the ranking or suggest a different methodology.

Copper’s runup was sparked by pledges from Chinese smelters to cut output by 5%-10% in the face of tighter-than-expected concentrate supply and overcapacity after years of relentless expansion which has lifted the country’s global refining share to over 50%.

Concentrating minds

Evidence of how desperate Chinese refiners are to source raw material is a report out Thursday by Bloomberg that BHP sold concentrate from Escondida, the world’s largest copper mine, at spot treatment charges as low as $3 per tonne and refining charges of 0.3 cents a pound to at least one Chinese smelter. 

That constitutes at least a decade low – when prices declined to below $8,000 a tonne in 2023, treatment and refining charges – paid by miners to refiners to convert concentrate into metal – were north of $90 a tonne. Benchmark annual contracts remain much higher but fell for the first time since 2021.

China would also increasingly compete with India for raw material in 2024 – just this week Adani said it started operating the first unit of its $1.2 billion Kutch Copper smelter. The plant will be the world’s largest single-location copper smelter with an initial capacity of 500kt a year and double that in the second phase of the project. 

Uncertainty remains about the impact of decisions by the so-called Copper Smelters Purchasing Team (CSPT) at its quarterly meeting in Shanghai currently under way. In the initial announcement, the group of 19 smelters stopped short of agreeing to outright coordinated cuts but vowed to rearrange maintenance, limit runs and delay the startup of new projects. 

Indeed, China’s top producer Jiangxi Copper said in its earnings report this week that while it wants to maintain capacity discipline it nevertheless plans to raise copper production this year by 11% to 2.32m tonnes. 

A copper ore export ban in Indonesia coming into effect in June could turn out to be the tipping point for the CSPT. 

ING investment bank in a note also points to signs of still muted demand in China evidenced by inventories on the Shanghai Futures Exchange which have recently hit their highest level since 2020 and are approaching 300kt.

At the same time, as detailed by Andy Home of Reuters, market open interest on the ShFE has jumped to life-of-contract highs and managed money investors on the LME and CME exchanges have sharply increased long positions.

Fears over undersupply

While plummeting TC/RCs have concentrated minds on copper supply, lack of growth and disruptions at mine levels have been plaguing the industry for years, as have worries about depletion and falling grades at the world’s top copper mines (the top 20 mines have weighted discovery year of 1928). 

The biggest bombshell to hit the copper market in decades was the closure last year of First Quantum’s Cobre Panama mine after massive protests in the central American nation. At 350kt of copper in concentrate, the $10 billion Cobre Panama mine accounted for around 1.5% of global copper output.  

The Panama fiasco stands out, but unplanned disruptions are a feature not a bug of the global copper industry. Antipodean investment bank ANZ points out at the beginning of 2023, mine production for 2024 was forecast to grow by over 6% year on year but after only one month this growth forecast decreased to 3.9%.

Anglo American’s move to slash production blaming low grades and high costs led the London-listed company to cut its target for 2024 from 1m tonnes to between 730kt–790kt. ING says output at Escondida, the only copper mine producing more than 1m tonnes per year, is expected to be at least 5% lower in 2025 than it is today.  

ANZ says the average total cash cost of producing a tonne of copper has risen more than 30% to $5,600 over the past three years and while inflation is subsiding elsewhere in the economy, miners continue to face increasing labour and energy costs. 

ANZ raised its supply disruption factor to an above average rate of 6% in 2024. That would be the equivalent of the loss of both the United Arab Emirates and Nigeria’s oil output for the year on crude markets. 

Meanwhile production at Codelco, the world’s top producer of the red metal, is sitting at 25-year lows and the state-owned firm has admitted that promises of a recovery (which have been made many times in the past) should it pan out this time would be slow.  

Five digit copper

Just how quickly conditions can change is clear from the prediction by the Lisbon-based Copper Study Group (ICSG), which as of late October last year was predicting the biggest surplus in a decade on copper markets of nearly half a million tonnes. 

Given developments since then, copper watchers have been forecasting deeper deficits or flipping expected surpluses and upping forecasts for the copper price. 

ANZ sees copper topping $9,000 in the short term and trading above $10,000 over the next 12 months as refined deficits reach 400kt. ING sees copper at $9,000 by the end of the year and concentrate deficits above 1m tonnes in 2025 and 2026. 

This week BMO Capital Markets, not always in the copper bull camp, increased its previous forecast for the long term price of copper to over $9,000. 

Perennial copper bulls Goldman Sachs sees the metal trading at $10,000 a tonne by the end of the year while Capital Economics now sees a $9,250 price by the end of 2024.

As for the long term demand outlook, few analysts have graphs that don’t start in the bottom left corner and end near the upper right.  

The authors point out that 2023 was the first time that more than 50% of BRI engagement was through investments where Chinese investors take equity stakes as opposed to construction contracts, which are typically financed through loans provided by Chinese financial institutions or contractors, often accompanied by guarantees from the host country.

Last year Africa overtook the Middle East as the no. 1 target of BRI projects after a 114% jump in investments and a 47% jump in construction projects on the continent. Investments in Latin America and the Caribbean also doubled last year.  

China’s BRI-related investment in metals and mining reached $19.4 billion in 2023 according to the study, a 158% jump compared to 2022 and the highest on record.  

Minerals and metals investment focused on the green energy transition with copper making up the lion’s share of new project announcements last year, followed by sizable lithium, nickel and uranium spending under the BRI. 

Apart from a giant new copper processing facility in Saudi Arabia, mining investments were focused in Indonesia and various countries in Africa and South America.  

Examples include vertical integration investments by the world’s largest battery manufacturer CATL, which bought shares for a nickel mining concession in Indonesia from PT Aneka Tambang (Antam).

Lithium projects in Mali attracted investment from Chinese firms Jiangxi, Ganfeng and Hainan Mining (through the acquisition of Kodal Minerals) while Zhejiang Huayou Cobalt commissioned a lithium processing plant in Zimbabwe.

Downstream investment in battery and electric vehicle manufacturing also soared, reaching nearly $10 billion, according to the report. The largest investors under the BRI last year were CATL, accounting for more than 15% of overall spending, followed by Zijin Mining at 11%.  

Zhejiang Huayou Cobalt contributed nearly 9% of the total while CMOC (formerly China Molybdenum) and Minmetals each had a 5%-plus share of the $92.4 billion total investments in 2023. 

For 2024, the Griffith Asia Institute sees further growth of Chinese BRI engagement with a strong focus on country partnerships in renewable energy, resource-backed mining and related technologies including EV batteries.  

China consumes more than half the world’s metals and an even greater proportion of iron ore and battery raw materials – and gloom about the country’s economic prospects amid a property and stock market crisis have only added to bearish mining sentiment. 

In a new trading desk note Marcus Garvey, head of Macquarie commodities strategy based in Singapore, and a team of analysts have identified the first green shoots for the sector (and 34 charts to back it up):   

“January’s full set of PMIs (World manufacturing new orders up 1.2pp to 49.8) looks like a potential turning point for the global industrial cycle, with bullish implications for industrial commodities demand.”

Expectations of a smaller reduction in US interest rates this year than previously anticipated have supported the dollar and put metal prices under pressure which usually move in the opposite direction. 

Nevertheless, says Macquarie: “Commodity prices have a far more consistent relationship with global growth than with FX.”

The investment bank also points to US goods demand which it says “increasingly looks to be reaccelerating,” and from a higher base. Macquarie also sees the potential of a developed market manufacturing recovery and a restocking cycle in Europe.”

And while China has so far held off on broad based economic stimulus, fixed asset investment in infrastructure, led by renewables, and certain sectors including autos (particularly electric cars) have shown notable strength.

“Ultimately, if commodity prices are lifted by a pick-up in global industrial production, the implications for goods inflation may become self-inhibiting, by reducing the scope for further central bank easing. 

“But that is an ex-post problem, not an ex-ante one, suggesting to us that dips should now be bought. 

“Selectively at least, in those markets where fundamentals are already relatively tight or have the potential to tighten quickly. Especially if positioning gets short.”

Musk premiered the Cybertruck smashed-window and all in November 2019. The Cybertruck – only the sixth production vehicle in the Tesla stable – sports the company’s proprietary 4680 cells first revealed at its now infamous Battery Day event in 2020.  

The 4680 is a soda can sized cell with a nickel-cobalt-manganese (NCM) cathode and is already powering the 84.6 kWh performance version of its Model Y assembled in Texas. 

The Cybertruck AWD and top of the range Cyberbeast model up that capacity to 122.4 kWh, according to Tesla filings with the US EPA.

Buyers can add a separately installed range extender to get the truck close to the 800km (500mi) driving range initially promised and qualify it for Biden administration’s $7,500 subsidy scheme until the base model becomes available.

Pre-orderly conduct

There is no firm number on the pre-orders Tesla has received. A crowdsourced tally put it as high as two million – a figure that is now widely quoted in the press – while Musk confirmed it is over one million. 

Given the hype surrounding the Cybertruck, two million fans who only had to put down $100 (now $250) for the privilege does not sound outlandish. 

How many Cybertrucks Tesla can produce is also far from being bolted down. 

Tesla told investors last year the company can produce anywhere between 250,000 and 500,000 units per year, but installed capacity at Giga Texas for this year is reportedly only 125,000. 

Elon Musk did admit in December that the Texas plant was in “production hell” and Tesla has a well-earned reputation for overpromising and underdelivering, but in 2023, Tesla did manage to up production 35% to 1.85 million vehicles. 

Mutatis Mutandas

Irrespective of model-version, Tesla’s triangle truck is a battery metals beast. 

If Tesla produces 125,000 Cybertrucks this year, the company would have had to procure around 14,000 tonnes of graphite, 11,000 tonnes of nickel, 10,000 tonnes of lithium carbonate equivalent, 1,400 tonnes of cobalt and 1,300 tonnes of manganese, according to data from Adamas Intelligence, Toronto-based EV supply chain research consultants.

Easily doable and at current prices for these battery metals a bargain, even if you take into account yields all the way up and down the supply chain. Cell manufacture is notoriously tricky and as much as 30% of the raw material entering through the factory ends up as black mass.

At the low end of Tesla’s Cybertruck production target – 250,000 – mining quickly becomes a weightier matter for the company now worth just $582 billion in New York after a horrendous start to 2024. 

Add in those Cybertruck owners who opt for an extra pack in the back and there are tonnes of reasons why Tesla could consider upping its mining investments. 

Under this scenario – still highly conservative given the immense interest in the Cybertruck – Tesla needs the entire nickel output of Glencore’s Murrin Murrin mine in Western Australia and over half its cobalt. 

Fulfill the million preorders and Tesla needs to offtake 100% of Glencore’s annual nickel production, which the Swiss miner said will be between 80,000 and 90,000 tonnes in 2024 and everything Mutanda produced last year. 

Two million? Hope that no-one orders the range extender and Cybertruck assembly lines would need to add half a Norilsk for the nickel (presuming it’s allowed into Texas then) and two-thirds of Glencore’s entire cobalt production. 

Finished stainless steel is about 8%-10% nickel – so there’s that too.

Battery day and night

Natural graphite has been on its own wild ride – down some $300 from this time last year to the early $500s a tonne now. 

To power 1 million Cybertrucks, Tesla needs the natural graphite of the world’s number two producing country, Madagascar, according to the USGS. 

If most drivers want to go the extra mile add half the output of world number three Mozambique or most of fourth-ranked Brazil.    

Much like those that mine the devil’s copper and the goblin’s ore, lithium mining companies – and their investors  – have gone through seven heavens and nine circles of hell since the Cybertruck’s 2019 debut. 

Lithium carbonate equivalent was exchanging hands for $8,500 a tonne at the time on a global weighted average basis, according to Benchmark Mineral Intelligence, a London-based price reporting agency and satellite battery factory tracker. 

November 2022 LCE topped $80,000 a tonne. Today it is around $14,400 a tonne. 

When it comes to LCE, one million Cybertrucks with no big black box in the back, need one Greenbushes, the world’s largest hard rock lithium mine. 

That is, provided the Sino-Australian venture does not cut back further on production to ride out the downturn.

At the end of 2023, the MINING.COM TOP 50* ranking of the world’s most valuable miners reached a combined $1.42 trillion, up a healthy, if far from spectacular $48.7 billion over the course of 2023. Mining’s top tier is also worth $330 billion less than in March 2022.

Metal and mineral markets are volatile at the best of times – the nickel, cobalt and lithium price collapse in 2023 was extreme but not entirely unprecedented. Rare earth producers, platinum group metal watchers, iron ore followers, and gold and silver bugs for that matter, have been through worse.

Mining companies have become better at navigating choppy waters and as a whole the majors performed fairly consistently last year despite geopolitical and market turmoil, but within the ranking, 2023 fortunes were made and lost over what seemed like days.

The forced closure of one of the world’s biggest copper mines – and the subsequent collapse of owner First Quantum Minerals stock – served as a stark reminder of the outsized risks miners face over and above market swings.

Panama root canal

After months of protests and political pressure, at the end of November the Panama government ordered the closure of First Quantum Minerals’ Cobre Panama mine following a ruling by the Supreme Court that declared the mining contract for the operation unconstitutional.

Public figures, including climate activist Greta Thunberg and Hollywood actor Leonardo Di Caprio backed the protests and shared a video calling for the “mega mine” to cease operations, which quickly went viral. 

That mining cobre is at the nexus of the green energy transition is clearly an irony lost on those trying to save the world.  FQM is seeking arbitration and completely winding down operations will take time, but a reopening of Cobre Panama is not on the cards. 

From 25th position in the ranking at the end of March 2022 and a valuation well above $20 billion, the November-December sell off saw FQM drop out of the top tier altogether, ending 2023 at number 58 with a market cap below $6 billion. 

Cobre Panama supplied more than 40% of the company’s revenue, and with nickel prices plummeting FQM has also been forced to suspend operations at its Raventhorpe mine in Australia. 

Amid the inevitable takeover rumours now in circulation, shares in the Vancouver-based company have rallied in 2024, but still not enough to reenter the top 50.

No. 12 with a bullet 

If 2023 was an annus horribilis for FQM it was mirabilis for Amman Mineral Internasional. Stock in the Indonesian firm surged by 269% from its July debut in Jakarta to reach a market capitalisation of more than $30 billion at the end of last year – and number 12 in the ranking. 

That valuation is quite an achievement on annual revenue of $2 billion no matter how fat margins are at the company’s Batu Hijau copper and gold mine.  Batu Hijau is the third largest mine worldwide in terms of copper equivalent output (but no match for Cobre Panama when it comes to the orange metal alone)  and has been in production since the turn of the millennium. Amman is also developing the adjacent Elang project on the island of Sumbawa. 

Amman Minerals’ ascent has minted at least six new billionaires and the stock appears to be building on its success in 2024, rising by double digits in January already.

Indonesia’s other major mining IPO, Harita Nickel, was on a different trajectory altogether. After listing in April and raising $672m, the company has had a tough go of it and the stock has shed more than 38% since then as nickel prices continue to decline.

Shiny gold, dull silver, tarnished PGMs

The price of gold hit an all-time record on December 1, 2023.  But bullion’s best ever level passed without the usual fanfare and despite bullish indications for 2024, gold mining stocks did not exactly storm the rankings of the most valuable miners.

Over the course of 2023 gold and royalty companies on the MINING.COM TOP 50* ranking of the world’s most valuable miners added a collective $20.8 billion in market cap. 

And judging by gold miners’ performance so far this year, gold above $2,000 is not providing enough support. Newmont is already down 17%, Barrick has shed 13% and Agnico Eagle shareholders are 9% poorer. 

The number of precious metals companies in the top 50 has also been relatively stable over the years. With Newmont’s absorption of Newcrest now complete, the open slot was taken up by Kinross, which spent a few years in the wilderness. 

Anglogold Ashanti was just edged out by Jiangxi Copper for position number 50 on the last trading days of 2023, but based on its performance so far in 2024 the London-listed company is already back among the top tier. Indeed Anglogold is the only major gold player in the black year to date.

Silver has not been able to ride gold’s coattails and the top 50 has not had a silver specialist for a few years after Fresnillo dropped out (now at #61) and while Pan American Silver has come close in recent years at the end of last year it made it to #58 only. 

The exit of platinum and palladium majors like Sibanye Stillwater and Impala Platinum, now both valued at less than $4 billion, made space for Royal Gold to reenter at 47 at the end of last year, up from 57th in 2022. 

After a dismal 2023, the sole remaining PGM specialist Anglo American Platinum looks likely to lose more ground this quarter as palladium and platinum prices continue to slide into the new year.

Not too tough at the top 

London-listed Anglo American has had a rough year in part due to its exposure to platinum group metals and control of AngloPlat, and is now valued at $30 billion after peaking at $70 billion in March 2021.  

Were it not for the London-listed company’s iron ore operations, the 40%-plus slump in share value may have been deeper. Rumours that Glencore may be sniffing around now that the Swiss behemoth’s bid for all of Teck Resources has soured is also keeping Anglo from falling further down the rankings .  

Investors in Anglo, with a history going back more than a hundred years on the South African gold and diamond fields, have had a particularly wild ride over the last few years. In January 2016, Anglo’s market cap fell below $5 billion after it came close to suffocating under a pile of debt.  

Against expectations, iron ore seems to be holding above $120 a tonne, Chinese property bankruptcies and Beijing’s tepid stimulus response notwithstanding. 

Iron ore’s resilience despite Chinese troubles has also kept the share prices of the other diversified majors, which make their fattest profits from the steelmaking ingredient, from skidding. 

The top 10 mining companies have been able to keep their share of the total above 50% for a few years now. Not quite the magnificent seven, but size does matter in mining, particularly when access to capital is no longer a headache but a migraine. 

Expectations of another active year of M&A in the sector is likely to make the Top 50 top-heavier, especially now that it’s painfully obvious just how one-commodity companies like the lithium stocks can so easily be derailed. Coal miners’ strong 2023 suggests there are still exceptional minerals that prove the rule.   

Lithium losers 

After defying gravity early on, the combined losses for lithium miners in the top 50 climbed to nearly $30 billion in market cap over the 12 month period. Four counters occupy the worst performance table for 2023. 

The M&A drama surrounding Liontown, Albermarle and Hancock Prospecting turned out to be a soap opera and Chile’s move to take control of its lithium industry now appears far less consequential than feared.

Despite the precipitous decline in lithium prices in 2023, after hitting all time highs above $80,000 a tonne in November 2022, none of the battery metal miners’ stock performance was dire enough to drop out of the Top 50.

The merger of Livent and Allkem to form Arcadium Lithium could in fact up lithium mining’s representation in the ranking to seven should Pilbara Minerals’ January bleeding be stanched. But with lithium prices far from stabilizing, the battery metal’s presence in the top 50 may fade further. 

Pilbara Minerals, which unlike its peers was still able to show share price gains last year,  joined the Top 50 last year, bringing the number of companies based in the Western Australia capital to five, surpassing the tally of Vancouver, BC as the top home base in the ranking. 

With the exit of First Quantum, three mining companies in the top 50 call Vancouver home while the return of Kinross saw the ranks of Toronto-headquartered miners move back up to four.  

Nuclear options

Uranium prices more than doubled during 2023 and recently hit triple digits for the first time in 16 years. The breakthrough for the nuclear fuel comes after a decade in the doldrums following the Fukushima disaster in Japan.

Canada’s Cameco made the best quarterly performer list once again in Q4 and after doubling in market worth in 2023.  The Saskatoon-based company now sits at no 23 in the ranking after jumping 22 places since end-2022.    

The value of shares in Kazatomprom, the world number one uranium producer, topped $10 billion at the end of 2023, placing it at position 38.  Until last year the state-owned Kazakh company was outside earshot of the Top 50 since its dual-listing in London and Astana in 2018.  

None of the smaller uranium companies are likely to pierce the top 50 by themselves, but combinations among the rank and file may edge in when countries aiming to ditch fossil fuels stop thinking they can have their yellowcake and eat it too.

*NOTES:

Source: MINING.COM, Morningstar, GoogleFinance, company reports. Trading data from primary-listed exchange at December 28 2023 to January 2, 2024 where applicable, currency cross-rates January 2, 2024. 

Percentage change based on US$ market cap difference, not share price change in local currency.

As with any ranking, criteria for inclusion are contentious. We decided to exclude unlisted and state-owned enterprises at the outset due to a lack of information. That, of course, excludes giants like Chile’s Codelco, Uzbekistan’s Navoi Mining, which owns the world’s largest gold mine, Eurochem, a major potash firm, and a number of entities in China and developing countries around the world.

Another central criterion was the depth of involvement in the industry before an enterprise can rightfully be called a mining company.

For instance, should smelter companies or commodity traders that own minority stakes in mining assets be included, especially if these investments have no operational component or warrant a seat on the board?

This is a common structure in Asia and excluding these types of companies removed well-known names like Japan’s Marubeni and Mitsui, Korea Zinc and Chile’s Copec. 

Levels of operational or strategic involvement and size of shareholding were other central considerations. Do streaming and royalty companies that receive metals from mining operations without shareholding qualify or are they just specialised financing vehicles? We included Franco Nevada, Royal Gold and Wheaton Precious Metals on the basis of their deep involvement in the industry.

Vertically integrated concerns like Alcoa and energy companies such as Shenhua Energy or Bayan Resources where power, ports and railways make up a large portion of revenues pose a problem. The revenue mix also tends to change alongside volatile coal prices. Same goes for battery makers like CATL which is increasingly moving upstream, but where mining still makes up a small portion of its valuation.  

Another consideration is diversified companies such as Anglo American with separately listed majority-owned subsidiaries. We’ve included Angloplat in the ranking but excluded Kumba Iron Ore in which Anglo has a 70% stake to avoid double counting. Similarly we excluded Hindustan Zinc which is listed separately but majority owned by Vedanta.

Many steelmakers own and often operate iron ore and other metal mines, but in the interest of balance and diversity we excluded the steel industry, and with that many companies that have substantial mining assets including giants like ArcelorMittal, Magnitogorsk, Ternium, Baosteel and many others.

Head office refers to operational headquarters wherever applicable, for example BHP and Rio Tinto are shown as Melbourne, Australia, but Antofagasta is the exception that proves the rule. We consider the company’s HQ to be in London, where it has been listed since the late 1800s.

Please let us know of any errors, omissions, deletions or additions to the ranking or suggest a different methodology.

Livent invests in EnergySource Minerals DLE technology ILiAD

Livent announced it has acquired a minority stake in ILiAD Technologies’ parent company, a subsidiary of EnergySource Minerals. The companies did not disclose financial details of the deal. 

The ILiAD absorption DLE technology has been under development for seven years, principally for the Salton Sea geothermal resources in California. Livent will have the right to license ILiAD at its Hombre Muerto operation in Argentina where commercial utilization could begin as early as 2025. Livent is also reviewing opportunities to apply it elsewhere within its portfolio.  

As previously forecasted by Adamas, M&A in the 3rd party DLE space is gaining momentum. The move is particularly fascinating when considering Livent’s 25-year history with absorption DLE. A closer look into Livent’s operational metrics reveals deficiencies in their water, energy and carbon footprint. This possibly explains why we’re seeing this deal today.

Bolivia signs $450m deal with Russia’s Uranium One

Bolivian state’s YLB has signed a deal with Russia’s Uranium One to the tune of $450 million.

The funds will be used over several years to build a pilot plant at the Uyuni salar. 

The initial scale will be 1 ktpa lithium carbonate before eventually scaling up to 14 ktpa. 

A tangible development in Bolivia’s long-awaited entrance into lithium production. The mammoth lithium reserves at Uyuni will undoubtedly require significant technical work, given their challenging brine characteristics and elevation. 

Winsome Resources releases long awaited maiden MRE at Adina

Winsome Resources announced this week a maiden Mineral Resource estimate (MRE) for its Adina project in Quebec, Canada.

The MRE stands at 58.5 Mt grading 1.12% Li2O (100% inferred) using a 0.6% cut-off. The resource is based on 27,600m of drilling along a 1.3km strike length at 100 x 100m spacing. 

A separate 25,000m of results are being assayed with an MRE update expected in H1 2024. The company also expects to undertake a further 50,000m drill program in 2024. Five drill rigs are currently on-site conducting infill and extensional drilling along the full 3.1 km strike of identified spodumene mineralization. 

The drill program has been exceptionally efficient, yielding 2.14 Mt/km. The results solidify Adina as a premier North American hard rock deposit worth paying attention to in 2024. The two pegmatites identified at Adina are adjacent to one another, thick, high grade and near surface which offer attractive open pit potential. 

Volt Lithium releases Rainbow Lake PEA

Volt Lithium released its PEA for the Rainbow Lake oil field brine project in Alberta, Canada, this week.

The company envisions a three-phase 1 / 5 / 23 ktpa LiOH DLE operation over a 19-year life of mine. The study features the company’s proprietary DLE process which has undergone pilot scale testwork. 

Total CAPEX required is $1.5 billion (including 10-15% contingency) while operating costs range from $3,276/t to $4,454/t LiOH ($3,722/t to $5,165/t LCE). Volt has also entered into a capital expenditure recovery program and cost sharing arrangement with a private oil and gas company which features in the project economics. Using a flat price of $25,000/t LiOH the NPV8% post-tax comes in at $1.1 billlion. 

With average grades of 49 – 92 mg/L Li, it is easy to be skeptical of the low operating costs featured in this PEA (though the cost estimates are class 5 which encompasses a +50% uncertainty margin). The purported synergies with a 3rd party E&P company are also an intriguing feature worth paying attention to as more details emerge. 

Arizona Lithium adds 0.6 Mt LCE to Prairie MRE

Arizona Lithium this week announced an update to their Mineral Resource estimate (MRE) at the Prairie project in Saskatchewan, Canada.

By appending more land packages, 0.6 Mt LCE was added onto their resource base for a total of 6.3 Mt LCE at 105 mg/L Li concentration (71% in the inferred category). 

The company is preparing a PFS due for release this month which will feature the company’s proprietary ion exchange resin. 

The news is unlikely to have a material impact to the project economics which should be revealed next month. 

Atlas Lithium secures $50m funding for Minas Gerais project

Atlas Lithium has received commitment of funding from China’s Chengxin and Yahua for $50 million, it announced this week. Funds will be used to construct Phase 1 of the Minas Gerais project in Brazil. 

$10 million will be placed as new equity at a 10% premium to recent VWAP, while $40 million will be product prepayment. The funding is in exchange for 80% offtake of Phase 1’s 150 ktpa spodumene concentrate output, split equally between the two parties.

The company is scoping out a modular dense media separation (DMS) concentrator design. A maiden resource and PEA is yet to be announced, although targeted for Q1 2024, while a DFS for Phases 1 & 2 (300 ktpa) is targeted for Q2 2024.  

This funding is very encouraging for one of the fastest development stories we’ve seen. However, hand-in-hand with speed to market is pronounced design and execution risks which the company will need to tightly manage going forward.

Green Technology Metals releases PEA and obtains ML

Green Technology Metals released PEA results for the Seymour/Root project in Ontario, Canada this week. The company also announced it has received the project’s Mining Lease.

The phased development starts with Seymour’s $212 million DMS-only plant producing ~207 ktpa of 5.5% Li2O concentrate. Root’s $350 million DMS & Flotation plant would extend this production rate out for a total of 15 years. LOM operating costs are calculated at $938/t SC5.5. Using a weighted average price of $2,029/t SC5.5 FOB Thunder Bay, the NPV8% comes in at U$892 milllion. 

An optional $798 million chemical plant was scoped at Thunder Bay which could produce 24,400 tpa LiOH. The plant adds an incremental NPV8% of $238 million. 

The company looks to accelerate the project’s development with a DFS and possible FID planned in 2024. 

Having to build two separate concentrators for a 15-year project weighs heavily on capital efficiency metrics. Further, operating costs are relatively high, owing to such factors as location, a 21.1 strip ratio and 1.09% Li2O average grade. 

Latin Resources adds 18.3 Mt to Colina deposit MRE

Latin Resources announced this week an updated Mineral Resource estimate (MRE) for the Salinas project in Minas Gerais province, Brazil.

18.3 Mt was added to the principal Colina deposit, which now sits at 63.5 Mt grading 1.3% Li2O. 41 Mt are now contained within M&I categories, up from 30 Mt. 

In addition, a separate deposit known as Fog’s Block was defined at 6.8 Mt grading 0.9% Li2O. The project’s global MRE now sits at 70.28 Mt grading 1.27% Li2O. 

Drilling is ongoing with 16 diamond drill rigs, as the company looks to define Mineral Reserves. DFS is targeted for completion in mid-2024. 

The Colina deposit appears to be mostly tapped out in terms of scale. As such, resource growth is dependent on prospects along strike. To this end, an aggressive 16x rigs will be used for infill drilling prior to the DFS, while some highly prospective targets offer upside potential. 

Power Minerals releases PEA for its Rincon DLE project

Power Minerals released the PEA results for its Rincon project in Salta province, Argentina. The project employs SunResin DLE technology to extract ~7,000 tpa Li2CO3 over 14 years from its 292 kt LCE resource. 

The estimated CAPEX came in at $216.55 million with an operating cost of $7,786/t Li2CO3. Using an average lithium carbonate price of $27,600/t the NPV10% post-tax came in at ~$309 million.  

The operating costs are in the upper percentiles relative to DLE competitors, even much higher than competing Latin American companies looking at using SunResin. It is possible the especially rural location of the project is probably driving this, and/or the high sulphate contained in the brine.

Vulcan Energy launches €40 million DLE optimization plant

Vulcan Energy launched its Lithium Extraction Optimization Plant in Germany last week.

The plant tests the brine-to-LiCl intermediate DLE flowsheet which was designed and refined from earlier pilot plants. The purpose of the plant is to optimize operational parameters, train staff and for product qualification. 

The plant uses absorption-type DLE technology on a geothermal brine resource containing 181 mg/L Li. After power generation and DLE steps, reverse osmosis concentrates eluate prior to purification steps which includes ion exchange and crystallization of select impurities. 

The product is a 40% lithium chloride which proceeds to a separate electrolysis and crystallization process to create lithium hydroxide. 

The operational readiness of advanced DLE projects such as ZCL might catch some observers off guard as projects ramp in coming years. 

SQM acquires 20% stake in French DLE company, Adionics

The world’s largest lithium producer, SQM, announced in its 3rd quarter results the acquisition of a 20% stake in French direct lithium extraction company Adionics. 

The deal was worth $20.3 million valuing the firm at $101.5 million. Adionics is developing its cold lithium extraction and hot regeneration process which derives from its research in desalination.  

SQM has a target to reduce water consumption by 50% by 2030, yet little information has been released to date as to how. Given this timeframe, DLE technology acquisition would be the most logical option. DLE technology acquisitions is a trend we expect more broadly throughout the decade.

Lake Resources adds 2.5 Mt LCE to MRE

Lake Resources announced this week an updated MRE for its Kachi DLE project in Catamarca province, Argentina. 

The total resource now stands at 10.6 Mt of LCE (up from 8.1 Mt) with a 223 mg/L Li concentration. Confidence has improved with 69% now in measured and indicated categories (up from 36%). 

The expansion results from step out wells which encountered lithium bearing brines over 600m deep. 

The material update is the M&I upgrade as it feeds into the upcoming DFS reserve estimate. The scale of the resource, although impressive, offers strategic value in the long term only as it is beyond the comprehension of a financeable plant size. 

Standard Lithium announce DLE test work results

Standard Lithium released DLE test work results from its demonstration plant in Arkansas this week. 

The plant uses Koch Industries LiPROTM LSS, an absorption type DLE system. Over a given 2-month period the process was able to recover 96.1% of lithium on average in the DLE step only. Impurity rejection averaged over 99% and boron rejection averaged over 95%. 

The parameters exceed the goals of the company set in its last DFS publication, which is encouraging. If these recoveries are to be relied upon, the effective whole-of-process Li recovery could be some of the highest in the industry.

Infinity Lithium unveils ‘new look’ Scoping Study for the San Jose project in Spain

Infinity Lithium announced updated Scoping Study results for its San Jose zinnwaldite project in Spain this week. The company envisages an underground mine feeding a 2 Mtpa hydromet plant. Crushed ore is put through a high-pressure sulphuric acid leaching process to produce lithiumsulphate before neutralization, impurity removal and causticisation to lithiumhydroxide. Relative to the 2021 PEA which used a flotation and sulphate roast water leach process, recoveries are now 90% (from 53%) resulting in 33 ktpa of lithium hydroxide output (up from 19.5 ktpa). 

The initial CAPEX is $1,544 million (including 20% contingency), while the operating cost EXW Spain is estimated at $5,922/t LiOH.H2O including by-products ($6,730/t LCE). Using a flat price of $27,000/t LiOH.H2O the NPV8% comes in at $2.87 billion post-tax.  

The ambitious project now shares a capital intensity in line with Thacker Pass and perhaps equally as difficult regulatory and technical challenges. The project will sure test the determination of Europe on its quest for lithium self-sufficiency.

Sibelco – Avalon joint venture finalised

Avalon Advanced Materials and Sibelco have closed a joint venture agreement, first announced in June 2023. Avalon contributes its Canadian hard rock lithium assets in return for ~€34.87 million (~C$51.3 million) JV cash contribution, resulting in a 60/40 Sibelco-Avalon JV. Concurrently, Avalon has issued a private placement to Sibelco raising C$10 million for 19.9% of Avalon’s shares together with a C$3 million secured loan. 

The deal involves the PEA stage Separation Rapids petalite-lepidolite project and the exploration stage Lilypad cesium-tantalum-lithium(spodumene) asset. Avalon is working with Metso to develop a petalite concentrate to lithiumhydroxide processing facility in Thunder Bay, Ontario. 

Although not your typical spodumene M&A event, the JV is a healthy development for Ontario and its lithium-bearing mineral projects which need some encouragement when competing with the likes of Quebec or Western Australia. The implied valuation of C$143/t LCE is decently high when considering market conditions and the rate of progress seen on the project. 

POSCO signs MOU to invest in oilfield brines

POSCO has signed an MOU with a private investment company Invest Alberta Corporation with the intention to invest in oilfield brine lithium extraction projects. 

The scope is broadly set to evaluate exploration and development opportunities with viable commercial processes for lithium extraction. 

Invest Alberta Corporation will provide administrative support, critical resource development information, tax incentives, and networking opportunities. 

In a culture where MOUs are taken seriously, so should the intentions of POSCO here. The company is not shy with trying different approaches, such as its phosphate precipitation technology being put into practice at the Hombre Muerto salar, Argentina. 

Azure Minerals enters binding takeover bid with Chile’s SQM

Azure Minerals has entered a binding scheme implementation deed with SQM for A$3.52 cash per Azure share. Azure’s core asset is 60% ownership of the pre-resource Andover hard rock project in the Pilbara region of Western Australia. The deal implies a project valuation of A$2.71 billion ($1.71 billion) on a 100% basis. The Creasy Group holds the remaining 40% and is free-carried to FID. 

SQM was an early investor in Azure, picking up 19.99% of the company for A$20 million in January this year. Following drill success, the company revealed SQM had made a takeover offer at A$2.31 per share, which was not pursued. 

Andover has an exploration target of 100 to 240 Mt grading between 1.0% to 1.5% Li2O. 

The hefty valuation implies a resource somewhere in the middle of the exploration target. Given the project’s vast network of pegmatite outcrops with initial proof of spodumene mineralization, this outcome would not be unreasonable, however it will be many years before value is realized. Highlighted once again are the great lengths mining insiders are going to secure the rock.

SQM moves in on 1,411 km2 of prospective Pilbara land

SQM has agreed to acquire up to 40% interest in Pirra Lithium, a privately held JV with tenements in the Pilbara region of Western Australia. 

A 30% interest will be acquired from JV partner Hoama Mining for A$2.5 million cash with the remaining 10% earnt via A$3 million JV contribution. 

JV partner Calidus Resources retains its 40% stake by contributing A$2M. Hoama is also contributing additional tenements to the JV on a earn-in basis and may earn back shares now worth ~7.3% should a resource of >20mt @ >1.0% Li2O be delineated. 

SQM appears to target repeat success following its pre-discovery investment into neighboring Azure Mineral’s Andover project.  This strategy is either an objective growth opportunity or continued diversification from its Chilean operations following the country’s nationalization initiatives.

Atlantic Lithium obtains mining license for Ewoyaa project

Atlantic Lithium has been granted a Mining License for its Ewoyaa lithium project in Ghana. 

The terms include an increased Government of Ghana free carried interest of 13% (from 10%) and a 10% royalty rate (from 5%). 

In addition to the previous announced 6% earn-in interest from the Minerals Income Investment Fund of Ghana, Atlantic will own 40.5% of the project once in production, down from 45%. 

For one of Africa’s most promising development projects this is a significant de-risking event. Although the deal destroys value to Atlantic shareholders relative to previously held assumptions, it is a typical compromise observed in late-stage projects especially when the underlying commodity has seen value appreciation.

Azimut / SOQUEM confirm Adina extension with 78m visual spodumene intercept

Azimut Exploration and Quebec province-owned SOQUEM have intercepted spodumene pegmatites at their Galinée project adjacent to the Winsome Resources Adina discovery. 

Intercepts of up to 78.4m were made, the geometry of which is interpreted to be a possible subparallel zone above Adina’s “Main Zone”. Another intercept of 26.85m is interpreted to be an extension directly down-dip of the Main Zone. Assays are pending. 

The company’s drill program has also been extended to >5,000m to further delineate the extensions.

Although not entirely unexpected, the news is notable as it adds color to the significant and evolving story of Winsome’s Adina discovery. 

Vulcan receives A$200m letter of support from Australian ECA

Vulcan Energy has received a conditional, non-binding letter of support for A$200M of debt finance from Export Finance Australia. 

Funds will be used for Phase One of its Zero Carbon Lithium Geothermal DLE project in Germany. To date, similar in-principle agreements have been received from French, Italian and Canadian ECAs. 

Phase One’s DFS CAPEX estimate of €1,496 million is set to be updated in the upcoming Bridging Study. Thereafter, equity financing will formally commence in November 2023. Vulcan is targeting project level debt-to-equity ratio of 65:35%. 

This broad-based ECA support is an encouraging lead-in to equity negotiations, which will be crucial in realizing one of the European continent’s (and the industry’s) most ambitious projects.

Lithium Energy updates Solaroz MRE

Lithium Energy Ltd has published an updated MRE for its Solaroz brine project in the Olaroz salar, Jujuy province, Argentina. 

The contained lithium remains unchanged at ~3.3 Mt LCE, though 2.4 Mt LCE has been upgraded from inferred to indicated category. The total resource brine concentration sits at 305 mg/L (from 310 mg/L).

The resource specific yield dropped ~36%, from 11.4% to 7.3%, upon inclusion of lab porosity test data to correlate with downhole BMR porosity data. The previous MRE relied solely on BMR results from 3 of 8 wells.

Highlighted is the risks in publishing a resource with immature datasets. Here, the old 3.3 Mt LCE inferred resource has effectively reduced to 2.1 Mt LCE only to be offset with the inclusion of additional volume.

Albemarle – Liontown Resources takeover fallout

Albemarle has pulled out of its A$6.6 billion ($4.2bn) takeover bid for Liontown Resources citing “growing complexities associated with executing the transaction”. 

The move follows Gina Rhinehart’s accrual of 19.9% of Liontown shares. The company was placed into a trading halt before releasing details of a funding package aimed at bringing Kathleen Valley into production. 

The package consists of A$376 million equity (via institutional placement and a shareholder purchase plan) and A$760M debt (from a syndicate of commercial banks and government credit agencies). The equity is being raised at A$1.80 per share, a substantial drop from Albemarle takeover offer of A$3.00 per share. 

The eye-watering 40% drop in valuation is a spectacular conclusion to this high-profile M&A saga. Highlighted are the divergent views of lithium production value by strategic interests versus financial speculators at present.

Chilean lithium strategy underway with binding Lithium Power offer

Lithium Power International (LPI) has entered a binding scheme implementation deed with state-owned Codelco for A$0.57 cash per LPI share, with an implied valuation of ~A$385M. LPI’s core asset is the shovel-ready Maricunga brine project in Chile.

The deal is supported by LPI’s board “in the absence of a superior proposal”, and is subject to approval from shareholders, an independent consultant and the Australian Government’s FIRB. The project’s declared resources total 2.88 Mt LCE, while a 2022 DFS using a volume-weighted-average price of ~$24,800/t LCE placed a NPV8% of $1.41Bn post-tax. 

No matter the chosen evaluation metric, the valuation is considerably lower than recent Argentinian deals. This is reflective of an M&A process lacking competitive price discovery, as to bid is to compete directly with government.

Bullish for locking up future supply, the precedent should not inspire confidence for Chilean developers as it speaks more to asset nationalization than it does “private-public partnership”. To be fair, the accompanying Tsingshan news is a solid example of the latter.

Chile selects Tsingshan Antofagasta lithium cathode plant proposal

China’s Tsingshan (under subsidiary Yongqing Technology) will invest $233.2 million in a 120 ktpa lithium iron phosphate (LiFePO4) cathode plant in northern Chile. Chilean President Gabriel Boric recently visited China where the announcement was made. 

As part of the deal, Tsingshan has preferential pricing on 11,244 tpa of lithiumcarbonate from Chile’s SQM (until 2030). Chilean economic development agency Corfo announced a similar deal for Chinese company BYD back in April 2023. 
Tsingshan’s plant will create 668 jobs but is also aimed at “transferring knowledge” to Chile as part the broader National Lithium Strategy. 

The initiative is a bold but clever means to upskill local industry while using favorable access to the word’s lowest cost lithium units as incentive.

Develop Global achieves key milestone in Essential Metals acquisition

Develop Global Limited (DVP) has progressed through a positive shareholder vote for the takeover of Essential Metals (ESS). The transaction conducted via 1:6.18 equity swap valued the project at A$152.6 million when initiated in July 2023. 

The target asset is the scoping study level Pioneer Dome project near Kalgoorlie, Western Australia, which hosts a 11.2 Mt resource at 1.16% Li2O. A number of formalities remain until the transaction is finalized, including a Federal Court of Australia hearing and an independent consultant review, set to conclude on or about the 6th of November 2023. 

First initiated with a failed bid from Tianqi Lithium, the 11-month long sale process received an 93% affirmative vote which is unsurprising given the deterioration of market conditions throughout 2023.

Lithium Ionic publishes PEA and updated MRE for Bandeira project

Lithium Ionic announced its PEA results based on an updated MRE for its Bandeira project in Minas Gerais, Brazil this week. The project now hosts 29.5 Mt grading 1.37% Li2O, including 2 Mt and 11.72 Mt at 1.40% Li2O in measured and indicated categories respectively. 

The company envisages an underground mine feeding a 1.3 Mtpa DMS plant, producing both a spodumene concentrate 5.5% Li2O product along with a SC 3% Li2O product via a DMS tailings recovery circuit. The initial CAPEX is $232.8 million, while the all-in sustaining cost CIF China is estimated at $469/t SC5.5 equivalent. Using a CIF $1,859/t SC5.5 price the NPV8% comes in at $1.6 billion post-tax. 

Another formidable Minas Gerais project is scoped out. What the development plan achieves on such a tiny tenement may surprise skeptics. The DMS-only plant is comparable to Sigma and Latin, however with the sublevel stoping, throughput is capped and as a result CAPEX intensity is considerably higher. Impressively, OPEX is contained at a level between Sigma and Latin which in a global context is not a bad place to be. 

Anson Resources project consolidation adds 45% to MRE

Anson Resources announced a 45% increase to its mineral resource estimate to 1.5 Mt LCE for its Paradox brine project in Utah, USA. The additional resources derive from the acquisition of the neighboring Green Energy LithiumProject.
 
The combined resource now has a lithium concentration in brine of 112 ppm and 3,023 ppm bromine. The advanced stage oilfield brine project aims to use Sunresin’s absorption + membrane direct lithium extraction technology which is operational in China. 

The project consolidation is a positive step for Anson, however, its rank remains among USA peers using “unconventional” technology with high CAPEX intensity, posing challenges.

Core Lithium adds confidence and ~400 kt to BP33 resource

Core Lithium announced a mineral resource upgrade for the BP33 resource, now 89% in measured and indicated categories (from 69%). 

In aggregate, 400 kt of ore has been added for 10.5 Mt at 1.53% Li2O (from 10.1 Mt at 1.48% Li2O) for an incremental +9 kt of contained Li2O. 

The underground target is the second in a line of ore bodies to be exploited at the Finniss lithium operation, near Darwin, Northern Territory, Australia. 

The project now totals 31.1 Mt of resources (not including depletion from Grants). Underground development is subject to a final investment decision in early 2024. 

Any increase in confidence, whether in resource or metallurgy, is especially meaningful to Core at this stage as it recovers from its subpar DMS-only concentrator ramp-up.

Green Technology Metals adds 2 Mt to Root Bay MRE

Green Technology Metals announced a mineral resource upgrade for the Root Bay resource, adding 2 Mt for a total 10.1 Mt grading 1.30% Li2O (from 8.1 Mt at 1.32% Li2O) for an incremental +23 kt of contained Li2O. 

Root Bay is now the company’s largest single resource, spanning 1.3km and remains prospective along strike. There are currently two drill rigs on site testing extensions with an 8,440m 46-hole drill program. 

The momentum of resource building at Root Bay is encouraging, although tonnes continue to be added at considerable depth. Furthermore, the success is at odds with the companies plans to develop the asset after Seymour and accompanying hydroxide facility, a decision likely due to favorable infrastructure connectivity.

Azure Minerals releases metallurgical testwork from its Andover project

Azure Minerals announced sighter metallurgical testwork results from its Andover lithium project in the Pilbara region of Western Australia. Three samples tested from the “Target Area 1” showed sub-economic HLS / DMS results which were not disclosed.

Flotation testwork on one sample at a grind size of P100 212 µm returned a concentrate grade of 5.59% Li2O at 82.37% recovery. Mineralogical analysis on this sample returned 2.05% iron(III) oxide, a key deleterious element. Moving forward, flotation testwork will be a focus as seven drill rigs continue resource definition on site.
The results advocate a fine grind whole-of-ore flotation with magnetic separation, translating to theoretically higher capital and operational costs. In the context of Azure’s recently rejected A$901 million takeover bid from SQM, the news highlights the criticality of metallurgical testwork as a pre-condition to tonnage & grade value realization. This holistic perspective is central to Adamas Intelligence’s analysis process.

Tantalex Resources publishes PEA for the Manono Tailings project

Tantalex Resources announced its PEA results for its Manono Tailings project in the Democratic Republic of the Congo this week.

The company conceptualizes historic tin mine tailings as feed for a 1.6 Mtpa DMS + fines flotation plant, recovering a spodumene concentrate 5.5% Li2O product for shipment out of Dar Es Salaam, Tanzania.

The initial CAPEX is $148 million, while the cash cost FOB is estimated at $1,002/t SC5.5. Using a flat price of $2,800/t SC5.5 FOB, the NPV10% comes in at $764 million pre-tax.

The valuation seems unreliable given aggressive price assumptions, project sizing and 6-year life of mine. However, with more drilling and tin & tantalum credits the plant may be justified, particularly if underpinned by development of the regions principle lithium project (AVZ Minerals).

Sibanye Stillwater gives the green light to Keliber Oy Phase Two

Sibanye Stillwater announced the approval of phase two of its Keliber integrated lithium project in Finland this week. The second phase includes the concentrator and develops the first of four open pits. Phase one’s 15,000 tpa lithium hydroxide refinery kicked off construction in February.

The total project capital estimate was also updated to €656 million, which is 11.5% higher than the €588 million estimate from the October 2022 DFS. Included is €10 million worth of flowsheet upgrades purported to increase recoveries, ensure environmental compliance, and maintain the project’s net-present value.

Continued momentum in Europe’s first integrated hard rock lithium project is encouraging. The late-stage capital cost upgrade is not uncommon particularly in the context of global inflationary pressures.

In a surprise move, China’s top battery manufacturer CATL will supply Tesla with lithium iron phosphate (LFP) batteries for Model 3 production at its newly built $2 billion factory outside Shanghai.

A follow up a year later confirmed the blow was bigly:

Cobalt, nickel free electric car batteries are a runaway success

Few months in, LFP Model 3 already commands 5% of global EV market, counts for 21% of Tesla battery capacity hitting roads–even before key patent expiry next year. 

The iron fist    

It’s January 2024, and unfortunately for said cobalt and nickel bulls the blow from the iron fist is even more severe than feared. And the runaway success has become a battery-powered juggernaut.  

During that month nearly four years ago when Elon Musk first announced the move to LFP batteries, the cathode chemistry contributed less than 50 tonnes to overall battery metal demand, according to Adamas Intelligence, Toronto-based research consultants tracking demand for EV batteries by chemistry, cell supplier and capacity in over 110 countries.

The 50 tonnes LFP batteries used were a fraction of the nearly 13,000 tonnes of lithium, graphite, nickel, manganese and cobalt that found their way into the batteries of electric passenger cars sold during February 2020.

NCM (nickel-cobalt-manganese) and Tesla-Panasonic’s NCA (nickel-cobalt-aluminum) dominated the market for electric cars at the time. LFP fares badly against ternary cathode batteries in terms of energy and power density and therefore charging time and range. LFP’s cold weather performance is also significantly worse, but is hard to beat when it comes to cost, is better at thermal stability not catching fire and lifespan. 

Musk had long voiced concerns about nickel supply – once saying that he called up all the big mining CEOs to ask them to please make (sic) more nickel. Thrifting out cobalt was also a priority at the Texas-based electric car pioneer with Musk saying publicly that Teslas were virtually cobalt-free while simultaneously inking offtakes with Glencore. 

At the time, LFP was associated with tiny and tinny city runabouts like the Wuling Hongguang Mini EV Macaron (not making that up and yes, there is a cabrio version and it’s called the FreZe Froggy in Europe), end-mile delivery vans, buses and other special purpose vehicles. 

Range then as now was a top concern for those looking to electrify and the Wuling Mini EV (a GM joint venture creation now available in the top-of-the-range Gameboy Edition; look it up) only managed around 100 miles in lab conditions. 

The Mini EV surpassed the Tesla Model 3 as China’s bestselling EV in 2020. A sticker price of less than $6,000 clinched it.

Like other outlets, this one was skeptical of the idea that LFP fitted well with Tesla’s luxury and sporty carmaker image.

We were wrong. Sorry again Mr Musk.

Build your nickel, cobalt free dreams

Weeks after Tesla’s Shanghai surprise, LFP received what turned out to be an even bigger boost to its build out.  

In March 2020, BYD “unsheathed to safeguard the world” its Blade batteries. The Shenzhen-based auto and battery manufacturer’s breakthrough technology compensated for the inherent energy density limitations of LFP by cramming more cells into battery packs. 

BYD even said at the event (online only – this was March 2020 after all) it was happy to share the technology with all interested parties. Much was made of the safety of LFP over NCM. BYD shifted its entire range to LFP.

The month of the unsheathing Tesla supplied new owners of its S,3,X models and just launched Y, nine power hours for every one BYD did.  

Today BYD’s full electric range outsells Tesla in good months. Factor in its popular plug-ins – also LFP only – and BYD is nearly 600,000 car lengths ahead of Tesla.  Tellingly, BYD started out as a battery company in the 1990s.

BYD, in which Warren Buffet famously bought a stake in 2008 for $232 million that is still worth some $6 billion after years of steady divestment, sells one out of every five EVs around the world. That’s despite being largely absent from markets outside China (BYD supplies Tesla’s Berlin factory with LFP batteries). 

LFP now also runs the gamut of vehicle segments.  All the way from the Wuling Hongguang Nano EV (for those who found the Mini a bit too bulky) to BYD’s gigantic YangWang U8. The YangWang wagon can do a 360 degree tank turn, float on water and sail at 1.62 knots and retails for $150,000, making it China’s most expensive EV. It also weighs 3-and-half tonnes (another comparative downside of LFP). 

The cheaper of the pack 

During the first ten months of 2023 LFP cornered 31% of the global EV battery market in GWh terms despite virtually zero LFP manufacturing capacity outside China. By the time final registrations for the calendar year are tallied, it may well be a third.

Nickel and cobalt containing batteries are now cut out of over half the Chinese market in GWh terms. With China leading the pack, on a cumulative basis LFP recently overtook NCM 523 (roughly 50% Ni, 20% Co, 30% Mn) as the top cathode technology in the global EV parc. Adamas battery capacity data is based on vehicles delivered to end-customers, not wholesale markets or sales to dealerships.

LFP is now also firmly in the driver seat at Tesla. The vast majority of newly sold Model 3s around the world this year have been LFP powered.  And the LFP-version of the Model Y occupies the top spot in China in terms of battery capacity deployed.  

The cost advantage of LFP shrank considerably as lithium flirted with $80,000 a tonne in 2022, but the decline has been swift since then. In China, spot prices for lithium carbonate are below $16,000 a tonne, hydroxide used in hi-nickel batteries dipped below $15,000 last week and spodumene averaged $1,300 a tonne – all down by 80% in 2023 with losses accelerating into the new year, according to Benchmark Mineral Intelligence.

The bounce caused by the trucker strike in central Africa and worries about DRC elections have turned into a dead cat and cobalt enters 2024 below $30,000 a tonne.

Coupled with the chaotic highs on London nickel markets giving way to a steady decline to the mid $16,000s a tonne on the LME, lithium’s losses have turned LFP cheap and cheerful again. 

Thanks a tonne 

The 50 tonnes of LFP induced demand of February 2020 is now 27,000 tonnes per month, to which you can add another few 100 tonnes from best of both worlds LFP-NCM combo batteries finding their way into more and more EVs.  

From just over 33% in 2019 before LFP’s coming out year, nickel’s share of global active battery material demand has now fallen below 25%.  From a nicely carved niche of 8% in 2019, cobalt clings on at less than 5% now.  Manganese is down from close to 9% to 6%. 

Nickel’s waning battery metal share comes despite the rapid adoption of nickel rich chemistries for NCM batteries. In early versions of NCM the metals were applied in a roughly 1:1:1 ratio. In 2023 this mix makes up 1% and that’s probably dealerships moving stock forgotten on a lot somewhere.  

So far this year NCM 811 with nickel in excess of 80% has cornered more than a fifth of the market in GWh terms, surpassing NCM 523 (roughly 50%+ nickel), according to Adamas. Tesla-Panasonic’s third generation NCA also contains over 80% nickel while NCM cathode chemistries with 90% nickel have been available for a while. 

Since lithium carbonate equivalent tonnages and LCE prices are almost always quoted in industry literature it’s easy to forget that tonne for tonne nickel is in fact THE battery metal and on a 100% metal content basis total demand for cobalt and manganese is not that far behind lithium. (New Year’s resolution: Always divide by 5.323.)  

Or in the words of Musk in 2016 well before LFP: “Technically, our cells should be called nickel-graphite, because the primary constituent in the cell as a whole is nickel. There’s a little bit of lithium in there, but it’s like the salt on the salad.”

Blade runners

So what would a world look like without blade runners like BYD’s Dolphin, Seal, Han, Song and YangWang and Fangchengbao luxury and off-road brands? What if Tesla opted to employ NCM and NCA for all their vehicles?  Or if the LFP cells supplied by CATL – the world’s biggest EV battery maker by a country mile – did not displace a third of its NCM output?

Hold onto your hard hats. It’s not pretty. 

The combined battery capacity of EVs (including conventional and mild hybrids) is likely to surpass 700 GWh in 2023, a 45% gain over 2022 and is more than five times the size it was in 2020 and the basket of battery metals in newly sold EVs should easily surpass one million tonnes, Adamas predicts.

On an annual basis potential nickel tonnes lost this year is likely to top 107,000 tonnes. For cobalt, the metal that went unwanted because of LFP would be more than 38,000  tonnes or roughly 20% of global production last year.  Producers of manganese for the battery supply chain would have enjoyed 58,000 tonnes greater annual demand.

Add tonnes lost to LFP to actual use for the year, and you get to 94,000 tonnes of cobalt demand from the EV sector. That’s more than half of cobalt mined each year ending up in the EV industry. For nickel that number is 375,000 tonnes and manganese 127,000 tonnes. 

Adamas crunched the numbers on the basis of mid-market NCM 5-Series being the battery doing the work of LFP, not NCM 811. Under the latter scenario the what-could’ve-been for nickel miners would naturally be even more eye-watering.       

Also keep in mind the kilograms that end up in every EV are fractions of what would have been procured upstream. 

A factor that is sometimes omitted from estimates of metal requirements is low yields in the conversion and manufacturing process.

CATL disclosed 50% yield in its factories early on, exacerbated by ramp up challenges, but even at a steady state your average cell producer turns as much as 30% of the metals entering factory gates into black mass. Between the mine mouth and the gigafactory many more tonnes are never recovered. 

Battery bulge 

Despite the havoc wreaked by LFP, other trends are nickel and cobalt’s friends. The combined battery capacity of EVs sold last year surged by 45% year on year and is running well ahead of new registrations which are up 33% globally, according to Adamas data.  

Battery capacity is a better gauge of metal demand than unit sales alone and not only are packs bulking up, the shift to high-nickel batteries has some way to go. 

Last year, the sales weighted average full electric vehicle – including LFP-powered units – sold globally contained just under 25 kilograms of nickel in its battery, 7% more than in 2022. The average battery in plug-in hybrids, which are soaring in popularity, particularly in China, had 6.4kg of the devil’s copper, a 12% year on year jump.  

The big battery bulge is also keeping cobalt weightings from falling more quickly amid ongoing thrifting. On average full electric cars sold globally in 2023 contained 4.8 kilograms and plug-in hybrids 2.2 kg up 5% and 2%.

Nickel’s not classy 

It’s perhaps too easy to blame LFP for today’s Ni-Co situation although it was earlier predictions for spectacular demand growth from electric cars that spurred much of the investment in new supply and in the case of nickel, new industrial processes, in the first place.

Global nickel exploration (and by extension cobalt) budgets, according to S&P Global Market Intelligence are up 19% last year to a remarkable $732 million, nearly a quarter of what is being spent expanding or finding new copper resources.  Nickel only reached annual output of 3 million tonnes last year and that’s after years of robust growth – the copper industry is nearly eight times the size. 

Most of the nickel mined around the world still ends up as stainless steel and soft demand from the construction and manufacturing sector on the all-important Chinese market has seen vast surpluses in non-class 1 nickel – not suitable for the battery supply chain – build up.

However, when it comes to demand from the EV sector, nickel class matters less today. Large chunks of the China-Indonesia nickel-pig-iron industry are pivoting towards LME and battery -friendly products (not so environmentally friendly though).

A rapid ramp up in Indonesia nickel mining, thanks to a slew of new high-pressure-acid-leach (HPAL) projects (even attracting investment from as far afield as Dearborn) which are about as environmentally conscious as they sound, only adds to the weak fundamentals. Indonesia is already responsible for half of global nickel output and Chinese investment in the archipelago is not slowing. 

Cobalt blues

Cobalt probably had most to gain from the EV revolution. It’s a small highly concentrated market, with few big players and sparkling per tonne prices.  

Indeed, Glencore was the first major to herald a new dawn for mining thanks to electric cars, telling investors in 2017 that “as early as 2020, when electric vehicles would still make up only 2% of new vehicle sales, related metal demand already becomes significant.”

That prediction proved conservative – global penetration reached over 5% in 2020.

But cobalt thrifting had become more of a priority after the 2018 spike to above $100,000 tonne scared automakers and ESG-transgression hunters went looking for breaches in the Congo.

Nearly all cobalt supply is a byproduct of nickel and copper mining. As far back as 2019, BMW’s offtakers pounced on what is the only primary cobalt mine in the world. Jervois halted construction on its Idaho project March last year, but Canada’s Fortune Minerals may provide an opportunity for enterprising automakers.

In an irony that would not be lost on cobalt promotors, rumours are swirling that Glencore is considering suspending production at Mutanda again to shore up cobalt prices (as it is, Mutanda’s output is down 15% due to lower grades). 

It worked in 2019 when Mutanda still had 20% of the market, but new supply not just from the Congo but also Indonesia where laterites come with a thick layer of cobalt would mute the impact this time around.

Cobalt just does not have much going for it at the moment. Vast cobalt stockpiles from Tenke Fungurume in the DRC are still being sold downstream and the copper-cobalt mine’s Chinese owner’s expansion plans are well under way. Tenke could soon rival Mutanda as the world’s largest cobalt mine and CMOC overtook Glencore as the world’s number one cobalt producer in 2023. 

A new railway through Zambia to Tanzania’s Dar es Salaam port will also alleviate cobalt’s lasting logistics problems, which have underpinned prices in the past. 

EVs overtook all else when it comes to cobalt demand a few years ago now, so a fall-off at the margins coupled with the small size of the market can quickly and thoroughly depress prices.  

Manganese meh

Manganese is often overlooked in the battery metals space and the excitement stirred by Volkswagen’s newly-formed PowerCo battery subsidiary back in March 2021 has long dissipated.  At the time, the world’s no 2 carmaker said it’s building six new plants and is looking at high-manganese batteries for its mid-range vehicles. 

But last month Volkswagen said a fourth European battery factory is postponed indefinitely, much to the relief of Czech taxpayers who unlike their Canadian counterparts now won’t have to shoulder billions in subsidies and tax breaks for the honour of having a large battery factory.  

Tesla has also expressed interest in manganese, with Musk saying last year high-manganese batteries could be an alternative to LFP, but there’s been little news since then. 

Besides, with ore production of 20 million tonnes per year, LMFP and other high-manganese chemistries were never going to light a fire under manganese at the mining level. 

That said, downstream battery ready compounds do become scarce from time to time and manganese sulfate in China has not succumbed the way lithium, cobalt and nickel have. Manganese sulphate is down 29% over the last year, changing hands for less than $700 a tonne in China.  

US, EU 2. Affordable Chinese EVs 0

Other development that could keep the LFP wolf from the door on markets outside China a bit longer are geopolitics and a growing mercantilist approach to trade in the world’s largest economies. 

While Chinese-made EVs have close to zero presence in the US, Europeans can and often do choose Geometry, HiPhi, Lynk & Co, Ruixing, Seres, Aeolus, Zeekr,  XPeng, Weltmeister (one of China’s earliest EV startups ribbing Wolfsburg and co), and others over homegrown automakers like Volkswagen, Peugeot and Fiat. 

Get behind the wheel of a Tesla, Citroen, BMW, Dacia, Honda, Renault or Smart and there’s also a good chance you’re driving a made-in-China vehicle.  Last year in terms of battery capacity rolled onto roads, nearly a fifth of the EVs bought by Europeans were made in China.  

The EU’s probe of Beijing’s subsidies to its EV industry is all but inevitable to result in tariffs and other measure to limit access to EU car markets while in the US, long-awaited new rules on so-called foreign entities of concern (FEOC) all but eliminates direct Chinese involvement. 

In 2024 EVs that contain any battery components manufactured or assembled by China will not be eligible for the US federal tax credit, currently a maximum of $7,500 per vehicle. The incentive cut-off date for any lithium, nickel, cobalt and graphite or other battery metals produced by, or which make their way through China, is 2025. Rare earths used in nearly 90% of all EV motors are already subject to IRA rules.  

Not much more than a handful of electric cars sold in the US would qualify. On top of that a bipartisan group of lawmakers also recently asked for Trump era duties of 25% on Chinese automobiles to be doubled and to close any loopholes should China locate factories in Mexico, for instance. 

The new guidelines may allow US automakers to cut licensing and technology deals with Chinese companies. This should give a green light (although that’s far from clear) to ventures like Ford’s partnership with CATL for its LFP plant in Michigan, and Tesla’s venture in Texas with the Chinese behemoth.  

Ford made much of the fact that BlueOval – which is now going to be 40% smaller than originally envisaged – would produce LFP batteries, calling it a “key part” of its US EV plans allowing it to “scale more quickly, making EVs more accessible and affordable for customers.” Given the success of Tesla and BYD with LFP, US automakers are bound to follow in their tracks. 

Benchmark Mineral Intelligence sees LFP factory growth outside China at factors more than NCM build-out. But that would not nearly be enough for the rest of the world to embrace the technology at the same speed and scale as China, which itself is expected to grow LFP cathode capacity by more than three times by the end of the decade, according to the London-headquartered research firm and pricing agency. 

FEOC FOMO

The new EV provisions pitted automakers against mining firms with the former arguing that barring China from directly participating in the US mine-to-megawatt supply chain would be close to impossible given the short timelines and would delay EV adoption by Americans by pushing up costs. 

The FEOC rules are intended to complement the Inflation Reduction Act’s requirement that any EV subsidy is conditional on a percentage of all material inputs being sourced either domestically or from a US free trade partner. Currently the threshold is 30% and will rise to 80% in 2027.

An exception was made for foreign subsidiaries of privately-owned Chinese companies in friendly countries, like Australia and Indonesia, but even these entities may fall afoul of the rules if they are deemed to be under the control of the Chinese government.  Even off-take agreements with Chinese buyers – and for EVs they act as close to a monopsony – may be deemed to bring too much CCP influence to bear.

Miners, justifiably, want rules that speed up and incentivize domestic production, not least because the time from resource discovery to mine production is often counted in decades.  The convoluted US permitting system also provides almost zero certainty that investments in new mines will pay off – no matter to what extent miners dot environmental i’s and cross social license to operate t’s.  

The one-two punch by US and European authorities may end up bringing the much talked about – and yearned for – premium pricing for metals and minerals supplied by Western firms. What it won’t do is make EVs cheaper or reignite sales growth in these markets.

The road not travelled 

While nickel-rich EV batteries will always have a large niche, it’s difficult to shake a sense of what could’ve been: 

The latest and greatest Model Y – the global bestselling EV on a GWh basis – coming out of Tesla’s Texas factory has a NCM 811 battery which uses kilograms of cobalt that approach double digits and more than 50kg of nickel. The Cybertruck uses NCA for now, but the bestselling truck in the US, the Rivian R1T is moving to LFP so that the California startup can stop making up in volume what they lose per sale.

Imagine selling 20 million a year – as Musk promised – of these workhorses. Instead, the unwanted tonnes of Ni-Co-Mn will only pile higher and higher. Or stay buried.  

According to China’s automobile association, November was the first one million month for electric car sales and December is likely to top that. The US market is expanding by more than 50% year on year and penetration rates are still in single digits.  

Germany is betting its industrial future, if not its national pride, on the ability to catch up to China in the electric car business. But at the moment three gasoline powered cars leave autohaus lots for each with a charging cable in the frunk. 

South Korea is the world’s sixth largest EV market in terms of battery power rolling onto roads in 2023 and the only country that rivals China in battery output despite the absence of LFP capacity. Yet EV penetration is 11% south of the DMZ. As for Japan, its power hours fall short of Belgium’s.             

How much of China’s lead can be ascribed to LFP remains up for discussion considering all the moving parts in the EV supply chain. But it’s safe to say China would not have been able to deploy more battery power in electric cars last year than the next 50 countries combined if it hadn’t. 

Sodium on the podium

Vehicle electrification is the biggest thing to happen to the automotive and mining industries in a century. The green energy transition more broadly is allowing mining to step outside the shadow of oil and gas. 

Crucially, for the first time metal extraction aligns with the goals of the environmental movement (even though the message does not seem to be getting through). 

But the story of how LFP crashed into battery metals illuminates something else about mining. 

Apart from gold which is money, the arrival of EVs has exposed the industry to the vagaries of technological change like never before. 

LFP has severely dented nickel and cobalt prospects and after all metal pricing is all about the marginal tonnes. The next thing to come out of a lab could turn the mine that took decades to build into a white elephant. Substitution has and will keep miners awake at night.  

Can sodium-ion batteries do to lithium-ion what iron phosphate did to nickel and cobalt?

BYD broke ground on its first $1.3 billion sodium-ion battery plant just today. Three former Tesla executives have set up a sodium-ion company and the first sodium-ion EVs could go on sale soon and sodium could also salt the field of stationary energy storage. 

Until now graphite has been immune to changing chemistries, but the hard carbon anode used for sodium-ion cells can be made from food scraps. Can solid state lithium batteries, which can also do away with graphite for the anode, nix the parts sodium doesn’t?

Crude awakening

Unlike in mining, oil and gas demand destruction is not an intrinsic part of technological progress – at least not one that can play out over a few short years like cobalt and nickel free cells. As the outcome of COP28 showed, it must be imposed.  

Indonesia, Russia and the Philippines control some three-quarters of global nickel supply, 70% of the world’s cobalt comes from the Congo and additional tonnes will mostly come from Indonesia. 

If copper – ground zero for the energy transition – was crude and output could be turned up or down after a secretariate meeting in Vienna, Chile would be Saudi Arabia and all the Gulf states combined. It would be Peru’s sovereign wealth fund dangling $1 billion in front of a French soccer player. 

But as platinum group metal watchers must realise by now, establishing an Opec+ style cartel will forever be a pipe dream in mining. 

Nickel is not the new gold and no, lithium is not the new oil. 

Yet here we are. 

Back at the salt mines. 

A year where the gold price sets an all-time record should be unalloyed good news for the mining and exploration industry, which despite all the buzz surrounding battery metals and the energy transition still represents the backbone of the junior market.

Metal and mineral markets are volatile at the best of times – the nickel, cobalt and lithium price collapse in 2023 was extreme but not entirely unprecedented. Rare earth producers, platinum group metal watchers, iron ore followers, and gold and silver bugs for that matter, have been through worse.

Mining companies have become better at navigating choppy waters, but the forced closure of one of the biggest copper mines to come into production in recent decades served as a stark reminder of the outsized risks miners face over and above market swings.

Panama shuts down giant copper mine

After months of protests and political pressure, at the end of November the Panama government ordered the closure of First Quantum Minerals’ Cobre Panama mine following a ruling by the Supreme Court that declared the mining contract for the operation unconstitutional.

Public figures including climate activist Greta Thunberg and Hollywood actor Leonardo Di Caprio backed the protests and shared a video calling for the “mega mine” to cease operations, which quickly went viral. 

FQM’s latest statement on Friday said Panama’s government hasn’t provided a legal basis to the Vancouver-based company for pursuing the closure plan, a plan that the industries ministry of the central American nation said will only be presented in June next year.

FQM has filed two notices of arbitration over the closure of the mine, which has not been operating since protesters blocked access to its shipping port in October. However, arbitration would not be the company’s preferred outcome, said CEO Tristan Pascall.

In the aftermath of the unrest, FQM has said it should have better communicated the value of the $10 billion mine to the wider public, and will now spend more time engaging with Panamanians ahead of a national election next year. FQM shares have bounced in the past week, but is still trading more than 50% below the high hit during July this year.

Projected copper deficit evaporates

Cobre Panama’s shutdown and unexpected operational disruptions forcing copper mining companies to slash output has seen the sudden removal of around 600,000 tons of expected supply would, moving the market from a large expected surplus into balance, or even a deficit.

The next couple of years were supposed to be a time of plenty for copper, thanks to a series of big new projects starting up around the world.

The expectation across most of the industry was for a comfortable surplus before the market tightens again later this decade when surging demand for electric vehicles and renewable energy infrastructure is expected to collide with a lack of new mines.

Instead, the mining industry has highlighted how vulnerable supply can be — whether due to political and social opposition, the difficulty of developing new operations, or simply the day-to-day challenge of pulling rocks up from deep beneath the earth.

Lithium price routed on supply surge

The price of lithium was decimated in 2023, but predictions for next year are far from rosy. Lithium demand from electric vehicles is still growing rapidly, but the supply response has overwhelmed the market.

Global lithium supply, meanwhile, will jump by 40% in 2024, UBS said earlier this month, to more than 1.4 million tons of lithium carbonate equivalent.

Output in top producers Australia and Latin America will rise 22% and 29% respectively, while that in Africa is expected to double, driven by projects in Zimbabwe, the bank said.

Chinese production will also jump 40% in the next two years, said UBS, driven by a major CATL project in southern Jiangxi province.

The investment bank expects Chinese lithium carbonate prices could fall by more than 30% next year, dipping as low as 80,000 yuan ($14,800) per tonne in 2024, averaging at around 100,000 yuan, equivalent to production costs in Jiangxi, China’s biggest producing region of the chemical.

Lithium assets still in high demand

In October, Albemarle Corp. walked away from its $4.2 billion takeover of Liontown Resources Ltd., after Australia’s richest woman built up a blocking minority and effectively scuppered one of the largest battery-metals deals to date.

Eager to add new supply, Albemarle had pursued its Perth-based target for months, eying its Kathleen Valley project — one of Australia’s most promising deposits. Liontown agreed to the US company’s “best and final” offer of A$3 a share in September — a near 100% premium to the price before Albemarle’s takeover interest was made public in March.

Albemarle had to contend with the arrival of combative mining tycoon Gina Rinehart, as her Hancock Prospecting steadily built up a 19.9% stake in Liontown. Last week, she became the single largest investor, with enough clout to potentially block a shareholder vote on the deal.

In December, SQM teamed up with Hancock Prospecting to make a sweetened A$1.7 billion ($1.14 billion) bid for Australian lithium developer Azure Minerals, the three parties said on Tuesday.

The deal would give the world’s no.2 lithium producer SQM a foothold in Australia with a stake in Azure’s Andover project and a partnership with Hancock, which has rail infrastructure and local experience in developing mines.

Chile, Mexico take control of lithium

This week Chile’s President Gabriel Boric hailed the formation of a new government-controlled lithium partnership that fuses assets of state-run Codelco with private miner SQM, as the leftist leader advances his push for greater public control over the battery metal. 

SQM said it would partner with copper giant Codelco for the future development and production of the metal in the Atacama salt flat, in a tie-up set to kick off in 2025 and run through 2060.

The deal gives Codelco majority control in line with the president’s plans announced in April to strengthen state control of lithium to generate more broad-based benefits from surging demand and to allow only public-private partnerships to participate in its exploitation.

For much of the year, the firms had been locked in talks over the future of lithium mining and production in the salt flat, located in Chile’s north and the home to 90% of the nation’s lithium reserves. The South American country has the world’s largest proven lithium reserves.

Mexican President Andres Manuel Lopez Obrador in February signed a decree handing over responsibility for lithium reserves to the energy ministry.

Lopez Obrador urged the private sector to work with the new state miner, saying the size of the investment needed means the government needs partners.

But analysts argue that companies are more likely to focus near-term investments in Chile or Argentina’s sprawling salt flats, where industries are more established and policies more market-friendly.

In August, Chinese lithium giant Ganfeng said Mexico’s mining authorities had issued a notice to its local subsidiaries indicating nine of its concessions had been terminated.

Gold to build on record-setting year

The New York futures price of gold set an all-time high at the beginning of December and looks set to surpass the peak going into the new year. 

London’s gold price benchmark hit an all-time high of $2,069.40 per troy ounce at an afternoon auction on Wednesday, surpassing the previous record of $2,067.15 set in August 2020, the London Bullion Market Association (LBMA) said.

“I can think of no clearer demonstration of gold’s role as a store of value than the enthusiasm with which investors across the world have turned to the metal during the recent economic and geopolitical turmoils,” said LMBA’s chief executive officer Ruth Crowell. 

JPMorgan predicted a new record back in July but expected the new high to occur in the second quarter of 2024. The basis of JPMorgan’s optimism for 2024 – falling US interest rates – remains intact:

“The bank has an average price target of $2,175 an ounce for bullion in the final quarter of 2024, with risks skewed to the upside on a forecast for a mild US recession that’s likely to hit sometime before the Fed starts easing.”

Even as gold climbed new peaks, exploration spending on the precious metal dipped. A study published in November overall mining exploration budgets fell this year for the first time since 2020, dropping 3% to $12.8 billion at the 2,235 companies that allocated funds to find or expand deposits.

Despite the sparkling gold price, gold exploration budgets, which historically have been driven more by the junior mining sector than any other metal or mineral, dropped by 16% or $1.1 billion year-on-year to just under $6 billion, representing 46% of the global total. 

That’s down from 54% in 2022 amid higher spending on lithium, nickel and other battery metals, a surge in spending on uranium and rare earths and an uptick for copper. 

Mining’s year of M&A, spin-offs, IPOs, and SPAC deals

In December, speculation about Anglo American (LON: AAL) becoming the target of a takeover by a rival or a private equity firm mounted, as weakness in the shares of the diversified miner persisted.

If Anglo American doesn’t turn operations around and its share price continues to lag, Jefferies analysts say they can’t “rule out the possibility that Anglo is involved in the broader trend of industry consolidation,” according to their research note.

In October, Newcrest Mining shareholders voted strongly in favour of accepting the roughly $17 billion buyout bid from global gold mining giant Newmont Corporation.

Newmont (NYSE: NEM) plans to raise $2 billion in cash through mine sales and project divestments following the acquisition. The acquisition brings the company’s value to around $50 billion and adds five active mines and two advanced projects to Newmont’s portfolio.

Breakups and spin-offs were also a big part of 2023 corporate developments.

After being rebuffed several times in its bid to buy all of Teck Resources, Glencore and its Japanese partner are in a better position to bring the $9 billion bid for the diversified Canadian miner’s coal unit to a close. Glencore CEO Gary Nagle’s initial bid for the entire company faced stiff opposition from Justin Trudeau’s Liberal government and from the premier of British Columbia, where the company is based.

Vale (NYSE: VALE) is not seeking new partners for its base metals unit following a recent equity sale, but could consider an IPO for the unit within three or four years, CEO Eduardo Bartolomeo said in October.

Vale recruited former Anglo American Plc boss Mark Cutifani in April to lead an independent board to oversee the $26-billion copper and nickel unit created in July when the Brazilian parent company sold 10% to Saudi fund Manara Minerals.

Shares in Indonesian copper and gold miner, PT Amman Mineral Internasional, have surged more than fourfold since listing in July and are set to keep rising after its inclusion in major emerging market indexes in November.

Amman Mineral’s $715 million IPO was the largest in Southeast Asia’s biggest economy this year and counted on strong demand by global and domestic funds.

Not all dealmaking went smoothly this year.

Announced in June, a $1 billion metals deal by blank-cheque fund ACG Acquisition Co to acquire a Brazilian nickel and and a copper-gold mine from Appian Capital, was terminated in September.

The deal was backed by Glencore, Chrysler parent Stellantis and Volkswagen’s battery unit PowerCo through an equity investment, but as nickel prices slumped there was a lack of interest from minority investors at the stage of the $300 million equity offering which ACG planned as part of the deal.

Talks in 2022 to acquire the mines also fell through after bidder Sibanye-Stillwater pulled out. That transaction is now the subject of legal proceedings after Appian filed a $1.2 billion claim against the South African miner.

Uranium upsurge

In late November uranium prices scaled $80 per pound for the first time in 15 years, driven by a resurgence in demand for nuclear power and supply disruptions.

Global yellowcake supply might reach 145 million lb. this year or next according to the World Nuclear Association. But annual demand is already at 180 million lb. and the industry group expects it to nearly double to 300 million lb. by 2040.

Some 60 nuclear plants are under construction globally and more are planned. Countries like Germany and Japan that considered phasing them out are reversing course.

Activity in northern Saskatchewan’s Athabasca uranium hotspot is intensifying. NexGen received environmental approval for its Rook I project in November, the province’s first OK for such a project in two decades. Denison Mines released a feasibility study for its Wheeler River project before investing in junior explorer F3 Uranium’s Patterson Lake North property.

Also, IsoEnergy took over Consolidated Uranium in September. Uranium Energy spent C$570 million over the past two years buying Uranium One, UEX Corp. and Rio Tinto’s Roughrider project. Cameco and Brookfield Renewable Partners in October closed their deal to buy Westinghouse’s nuclear plant construction unit for $7.9 billion.

Nickel nosedive

In April, Indonesia’s PT Trimegah Bangun Persada, better known as Harita Nickel, raised 10 trillion rupiah ($672 million) in what was then Indonesia’s largest initial public offering of the year. 

Harita Nickel’s IPO quickly turned sour for investors, however, as prices for the metal entered a steady and long decline. Nickel is the worst performer among the base metals, nearly halving in value after starting 2023 trading above $30,000 a tonne.

Next year is not looking great for the devil’s copper either with top producer Nornickel predicting a widening surplus due to lacklustre demand from electric vehicles and a ramp-up in supply from Indonesia, which also comes with a thick layer of cobalt:

“…due to the continuing destocking cycle in the EV supply chain, a greater share of non-nickel LFP batteries, and a partial shift from BEV to PHEV sales in China. Meanwhile, the launch of new Indonesian nickel capacities continued at a high pace.” 

Palladium also had a rough year, down by more than a third in 2023 despite a late charge from multi-year lows hit at the start of December. Palladium was last trading at $1,150 an ounce.

China flexes its critical mineral muscle

In July China announced it will clamp down on exports of two obscure yet crucial metals in an escalation of the trade war on technology with the US and Europe.

Beijing said exporters will need to apply for licenses from the commerce ministry if they want to start or continue to ship gallium and germanium out of the country and will be required to report details of the overseas buyers and their applications.

China is overwhelmingly the top source of both metals — accounting for 94% of gallium supply and 83% of germanium, according to a European Union study on critical raw materials this year. The two metals have a vast array of specialist uses across chipmaking, communications equipment and defence.

In October, China said it would require export permits for some graphite products to protect national security. China is the world’s top graphite producer and exporter. It also refines more than 90% of the world’s graphite into the material that is used in virtually all EV battery anodes, which is the negatively charged portion of a battery.

US miners said China’s move underscores the need for Washington to ease its own permit review process. Nearly one-third of the graphite consumed in the United States comes from China, according to the Alliance for Automotive Innovation, which represents auto supply chain companies.

In December, Beijing banned the export of technology to make rare earth magnets on Thursday, adding it to a ban already in place on technology to extract and separate the critical materials.

Rare earths are a group of 17 metals used to make magnets that turn power into motion for use in electric vehicles, wind turbines and electronics.

While Western countries are trying to launch their own rare earth processing operations, the ban is expected to have the biggest impact on so-called “heavy rare earths,” used in electric vehicle motors, medical devices and weaponry, where China has a virtual monopoly on refining.

According to a new study by S&P Global Market Intelligence, overall mining exploration budgets fell this year for the first time since 2020, dropping 3% to $12.8 billion at the 2,235 companies that allocated funds to find or expand deposits.

Gold budgets, which historically have been driven more by the junior mining sector than any other metal or mineral, dropped by 16% or $1.1 billion year-on-year to just under $6 billion, representing 46% of the global total. 

That’s down from 54% in 2022 amid higher spending on lithium, nickel and other battery metals, a surge in spending on uranium and rare earths and an uptick for copper. 

But the dominant role gold plays in exploration – and therefore the industry’s future remains clear from the fact that the combined money flowing into green energy transition metals (or future facing commodities as some majors like to label them) was not enough to offset the decline in gold.

Gold exploration budgets, like most mined commodities, peaked in 2012 when the precious metal accounted for nearly half the more than $20 billion spent. 

Gold juniors represent 38% of the allocation to exploration this year and reduced spending by the sector was responsible for the bulk of the overall reduction in budgets. 

It also follows the years-long trend in the gold sector identified by S&P Global where exploration has shifted to minesites and away from grassroots exploration. 

The top region for gold exploration thanks in no small part to its vibrant junior sector, Canada, saw a roughly $400 million drop in budgets. Only in Asia Pacific did allocated resources increase compared to 2022 although not by much and from a low base. 

Junior jaundice 

The pullback among gold explorers represents a significant drop compared to last year when the sector spent more than the majors searching for the precious metal. 

It is an indication of the difficulty junior exploration companies have had over the last year or so of tapping markets for new funding. 

On a quarterly basis, gold financing for junior and mid-size mining companies was the lowest in Q3 since the September quarter of 2018.

Overall financing, excluding majors at $8 billion year-to-date was the lowest since 2019 and less than half raised over the same period last year. 

Like with exploration budgets, the overall decline in financings came despite mining companies involved in specialty commodities managing to raise 46% more in the year to end-September than the same period last year.  

Overall the 41,086 holes drilled around the world from January to mid-Oct 2023 in search of non-ferrous metals and minerals represent a 23% decline compared to last year. 

Gold drilling is down by 36% over the same period. With the gold price back in touch with $2,000 an on geopolitical safe have demand and the weakness across base and battery metals, it’s not inconceivable that gold’s share of exploration budgets top 50% again soon.

Basic base metals    

Base metal budgets increased to 33% of the total, led by a $327 million increase in spending on copper, the metal at the centre of the energy transition, and a significant $117 million jump in outlays to find or expand nickel deposits.  

The bulk of nickel exploration funds are directed at Canada where budgets for the stainless steel alloy and battery metal are now approaching $300 million.

“You’d have to go back to 2006/2007 to find a year in which the collective base metals attracted more money for exploration than gold,” says Kevin Murphy, research director metals and mining S&P Global Commodity Insights. 

Copper in 2023 represents less than a quarter of mining exploration spending despite a double digit gain from 2022 to $3.12 billion, mostly by major miners and not juniors.

Murphy says copper exploration lagged behind other metals when it came to the shift of exploration to minesites, but this year despite growing budgets overall grassroots exploration for copper declined compared to 2022. 

Nickel exploration budgets are also being spent on minesites with more than half of the $732 million budgeted this year aimed at replenishing reserves and extending mine lives. Majors carry out 54% of global nickel exploration, a rising share.     

Lithium is the new old gold

Lithium exploration budgets almost doubled this year after doing the same in 2022. In total $830 million was allocated to finding and expanding lithium resources in 2023, the third most explored non-ferrous commodity.

“Lithium is a young commodity for both exploration and development and it reflects this in a lot of different ways,” says Murphy.  

The sector is entirely dominated by juniors at the moment with 82% of the exploration work carried out by smaller companies. “Whenever there’s a lot of interest in a commodity, the juniors tend to follow suit.”

The undeveloped nature of the lithium mining industry also shows up in the stages of development with grassroots, late stage exploration and feasibility making up the vast majority of field work being carried out. 

A not insignificant portion of exploration for lithium is being carried out by governments which at 4% works out to more than $30 million from public coffers.  

Large budget increases were seen all over the world led by Latin America and specifically  Argentina, which hosts the largest undeveloped resources of the battery metal. 

Australia produces half the world’s lithium currently and it’s the second most funded region for exploration followed by Canada, where budgets have doubled year on year to in excess of $160 million. 

Exploration in the US also jumped substantially – the country is home to the second largest undeveloped resource of lithium globally.   

Murphy expects lithium budgets to grow “although it’s tough to say just how much, simply because a lot of this is going towards late stage and feasibility work”:

“And of course, once a feasibility study gets completed, that’s a very large expenditure that falls away. There is the potential that we could see a small dip in lithium in the coming years.”

Also impacting future funding of lithium exploration is a precipitous and unrelenting slide in prices for the metal, now around $20,000 a tonne, from a peak north of $80,000 in November last year. 

Uranium upsurge, REE ramp up

S&P Global now tracks 121 active projects grouped under what it calls specialty commodities and includes lithium, cobalt, graphite, rare earth, uranium and others, a near six-fold increase from two years ago. 

Platinum group metals and diamond exploration has been on a downtrend for about two decades, according to the research company and until recently that was also true for uranium.

However a rebound in spot prices for the nuclear fuel – now trading at its highest in more than a decade after scaling $70 a pound last month – saw a more than $35 million bump in exploration budgets in 2023. 

There’s growing realisation, even among environmental groups, that the move away from fossil fuels is too heavy a lift for unreliable wind and solar energy alone. 

Rare earths, also expected to play an important part in the green energy transition due to extensive use in electric motors and wind turbines, received a massive bump in funding for exploration in 2023 given the industry’s overall size – just shy of $50 million more than last year.   

At the end of Q1 2022, the MINING.COM TOP 50* ranking of the world’s biggest miners hit an all-time record of a collective $1.75 trillion as copper spent time above $10,000 a tonne, real nickel trades were being made above $40,000, lithium shipped for over $60,000 and everything from gold and platinum to uranium and tin were rallying hard. 

Uranium prices have doubled since then to above $60 a pound, tin is also trading higher, although well below its March 2022 peak while gold’s recent safe haven rally means the precious metal is also trading higher compared to March 2021.

Iron ore, where the top diversified mining companies dig for most of their profits, has also held up remarkably well, trading at $120 a tonne this week, little changed from end-June.  

Base and battery metals however have entered a deep slump since those heady days. Copper, zinc and aluminium are firmly in bear market territory down by a fifth or more, nickel and palladium investors are nursing 40%+ losses, cobalt is nearing record lows and lithium prices are hovering above $20,000.

After defying weakness on metals markets due to high expectations of strong future demand, particularly for copper, lithium and nickel, mining stock valuations have now succumbed. 

At the end Q3 2023, mining valuations for the industry’s top tier have slumped a total of $516 billion since the all-time highs. Declines so far this year total $145 billion for a combined market value of $1.38 trillion – back to levels seen at the end of September 2021.  

Just how bad sentiment is across the board is evident from the best performer list for Q3, which includes for the first time three counters which lost ground over the period. 

Archipelago ascent

The first Indonesian company to make it into MINING.COM’s ranking of world’s 50 most valuable mining companies, Amman Minerals Internasional, has surged 213% in US dollar terms since its July debut in Jakarta to reach a market capitalisation just shy of 450 trillion rupiah, or more than $28 billion.

Amman Minerals is the owner and operator of the giant Batu Hijau copper and gold mine in production since the turn of the millennium and is developing the adjacent Elang project on the island of Sumbawa. 

Elang is one of the world’s largest undeveloped copper and gold porphyry deposits and is currently in the feasibility stage. Elang boasts 4.7 million tonnes of proven and probable copper reserves and over 15 million ounces of gold.

Indonesia has become a red-hot IPO market this year and Amman was the largest of the year so far raising more than $700m in its IPO, and now sits at number 11 on the ranking. 

Bloomberg reports Amman Minerals’ ascent has minted at least six new billionaires, including chairman Agus Projosasmito, whose stake in the company is now worth $2.7 billion. The miner’s spectacular market performance has also added $4 billion to the net worth of Anthoni Salim, who helms one of Indonesia’s largest conglomerates, taking the tycoon’s paper billions to within shouting distance of double digits.

Indonesia’s other major mining IPO, Harita Nickel, is on a different trajectory altogether. Listed on the Indonesian Stock Exchange  in April raising $672m, the company has had a tough go of it and the stock has shed more than 60% since then as nickel prices continue to decline.

Lithium losses

The strength of the lithium sector outside China had been remarkable given the precipitous decline in prices for the battery metal since hitting all time highs above $80,000 a tonne in November last year. 

But during Q3 the slump in prices of the battery raw material caught up with the six stocks represented in the Top 50, for a combined loss of over $30 billion in market cap over the three month period to just over $70 billion. 

Measured from their 52-week highs the correction in the sector has been brutal – Perth-based Pilbara Mineral has bled 31% in market cap, making it the best performer. Mineral Resources has given up 37% while the declines for Albemarle, SQM, Ganfeng and Tianqi have been over 50%.  

Pilbara Minerals, which unlike its peers is clinging onto year-to-date gains,  joined the Top 50 last quarter and brought the number of companies based in the Western Australia capital to five, surpassing the tally of Vancouver, British Columbia as the top home base in the ranking.

The chances of another Perth-based lithium miner, IGO, of entering the Top 50 has dimmed. With a market cap of $5.4 billion, the company is down to the mid-60s in the ranking. 

The merger of US-based Livent and Australia-Argentina lithium miner Allkem, expected to close before 2023 is out, may also not be enough for the combined firm to enter the Top 50. Together the two companies are now worth $7.4 billion, which would edge out AngloGold Ashanti for the last spot, but the fortunes of lithium and gold going into 2024 are diverging widely.  

The blocking tactics of Gina Rhinehart’s Hancock Prospecting against the takeover of Liontown Resources by Albemarle turned out to be successful with the US lithium giant deciding to walk away from the deal this week.

Liontown’s 127% surge this year afforded the Perth-based company a market value of $4 billion before the collapse of the takeover which halted trading in the stock. Liontown on Thursday said it has secured the necessary funding to bring its Kathleen Valley project into production.

Enriched uranium

In September, uranium scaled $60 per pound for the first time since 2011. The breakthrough for the nuclear fuel comes after a decade in the doldrums following the Fukushima disaster in Japan.

The World Nuclear Association predicts world reactor requirements for uranium to surge to almost 130,000 tonnes (~285 million pounds) in 2040. That’s up from an estimate of 65,650 tonnes in 2023. 

A significant portion of the WNA’s upward growth adjustments can be attributed to the accelerated adoption of Small Modular Reactors (SMRs) as part of decarbonisation efforts for a range of industries from shipping to data centres with powering remote mine sites near the top of the list for SMR potential.

Canada’s Cameco makes the best performer list over the three months again in Q3 after spending much of the post-Fukushima period in the wilderness. The Saskatoon-based company enters the top 30 for the first time after jumping 19 places so far this year.    

The value of shares in Kazatomprom, the world number one uranium producer, topped $10 billion at the end of Q3 placing it at position 36. Until this year the state-owned Kazakh company was outside earshot of the Top 50 since its dual-listing in London and Astana in 2018.  

Diversified drop

BHP’s market position has also been supported by uranium prices as the Melbourne-based company boosts output at its Olympic Dam operations. 

The world’s top mining company’s market value has declined by less than 8% year to date for a $142 valuation, outperforming other diversified heavyweights Rio Tinto, down 17%, Glencore (–21%), Vale (–25%) and Anglo American (–38%). 

London-listed Anglo American has had a rough year in part due to its exposure to platinum group metals and control of Anglo American Platinum, and is now valued at $32 billion after peaking at $70 billion in March 2021.  

Investors in Anglo, with a history going back more than a hundred years on the South African gold and diamond fields, have had a particularly wild ride over the last few years. In January 2016, Anglo’s market cap fell below $5 billion after it came close to suffocating under a pile of debt.  

The dramatic slump in palladium prices (down 38% this year) and platinum (–16%) have also seen AngloPlat drop to its lowest position ever at a valuation of $10 billion, down from nearly $40 billion end-March 2021. 

Former PGM high flyers Impala Platinum and Sibanye Stillwater, both valued around the $4 billion mark today, have lost sight of the Top 50 altogether. 

*NOTES:

Source: MINING.COM, Mining Intelligence, Morningstar, GoogleFinance, company reports. Trading data from primary-listed exchange at Sep 29-Oct 5, 2023 where applicable, currency cross-rates Oct 7, 2023. 

Percentage change based on US$ market cap difference, not share price change in local currency.

As with any ranking, criteria for inclusion are contentious. We decided to exclude unlisted and state-owned enterprises at the outset due to a lack of information. That, of course, excludes giants like Chile’s Codelco, Uzbekistan’s Navoi Mining, which owns the world’s largest gold mine, Eurochem, a major potash firm, and a number of entities in China and developing countries around the world.

Another central criterion was the depth of involvement in the industry before an enterprise can rightfully be called a mining company.

For instance, should smelter companies or commodity traders that own minority stakes in mining assets be included, especially if these investments have no operational component or warrant a seat on the board?

This is a common structure in Asia and excluding these types of companies removed well-known names like Japan’s Marubeni and Mitsui, Korea Zinc and Chile’s Copec. 

Levels of operational or strategic involvement and size of shareholding were other central considerations. Do streaming and royalty companies that receive metals from mining operations without shareholding qualify or are they just specialised financing vehicles? We included Franco Nevada, Royal Gold and Wheaton Precious Metals on the basis of their deep involvement in the industry.

Vertically integrated concerns like Alcoa and energy companies such as Shenhua Energy where power, ports and railways make up a large portion of revenues pose a problem as does battery makers like CATL which is increasingly moving upstream, but where mining still make up a small portion of its valuation.  

Another consideration is diversified companies such as Anglo American with separately listed majority-owned subsidiaries. We’ve included Angloplat in the ranking but excluded Kumba Iron Ore in which Anglo has a 70% stake to avoid double counting. Similarly we excluded Hindustan Zinc which is listed separately but majority owned by Vedanta.

Many steelmakers own and often operate iron ore and other metal mines, but in the interest of balance and diversity we excluded the steel industry, and with that many companies that have substantial mining assets including giants like ArcelorMittal, Magnitogorsk, Ternium, Baosteel and many others.

Head office refers to operational headquarters wherever applicable, for example BHP and Rio Tinto are shown as Melbourne, Australia, but Antofagasta is the exception that proves the rule. We consider the company’s HQ to be in London, where it has been listed since the late 1800s.

Please let us know of any errors, omissions, deletions or additions to the ranking or suggest a different methodology.

Paul Mitchell, Global Mining & Metals Leader at the management consulting firm says the latest ranking of the top 10 business risks for mining and metals in 2024  which is based on interviews with 150 executives involved in the sector “highlights the complex operating environment miners will face in 2024”: 

“Responses to these risks are now clearly embedded into the strategies of the best operators — particularly environmental, social and governance and license to operate — and will remain priorities for a number of years to come.”

Respondents to the survey say scrutiny from all stakeholder groups is increasing, particularly around ESG issues and, according to EY mining firms that get ESG right will enjoy “significant benefits, including improved access to capital, a healthier talent pipeline and stronger licence to operate.”

While a “healthier talent pipeline” has become less of a worry for mining executives (now tenth on the list of top risks), “improved access to capital” is now considered the second most important priority for major miners after ESG as the massive outlays required by the green energy transition become a firm boardroom agenda item. 

Growth capital not growing

A renewed focus on growth capital could mark something of a turning point for the mining industry. 

Average shareholder returns by the top 30 miners have increased by a compound annual growth rare of 22% from 2019 to 2022, according to the EY report.

Despite a return to mega-profits at the top tier, the focus has remained on dividends and capital discipline, not gearing up for growth. 

Over the past 20 years, expansion capital spending across the industry has typically run above 20% of top line profits, which is to be expected in an industry with depleting assets and falling grades. 

The last couple of years have seen this metric slip to around 10% as companies continue to favour shareholder returns over building new mines.

So far however, growth capital for the energy transition does not appear to be flowing into mining with the report finding iron and steel, gold, and coal companies attracting the most capital since 2022. Not exactly Mining 2.0 money.

The report states that capital raised through debt and equity in the first seven months of 2023 has remained steady ($196 billion compared with $192 billion in the same period of 2022) and according to the authors “this trend is expected to continue into 2024.”

There is no doubt lithium and nickel are attracting attention as mainstream investors and outside capital jump on the electric car bandwagon, but steep price falls for these commodities this year may see many cool on EV raw materials sooner than expected. 

It’s also noteworthy that money raised for copper – the crux of the energy transition – is down 28% in 2023 while specialty metals investment is down by almost 50%, despite the many “critical minerals” lists drawn up by countries over the last few years.

In the first seven months of 2023, mining and metals companies issued $1 billion of green bonds, down from nearly $4 billion in the same period of the prior year. EY expects the trend of linking ESG bonds to specific projects, for example renewable energy, biodiversity and investing in local communities, rather than large overall targets, continuing.

Get the balance right

Building new mines has become a trickier proposition with new ESG requirements adding significantly  to capex costs – and not just for greenfield projects.  The financial woes of Codelco struggling to lift output from a decades low at its existing operations serves as a warning to the rest of the industry.

Recent volatility has exacerbated the problem of capital productivity that has long concerned the mining sector, adding that apart from increased input costs, higher interest rates are pushing up the cost of capital, says EY.

A review of 132 development projects requiring more than $1 billion of capital investment showed nearly one in five faced cost overruns, with an average blowout of $500 million.

EY says miners “should be mindful of the need for older projects to meet newer ESG requirements, which may include electrification, green energy and low water usage, to win financing.”

EY highlights the challenge miners face to “balance returns with responsibilities” and quotes one executive who said “new mines need to be carbon neutral from the outset” and another who stated “you can no longer develop brownfields if there is no green power supply”:  

“As miners adapt models and make more difficult investment decisions, they will need to make sure they bring investors along on the journey. 

“With interest rates unlikely to decline soon, companies may need to work harder to balance sustainable alternatives with economic returns.“

“Global markets are now flooded with cheaper Chinese electric cars and that price is kept artificially low by huge state subsidies. This is distorting our markets,” von der Leyen told the European parliament in Strasbourg, and just to make sure the scale of the problem is not lost on anyone she added that European carmakers “are often undercut by competitors benefiting from huge state subsidies.” It’s huge.

Considering the high stakes and troubling outlook that particularly the German mass market automakers like Volkswagen are facing, the eventual imposition of tariffs or other measures to limit Chinese carmakers’ access to Europe has an air of inevitability to it. 

European carmakers already have a number of successful joint ventures inside China and at the beginning of last year Beijing scrapped ownership restriction for foreign carmakers entirely, so how the country could further open up its market to the EU is unclear.

Mad at made-in-China

Chinese EVs are scarcer than Chinese-made electric golf carts in the US and the subsidies incentives under the $430 billion-plus Inflation Reduction Act (IRA) are designed to keep it that way. 

The Biden administration’s grants, subsidies incentives and loans to build its EV supply chain under the IRA led to consternation in Brussels over how to respond.  The European Green Deal (EGD) is huge, and just to to reiterate, it’s huge – at least €600 billion from the continent’s covid recovery plan is being funnelled into the program. 

For the EU, bolstering its eastern flank to defend its car industry is a logical next move.

The middle kingdom’s vehicle exports surpassed South Korea in 2021, then overtook Germany in 2022, and this year will take top spot from Japan. Trade data indicates a total of 2.8 million vehicles were exported from China during the first 7 months of 2023 including 1.8m ICE-powered vehicles, a 74% jump compared to last year. 

At the recent Munich auto expo 50 Chinese companies displayed their wares and even the most ardent euroland car lovers agreed, they stole the show. 

There may be a case to make that China’s growing success on European car markets is the result of predatory practices and Beijing pouring money into its industrial champions, but if the IRA and the EGP is not a dollar short, it’s more than a day late. 

China powers ahead, in Europe

The rapid success of Chinese automakers in dominating all aspects of the global mine-to-megawatt supply chain – the key to EV affordability – over little more than a decade is short of astonishing. How Chinese electric cars, which are shot through with high-tech features often not found in US and European-made vehicles, were able to leapfrog the West, is not.

Europe has reason to worry.  From a standing start, China has now cornered a full fifth of Europe’s EV market.

Adamas Intelligence tracks electric passenger car registrations and the metals contained in their batteries in over 100 countries. The Toronto-headquartered research consultants’ EV Battery Capacity and Battery Metals Tracker shows that in the first half of 2023, 19% of all GWhs delivered to EV (and hybrid) buyers in Europe, including Britain and non-EU states, were contained in China-made EVs and packs.

In absolute terms, the battery power exported to Europe from China has grown more than 51% year to-date – a total of 14 gigawatt hours. And China is stepping on the accelerator. The month of June saw 71% more made-in-China GWhs end up in Europe compared to June 2022, cornering a full fifth of the market.

Cheap but good

European car-buyers probably won’t be pleased if the European Commission’s response leads to higher EV prices and less variety (as it likely will). 

Adamas data show the best-selling electrified car in China in 2023 is the BYD Song Plus DM-i plug-in hybrid, with a range of 1,000 km, including 150 km in fully electric mode. It goes for a song in its home country – just $27,000. Given the cutthroat competition there it can probably be had for even less. 

For European car buyers struggling to cope with rolling energy crises the ability to drive from Berlin to Paris in an sleek compact SUV on a single charge won’t go unnoticed. (Neither would the rotating 13” TikTok-ready touchscreen.)  

The Song is not available in the US or Europe although Brazil has taken more than 1,000 deliveries in 2023. In China, BYD has sold Songs to the tune of 229,000 units in the first half of this year.

Chinese car shoppers enjoy an embarrassment of riches with 110 (yes, that’s one-hundred-and-ten) different brands and more than 300 different electrified models to choose from.

The Commission may be pleased to hear that the majority of Chinese EV exports to Europe this year were non-Chinese brands, including cars made by BMW and Dacia in China. The fact that the best part of these shipments were Teslas only complicates matters. 

Possibly slapping tariffs on the US electric car pioneer because it assembles EVs and uses batteries made in Shanghai won’t please Washington but makes it clear any legislation that comes out of the investigation won’t be easy to navigate.  

A fast boat from China

For miners supplying the battery metals, the EU-China EV spat is simply more fuel on the fire started by the IRA and continued by EGP.

Made-in-China EVs have hauled 30,000 tonnes of battery metals onto European roads so far this year.

Adamas data shows that the batteries of made-in-China EVs exported to Europe over the first six months of 2023 contained over 8,000 tonnes of lithium carbonate equivalent, representing 18% of Europe’s total consumption over that period, and an increase of 67% year-on-year. 

No doubt when sodium-ion batteries, already garnering market share in China, fully take off, Europe should expect even more salted roadways.

Similarly, 20% of graphite deployed onto Europe’s highways and byways through the first half of 2023 hit the road in China-made EVs and packs, totaling almost 13,000 tonnes year-to-date, up 68% year-over-year.

Over the same period, nearly 6,000 tonnes of nickel made its way to Europe from China in EVs with NCM lithium-ion batteries, representing 14% of all battery nickel deployed in the region year-to-date and a 46% increase in imports year-over-year.

Moreover, some 1,300 tonnes of manganese was exported to Europe from China in latter-made EVs and packs, making up 12% of all manganese deployed onto European roads through the first half of the year and a whopping 82% more than it imported the year prior.

Cobalt exposure was more modest, with approximately 1,000 tonnes of the thermal-runaway curbing battery metal deployed onto European asphalt in China-made EVs so far this year, constituting just 11% of all battery cobalt deployed in the region year-to-date, albeit a 62% rise in import tonnage year-over-year. 

Modest cobalt use in China-made EVs points to the fact that Chinese EV and battery makers’ chemistry of choice is cheap lithium iron phosphate (LFP), which in June made up 50% of the market there. LFP battery production for EVs outside China is virtually non-existent. 

Premium product

The likely outcome of the EU move is to halt or at least slow down China exporting the overcapacity that has built up in its domestic EV industry.

The 30,000 tonnes of battery materials sourced from all over the world by China’s EV and cell makers then exported to Europe will now have to find a different route.

China’s dominant position along the supply chain means it holds sway over battery metal prices and on some raw material markets acts as a monopsony.

Miners have long dreamt about attracting a premium for their products when delivered to Western markets where environmental, social and governance rules are stricter.

Von der Leyen’s talk of artificially low prices brings that reality one step closer.