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copper

Tanzania turns up heat on overseas miners with State stake law

DAR ES SALAAM – Tanzania put more pressure on foreign mining companies on Tuesday by amending mining and tax laws to make it mandatory for the State to own at least 16% of mining projects, while also raising export royalties.

Parliament passed the bill unanimously, the State-run Tanzania Information Services said.

This followed two other laws passed on Monday giving the resource-rich East African nation the right to tear up and renegotiate contracts for natural resources like gas or minerals, and removing the right to international arbitration.

The bills were introduced on Thursday and rapidly passed, despite pleas for more time from an association representing mining companies.

“In any mining operations under a mining licence or a special mining licence, the government shall have not less than 16% nondilutable free-carried interest shares in the capital of a mining company,” the text of the new law says.

The government also left itself scope to further increase its stake in the companies.

“In addition to the free carried interest shares, the government shall be entitled to acquire, in total, up to 50% of the shares of the mining company commensurate with the total tax expenditures incurred by the government in favour of the mining company.”

There was no further explanation from the government, but industry sources said they believed the bill meant the government might take further shares in companies that it accused of owing taxes, in lieu of the money owed.

Government officials were not available for comment.

President John Magufuli has accused large mining companies of evading taxes. Charges they deny. At a public rally on Tuesday, he said Tanzania was fighting an economic war.

“We couldn’t wait to pass the laws because of the large scale theft taking place in the mining sector,” he said.

RISING ROYALTIES
The new law also raises royalties from gold, copper, silver and platinum exports to 6% from 4%. It increases the royalty on uranium exports from 5% to 6%.

The law also allows the government to reject a company’s valuation if it believed the price was too low. The government would be entitled to buy the consignment of minerals at the price quoted.

“For the purposes of calculating the amount of royalties payable, the government shall be entitled to reject the valuation,” the text of the new law said.

“Where the government rejects the valuation, it shall have the option to buy the minerals at the low value.”

Tanzania’s largest miner Acacia, majority owned by Barrick Gold, said on Tuesday that notices of arbitration were served on behalf of companies that own its Bulyanhulu and Buzwagi mines, which have been hit by an export ban.

“The serving of the notices at this time is necessary to protect the Company,” Acacia said.

 

 

Source: Mining Weekly

Zambia’s 2017 copper output expected to top 850 000 t

LUSAKA – Copper production in Zambia, Africa’s No.2 producer of the metal, is expected to rise to 850 000 t in 2017 from 770 597 t last year, the nation’s vice president said on Thursday.

“Copper production is poised to continue increasing owing to the expansion projects at existing mines and greenfield projects that are ongoing,” Vice-President Inonge Winasaid at a mining and energy conference.

Source : Mining Weekly

Copper production growth to accelerate to 2021

JOHANNESBURG – Global copper production growth will be supported by key markets with low operating costs and strong project pipelines in the next four years, according to research firm BMI’s copper outlook report, released Monday.

Global copper mine production, supported by markets and low operating costs, is forecast to increase by an average yearly rate of 4.1% between 2017 and 2021, as many major projects come on line.

“In terms of volume, we expect global copper output to climb from 20-million tonnes in 2017 to 23.7-million tonnes by 2021,” said BMI in a statement.

However, the research firm noted that a few developments will pose considerable risks to the copper mine outlook for 2017, namely labour unrest in Latin America and Freeport McMoRan’s negotiations with the Indonesian government to resume copper exports from the Grasberg mine, which could result in lower-than-expected output.

The Democratic Republic of Congo’s (DRC’s) copper production will return to solid production growth in 2017, supported by continued investment in high-grade reserves, the report says.

“The DRC will regain global copper ore market share of 5% by 2021, after falling to 4.7% in 2016.”

Chile, meanwhile, is expected to remain the leading global copper producer by a wide margin, though the nation’s copper sector will face ongoing challenges, declining ore grades, freshwater shortages and labour unrest.

“Chile will account for a gradually declining share of the global total, from 27.2% in 2017 to
24.7% in 2021,” said BMI.

“We forecast Chile to produce 5.4-million tonnes of copper in 2017, down slightly from 5.5-million tonnes the previous year, and to return to gradual production growth thereafter,” the statement said.

BMI further noted that China’s copper sector will post steady production growth as miners contend with declining ore grades and a slow copper price recovery.

“We forecast China’s copper production, which accounts for 9% of global output, to increase from 1.8-million tonnes in 2017 to two-million tonnes by 2021.”

Peru’s copper sector, meanwhile, continues to post strong production growth as projects in the country come on line. Its total output exceeded two-million tons in 2016, thereby overtaking China as the world’s second-largest copper producer.

“Peru’s copper production will increase from 2.6-million tonnes in 2017 to 3.7-million tonnes by 2021, averaging 10.2% yearly growth.”

BMI added that competitively low operating costs and high-grade reserves will underpin Peru’s copper production as copper prices remain subdued by historical standards.

US copper production will increase from 1.4-million tonnes this year to 1.6-million tonnes in 2021.

“Environmental deregulation under US President Donald Trump will encourage project development in the copper sector,” the report said.

Source : Mining Weekly

Impact of copper strikes fizzles on scrap inflow, mine rebound

LONDON – Disruptions at the two biggest copper mines early this year may have only a muted impact on prices after a surge of scrap metal partially filled the supply gap and a recovery in mine output is due to help in the second half.

A strike at the world’s biggest copper mine, Chile’s Escondida, and other disruptions initially prompted worries about shortages of the metal used in construction and power transmission, pushing up prices.

Analysts polled by Reuters in April expected a copper deficit this year of 17 000 t versus a consensus forecast in January of an 80 000-t surplus.

But some analysts now say supplies will be adequate and that the market will end the year with a modest excess of metal.

“It’s a smaller surplus, but it’s still essentially a surplus,” said Karen Norton, an analyst with Thomson Reuters GFMS.

“There were enough stockpiles during that critical period and there was also the secondary (scrap) offsetting as well.”

The benchmark copper price on the London Metal Exchange climbed 12% early in the year to a peak of $6 204 a tonne by mid-February as investors fretted over supplies, but it has since given up 7%.

BIG MINES RAMP UP
BHP Billiton lifted force majeure this month at Escondida after a strike that lasted 43 days, the longest in Chilean mining history.

The second-biggest copper mine, Grasberg in Indonesia, has been ramping up shipments after the government granted an export permit in April following a 15-week outage related to a dispute over mining rights.

On Friday, Freeport-McMoRan Inc said it was “on a path” to get a new mining deal with Indonesia this year for Grasberg, although the company continued to grapple with labour problems.

While the Grasberg situation has created some uncertainty, other mines such as Chile’s Collahuasi have agreed new contracts.

“Looking forward, we see limited scope for further major, labour-related supply disruptions this year,” analyst Natasha Kaneva at JPMorgan said in a note.

Kaneva forecasts copper mine production to grow by an average of 2.1% year-on-year from April to December and the copper price to weaken to $5 000 by the end of the year.

Mining operations could also benefit from having had time during the strike to perform extra maintenance, said analyst Vivienne Lloyd at Macquarie.

The market remained relatively well-supplied when the two biggest mines were shut after high copper prices late last year drew a wave of scrap metal into the market.

“It looks as though the scrap inflow into the market really diluted the impact of the primary shortage, because we saw scrap moving in, not so much into smelter furnaces, but in place of cathode being consumed by the fabricators,” Lloyd said.

The flow of scrap is now dissipating, which may support copper prices temporarily, she added.

“We saw the second quarter as a bit of a deficit, but we think it will move back towards surplus in the second half,” Lloyd said.

In another sign of healthy supply, copper concentrate treatment and refining charges have risen to the highest levels since mid-February, specialist publication Metal Bulletin said.

The charges, paid to smelters to process concentrates into metal, move higher when supply rises.

Source : Mining Weekly

China says Zambia let go 31 Chinese held for illegal mining

BEIJING – Dozens of Chinese nationals who had been held for illegal mining in Zambia have departed the African country to return home, China’s Foreign Ministry said on Wednesday.

China had complained that Zambia provided no strong evidence of crimes committed by the 31 arrested in the copperbelt town of Chingola, including a pregnant woman and two victims of malaria.

But Zambia’s immigration chief had told Zambian media the Chinese would have to be deported for violating the law.

“After repeated representations by China’s Foreign Ministry and its embassy in Zambia, on the afternoon of June 6, the 31 Chinese citizens that had been seized and detained, boarded a plane and left Zambia smoothly, to return home,” ministry spokesperson Hua Chunying said.

In a letter, the 31 had expressed their “satisfaction” with the Chinese embassy’s efforts on their behalf, Hua told a regular news briefing.

Chinese companies have invested more than $1-billion in copper-rich Zambia, but there has been animosity, with some Zambian workers accusing firms of abuses and underpaying.

In 2012, Zambian miners killed a Chinese supervisor and seriously wounded another in a pay dispute at a coal mine. Zambian police charged two Chinese supervisors at the same coal mine with attempted murder two years earlier, after the shooting of 13 miners in a pay dispute.

Resource-hungry China is investing heavily in Africa, a supplier of oil and raw materials, such as copper and uranium, but critics have warned its companies take with them their poor track record on workers’ rights and environmental protection.

Source : Mining Weekly

China says 31 nationals detained in Zambia for illegal mining

BEIJING – Zambia has detained 31 Chinese nationals for illegal mining in the African country’s copper belt but has failed to provide strong proof of their crimes, a senior Chinese diplomat said as he lodged a complaint.

Lin Songtian, the Chinese Foreign Ministry’s director-general for African affairs, told a Zambian diplomat in Beijing that China understands and supports actions to crack down on illegal mining, the ministry said in a statement late on Sunday.

However, Zambia had not only not provided strong proof of the crimes of the 31 detained but had also detained a pregnant woman and two others with malaria, Lin said.

“China expresses serious concern and resolute opposition to this,” the ministry cited Lin as saying.

China hoped that Zambia could handle the incident appropriately and as soon as possible, and release those who are innocent, Lin said.

Chinese companies have invested more than $1-billion in copper-rich Zambia but there has been animosity, with some Zambian workers accusing firms of abuses and underpaying.

In 2012, Zambian miners killed a Chinese supervisor and seriously wounded another in a pay dispute at a coal mine.

Zambian police charged two Chinese supervisors at the same coal mine with attempted murder two years earlier after the shooting of 13 miners in a pay dispute.

Resource-hungry China is investing heavily in Africa, a supplier of oil and raw materials like copper and uranium, but critics have warned that its companies are taking with them their poor track record on workers’ rights and environmental protection.

Source : Mining Weekly

Congo businesses denounce ‘unjust’ taxes in copper-mining region

KINSHASA – The Chamber of Commerce in Democratic Republic of Congo has complained to the government about a worsening business climate in the country’s copper-mining region, including what it says are unjustified duties on power imports.

In a letter to the finance minister dated June 1, the chamber said Congo’s customs agency has levied more than $300-million in penalties on mining companies for failing to declare electricity imports or making false customs declarations.

The chamber said this was despite the fact the public power utility, rather than the companies themselves, imported the electricity before selling it on, according to the letter.

“To force the companies to pay the unjustly demanded sums, the (customs agency) uses heavy-handed tactics, going as far as withholding the goods of the concerned companies so that they quickly give in and pay the high penalties,” the letter said.

The finance minister, who oversees the customs agency, did not immediately respond to a request for comment.

Authorities routinely say they are committed to improving Congo’s business climate, which ranks a lowly 184 out 190 countries on the World Bank’s Doing Business Index.

However, mining companies say they see little progress and are also concerned about a government proposal to revise the 2002 mining code to raise royalties and other taxes to boost the cash-strapped government’s revenues.

Mines Minister Martin Kabwelulu told Reuters on Friday the proposal would be presented to parliament later in the day.

Despite such concerns, mining giants such as Glencore, Randgold and China Molybdenum have made major investments in Congo, Africa’s top copper producer and a significant producer of cobalt, gold and diamonds.

But electricity poses a knotty challenge. Congo’s copper-mining Katanga region receives only about half the power it needs from the national grid, forcing operators to rely on expensive generators or imports from neighbouring Zambia.

The state power utility recently signed a provisional agreement with South Africa’s Eskom to import 200 MW of power which would be used by mining companies.

Source : Mining Weekly

Tembo secures shareholding in Orion

PERTH – ASX-listed junior Orion Minerals has welcomed a A$3-million investment from equity group Tembo Capital Mining Fund, which would see the UK group hold a combined 19.6% share in Orion.

In April this year, Orion flagged the possible investment by Tembo, as well as the formation of a strategic relationship.

The company on Wednesday told shareholders that Tembo has now agreed to subscribe for 125-million shares, at an issue price of 2.4c each, for a total capital investment of A$3-million. The placement would result in Tembo holding a 12.6% share in Orion, but when combined with its convertible notes, the firm’s shareholding would increase to 19.6%.

The share issue has already been approved by shareholders, with Orion also retaining its 15% placement capacity.

Meanwhile, Orion is in the process of reviewing the amount of funding required to rapidly advance its Prieska zinc-copper project, in South Africa, through to the completion of a feasibility study, leading to a development decision.

Following this review, the company will determine what capital raising initiatives would be required, with Tembo already indicating its support.

Orion said on Wednesday that the company was planning a rights issue to raise additional equity, as soon as reasonably practicable.

Source : Mining Weekly

Surging copper stockpiles point to concerns over global demand

LONDON – Another surge in copper stockpiles tracked by the world’s top base-metals bourse is reigniting concerns about demand for the material that’s often viewed by investors as a bellwether for the global economy.

A 40% jump in inventories monitored by the London Metal Exchange in just three days comes amid concerns about China’s slowing industrial activity. Prices of copper, referred to as the metal with a Ph.D in economics, are trading near a four-month low.

Financial markets in China, the top copper user, are feeling the pressure of tighter liquidity and rising money-market rates that have pushed down prices of iron ore to zinc. Investors are also waiting for US President Donald Trump to push through electoral pledges, including boosting stimulus spending that helped push copper prices higher since late last year.

“The optimism over Trump’s spending and China has been overblown,” Dan Smith, head of commodities research at Oxford Economics in London, said by phone.

While copper futures were little changed on the LME Friday, they’re heading for the biggest weekly drop this year.

Copper held in LME warehouses climbed more than 11% for a third day and is at the highest since October. A measure of stockpiles tracked by the LME, Comex and Shanghai Futures Exchange rose 13% this week.

Still, analysts said the LME inflows could also be due to traders moving metal from China to other destinations to profit from a price gap between LME and Shanghai prices. The London bourse doesn’t have any storage facilities in China.

“Some are saying it could be a reflection of weak demand in China, but equally it could simply be that stocks are being relocated from the Shanghai Futures Exchange to London Metal Exchange warehouses due to the arbitrage,” Robin Bhar, an analyst at Societe Generale SA in London, said by phone. “That would be my favored theory.”

Recent history shows the LME’s incoming metal may be in strong demand. Three similarly large inflows since August were then withdrawn in the following months.

“The pattern has been one of volatility, with stocks increasing sharply and then falling away,” Eugen Weinberg, an analyst at Commerzbank AG in Frankfurt, said by phone. “It’s a massive inflow, but whether we will see outflows in the next few weeks remains to be seen.”

Source : Mining Weekly

Deshnee Naidoo in Tasmania as govt invests in copper restart

JOHANNESBURG (miningweekly.com) – Deshnee Naidoo, who is leading the development of former Anglo American-owned zinc assets in South Africa’s Northern Cape, has just returned from a fruitful interface with the Tasmanian government, which has agreed to invest A$9.5-million in the restart of the Mt Lyell copper mine, a Copper Mines Tasmania (CMT) operation, which is part of the Vedanta group.

Involved is the restart of an operation that is more than 120 years old and which has been on care-and-maintenance for the last two and a half years.

Naidoo, who is CEO of Vedanta Zinc International and CMT, was in Tasmania last week to meet Tasmanian Premier Will Hodgman and Tasmanian Resources Minister Guy Barnett to discuss the update on a CMT restart.

“This is an extreme display of the government’s commitment towards a restart. Although recognising that further study work needs to be completed before a firm restart decision is made, the government gave CMT A$9.5-million for activities to support an accelerated restart,” Naidoo told Mining Weekly Online in an emailed response, in which she explained CMT’s integral role on the West Coast of Tasmania and the firm government opinion that everything possible needs to be done to further support Vedanta, which has spent in more than $80-million in the past two and a half years of the operation being on care-and-maintenance.

Naidoo said that a restart decision would be taken by the end of the year, once the necessary study work was completed.

However, pre-start activities that the A$9.5-million supported would begin immediately and support the employment of 50 to 60 people.

She said the government of Tasmania encourages foreign investment, with CMT also being offered payroll tax and royalty relief for a period after restart.

The intention is to restart on operating parameters similar to those that pertained prior to care-and-maintenance, involving the production of 2.5-million tonnes of run-of-mine material a year.

In parallel, work would be done on de-bottlenecking options in hoisting and processing and targeted exploration.

Naidoo revealed that the team had also proposed a ‘green, reduced emissions’ restart by looking at using electric trucks.

The Premier told journalists that the investment would allow CMT to undertake a range of projects essential for the restart of operations and could potentially bring forward a restart by more than six months.

Reporting from Perth, Creamer Media Senior Deputy Editor Esmarie Swanepoel quoted the Premier as saying that the projects would begin almost immediately and create more than 50 to 60 new jobs at the mine in the construction phase.

“Importantly, this will move us closer to the restart of mining operations, which in the longer term will be expected to create up to 300 jobs,” Hodgman added.

The decision to restart operations at Mt Lyell could require a capital investment of between A$80-million and A$100-million, Naidoo revealed.

Since mining operations ceased in January 2014, CMT and Vedanta had invested around A$100-million in the project to develop new block cave mining methods, environmental projects, and on exploration and rehabilitation at the project area.

Barnett said that CMT’s recent announcement that it was reviewing restart plans on the back of improved copper prices meant that the present was the perfect time for the Tasmanian government to take decisive action to help bring about the restart.

The A$9.5-million government investment would support four key projects at the mine, including the A$4.5-million decline refurbishment, the A$1.5-million North Lyell tunnel rehabilitation, the A$2-million West Queen water supply pipeline replacement and the A$1.5-million associated infrastructure for the crushing mill upgrade.

Naidoo told journalists that the government’s investment would allow a restart decision much sooner, and would make it more likely, besides providing community and environmental benefits.

Barnett said  CMT were investigating the redevelopment of the processing plant and ore handling circuit with the possibility of employing electrically powered trucks to bring ore to the surface.

“This is an innovative approach which would make the Mt Lyell mine the first fully electrified underground mining operation in Tasmania,” Barnett added.

Diversified mining company Vedanta, which is being associated with the acquisition of 11% of the equity of Anglo American by Volcan Investments because of the link both these entities have with Indian billionaire Anil Agarwal, has done well with the South African assets it acquired from Anglo seven years ago.

On the $1 338-million Vedanta paid for Anglo’s zinc assets in 2010, the London-listed, India-rooted company achieved full payback two years later through decisive underground and near-pit mining.

A formerly of Anglo American executive, Naidoo has managed to shave close to $200-million off the project’s original capital estimate, taking it down to $400-million.

In a video interview with Mining Weekly Online last year, Naidoo again outlined Vedanta’s thrift culture in that the company is planning to use revenue generated during the Gamsberg project’s first phase to help fund its second phase, which will probably include a new 300 MW to 350 MW zinc refinery at a cost of nothing less than $500-million to $600-million.

A contract to establish and mine the Gamsberg opencast zinc operation has been awarded to Aveng Moolmans by Black Mountain Mining, a Vedanta Zinc International operation.

The contract award to Aveng Moolmans involves the setting up and commissioning of a concentrator plant and associated infrastructure for the opencast mine, which is located on one of the world’s largest undeveloped zinc deposits, 20 km east of the town of Aggeneys, in South Africa’s Northern Cape.

Engineering solutions provider ELB’s Engineering Services will oversee the construction of the process, power and water plants at the project.

Source : Mining Weekly