203 (21.10.18)


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NEWS IN BRIEF

Good Week for vanadium prices, up 550 per cent in two years. Vanadium goes into alloys to toughen steel, but is increasingly being used to make giant, backup batteries. Shares in producers including Largo and Bushveld Minerals hit an all-time high on Wednesday.

Bad Week for iron ore miner Cliffs Natural Resources, which fell 10 per cent after CEO Lourenco Goncalves lashed out at analysts on a conference call. “You are an embarrassment to your parents,” he said, calling them “kids that play with computers... You are messing with the wrong guy.”

Shopping Copper

From Freeport's huge copper mines in Arizona to First Quantum's $6bn Cobre Panama project, the market is suddenly awash with copper assets that bankers are struggling to sell.
Atalaya Mining, which has breathed new life into an abandoned copper mine in Spain, was the first to break cover, confirming reports in Reuters that it is looking for a potential buyer. But other assets are also being quietly shopped around, including the Mantos copper mine in Chile and the operations underlying Freeport and First Quantum, two of the world's biggest copper producers. “You would see us trying to get the best deal we can,” Freeport's chief executive Richard Adkerson, 71, told Bloomberg.
Several cash-rich companies, including Lundin Mining and Rio Tinto, have publicly said they want to bulk-up on copper, but everything on the market currently comes with downside: First Quantum is in the midst of a $7.9bn tax dispute with Zambia’s government, whilst Indonesia is piling pressure on Freeport's giant Grasberg mine, lifting the state’s interest to 51 per cent. Copper grades are meanwhile dwindling at both Mantos and Atalaya.
Behind each asset is an investor looking for cash. Freeport is backed by American trader Carl Icahn, who bought into the company when copper collapsed in 2015 and has been dumping stock ever since, whilst Mantos is backed by London-based fund manager Julian Treger, known for flipping assets. First Quantum's founders, including chairman Philip Pascall, 70, are also looking for an exit.
“I’m not sure there is a buyer for large-scale assets at premium in the market now,” said Jefferies analyst Christopher LaFemina. “Who’s going to spend $20bn plus?”

Pressure on Detour Gold

Canadian gold miner Detour “always welcomes constructive input from shareholders”, a company spokesman said this week, though that sentiment was dearly tested after a second American hedge fund piled pressure on the company's board.
Its Detour Lake mine in Ontario is one of the world's largest gold operations and is due to produce a whopping 600,000 ounces per annum for the next 20 years, but New York-based hedge fund Paulson & Co. has been calling for an overhaul, accusing Detour's directors of cashing-in options as costs drift ever-higher.
Illinois-based Livermore Partners has now also joined the fray, saying it can no longer be silent. “We think there needs to be wholesale change,” said Livermore's managing director. “I have zero conviction that the current management team and board can execute.”
Detour's shares are down by two-thirds over the last three years, knocking $4bn off its market cap.

Uranium in Spain

Shares in Australian uranium play Berkeley Energia tanked this week, falling 29 per cent on news that the Spanish government published a report three months ago saying it will block the company's project.
Despite Spain's cumbersome permitting process and opposition to nuclear energy, Berkeley has sunk ten years and $81m on its Salamanca project west of Madrid, hoping to build Europe's only opencast uranium mine. It is “business as usual”, the company recently told investors, though sources involved in the permitting say the company is “living in a parallel universe.”
Berkeley has received “no official notice” from the government, it told the Australian stock exchange.

 

QUOTE OF THE WEEK

“We reject all criticism.”

Afghanistan is privatising its mining assets, but officials were asked awkward questions after two large copper deposits went to a former minister (Reuters)


CONTENTS

Glencore & Volkswagen: When Carmakers Drove into the Mining Industry

The inside track on how VW tried to buy up the global cobalt market

Elliott’s New Royalty Group Open to IPO

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20 Critical Trade Routes

Before dawn in the DRC, a mercenary is sitting in a truck parked-up on the edge of the country’s largest mine