206 (27.12.18)


NEWS WRAP

Good Week for gold miner Petropavlovsk. After five years of in-fighting the company has appointed to its board Harry Kenyon-Slaney, one of the industry's top troubleshooters, who quietly fixed-up Rio Tinto's coal and uranium assets, before leading a dramatic turnaround at Gem Diamonds’ Letseng mine in Lesotho in the last year

Bad Week for voters in the D.R.C., where elections have been delayed after 8,000 of the country's 10,368 voting machines were burned in a warehouse fire in Kinshasa. Now three years overdue, voting was due to begin last Sunday but will be staggered over three months. Voters in opposition strongholds in the east will have to wait until March 2019

Australian Gold Booming

10km from one of the world's largest gold mines in Kalgoorlie in Western Australia, gold miner Northern Star is drilling holes into the outback.
Under an A$80m ($56m) deal earlier this year, chairman Bill Beament snapped-up a small gold mine surrounded by a large land package near the iconic Super Pit, a 3.5km crater that has produced more gold than any other mine in Australia. “There's six major structural corridors ripping through the guts of that 1,000km tenement package,” Beament told investors. “We see huge geological upside.”
Beament’s efforts are being replicated across Australia's booming gold mining industry, which is days away from finishing its best ever year. Companies across the country have mined 162 tonnes of gold in the last two quarters, putting Australia on track for a record-breaking 12 months.
The strength of the US dollar means Australian gold mines are enjoying high prices and bumper cash flow. Shares in Northern Star are up 48 per cent this year. Rivals Saracen and Evolution have also seen their shares rocket.
With output up 50 per cent in a decade, Australia looks set to fly through 10 million ounces in 2018 and may even beat its all-time high of 314 tonnes in 1997.
Australia is the world's second largest gold miner, behind China, producing almost twice as much gold as Canada. But unlike the US or South Africa, Australia's output is spread across dozens of smaller operations with high-grades and short mine-lives, meaning output goes up and down quickly with exploration budgets.
Northern Star recently lifted its drilling budget to A$60m, but is planning another increase to nearer A$80m. Exploration spending across Australia is up 28 per cent in 12 months, according to the Australian Bureau of Statistics, whilst spending by gold groups in Western Australia is at its highest level since records began in 1988.
Even non-gold companies, including copper miner Teck, have started pegging ground near Kalgoorlie, whilst smaller companies, including RNC, have reported monster gold hits in Australia in 2018. At its new land package, Northern Star has so far reported grades up to 8.9 grams per tonne. “It's like a new car,” Beament says. “It's getting a bit of love and attention.”

Barrick: Unplugged

Barrick Gold has switched off its new tech division. Under chairman John Thornton, Barrick was investing heavily in technology, wiring up its underground mines under a $100m partnership with Cisco Systems, aiming to use sensors and A.I. to make key decisions, including where to drill for ore, and when to pull trucks for maintenance. Tech investment was “the primary battle ground”, Barrick's lenders told Reuters.
But soon after its $18bn merger with Randgold, incoming chief executive Mark Bristow, who built Randgold’s mines across Africa, is reversing away from the idea of creating a digital mine of the future.
Chief innovation officer Michelle Ash, chief operating officer Richard Williams and chief digital officer Sham Chotai have all left. Bristow has also disbanded teams in Toronto and Nevada. Technology will “continue to be a key driver”, a Barrick spokesman told the Wall Street Journal.
Shares in the combined company are due to begin trading in New York in January under Randgold’s ticker, GOLD. “This is now Mark Bristow’s company and I think John knows that,” VanEck fund manager Joe Foster told Bloomberg.

Kaput: German Coal

In a sorrowful day for German coal, the country has closed its last underground colliery, waving an emotional goodbye to one of the world's dirtiest commodities.
1,500 miners clocking off in the city of Bottrop last week passed round the final block of coal, before handing it to German President Frank-Walter Steinmeier, who took it with the words, “glueck auf” (“good luck”). “This is more than a piece of coal,” he told a tearful crowd. “This is history.”
The event was aired live on television. Churches held special services across the country, reports news agency Associated Press. EU Commission chief Jean-Claude Juncker looked on as a mining choir sang “Steigerlied”, a German miners’ anthem.
Germany still has some of the world's largest open pit coal mines, but deep collieries have been undercut by imports and wind energy. Chancellor Angela Merkel began phasing-out coal subsidies in 2007, dodging protests by giving workers 11 years notice. “This day has moved many people across Germany,” Steinmeier said.

 

QUOTE OF THE WEEK

“We never comment on market speculation.”

AngloGold on reports it will exit South Africa and list in London, filling a gap left by Randgold after its merger with Barrick. With 14 mines in 10 countries, AngloGold mined $4.4bn of gold last year


CONTENTS

“Every Last Cent”: Inside Anglo’s Trading Office in Singapore

“You think a piece of coal is a piece of coal, but all of that is worth money, because it's valuable to the customer.”

Copper Deals 2019

As bankers and dealmakers look into 2019, who’s buying, what’s up for grabs and who could partner-up?

Every Day in China

A daily snapshot of how life has changed in the 20 years since China was invited to join the World Trade Organization

20 Critical Trade Routes

How Glencore wrings cash out of zinc at all points in the cycle: “Even if you stress test the business we still generate a vast amount of cash.”