Newsletter 8-04-2024

Newsletter – 2.04.2024

2/04/24                                      WEEKLY NEWSLETTER
  • Saudi Arabia's mining profits rise thanks to Jeddah
  • Copper price bulls bring back $10,000 forecasts
  • How Gulf states are putting their money into mining
  • MP Materials awarded $58.5 million tax credit for Texas rare earth magnet factory
  • US talks often with Congo’s Gecamines on cobalt and copper, official says
  • Nigeria to issue mining licences to companies with local processing plans
  • Sigma Lithium gets board’s nod for $100m Brazil plant expansion

Saudi Arabia's mining profits rise thanks to Jeddah

Saudi resort city consolidates its position as a global trading hub

The London Metal Exchange recently revealed that it intends to list the Saudi city of Jeddah, on the Red Sea coast, as a new key delivery hub for copper and zinc. The main hubs listed on the world's oldest metals exchange are typically located in high consumption areas or major trading centres such as Rotterdam.

Aramco plans to extract lithium from salt water

And in this regard, according to Matthew Chamberlain, chief executive of the exchange, Saudi Arabia "is an increasingly important global metals hub". For this reason, Jeddah "meets the operational and logistical standards for the location of new warehouses, as it is an important region with a high consumption of metals and has an efficient transport network". 

This important recognition has been achieved thanks to the efforts of the Kingdom, which intends to launch an ambitious programme of industrial development and logistics services within Vision 2030. This industrial programme aims to transform the country into a pivotal entity on the global stage in the energy, mining, logistics and industrial sectors.

Copper price bulls bring back $10,000 forecasts

Can copper supply keep up with green demand.

After a solid lift to near one-year highs, the copper price is once again in danger of falling below the pivotal $4.00 a pound ($8,820 a tonne) level, closing the first quarter at $4.0115 a pound in New York. LME prices have followed the same course after hitting a high of $9,164.50 on March 18.

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.

How Gulf states are putting their money into mining

The geopolitics of mining and the role of the Gulf states in the future of energy and its supply chains is a tide change, both useful to the US in a challenge to Chinese dominance but also a consolidation in state ownership trends.

MP Materials awarded $58.5 million tax credit for Texas rare earth magnet factory

MP Materials (NYSE: MP) announced on Monday it has received a $58.5 million award from the US government to advance the construction of America’s first fully integrated rare earth magnet manufacturing facility.

The award is part of the historic $4 billion in tax credits (also known as Section 48C) announced last week by the US Department of Energy (DOE), the US Department of Treasury, and the Internal Revenue Service (IRS).

The Section 48C program is designed to accelerate domestic clean energy manufacturing and reduce greenhouse gas emissions at industrial facilities, with funds being earmarked for over 100 projects across 35 states.

Issuance of the tax credits, according to MP Materials, followed a “competitive, oversubscribed process” administered by the DOE that evaluated the technical and commercial viability and environmental and community impact of approximately 250 projects.

MP Materials first began construction of its manufacturing site in Fort Worth, Texas, in April 2022. The facility was a substantial component of a $700 million investment the company had designated to fully restore the US rare earth magnetics supply chain.

US talks often with Congo’s Gecamines on cobalt and copper, official says

The United States speaks regularly with the Democratic Republic of Congo’s state miner Gecamines, a senior State Department official told Reuters, as Washington seeks to deepen relationships with key suppliers of cobalt and copper across the African continent.

Why it’s important

Chinese aggressive investment across Congo, Zambia and elsewhere in Africa – which holds massive supplies of minerals used to make electric vehicles and other electronics – has for some time raised concern in Washington.

Jose Fernandez, the US State Department’s under secretary for economic growth, energy, and the environment, said in an interview this week that conversations with Gecamines center on supply deals and potential new mines or other projects the company is considering. Conversations take place on average every four to six weeks, he said.

Nigeria to issue mining licences to companies with local processing plans

Nigeria is set to grant new mining licences exclusively to companies that provide a plan for local mineral processing, Reuters reported.

This marks a significant shift from the country’s long-standing policy of exporting unprocessed raw materials.

A government spokesperson said that the government aims to maximise the value derived from Nigeria’s solid mineral deposits.

Despite being Africa’s leading energy producer, Nigeria has historically gained minimal value from its abundant mineral resources.

The mining sector’s contribution to the nation’s gross domestic product remains below 1%, attributed to inadequate incentives and neglect.

Sigma Lithium gets board’s nod for $100m Brazil plant expansion

Sigma Lithium has announced a final investment decision (FID) to allocate $100m (C$135.64m) in capital expenditure (capex) for Phase 2 of its Greentech Industrial Plant in Brazil.

This investment is set to double the annual production capacity of its Quintuple Zero Green Lithium from the current 270,000t to 520,000t by 2025.

The expansion, approved by Sigma’s board, will enable the company to produce enough lithium concentrate to power an estimated 1.8 million EVs.

Sigma has also confirmed the imminent mobilisation of around 180 workers and construction equipment to commence the building of the earthworks, foundation and infrastructure for the dense media separation production plant.

The construction civil works, to be undertaken by Brazilian company Promon Engenharia, which delivered Phase 1, are expected to be finished within six months.


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