Australian Resources & Investment August 2021 by Prime Creative Media

VOLUME 15 NUMBER 2 | 2021

Australian Resources & Investment CREATING COPPER OPPORTUNITIES

IRON ORE DEMAND DYNAMICS

GOLD’S GLOBAL STRENGTHS

CHARGING UP

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AUSTRALIAN RESOURCES & INVESTMENT

COMMENT

Rising values reflect mining’s contribution BEN CREAGH Ben.Creagh@primecreative.com.au

Surging market capitalisations and dividends have highlighted the incredible performance of Australian mining companies over the past year.

he Australian mining industry’s contribution to the national economy as it rebounds from the COVID-19 pandemic shows no signs of slowing down. It is clear that the comeback has been aided by the strength of commodity prices such as iron ore and copper, as well as various battery metals. Despite easing significantly at the start of August, iron ore has celebrated a record year, increasing to $US230/tonne ($310) at one stage. The steel-making ingredient wasn’t the only bulk commodity to find form, however, with supply-demand dynamics also helping thermal coal, LNG and oil bounce back from a forgettable first half of 2020. Deloitte, in its annual WA Index, points out that despite one of the most crippling pandemics of this lifetime, the thirst for commodities has in many cases exceeded supply. Western Australian-based companies have, therefore, been major beneficiaries of these market conditions given the state’s resources industry strengths. Their value on the ASX climbed 46 per cent in the 2020-21 financial year, according to Deloitte, with heavyweights Fortescue Metals Group and Wesfarmers leading the way Western Australia has enjoyed a storied history in commodities such as gold and iron ore, but it is a newer breed of minerals that put the stamp on this incredible growth. Sustainable minerals, as Deloitte describes them, have guided the rising values of WA’s top movers, with lithium, nickel, copper and zinc the focus metals for these companies. While Western Australian resources stocks are headlining the surge, the prosperous environment they are enjoying extends beyond the state’s secure borders. The world’s leading miners are sharing similar growth, which PwC, reporting in its annual Top 40 miners (see pages 12-15), expects to accelerate over the remainder of this year. Australia’s ‘fantastic five’ in the Top 40 – BHP, Rio Tinto, Fortescue Metals Group, Newcrest Mining and South32 – have all increased revenues despite the impact of COVID-19. Unsurprisingly, they are also producers of iron ore, gold or copper – three minerals that have been in record territory at some point during the 18-plus months since the pandemic hit. Their good fortunes have resulted in their shareholders being rewarded at levels not seen before as rising dividends reflect the booming revenues by also hitting all-time highs As AR&I went to print, Rio Tinto was the only one of these majors that had announced its latest dividend with a whopping $US9.1 billion going to shareholders. Market expectations, however, pointed to the other four following in similar fashion. Unprecedented has certainly been an overused word to describe the pandemic in recent times, but these are certainly unprecedented times for the mining industry. The difference is that these records are positively unprecedented.

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CONTENTS

I N T H I S I S SU E T H E F E AT H E R S T O N E R E P O R T

6 Mining-services stocks hint at a revival

F E AT U R E D

10 Analysis with Regina Meani 12 Australia’s fantastic five in the top 40

14 The continuing strategic role of gold 18 Risk and reward for mining companies

COPPER

IRON ORE

20 Ironing out demand as prices surge

GOLD

22 Australia’s gold industry finds its feet

24 West Africa presents golden

32 Copper’s myths and realities of 2020

COPPER- GOLD

34 Copper, gold surge excites miners

C OA L

42 Guiding coal companies to meet dual challenge

MANGANESE

44 First Butcherbird shipment sets sail

36 Philippines decision sets up Celsius

chance for Mako

W O R K F O R C E M A N AG E M E N T

46 How mining can adapt to the skills shortage

MINERALS SANDS

NICKEL

26 Elon Musk powers nickel miners

38 The rising sands at Australian mines

MINING SERVICES

28 EVs to drive Australia’s mining

50 Reducing mining risk through

future

30 High quality projects transform Boadicea

climate adaptation

B AT T E R Y M E TA L S

40 Battery metals demand set to peak

52 Epiroc at forefront of next-gen technology

53 FLANDERS drills into value gains 54 National Group at forefront of equipment supply

FOLLOW THE LEADERS

68 The latest executive moves in

54 –4–

the resources sector

EVENTS

70 What’s happening in the resources indust r y?

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T H E F E AT H E R S T O N E R E P O R T

THE

Featherstone REPORT

NEW SPRING IN THE MINING-SERVICES STEP BY TONY FEATHER STONE

Impressive turnaround for some stocks but much ground to make up. Tony Featherstone is a former managing editor of BRW, Shares and Personal Investor magazines. The information in this article should not be considered personal advice. It has been prepared without considering your objectives, financial situation or needs. Before acting on information in this article consider its appropriateness and accuracy, regarding your objectives, financial situation and needs. Do further research of your own and/or seek personal financial advice from a licensed adviser before making any financial or investment decisions based on this article. All prices and analysis at July 31, 2021.

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fter several tough years, parts of the listed mining-services sector are roaring back to life, creating opportunities for investors to capitalise on the next leg of the mining boom. Australian Resources & Investment (AR&I) analysis of 23 mining-services stocks shows a median total return (including dividends) of 29 per cent over one year to July 2021. That’s better than the 23 per cent total return in the S&P Small Ordinaries index over that period. And a remarkable turnaround for a sharemarket subsector under pressure. Several mining-services stocks have starred: Cardno has a one-year total return of 196 per cent after steep falls in 2019. Mining-software group RPM Holdings is up 143 per cent. Although recent gains impress, mining-services stocks have much ground to make up. AR&I found the median three-year total return for mining-services stocks was just 2.5 per cent. Few parts of the market have been as out of favour as mining services in the past few years. That is no surprise. Mining-services companies were hit with a tsunami of challenges: COVID-19 disrupted all industries and sparked shutdowns at some mines, particularly overseas. It also caused labour shortages, wage-inflation pressures and other supply-chain complications. Fund managers were concerned about the earnings viability in mining-services contracts, fearing providers had little recourse with large mining companies that halted projects because of COVID-19. In a volatile sharemarket, mining-services stocks were harder to buy. The three-year total-return figures tell the story (see table on page 8). Most ASX-listed mining-services companies have a negative total return, or low singledigit annual return, in that period. A year ago, several mining-services stocks traded at multi-year lows. Strong gains over one year look good on paper, but won’t please

long-suffering shareholders. However, every stock has its price. Cadence Capital founder Karl Siegling examined mining-services stocks after their share price tumbled last year. Siegling, one of the Australian sharemarket’s top contrarian investors, is known for buying deeply out of favour stocks – when other investors have given up on them or stopped looking. “Things looked awful for mining-services companies,” Siegling tells AR&I. “But around June this year, it felt like conditions started to change. It was clear from my visits to mining-services companies that demand was improving. Share prices of key mining-services stocks were starting to trend higher again, which fits Cadence’s investing style.” Siegling has been around long enough to know that contrarian investors never pick the exact bottom with turnaround ideas. “If the latest COVID outbreaks linger, we might see mining-services stocks give back their recent shareprice gains,” he says. “But I’m confident we are close enough to the bottom – and that there is sufficient margin of investment safety – to buy.” Siegling’s preferred mining-services picks are Emeco Holdings and MACA. He was impressed by MACA’s recent acquisition of Downer EDI’s Mining West business. Perenti Global also looks cheap, says Siegling, but the company is resolving internal issues. Montgomery Lucent Investment Management, another leading value investor, is also bullish on mining-services stocks. In May, Dominic Rose, portfolio manager at the Montgomery Small Companies Fund, wrote favourably about four mining-services stocks: Seven Group Holdings, Imdex, NRW Holdings and Mineral Resources. Rose wrote in May 2021: “We have recently taken advantage of depressed valuations and selectively added to our small-cap mining-services exposure. While this is a cyclical sector, the risk-reward profile

AUSTRALIAN RESOURCES & INVESTMENT

As exploration activity increases usually the value of mining-services stocks do as well.

appears better than prevailing share prices would otherwise suggest.” Montgomery’s bet on mining services is paying off. Mineral Resources has a total return of 143 per cent over one year. Imdex is up 64 per cent over that period; Seven Group Holdings has returned 32 per cent; and NRW Holdings has a slight negative return. Care is needed with one-year results. Several mining-services stocks are bouncing off multi-year lows, which amplifies percentage gains in the share price. But there’s little doubt that mining-services stocks, collectively as a sub-sector on the ASX, are starting to turn. L E V E R AG E D T O M I N I N G G R O W T H Fund managers view mining-services companies as a “second-derivative” beneficiary of the commodity price booms. Rising minerals prices encourage more Australian mining and energy companies to raise capital and explore, more increase

production. That’s good for mining-services companies that supply goods and services for mining activity. Thanks to COVID-19, opportunities in this exploration cycle for mining-services companies could be magnified in the next few years. Australian non-ferrous metals exploration budgets fell 12.5 per cent year-on-year, according to Standard & Poor’s World Exploration Trends 2021 report. However, S&P forecasts global exploration spending to recover strongly amid the COVID19 vaccine rollout and favourable metal prices. If S&P is correct, demand for mining services in Australia and overseas will rise. A solid recovery in global economic growth should underpin higher commodity prices, resource activity, and thus higher earning for mining-services companies. In the June 2021 Resources and Energy Quarterly, the federal government states: “The outlook for Australia’s mineral exports

continues to improve, as the world economy rebounds from the impact of the COVID pandemic. As the world economy recovers, record iron-ore prices have driven a surge in export earnings. Our metallurgical coalmining firms are also benefiting from the surge in world steel production.” The International Monetary Fund forecasts global economic growth of 6 per cent in 2021, after a contraction of 3 per cent in 2020 due to the pandemic. The IMF forecasts world growth to moderate towards more typical levels in 2022 and 2023. RISING INVESTMENT The key for mining-services companies is the level of mining investment. About $8.1 billion was invested in the March 2021 quarter, up 1.3 per cent on the same quarter a year ago, the Australian Bureau of Statistics Private New Capital Expenditure and Expected Expenditure Survey found. The ABS found mining expenditure

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T H E F E AT H E R S T O N E R E P O R T

S E L E C T E D A S X- L I S T E D M I N I N G S E R V I C E S C O M PA N I E S * C O M PA N Y

1 Y E A R T O TA L R E T U R N (%) * *

3 YE AR ANNUALISED T O TA L R E T U R N (%)

Cardno

196

Mineral Resources

143

RPM Global Holdings

105

Weststar Industrial

Vysarn

IMDEX

Mastermyne Group

-5

Alliance Aviation Services

Emeco Holdings

-27

Seven Group Holdings

Monadelphous Group

-7

Austin Engineering

-6

Swick Mining Services

-1

Lycopodium

Engenco

MACA

-2

-8

NRW Holdings

-3

CIMIC Group

-4

-23

Macmahon Holdings

-13

-1

Decmil Group

-20

-50

Median return (%)

28.5

2.5

* Does not include all ASX-listed mining services stocks. Ranked by one-year total return. ** Includes capital growth and assumes dividend reinvestment. Source: Morningstar. As at July 22, 2021.

rose for buildings and structures, and for machinery and equipment, in the March quarter. Spending on mining plant and equipment remains above its average level in recent years, found the ABS. The government’s Resources and Energy Quarterly states: “Forward expectations suggest that (mining) investment in 2020-21 will be slightly higher than in 2019-20. Strong prices for gold, iron ore and other minerals are leading to new investment plans, including the re-opening of mines. However, investment in new greenfield projects remains well below the levels of the previous decade, when seven LNG plants were built.” On exploration, data suggests mining capital expenditure is recovering at a marginal pace following falls in early 2020, the government states. Exploration spending edged up in the March quarter, with exploration spending for all commodities reaching $956 million. Clearly, mining-services bulls hoping for a sharp upturn in mining-investment activity, and thus mining-services demand for exploration and production services, will be disappointed. But after lagging the sharemarket over several years, mining-services company valuations had much bad news factored into

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Mining-services stocks have made up some ground in 2021.

their valuations – meaning they are poised to surprise on the upside. Mining-services stocks can be a great investment when resource companies boost exploration spending and get more projects into production. Conversely, they can be terrible investments when mining capital-expenditure cycles turn, leaving mining-services companies with expensive equipment that depreciates as it sits idle. The trick is buying mining-services stocks

at the right time in the commodities cycle – knowing the risks and being prepared to take profits – rather than adopting a “buyand-hold” strategy. For all the challenges, Australia has a great mining-services sector and a worldclass resource industry. When COVID-19 finally clears, few parts of the sharemarket are better placed to benefit from continued strong growth in Australian resources than mining services.

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F E AT U R E D

— ANALYSIS — WITH REGINA MEANI We are wired to copper THE BRONZE AGE came about when copper was the first metal to be worked by mankind. They discovered that it could be hardened with a little tin to form the alloy bronze, hence the beginning of a new age for man. One of its traditional uses is to make coins but basically, we are all wired to copper in some way. Copper is used in and around our homes in the wiring of electrical equipment and motors. It is a good conductor of both heat and electricity and is used in construction, in industrial machinery and transport. Copper sulphate and its other compounds are used in agriculture and as a water purifier. Biologically, an adult human requires around 1.2

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milligrams of copper a day. Because copper has so many useful properties, is easily extracted and used widely throughout the world, it has long been perceived as the bellwether for individual countries and for the wider global economy. The following chart (below, left) shows the strong relationship between the copper price and the MSCI World Index. The MSCI World Index is a broad global index, representative of 23 developed countries markets including: Australia, Austria, Belgium, Canada, Denmark, Finland, France, Germany, Hong Kong, Ireland, Israel, Italy, Japan, the Netherlands, New Zealand, Norway, Portugal, Singapore, Spain, Sweden, Switzerland, the United Kingdom and

with the most significant weighting for the United States market. The impact of the copper price on the world is evidenced by the MSCI World Index following copper’s lead for the most part with the exception of a divergence during 2019 when the price for copper trended down while markets stretched higher. Singling out the Australian market, it is apparent that our own All Ordinaries Index dancers to the piper except for that 2019 bubble. The beginning of 2020 saw the world and its economies buckle under the weight of the global COVID-19 pandemic. The price for copper peaked first and then fell into sharp decline with the world a few weeks behind. The long-term chart for the copper price presents a powerful story as the current positioning and momentum for the price resemble that which occurred in the mid-2004 to mid-2005 period where the price reached its then all-time high area between $US1.40 and $US1.50/lb. At that time the price paused and consolidated in an upward motion ahead of surging higher to more than double in price within a year. The recent push to $US4.89 in May this year was propelled by a short-term momentum burst, which produced a price divergence at the peak initiating a pullback phase. This is not out of line with the 200405 experience and suggests that the corrective action may continue over the short to medium term, producing more price volatility. If the similarities to the 2004-05 corrective phase continue then the price could pullback in the 20-25 per cent

AUSTRALIAN RESOURCES & INVESTMENT

range as it restores its momentum to push higher. This would be line with support located in the $US4.00-$US4.20 area and lower and more importantly in the $US3.50-$US3.75 range. At the time of writing in early July, a drop to the lower levels was not indicated. While this action develops the price retains the ability to retest resistance around $US4.60 and then at the $US4.90 area. Once there is a clear breakaway through the high point the metal would gain the ability to head towards $US5.50$US6.00 and potentially beyond. The risk for the copper price would be a more severe downturn triggered on a drop below $US3.50. OZ Minerals (ASX: OZL) is Australia’s third largest copper producer operating globally with headquarters in South Australia. The company owns and operates the copper-gold mine at Prominent Hill and the copper mine at Carrapateena, both in South Australia. Other projects in the pipeline are the West Musgrove project in Western Australia with the Nebo-Babel nickelcopper and Succoth copper deposits, and the Antas, Pedra Branca and CentroGold projects in Brazil. The share price for OZ Minerals closely tracks the copper price but usually bottoms ahead of the metal and tops out in tandem. However, the recent low in March 2020 was in unison, possibly as it was a quick and pivotal point for both

the stock and the metal. Since then both prices have enjoyed a strong uptrend with the copper price gaining 146 per cent, while OZ Minerals gained more than double that with a 365 per cent rise to its peak at $27.15 in May this year. Following its pivotal turnaround in May 2020 the price for OZ Minerals completed a base in June 2020 to spur the advance to $27.15 in May this year. At this point the stock encountered resistance, combined with overbought momentum, producing a three-day minor top signalling a pullback. The price has support located in

the $19-20 range and more importantly around $17.50. The base completed in June last year suggests that once the corrective phase is completed and the stock regains the ability to push through the barrier zone created by the previous peak in the $30-40 zone then the price would head towards higher objectives at $50 and potentially $75. With our focus on copper, it would be remiss to overlook the big Australian, BHP. Not only is BHP our biggest producer of copper but it produces a range of commodities that empower the global economy. Along with the strong copper price, its share price has benefited from the significant gains in iron ore and oil prices. It is interesting to note that in times of divergence in the commodities, BHP is able to benefit from its diversity and follow or anticipate its strongest lead. For most of the first part of 2021 BHP’s share price (ASX: BHP) has been oscillating around its previous high zone of $50. The similarities to the mid-2004 period is strong in line with the copper and oil prices with a stable iron ore price during the period. So far, the oscillation range has swung within a rising frame which currently lies between $45 and $55. This action may develop ahead of a breakaway towards $65 and $85 and possibly higher. The risk would be a drop below the framework extending the oscillations into a corrective phase within its long-term upward path.

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F E AT U R E D

What sets Australia’s top companies apart? Five Australian mining companies have made the cut in the PwC Mine 2021 report’s Top 40 list. Here’s why they are among the leaders.

oming off a banner year, market conditions look set to only get better for the world’s top 40 mining companies. Mining was an exception during 2020, being one of the few sectors globally to emerge from the COVID-19 crisis in great financial and operational shape. PwC’s Mine 2021 report, which analyses the top 40 mining companies in the world based on their financial performance, highlights this admirable position. In 2020, the Top 40’s net profits improved by 15 per cent, cash on hand by 40 per cent and market capitalisation by nearly two thirds against 2019.

Image: Fortescue Metals Group.

Christmas Creek has been a key driver of Fortescue’s rise.

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Strong commodity prices propelled the Top 40 to this position, with copper leading the way, contributing $US122 billion ($166.2 billion) to group revenue. Diversified Australian companies, BHP and Rio Tinto, held their positions as first and second on the Top 40 list. Perth-based Fortescue Metals Group jumped six spots to fourth on the Top 40 off the back soaring iron ore prices, which increased throughout the second half of 2020 (and into 2021). Gold company Newcrest Mining (14th to 18th) and diversified miner South32 (28th to 35th) also represented

Australia in the Top 40 list. Despite the nervousness that COVID-19 created, PwC global mining leader Paul Bendall says the industry clearly benefitted from being considered an essential service in 2020. “It was that, together with strong commodity prices at the end of the year. Some of the larger miners are also reaping the benefits of automation,” Bendall tells Australian Resources & Investment. “It would be wrong to think automation was in response to COVID; it has been years and years in the making and they have received a quick return to that.”

AUSTRALIAN RESOURCES & INVESTMENT

Image: South32.

Worsley Alumina is a key asset for South32 in Western Australia.

E V E N B E T T E R DAY S A H E A D ? If 2020 was a year to remember for the mining industry, 2021 is shaping up to be even better. Commodity prices have remained in a strong position so far in 2021, with iron ore and copper both reaching new records. Debate rages on how long iron ore can hover around $US200 ($270) a tonne, but the

buoyancy around copper and future demand for the base metal is gathering momentum. PwC predicts that the average price of copper will increase by 40 per cent in 2021, compared with the average 2020 price. This is in no small part due to increased demand from a market shift towards commodities in the global transition to a low

carbon future, PwC adds. Gold, while not at its 2020 heights, has maintained a healthy value, while battery metals such as lithium have continued to rebound throughout the year. But, according to Bendall, there’s more to the Top 40’s improving financial position than surging commodity prices, most notably the current phase of development in mining compared with the ‘boom’ period of a decade ago. “This is different from that 2010, 2011 and 2012 period. If you look at the forecast capital spend in those years it was very significant,” Bendall says. “Not quite that amount of money is on the table to be spent in 2022. We see one of the outcomes of that is free cash flow and the potential for dividends is significant. “There are other stakeholders that will want their fair share, the government included, but we are reporting $70 billion in dividends this year, which is an enormous amount. “Those three Aussie miners at the top of the order have paid out $22 billion of that already.” As Bendall alludes to, BHP, Rio Tinto and Fortescue Metals distributed their highest ever dividends to that point during the February reporting season this year, at a time when iron ore prices had not yet peaked. ESG FOCUS GUIDES GROW TH While many industries were pre-occupied with COVID-19 in 2020, mining didn’t stop advancing its ESG (environment, social and governance) agenda. Overwhelmingly, the Mine 2021 report identifies ESG as the best opportunity for growth. It explains that companies with

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F E AT U R E D

higher ESG ratings returned an average total shareholder return of 34 per cent over the past three years – 10 per cent higher than the general market index. The Top 40’s leading company, BHP, has been vocal about how ESG values such as decarbonisation are guiding its growth strategy. BHP chief executive officer Mike Henry says the drive to more rapidly decarbonise the globe may also accelerate demand for many of the products that the company produces. “A growing number of governments are committing to tackling climate change with greater ambition and are cooperating to do so,” Henry, presenting at the 2021 Bank of America Metals, Mining and Steel Conference, says. “A transition to a world where warming is limited to no more than 1.5 degrees above preindustrial levels is positive for BHP and would allow us to create significant value.” The PwC Mine 2021 report identifies two more reasons for why the Top 40 miners should have ESG at the top of their growth agenda: • Products and operations differentiation – higher premiums for low-carbon commodities, as companies seek to incorporate greener inputs into their products and services. • Improved access to capital – companies with an embedded ESG strategy are increasingly frontrunners for accessing capital at generous rates, while ESG is also driving investment capital as investors seek to cash in on the wave of ESG opportunities.

Bendall says it has become clear that those mining companies that are graded well for ESG strategy and disclosure are commanding a premium over their peers. “This certainly didn’t start in 2020; it had started earlier around a premium for a product that has lower carbon in it,” Bendall says. “Partnering for Scope 3 emissions is also important – it leads very clearly into acquisition and investment activity. “It means, very simply, that the top miners are exiting thermal coal. We expect that when acquisitions are made or projects are being developed that the energy profile for them will be more important considerations.” TA X I N G T I M E S Tax transparency has also emerged as an integral part of the ESG strategies of the Top 40 mining companies in the PwC report. According to the Mine 2021 report, the concerns of mining CEOs over tax regulations has skyrocketed over the past 12 months. The report reveals that metals and mining CEOs are far more likely to be extremely concerned about tax policy uncertainty (39 per cent) than their global counterparts (31 per cent). Despite the concern over tax policies, Bendall says it is clear that not many mining companies are doing much about it. However, there are high achievers in this area setting an example for the rest of the industry to follow. “If you look at our two biggest miners and their tax transparency reports, we regard them as very good,” Bendall says. “They have been producing them for 10

years at least and we see that as a good way for miners to tell their story. It tells the width of the taxes they pay – where the money goes is a really good story to tell.” And while Australia is often viewed as a low-risk jurisdiction for mining companies to operate in, that doesn’t mean that tax regulations aren’t cause for concern in the industry. Bendall says it would be a mistake to think it is just in overseas jurisdictions where mining companies face volatility over tax policy. “It is the sector (in general),” Bendall emphasises. “PwC runs a CEO survey each year across many sectors and tax is a topic in it. A clear comeback among metals and mining CEOs was a doubling of them calling out tax policy uncertainty as an extreme concern. “That, to me, signals it is across the board and it is understandable; some countries where mining is a big part of it like Australia, their balance sheets are under stress. “The uncertainty is on if special or specific tax measures will be put in place, however they might be dressed up. We saw this in Australia a decade ago with the MRRT (Mineral Resources Rent Tax).” L E A D E R S O F T H E PAC K The agility of the Australian companies in the Top 40 has enabled them to either maintain or reach their current standing on the PwC list. Top 40 leaders, BHP and Rio Tinto, continue to strengthen their diversified portfolios in the commodities of the future, particularly copper and iron ore,

Image: Rio Tinto.

Rio Tinto has been a pioneer in the Pilbara with its AutoHaul operations.

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AUSTRALIAN RESOURCES & INVESTMENT

while abandoning thermal coal. BHP expects the world’s Paris-aligned emissions reductions targets to more than double the demand for copper and quadruple the demand for nickel over the next 30 years. “They are diversified heavily into copper as being very tied to green outcomes, that has great prospects (for BHP and Rio Tinto),” Bendall says. “I don’t think anyone believes the iron ore price is going to stay where it is forever, but there’s still a lot of margin there between their cost of production, and that includes FMG (Fortescue) too.” Fortescue’s incredible rise up the rankings as a single-commodity miner is, of course, largely tied to the strength of the iron ore price. However, Bendall has confidence in the company’s future near the top. “I’m not sure Fortescue is going to stay at fourth, but I think they have marked out some ground now as a very big player,” Bendall says. “They don’t have the diversification of other two, but they do have access to a lot of iron ore and their costs are good, so there’s no reason why they won’t be in and around the top 10 for a long time.”

Iron ore (pictured) and copper are the foundation of BHP and Rio Tinto’s business.

Despite the operational differences between Australia’s contingent of companies in the Top 40, if there are notable similarities, they would be how they responded to COVID-19 and the development of their ESG strategies. Bendall congratulates these miners for the agile approach they have shown in this regard. “They were granted essential services

classification and they have adapted that well to their assets to continue production. That has required nuance and they should be rewarded for doing a good job,” he says. “I’d also expect the focus will only pick up on the elements of ESG as well. That message is here to stay and there’s some good work being done, but that doesn’t mean there’s still room to improve.”

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F E AT U R E D

THE CONTINUING STRATEGIC ROLE OF GOLD BY ANDR EW NAYLOR, WOR LD GOLD COUNCIL R EGIONAL CHIEF EXECUTIVE OFFICER, APAC AND PUBLIC POLICY

020 was a record year for gold. A combination of economic uncertainty and a low interest rate environment saw record flows into gold ETFs. By contrast, 2021 has been more subdued for gold. Economies are starting to recover, and this has helped bolster consumer demand in gold’s largest retail markets, especially China. This article looks at the main drivers of gold’s performance, and some of the key issues having an impact on the market – global regulation and the push for sustainability. GOLD MARKET OUTLOOK In the first quarter of 2021, strengthening consumer demand mitigated the impact of ETF outflows. This demonstrates the dual nature of gold as demand comes from both retail and institutional investment, both with different drivers. Consumer demand, which tends to be concentrated in Asian markets, the United States and Germany, is more pro-cyclical. When economies are doing well,

consumers buy more gold or consume technology that uses gold. Institutional investors have different drivers – when the economic situation is uncertain institutional investors may take an interest in gold as it is seen as a risk mitigator and safe-haven asset. The first half of this year demonstrated how gold’s diverse sources of demand and supply interact. The gold price dropped by over 6 percent in the first six months, as gains during most of Q2 were offset by pullbacks since June. Gold’s price also underperformed in most key currencies except for the Japanese yen and the Turkish lira, which weakened against the US dollar. This was driven primarily by higher interest rates and interest rate expectations, including a more hawkish-than-expected statement by the US Fed. Looking ahead, interest rates will likely remain a major driver of gold in the short and medium term. In the longer term though, the potential effects of the expansionary monetary and fiscal policies we have seen worldwide

could prompt a renewed interest in gold. These effects may include inflation, currency debasement, and higher risk-on asset exposure. W H AT M A K E S G O L D A S T R AT E G I C A S S E T ? Gold has unique and diverse sources of demand: as a central bank reserve asset, jewellery, as a component in technology and industrial applications, and as an investment (in both the retail and institutional markets). This diversity of demand means it could behave differently to other assets and therefore is a potential diversifier. But it is also coveted as a possible source of returns, for its liquidity (over $US237 billion, $320 billion, of gold was traded every day on average last year), and for its potential impact on portfolio performance. These strategic motivations also ring true in Australia. As a major producer country (Australia was the third largest producer of gold in 2020 after China and Russia), the Australian dollar (AUD) has a different relationship to gold than the US dollar.

This year has been more subdued for the gold market than in 2020.

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AUSTRALIAN RESOURCES & INVESTMENT

Kalgoorlie’s famous Super Pit gold mine.

However, gold (in AUD) has outperformed most broad-based portfolio components over the last two decades, including Australian sovereign bonds and Australian equities. T H E F I N A N C I A L R E G U L AT O R Y R E F O R M AG E N DA Whilst the strategic case for gold remains, there are regulatory headwinds that will have an impact on the gold market. In particular, there has been much recent speculation about the impact of the forthcoming Basel III reforms, especially the Net Stable Funding Ratio and its potential impact on the bullion market. What is clear is that under the current rules the cost to banks of holding gold on balance sheet will increase – the NSFR entails 85 per cent of required stable funding. This will increase the funding costs of unallocated gold, an essential source of gold market liquidity. But whilst the funding costs will increase, the unallocated market will persist. The clearing and settlement regime depends on it, and without an unallocated gold market it will be very difficult to finance (and facilitate) the upstream activities of gold producers and refiners, and the downstream users of gold such as jewellers and fabricators. The real economy demand for gold relies on the unallocated gold market. So whilst the funding cost of unallocated gold will increase, we are unlikely to see a major distortion in favour of allocated metal due to the imposition of the NSFR. The United Kingdom’s Prudential Regulatory Authority (PRA) has recently announced a mechanism for banks to apply for an exception in respect of their own unencumbered physical precious metal stocks and customer precious metal deposit accounts. This will ensure the smooth functioning of the London OTC market, the world’s largest. So, whilst there are regulatory headwinds, the impact will not be as bad as initially feared.

T H E B I G I S S U E : S U S TA I N A B I L I T Y Another major issue is sustainability. Investors worldwide – including here in Australia – are applying a sharper focus on issues of sustainability. The gold mining community has undertaken a lot of good work. A recent report highlighted the actions taken by leading gold mining companies as part of global efforts to reach the UN Sustainable Development Goals. Efforts have also been made to codify environmental, social and governance (ESG) practices. The Responsible Gold Mining Principles, published in 2019, collect these practices into an organising framework so that all stakeholders can understand the material ESG risks associated with gold mining; and understand how responsible gold mining companies are managing these risks and seeking to maximise opportunities for their host societies. Finally, when it comes to climate change, work has been undertaken by the leading producers to better understand the industry’s greenhouse gas emissions, raise awareness of the efforts already underway to reduce these, and gold’s potential contribution to the development of low carbon technologies. A lot of work has been done, and a lot more is in the pipeline, to ensure that gold contributes positively to the global economy, society at large, and host communities. C O N T I N U I N G R E L E VA N C E O F G O L D Whilst the economic dynamics are changing, gold is still an important strategic asset. It plays a major role in household finances in many countries around the world. It plays a strategic role in the institutional and official sector investment industry. And it is an important component in many innovative and cutting-edge technologies. As the third largest producer of gold and a major international refining centre, the gold industry will likely continue to contribute to Australia’s economic resilience.

Andrew Naylor Andrew joined the World Gold Council in 2016 and since 2020 has led our regional office in Singapore. Originally part of the central banks and public policy team, Andrew was responsible for our Islamic finance initiative, culminating in the launch of the AAOIFI Shari’ah Standard on Gold. Andrew started his career at international consultancy firm Cicero Group advising financial institutions on foreign investment and trade policy in Asia, and the global regulatory reform agenda. In this role, he provided economic and political commentary for global broadcasters including the BBC, Bloomberg, CNBC and China Central TV.

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F E AT U R E D

The risk and reward of modern mining KPMG’s Australian Mining Risk Forecast for 2021-22 is defined by two themes, one representing a challenge for the industry and the other an opportunity.

urging commodity prices are usually associated with ‘boom’ times in the Australian mining industry. But what might come as a surprise to many observers of mining, commodity prices (and their historical volatility) remain the KPMG survey’s number one risk in the industry after again topping the list in 2020-21. Commodity price risk kept its position despite gold being in record territory (in Australian dollar terms) last year, and iron ore and copper reaching never-seen-before heights in the first half of 2021. However, KPMG points out that commodity prices are not only a risk for mining companies, but also an opportunity. The latest report finds that the general situation and outlook for commodity prices has rarely been stronger, although there are exceptions. Iron ore, gold and copper are joined by lithium and rare earths as commodities enjoying price surges, with government stimulation credited as a key spur of the upward trend. KPMG Australia head of mining Nick Harridge explains the commodity price environment, warning that there are risks that mining companies must consider despite their surging values. “Whilst it may be surprising during these times to see commodity price risk reclaim top spot on the list, industry veterans will be very aware of the cost blowouts and inefficiency that can creep into systems and practices during upswings,” Harridge says. “The risk here is that it leaves companies vulnerable when commodity price momentum shifts direction.” Commodity price risk may have kept its top position on the list, but Harridge notes that operating costs fell from this year’s top 10. “Depending on where prices go over the next 12 months, we believe the operating costs risk may emerge with renewed focus and we suggest Australian miners be alert to that,” Harridge says. “In addition, we believe now is the time

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Executives are wary of commodity price volatility.

for mining companies to maintain rigour on updating and improving the efficiency of their operations, even though the imperative may not feel urgent. “Maintaining discipline and streamlining processes today will deliver a stronger position when times change.” SOCIAL SKILLS Community relations and social licence is this year’s biggest mover on KPMG’s risks leaderboard, jumping four spots to second. Last year’s community and public outcry after Rio Tinto destroyed rock shelters of exceptional significance at Juukan Gorge near its Brockman iron ore mine in the Pilbara highlights the importance of managing this risk. In response to the backlash from key stakeholders, Rio Tinto took responsibility for the destruction, overhauled its company board and launched an extensive program to regain community and social trust. KPMG Australia partner and mining risk & governance lead, Caron Sugars, believes that maintaining a social licence looms as an ever more complex problem for executives to deal with. “This is further complicated by the increased risk related to the need for diligent

management of sites with cultural heritage significance and the fact that community groups, activists and investors have also joined the push for mining companies to take greater responsibility for the land and the people impacted by their operations,” Sugars explains. The KPMG Risk Forecast found that 88 per cent agreed it is important for mining companies to have a clear and measurable ESG (environmental, social and governance) statement. At the same time, 64 per cent noted that investor ESG expectations and measures are not clearly understood. U N C E R TA I N T Y P R E VA I L S Unlike most industries, Australian mining overcame many of the problems caused by the COVID-19 pandemic by being considered an essential industry. But the pandemic still served as a wake-up call for how the mining industry can change the way it operates in response to the threat of border closures and supply chain disruptions. At the time of writing, COVID-19 was still causing havoc in Australia and around the world, and there are fears this iteration may not be the only global health concern in the foreseeable future.

AUSTRALIAN RESOURCES & INVESTMENT

Sugars reinforces that global health experts warn that the next pandemic is a case of ‘when’ and not ‘if’. “Executives understand how swiftly theory can become a reality,” Sugars says. Trade wars are causing just as much uncertainty as the pandemic and have proven equally as persistent in the past 18 months. The US-China trade war owned much of the focus in this way during 2020. But as KPMG points out, the departure of the Trump Administration late in the year has diffused much of the geopolitical debate between the two power nations. Enter Australia, which has struggled to maintain strong relations with China in 2021, leading to trade barriers, tariffs and restrictions on many of our key exports. “The global trade war situation is arguably an even more complex scenario to grapple with (than COVID-19),” Sugars says. “In KPMG’s Global Mining Risk Survey March 2021, it wasn’t considered a top five risk factor but here in Australia it is looming larger.” With the ongoing threat of these factors, KPMG believes it is not a surprise that global trade war, global pandemic and uncertainty made up the top five risks on this year’s list.

CRITICAL OPPORTUNIT Y An emerging feature of the risk landscape, according to KPMG, is the importance of critical minerals. This also represents an opportunity for Australian mining companies. As manufacturing of renewable energy technologies ramps up, Australia’s rich critical minerals reserves have elevated the potential of the country to become a dominant force in the critical minerals supply chain. For example, Australia is the world’s top producer of lithium, rutile and the second largest producer of zircon and rare earth elements. The Australian Government recognised this opportunity by launching its Resources Technology and Critical Minerals Processing Road Map in March to fortify the country’s position as a key supplier in this market. “We are already witnessing a shift in demand for these critical minerals as they will play a key role in the global move to zero carbon,” Harridge says. “We believe copper, nickel and rare earths will continue to see surges in demand because of their use in renewable energy infrastructure and batteries.” Harridge and Sugars both agree that in

risk terms, the challenge for modern mining companies is to ensure that as a producer of these metals Australia could collaborate constructively with industry to do its part in ensuring the world can access the resources needed to keep pace with the transition to a low carbon world.

AUSTRALIAN MINING RISK FORECAST 2021-2022 KPMG ASKED AUSTRALIAN MINING EXECUTIVES TO IDENTIFY THE LEADING RISKS FACING THE MINING INDUSTRY 1

Commodity price risks

Community relations and social licence to operate

Global trade war

Global pandemic

Economic downturn / uncertainty

Envrionmental risks

Health, safety and security risks

Access to key talent

Regulatory and complicance changes / burden

Cyber and IT secutiry risks

I’m not sure about the commodities supercycle, but I am 100% sure about the copper supercycle. Kostas Bintas, Head of Copper - Traﬁgura

World class assets,

highly experienced team

Celsius Resources (ASX:CLA) is an exploration and development company with a portfolio of world-class copper-gold assets in the Philippines.

To ﬁnd out more, visit: celsiusresources.com.au

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IRON ORE

Ironing out demand The perfect mix of market conditions has led to iron ore reaching record highs well above $US200 per tonne this year, but how long can the metal stay at these all-time levels?

Iron ore prices are expected to ease following record highs.

hinese steel consumption has set the stage for iron ore producers to thrive in current market conditions. Following the initial economic impacts of COVID-19 on China, the country responded with a ramp up of infrastructure projects that has driven iron ore demand. Such demand has seen prices maintain levels above $US200 ($270) per tonne as mine production also grows. Iron ore giant BHP produced a record 252 million tonnes of iron ore at its Western Australia Iron Ore operations in the 2020-21 financial year as it brought the massive South Flank project online.

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According to Ausbil, the global market for iron ore sits at 1.5 billion tonnes. But with production capacities stressed, some miners are struggling to overcome internal issues, including Vale and Rio Tinto, impacting ideal levels of output. Vale, for example, slashed its production guidance for the 2020-21 financial year from 375 million tonnes to 315-335 million tonnes due to tailings dam issues and problems restarting its suspended capacity. Ausbil Global Resources Fund co-portfolio managers James Stewart and Luke Smith say this has left a supply gap in the market. “Vale are targeting a 400 million tonne per

annum run-rate by year-end 2022, however, this likely only implies reaching that run-rate in the final quarter,” Stewart and Smith say. “The wet season and continued issues with restarts are likely to impact output leading into those run rates, and as a result we currently estimate they will produce 355 million tonnes in 2022 overall.” Rio Tinto has seen a 9 per cent fall in iron ore production in the June 2021 quarter due to rainfall issues and COVID-19 travel restrictions, adding to the skills shortages facing mining in Australia. “Heightened COVID-19 constraints, which resulted in numerous travel restrictions,

AUSTRALIAN RESOURCES & INVESTMENT

added further pressure on the business and limited our ability to access additional people, particularly in Western Australia and Mongolia, in order to deliver operational improvements or maintenance initiatives and accelerate projects,” Rio Tinto chief executive officer Jakob Stausholm says. According to UBS, Rio Tinto will need to lift its iron ore shipments by around 25 million tonnes to reach the middle of its 2021 guidance. Ausbil anticipates that increased demand and limited supply will continue but will ease in the coming years. This will be due to softening Chinese demand following a decline in construction activity and a recovery of supply. “Our expectations for demand strength and supply weakness continue and have been exceeded during this period, with COVID only exacerbating market tightness, through Chinese construction-related stimulus and COVID-related supply issues in Brazil,” Stewart and Smith say. “We expect Chinese domestic iron ore supply will remain the marginal source of supply. The key question for us is how large, and how quickly, the Simandou project in Guinea will be brought online over the medium term. “While we expect the Simandou project to come online faster and larger than market expectations – similar to what we have seen with China’s investment in bauxite in Guinea, and supporting China’s aim to diversify away from Australian supply – ultimately Chinese domestic iron ore supply is likely to remain the marginal tonne.” Australia exports around 70 per cent of its iron ore to China, according to a UBS report, demonstrating how vital the Asian country is for the nation’s economy and its mining industry. In the near term, UBS anticipates that China’s steel mills are being told to halt production in the second half of 2021. While this may be bullish for steel, it will mean a bearish market for iron ore, resulting in around 75 million tonnes lower demand for iron ore in the second half of the year. “Press reports suggest China is imposing more restrictive measures on steel production in (the second half of 2021) to ensure output is lower year over year and to meet carbon emissions goals,” UBS states. “The extent of the policy is not yet clear as six other producers indicate they have not received the order to cut production; we note this policy would also be at odds with the government’s aim to deflate steel prices (albeit

Australian iron ore exports have smashed records in 2021.

it could result in lower iron ore prices).” Wood Mackenzie is expecting Brazilian iron ore supply to grow in the second quarter of 2021, with its iron ore price forecast for the September quarter higher against a previous estimate as a result. “We have raised our third quarter price forecast to $US185 per tonne (cost and freight) versus an estimated $US200 per tonne in the second quarter,” Wood Mackenzie head of iron ore research Rohan Kendall says. “We still think the second quarter was the high point for Fe grade premiums (and discounts), and we expect both to contract slightly in the third quarter – smaller premiums and smaller discounts – as mills adjust to much lower margins than were achieved in the second quarter. “We still believe prices will be lower in (the second half of 2021) than (first half of 2021) as Chinese credit tightening cools down construction-related demand and Brazilian mine production accelerates. “But neither is a safe bet and the balance of risk leans towards demand overperformance and supply underperformance.” Kendall echoes a similar sentiment to Ausbil with Chinese construction activity met with supply issues in Brazil.

“On the demand side, Chinese construction and manufacturing hold the key,” Kendall says. “Tighter credit availability should take some of the heat out of the property market, but manufacturing activity remains red hot as recent demand-led power shortages in Guangdong and Yunnan provinces demonstrate. On the supply side it’s still all about Brazil, as the country’s iron ore industry strives to regain its position in key markets after two dreadful years (in volume not value terms). “Progress is slow going for Vale on its ‘pathway to 400 million tonnes per year’ with supply of high-grade (Carajas) fines and pellets still running well below target.” Australia’s iron ore production has taken the helm from Brazil. According to the Australian Bureau of Statistics, metalliferous ore exports achieved a record high of $20.49 billion in June 2021. Iron ore was up by 6 per cent in the same month, delivering $17.55 billion worth of metalliferous ore exports. With Australia breaking all-time highs for iron ore supply and demand, mining companies and government bodies will need to carefully navigate the market for future impacts derived from China and production ramp ups in Brazil.

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GOLD

GOLD EXPLORERS AND PRODUCERS FIND THEIR FEET The gold industry has started to settle following record highs amid the initial outbreaks of COVID-19 in 2020, but what’s next for the precious metal?

old continues to be a safe-haven bet for investors, particularly during the ongoing disruptions of the COVID-19 pandemic. Australian gold exports delivered record revenues in 2020, according to the Australian Bureau of Statistics (ABS), increasing by 12 per cent on the previous year to $27 billion. This was backed by record prices (in Australian dollar terms) as investors poured money into gold in response to global lockdowns and supply chain issues related to the pandemic. The gold price did, however, drop by almost 7 per cent in the first half of 2021. While prices sit around the $US1800 mark (at the time of writing), demand has not faltered. According to the ABS, non-monetary gold increased by $507 million (34 per cent) to $2.12 billion in the June quarter.

“The increase in non-monetary gold was driven by increases to the United Kingdom, up $441 million, and China, up $396 million,” the ABS states. “June observed the second highest non-monetary gold export to China on record.” Market turbulence aside, junior gold miners are looking to create their own slice of history in the gold market. Pacgold is an Australian gold explorer currently focused on the Alice River gold project in North Queensland. The company listed on the ASX in July after closing a $6 million initial public offering (IPO) backed by strong institutional investment early. “The IPO was supported by institutional investor Resource Capital Funds, which is a tremendous endorsement for the Alice River project because these guys did a lot

of due diligence on us and on the project,” Pacgold managing director Tony Schreck tells Australian Resources & Investment. “It’s also a really good endorsement for the team.” The Alice River project consists of eight mining leases and a number of exploration permits centred on a historical goldfield in Queensland’s Cape York Region. Several underground mines, which produced 3000 ounces of gold at 30 grams per tonne operated within the area in the early 1900s. Decades later, open pit mining occurred in the 1980s, and colluvial and alluvial ore mining in the late 1990s. “Historical exploration in the 80s and the 90s has given us exciting indications along the 30-kilometre gold trend,” Schreck says. “The institutional support gives investors confidence of high-quality targets and the team.”

The Alice River project is located in Queensland’s Cape York region.

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AUSTRALIAN RESOURCES & INVESTMENT

With the company now listed on the ASX, Schreck expects the brownfields project to deliver exciting results as the exploration program progresses. “We’ve put in a lot of initial work ourselves with seed capital to generate the targets and get the ball rolling,” Schreck says. “This raise will accelerate exploration on the project and get these targets drilled and hopefully put resources around that drilling.” The company will focus on its most compelling targets in the first phase of drilling, with IP geophysical surveys already underway. “I think what Pacgold brings to the table is a new perspective – it’s a completely reinvigorated story,” Schreck says. “Out of the last 18 months, very few junior gold IPOs have been able to attract institutional investors at the IPO level, let alone being able to secure one that was willing to cornerstone an IPO upon lodgement of a prospectus. That is probably our biggest point of difference.” For Schreck, Pacgold has played its cards right as it gears up at Alice River. “In the current gold market, a good story that has potential and scale is something that I think is attractive,” he says. “Investors in junior explorers are looking for that big discovery and many multiples of return, so what I believe you need for a company to deliver is a big gold system to start with. “That’s what we can demonstrate now. Once you’ve got a big footprint, then you can find a big deposit and in a strong gold market, that’s what we’re bringing to the table.” At the other end of the scale in the Australian gold sector, production is surging despite the impacts of labour shortages and COVID-19 disruptions. With gold prices easing in the first half of 2021, the share prices of the world’s leading producers have however fallen as a result. S&P Global Market Intelligence’s report of the top 25 mining and metals companies found that the share prices of Newmont and Barrick Gold declined by 13.7 per cent and 10.5 per cent, respectively. However, Newmont president and chief executive officer Tom Palmer says the company met its production guidance despite COVID-19-related impacts. “Our portfolio will produce steady gold production of more than 6 million ounces per year through until at least 2030, balanced across each of our four regions,” Palmer says. In Australia, Newmont operates the Boddington (Western Australia) and Tanami

(Northern Territory) gold mines. The United States-based company was forced to quarantine 700 workers at the Tanami mine for two weeks from late June after a fly-in, fly-out worker at the site was infected by COVID-19. In addition to this disruption, Newmont has also faced labour issues in Australia, with a 3 to 5 per cent cost increase for materials, energy and labour being factored into its guidance. Palmer says the impacts of the pandemic are driving inflation around the globe. “There’s a high demand for operators, maintainers and technical people … where the state governments, the provincial governments in Australia are constantly opening-closing borders,” Palmer says. “So there is a real push on to the employing out of the state, so you’ve got that reliability in the staff being within the state. “And we’re likely to have in Australia those interstate pressures for still some time to come, given the slow take-up of the vaccination, which is certainly … now with the Delta strain of the virus.” Mid-tier gold producer Ramelius Resources also regards labour shortages as an issue despite production at the company hitting all-time highs. The company continued to increase its gold production with a record 272,109 ounces mined at its Western Australia

mines during the 2021 financial year. Ramelius is, however, looking for strategies to remain an employer of choice in a competitive labour market. “We try to be attentive to employees’ needs and look to ensure we are competitive in the current market,” Ramelius managing director Mark Zeptner says. “We like to think that Ramelius is a good place to work with a variety of different sites that allow for differing experiences and career progression. “The skills/labour shortage is real and every resource company in Western Australia will be dealing with this issue now and at least for the next six to 12 months.” Ramelius’ production, while narrowly missing its fiscal year guidance, was strengthened by strong results at the Edna May and Mt Magnet gold mines. “The record result was achieved through continued solid production at Edna May and with an outstanding year from Mt Magnet,” Zeptner says. “The result continues the Ramelius growth story and provides an excellent foundation for the 2022 financial year and beyond, with an experienced management team and strong balance sheet in place.” The Australian gold industry is increasingly active, but with COVID-19 challenges lingering, companies are adapting to a new and unprecedented environment.

Pacgold’s Alice River project.

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GOLD

WEST AFRICA PRESENTS GOLDEN CHANCE Mako Gold’s increased share of the Napiè gold project in West Africa could create some exciting prospects for the greenfield site.

ôte d’Ivoire in West Africa is home to part of the Birimian greenstone belts, which stretch across 11 countries from Senegal to Niger. The underexplored prospective belts host more than 70 one-million-once gold deposits. The belts are similar to the width of Western Australia, but have the potential for an abundance of open pit deposits to be discovered in the future. Mako Gold has been exploring West African tenements in the Birimian belts since the company was founded in 2018. Much of the junior explorer’s DNA was derived from Orbis Gold, which made three gold discoveries in West Africa. Members of Orbis Gold’s management team formed Mako and have since consolidated their expertise to focus on projects located in Côte d’Ivoire in the Birimian greenstone belts. In July, Mako acquired a further 39 per cent interest in the Napié gold project in Côte d’Ivoire from joint venture partner Perseus Mining, bringing its total ownership to 90 per cent with the

The Birimian greenstone belts.

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remaining 10 per cent owned by an Ivorian Consortium. Mako started its maiden drilling program at Napiè, which is located along the Birimian greenstone belt, in 2018. The project’s Tchaga prospect has recorded a multitude of wide, high-grade assays including 13 metres at 20.82 grams per tonne of gold from 32 metres, 32 metres at 7.10 grams per tonne, and 14 metres at 5.46 grams per tonne of gold from surface. With a 90 per cent interest in the project, the next phase of Mako’s journey in progressing Napié has arrived. Mako managing director Peter Ledwidge says the larger slice of Napié represents a significant step forward for the company, with backing from reputable North American and European investors. “Out of our recent $10 million equity raising to acquire Perseus’ interest in Napié, we received cornerstone support from Dundee Goodman and DELPHI,” Ledwidge tells Australian Resources & Investment. “Between the two of them, they covered $6.3 million of the $10 million raise.” Ledwidge says 40 out of the 70 gold

deposits in the Birimian Greenstone belts have more the 3 million ounces. “There has been more than 400 million ounces of gold discovered there, according to our internal database,” he says. Mako, which is based in Brisbane, is confident that Côte d’Ivoire represents a huge potential as a jurisdiction for greenfield exploration. “What’s even more important is that most of those deposits are open pit,” Ledwidge says. “It’s pretty challenging to find open pit deposits like that in Western Australia these days – I’m not saying they’re not there, but West Africa is so underexplored in comparison. “If you look at Côte d’Ivoire, there’s a few companies that have been here for a number of years, but out of all the West African countries it has only seen some serious exploration in the last 10 years or so.” “For example, our Korhogo project has had zero exploration, so it’s pretty exciting, and within 30 kilometres of Barrick’s 5-million-ounce Tongon mine, which is almost out of reserves; it’s exciting to be working on totally virgin ground like that.” For Ledwidge, greenfield exploration is much more attractive than the brownfield projects that are now commonly seen across Australia. “Working with greenfield projects is what we’re good at, as shown in Burkina Faso when we were with Orbis and made three greenfield discoveries,” he says. “I prefer to get a totally greenfield project that ticks all the boxes as far as the potential to host a significant deposit rather than some of the leftovers of an old mining operation.” Ledwidge and his wife, Ann Ledwidge, who is also Mako’s general manager of exploration, have more than 30 years’ experience as geologists, which has bolstered Mako’s knowledge of the Côte d’Ivoire prospects. Mako is due to release its JORC maiden

AUSTRALIAN RESOURCES & INVESTMENT

Mako Gold’s Napié permit.

Mako Gold’s Tchaga prospect.

Working with greenfield projects is what we’re good at, as shown in Burkina Faso when we were with Orbis and made three greenfield discoveries. resource estimate for the Napié project before the end of this year, and Ledwidge expects its ongoing drill assays to help contribute to a promising result. “We’re potentially talking about open pit that could be pretty high margin,” Ledwidge says. “We think the stripping ratio would be quite reasonable as well.” So far, the junior explorer has completed 45,000 metres of drilling at Napié’s Tchaga prospect. While he understands it works for some companies, Ledwidge says Mako doesn’t believe in grid pattern drilling. “A lot of companies like to do that in their early phase, doing air core drilling,”

Ledwidge says. “We don’t favour it much because it chews through the money and then after that you have to do RC or diamond drilling. “Perseus has done all the soils on the permit and our structural analysis has led us to change our drilling direction from west to east to a more preferrable northwest to south-east; by doing that we’re intersecting the high-grade zones. “Our share price right now is at about 9 cents per share (at the time of writing) and our market cap is in the order of $30 million,” Ledwidge says. “The share price at Orbis was 8 cents when we acquired our first permits in West

Africa, which increased to 72 cents within a few years. “For Mako, I hope that the share price will be significantly higher and so will the market cap in another two to three years. “We are just about to come out with a maiden resource and I hope that once that happens we’ll get a re-rating .” There is further potential on the horizon for Mako’s Korhogo project, also located in Côte d’Ivoire, which has received two permits within the last 12 months “Like our namesake the Mako shark, which is the fastest shark in the ocean, we’ve already completed the airborne drilling, an airborne magnetometer and radiometrics survey, and soil sampling,” Ledwidge says. “As soon as we get results from infill soil samples, we’ll conduct a maiden drilling program, which we hope to begin in the next three to four months.”

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NICKEL

ELON MUSK POWERS NICKEL MINERS BY ANTHONY FENSOM

Australia’s nickel sector is on a high after a major agreement was secured by the country’s largest producer of the metal.

Drilling at Poseidon Nickel’s Golden Swan prospect.

ickel miners are basking in the global ‘clean energy’ limelight after a deal between the world’s biggest miner and the planet’s leading electric vehicle (EV) maker. On July 22, BHP announced the signing of a nickel supply agreement with Tesla, with the Australian miner to supply Elon Musk’s EV powerhouse from its Nickel West mines in Western Australia. Commenting on the deal, BHP chief commercial officer Vandita Pant says: “Demand for nickel in batteries is estimated to grow by over 500 per cent over the next

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decade, in large part to support the world’s rising demand for electric vehicles. “We are delighted to sign this agreement with Tesla Inc., and to collaborate with them on ways to make the battery supply chain more sustainable through our shared focus on technology and innovation.” BHP states the two companies will also “collaborate on ways to make the battery supply chain more sustainable, with a focus on end-to-end raw material traceability using blockchain; technical exchange for battery raw materials production; and promotion of the importance of sustainability in the

resources sector, including identifying partners who are most aligned with BHP and Tesla Inc.’s principles and battery value chains.” The Australian miner will also collaborate with the United States company on energy storage solutions “to identify opportunities to lower carbon emissions in their respective operations through increased use of renewable energy paired with battery storage.” Nickel West’s production is estimated at between 85,000 and 95,000 tonnes in fiscal 2022, with first output from its nickel sulphate

AUSTRALIAN RESOURCES & INVESTMENT

Tesla boss Elon Musk.

Demand for nickel in batteries is estimated to grow by over 500 per cent over the next decade. plant expected in the September 2021 quarter, according to BHP. BHP chief executive officer Mike Henry has described copper and nickel as “future facing commodities” for their role in supplying EVs and supporting decarbonisation. The Tesla deal follows Musk’s February 26 tweet, where he stated that “nickel is our biggest concern for scaling lithium-ion cell production.” The move by the ‘Big Australian’ supercharged the ASX-listed nickel sector, with Mincor Resources and Western Areas, both current or future suppliers to BHP’s nickel business, seeing share price gains on the announcement. Announcing a high-grade nickel intercept between its Long and Durkin North mines in Western Australia, Mincor Resources also congratulated BHP on its Tesla deal. “Our nickel concentrate off-take agreement with BHP means that Mincor will be a key participant in the ESG-friendly global EV battery supply chain,” Mincor managing director David Southam says. Nickel explorers Auroch Minerals, Lunnon Metals and Posideon Nickel also gained ground on the positive news from BHP. With most of the world’s nickel currently supplied by producers in Indonesia and Russia, BHP’s move has effectively put Australia’s nickel industry at the centre of an ethical supply chain for the ESGconscious battery sector. PRICE RISE Australia’s nickel miners are enjoying the increased attention. The nickel price is projected to average $US17,360 ($23,620) a tonne in 2021, up 26 per cent on last year, due to “strong demand from stainless steel producers and rising expectations about EV demand,” according to the Office of

the Chief Economist. New projects and expansions are expected to increase Australia’s nickel export volumes from an estimated 197,000 tonnes in fiscal 2021 to around 251,000 tonnes in fiscal 2023. Nickel export earnings are also expected to grow, reaching $4.6 billion in fiscal 2023, up from $3.8 billion in fiscal 2020, according to the government forecaster’s June 2021 Resources and Energy Quarterly. Australia, which has around a quarter of global nickel resources, is expected to contribute more than 25 per cent of new global mined supply by 2030, boosted by restarts and new projects. In April, Panoramic Resources announced it will restart the Savannah nickel operation in Western Australia, with the company detailing a 12-year mine life with annual average nickel production of around 9100 tonnes. The first concentrate shipment is targeted for December 2021. Elsewhere, Poseidon Nickel plans to make a final investment decision on its Golden Swan project by the end of 2021, with first production likely by mid-2022. Mincor Resources officially opened its Cassini nickel mine in late March and is projecting first delivery of nickel concentrates in the March quarter 2022. Significant potential also exists in refinery capacity, with First Quantum successfully restarting the Ravensthorpe nickel operation in the March quarter 2021. Exploration expenditure has also risen, with spending on nickel and cobalt exploration totalling $46 million in the December 2020 quarter, up 24 per cent year-on-year. Among those seeking to capitalise are Brisbane-based Superior Resources, which has reported its Big Mag and Dido prospects in Queensland are “highly prospective

for Voiseys Bay-style Ni-Cu-PGE magnetic sulphide ore deposit systems.” S U P P LY D E F I C I T Nickel supplies are expected to be tight for the next three years and there could even be a significant deficit as early as 2023 as demand rises, according to BloombergNEF analyst Allan Ray Restauro. While currently used mainly in stainless steel production, which accounts for 70 per cent of global consumption (batteries account for 5 per cent) analysts see increasing demand for nickel as a key component in lithium-ion batteries used in EVs. Although the development of a new technology by China’s Tsingshan Holding Group that can process nickel pig iron (NPI) into battery nickel (nickel matte) hit prices earlier in 2021, analysts at ANZ Research consider it a long-term positive for the industry. “Margins for NPI and stainless steel are currently much higher than for nickel matte. If growth in demand for battery nickel exceeds expectations, the market could remain tight, keeping nickel prices high and stimulating nickel matte production,” the bank states in a March report. “Overall, the nickel industry is likely to become a more reliable supplier of raw material for batteries, supporting nickel demand and therefore price in the long term.” Benjamin Bell, managing director of Australian Mines, has described the opportunity for Australia’s nickel miners. “For a nickel producer, the electric vehicle sector is the equivalent of what China was to iron ore producers 20 years ago,” he says in an Australian Financial Review article.

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NICKEL

BHP will supply nickel for Tesla’s electric vehicles.

Electric vehicles to drive Australia’s mining future Industry leaders predict critical minerals for battery technologies will lead to significant opportunities for the nation’s growing resources sector.

ustralia is expected to be at the forefront of the electric vehicle (EV) boom with key industry figures signalling that a combination of critical minerals for battery production and increased demand for the vehicles will create an enormous opportunity. BHP Market Analysis Economics vice president Huw McKay, in the company’s first-half economic and commodity outlook, says EVs are expected to constitute around 17 per cent of the light duty vehicle fleet by 2035 and around 41 per cent of annual sales. “While the collapse in auto sales activity under COVID–19 (from already low levels) also hit EVs, they bounced back hard in the second half of calendar 2020,” McKay says. “Annual sales passed three million

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units for the first time, representing 37 per cent growth year on year. “The 17 per cent fleet share we now project in 2035 translates to 314 million EVs on the road, versus 275 million previously.” Tesla chair Robyn Denholm, speaking at the Mineral Council Australia’s minerals week event in June, explains that each EV has around $5000 worth of minerals, with Australia capable of supplying almost all of it. “Australia is the only country in the world with resources in all three of the critical battery metals, as well as other minerals required for the clean energy transition,” Denholm says. “By 2030, the value of the global lithium-ion battery market is forecast to

be $400 billion. That’s eight times the revenue generated by Australia’s coal exports in 2020.” Federal Minister for Industry, Science and Technology Christian Porter says Australia is well placed to capitalise on growing global demand for battery systems and the critical minerals associated with their production, with the energy storage market expected to be worth almost US$20 billion ($27.2 billion) by 2027. “Australia’s resource sector is worldclass. Through our $1.3 billion Modern Manufacturing Initiative, we are helping to unlock this enormous potential by providing targeted support for projects that will deliver big rewards for our local economy in terms of export earnings and

AUSTRALIAN RESOURCES & INVESTMENT

“We expect this trend to begin taking hold over the coming years as consumers favour EVs with longer driving distance capabilities before recharging, making nickel-based battery compositions the optimal choice for vehicle producers.” According to Denholm, Australia has a competitive opportunity to enhance its environmental, social and governance (ESG) practices for the future as the global market for electric vehicles grows. “Tesla is the world’s largest manufacturer of electric vehicles and battery storage systems,” Denholm says. “At the heart of everything we do in our quest to accelerate the transition to sustainable energy is the lithium-ion battery – one of the most important technologies of the century. “There is a global transition to sustainable energy underway and this presents a huge opportunity for Australia.” In July, BHP agreed to supply Tesla with nickel from its Nickel West assets in Western Australia in a collaboration which will aim to make the battery supply chain more sustainable. Western Australian Mines and Petroleum Minister Bill Johnston says the agreement highlights that the state hosts

the best quality raw materials integral to the world’s decarbonisation efforts. “It also reinforces the level of comfort global brands have in investing in the state knowing that raw materials are responsibly sourced,” Johnston says. “As investors and the community are increasingly holding mining companies to the highest ESG standards and practices, the supply agreement between BHP and Tesla reflects the regulatory framework in place in Western Australia that ensures the sustainable production of battery materials.” Denholm believes Australia should prioritise onshore refining of its lithium to save costs and reduce emissions. “There’s another reason for Australia to prioritise onshore refining; it’s a huge economic opportunity,” she says. “Tesla estimates that last year, Australia supplied approximately 49 per cent of the world’s lithium ore – spodumene – but zero per cent of the refined product suitable for battery cells. That lithium sold for about $US100 million – but if it was processed onshore in Australia the value would have been more like $US1.7 billion. “So that’s a $US1.6 billion annual opportunity and growing.”

Image credit: BHP.

new job opportunities,” Porter says. “It is also critical that we build our sovereign capability in this sector, with China currently the world leader in critical minerals processing including battery production. “Whether it’s building large-scale battery systems, adding value to critical minerals exports through new refining techniques, or driving the adoption of battery power in mining vehicles, these projects will increase Australia’s international competitiveness and help position us a future leader in this crucial sector.” Australia’s nickel production will be a crucial part of this supply chain and price forecasts are already starting to reflect the metals promising future. In its June nickel price revision, Fitch Solutions predicts the 2021 average price forecast for nickel will rise from US$15,750 per tonne to US$16,500 per tonne. According to its Nickel Prices – Upwards Revision Amid Strong Demand report, Fitch Solutions expects nickel prices will trade lower than present levels in the coming months, as demand from steel production stabilises and nickel metal production ramps up. Prices (at the time of writing) have recovered from a steep price correction in March which occurred after an announcement that Chinese stainless-steel producer Tsingshan plans to bridge the NPI to battery-grade nickel divide by the end of 2021 and substantially increase nickel production for both 2022 and 2023. Subsequently, nickel prices fell to US$16,450 per tonne. In May, prices reached a four-week low in response to Chinese regulators warning domestic commodities firms to keep the market fair after base metals experienced a strong rally. Prior to the Tsingshan announcement, nickel prices had progressed to multiyear highs on the back of increased optimism in the market, a weakening dollar and expectations about future nickel supply deficits. Fitch Solutions also predicts that the EV market will be a source of growing demand as the use of nickel in lithium-ion battery compositions increase. “China will once again be a key source of demand in this respect, particularly as manufacturers begin to use higher nickel content batteries in their EVs,” Fitch Solutions states.

BHP’s Nickel West operations in Western Australia.

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NICKEL

High quality projects transform Boadicea’s future Boadicea Resources is uniquely positioned to advance its Western Australian and Queensland tenements. Under its own drilling team and teaming up with IGO in the Fraser Range last year, the company is embarking on its most ambitious exploration period to date.

ustralia has enjoyed its share of success when it comes to greenfields discoveries. In 2012, Sirius Resources uncovered the Nova nickel deposit in the underexplored Fraser Range of Western Australia, igniting a wave of exploration in the region. The Nova deposit rocketed Sirius’ market capitalisation to more than $1 billion in 2013. IGO (then Independence Group) acquired Sirius in 2015 for $1.8 billion, giving rise to stronger investment and understanding of the Fraser Range nickel belt. With greater emphasis on green metals such as nickel, copper and lithium to drive the EV revolution, an exploration company such as Boadicea Resources is poised for significant investor interest as its exploration and drilling programs advance in the search for these new-age minerals to fuel the clean energy requirements of the future. Boadicea received a significant kick-along in September last year when IGO sealed a landmark deal with its Nova neighbour. IGO signed an asset sale agreement to explore nine of Boadicea’s 100 per cent owned Fraser Range tenements over a fiveyear period. If a resource is declared by IGO within the five years of exploration, Boadicea will receive $50 million. Boadicea hailed the agreement as the start of a metamorphic period for the company, with it since targeting additional copper-gold tenements in the Paterson Province and gold tenements in Queensland. Boadicea managing director Jon Reynolds says the IGO deal defines the company among junior explorers on the ASX. The Fraser Range has enjoyed a ‘hot property’ status since the Nova discovery in 2012. It has grown in importance since that time with the price of nickel soaring and demand for the metal not looking like it will abate any time soon. According to a Roskill report from February, global nickel demand will rise by 2.6

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Drilling at Symons Hill.

million tonnes by 2040 off the back of rising electric vehicle (EV) manufacturing. The report found that Australia will contribute more than 25 per cent of new mined nickel supply by 2030. The Fraser Range has a key role to play in this. “The new Boadicea board of management that took over the company reins in April 2020 has transformed the company in the last 12 months in a significant way and we are on the threshold of highly prospective new projects with the exploration targets we have,” Reynolds tells Australian Resources & Investment. “At the same time, we’ve added two extra exploration regions to our portfolio in terms of the Paterson Province and the Drummond Basin in Queensland. “Within six months of IGO’s deal, the first

809-metre diamond drill hole from its most highly rated exploration target – Orion, which sits on the border of Boadicea’s Symons Hill licence. “The results to date show the drilling has skimmed the margin of the chonolith intrusion, buoying IGO’s exploration efforts in the region to find the extension of its Orion intrusion. The intrusion is showing increased mineralisation on Boadicea’s Symons Hill licence.” A discovery at Symons Hill provides IGO its closest feed source for its hungry Nova mill located three kilometres away. With Boadicea and IGO waiting on initial assays following their partnership, Reynolds says the early signs are promising. “The preliminary indication is that there is a lot more potential in our licence,” he says.

AUSTRALIAN RESOURCES & INVESTMENT

“IGO has a large exploration program at the moment, including geophysical surveys and aircore drilling, and they’re committing to further diamond holes.” As IGO reaches deep into its pockets to explore nine of the 11 Fraser Range tenements owned by Boadicea, the junior explorer is looking to simultaneously grow its other projects. “It allows us to focus on our other tenements. IGO is the expert in the Fraser Range and we will let them explore the tenements on our behalf to add value to shareholders,” Reynolds says. Boadicea’s Koongulla copper-gold project in the Paterson Province is also surrounded by major companies, including Newcrest Mining’s Telfer mine, which contains 32 million ounces of gold and 1 million tonnes of copper. Airborne geophysics have shown that Koongulla’s interpreted dome shares similar characteristics to Telfer. “To say we have identified the exceptionally promising characteristics about Koongulla is an understatement,” Reynolds says. “We’ve picked up a really good quality position in the Paterson Province for almost no cost and we have a potential Telfer lookalike.” Boadicea aims to start drilling at Koongulla either late this year or next year. With its Western Australian tenements showing signs of nickel and copper mineralisation, Boadicea is well prepared to capitalise on growing demand for both base metals which have been bullishly priced this year. “Just the fact we’ve got nickel and copper exposure in terms of what we’re looking at means by default we’re in the EV market and exposed to that supply and demand,” Reynolds says. According to Reynolds, Boadicea is part of a new generation of junior companies that will be developing projects in the same hot exploration areas as larger mining companies. “Being one of the top key targets for IGO to find its mixed resource for its Nova mill certainly put us in that new generation,” Reynolds says. Boadicea’s focal point at two exploration licences in the Drummond Basin and Charters Towers regions of Queensland is gold. Reynolds says both licences at the tenements, which were secured at a low price, are progressing through their early stages. “We identified that Queensland has a lot of opportunities for quite interesting gold exploration potential,” he says. “It was less explored, less covered by tenements and explorers; Charters Towers and the Drummond Basin jumped out to us for that reason. “We like gold as it’s of relatively low cost to develop and maintains its interest within the investment community, so it was a natural fit for our portfolio.” Boadicea’s substantial to-do list for the remainder of the year will have the board working diligently, and keep it agile and nimble to ensure it harnesses the full potential of the exploration efforts. The works include geophysics work across its Paterson Province and Queensland tenements. With a background as a geologist, Reynolds says greenfields exploration remains the focus for Boadicea. “We’ve got an excellent range of greenfields tenements in regions of Australia that are highly prospective for base metals and gold,” Reynolds says. “We previously only had the Fraser Range but now we have three exceptionally good quality regions for us to explore and specifically targeting the biggest upside of all – mineral discovery and growing shareholder value.”

BOADICEA RESOURCES

PATERSON PROVINCE

CHARTERS TOWERS / DRUMMOND BASIN

FRASER RANGE GRAVITY HIGH

BOADICEA PROJECT LOCATIONS

QUALITY MANAGEMENT

• Experienced board • Completes IGO deal • Growth in quality projects • Successful capital raising

WORLD CLASS LOCATIONS

• • • •

Fraser Range Paterson Province Charters Towers Drummond Basin

BOA OFFICE

ACTIVE EXPLORATION

SHAREHOLDER VALUE

• Drilling at Symons Hill, Transline, Koongulla, Clarke Reward

• Positioned to be the next major nickel and gold discovery

ASX: BOA | ACN: 149582687 www.boadicea.net.au info@boadicea.net.au 0409 858 053 BOADICEA RESOURCES (ASX:BOA)

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COPPER

Unravelling the myths and realities of 2020 – where to next for copper prices? BY JONATHAN BAR NES, PR INCIPAL ANALYST COPPER, ROSKILL: A WOOD M ACKENZIE BUSINESS

he global refined copper market has been in a statistical deficit for the past six years, cumulating to a total deficit of 1.8 million tonnes (Mt). In 2020, the market deficit was just short of 0.5Mt. In hindsight, the spectacular recovery in London Metal Exchange (LME) cash prices last year – in complete defiance of the pandemic – can be attributed more to genuine physical market tightness than to speculation. In truth, the copper industry has largely escaped unscathed from the impact of COVID-19 crisis. This was due to the unique interplay of internal and external forces that resulted in a drawdown in the industry’s visible refined copper inventories. Not the least among these were conditions in the scrap industry, the socalled ‘unseen hand’ of the market. Through its vital contribution to both supply and demand, recycled materials significantly represent 10Mt, or one third of the global market. The principal interacting forces at work were: • T he Chinese copper supply chain was completely destocked following the 2019 trade war • China’s economy experienced a strong sequential recovery from March 2020 • Strong Chinese Government investment in new renewable energy generation projects • China enforced import quotas on copper scrap at 50 per cent of 2019 levels until November 2020 • World scrap generation, collection,

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Roskill principal analyst copper Jonathan Barnes.

recovery and trade was badly affected by the crisis • C OVID-19 restrictions impacted mine supply, especially in South America • C hina commissioned multiple new large scale semis plants during 2020 that were already well under construction when the pandemic hit, widening the consuming industry base • F abricators in China and elsewhere had to buy extra refined metal to replace missing scrap • C hina’s State Reserve Bureau imported copper cathodes to build its strategic stockpile. Disruptions to primary mine supply and scrap availability due to COVID-19 effects, falling prices (initially), and Chinese scrap quotas (to meet previously announced

environmental targets), as well as logistical port and shipping difficulties, resulted in a drop in total supply. Consumption fell sharply in China but then rebounded strongly, creating a supply shortfall across southern China that was at its peak from March to August. In the rest of the world, the slump in demand was deeper and more protracted, and was at its worst in the second quarter before gradually improving thereafter. Demand for refined copper in the rest of the world probably fell by 8-9 per cent last year, but this was almost completely offset by the rebound in total Chinese demand in 2020, which significantly outperformed GDP (gross domestic product) growth. Several new wire rod mills were opened in 2020, which were already being built before COVID struck. This added to the industrial base of Chinese consumers. Also, fabricators had to purchase extra cathode to replace scrap in their feedstock, due to the selfimposed import restrictions. Moreover, the secretive Chinese SRB made speculative undisclosed volumes of purchases from foreign producers and trading houses to bolster its strategic

AUSTRALIAN RESOURCES & INVESTMENT

BHP’s Olympic Dam is Australia’s leading copper producer.

stockpiles, taking advantage of bargain international prices and weak industrial demand in the rest of the world. As a result, total visible stocks (Exchanges + Chinese bonded warehouses) dropped from 955,000 tonnes at end-March 2020 to under 620,000 tonnes by the end of the year. The impact of the global pandemic might have been novel and unprecedented, but China reacted in the same way as it did during the Global Financial Crisis. Those around at that time had seen this all before. History may not repeat itself, but it does rhyme. There has been a similarly confused market picture so far in 2021. LME prices hit a nominal peak in March, spurred on by speculative influences and healthy Chinese demand. However, Chinese consumers have been very resistant to paying higher prices and refined demand has subsequently slumped in the second quarter compared to the strongest quarter for demand last year. Recently initiated sales of SRB cathodes aimed to cool commodity price inflation in China, though admitted only at a rate of 20,000 tonnes per month, have dampened

market sentiment particularly that of the speculators. Chinese refined consumption will likely decline again in the third quarter but may improve by the fourth quarter. The baton for recovery consumption has been firmly passed from China to the rest of the world. Demand in North America is exceptionally strong, driven by a buoyant construction market. Europe is not far behind, and other Asian markets such as South Korea, Vietnam and Thailand are also rebounding, though Taiwan and Japan are still struggling. In South America, the Peruvian Presidential Election, and the issue of higher mining royalties in Chile and the New Constitution are all deterring new investment. Brownfield and greenfield projects are proceeding but have been delayed by the pandemic, perhaps by six months. Meanwhile, Ivanhoe Mining’s KamoaKakula mine in the Democratic Republic of Congo is now shipping its first concentrate, in the biggest new mine project the industry has seen for many years. While on the secondary side, world scrap flows are improving but are not yet back to pre-pandemic levels.

Roskill believes copper prices will largely trade sideways during the second half of this year. Demand growth in China is capped by higher prices, but consumption in the rest of the world (though not everywhere) is rebounding strongly. We see these two influences, plus future supply uncertainties in South America, cancelling each other out, with prices generally trading in the $US9000 ($12,170)-$US9500/tonne range during the second half of 2021. In the medium term, copper demand in electric vehicles, wind power and solar power will only increase to meet global decarbonisation targets. If primary supply cannot steadily improve and better scrap recovery does not provide the extra units required, then the price sooner or later is only heading one way, and that is back up. In 2020, Australia produced 885,000 tonnes of mined copper (4.3 per cent of world supply) and 427,000 of refined copper (1.8 per cent of world production). The world will need more and more of Australia’s copper reserves and resources to achieve the energy transition over future decades.

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COPPER - GOLD

COPPER, GOLD SURGE EXCITES MINERS BY ANTHONY FENSOM

Strong market conditions for two key commodities mined by ASX-listed companies are set to spark an increase in exploration activity.

urging prices for copper and gold are exciting Australia’s mining companies, which are ramping up their global exploration plans in response. Copper prices hit record highs in May, with three-month copper on the London Metal Exchange soaring to $US10,747.50 ($14,625) a tonne, as bullish investors bet on a recovering global economy and green energy boost to demand. Meanwhile, in July, the Australian dollar gold price climbed to a six-month high above $2470 per ounce, helped by a weaker local currency. CONFIDENCE BOOST Peter Hwang, managing director of Queensland explorer Superior Resources,

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says the price surge has boosted confidence across the sector “Higher prices are attracting investors and encouraging increased exploration activity and investment,” Hwang says. “As an explorer this is an exciting time and we’re ramping up our exploration activity across our Queensland projects.” In June, Superior announced an 8000metre drilling campaign at its Greenvale project, located around 210 kilometres west of Townsville. The company is targeting gold, copper and nickel in an “aggressive” drilling campaign, with activity planned through to year-end. Elsewhere, other miners are targeting areas near De Grey Mining’s Hemi discovery

in Western Australia, which has sparked a renewed focus on the Pilbara region. In June, the company announced a maiden 6.8-million-ounce gold resource for its Mallina gold project, which it described as “redefining the gold potential of the Pilbara.” Sayona Mining has built a large tenement portfolio in the Pilbara region, where it is exploring for Hemi-style targets near the discovery. In June, it announced additional funding for its exploration activities, including drill testing of magnetic anomalies at its Mt Dove and Deep Well projects. “Our Pilbara gold projects all lie within a 10 to 50 kilometre radius and encircle the expanding Hemi, which is shaping up to

AUSTRALIAN RESOURCES & INVESTMENT

Superior will conduct an 8000m drilling campaign at the Greenvale project.

be a large footprint, world-scale deposit,” Sayona Mining managing director Brett Lynch says. Corey Nolan, managing director of Platina Resources, has increased the company’s gold footprint in Western Australia with a number of merger and acquisition deals. In June, the company completed its acquisition of the Xanadu gold project, located in the Ashburton Basin and in close proximity to the multi-million-ounce Mt Olympus deposit. Platina was also buoyed by the discovery of significant grades of palladium at its partowned Munni Munni project. New drilling is also planned at the company’s Challa gold project, located in between the Mt Magnet and Sandstone gold districts. Further afield, Adyton Resources is targeting both gold and copper in resourcerich Papua New Guinea (PNG). The company, which spun out of Mayur Resources in February 2021 to list on Canada’s TSX Venture Exchange, has reported positive results from drilling at its Gameta gold project on Fergusson Island. It has also mobilised a diamond drill rig at its

Wapolu gold project on the island, located within PNG’s “Rim of Fire.” Adyton’s Feni Island project, Kabang, is seen as prospective for epithermal gold or intrusive-related copper-gold mineralisation. “PNG is a prime address for epithermal gold and porphyry copper,” Adyton executive chairman Frank Terranova says. “We’re excited to be drilling and working to create shareholder value in one of the world’s most prolific gold and copper regions.” EXPORT BOOST Boosted by record high prices, Australia’s copper export earnings are expected to swell to reach $13 billion in fiscal 2022, up from $10 billion in fiscal 2020, according to the Office of the Chief Economist. “Copper has benefitted from both infrastructure-focused stimulus spending and ‘green’ stimulus spending,” the government forecaster says in its June 2021 ‘Resources and Energy Quarterly.’ “Stimulus spending, including policies to subsidise EVs (electric vehicles), renewable energy generation and transmission, are expected to influence consumption over the medium term due to copper’s use in EVs, batteries and grid infrastructure. “In line with recovering economic activity, total world consumption is forecast to reach 27 million tonnes in 2023, up an average 3 per cent a year.” Mine expansions and new investment are expected to drive increased copper production in Australia, which ranks as the world’s sixth largest producer but second for copper resources. In fiscal 2023, domestic production is forecast to reach 910,000 tonnes, up an average 2.2 per cent a year on the estimated 871,000 tonnes produced in fiscal 2022. New projects including Golden Cross Resources’ Copper Hill project, KGL Resources’ Jervois project and Havilah Resources’ Kalkaroo project are expected to help lift local output, with copper exploration rising 8 per cent year-on-year. Meanwhile, Australia is projected to become the world’s top producer of gold, with output rising from 332 tonnes in fiscal 2021 to 388 tonnes in fiscal 2023. Gold export earnings are seen reaching $29 billion in fiscal 2022, with prices averaging around $US1800 an ounce in the first half of 2021. The government forecaster also notes the Pilbara had become “Australia’s new gold rush region” following the discovery of conglomerate gold nuggets in 2017. It points to the success of Newcrest

Visible gold from Platina’s Challa gold project.

Mining’s Telfer mine in the Great Sandy Desert, together with the Hemi discovery south of Port Hedland, of intrusion-hosted mineralisation. The Paterson Province has become “one of the world’s most sought-after exploration areas” following discoveries such as the Winu and Havieron copper and gold deposits, it says. Gold exploration expenditure rose by nearly 32 per cent year-on-year, with Western Australia accounting for nearly 70 per cent of the total. POSITIVE OUTLOOK Will the good times continue for Australia’s copper and gold miners? “Rising uncertainty around monetary policies, inflation and increasing risk of equity market volatility should favour safehaven gold demand,” ANZ Research says in a July 7 report. “The US bond yield and prospects of a weaker (US dollar) further strengthen our conviction that the gold price will trade higher.” For copper, the bank’s analysts note that South American supply has improved since bottoming out in February 2021, yet “political and COVID-19 related operation supply risks remain in place.” With “Dr Copper” now becoming known as “King Copper” due to surging demand and gold retaining its traditional safe-haven status, Australian miners have reason to be confident.

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COPPER - GOLD

Philippines decision sets up Celsius projects Celsius Resources is a major beneficiary of the decision by the Philippines to lift a nine-year ban on new mining developments in the country in an effort to boost economic recovery from the pandemic.

Celsius executive director Blair Sergeant.

he Philippines Government’s lifting of the ban by an executive order in April from President Rodrigo Duterte followed the March quarter completion by the Perth-based Celsius of a portfolio of advanced copper-gold projects in the country. Celsius executive director Blair Sergeant acknowledges that the Philippines has suffered in terms of being a mining investment destination, at least in the minds of Australian investors, because of the ban on new mines. “But we’ve always thought that was misguided because while there have been a

The location of the flagship MCB copper project.

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few Australian companies that have had a few missteps in the country over the years, often it has reflected a lack of understanding of the jurisdiction in which they are operating,” Sergeant tells Australian Resources & Investment. “Now there has been a fundamental shift in the attitude of the government, we intend to build one or more new copper-gold mines on the back of the portfolio of assets that we acquired. Quite clearly the executive order clearly paves the way for us to do that. “So we are now moving the assets up the development curve as quickly as is practically possible. Now that the decrees have been issued, the path is very clear for us in terms of our ability and the government’s willingness to facilitate new mining titles being granted.” The Filipino projects were acquired under a deal, first announced in September 2020, with a private United Kingdom company, Anleck. All of the properties were once explored by United States copper giant Freeport-McMoRan. The flagship MCB copper project is located 320 kilometres north of Manila. A maiden resource estimate was announced in January 2021 – 313 million tonnes grading 0.48 per cent copper and 0.15 grams a tonne (g/t) of gold for 1.5 million tonnes of contained copper and 1.47 million ounces of gold.

The MCB deposit includes a high-grade core of 93.7 million tonnes grading 0.8 per cent copper and 0.28g/t gold, which is the focus of a scoping study into a development, with the study due to be completed in the September 2021 quarter. “Because Freeport spent more than $45 million collectively on the portfolio, including $15 million on MCB itself, we are pretty confident the scoping study numbers will be relatively robust,” Sergeant says. “We are further down the track than the market appreciates. It reflects the fact that Freeport spent so much time and money on MCB and the other assets. We get the benefit of that as we move this up the development curve.” An earlier focus of the company – the Opuwo cobalt and copper project in Namibia – continues to be assessed in parallel with the flagship copper-gold assets in the Philippines. Opuwo’s mineral resource estimate was more than doubled in July 2021 to 225.5 million tonnes grading 0.12 per cent cobalt and 0.43 per cent copper. “We are still assessing its technical and economic merit so as to inform the board as the best way forward. But we’re certainly like what we are seeing so far,’’ Sergeant says. BY BAR RY FITZGER ALD

Sagay is another of Celsius’ projects in the Philippines.

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MINERAL SANDS

Rising sands BY ANTHONY FENSOM

Australia’s mineral sands miners are eyeing better times, with supply issues and a post-COVID recovery lifting prices.

tock prices for ASX-listed minerals sands companies have surged as a result of the changing market conditions, encouraging increased investment in an industry key to global construction and green technology. Home to the world’s largest mineral sands deposits, Australia has nearly a third of the world’s ilmenite (titanium) resources, 62 per cent of rutile and 68 per cent of zircon resources, according to the Minerals Council of Australia.

On July 23, industry leader Iluka Resources was trading at $9.75 a share, having risen by nearly 50 per cent since the start of the year. Other sand miners have also enjoyed impressive gains, including Astron Corporation (up 125 per cent) and Sovereign Metals (up 70 per cent). Macquarie Bank analysts see zircon prices rising by 14 per cent in 2022 to US$1643 ($2230) a tonne and rutile prices increasing by 4 per cent as demand recovers on the back of a strengthening world economy. Diatreme has advanced the Cyclone project to a ‘shovel-ready’ status.

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In its June quarterly review, Iluka reports that zircon demand “remained strong” throughout the first half of 2021, on the back of improved ceramics production in Asia and Europe. Demand for titanium dioxide was also described as “robust,” with sales up 72 per cent in the first half due to extra demand for high-grade feedstock amid constrained supply in China and Africa. Iluka notified the Sierra Leone Government in May that it plans to “temporarily suspend” operations at its Sierra rutile project, effective November 19, due to reported operational issues. “Iluka’s sales of high-grade feedstocks will likely be production constrained in (the second half),” it notes. The Perth-based company has hiked prices for both rutile and zircon. Supply worries further escalated in June, when Rio Tinto shut its Richards Bay mineral sands operation following growing community violence, including the death of a senior executive. Richards Bay is responsible for around 17 per cent of the world’s titanium feedstocks and 13 per cent of zircon. On July 21, Rio Tinto announced operations at Richards Bay would remain halted “until further notice,” with a restart depending on “when the safety and security position improves.”

AUSTRALIAN RESOURCES & INVESTMENT

Samples from Diatreme Resources’ Cyclone project.

N E X T WAV E Smaller producers and the next wave of emerging mineral sands miners are emerging to fill the supply gap. Among the emerging producers is Brisbane-based Diatreme Resources, which is advancing its Galalar silica sand project in Far North Queensland towards development. Located near the world’s largest operating silica sand mine at Cape Flattery, Diatreme sees its silica operation as supplying the fastgrowing solar PV market. “Galalar is rapidly progressing into becoming a leading supplier of high-purity silica sand, perfect for the needs of the solar PV market and specialty glass makers,” Diatreme chief executive officer Neil McIntyre says. “With silica described as the ‘next lithium’ due to its role in the world’s clean energy revolution, we’re confident of advancing the project towards production in 2022.” In mineral sands, the company’s Cyclone zircon project in Western Australia is also attracting increasing interest. Having advanced the project through to ‘shovel-ready’ status, Diatreme is keen to attract partners capable of developing it through to production. “Cyclone has everything in place ready for its development and with continued constrained supply of high-grade zircon, we are confident of finding the right partner to unlock value from this project,” McIntyre says. Also in Western Australia, Image Resources announced record quarterly production in the June quarter 2021 at its zircon-rich Boonanarring mineral sands

project, located 80 kilometres north of Perth. Heavy mineral concentrate output reached a quarterly record high of 102,000 tonnes, with the company reporting rising prices for ilmenite, rutile and zircon. “Market prices for ilmenite and rutile have been rising steadily for the past nine months and are now at seven-year highs in response to real demand for final products, presumably resulting from the significant economic growth globally following the COVID-19 economic contractions in (calendar year) 2020,” it says in the July 20 report. It also notes that zircon prices were at “three-year highs,” with the benchmark price effective July 1 of $US1630 per tonne the highest price recorded since 2014. Similarly, both ilmenite and rutile prices have hit their highest levels since 2014. Image plans further expansion, including at its nearby Atlas, Helene and Hyperion projects, together with progressing a pre-feasibility study at its Bidaminna project located 25 kilometres north-west of Boonanarring. Another emerging producer, Strandline Resources, has commenced construction at its Coburn mineral sands project, located 240 kilometres north of the export port of Geraldton. The company expects the first production of heavy mineral concentrate in the fourth quarter of 2022, with an estimated 22.5-year mine life. Also in Western Australia, Sheffield Resources has secured new offtake agreements for its Thunderbird mineral sands project,

located halfway between Derby and Broome. The company describes the project as “the first major mineral sands deposit to be discovered in the Canning Basin and one of the largest mineral sands deposits to be discovered in the last 30 years.” Sheffield aims to complete an updated bankable feasibility study for the project by late 2021, while progressing project financing with government and commercial lenders. On the east coast, Astron Corporation plans to commercialise its Donald mineral sands project in Victoria following a demerger completed in July. Other ASX-listed mineral sands miners are looking further afield, principally in Africa. Perth-based Base Resources is looking to expand its profitable Kwale titanium and zircon mine in Kenya and develop a new mineral sands project in Madagascar, while its Perth counterpart Sovereign Metals is progressing a scoping study for its Kasiya rutile project in Malawi. Strandline also has a portfolio of mineral sands projects in Tanzania, comprising its Fungoni and Tajiri projects and other exploration targets. With increasing demand driven by global urbanisation and supply constrained amid mine shutdowns and declining grades, the outlook appears bright. “A structural supply gap is widening for both zircon and rutile, driving prices higher and attracting increased investment. The time is right for Australia to maximise the opportunity from our highgrade mineral sands resources,” Diatreme’s McIntyre says.

Diatreme drilling activities in the Eucla Basin.

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B AT T E R Y M E TA L S

Battery metals demand set to spike Australia has a key role to play as a supplier of battery metals in the coming years. After a strong first half of the year, demand for these metals is only going to rise.

loombergNEF (BNEF) has forecast that the battery metals industry will become even more vibrant than it previously anticipated by the end of the decade. Across the board, battery metal prices recovered strongly in the first half of the year, providing an incentive for new production to come online. By 2030, under BNEF’s least-cost Economic Transition Scenario, annual demand for lithium-ion batteries will pass 2.7 terawatt-hours per year. BNEF’s 2021 edition reports that total annual battery demand in 2030 is 35 per cent higher than last year’s outlook, largely due to expectations for higher demand from passenger electric vehicles (EVs). However, BNEF’s adds that higher metal prices could influence chemistry adoption but not EV uptake.

Manufacturing of lithium-ion batteries is increasing.

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According to BNEF, high raw material prices could result in a significant shift in battery chemistry mix. “Automakers could switch to lithium iron phosphate (LFP) chemistry, which would reduce the performance of some EVs, particularly their range,” BNEF reports. “But this would enable the electrification of transport to continue unabated. In BNEF’s LFP scenario, LFP’s share of stationary storage deployments in 2030 jumps to 53 per cent in this outlook from 23 per cent, at the cost of the highest nickel chemistries.” Of all the key battery metals, lithium and nickel stand out as the two where the Australian mining industry holds the most sway. Here’s a summary of the prospects for lithium, nickel and other battery metals this decade.

LITHIUM BNEF expects that lithium carbonate and hydroxide should be sufficiently supplied until at least 2025. However, it predicts that hydroxide could face a shortage by 2027, as demand for high nickel chemistries surges. Australia is on track to play a major role in the supply-demand environment for lithium over this period, according to BNEF. “One key risk is that some 35 per cent of the projected supply growth from now until 2025 will come from integrated spodumeneto-hydroxide converters in Australia,” the report states. “These projects are expensive and have a history of delays. Should the commissioning of these Australian converters be delayed there may be a shortage of hydroxide by 2025.” Lithium prices have continued to rise

AUSTRALIAN RESOURCES & INVESTMENT

Supply of manganese has recovered in 2021.

in 2021 due to the restraint on supply as a result of the pandemic and the higher demand recorded in China and Europe. By end-June, lithium prices climbed 71 per cent for carbonate, 91 per cent for hydroxide and 58 per cent for spodumene concentrate. BNEP expects all prices to continue their rally but gradually plateau as more supply comes online in 2021-2022. NICKEL BNEP reports that the nickel sulphate market remains in the balance in the near term despite the increased demand expected in the next five years. Domestic demand in China was relatively low as some automakers shifted to LFP chemistries, the report adds. “This will have limited impact in the adoption of nickel-rich battery cathode chemistries, and as such, the nickel sulphate market may slip into a 128,000 metric ton deficit as early as 2024,” BNEP states. Nickel prices are forecast by BNEP to remain steady. At the start of the year, BNEP predicted that the nickel market would move into a two-tier system for nickel pricing to further incentivise investment into addition class one, battery-grade nickel supply. At the end of the first half of 2021, however, it conceded there have been no concrete developments towards this muchneeded change in the dynamics of pricing in the nickel market.

“Prices will likely remain around $US18,000 per metric ton for 2021,” BNEP states. C O B A LT BNEP expects the cobalt market will likely be in a narrow surplus this year, with largescale and artisanal miners to produce about 166,434 tonnes of the metal in 2021. Demand for cobalt, under BloombergNEF’s least-cost Economic Transition Scenario, will reach 163,121 tonnes in 2021, leading to a 3313-tonne surplus this year. “This projected surplus will be dependent on the ability of artisanal producers to ramp up supply,” BNEP states. Cobalt metal prices increased by 42 percent on the London Metals Exchange by end-June. In March, the metal’s price rose to $US53,000/tonne, its highest price since March 2018 and 15 per cent above the five-year average. “The cobalt metal price could average $US45,000 per tonne year-end 2021,” BNEP forecasts. “With the market projected to be relatively in surplus this decade, BNEF expects prices will hold at an average of $US44,000 per tonne up to 2025.” MANGANESE Manganese supply has recovered in 2021, according to BNEP, with production in South Africa during April increasing by 208 per cent year on year. The market has recovered strongly after the disruptions caused by the COVID-19

pandemic, the report continues. “In spite of the resumption of mine operations in South Africa, the industry has been saddled with challenges associated with haulage, electricity reliability and port operations,” BNEP states. As a result of the changing market dynamics, manganese sulphate prices are forecast to continue their rise. Over the first half of the year, manganese sulphate prices increase by 30 per cent (from $US867 per tonne in January to $US1128 in June) due to an increase in battery demand. “Prices are likely to keep rising in the second half of the year as demand for batteries is projected to grow,” BNEP forecasts. “With the manganese sulphate market currently projected to be in a deficit, prices are likely to rise to support new refinery projects in order to meet demand by 2024.” GRAPHITE Graphite demand from lithium-ion batteries, under BloombergNEF’s least-cost Economic Transition Scenario, is set to rise yearon-year by 37 per cent to 446,914 tonnes in 2021. By the end of the decade, demand is forecast to grow by 297 per cent to supply battery manufacturers. “Commercial vehicles will represent the fastest growth, with year-on-year demand doubling in 2021. Overall, graphite demand from lithium-ion batteries will reach 446,914 tonnes in 2021,” BNEF estimates.

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COAL

Guiding coal companies to meet a dual challenge BY NOOR A PURO, GR I SECTOR PROGR A M M ANAGER

s the build-up continues to the pandemic-delayed UN Climate Change Conference (COP26), all eyes – and hopefully all agendas – are on how to reach net-zero carbon emissions. And as the International Energy Agency (IEA) made clear in its recent Net Zero by 2050 report, this aim will fall short without a radical decrease this decade in the share of coal in global energy generation. Indeed, taken together, the coal, oil and gas sectors are the single main cause of climate change due to their production of greenhouse gas (GHG) emissions. It’s timely, therefore, that Global Reporting Initiative (GRI) has released an exposure draft for a Sector Standard for Coal. With the aim of ensuring transparency on impacts that matter most, the draft standard has the potential to unlock improved public disclosure on the most significant sustainable development challenges facing companies in the coal sector. Of all GHGs from fossil fuels, 40 per cent comes from burning coal. And given the sector’s wide-ranging impacts in areas such as biodiversity and human rights, in addition to climate change, the rationale for developing a new reporting standard is clear. I M PAC T S A N D O P P O R T U N I T I E S The proposed GRI Standard for Coal acknowledges that the sector is challenged by the tension of opposites. On the one hand, organisations have a responsibility to mitigate and combat the effects of climate change – manifested, for example, in how they are transforming their business models to lowercarbon alternatives. At the same time, they have a remit to ensure ongoing operations are conducted responsibly. After all, in some regions, coal mining and consumption is still growing. At least 50,000 people continue to be employed in the coal sector, while hundreds of thousands of jobs are indirectly connected. In addition, whole regions and

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communities rely on income from coal. These regions will likely make the shift more slowly than developed countries, where decarbonisation is already well underway. And there is an imperative for a just transition, to ensure that workers and communities get both protection and benefits from the shift towards climate resilience and a low-carbon future. A part of GRI’s new Sector Program, which has an aspiration to deliver 40 Sector Standards, the exposure draft for the Coal Standard is the culmination of a rigorous process, which has drawn on multistakeholder expertise. An independent working group, including diverse and global expertise from organisations within and connected to the coal sector, has been instrumental to getting the draft standard to this stage. Its final version will help companies use the GRI Standards to identify likely material topics for the sector, increasing consistency when it comes to how they provide transparency to their stakeholders. TA R G E T I N G I M PA C T A R E A S The exposure draft makes the connections to existing topic-specific standards, in areas such as biodiversity, waste, local communities, taxes and employment. It also introduces new topics that don’t have a corresponding GRI Topic Standard. The standard emphasises disclosures that get to the heart of the transition challenges faced by coal companies and the communities where they operate. For example, it seeks forward looking information on the actions organisations are taking to manage their actual and potential impacts that contribute to climate change. This recognises the crucial role that the decisions and strategies of fossil fuel companies have on global efforts to mitigate climate change. This standard singles out three key topics:

•C limate adaption and resilience guides organisations to report on how the low-carbon transition impacts workers and local communities, to encourage a just and fair transition for all. Organisations should also disclose the climate change scenarios they use to assess the resilience of their strategy, and whether they are investing in lowcarbon solutions. Acknowledging that the climate change debate evolves rapidly, the topic conveys the latest

AUSTRALIAN RESOURCES & INVESTMENT

stakeholder expectations for transparency. •G HG emissions covers carbon and methane emissions from coal activities. It advises organisations to report on all GHG Scopes, including Scope 3 emissions, which cause the most emissions in this sector. Disclosures about product use emissions are not a means to allocate fault, but rather to enable a link to the global carbon budget, allowing set limits on how much can be burned. • Closure and rehabilitation focuses on preparation for ending operations, which can happen quickly, especially from the workers’ perspective. This topic asks organisations to disclose how they will support the future employability of workers as well as their financial provisions to cover closures and rehabilitation.

those working for coal companies, their families and surrounding communities. These people-related impacts are also addressed in the Coal Sector Standard. They include issues such as health and safety risks; providing decent work; supporting local development and mitigating social impacts around mining sites; conducting business with integrity when it comes to distribution of wealth and corruption; and last but not least, respecting human rights. That said, we recognise all sustainability topics are interconnected. The environment may be the initial receptor of impacts, but the effects of climate change will eventually – and at an alarmingly exponential pace – pervade human and animal health and wellbeing.

ROLE OF COAL IN SOCIE T Y Even in the IEA’s most progressive pathways, coal will be mined for the next 20 years. And the sector’s activities will continue to have major impacts on

GRI’s exposure draft for a Sector Standard for Coal can be read at https://www.globalreporting.org/ standards/standards-development/sector-standardproject-for-coal/

Noora Puro is a project manager for the GRI Sector Program, and is currently leading the work to develop a sustainability reporting standard for coal companies. She has been with GRI since 2017 and has also worked on the GRI Oil and Gas Sector Standard.

The coal sector remains a significant employer in Australia and abroad.

About GRI Global Reporting Initiative (GRI) is the independent, international organisation that helps businesses and other organisations take responsibility for their impacts, by providing the global common language to report those impacts. The GRI Standards, which are provided as a free public good, are the world’s most widely used sustainability reporting standards.

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MANGANESE

First Butcherbird shipment sets sail Element 25 is celebrating its status as Australia’s newest manganese producer from the Butcherbird project in the Pilbara region of Western Australia.

lement 25’s first shipment of 27,000 tonnes of high-quality manganese concentrate from Butcherbird sailed from the Utah Point facility at Port Hedland in July. The shipment marks the first stage of Element 25’s plan to become a globally significant producer of manganese concentrates for the steel industry, as well as high purity battery-grade manganese sulphate (HPMSM) for use in the booming lithium-ion battery sector. “The shipment is the first step in what we see as a long journey,’’ Element 25 managing director Justin Brown tells Australian Resources & Investment. The pre-feasibility study into the low cost first stage was only completed 14 months before the first shipment of concentrate. The speed to market by the project reflects Butcherbird’s long history as a known manganese occurrence, and the attraction of the lithium-ion battery boom creating a new and fast growing market for HPMSM. “Butcherbird was long known about as a manganese occurrence, but nobody had ever

Element 25 has a stage two expansion of Butcherbird in its sights.

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had a proper look at it,’’ Brown says. “We were the first to do that and we identified this massive resource – 263 million tonnes in resource, and potentially double that if we drilled more.” A key reason why Butcherbird had long been overlooked was its comparatively low grade. “It sits in the ground at around 10-12 per cent manganese content, which historically at least, is not a particularly exciting grade,’’ Brown explains. “But we joined with the CSIRO in 2016 to unlock a high purity downstream processing angle which was very successful. “The problem at that point was that the use of chemical or battery-grade manganese sulphate was fairly limited because the electric vehicle (EV) industry was just getting started. So we did quite a lot of work on producing an electrolytic manganese metal product which is 99.9 per cent pure metallic manganese for use in the steel industry along with the concentrates. “But the challenge there was the capital requirement was quite high at $300-$400

million to get a plant up and running.’’ Instead, the company went down the low-cost option of first producing manganese concentrate for export. “It has been more doable but we still want go down the value-add chain and we have done 90 per cent of the work to get there in terms of understanding what has to happen, and we are in the process of finalising a pre-feasibility study, which will be out later this year to show the potential of that journey,’’ Brown says. Element 25’s project team is now turning its attention to a stage two expansion of the concentrate business, followed by a stage three development to convert the concentrate in to HPSM for batteries. “One of the key criteria is that the supply of HPMSM needs to have high levels of ESG (environment, social and governance) compliance,” Brown says. “So being zero carbon is a big part of that. It is a goal for us and is a requirement for products that have a desire to go into the EV industry, which is very much where we want to go.”

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WORKFORCE MANAGEMENT

Autonomous equipment has been a game-changer in current market conditions.

HOW MINING CAN ADAPT TO THE SKILLS SHORTAGE

Industry experts explore the cause and potential solutions for the mining and resources sector as it deals with the ongoing disruptions caused by the COVID-19 pandemic.

s the global COVID-19 pandemic continues to create mayhem across national economies all over the world, the Australian mining and resources industry has experienced a surge in activity. According to Australian Bureau of Statistics data, employment in the resources sector grew by 8.5 per cent between February 2020 and November 2020. However, that growth, along with the closure of international borders, is creating a new problem. The lack of international skilled workers due to travel restrictions, along with an intermittent fly-in, fly-out (FIFO) workforce imposed by state lockdowns and interstate border closures, means companies are

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struggling to find solutions to labour shortages in the lucrative industry. Australian Resources and Energy Group (AMMA) chief executive officer Steve Knott says Australia’s resources and energy industry has been firing on all cylinders throughout the pandemic. “Hundreds of thousands of dedicated Australian employees have kept our industry among the most productive and prosperous in the world,” he says. “However, prolonged closed borders to the small pool of international skilled migrants that supplement our domestic workforces has wreaked havoc on Australia’s resources industry, as it has most others. “AMMA’s members have been reporting

worsening skills shortages that have threatened to cripple our national recovery from the pandemic’s crushing economic impacts.” According to findings from the World Economic Forum’s The Future of Jobs Report 2020, automation, in tandem with the COVID19 recession, is creating a ‘double-disruption’ scenario for workers. “In addition to the current disruption from the pandemic-induced lockdowns and economic contraction, technological adoption by companies will transform tasks, jobs and skills by 2025,” the report states. “By 2025, the time spent on current tasks at work by humans and machines will be equal. A significant share of companies also

AUSTRALIAN RESOURCES & INVESTMENT

expect to make changes to locations, their value chains, and the size of their workforce due to factors beyond technology in the next five years.” Accenture head of resources David Burns says a more individualistic approach to the workforce post-COVID will be to look at every dimension of every worker – the personal and the professional – to support both the person and the collective business. “Acknowledging and adapting to this reality can help mining companies operate with greater understanding and empathy, ultimately transforming their workplace – and the workforce – in the process,” Burns tells Australian Resources & Investment. “This is increasingly important, as reflected in the World Economic Forum (WEF) 2020 jobs report, which showed that leadership and social influence are the top attributes that mining companies’ reskilling or upskilling programs are focused on. “As managers move from managing manual workers to analysing data and managing remote teams, they will also require superior communication skills, and project and change management experience.” Burns says COVID-19 is pushing companies to take digital transformation further by devising new ways to gain efficiencies at a time when fewer workers can be on site. “The majority of on-site roles in the mining sector are typically mechanical in nature, relying on maintenance workers,

machine operators and engineers handling heavy mining machinery and vehicles,” Burns says. “The WEF 2020 jobs report found that 67 per cent of repetitive and manual tasks, such as information and data processing, and about 60 per cent of tasks involving physical labour will be automated. “On the other hand, the report said that the top two emerging roles that will be critical for the future of the mining industry are artificial intelligence and machine learning (AI/ML) specialists and processautomation specialists.” Burns acknowledges that prior to the COVID-19 pandemic, drones were already carrying out pit surveillance and autonomous trucks were hauling ore. However, he says to advance the industry further, trucks that have full situational awareness and decision-making autonomy will be key to establishing fully autonomous and remote mine sites post-pandemic. “Humans will still be needed to operate the trucks, but can do this from a control centre, rather than on site,” Burns explains. “For this to happen, all fixed and mobile equipment will need to be connected and able to exchange signals and talk to each other. “As always, the safety of all persons and equipment remains parallel. Once this can be met, the next challenge rests on the mining industry’s chief human resources officers (CHROs) and digital officers to reimagine their strategy for the

post-pandemic era and explore new ways to re-organise and redesign their workforce, with new digital processes at the heart of that transformation.” A report commissioned by the Chamber of Minerals and Energy Western Australia (CME) in June, undertaken by independent labour market specialists Pit Crew Consulting, looks at the sector’s workforce requirements in the near term and out to 2025. Findings of the report show there is a significant shortage of workers in the Western Australian mining and resources industries now, with the potential for there to be a peak shortage of 33,000 workers. CME chief executive officer Paul Everingham says the Western Australian mining and resources sector has traditionally been able to draw upon an international pool of skilled workers, particularly to address highly specialised positions/trades that might be subject to acute shortages. “Being unable to access this pool in the next few years would mean potential peak shortages identified in the report would be more likely to become a reality,” Everingham says. “The WA mining and resources sector currently has approximately $140 billion in its project pipeline. “If the skills challenge is left unaddressed, there is a significant risk that not all opportunities will be able to be fully realised, in an environment where key commodity prices are forecast to remain

COVID-19 has disrupted FIFO mining schedules.

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WORKFORCE MANAGEMENT

strong into the immediate future.” Burns says skilled labour in mining, in both traditional and emerging areas, has struggled to keep up with stimulusaccelerated demand for almost all commodities, amid COVID-related travel restrictions. State and international border restrictions have made mining companies more dependent on a smaller pool of local workforces. “Western Australia is feeling the impact of these developments, perhaps more than any other state. The WA Chamber of Minerals and Energy has warned of a looming shortage for key skills such as trades and technicians, flagging demand for an additional 8000 workers in 2021-22,” Burns says. “Industry CHROs have confirmed these concerns, saying that metallurgists, mine geologists, engineers and surveyors are particularly difficult to hire and retain at the present time. “In addition to the shortage of traditional skills, there is also an urgent need for ‘new skills’ in mining such as data science and programming, that needs to be addressed in order for the industry to propel forward.” Burns says there is an opportunity to address these shortages by attracting a new wave of employees from adjacent industries who are used to working in an agile, fastmoving and tech-focused world. By doing so, the industry can advance the much-needed diversification of the workforce. “Based on our research, industry CHROs also hope that flexible and remote work policies in mining will attract greater diversity including higher female participation, a group that has historically been underrepresented in the industry,” Burns says. “People with families or other responsibilities, or health-related restrictions and disabilities, will also have a greater incentive to join the newly flexible and inclusive mining industry workforce.” The WEF Jobs 2020 report states that the public sector needs to provide stronger support for reskilling and upskilling for atrisk or displaced workers. It explains that the public sector will need to create incentives for investments in the markets and jobs of tomorrow; provide stronger safety nets for displaced workers amid job transitions; and to decisively tackle long-delayed improvements to education and training systems. “Additionally, it will be important for governments to consider the longer-term

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Technologies like virtual reality are being used to train workers.

labour market implications of maintaining, withdrawing or partly continuing the strong COVID-19 crisis support they are providing to support wages and maintain jobs in most advanced economies,” the report states. In September 2020, the Australian Government introduced the Priority Migration Skilled Occupation List (PMSOL), which aims to ensure certain critical occupations are filled to support Australia’s COVID-19 recovery. In June, mining occupations were added to that list to address the skills shortage in the resources sector. Federal Minister for Immigration, Citizenship, Migrant Services and Multicultural Affairs Alex Hawke says the Australian Government engaged with Australian employers, business leaders and industry bodies to determine the changes. “Government has received valuable feedback from Australian business stakeholders on critical skill vacancies, which has been considered together with data from the National Skills Commission, in order to develop today’s update to the Priority Migration Skilled Migration List,” Hawke says. “The Morrison Government will continue to support Australian businesses, including through skilled migration, as the engine

room of our nation’s economy.” Minerals Council of Australia (MCA) chief executive officer Tania Constable welcomes the mining occupations added to the PMSOL. “MCA continues to see an effective, flexible and functional skilled migration framework as more important than ever, so that relevant skills are available for and applied to projects and opportunities across industry,” Constable says. “As Australia adjusts to a post-COVID environment, the role of skilled migration in accessing specialist and technical skills for the mining industry will be crucial.” The mining industry is also seeing increased competition from other sectors around Australia, a factor it didn’t contend with during the mining constriction boom of a decade ago. Everingham says there is significant nationwide competition for skilled labour on the back of large-scale, government-backed infrastructure and construction projects being undertaken around Australia. “While CME and its member companies understand the strong focus on community safety in relation to the COVID-19 pandemic, increased certainty and confidence around the status of state borders is one factor that could help encourage increased workforce mobility and interstate migration,”

AUSTRALIAN RESOURCES & INVESTMENT

Everingham says. “COVID-19 has certainly impacted the current skills situation, with international migration effectively stopping, interstate migration being limited and shutdown work being held over from 2020. “But the scale of demand for ongoing operational and construction workforces is such that there would inevitably have been some element of tightening of the skilled worker pool over the next few years.” Burns says technical talent with experience in high-capital industrial settings has always been highly valued in the industry and will continue to be. Now, however, environmental, social and governance goals are reshaping the employee profile towards new types of talent, such as climate scientists, and talent that can help build strategies so that mining thrives in a world that is volatile, uncertain, complex and ambiguous. “Mining companies should provide both reactive individual training and proactive large-scale training, to create as many productive upskilling opportunities as possible,” Burns says. “This will facilitate the necessary diversification of modern mining roles. For example, a mechanic will need to work with AI/ML technology to predict machinery

failure and perform preventative repairs; a mining vehicle operator will need to remotely oversee multiple pieces of autonomous machinery; and mining engineers will need to use technology to plan and design drill sites. “At the same time, considerations for safeguarding employees’ mental health in what is a hugely challenging industry, in that respect, has never been more top of mind. “Accordingly, it will be necessary for the modern mining professional to be emotionally intelligent, with the communications skills to safeguard remote working employees.” The WEF Jobs 2020 report shows this to be the case, with key findings highlighting the window of opportunity to reskill and upskill workers has become shorter in the newly constrained labour market. This applies to workers who are likely to stay in their roles, as well as those who risk losing their roles due to rising recessionrelated unemployment and can no longer expect to retrain at work. However, the report also states that a significant number of business leaders understand that reskilling employees, particularly in industry coalitions and in public-private collaborations, is both cost-effective and has significant mid- to long-term dividends – not only for their

enterprise but also for the benefit of society more broadly. “Companies hope to internally redeploy nearly 50 per cent of workers displaced by technological automation and augmentation, as opposed to making wider use of layoffs and automation-based labour savings as a core workforce strategy,” the report states. Burns says the challenge for industries is to reimagine their strategy for the postpandemic era and explore new ways to re-organise and redesign their workforce, with employee experience and new digital tools playing a key role in that transformation. “The good news is that mining CHROs have a head start – the pandemic only accelerated a change that was already occurring in mining – such as greater automation and critical evaluation of the skills required on site to encourage remote working,” he says. “The recent WEF Future Jobs study found that around 95 per cent of surveyed mining companies are adopting strategies that create more remote working opportunities. There is also evidence that 85 per cent of mining workers are ready to embrace these changes to their environment. “The companies that succeed will be those that make these changes quickly.”

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MINING SERVICES

A gold site in Western Australia.

Reducing mining risk through climate adaptation SRK Consulting highlights why operations need to be stress-tested against a range of environmental scenarios.

n biology, adaptation refers to an organism changing its behaviour, physiology or structure to better suit its environment. In mining, adaptation is about resource companies responding to the great challenge of our time: climate change. Brian Luinstra, principal consultant (hydrogeology) at SRK Consulting, is passionate about mining adaptation. He believes Australian resource companies are more focused on climate-change riskmitigation strategies than adapting to a changing climate. “Mitigation is important,” Luinstra says. “Everything miners can do to reduce carbon emissions and preserve the environment makes a difference. But a faster rate of climate change is already affecting mining companies. We need to think a lot more about adapting to this change.” Luinstra uses a clothing analogy to describe the process. “The weather influences what you wear today. But it’s the climate that influences what you keep in your wardrobe, so you can deal with a range of weather scenarios,” he says. Boards and management should ensure their operations have been stress-tested

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against a range of climate scenarios, using latest tools and data. “They should ask: what happens if there’s a lot less water than we modelled for a project due to drought? Or if there’s a lot more water due to floods? Or hotter temperatures and extreme weather events?” Luinstra says. Luinstra says adaptation-planning is not a theoretical exercise. “There’s been some major failures in tailing dams in recent years due to water management issues. Not all the problems were related to climate change, but it can be extremely costly if a tailings dam, for example, gets a lot more rainfall than it was designed for,” he says. Surface-water management is another issue. Excess rainfall can create flooding at open-mine pits and cause environmental problems if larger-than-expected quantities of water are discharged. “Climate change is likely to increase the incidence of flooding,” Luinstra says. “Mines will need to plan for that in their watermanagement strategies.” The other extreme is drought. “What happens if a mine gets 20 per cent less rainfall than engineers modelled in a plant design, due to climate change?”

says Luinstra. “How would that affect the site’s day-to-day operations and longterm viability?” Mining companies should be aware of the potential impact of rising temperatures across various aspects of their operations. Greater weather variability is another consideration. “Two years ago, Australia had severe drought and bushfires,” Luinstra says. “This year, we could have record rainfall and flooding. Mining companies will need to adapt to more extreme swings in weather.” Climate change is affecting mine-closure planning. “There are mine-closure experts who are acutely focused on climate change. They recognise that faster climate change has ramifications for mine remediation and closure strategies that need to last thousands of years,” Luinstra says. M E A S U R E D A P P R OAC H As a geologist by profession, Luinstra knows the climate is always changing. The issue is the increasing speed of climate change. He says companies need a measured, structured approach to adaptation, as part of their riskmanagement activities. “Essentially, companies need to treat

AUSTRALIAN RESOURCES & INVESTMENT

mining adaptation like any other risk. That is, they need to stress-test, measure and monitor the impact of climate change on their assets under various scenarios. Then, report and communicate the results, and have a process to manage this risk,” Luinstra says. Luinstra says Australia’s mining industry is well placed to develop a stronger culture of adaptation that complements work in climate risk-mitigation. “Many mining companies are used to working in arid conditions and dealing with long droughts. Others, particularly in Northern Australia, are used to cyclones and flooding,” Luinstra says. He says Australian miners rank favourably on climate- adaptation. “We are probably a bit behind European and Canada on risk mitigation. On adaption, we’re up there with the world’s best. That doesn’t mean our industry is doing enough on adaptation or can’t do more. It’s an issue for all global mining companies,” Luinstra says. Australia has another advantage in adaptation – data and tools – says Luinstra. “Our Bureau of Meteorology has developed exceptional tools to help mining companies stress-test assets against climate change. The tools are extremely insightful, yet not enough miners use them,” he says. A DA P TAT I O N B A R R I E R S Luinstra says several factors are inhibiting mining adaptation. The first is perceived complexity. “Some miners think stress-testing assets against climate-change scenarios is a highly technical, scientific process. Or a ‘dark art’ that requires a lot of investment for uncertain outcomes. There are tools available that are simple and quick to use,” he says. Data is another factor, says Luinstra. “Many miners already model the effect of climate change on their assets. But too often, they use data from the 1980s or 1990s, which is becoming dated due to the speed of climate change. They don’t understand the full significance of climate change on their operations because they’re using out of date data. Or they have not Drilling activities at an exploration site.

incorporated climate change into project modelling.” Luinstra says adaptation is an organisation-wide issue, not only something for mining engineering teams. “Mining companies need to ‘mainstream’ this issue by getting employees across departments talking about the potential impact of climate changes on the assets and workforce,” he says. Lack of awareness also weighs on mining adaptation. “Frankly, climate-risk mitigation is an easier topic to communicate and promote. Companies often want to show stakeholders what they are doing to address climate change. Some are less interested in grappling with the harder question of how all their operations will fare with climate change in years to come,” Luinstra says. Another issue, says Luinstra, is company size. “There’s a risk that smaller miners believe adaptation is something only for large companies. All miners need to plan for climate change. Adaptation strategies are especially important for companies with older operations,” he says. Luinstra says mining-adaptation laggards face significant risk in their operations, and from stakeholders. “Increasingly, investors want to understand board oversight of climate-change risk and how management teams are addressing this issue,” he says. “Mining companies that aren’t adapting sufficiently to climate change will inevitably pay a higher cost of capital.” Boards, says Lunistra, should encourage adaptationplanning in mining. “They should ensure there is an organisation-wide culture of adaptation for climate change, not just mitigation. Mining companies need both strategies in tandem, but they have to start adapting now,” he says. SRK Consulting is a leading, independent international consultancy that advises on clients mainly in the earth and water resource industries. Its mining services range from exploration to mine closure. To learn more about SRK Consulting, visit www.srk.com

SEVEN STEPS FOR MINING ADAPTATION 1. Separate the issue: Understand the difference between climate-risk mitigation strategies and adaptation strategies that deal with climate-change scenarios. 2. Prioritise adaptation at board level: Create time in board meetings to discuss the issue and encourage management to ensure there is sufficient adaptation planning and testing. 3. Add adaptation to the risk-management register: Ensure there is a structured process to treat mining adaptation like other risks that are tested, measured and reported on. 4. “Mainstream” it: Don’t make adaptation an issue for only part of a mining company, or one asset. In one way or another, climate-change adaptation affects all areas of mining. 5. Get the right advice: Ensure your advisers have state-of-the-art skill in adaptation testing and planning, particularly in areas such as water management. 6. Know what’s available: Understand which tools and data are available to help your organisation test assets against climate change, cheaper and faster. 7. Communicate: Consider how you will report the result of adaptation planning to stakeholders, such as investors, customers and communities.

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MINING SERVICES

Epiroc at forefront of next-generation technology The original equipment manufacturer’s breakthrough autonomous blasthole drill is a big stride forward in safety and productivity.

rom a Perth office, a mine worker controls up to six Epiroc Pit Viper autonomous drills that prepare blast holes at a site in the Pilbara in northern Western Australia. Used by some of the world’s largest mining companies, the remote-controlled Epiroc Pit Viper can operate continuously. Epiroc is the only manufacturer in the world to have a fully autonomous blast hole drill. The autonomous Pit Viper is safer and more productive than traditional blasthole drills with up to 41 per cent higher productivity than traditional drills. “Automation and interoperability are the future of mining,” says Rohan Anderson, Epiroc Australia’s regional application centre manager. “Mining companies will increasingly use autonomous machines that talk to each other through a common technology platform, and require less human intervention.” Six years in the making, this nextgeneration drill technology was co-designed at Epiroc’s Swedish, United States and Australian operations. Anderson led a local team of 20 who worked with Epiroc’s global innovation experts and Australian mining companies. “Our team took software created in Sweden and Texas, and developed and commercialised it in Australia,” Anderson says. “We worked with clients to retrofit their blasthole drills, listened to their needs, and relayed the data to our innovation team. Through a process of iteration, we developed a breakthrough product.” Outcomes from the autonomous Pit Viper have surpassed expectation, says Anderson. “We’re seeing higher more consistent penetration rates in hole drilling, less drill downtime, lower fuel burn and lower maintenance costs because automation operates equipment to specification,” he says. Labour savings is another benefit. “One employee can remotely simultaneously monitor multiple Epiroc Pit Viper autonomous drills,” says Anderson. “And they can do so from a capital-city office rather than a remote mine site.”

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An Epiroc autonomous drill operating in the Pilbara.

Anderson’s team has successfully adapted the Pit Viper autonomous drill for Australia’s coal industry with rods autonomously changed for deeper blastholes. “The coal sector is a focus for Epiroc. We believe Australian coal companies can generate significant productivity gains through our drilling technology,” he says. Epiroc has also automated its Scooptram ST18 loader for underground mines. In collaboration with clients, Epiroc tested the technology on its 18 metric tonne front-end loaders. A gold mine is already using the technology to tram ore to a crusher. “Autonomous technology is important in underground mines due to the risks of working below surface,” says Anderson. “We intend to apply the technology to our other loaders and mine trucks which operate on the same platform as ST18 loaders.” Anderson says Epiroc’s automation technology has two inter-related advantages. The first is the ability to be retrofitted. “Clients can apply Epiroc technology to their existing Pit Viper drills and Scooptram ST18 loaders rather than buy new equipment.” The second advantage is interoperability. Simply, third-party machines that use Epiroc’s automation technology can talk to each other through Epiroc’s autonomous system – and integrate into a mine’s production system. Epiroc’s system is an intuitive interface that allows an operator to run multiple machines, and provides data-rich insights on production performance. Epiroc is investing in mining technology.

Atlas Copco (Epiroc’s former parent company) in 2017 acquired Mobilaris, another Swedish company that provides advanced software that optimises underground-mining operations. In 2017, Altas Copco split Epiroc into a separate company and listed it on the Nasdaq Stockholm stock exchange. In 2020, Epiroc acquired MineRP to enhance its capabilities in mining data and digitisation. “Automation on its own is not enough,” Anderson says. “Mining companies need technology that allows mining equipment to capture data and communicate.” Anderson says Australia is an exceptional market to develop mining technology. “We have a world-class mining industry that understands the value of long-term collaboration and investment in innovation,” he says. “We also have mining companies at the forefront of applying latest global innovations to their operations.” Epiroc provides the “best of both worlds” for Australian miners, says Anderson. “Like many Swedish companies, Epiroc has a long history of innovation (Atlas Copco was founded in 1873). Epiroc Australia, which has operated here since 1950, understands local conditions. Our strength is harnessing that global capability to help Australian miners,” he concludes. To learn more about Epiroc, visit https://www.epiroc.com/en-au

AUSTRALIAN RESOURCES & INVESTMENT

DRILLING INTO VALUE GAINS As the mining industry’s smaller players future-proof operations, FLANDERS is at the forefront of providing automated drill solutions.

ith pressure on mining companies to drive down costs while increasing productivity, there is strong incentive to invest in automated solutions. Automation is being increasingly adopted, but the benefits and affordability are only now starting to trickle down to smaller companies. Australia’s border closures in response to the COVID-19 pandemic have caused major disruptions and labour shortages for operations across the country. To maintain production and drilling targets, automated solutions have been a saving grace for operators facing cost pressures. FLANDERS automated blasthole drilling can unlock productivity and safety benefits for drilling operations with its ARDVARC control system. The system is compatible with any drill rig on the market through its openarchitecture control system. FLANDERS offers the ARDVARC platform, which is scalable dependant on the mines readiness for automation. The first level, the ARDVARC Intelli-Rig system, provides more stringent data analysis and high-precision GPS blasthole positioning without automation. The second level is ARDVARC One-Touch, which provides touchscreen drilling that automatically configures drill settings hole by hole, automating the sequence. “ARDVARC One-Touch unlocks the ability to get consistency in data out of drill holes, which ensures compliance to plan as well as consistency in data that comes out of the hole,” Flanders product development manager Josh Goodwin says. “It also provides efficiencies when aligning over the hole, which reduces the time taken between holes and increases the amount of production out of the machine.” ARDVARC One-Touch also features a teleremote system, allowing operators to control drills from a safe distance, keeping them out of the line of fire. “We then have our tele-remote system which allows the drills to be operated remotely via line of site or from a centralised location,” Goodwin says.

ARDVARC can reduce the amount of personnel required on site.

“It can bring operations outside the line of fire by getting them out of a hazardous operating area and keeping them in a safe zone.” The third level, ARDVARC fully autonomous, provides complete automated control over drilling operations. This option increases productivity by up to 30 per cent by preventing human shift changes or stops during blasting operations. “ARDVARC fully autonomous allows operators to up to eight rigs at one time,” Goodwin says. “The automated drills can operate under the full drill sequence from drilling the hole to tramming to the next hole. “The benefit is increasing the number of utilised operational hours of that machine, improving production.” With the industry facing labour shortages, ARDVARC fully autonomous requires fewer personnel on site to operate drill rigs, providing another production advantage. “By reducing the number of assets you’re reducing the overall costs because you don’t have to operate more assets,” Goodwin says. “It can also reduce maintenance costs by continuously operating the machine within its operating parameters. Running the drill through the FLANDERS’ control system mitigates any human error that

could damage the machine.” While it’s not currently operating in the mineral exploration space, ARDVARC’s ground hardness index functionality could be used to detect orebodies. FLANDERS has partnered with Tribe Technology to move ARDVARC into mineral exploration by developing the world’s first fully automated RC drill. “With Tribe Tech, we are shifting up the exploration mineral RC drilling market by creating a machine from the ground up with automation in mind using FLANDERS’ autonomous capabilities to bring that together,” Goodwin says. Goodwin says the Western Australia mining industry has widely adopted autonomous technologies. “In the past two to three years, we’ve seen a lot of Tier 2 and 3 miners taking advantage of the technology due to more acceptance and data showing the benefits,” he says. “Whenever you have a real innovative technology there’s an acceptance curve with customers needing to have confidence in the technology, which we’re really seeing now.” To learn more about Flanders, visit https://www.flandersinc.com.au

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MINING SERVICES

‘Unstoppable’ National Group at forefront of mine-equipment supply Strong case for renting rather than buying machinery, amid resource sector uncertainty.

ining-services star Mark Ackroyd has had a front-row view of mining cycles for decades. As founder and chief executive officer of National Group – a leading equipment supplier to Tier 1 mining companies – Ackroyd understands the challenges of resource-sector volatility. Over the years, Ackroyd has watched mining companies buy expensive equipment when commodity prices rise. Then, when the cycle inevitably turns, companies are left with depreciating mining equipment, hurting their balance sheet and cash flow. “There’s never been a more important time to rent rather than buy mining equipment,” Ackroyd says.

Liebherr’s R 996B is one of mining’s most famous excavators.

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“Commodity-price volatility is rising and external forces, such as COVID and Chinese bans are adding to uncertainty. “Long-term dry hire of earthmoving equipment has become a highly attractive option as the mining industry has grown, and as more companies transition to an ownerminer model (versus contract operators).” Ackroyd says mining companies should heed lessons from the 2008-09 Global Financial Crisis (GFC). “The GFC fallout reinforced the benefits of mining companies keeping more capital in reserve for unforeseen circumstances,” he says. “Renting mining equipment from a

trusted supplier, such as National Group, reduces financial and operational risks, and frees up cash flow.” Renting equipment also provides a scaleable solution for mining companies wanting to increase production or expand mine-site operations, says Ackroyd. “They can use the equipment for a period and give it back when it is no longer required. Also, renting equipment aids their budgeting and allows better fleet customisation for their needs,” he says. Buying heavy earthmoving equipment is a large capital expense. An extra-large excavator can cost up to $18 million, weigh up to 800 tonnes and take 18 months to manufacture.

AUSTRALIAN RESOURCES & INVESTMENT

National Group founder and CEO Mark Ackroyd.

“Mining companies can quickly rent equipment from National Group, rather than wait longer periods for equipment to be manufactured, as is the case now during COVID,” Ackroyd says. I N N OVAT I V E A P P R OAC H Ackroyd’s “long view” on mining cycles is embedded in National Group’s DNA. “From day one, our focus has been to build and maintain long-term relationships with top mining companies,” he says. “We understand their needs and work closely with them through all stages of the mining cycle. Many of our clients have been with National Group for years or decades.” This focus on long-term relationships is captured in National Group’s reputation as “unstoppable”. The Queensland-based company prides itself on achieving consistent results for clients in all market and project conditions – and on its fleet durability. From humble beginnings in 1997, National Group has become one of Australia’s great privately-owned mining-services companies. Since launching, its equipment (through National Plant & Equipment) has been used throughout Australia, across a range of commodities and locations, by the world’s top resource companies. From one bulldozer at launch, National Group has built a fleet of more than 350 units of heavy earthmoving equipment.

This includes excavators, dump trucks, dozers, graders, loaders, compactors, water trucks and other earthmoving vehicles. New units are consistently added, giving National Group one of Australia’s best earthmoving fleets. New fleet additions include CAT 24 motor graders, CAT 6040 excavators and CAT D11 dozers. National Group has fleet-wide availability of more than 90 per cent. Equipment can be rented for up to 700 operating hours per month, per unit – on a 12-month, two or three-year basis. Clients can choose fully maintained rental solutions, where National Group services and repairs units,

or do it themselves through a selfmaintained option. The company also provides hire-to-buy options for clients that are considering buying mining equipment but want to free up capital in the short term. Ackroyd is proud of National Group’s past and excited by its future. “The mining sector continues to grow, even during the pandemic. The five-year outlook is promising. National Group has an important role to keep supplying equipment and help our mining sector create more jobs and wealth for Australia,” he concludes. To learn more about National Group, visit www.nationalgroup.co

The CAT 24 is the largest of the motor graders.

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FOLLOW THE LE ADERS

FOLLOW THE LEADERS

THE LATEST EXECUTIVE APPOINTMENTS Keep up to date with the latest executive moves across the mining sector, including at Northern Star Resources, VentureX Resources and IGO. Northern Star Resources has appointed chief executive Stuart Tonkin as the company’s managing director. Tonkin brings five years’ experience as chief executive and three years’ experience as chief operating officer of Northern Star. According to Northern Star chairman Michael Chaney, Tonkin is the right fit to bring the company into its next phase following the $16 billion merger with Saracen Mineral Holdings. “Stuart is perfectly placed to lead Northern Star as we seek to optimise the operational performance and financial returns of the exceptional asset base which the company has established as the result of an intense period of merger and acquisition activity,” Chaney said. Former managing director Raleigh Finlayson has moved to an executive director role for a transitionary period of around two months before he retires from the board. Finalyson will then re-join the board as a non-executive director in 2022 after taking a six-month break to complete an advanced management program with Harvard University. VentureX Resources has appointed former Northern Star chairman Bill Beament as managing director of the company. Beament was previously listed as an executive director of the company after leaving Northern Star.

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Former Northern Star non-executive director Shirley In’t Veld has also been appointed as a non-executive director of VentureX. In’t Veld served as managing director of Verve Energy from 2007 to 2012 and has also worked in senior executive roles at Alcoa of Australia, WMC Resources, Bond Corporation and BankWest. According to Beament, In’t Veld’s corporate experience will assist the company’s strategy in new generation energy and technology. “I have worked closely with Shirley for several years and I consider her to be one of the most talented and valuable directors in Australia,” Beament said. VentureX announced that director Anthony Reilly has resigned from his role. IGO has appointed Michael Nossal as company chairman, with current chair Peter Bilbe transitioning to a non-executive director role in July. Nossal joined IGO as a non-executive director in December 2020 before his planned move to the role of chairman in 2021. Bilbe will formally retire in November 2021. “We welcome Michael Nossal to the role of chair, in line with the planned transition announced last December,” IGO managing director and chief executive officer Peter Bradford said. “I would also like to take this opportunity,

on behalf of the board, to thank Peter Bilbe who was appointed to the IGO board in 2009, for his substantial contribution to IGO. “Over his tenure, Peter has overseen the positive transformation of IGO, culminating in (the) announcement of the completion of the transaction with Tianqi Lithium Corporation.” Austin Engineering has enlisted David Singleton as chief executive officer and managing director of the company. Singleton previously worked as a nonexecutive director for Austin and replaces Peter Forsyth, who resigned from the role in June. He has previous experience as chief executive officer of Austal. “We’re very pleased to bring David into the role of company chief executive officer,” Austin chairman Jim Walker said. “He brings a relevant skill set to Austin as it embarks on a crucial strategic review to elevate it to the next stage of growth. “He has both corporate and operational skills and has already made a strong contribution to the company through his role as non-executive director.” Glencore has appointed Kalidas Madhavpeddi as its new chairman following the resignation of former chairman Tony Hayward. Madhavpeddi joined Glencore’s board in February 2020 and brings more than 40 years’ experience in the mining industry.

AUSTRALIAN RESOURCES & INVESTMENT

He is currently non-executive director of Novagold Resources, Trilogy Metals and Dundee Precious Metals. “I am delighted to have been appointed chairman at such an exciting time for the business,” Madhavpeddi said. “As the world transitions to cleaner forms of energy and mobility, our portfolio of commodities will allow Glencore to play a key role in helping us achieve the goals of Paris and play a key role in the ongoing energy and mobility transition.” AngloGold Ashanti has announced Alberto Calderon will take over as chief executive officer of the company from September 1, 2021. Interim chief executive officer Christine Ramon will resume her role as chief financial officer once Calderon starts his role. Calderon brings more than two decades of executive leadership experience to AngloGold Ashanti. He was chief executive officer of Orica until March this year and was previously a senior executive of BHP and chief executive officer of Cerrejón. AngloGold Ashanti chairman Maria Ramos welcomed Calderon to the role. “We are confident that, in Alberto, we have the right person to lead this company forward and realise its outstanding potential, drawing on his huge leadership experience in the resources sector across a variety of geographies,” Ramos said.

Aeon Metals has made Fred Hess its permanent managing director and chief executive officer. Hess has worked as interim managing director and chief executive officer at Aeon since March 2021, with the board deciding to appoint him permanently. “The decision to appoint Dr Hess in a permanent capacity has been taken by the Aeon board as a direct result of his expressed commitment to the role, his exceptional professional track record and expertise, and the sustained focus that he has already brought to the executive leadership position,” Aeon stated. Hess said he was looking forward to advancing the Walford Creek project in Queensland. “The recent changes to the strategic direction of the Walford Creek project are indeed transformational – both technically and economically,” he said. “The decision to continue my hands-on involvement in the current role reflects my excitement with the challenge, my growing confidence in success, and ultimately my determination to guide the Walford Creek project towards a development reality.” Rio Tinto has appointed Peter Cunningham as chief financial officer after he served as interim chief financial officer from January 1, 2021. Cunningham will also join Rio Tinto’s board as executive director following a 28-

year career at the company. Rio Tinto chief executive Jakob Stausholm welcomed Cunningham to the role. “I am delighted to confirm Peter in the role and, having worked closely with him for a number of years, I know he is the ideal person to be our chief financial officer,” he said. “His detailed knowledge of the company and of the financial and non-financial drivers of our industry will be invaluable as we continue to strengthen Rio Tinto.” Talisman Mining has appointed Shaun Vokes to the role of chief executive officer of the company. Vokes has served as interim chief executive officer since September 2, 2020. Talisman’s board unanimously voted to give Vokes the permanent role due to his strong performance and leadership during the company’s restructuring period. The company has also appointed Russell Gregory, who previously served as senior advisor – studies and technology for Rio Tinto, as exploration manager in August. “We are pleased to announce these senior management appointments as we gear up for a period of significantly increased activity across our NSW portfolio,” Talisman chairman Kerry Harmanis said.

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EVENTS

L I T H I U M B AT T E RY A N D E N E R G Y M E TA L S C O N F E R E N C E 2 02 1 P E R T H | S E P T E M B E R 1-2

Following successful Lithium and Battery Metals Conferences in 2018, 2019 and 2020, AusIMM will host another future-focused event over two days to showcase the latest industry efforts to expand lithium’s market presence. Perth’s Murdoch University will see more than 200 industry professionals come together to discuss the potential for lithium and associated metals to advance the global electrification process, and the impact of COVID-19 on global commodities. Keynote speakers will include Ken Brinsden from Pilbara Minerals, which continues to run the Pilgangoora lithium operation to its peak; Matt Dusci from IGO, which recently joined the Electric Mine Consortium; and chief executive officer at the Minerals Research Institute of Western Australia, Nicole Roocke. • ausimm.com/conferences-and-events/lithium NEW LEADER S CONFER ENCE B R I S B A N E A N D O N L I N E | S E P T E M B E R 2 8 -2 9

AusIMM’s New Leaders Conference returns in September 2021 providing young mining professionals with an exclusive opportunity to learn from, and engage with renowned mining leaders. Delivered in person and online, this outstanding conference provides access to engaging presentations and discussions on topics and issues impacting young professionals based on the thoughtprovoking theme, ‘Champions of Change’. Topics explored during the conference include leadership growth and development, diversity and inclusion, social and environmental impacts, safety leadership and mental health, and technology trends. Join delegates from around the world to hear from leading global industry experts, participate in robust discussions, see the latest mining innovations, and meet with speakers and peers at networking events. • ausimm.com/conferences-and-events/new-leaders/ AU S T R A L I A N M I N I N G P R O S P E C T AWA R D S B R I S B A N E | O C T O B E R 14

The Australian Mining Prospect Awards will return to in-person proceedings this year, after pandemic restrictions hampered the event in 2020. The Prospect Awards are the most esteemed and prestigious honours in the Australian mining and minerals processing industry. Since 2004, the Australian Mining Prospect Awards have been

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the only national awards program to stop, take a look at what the mining industry is doing, and reward those who are excelling and going above and beyond, recognising and rewarding innovation. Nominations for the awards are free and must recognise companies and sites from across Australia. Join Australian Mining for an evening of celebration as we acknowledge the collective success of the industry. • prospectawards.com.au T H E AU S T R A L I A N G O L D C O N F E R E N C E S Y D N E Y | O C T O B E R 2 1-2 2

The Australian Gold Conference 2021, held in association with The Perth Mint at the Sydney Sofitel Wentworth Hotel, will help attendees learn about the big macro-economic picture from a series of expert keynote speakers. The conference and exhibition will bring together every aspect of the precious metals investment industry to educate everyday Australians and inform those already invested in the sector. This is an event not just for the industry but for everyday people to understand the importance of protecting yourself in volatile times. The event will include presentations from ASX-listed precious metals mining and exploration companies, which will share news so you can make informed investment decisions. Bullion dealers will also be on hand to help you understand how and when to purchase physical metals. • goldevents.com.au/australian-gold-conference I N T E R N AT I O N A L M I N I N G A N D R E S O U R C E S C O N F E R E N C E ( I M A R C) | M E L B O U R N E | O C T O B E R 2 5 -2 7

IMARC will be held at the Melbourne Showgrounds for the first time in 2021, providing Australia’s resources industry with opportunities to connect globally and grow. As Australia’s largest mining event, IMARC creates a global conversation, mobilises the industry for collaboration and attracts some of the greatest leaders in the mining, investment and technology industries. This year will see the introduction of a new venue to showcase the industry, providing an opportunity to launch a brand-new outdoor exhibition space, allowing IMARC to showcase bigger and better machinery and equipment than ever before. With the world’s borders still locked down, IMARC in 2021 will be a hybrid event, welcoming Australian attendees to Melbourne and international attendees from more than 100 countries. • imarcglobal.com

WHERE GLOBAL MINING LEADERS CONNECT WITH TECHNOLOGY, FINANCE AND THE FUTURE.

The International Mining and Resources Conference (IMARC) is where global mining leaders connect with technology, finance and the future. As Australia's most influential mining event, IMARC creates a global conversation, mobilises the industry for collaboration and attracts some of the greatest leaders in the mining, investment, and technology industries for three days of learning, deal-making and unparalleled networking. Hear from more than 250 mining leaders and resource experts with a conference program that covers all aspects of the mining supply chain. From exploration, to investment, production to optimisation through to new technologies and global opportunities. Alongside discussions on health and safety, renewable energy, critical minerals, and sustainability. Furthermore, the exhibition will feature over 200 leading companies across the 10,000m2 expo floor showcasing the latest mining projects, equipment, and innovations the industry has on offer. With the world’s borders still locked down, IMARC will be a hybrid event in 2021, welcoming international attendees from more than 100 countries via our online platform. Attendees will be able to log in online to stream live and on demand conference presentations, participate in virtual meetings and interactive networking.

VISIT IMARCGLOBAL.COM TO REGISTER FOR AUSTRALIA'S MOST INFLUENTIAL MINING EVENT AND RECEIVE 10% OFF WITH THE DISCOUNT CODE AUSRI

IN-PERSON & ONLINE 25 – 27 October 2021 Melbourne Showgrounds

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