Skillings June 2020 by CFX Network, LLC

2020 JUNE ADVETORIAL ISSUE

109/06

INDIA’S LOW-GRADE IRON ORE key behind spurt in export demand

26 Mining shutdowns: Covid 19 hurt silver production the most, gold the least

Coal’s crash could lead to a landscape of abandoned mines

SMALL TEAM

BIG RESULTS Optiro is a resource consulting and advisory group.

Our 5 core services are Geology, Mining Engineering, Corporate, Training and Software. In eleven years, our team has travelled the world providing expertise to improve, value, estimate and audit the world’s minerals. Pound for pound we think you’ll find no-one delivers greater value – and BIG results.

DEALS/ VALUATIONS

COMMODITIES

RESOURCE ESTIMATES

+$15

>64

BILLION

RESOURCE AUDITS

>780 MILLION oz Au

CLIENTS

>3,000

PEOPLE TRAINED

+5 BILLION TONNES

MILLION oz Au

+2,000

IRON ORE

COUNTRIES

COPPER

NICKEL

>4,300

>5,100 MILLION lb

MILLION lb

www.optiro.com 2 | SKILLINGS MINING REVIEW June 2020

contact@optiro.com

+61 8 9215 0000

AMERICA

EQUIPMENT

GLOBAL

10 India’s low-grade iron ore key behind

24 Expect more Earthquakes as mines dig

16 De Beers diamond mines win this year's

deeper to extract ore, Vale says

industry awards for safety record

29 Five workers killed after mine explosion

18 Ted Cruz seeks to end US dependence

spurt in export demand

12 Mining projects to slow further in second quarter 2020

13 Russia’s Rosgeo to start hydrocarbon exploration in Equatorial Guinea

14 Iron Ore Price boosted as a result of Resilient China Steel Production

15 Nordic Investment Bank €100 million loan to help finance mining expansion at Boliden’s Kevitsa mine

20 S&P hits back in court after Fortescue Metals takes legal action to prevent publication of iron ore price

30 Three Hundred Powder River Basin coal workers laid off

33 China stainless steel hits nine-month high as local demand recovers

36 Coal’s crash could lead to a landscape of abandoned mines

42 Another Mining Giant awakens 44 Federal secrecy is a warning signal on mining near BWCA

45 Cliffs CEO optimistic demand for steel will return as automakers resume production

at Chinese Coal Mine in Laos

34 Open pit wireless detonation targets safety & productivity

34 Assore chrome mine in South Africa closed after worker diagnosed with Covid-19

35 Explosives manufacturer Orica lifts profit but cuts dividend to preserve cash

43 A collaboration for Deep-sea mineral mining between India and Russia

on China for critical minerals

19 Rio Tinto targets M&A opportunities amid Covid-19 uncertainties

22 BOT Model can boost emerging contractors, revamp mining

23 Matrix Design forms new Equipment Division to supply essential support products for underground coal operations

26 Mining shutdowns : Covid 19 hurt silver production the most, gold the least

27 Covid-19: Unsung mining heroes brave odds to produce coal, keep power plants running

38 Papua New Guinea takeover Barrick Gold’s Porgera mine

40 China’s top gold producer Shandong installs 5G network underground at its Laixi operations

41 China’s coal mining industry implement 5G technologies in Yangquan Coal Mine

STATISTICS

46 April 2020 crude steel production 46 Interim steel demand economic statement www.skillings.net | 3

JUNE 2020 VOL.109. NO.06

SUBSCRIPTIONS UNITED STATES

OUTSIDE OF UNITED STATES

$72 Monthly in US Funds $109 Monthly in US Funds 1st Class Mail

$250 US Monthly for 7 - 21 day delivery $335 U S Monthly for Air Mail Service All funds are monthly

SKILLINGS MINING REVIEW NEWS ROOM

4.95

Digital Monthly Magazine SMR Americas Monday Global Skillings Wednesday Skillings Equipment Gear Friday

USD

per month

Skillings Mining Review of CFX Network LLC, publishes comprehensive information on global mining, iron ore markets and critical industry issues via Skillings Mining Review Monthly Magazine and weekly. SMR Americas, Global Skillings and Skilling Equipment Gear newsletters.

Publisher

CHARLES PITTS Chas.Pitts@Skillings.net Ma n a g i n g Ed i t o r

JOSEPH SCOTT Joseph.Scott@cfxnetwork.com

CUSTOMER SERVICE/ SUBSCRIPTION QUESTIONS: For renewals, address changes, e-mail preferences and subscription account status contact Circulation and Subscriptions: subscriptions@Skillings.net Editorial matter may be reproduced only by stating the name of this publication, date of the issue in which material appears, and the byline, if the article carries one.

Co n t r i b u t i n g Ed i t o r

PAVNEET LUBANA Pavneet.Lubana@cfxnetwork.com Sr. P ro j e c t Ma n a g e r

FAISAL KHAN website: www.skillings.net SKILLINGS MINING REVIEW

(ISSN 0037-6329) is published monthly, 12 issues per year by CFX Network, 350 W. Venice Ave. #1184 Venice, Florida 34284

Phone: (888) 444 7854 x 4. Printed in the USA. Payments & Billing: 350 W. Venice Ave. #1184, Venice, FL 34284. 4 | SKILLINGS MINING REVIEW June 2020

Periodicals Postage Paid at: Venice, Florida and additional mail offices. Postmaster: Send address changes to: Skillings mining review, 350 W. Venice Ave. #1184 Venice, Florida 34284. Phone: (888) 444 7854 x 4. Fax: (888) 261-6014. Email: Advertising@Skillings.net.

faisal957khan@gmail.com C re a t i v e D i re c t o r

MO SHINE Mo.Shine@cfxnetwork.com D i re c t o r o f S a l e s & Ma r ke t i n g

CHRISTINE MARIE Advertising@Skillings.net C i rc u l a t i o n & Su b s c r i p t i o n s

Subscriptions@Skillings.net

GENERAL EQUIPMENT SUPPLIES

ME ELECMETAL

NAYLOR PIPE

Skillings Mining Review is supported by these leading providers of materials, services and supplies to the mining industry. Please patronize them whenever possible and let them know you saw their advertisement in Skillings.

www.skillings.net | 5

Innovative Solutions and Proven Performance from ME Elecmetal! For over 100 years, ME Elecmetal has worked closely with mineral processors to help them increase productivity and reduce downtime by developing the most cost-effective and innovative products and services in the marketplace. ME Elecmetal offers complete solutions that include impact and abrasion resistant liners for grinding mills and crushers, using alloys and designs unique to each specific application. In addition, we also provide a full array of the highest quality grinding media â&#x20AC;&#x201D; from small-diameter forged steel balls to 6+ inch SAG balls. ME Elecmetal provides valuable insight based on our years of experience and advanced technologies. Our experienced and knowledgeable sales and technical engineers will help you optimize your process, reduce downtime and increase productivity, resulting in higher profits. We deliver value to our customersâ&#x20AC;&#x2122; operations with Innovative Solutions based on Proven Performance!

ME Elecmetal

3901 University Avenue NE Minneapolis, MN 55421 480-730-7500 www.me-elecmetal.com

Innovative Solutions and Proven Performance Let ME Elecmetal help you rise to the top at your mine site! We can help you deliver reliable and consistent grinding and crushing solutions that maximize throughput and minimize downtime â&#x20AC;&#x201D; with no surprizes! ME Elecmetal has the expertise, experience and manufacturing capabilities to help you deliver innovative solutions and proven performance to your mine site, so you can rise to the top! Innovative Mill Lining Solutions for SAG, AG, Ball & Rod Mills â&#x20AC;˘ Steel â&#x20AC;˘ Rubber â&#x20AC;˘ Composite Premium Quality Forged Steel Grinding Media for SAG, Ball & Rod Mills â&#x20AC;˘ ME Super SAGÂŽ: 4â&#x20AC;? to 6.25â&#x20AC;? â&#x20AC;˘ ME Ultra GrindÂŽ: 1.5â&#x20AC;? to 4â&#x20AC;? â&#x20AC;˘ ME PerformaÂŽ II: 0.88â&#x20AC;? to 4.0â&#x20AC;?

Wear Components for Primary, Secondary & Tertiary Crushers â&#x20AC;˘ Gyratory Crushers â&#x20AC;˘ Jaw Crushers â&#x20AC;˘ Cone Crushers ME Elecmetal 3901 University Avenue NE â&#x20AC;˘ Minneapolis, MN 55421 480-730-7500 â&#x20AC;˘ www.me-elecmetal.com

www.skillings.net | 7

8 | SKILLINGS MINING REVIEW June 2020

www.skillings.net | 9

AMERICA

Indiaâ&#x20AC;&#x2122;s low-grade iron ore key behind spurt in export demand

Even as Lockdowns across the world have crippled manufacturing activity, Indiaâ&#x20AC;&#x2122;s exports of iron ore, essential to the outcome of steel, have been flourishing. Under pressure Steel furnaces running when demand for finished steel products has come to a standstill, steelmakers across the world have turned to cheap, lowgrade iron ore exported by India to reduce costs and preserve margins. 10 | SKILLINGS MINING REVIEW June 2020

ata from the steel ministry showed that India’s Iron Ore exports during Jan-Mar were at 8.9 mln tn, against 2.0 mln tn in the same period last year. In 2019-20 (Apr-Mar), exports were 25.14 mln tn, sharply higher than 16.2 mln tn the previous year. Steelmakers will need to maintain their blast furnaces running constantly. They tend to harden into a mass of solid iron, which would need to be replaced with a new one resulting in huge costs if such furnaces remain idle. As a result, the only way to minimize losses would be to source cheaper grades of ore to keep the furnace running. India mainly exports lower grade iron ore, with as much as 58% iron material, to countries such as Japan, China, and South Korea. Export of over 58% iron content attracts 30% export duty and is, thus, widely used by the domestic industry. India had already started stepping up its iron ore exports since last year to bridge the global supply gap, as productions from the world’s two biggest producers—Brazil and Australia were on a decline. Global Iron ore supply had taken a hit after the Brumadinho dam rupture in Brazil led to decommissioning of all Vale’s upstream tailings of more than 40 mln tn. Further Rio Tinto’s and BHP production in Australia were hit due to tropical cyclone Veronica. The disrupted supply from both countries amounted to about 6% of the global iron ore market. According to industry experts, supply from these countries is likely to remain lower henceforth, and preference for lower grade iron ore may pave the way to more iron ore exports from India in the coming months. “Excellent grade ore is preferred when profitability is high. Currently, Chinese steel mills are on a

break; margins are hardly around 1-2%. In this case, they will plan to get ore having a lower market price,” CRU India Steel analyst Atul Kulkarni said. Iron ore with 56-57% Iron material, which India provides, is currently being sold in the global industry at $55 - $60 per tn. One of the major buyers of the Indian-origin ore is China, which accounts

Iro n o re p ro d u c e r s increased production because of anticipation o f a s u p p ly c r u n c h this year. However, the deadly Covid-19 outbreak weighed on the country’s iron and steel demand. for 85%, while Japan holds a share of 5.3% and South Korea 3.1%. Turkey, Oman, and Nepal are other key buyers of Indian iron ore. According to industry experts, India has the potential to export more iron ore because of increased rates. In the previous financial year, In the previous financial year, miners ramped up output to optimal levels ahead of the expiry of mining licenses for over 30 iron ore mines, accounting for 30% of India output. 22 of non-captive iron ore mines were auctioned in February out of about 25 of the total non-captive iron ore mines. The country’s iron ore production rose to a decade-high of 220 mln tn in 2018-19 (Apr-Mar), up 9.5% on year, CARE Ratings

said. The output is estimated to have surged 17% on year to 174.7 mln tn during Apr-Dec. Iron ore producers increased production because of anticipation of a supply crunch this year. However, the deadly COVID-19 outbreak weighed on the country’s iron and steel demand. Market participants believe that after inventories with miners decrease, further production of iron ore would come under pressure as a result of weak steel consumption in the domestic market. According to a statement by the assistant vice-president and associate head of ICRA Ltd Ritabrata Ghosh, “There’s going to be a contraction of up to 18-20% in steel demand in the current fiscal which would lead to a production loss of roughly 20 mln tn. This production loss in steel will boil down to lower iron ore demand by up to 38-39 mln tn.” According to industry experts, Steelmakers should focus more on the export of pellets, since it’s a value-added product and does not require export duty. Moreover, pellet prices also have a premium over ore prices, which increases the profitability of the producer. “The idea is not to sell the ore, but the pellet form should be encouraged. We have a capacity for pellet making currently running at 30-35%. It can always be jacked up, and pellets can be exported where India can smartly enter into that market. There is absolutely no problem,” former steel secretary Aruna Sharma stated. Iron ore pellets have a better heat resistance indicator than the ore itself and are used in countries where lump ore is not available as a substitute in blast furnaces. India’s pellet manufacturing has shown signs of nascence and has higher potential in the export market, even after supply from Australia and Brazil normalizes. www.skillings.net | 11

AMERICA

Mining projects to slow further in second quarter 2020 The share of international mining projects that progressed to the next stage of development has significantly decreased from 3.8% in Q4 2019 to 2.8% in Q1 2020 and is expected to slow further in Q2 2020 because of the coronavirus outbreak, according to a new report by energy research firm GlobalData.

ccording to the industry report, mining companies have minimized their workforce to temporarily suspend operations and development activities as several countries are currently in complete lockdown,

As of April 13, the progress of 35 mines currently under construction globally was suspended because of such lockdowns. “These projects account for approximately 9% of total mines under construction and around 10.5% of total capacity as measured by run-of-mine (ROM),” explained Vinneth Bajaj, mining analyst at GlobalData. Anglo American slowed the development of its $5.3 billion Quellaveco copper mine in Peru, withdrawing employees and contractors amid the country’s lockdown. The company also temporarily suspends its newly acquired potash project in the UK, Woodsmith, from March 27. In Canada, Vale originally placed its Voisey’s Bay mine on care and maintenance for four weeks but has since extended this for up to three months 12 | SKILLINGS MINING REVIEW June 2020

– delaying the development of its mine expansion project and transition from open pit to underground mining. Likewise, in Chile, Teck Resources has put on hold construction works at its Quebrada Blanca phase 2 in the wake of the country’s lockdown measures. The updated feasibility study work of the Prieska copper-zinc project in South

Africa is undergoing remotely, with the site being temporarily closed. “About 76 mineral projects advanced in Q1 2020, down from the 101 projects in Q4 2019. Assets moving forward into construction include the El Pilar copper project in Mexico, the Zaldivar copper-molybdenum in Chile, and North star iron ore in Australia,” Bajaj said.

Russia’s Rosgeo to start hydrocarbon exploration in Equatorial Guinea The Ministry of Mines and Hydrocarbons (MMH) of Equatorial Guinea and Russia’s geological firm Rosgeo have signed two service contracts for the first phase of seismic acquisition in the transit zone, and state geological mapping in the Rio Muni area, Equatorial Guinea.

I Gabriel Mbaga Obiang Lima, Equatorial Guinea's minister of mines and hydrocarbons and Sergey Gorkov, director general and chairman of the board of Rosge photo: www.africa-newsroom.com/

t is a follow up to an MoU signed at the RussiaAfrica Summit in Sochi last year. Rosgeo subsidiaries JSC Zarubezhgeologia will be the scout for state geological mapping, and JSC Yuzhmorgeologia will be performing scouting works for complex seismic acquisition in the transit zone of Rio Muni.

tion frontiers in Equatorial Guinea, which can once again turn the nation into a hotspot for the exploration of natural resources. Increased exploration will not only help in sustaining and increasing the domestic output of oil and gas, but it will also provide additional mineral reserves to help Equatorial Guinea further diversify its economy.

Proud to be your reliable partner.

The activities involve evaluating landscape conditions for geological surveying and prospecting, determining the scope of mapping and drilling, researching the possibility of mineralogical sampling of channel deposits, evaluating technical requirements for geological camps in Rio Muni, and other necessary tasks for the preparation of next stages of exploration. “These exploration activities will help extend more natural resources and potential reserves in Rio Muni, notably crude oil, minerals, and natural gas. This falls under the increasing cooperation between the Republic of Equatorial Guinea and the Russian Federation, and will help in developing a strong exploration base in the country,” stated Gabriel Mbaga Obiang Lima, minister of mines and hydrocarbons. “Russian geologists formed the basis of Equatorial Guinea’s geological exploration industry back in the 1970s, and we are excited to be reviving this successful partnership, and bringing in world-class geological activities to the Rio Muni area,” Sergei N. Gorkov, CEO of Rosgeo said. The Rio Muni area is believed to be among one of the most promising explora-

19260

We have long supported the region’s mining industry by providing safe, reliable and competitively priced electricity. In 2021, half of the energy we provide to all of our customers will come from renewable sources. Together, we power northeastern Minnesota’s economy.

mnpower.com/EnergyForward

www.skillings.net | 13

AMERICA

Iron Ore Price boosted as a result of Resilient China Steel Production Iron ore prices edged higher last week thanks to a near 1% rise on Friday despite news of the record fall in Chinese economic growth in the March quarter.

to pass the Pilbara coastline in years. But it was down sharply – 16% – from the December quarter. The March 2019 quarter was impacted by Cyclone Veronica, which hit Rio’s operations in late March), while fires at the export terminals at Cape Lambert also cut shipments.

he Price of 62% Fe Fines delivered to northern China increased 80 cents on Friday to $US86.17 a tonne, up from $US85.60 last Thursday before the Easter break. China’s GDP fell at an annual rate of 6.2% in the first quarter from the 6% rate in the last three months of 2019. The slight rise in iron ore prices was more as a result of the improved expected crude steel production figures for March and the first quarter. China’s National Bureau of Statistics stated that the country’s crude steel output fell 1.7% to 78.98 million tonnes of crude steel last month, down from 80.33 million tonnes in March 2019 and 74.8 million in February. It was up on the 75.7 million tonnes produced in January. China produced 234.45 million tonnes of crude steel in the first quarter of the year, up 1.2% from the first quarter of 2019. Output in January and February 2020 was combined and was up 3.1% in the first two months of last year. According to Reuters, the average daily output In March eased to 2.55 million tonnes, compared with 2.58 million tonnes in the first two months of this year, hitting the lowest daily average since January-February 2019. Earlier in the week, China’s March trade data showed a solid set of import numbers for iron ore. According to China’s 14 | SKILLINGS MINING REVIEW June 2020

And figures from Brazil Last week helped explain some of the stability in global iron ore markets thus far this year. Vale’s exports were down last year, despite the March 2019 quarter being hit by the January 25 mine dam wall crisis that saw around 90 million tonnes of exports removed from the market. General Administration of Customs, China’s iron ore imports fell by only 1.3% in March to a still-high 85.91 million tonnes. That was down 0.6% from 86.42 million tonnes a year earlier and compared with 176.8 million tonnes over the first two months of 2020. For the first quarter this year, imports were up 1.3% at 262.7 million tonnes of iron ore from 259.3 million tonnes in the same period a year earlier. Rio Tinto reports a solid increase in first-quarter iron ore exports to 72.9 million tonnes on Friday, up from 69.1 million tonnes a year earlier. Rio Tinto said the result dropped as a result of the disruption caused by the destructive Tropical Cyclone Damien in February, one of the strongest systems

According to the Brazilian mining group, Ibram, First-quarter iron ore exports similarly fell 17% compared with a year ago to 70.3 million tonnes. Iron ore exports dropped to 22.3 million tonnes in March alone, a 7 year low for a single month. March exports were down 6.74 million tonnes or 23.3% from February. That helped power a 17% fall in all mining output with the blame placed on the impact of the global response to the COVID-19 pandemic and heavy rains. Total mine output reached 220.44 million tonnes in the January-March period, Ibram stated on Wednesday, April 15, compared with 265.45 million tonnes in the first quarter and 267.76 million tonnes in the fourth quarter of 2019.

Nordic Investment Bank €100 million loan to help finance mining expansion at Boliden’s Kevitsa mine The Swedish mining and smelting company Boliden and the Nordic Investment Bank (NIB) have signed a loan of $100 million to finance investments at the Kevitsa mine in Finnish Lapland and the Rönnskär smelter in northern Sweden.

he eight-year loan will finance the expansion of mining activities at Kevitsa in northern Finland, where nickel, gold, copper, palladium, and platinum are mined. The open pit's expansion will result in an output increase of nearly 20%.

Further, Boliden is investing in a new leaching plant at the Rönnskär copper smelter in northern Sweden. The plant will extract metal from residual material. About 50,000 t of waste that is generated by the smelter operations will

be upgraded each year and transformed into an additional output of lead sulfate and copper/zinc sulfate. "Mining plays an important role in economic output, employment, and labor productivity in the Arctic region. The investments will boost competitiveness and resource efficiency and will help Boliden to process waste material more efficiently", says Henrik Normann, NIB President & CEO.

Equipping the mining industry with legal services since 1893. ∙ Mineral purchase agreements, leases and options ∙ Land assembly and mineral rights acquisition ∙ Severed mineral registration and title work ∙ Environmental permitting and compliance ° MINING & MINERALS LAW °

›› Paul Kilgore ›› Paul Loraas

fryberger.com www.skillings.net | 15

GLOBAL

De Beers diamond mines win this year's industry awards for safety record Victor diamond mines and the De Beers Gahcho Kué have received industry awards this year for their safety records.

he Canadian Institute of Mining, Metallurgy, and Petroleum (C.I.M.) has named the N.W.T. ‘s Gahcho Kué mine as the national 2020 John T. Ryan award winner for the lowest reportable injury frequency last year. According to a news release from De Beers on Thursday, the mine “reduced the number of injuries by 38 percent compared to 2018 and had zero lost-time injuries during the year.” The company says this means that Gahcho Kué has “one of the lowest injury frequency rates among operating mines in Canada.” This is the fourth security award for the mine. The mine won the Workplace Health and Safety award from the Yellowknife Chamber of Commerce in 2016 and 2019 and also won the Hatch-CIM Mining and Metals Project Development Safety Award in 2017. The Gahcho Kué mine is at Kennady Lake, approximately 280 kilometers northeast of Yellowknife. The $1.1 billion mine began industrial production in March 2017 and is expected to remain in production until at least 2030. The mine is a joint venture

16 | SKILLINGS MINING REVIEW June 2020

project between the De Beers Group, which owns 51 percent of the operation, and Mountain Province Diamonds, which holds 49 percent. De Beers is the mine operator. The 100 percent De Beers owned Victor mine in northern Ontario is in its closure phase. For that mine, De Beers was awarded the 2020 eastern regional John T. Ryan Award winner. This is the third consecutive year De Beers won the regional award for the Victor mine operation. Previously De Beers won the national John T. Ryan award for Victor in 2015 and 2016. According to De Beers, “97 percent of all days worked during 2019 [at Victor]

were ‘triple zero’ with no first aids, no medical intervention, and no lost-time injuries.” “To have both our Canadian operations recognized as being among the safest mines in the county is an outstanding accomplishment,” stated Mpumi Zikalala, a managing director with De Beers, in the press release. “I’m confident that the Gahcho Kué team will continue to be the safest mining company in Canada.” During the COVID-19 pandemic, the Gahcho Kué mine has stayed long in operation, along with the Diavik Diamond Mine, in cooperation with N.W.T. Office of the Chief Public Health Officer.

The 100 percent De Beers owned Victor mine in northern Ontario is in its closure phase. For that mine, De Beers was awarded the 2020 eastern regional John T. Ryan Award winner. This is the third consecutive year De Beers won the regional award for the Victor mine operation.

FloLevel Technologies www.skillings.net | 17

GLOBAL

Ted Cruz seeks to end US dependence on China for critical minerals US senator Ted Cruz has introduced legislation to end what he describes as the country’s “dangerous dependence” on China for critical minerals and rare earth elements.

which was not enacted. Meanwhile the DOD is set to award phase one contracts in April, to plan and design a US-based heavy rare earth separation centre. Australia-based rare earths producer Lynas (ASX: LYC) said it was told the DOD planned to award it a phase one contract, and MP Materials, which has the Mountain Pass REE mine in California, was also chosen for a contract.

ed Cruz said the Onshoring Rare Earths Act of 2020, or ORE Act, was designed to set up a supply chain in the US, by providing tax incentives to the rare earths sector, requiring the Department of Defense to source the minerals domestically and establishing grants for pilot programs to develop the materials in the US. “Our ability as a country to manufacture defence technology and support our army is dangerously dependent on our ability to get rare earth elements and crucial minerals mined, refined, and manufactured almost exclusively in China,” he explained. He said if China cut off access to these rare earth elements and crucial min2018

18 | SKILLINGS MINING REVIEW June 2020

He said if China cut off access to these rare earth elements and crucial minerals it would significantly threaten US national security.

A China-based company has a minority interest in MP Materials, which estimates it produces about 15% of global rare earth material.Its product requires reprocessing in Asia, but the firm has said it is planning to relaunch its onsite processing facilities after a modernisation programme this year.

Rio Tinto targets M&A opportunities amid Covid-19 uncertainties “You have heard me say prior to that, mining developments of the future may start smaller and be embedded with optionality for growth within phases, yielding quick cash flows to shareholders, governments, and communities,” he said.

Rio Tinto Chief Executive Jean-Sébastien Jacques

Rio Tinto Chief Executive Jean-Sébastien Jacques has noted that his organization is keeping a close eye on merger and acquisition (M&A) opportunities in a bid to overcome market doubts surrounding Covid-19 with a more diversified portfolio.

peaking at a virtual presentation at Bank of America, Jacques said part of Rio Tinto’s approach to adapt to the “new standard” in the company environment was to enlarge its portfolio further. “We are currently studying M&A. Right now, the market is finding it difficult to value companies, and the Covid-19 recovery pathway is not apparent. Rio Tinto will only transact if an opportunity creates value,” he explained.

“In the post Covid world, this kind of development strategy may become more viable.” Rio Tinto reported robust production results in the first quarter of the 2020 calendar year, which Jacques said was driven by the sustained demand for products such as iron ore and bauxite. “Our Q1 generation report reveals our iron ore resources are doing well in a strong pricing environment. We’re on track to meet our 2020 iron ore guidance,” he said.

Let’s show the world what we can do together. Day by day. Project by project. Together we’re engineering what’s possible and moving the world forward.

Jacques also cautioned that the pattern of market recovery from the Covid-19 impact remains uncertain, noting that market volatilities might remain in place for another decade. “In terms of recovery, many predict either a W or a V-shaped economic recovery. Although, to be honest, it is just too early to tell,” he said. “According to recent events, we need to expect the unexpected. And I don’t see this changing in the decade ahead.” The Rio chief noted that Rio Tinto’s balance sheet remained strong, with the company’s net debt reduced from $13.8 billion to $3.7 billion over the last four years and simplified portfolio divesting $12 billion in non-core assets. “Therefore, we are well-positioned to withstand shocks,” he said. Jacques also hinted That Rio might focus more on smaller mine development projects in the future to create quick cash flows.

Building a Better World for All of Us Engineers | Architects | Planners | Scientists

sehinc.com/subscribe 800.325.2055

www.skillings.net | 19

AMERICA

S&P hits back in court after Fortescue Metals takes legal action to prevent publication of iron ore price Fortescue Metals Group, the mining company controlled by the billionaire Andrew "Twiggy" Forrest, has initiated legal action to stop the financial data giant S&P publishing information about the price it charges for iron ore.

UK Court has ordered S&P to stop publishing the information, which Fortescue claims is confidential, but S&P's commodity price reporting agency S&P Global Platts has hit back in a US court, accusing the mining company of attempting to keep iron ore prices secret so it can charge more for its ore. S&P also alleged that the Fortescue lawsuit threatened to disrupt standard journalistic practices, such as the use of confidential sources. The Duelling court cases have emerged in a busy week for Forrest, who has been touted as a possible buyer of the stricken airline Virgin Australia and caused a political storm by inviting a senior Chinese diplomat to a press conference where he announced he would obtain 20 | SKILLINGS MINING REVIEW June 2020

10m Covid-19 testing kits for use by the Australian government. At the center of the globe-spanning legal storm is pricing information about Fortescue, which is the world's fourth-biggest iron ore producer, that was released by a subsidiary of S&P, S&P Global Platts (S&P Platts), in its newsletter SBB Steel Markets Daily. Organizations selling iron ore set their prices by offering a discount relative to a benchmark, evaluated by S&P Platts, and the information Fortescue claimed was confidential was the percentage price reductions it was offering for ore shipped in March and April 2020. The high court of Wales and England held a hearing in S&P Platts' absence last Thursday, and the next day issued an injunction forbidding the reporting agency and another publisher, Argus Media, from

publishing Fortescue's discount prices. But on Wednesday S&P Platts told the district court for the southern district of New York to issue an injunction of its own forbidding Fortescue from continuing the lawsuit in London, in addition to a declaration that any ruling against it from the British court was unenforceable in the US due to the country's strong free speech protections. S&P Platts also told the court the pricing information was not confidential before S&P Platts published it since it appeared on Chinese social media network Weibo. It said that any disputes should be resolved in the court in New York, rather than London, because of a clause in the contract under which Fortescue subscribes to S&P Platts' publications.

S&P Platts claimed that by publishing price information obtained from buyers, it was helping to promote an efficient market. According to the document S&P Platts filed with the court, "FMG, In contrast, seeks to protect only its own commercial interest by imposing opacity for its pricing independently in the hopes that an uneven playing field will allow it to charge higher prices." Fortescue's Chief executive, Elizabeth Gaines, stated that the company "vigorously disputes any allegation that it engages in any unlawful conduct or any other conduct that would negatively influence our longstanding and valued customer relationships." "If organizations were allowed to prohibit the solicitation and publication

employees and clients, it would severely disrupt time-honored journalistic practices and hinder the flow of information that's essential to the public and the capital markets," S&P Platts' told the court.

According to the document S&P Platts filed with the court, "FMG, In contrast, seeks to protect only its own commercial interest by imposing opacity for its pricing independently in the hopes that an uneven playing field will allow it to charge higher prices."

It accused Fortescue of causing "irreparable harm" by preventing it from publishing the information and said that if the UK judgment was allowed to stand, it would "cripple" S&P's business. An S&P spokeswoman said the company did not comment on ongoing litigation. "However S&P Global Platts, like other price reporting agencies, places significance on its right to Independently report market information obtained through legitimate Journalistic techniques, which increases transparency across commodity markets," She explained.

of factual information regarding their businesses based on an asserted violation of confidentiality obligations placed on

Industrial General Contractor Specializing in Equipment Installation and Maintenance Millwrighting l

Piping l

Ironwork l

Concrete l

Boilermaking l

Building Construction l

Design/Build l

Offices Nationwide

crmeyer.com 800.236.6650

Offices: Byron, GA Escanaba, MI Muskegon, MI Coleraine, MN Tulsa, OK Chester, PA Oshkosh, WI Green Bay, WI Rhinelander, WI www.skillings.net | 21

GLOBAL balance sheet, which many young companies do not have. There is also the risk that a new plant may not run smoothly or to specified capacity, demanding a depth of technical expertise not yet developed by a new contractor. “With our experience of running plants, together with our in-house design and manufacturing capabilities, we now shoulder a large part of the initial risk for the smaller players,” he says. “We design and build the plant to match our BOT partner’s operational needs, and then run it ourselves. The partner pays us only for the final saleable product from the plant.”

BOT Model can boost emerging contractors, revamp mining According to B&E International, opening the doors of the mining industry to junior miners and emerging contractors can be boosted by partnerships depending on the buildoperate-transfer (BOT) concept.

xperts in integrated crushing, mining, and mineral processing solutions, B&E International brings its experience of not only operating crushing plants but designing and manufacturing its innovative equipment locally, according to the company’s director of plant and engineering, Ken Basson. “As a committed Level 1 BBBEE contributor, we understand the value of transforming our industry, by building 22 | SKILLINGS MINING REVIEW June 2020

local expertise and capability,” says Basson. “We’ve therefore partnered with junior miners and emerging contractors to assume some of their initial risk in mining projects and giving them a more profound basis for sustainable growth.” He highlights that new entrants to the mining industry face both technical and financial hurdles. Sourcing a fit-for-purpose processing plant is often a ‘bridge too far’ to capital expenditure. Financial institutions usually require a strong

The arrangement is a close collaboration with the partner, who must be confident of fulfilling their contractual duties to the end-customer - in the case of a coal-producing operation, for instance. The production experience in B&E International – which has for decades run screening and crushing operations for its account – is what puts their BOT partners’ minds at ease. “The ‘transfer’ facet of the BOT contract is also a crucial step in developing a new generation of miners and contractors in South Africa,” he says. “This allows our BOT partners to take possession of the plant after an agreed period of time, should they wish to take over the operation of processing activities.” This allows a junior miner to build its skills base and balance sheet base over a manageable timeframe while mitigating its operational risk and ensuring a solid growth trajectory. Basson also stressed the value of B&E International local manufacturing experience, particularly given the continuous weakening of the Rand against the US dollar and Euro – the currencies in which most mineral processing equipment is sold. “Our Rand-based manufacturing capability has always been cost-effective,” he said. “This further improves the economics of our plants’ performance and maintenance.”

Matrix Design forms new Equipment Division

to supply essential support products for underground coal operations A leading provider of technology for mining safety and productivity, Matrix Design Group, has announced the introduction of an Equipment Division, which features essential support products for coal underground operations.

patented "Bottles Off"-design LifeShelters and Dozer Rescue Kits. The firm says the new Matrix Equipment Division can build new Rock Dusters or rebuild any Dusters that the client may have. While mines can buy ready-made products, Matrix staff will also work closely with customers to customize their purchase. "We know that the possibilities of a widespread explosion can be greatly reduced when rock dust is applied and maintained according to industry standards," explained Sam Kinder, Equipment Division Technical Sales Rep, "and that is why standard Rock Dusters are so crucial. We work to meet our customer's exact needs and work best to support their employees' safety."

Pressurized-Pod-Duster.

he new Division has launched with a product line of new or rebuilt Rock Dusters as well as Rock Dust Bins, Dozer Kits, and Refuge Shelters. "We would like to offer coal mines high-quality new and rebuilt products with an eye toward cost savings," said David Clardy, President of Matrix Design Group. "During this challenging time, mines need to maximize every dollar, and we feel that combining this new product suite with our outstanding service is a fantastic way to encourage American mining." The line of new and rebuilt equipment will include a recently designed 1,000-lb Electric Trickle Duster, 400-lb Electric Trickle Duster, Scoop Flinger Dusters, Pull-behind Electric Beltline Duster, Slurry Dusters, Single and dual, rail or rubber-tired, Pressured Pod Duster, portable and stationary Rock Dust Bins, www.skillings.net | 23

EQUIPMENT

View at the quarry in Catequilla, near Quito, following a landslide after a 5.1-magnitude earthquake rattled the Ecuadoran capital and the surrounding area causing buildings and homes to shake violently, on August 12, 2014. The quake triggered landslides that killed at least two people and left three others trapped while another eight people were also injured at quarries on the outskirts of Quito. AFP PHOTO/JUAN CEVALLOS (Photo credit should read JUAN CEVALLOS/AFP via Getty Images)

Expect more

Earthquakes as mines dig deeper to extract ore, Vale says

More pressure builds up in rock near-surface as mines continue to dig for ore extraction. Mining giant Vale says Seismic activity around its Sudbury-area mines is likely linked to its deep drilling operations, and there is the probability that more incidents will follow.

ast week, Natural Resources Canada recorded two earthquakes. A 3.6 MN (magnitude) tremor hit Creighton Mine Thursday morning, and a 3.0 MN quake forced Garson Mine to stop operations Friday night till Saturday. According to Natural Resources Cana-

24 | SKILLINGS MINING REVIEW June 2020

da’s website, it’s unlikely that any quake below 5 MN could cause damage above ground, although tremors were felt as far off as lively.

above ground. “First And foremost, our top priority is to get people to secure locations because there could be unknowns shortly after it happens,” Lamarche said.

Gilbert Lamarche, Vale’s head of Mines and Mills Technical Services, said inspection teams were on the scene quickly while the company brought its employees

“Then, from there in both cases, due to the magnitude of these events, employees are hoisted to the surface, and then we have monitoring throughout the mine that

shows ground vibrations.” The blasting that likely caused the tremors at Creighton was closer to 8000 feet, while Garson was at the 5000 levels, or 5200 feet below the surface, Lamarche said.

“It’s a good testament to the level of ground support we use in our excavations together with our experienced miners installing it.” “When you have minor damage, that means that the ground support that our people are installing is quite

effective in helping to protect themselves and our assets.” The teams are trying as much as possible to create models that will help them predict where the next tremor could occur, as crews work at ore bodies deeper in the mines, causing more stress on the rock above, Lamarche said. “Looking at the last ten years, we have had seismic events greater than [1.0 MN],” he said. “And noteworthy ones have increased over the years. But the rock bursts have diminished, meaning we’ve been controlling them better and keeping damage to minimal”.

The Garson tremor was also likely caused by “crown blasting,” a large type of underground explosion. “We typically get some of these a year in our Operations,” Lamarche said.” This is due to mining activity, and in the host rock we are in, it’s a very strong host rock.” The potential for quakes begins the moment drills go into the ground. The natural pressures and stresses in the rock redistribute themselves, Lamarche explained. “If you get some faulting in the ground, which is common around these areas, there is sometimes a sudden release of energy or a shift, which causes these [quakes.]” After the events, experts descend to the area to find out if they can detect any more vibrations in the rock. “I have a fantastic team of about 20 that take care of these issues,” Lamarche said. “They talk to the team members and www.skillings.net | 25

GLOBAL

Mining shutdowns

Covid 19 hurt silver production the most, gold the least According to the GlobalData report, COVID-19 shutdowns across the globe have affected silver mining production the most. The coronavirus pandemic has forced governments across the world to close down several non-essential businesses and, in some cases, that meant mining.

he recent report from GlobalData looked at different mining sectors and how they have been affected across the world. Silver fared the worst, while gold was hurt the least out of all the major mining sectors the report looked at. There were temporary shutdowns Introduced by over 1,600 mines across 32 countries as of April 3, '' the report stated. Since then, the total mine shutdown has already dropped to 729, GlobalData added. Apart from temporary shutdowns, the mines that were working were functioning at reduced capacity, limiting the number of employees on-site to minimize the spread of COVID-19. Silver production was affected the most by temporary shutdowns.

26 | SKILLINGS MINING REVIEW June 2020

UNDAUNTED BY THE fear of death, 57-year-old Asif Khan has kept his nose to the grindstone to dig out coal so that the country's power plants can keep running at a time when people are forced to stay inside as a result of the COVID-19 crisis. With the country faced with an unprecedented situation, Khan, who works in the Kamptee open cast mine of Coal India arm WCL, stated it was time to serve the nation "the way a soldier fearlessly keeps his life at stake to guard his country against the enemies." Khan believes the COVID-19 crisis as a "once in a Lifetime" opportunity to serve the country by going to work amid all the risks. "If my colleagues and I refused to go to work, who would produce coal," he inquired. "I don't like a situation when in the absence of coal, the country's powerhouses come to a standstill, and in the absence of electricity, the hospitals which are treating Covid-19 patients collapse," Khan told PTI over the phone. There are many more mineworkers like Khan who have braved the risks associated with the pandemic to fulfil their professional duties. Shiv Kumar Yadav is another employee who has been at the frontline since the beginning of the crisis, producing coal so that Coal India Ltd (CIL) can meet its output target and keep power generators well-supplied during summers when the fuel demand shoots up drastically. Yadav was haunted by the fear of COVID-19 when the nationwide lockdown began. "My son said 'papa, please don't go. God forbid if You get infected, so could we'," Yadav reminisces. However, Yadav says he did not succumb to the pressure of his family, adding that a sense of duty and obligation to serve the country makes him and his colleagues report to work amid the Covid-19 crisis. Another coal miner Ranjeet Singh said, "All of us are putting our best so that Coal India does not die." Gopal Singh owes a lot to the Coal India management, especially his

As of April 27, there was an equivalent of 65.8% of annual global silver production still on hold, GlobalData identified. Companies that withdrew Production guidance included Hochschild, First

Covid-19

Unsung mining heroes brave odds to produce coal, keep power plants running immediate manager Diwakar Gokhale, who is Area General Manager (Nagpur Area) of Western Coalfields Ltd (WCL), for his braveness. The company undertakes various initiatives to motivate the workers. Recently, under the leadership of Gokhale, the workers were given floral tributes and commended heartily when they came out of the mine after completing their shift. A special team of four-five members was flown from Nagpur to the mines, some 40 km away, for the initiative. All Social distancing

Majestic, Hecla, and Endeavour Silver. In comparison, 23.8% of zinc, 19.5% platinum, 14.6% of nickel, 14.4% of diamonds, and 12.7% of copper, 12% of lead, 10% of manganese, 32% of uranium production and 9% of gold have been put on hold,

practices were followed, Gokhale said, adding that miners need to be motivated in these challenging times. The company has also taken several measures to ensure the security of its employees. Aside from providing masks, foot-operated wash basins have been installed at vulnerable places in all the mines of the Nagpur region, with the city reporting many coronavirus cases. Sanitation of heavy earth moving machines takes place in all the three working shifts daily, he added.

stated GlobalData senior mining analyst Vinneth Bajaj. Lockdowns remain in place in Mexico (until May 30), Peru (May 10), Bolivia (April 30), and Namibia (May 4). Calculations

were also run by CPM Group to see how badly the silver mining sector was hurt, estimating that 21 million ounces of output were lost so far. "At the minimum, based on the current duration of mine closures and the daily output in 2019, the mine www.skillings.net | 27

GLOBAL closures in South Africa, Mexico and Peru should result in lost output of about 21.1 million ounces of silver," CPM Group said in its Silver Yearbook 2020 released Tuesday. From a price outlook, silver has been lagging behind gold this year. Panic mass sell-off triggered by COVID-19 dragged silver prices to 11-year lows in March. Since then, the metal has recovered; however, it is still trading below February highs. Spot silver last traded at $15.16, up 0.07% on the day while May silver Comex prices were last at $15.250, up 0.52% on the day.

seek to further bolster economic recovery, we expect silver-intensive areas such as 5G and solar technologies may well benefit from any fiscal impulse, making silver increasingly the 'infrastructure' precious metal," Colin Hamilton, head of commodities research at BMO Capital Markets, wrote in a report in April. Some analysts see good upside potential for silver in comparison to gold in the short term. "Given silver's relatively healthier spec positioning than gold's and a historically high gold: silver ratio, we believe that silver prices could catch-up and outperform gold prices in the coming months," Orchid Research stated in a Seeking Alpha post this week. The principles supporting silver are extremely solid, Wheaton Precious Metals CEO Randy Smallwood told Kitco News last week. "The fundamentals behind silver are as good as I've ever observed. The industrial need and its usage are significant to the society together with its high efficiency in electronics and its antibacterial applications and also solar panels, Smallwood said.

From a price outlook, silver has been lagging behind gold this year. Panic mass sell-off triggered by COVID-19 dragged silver prices to 11-year lows in March. Since then, the metal has recovered; however, it is still trading below February highs. Analysts see great potential in silver as demand is expected to pick up as the precious metal adopts a new position in the commodity world â&#x20AC;&#x201D; an 'infrastructure' precious metal. "While gold naturally gets most of the attention in a macro environment of competitive monetary support, we feel there's an opportunity emerging in silver. As governments 28 | SKILLINGS MINING REVIEW June 2020

EQUIPMENT

Five workers killed after mine explosion at Chinese Coal Mine in Laos Five miners were killed, and also another left seriously hurt in an explosion on May 10 at a Chinese coal mine in the Ta Oy district of Saravane province in southern Laos, sources told RFA on Thursday. Two of those killed in the blast were Lao, with the other three and the wounded worker all Chinese, a district official informed RFA’s Lao Service, adding that initial reports had claimed only four were killed.

from the locations of the blast,” he stated. “What took place, in this case, should serve as a warning for everybody to learn.”

n a later report, we learned that five people had actually been killed,” the officials stated, speaking on condition of anonymity. “We are still investigating the incident; however, we have no further details yet.” The men that were killed had been trapped when rocks fell on them after the blast, another Ta Oy official said, citing accounts by witnesses to the explosion. “They claimed the miners had brought the explosives to the target area for blasting, but they don’t understand what happened after that. There might have been a malfunction of some kind. The rocks exploded, trapping the men and causing their death,” he stated. The miner wounded in the blast was sent to a local health center for treatment, Ta Oy district governor Boun Neuang Luang Kham Tai told a Lao radio station in a meeting later on that day, adding that the bodies of the dead Chinese miners were taken to managers at the coal mine for handling. “We could not talk about more than this due to the language barrier between the injured man and us as well as the company officials,” he stated. The bodies of the Lao miners who were killed were returned to their families so that religious ceremonies can be held for them, and Lao authorities are investigating the cause of

The Chinese firm involved in the blast had been operating in Ta Oy since 2012, although the length of time they have actually held a concession from the Lao government to work there is still unclear, one district official told RFA.

the accident so that compensation can be claimed from the Chinese firm, he said. STRONGER SAFETY PRECAUTIONS REQUIRED.

A district villager who witnessed the incident told RFA that he wants the coal mine now to enforce stronger measures so as to protect the safety and lives of its employees and also to give fair compensation to the families of the deceased. “If they are going to blast rocks, they should warn people to move far away

“The company has hired several workers to dig coal and also transport rocks by truck, and the majority of the tasks assigned to these men are very dangerous,” he stated. The Lao Ministry of Planning and Investment reported on Jan. 15 that 2,607 Lao workers out of a total workforce of around 27,000 are employed by foreign firms now invested in 12 special economic zones across the nation. According to Ministry figures, a lot of workers are Chinese, making up about 20,000 of the total, with Vietnamese employees numbering about 3,500. Chinese-owned industrial, hydropower, tourism, and mining projects in Laos have actually caused friction with local residents over pollution, loss of farmland, and economic compensation for displaced villagers, sources told RFA in earlier reports. www.skillings.net | 29

AMERICA

About 300 workers were laid off last week at three Powder River Basin coal mines, adding to a string of bad news for Wyomingâ&#x20AC;&#x2122;s already struggling coal industry as it responds to deep cuts in demand aggravated by the COVID-19 pandemic.

300 Powder River Basin coal workers laid off 30 | SKILLINGS MINING REVIEW June 2020

oal Company Navajo Transitional Energy Company announced 130 layoffs at its Antelope and Spring Creek mines in the Powder River Basin on Thursday. Seventy-three miners were laid off at Spring Creek Mine, which is located at Southern Montana and employs workers from northern Wyoming. Another 57 employees at the Antelope Mine in Wyoming were laid off.

Leading Coal firm Peabody Energy also announced Thursday it would lay off 170 workers at the nation’s largest producing coal mine, North Antelope Rochelle

near Wright. Both companies cited tough economic conditions and low demand for coal as reasons for reducing their workforces. “We regret the hardship that this decision creates for families and our communities,” Clark Moseley, CEO of Navajo Transitional Energy Company, stated in a statement. “We’re confident in our projections for future earnings, and all mines will continue operations to fulfill orders as we look forward to better days.” The layoffs at the North Antelope Rochelle mine mark the third workforce reduction in Wyoming by Peabody Energy this spring. Earlier this month, Peabody Energy laid off three of its employees at the North Antelope Rochelle mine, in

addition to letting go of 10 temporary employees at the Rawhide and Caballo mines. Also, in March, the firm let go of 50 temporary workers at its North Antelope Rochelle mine. “We have made a tough decision to reduce our workforce at the North Antelope Rochelle Mine based on the need to align our workforce with customer needs,” Kemal Williamson, Peabody Energy’s president of U.S. operations, said in a statement. “We know this announcement comes at a time when many are already challenged with circumstances surrounding the current national emergency, and we very much regret the added impact this challenging decision has on employees, their families, and our nearby communities in northeast Wyoming.” Peabody Energy offered affected employees outplacement services and separation packages.

“We regret the hardship that this decision creates for families and our communities,” Clark Moseley, CEO of Navajo Transitional Energy Company, stated in a statement. “We’re confident in our projections for future earnings, and all mines will continue operations to fulfill orders as we look forward to better days.”

www.skillings.net | 31

AMERICA

WAVE OF LOSSES

Similarly, Buckskin mine owned by Kiewit Corp. reduced its workforce by 60 miners last month. Together, the recent wave of layoffs adds to the increased decline of coal jobs in the Powder River Basin since last year, when the region was rocked by several major bankruptcies in extremely short order. “What is really regrettable is the issues that were important in September, October and November, continue to be important to Wyoming today, and one of those problems is the decline of coal,” Gov. Mark Gordon said during a Thursday press briefing on COVID-19. “... Our hearts go out to that community.” According to data from the U.S. Mine Safety and Health Administration, total employment and production in the basin’s coal sector have declined steadily since their peak in 2015. Demand for coal had continued its precipitous drop in the early months of 2020 — with output during the first quarter setting a new two-decade low, data released by the U.S. Energy Information Administration reveals. Wyoming coal mines produced 54.6 million tons of coal, a sharp 10.8 million

ton drop from this time last year. However, the COVID-19 crisis appears to have quickened that decline. Reports released by the Energy Information Administration earlier this month predicted market conditions would probably worsen later in the year because of decreased energy demand, declines in domestic and global steel production, and overall public health issues, which has created a shocking effect on economies across the world.

ers shut-in wells during a historic low in oil prices.

Meanwhile, fiscal analysts for the state of Wyoming have predicted declines in coal production ranging between 10 to 20 percent over the next two-year budget cycle due to the COVID-19 pandemic. According to projections released earlier this month, the estimated declines would be equivalent to $35 million to $74 million in lost earnings.

Dubbed the Energy Capital of the country, the city of 30,000 is a significant hub for the fossil fuels that drive Wyoming’s economy: oil, coal, and natural gas. “Operating Conditions are very tough today and are exacerbated by the effects of the COVID-19 pandemic as well as the economic shut-down,” explained Travis Deti, executive director of the Wyoming Mining Association. “It is sad and frustrating.”

Similarly, in Gillette, a city surrounded by several of the nation’s largest mines, also stands to sustain blows from the layoffs. Geno Palazzari, communications manager for the city, said workforce reduction such as this “reverberated throughout the community — not only the coal business but any of the extractive industries.”

PAINFUL CONSEQUENCES

For Wright, a town deeply dependent on coal and other energy industries, the economic downturn could have devastating consequences, said Mayor Ralph Kingan. The majority of households residing in Wright rely on the nearby coal mines for employment or business. “We are pretty dependent on coal here,” Kingan said. Oil workers have started to pack up and depart Wright, as employ-

According to Deti, the response to the Covid-19 outbreak has not been the same across all operators. However, a majority have responded to the outbreak. Measures taken by operators include keeping workers from congregating in high-trafficked areas and screening visitors and vendors with questionnaires. Operators continue to struggle to find cleaning supplies and sufficient sanitation, along with protective wear, like particulate filters. However, all 16 coal mines in Wyoming have managed to continue working during the pandemic, as industry leaders have encouraged the governor to exclude mining businesses from the state’s public health orders. When asked on Thursday if Wyoming was ready for the coal industry decline, the governor gave a sobering response. “I don’t think anyone is ready for the kinds of losses we have seen periodically over the past few years,” Gordon said. “This one is particularly painful because it is driven so much by a complete downward trend in the global economy.”

32 | SKILLINGS MINING REVIEW June 2020

FUNDAMENTALS 1 Benchmark iron ore futures on the Dalian Commodity Exchange, for September delivery, dropped down 0.3% to 630 yuan a tonne.

China stainless steel hits ninemonth high as local demand recovers Chinese stainless steel Futures rose on Monday, hitting their highest level in over nine months as domestic demand continued to recover after Covid-19 related shutdowns.

he Most-traded stainless steel futures contract on the Shanghai Futures Exchange, for June delivery, rose to 4.4% before ending the session 4.0% higher at 13,675 yuan ($1,931.55) a tonne, the highest since August 1.

stainless steel maker who asked not to be named. The top two miners in the Philippines have gradually resumed mining and shipping operations since May after coronavirus-led disruptions. However, the trader said output was still lower compared to a year earlier.

"The purchasing demand in downstream sectors (for stainless steel) has been good," said Fu Zhiwen, an analyst with Huatai Futures.

Other steel futures on the Shanghai exchange market were range-bound, together with the October contract of construction rebar dipping 0.1% to 3,452 yuan a tonne while hot-rolled coil climbed up 0.03% to 3,329 yuan for a sixth straight session of gains.

"There had been concerns about an export impact on consumption, but not noticeably affected so far." Apart from a revival in demand, the price also climbed on concerns about the supply of raw materials such as chrome and nickel, according to a contact at a

China's monthly car sales rose for the first time in two years in April as authorities loosened restrictions, and more customers visited car showrooms after the economy began to open up.

1 Spot prices of iron ore with 62% iron content for shipping to China climbed to $89.3 a tonne on Friday. [SH-CCN-IRNOR62] 1 Dalian coking coal dropped 1.2% to 1,081 yuan per tonne, and coke lost 1.5% to 1,726 yuan a tonne. 1 Over 4.03 million people are reported to be infected with the novel coronavirus globally, and 277,092 have died, according to a Reuters tally. 1 Brazil's Vale SA sees a "vigorous" economic rebound in China, the iron ore miner's principal export market, Chief Financial Officer Luciano Siani said during an online event hosted by newspaper Valor Economico on Friday. 1 China's Baoshan Iron & Steel Co Ltd increased hot-rolled coil prices for June delivery by 50 yuan per tonne and kept cold-rolled products unchanged. 1 Local governments in China issued 286.8 billion yuan ($40.55 billion) worth of bonds in April, of which 120.2 billion yuan have been in new bonds, and 166.6 billion yuan were refinanced, as shown by a statement by the Ministry of Finance on Saturday. 1 China's central bank said it reduced Interest rates on its standing lending facility (SLF) in April, catching up with similar reductions in other liquidity tools as part of Beijing's effort to support the coronavirus-hit economy. www.skillings.net | 33

EQUIPMENT

Open pit wireless detonation targets safety & productivity French Research institute CEA-Leti and demolition Services Company Davey Bickford have developed a wireless electronic detonation system for use at open-pit mines. The Industrial Internet of Things solution uses electronic detonators connected to bi-directional radio modules placed on a mining pit surface, which are linked by secure wireless protocol to a control system located kilometers away. Wireless blasting Technology has been in use by commercial explosives company Orica since 2018-2019 for underground mining, but a challenge was presented by open-pit mines for other firms as internet connectivity protocols such as WiFi are not designed for wide-area outdoor coverage. While the distance built into the CEA-Leti – safety is improved by Davey Bickford system, the ability to program and reconfigure detonators with a remote programming unit can lead to new, more efficient, and productive blasting techniques. “By replacing wired communications with an innovative wireless link, this new system helps bring large-scale mining to the electronic age,” explained Hughes Metras, director of IRT Nanoelec, a Consortium focused on semiconductor R&D that provided the framework for the project. 34 | SKILLINGS MINING REVIEW June 2020

Assore chrome mine in South Africa closed after worker diagnosed with Covid-19 Assore chrome mine in South Africa suspended production this week after an employee tested positive for COVID-19, the company said on Wednesday, highlighting the challenges mining companies face as they start operations again as lockdown eases. The worker was screened last week as part of Dwarsrivier Chrome Mine's return to work protocols and was tested after showing COVID-19 symptoms, an Assore spokesman said. Operation at the mine, which generated 1.55 million tonnes of chrome ore in the last financial year, was suspended on Monday after the worker's test positive to COVID-19 a day earlier. The suspension was a precautionary measure, and the mine would "resume operations once management has successfully completed an audit," the spokesman wrote in an email. The employee had been in self-isolation for a week, and other employees who had been in close contact with him would remain in self-quarantine until their test results were known, he said. The National Union of Mineworkers of South Africa (NUMSA) criticized Assore on Tuesday for not telling the union about the case until Monday. The union has criticized mining's resumption, stating that workers can't maintain social distancing in mines. Most mines in South Africa, the world's biggest producer of chrome ore platinum, and manganese, temporarily closed when the government imposed a lockdown on March 27 to stop the spread of the coronavirus. The government said on April 16 that mines could operate at 50% capacity, although mines producing coal to fire power plants are allowed to work during the crisis. A phased reopening of other sectors of the economy began on May 1.

Explosives manufacturer Orica lifts profit but cuts dividend to preserve cash

to preserve cash. Orica announced a dividend of 16.5 cents per share, to be paid on July 8. However, the profit is down 25 percent over the corresponding prior period. The dividend cut arises after a range of major companies were also forced to ditch or delay dividend payments, or defer a decision on dividends for possibly months.

Explosives manufacturer Orica's boss Alberto Calderon is confident the mining industry will help fuel the economic recovery post-COVID-19, as major economies pump money into infrastructure projects.

r. Calderon said important stimulus spending on infrastructure was likely to be revealed in the September quarter, as nations battered by the pandemic get on top of the disease and look to reignite economic activity. "Mining, We're at the beginning of everything, the car industry...steel, infrastructure, tunneling. We expect to see greater infrastructure spending in the US and Europe, more tunneling in Norway

and all that; it has to do with explosives," he told The Age and the Herald. "As long as governments can keep the curves under control...I think they would then switch to the economy," he explained. The $6.6 Billion ASX-listed company is a major supplier of explosives to mining giants like BHP and Rio Tinto, and Mr. Calderon's remarks on Friday came as it introduced a significant jump in net earnings for the first half to $165.2 million but reduced its interim dividend

Orica's $165.2 million statutory profit result compares to a $33 million net profit in the corresponding prior period, but the company's first-half 2019 results were weighed down by a significant writedown. Net profit for the first half of 2020 was 1 percent down on the first half of 2019, before significant items. Before significant items, net profit for the first half of the financial year 2020 was 1 percent down on the first half of 2019. The company also warned that strict government restrictions on mining in some countries would curb mining activity in some places this half. Strict mandates had affected mining in Europe, Asia, Mexico, and Africa, it said. Based on current levels of mining activity, Orica forecasts that its second half ammonium nitrate sales volumes would be 10-15 percent below its pre-COVID-19 expectations. Ammonium nitrate is the major ingredient in explosives. "Orica delivered a solid effect, amidst challenging recent impacts from NSW bushfires and COVID-19 related mine disturbance," UBS analyst Nathan Reilly stated in a note to clients. The company's shares ended the session 3 percent weaker at $16.28 www.skillings.net | 35

AMERICA

Coalâ&#x20AC;&#x2122;s crash could lead to a landscape of abandoned mines As yet another coal mining company teetered on the edge of bankruptcy, West Virginia, on March 26, asked a court for control of several abandoned mines, all possessed by mining company ERP Environmental Fund. This could be the first mining emergency steps states must take to stop several defunct mines from littering the landscape with no fund to restore them.

36 | SKILLINGS MINING REVIEW June 2020

he Covid-19 pandemic is leading to decreasing energy demand across the world, further destabilizing the battered coal market. Last month, ERP, after accruing countless citations from state regulators, appeared to run out of cash and sack its staff, who walked away from the mining sites. The ERP mines pose an “imminent risk of harm to the environment and the public health and safety,” West Virginia contends in its lawsuit. It is requesting a third party to manage ERP (the acronym stands for “Earth Restoration Project”) as it attempts to recover

cleanup funds from the mine’s owner. According to the West Virginia Department of Environmental Protection (WVDEP), ERP has racked up 160 environmental law violations and repeatedly ignored orders to prevent risks to public health and the environment. ERP has been operating on a “shoe-string budget with under-experienced and under-manned staff,” WVDEP claims. “The [agency] was left with no choice but to step in to seek the appointment of a receiver to take charge of ERP’s operations so as to protect the public health and safety.” The legal maneuver is highly unusual, states Peter Morgan, an Attorney at the Sierra Club. This means the state is trying to cut in line ahead of other lenders and keep ERP out of bankruptcy (for the time being). “What the state of West Virginia is desperate to prevent is all mines being abandoned along with the state being responsible for cleaning them up,” said Morgan. This is not how mining is supposed to work in the United States. The federal 1977 Surface Mining Act requires all coal firms to post bonds that would

cover the cost of cleanup in the event of abandonment. Replanting trees, replacing soil, eliminating toxic waste, removing hazards, and treating waste cost millions and leaving open coal mines is hazardous. A 2008 study in the American Journal of Public Health discovered higher rates of cardiopulmonary disease, lung disease, kidney disease, hypertension and other ailments for West Virginians residing near mines. But enforcement by state agencies has been uneven,” says Morgan. Their reliance on historical default rates to evaluate how many companies might go under, and how much money future reclamation requires, has fallen woefully short. State funds to cover any shortfalls, financed by coal taxes, are running low as the market for coal continues to decline. In 2020, renewables and natural gas have accounted for 100% of new electricity generation capacity in the US, according to federal energy data. No new capacity has been added by coal. The last proposed coal plant in the US was killed off by Georgia regulators this month. Companies like ERP were once seen as saviors for cash-strapped states. It was among several companies buying up distressed mines around 2015. They promised to pay off environmental liabilities, revive mining, and fulfill pension

www.skillings.net | 37

GLOBAL

obligations previous owners hoped to shed in bankruptcy court. None of that has occurred. The approximately $115 million in bonds secured by ERP are not enough to clean up the mess from over 100 mining permits ERP acquired from the defunct Patriot Coal Corporation in 2016, West Virginia states in filings. The required cleanup costs would likely bankrupt, not just the issuer of ERP’s bonds, the Indemnity National Insurance Company, but leave West Virginia’s own Special Reclamation Fund empty. The ERP fiasco is a flashing red light for other coal mining states faced with the prospect of cleaning up an industry running out of cash. In Ohio, the state’s reclamation fund has just $22.2 million to cover as much as $544.8 million in reclamation costs. Even after spending millions to shut down its mine, water pollution may still remain a continuous threat. In West Virginia, the underground Martinka mine owned by ERP requires almost $1 million annually to pump out and treat groundwater that would contaminate the drinking water of thousands of people. About 11 coal firms have gone out of business in the last four years. More are expected as the coronavirus pushes them “into a much more perilous position,” said Moody’s Investor Service. It predicted coal production in the US would fall more than 20% in the wake of the pandemic. And as coal gradually exits the energy equation, its legacy could disrupt public health and the landscape for generations. ERP may be the first domino to fall. “I think it resembles Lehman Brothers,” said Morgan, comparing the West Virginia mining firm to the defunct New York Investment bank that presaged a wave of bankruptcies during the 2008 financial crisis. “Suddenly, the holes in the system are observable.” 38 | SKILLINGS MINING REVIEW June 2020

Papua New Guinea takeover Barrick Gold’s Porgera mine Papua New Guinea is ready to take control of Barrick Gold's Porgera mine after refusing to extend the company's lease on social and environmental grounds, Prime Minister James Marape said.

he special Mining Lease will not be renewed in the best interests of the state, particularly in lieu of the environmental damages, claims and resettlements issues," Marape said.

with the government on the issue since then, Barrick stated in the statement. The company proposed in 2019 a benefit-sharing arrangement in response to a request from Marape. The deal could have delivered over half the economic benefits to PNG stakeholders, including the government, for 20 decades, according to Barrick. Tier One Possible

The decision comes nine months after the mining lease expired. During this time, the world's second-largest gold miner has faced a backlash from residents and landowners The gold mine, situated over what in the northern highlands they claim are negative social, region of PNG, is a joint environmental venture between Barrick and financial impacts and Zijin Mining. Each from the mine.

own 47.5% of this mine, with the remaining 5% held by landowner group Mineral Resources Enga.

Negotiations with Porgera's operators were complicated further by a split among the landowners. Barrick Niugini Limited, Porgera's manager, applied for a permit extension in June 2017 that could have renewed its rights for 20 years and had been engaging

Barrick's president and chief executive officer, Mark Bristow, had stated last month that Porgera had "tier one potential" but faced many challenges in the form of "legacy problems and an unruly neighbourhood."

The gold mine, situated in the northern highlands region of PNG, is a joint venture between Barrick and Zijin Mining. Each own 47.5% of this mine, with the remaining 5% held by landowner group Mineral

Resources Enga. The government has stated it intends to give a portion of Barrick and Zijin's stakes to the landowners and the national and provincial governments. "After the transition period has been completed, then the state will enter into owning and operating the mine after transition arrangements," Marape said in a televised speech from the capital Port Moresby. Porgera contributes to approximately 10% of the nation's exports and employs over 3,300 Papua New Guinea nationals. The Open pit and underground gold mine sits in Enga province at an altitude of 2,200-2,600 metres and is about

600 km northwest of Port Moresby. "We don't have enough details on the implications of the decision yet, including the timing of the transition," Jackie Przybylowski of BMO Capital Markets said in a research note. "Barrick has warned that it will seek all legal avenues to challenge the government's decision and also to recover any damages. We anticipate that discretionary spending, such as development Capex, will be lessened throughout the current period of uncertainty," Przybylowski noted.The mining analyst also said that "while removing Porgera from Barrick's portfolio could have a negative financial impact, it would improve the ESG

performance of their organization's portfolio going forward." "Barrick reports allegations of human rights violations in the region on its website," she pointed out, "including allegations of 'extreme' violence linked to local police forces or private security forces acting on behalf of the joint venture." Other mining firms operating in PNG, including Australia's Newcrest (ASX: NCM), have not been affected by the decision regarding Porgera. The miner has "welcomed" the Prime Minister's support for its Wafi Golpu gold and copper asset, adding that its special mining lease in the Lihir operations remains in good standing having a lease renewal not expected until 2035.

From Barrick-Q4-2019-Presentation. www.barrick.com/

www.skillings.net | 39

GLOBAL

Chinaâ&#x20AC;&#x2122;s top gold producer Shandong installs 5G network underground at its Laixi operations Shandong Gold Mining Co Ltd, which has a Hong Kong listing, gave some insight into the technology moves being made by the prominent Chinese mining companies in its 2019 full-year results released.

he Company is the leading local producer and achieved a gold mine production volume of 40.12 tonnes or 1.42 Moz during the year, representing a rise of 2.03% year-on-year. This compares to a Chinese domestic total production across all mines in 2019 of 314.37 tonnes or 11.09 Moz, representing a decrease of 9.13% year-onyear. Sanshandao, Shandong Jiaojia and Linglong gold mines have all produced over 100 tonnes of gold in total, again a first for Chinese gold mining complexes. The Company says it plans to boost its large-scale operations by "vigorously improving the mechanized operation and the efficiency of enterprises." At present, Shandong says, "the equipped production level and mechanization degree of the mining businesses firmly occupy the leading position in the domestic mining sector. Also, the underground trackless mining equipment configuration has always been at an advanced level in the world."

Photo: www.gizchina.com

40 | SKILLINGS MINING REVIEW June 2020

The Company is steadily advancing the execution of its planning programmes including the 'Mineral Resources Development and Utilisation Project of Sanshandao Gold Mine' and the 'Resources Development and Utilisation Project of Jiaojia Gold Mining Belt.' The three crucial Laboratories of the Company, namely the deep underground mining laboratory, beneficiation laboratory and filling laboratory, have started to take shape, and some of the scientific research outcomes are playing or will play a vital role in the Company's technological innovation development. For instance, the national-level 'Key Technologies on Safe and Efficient Mining of Large-scale Submarine Metal Deposits' worked on by the deep underground mining laboratory are being implemented at the Sanshandao gold mine; the mine rock mechanics data management and visualisation system fills in the gaps in rock mechanics work for domestic underground metal mines; and the first domestic industrial use of 5G technology

in the mining area has been successfully realised in Laixi mine. The Company emphasized the importance of reform and innovation and gathered resources on transformations and upgrades. Sanshandao gold mine is being built into a safe, efficient, smart and safe modern mine this year. On the Laixi 5G Project, China Mobile and Huawei successfully deployed the first network of 5G base stations 500 m underground. The 5G coverage is across the 500 m level of the underground mine, and it has been successfully used to control the unmanned electrical rail transportation cars. This is one of the first occasions that 5G has been deployed for an underground mine operation in China. Huawei and China Mobile say they will continue to deepen cooperation and promote the construction of 5G smart mines. At Laixi, field test data reveals that the downlink speed is steady at over 800 megahertz. While the end-to-end delay is significantly less than 20 milliseconds, the uplink rate is stable at more than 100 megahertz. This actually exceeded customer expectations. In the future, Shandong Gold's Laixi mine plans to combine the 5G, Unmanned motor, edge computing, cloud platform, and other new-generation information technologies to gradually achieve remote control and automation of its underground production fleet as well as scrapers and rock drilling rigs.

China’s coal mining industry implement 5G technologies in Yangquan Coal Mine China’s largest hard coal producer Yangquan Coal Industry (Group) Co., Ltd. in Shanxi Province has finished building a 5G network in one of its mines, heralding the coming of 5G era of the nation’s cold industry and paving the way for smart mining based on 5G technologies.

he 5G network in Yangquan’s subsidiary, Xinyuan, is the country’s first commercial 5G service under a coal mine shaft. It is constructed in partnership with China Mobile and Huawei. The deputy manager of Xinyuan, Wang Haigang, stated that the 5G network had been in stable operation for a week after its launch and optimization. With the integrated 5G coverage, the data upload rate is over 800Mbps, and the transmission latency is less than 20 milliseconds in the mine, enabling a variety of applications such as high-definition audio and video communications and intelligent remote control of equipment to free employees from the hazardous workplace, according to Yu Beijian, deputy general manager of Yangquan Coal Industry Group. Yu said coal mines are usually hundreds of meters deep without telecommunications signals underground,

and specialists have tackled technological problems to build the 5G network in the mine shaft, which has complicated underground conditions.

with China Unicom and Chinese telecom equipment maker ZTE to develop 5G and intelligent mining in areas including smart transportation and drone patrol.

With the 5G network in operation, the mine is expected to reduce its labor force in one underground working team from over 170 to about 90 while maintaining the coal output, Wang said, adding that Xinyuan hopes to raise the annual output from 3 million tonnes to 5 million tonnes.

Kailuan Group in northern China’s Hebei Province has won a contract with China Telecom on 5G technology application development, while Shanxi Coking Coal Group has signed with the Shanxi branch of China Unicom on leasing 5G facilities.

Yu said the firm had planned further to enhance the 5G application scenarios with an objective to build a “smart mine” in the future. Yangquan Coal Industry Group is not the only one in embracing new modern technology. China’s traditional coal mine firms are increasingly merging onto the 5G “expressway.” Yankuang Group, a mining conglomerate in eastern China’s Shandong Province, has set up a joint lab

Liu Feng, vice-chairman of the China National Coal Association, said that China currently has over 5,000 coal mines, which have built more than 200 intelligent mining platforms facilitated with automatic equipment. The “new infrastructure” of the 5G network structure in coal mines will lead to an elevation in performance, efficiency, and energy reform and greatly transform the traditional development setting in the coal sector, Liu stated. www.skillings.net | 41

AMERICA

Another Mining Giant awakens Photographs of early Mesabi Iron Range mining are in black and white. We may identify the gray material in the rail cars as iron because why else would those mustachioed gentlemen have shoved it up?

ut the early open pit and underground mines were very much driven by the color — bright, vibrant colors of steel blue, pink, red, and gunmetal grey. Mining engineers like my great-grandfather plied their skill by sight as well as by drilling and assaying. I know this because I have seen a vast hematite reserve in modern photographs. In reality, the soft, rich iron ore that built Chisholm, Hibbing, and all the towns of the Iron Range still exists. However, its abundance lies on the other side of the same ocean people crossed to extract the ore here. The largest untapped iron ore reserve in the world may be found at the Simandou

mine in the West African nation of Guinea. Two billion tons of high-grade ore rest below a jungle mountain range deep in the country’s interior. Reports list the iron content of the ore there at 65-66%. This is significantly greater than the industry standard of 62%. For steelmakers, it’s the difference between 87 octane and racing fuel from the local Spur station. Big mining companies have known about the iron ore in Guinea for a long time. Simandou merely represents the richest of several mountains of iron. Not only does one have to dig the ore from a densely forested area, but you have to get it through a jungle to the Atlantic Ocean some 400 miles away. Remember, When the Merritt Brothers discovered

Big mining companies have known about the iron ore in Guinea for a long time. Simandou merely represents the richest of several mountains of iron. The Mesabi Range’s major benefit is that expensive taconite plants currently operate here with a robust system of shipping iron ore to market. 42 | SKILLINGS MINING REVIEW June 2020

Mesabi iron ore in 1980, they were nearly ruined, moving it less than 85 miles to Duluth. Rio Tinto has been developing mines at Simandou for the last ten years. But the company hit several snags with the Guinean government, a barely democratic regime with a history of corruption in mining leases. Rio Tinto was dealt a further blow when Guinea parceled off the Simandou reserve and gave a stateowned Chinese company right to almost half the ore. Early last month, the Chinese government approved the building of a 400-mile railroad and new port. Their companies will withdraw iron out of Guinea, around Cape Horn, and off to hungry mills in China. Now, this might not directly impact our local iron mining industry. Rather, we see another case of the complex international dynamic that keeps our mining economy in a holding pattern. The Mesabi Range’s major benefit is that expensive taconite plants currently operate here with a robust system of shipping iron ore to market. Although the

EQUIPMENT

plants are getting older, upgrading them would be easier than building new ones. This region will continue serving North American markets for decades. Probably not with the same number of mines and mining jobs, but that’s another topic. But these mining facilities are only as active and innovative as the companies that own them. And this has proven a mixed bag. Cleveland-Cliffs developed iron nugget technology at Northshore and new varieties of pellets at United Taconite, all with an eye for the newer electric arc furnace markets. By contrast, U.S. Steel appears permanently wedded to older blast furnace technology. Their stockholders want profits now, not billions in new costs. And as we have seen this year, any slump in demand sends all mines reeling backward. I’m the fifth generation of my family to live on the Mesabi Iron Range, the first in my father’s line to never work in a mine. Steeped in the history of this place one might assume that the gods of iron ordained the Mesabi as the global pinnacle of iron ore production. But that hasn’t been true in half a century. We’re currently a regional mining center. Our mines feed a mature economy that won’t repeat the meteoric growth of the 20th Century anytime soon. Iron ore comes from various places, sometimes at a higher quality than it does here. Our region’s objective — in mining and everything else — should be stability and sustainability. We have to make a much better product, not necessarily more. We should profit equally from the knowledge in our heads as we do from the minerals under our feet. If we fail in these modest goals, we’ll watch it all slip away far sooner than most would like. The whole world is colored by iron, not our region alone.

A collaboration for Deep-sea mineral mining between India and Russia Russia and India had previously expressed mutual interest in Iron ore and mining coal in Russia as a step to increase the trade and economic ties between the two nations.

oth the countries are working together to explore coking coal and Iron ore mining in Russia's Arctic north.Also, the National Institute of Ocean Technology (NIOT), Chennai, India, has signed an MoU with Krylov State Research Centre in Russia to develop machines and tools in order to mine minerals from the deep sea owned by India in the Indian Ocean. India has rights around over 75,000 square kilometers in the Indian Ocean's International waters for mining and development activities provided by International Seabed Authority (ISA). For the exploration and mineral mining from deep sea, India and Russia have collaborated. These collaborations are expected to develop machines, deep-sea mining equipment, and submersible manned vehicles for inspection and proper processing. The ocean Indian ocean floor has polymetallic nodules that contain minerals such as copper, manganese, cobalt, nickel, etc. The program's intention is to extract these potato-shaped polymetallic nodules from the ocean bed. These metals can be used in electronic industries, batteries, solar cell equipment, etc. However, the floor is located at a depth of approximately 5.5 Kms from the ocean surface. This depth can cause several issues in mining minerals from the ground. The water pressure at this depth is very high, which requires specialized technology and equipment design. The ministry of earth sciences, India has estimated the potential of polymetallic nodules residing in this region to about 380 million tonnes, which contains 4.7 MT of nickel, 0.55 MT of cobalt, 4.29 MT of copper and 92.59 MT of manganese, while the rest could be Iron ore or other minerals. Several other countries, for instance, China, Germany, South Korea, Japan, Russia, have all started this trend of deep-sea mining. Most of these countries have tested their equipment in the shallow waters and will start mining in a couple of years. "This is a very challenging task," M. A. Atmanand, Director of NIOT, said. This project will be achieved by the collaboration on both parties for mutual benefits. The machine requires to work in deep-sea and pulls the polymetallic nodules with it to the surface. Krylov would offer its high-pressure pumps and its ability to test the vehicles at deep sea levels. This machine was expected to test in the Indian Ocean in February, but it would likely be delayed later this year due to current circumstances. We can expect the demonstration of mineral mining in a couple of years.

According to ISA, these deep-sea mining will be commercially viable only if they can mine 3 ML per year. To be able to extract effectively, more research and study is currently in progress in this direction. www.skillings.net | 43

AMERICA

Federal secrecy is a warning signal on mining near BWCA Minnesota should stop all state-level work on the controversial Twin Metals Mining proposal if the Trump government doesn’t share vital information about copper mining’s risks to the Boundary Waters Canoe Area Wilderness (BWCA).

ov. Tim Walz may be managing a pandemic, but other crucial decisions concerning the state’s future must also be made. Protecting this beloved, fragile natural preserve is one of them. The $1 billion Twin Metals project is still years away from becoming a reality, a long timeline due to the extreme scrutiny needed to issue critical licenses. The underground mine and its above ground operations would be within the BWCA’s watershed and unsafely close to the shoreline of a reservoir draining into the wilderness. In November, a Star Tribune Editorial Board special report, “Not this mine. Not this location,” argued that the regulatory framework is broken and the contamination risks unacceptable. The editorial board warned about the relationship between the Antofagasta, the mine’s Chilean corporate owners, and the Trump administration. It also called out the administration for keeping secret the scientific data gathered during a two-year federal study of copper mining’s potential harm to the BWCA’s watershed. That study was aborted in September 2018, four months shy of completion. On March 10, the Minnesota Department of Natural Resources (DNR) officially requested that the U.S. Forest Service share the data. The letter from DNR Commissioner Sarah Strommen cited the 44 | SKILLINGS MINING REVIEW June 2020

agency’s long-standing interest in this data, the data’s “significant implications for the people of Minnesota,” and the decision last fall to do a state-level environmental review of Twin Metals. It didn’t take long for the Trump administration to reject it. The brusque April 13 response from the U.S. Department of Agriculture, which oversees the Forest Service, said the study was not finalized; therefore, no findings could be released. That response is a troubling departure from how agencies traditionally work even through the early phases of the research. “You share draft information all the time,” said Tom Landwehr, a former DNR commissioner who now leads the Campaign to Save the Boundary Waters, which opposes Twin Metals. “It is a general practice on these large state and federal projects.” The response is also insulting to Minnesota scientists and the public, suggesting that they can’t be trusted to interpret data from a nearly completed study. However, nobody should be deceived by maneuvering. There’s only one conclusion to draw from the secrecy: Science doesn’t support the project. To their credit, Twin Metals officials recently told an editorial writer that the firm “has never been in possession nor objected to the release of information gathered by the U.S. Forest Service.” The DNR provided a statement saying it has not decided how it will

respond to the USDA. However, the next steps of the agency should be apparent. It sought this data to do its own analysis, and it shouldn’t proceed without it. Another recent development adds to concerns about the state moving ahead. The Trump administration is pursuing alterations to the federal Clean Water Act that would expedite huge projects like mines while hobbling state and tribal efforts to study the water quality effect. The changes are disturbingly close to finalization. The federal secrecy continues to be a serious red flag. The Clean Water Act changes also indicate that the Trump administration is doing what it could to coddle Twin Metals instead of protecting the BWCA. The only logical response is for the DNR and other state agencies with permitting responsibilities to suspend work on this risky mining project.

ADVERTISING INDEX

Azcon.......................................... 45 Barr Engineering......................... 15 CR Meyer.................................... 21 FloLevel Technologies............... 17 Fryberger..................................... 15 General Equipment Supplies..... 05 Global Minerals Engineering..... 45 Golder Associates...................... 45 Lake Superior Chapter ISEE....... 45 Malton Electric Company.......... 17 ME Elecmetal........................06/07 Minnesota Power....................... 13 Mielke Electric Works................ 23 Naylor Pipe............................08/09 Neo Solutions............................. 25 Northern Engine & Supply.......... 45 Optiro.......................................... 02 SEH............................................. 19 Walcot water.............................. 28

Cliffs CEO optimistic demand for steel will return as automakers resume production

he company has idled Northshore Mining as steel demand declined during the pandemic. The "Big Three" car manufacturers are preparing to restart manufacturing next week, and Cleveland Cliffs, a major producer of iron ore pellets on the Iron Range, is hopeful steel demand will return with it. Cliffs idled its Northshore Mining iron mine and pellet plant in Silver Bay and Babbitt in April until August, laying off 470 of its 570 workers, as steel demand dropped as a result of the COVID-19 pandemic and U.S. automakers Ford, General

Motors and Fiat Chrysler shuttered plants to help curb the spread of the virus. With its recent purchase of steelmaker AK Steel, Cliffs is now supplying steel to "virtually all" U.S. car manufacturers, Cliffs President and CEO Lourenco Goncalves said. He said automobile plants are reopening earlier than expected. "We are going to start seeing numbers normalizing early in June," Goncalves said of the auto industry in a call announcing first-quarter results Monday morning. Goncalves said he believes car ownership will increase as people are worried about coronavirus direct exposure from public transportation or rideshare services like Lyft and Uber. He pointed to a CNBC interview of Mike Jackson, the CEO of AutoNation, the nation's largest auto dealership chain. In the interview, Jackson urged car manufacturers to restart production and said demand for vehicles is returning due to "suppressed demand, the need for personal space, readily available funding at very affordable prices, and it's entirely

appropriate that the factories resume operation." "We are going to see renewed interest in car ownership. We are very optimistic," Goncalves said. However, Tony Barrett, an economics professor at the College of St. Scholastica who follows Minnesota's iron ore sector, claimed that expectation might be a little bit too optimistic. "The unemployment insurance and the additional $600 has really softened the blow, and customers do have some money to spend," Barrett stated. "The question is, Will they?" Last week, the U.S. insured unemployment rate reached 15.5% as a record 22.6 million people are currently receiving unemployment benefits. Barrett said he believes the economy will recover at a slower pace. "Cleveland-Cliffs said they expect consumers to buy cars. I am much more pessimistic," Barrett said. "I believe more of these furloughed workers are most likely going to become permanent layoffs."

We thrive on challenges golder.com

www.skillings.net | 45

STATISTICS United States Exports to World of All Steel Mill Products in Thousands of Metric Tons

APRIL 2020 CRUDE STEEL PRODUCTION

orld crude steel production for the 64 countries reporting to the World Steel Association (worldsteel) was 137.1 million tonnes (Mt) in April 2020, a 13.0% decrease compared to April 2019. Due to the ongoing difficulties presented by the COVID-19 pandemic, many of this month’s figures are estimates that may be revised with next month’s production update. China produced 85.0 Mt of crude steel in April 2020, an increase of 0.2% compared to April 2019. India produced 3.1 Mt of crude steel production in April 2020, down 65.2% on April 2019. Japan produced 6.6 Mt of crude steel in April 2020, down 23.5% on April 2019. Production in the EU is estimated to be 10.7 Mt in April 2020, down 22.9% on April 2019. The US produced 5.0 Mt of crude steel in April 2020, a decrease of 32.5% compared to April 2019.

Production in the C.I.S. is estimated to be 6.6 Mt in April 2020, down 22.6% on April 2019. Ukraine produced 1.4 Mt of crude steel in April 2020, down 30.9% on April 2019. Brazil produced 1.8 Mt of

crude steel production in April 2020, down by 39.0% on April 2019. Turkey’s crude steel production for April 2020 was 2.2 Mt, down by 26.3% on April 2019.

INTERIM STEEL DEMAND ECONOMIC STATEMENT

n light of the continuing disruption caused by the COVID-19 pandemic, the World Steel Association (worldsteel) has taken the decision not to publish its April Short Range Outlook (SRO) for steel demand this month. The current plan would be to release a full SRO in June when it is hoped we can make a clearer assessment on steel use going forward.

may turn out to be less severe than that seen during the global financial crisis. The 2008 financial crisis was prompted by a severe reduction in industrial and investment activities because of the collapse of the financial system. The current economic crisis for all service and direct consumer sectors may prove to be less steel intensive.

The global steel industry is being impacted as our customers are hit by shutdowns, disrupted supply chains, collapsing confidence and delayed investment and construction projects, as well as a decline in consumption activity. Financial market volatility and collapsing oil prices have further undermined investment.

The recovery path from the current crisis will critically depend on the duration of the lockdown and the timing of exit plans. This of course will vary widely around the world. The manufacturing sector is expected to be quicker to rebound compared to other sectors, but supply chain disruptions are expected to continue for some time. The longer the lockdown, the greater the damage to supply chains, thus making a quick recovery more difficult.

After slower than expected growth in 2019, mainly due to the deep manufacturing recession in the developed economies, we are seeing a further decline in global steel demand in the second quarter of 2020. The duration of the present disruption is currently impossible to judge. However, it is possible that the impact on steel demand in relation to the expected contraction in GDP 46 | SKILLINGS MINING REVIEW June 2020

Across the world the steel industry is carefully monitoring the latest updates about this pandemic and is taking all necessary actions to safeguard the health of its employees whilst at the same time preserving the ability to operate.

CRUDE STEEL PRODUCTION, APRIL 2020. Source – World Steel Association COUNTRY

APRIL 2020

APR % CHANGE 2019 APR 20/19

2020

% CHANGE

COUNTRY

APRIL 2020

APR % CHANGE 2019 APR 20/19

2020

% CHANGE

Austria

484

652

-25,8

2 299

-14,4

Mexico

1 450 e

1 649

-12,1

5 937

-10,3

Belgium

540 e

661

-18,3

2 380

-10,7

United States

4 968

7 357

-32,5

26 686

-9,6

Bulgaria

50 e

-8,4

208

6,2

Croatia

0 e

-100,0

North America

7 203

10 048

-28,3

36 798

-9,8

107

421

-74,5

1 035

-31,0

1 811

2 970

-39,0

9 954

-14,3

0 -100,0

Czech Republic

372

417

-10,6

1 562

-5,3

Finland

287

373

-23,0

1 305

2,2

France

800 e

1 288

-37,9

4 232

-17,9

3 000 e

3 358

-10,7

12 860

85 e

111

-23,4

172

Germany Greece Hungary Italy

152 1 350 e

45 e

187,6

270

13,1

-6,8

Colombia

60 e

118

-49,0

362

-15,5

438

-13,4

Ecuador

35 e

-28,1

187

-7,1

-11,9

554

-16,1

Paraguay

2 e

54,1

42,0

1 949

-30,7

6 631

-19,6

Peru

40 e

-58,9

281

-28,9

Uruguay

3 e

-44,3

-17,2

Venezuela

2 e

-62,7

-56,3

3 682

-42,8

12 125

-16,0

201

-60,1

536

-32,1

Netherlands

494

511

-3,3

2 231

-3,5

Poland

600 e

805

-25,5

2 642

-20,6

Slovenia

45 e

-21,4

209

-5,8

Spain

676

1 300

-48,0

3 933

-21,2

Sweden

403

432

-6,7

1 655

-5,1

United Kingdom

560 e

631

-11,2

2 423

-4,8

Other E.U. (28) (e)

750 e

929

-19,3

3 324

-9,6

-22,9 49 423

-12,5

Bosnia-Herzegovina

13 909

0 e

-100,0

185

-37,3

Macedonia

15 e

-32,4

-32,2

Norway

-2,1

228

7,2

Serbia

109

177

-38,3

511

-24,5

Turkey

2 245

3 044

-26,3

11 220

-0,1

Other Europe

2 419

3 371

-28,2

12 203

-2,4

Byelorussia

180 e

227

-20,8

879

1,2

Kazakhstan

260 e

381

-31,7

1 206

-2,1

15 e

-62,6

-21,5

Russia

4 700 e

5 831

-19,4

22 885

-4,4

Ukraine

1 339

1 938

-30,9

6 657

-10,6

11,1

302

57,3

8 471

-22,6

32 020

-5,2

750 e

992

-24,4

3 988

-10,5

Cuba

10 e

-43,5

-12,2

El Salvador

10 e

29,1

14,7

Guatemala

15 e

-40,4

-12,3

Moldova

Uzbekistan C.I.S. (6) Canada

60 e 6 554

Brazil Chile

Luxembourg

European Union (28) 10 729

Argentina

South America

2 105

Egypt

600 e

728

-17,6

2 827

-0,6

Libya

-100,0

150

-16,5

South Africa

3 e

576

-99,5

1 257

-42,1

603

1 361

-55,7

4 234

-18,5

1 790 e

2 178

-17,8

8 490

4,3

192

-74,3

621

-24,6

Saudi Arabia (1)

612

651

-6,0

2 704

-2,1

UAE

115

269

-57,1

972

-9,5

2 566

3 289

-22,0 12 787

-0,1

China

85 033

84 879

0,2 319 461

1,3

India

3 137

9 021

-65,2

30 055

-21,1

Japan

6 617

8 648

-23,5

30 730

-8,6

South Korea

5 500 e

6 001

-8,4

22 436

-5,7

250 e

293

-14,7

1 216

12,7

1 650 e

1 970

-16,3

6 966

-9,2

350 e

327

6,9

1 473

12,6

1 946

1 867

4,2

7 168

4,7

104 483

113 007

-7,5

419 505

-1,9

400 e

472

-15,3

1 733

-1,0

35 e

-42,6

167

-24,0

533

-18,4

1 900

-3,5

-13,0 580 994

-4,1

Africa Iran Qatar

Middle East

Pakistan Taiwan, China Thailand Vietnam Asia Australia New Zealand Oceania

435

Total 64 countries (2) 137 098

157 672

(1) - HADEED only. (2) - the 64 countries included in this table accounted for approximately 99% of total world crude steel production in 2018. e - estimated

www.skillings.net | 47

1. 2. 3. 4.

Visit Us Online At: www.skillings.net. Select Subscribe Tab. Fax The Completed Card 888-261-6014 Call: 909- 962-7321 x 4 Mail The Completed Card.

MINING INFO YOU DONâ&#x20AC;&#x2122;T HAVE TO DIG FOR.... SUBSCRIBE NOW FOR IRON ORE MINING NEWS AND MORE S U B S C R I P T I O N I N F O R M AT I O N Name................................................................................................... ............................................................................................................ Company.............................................................................................. ............................................................................................................ Address................................................................................................ ............................................................................................................ .........................................................Suite............................................ City:..............................State:..........................Zip:.............................. Phone.............................. Fax...............................................................

E-Mail.................................................................................................. c Amount Enclosed........................................................................... c Please Bill Me Card Number: ...................................................................................... Exp. Date: ....................... c Visa

c MaterCard

c American Express

CVS No. (Security Code): .....................................................................

S U B S C R I P T I O N R AT E S ( A L L F U N D S I N U . S . D O L L A R S )

Check ( ) your choice of Subscription. SKILLINGS MINING REVIEW

One-Month: c $72 BY AIR MAIL One-Month: c $109 SKILLINGS MINING REVIEW DIGITAL

SKILLINGS MINING REVIEW International Rates (outside the US)

One-Month: c $250 BY AIR MAIL: One-Month: c $335

One-Month: c $4.95

Return This form to

SKILLINGS MINING REVIEW

PO BOX 1203 | NOKOMIS, FL 34274, USA