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Chromium/Platinum Group Metals

Norilsk Sees Africa Cutting Platinum Output on Spending – by Yuliya Fedorinova (Bloomberg News – April 7, 2015)

http://www.bloomberg.com/

OAO GMK Norilsk Nickel sees South African output of platinum-group metals declining in the next several years as the Russian mining company leads investors in creating a $2 billion palladium fund.

“Investments in a vast amount of projects in South Africa were delayed and it’s hard to expect an increase in output in the region,” Anton Berlin, head of strategic marketing at Norilsk, said in an interview on Monday. “Most likely, it will even fall.”

This year, South African output will recover to match its 2013 level of 4.4 million ounces of platinum and 2.4 million ounces of palladium following a sharp decline caused by five months of strikes in 2014, he said.

Production of platinum and palladium, which are mined from the same deposits and used in automobile catalytic converters, has been lower than demand since at least 2012. Opaque stockpiles held by hedge funds have contributed to price volatility, according to Norilsk.

More than 1 million ounces of potential output were lost during strikes in South Africa that ended in June, according to research by Johnson Matthey Plc. The platinum market had a deficit of almost 1 million ounces last year, which should narrow to 500,000 ounces this year, according to Norilsk’s estimates.

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Underneath the chrome [Ring of Fire] – by Kip Keen (Mineweb.com – March 27, 2015)

http://www.mineweb.com/

Why Franco-Nevada is playing in the Ring of Fire.

The Ring of Fire, an Achaean greenstone belt in Northern Ontario, has become synonymous with – and infamous for – chromite. Cliffs Natural Resources was until couple years ago to put the region on the map as a new global mining centre of the stuff. It has, as many will recall, scuttled those plans and agreed to sell its assets – chiefly a series of chromite deposits, but also a lot of interesting exploration claims – in the Ring of Fire to Noront Resources, the leading junior still operating in the remote region. Among other chromite assets it is chiefly developing a modest-sized nickel-copper-palladium deposit.

At the heart of the deal is Franco-Nevada, the leading gold royalty company. It’s lending Noront $22.5 million to cover the $20 million acquisition cost of the assets. Along with the five-year loan at 7% interest, payable in an accumulated lump sum at the end, it’s also paying Noront $3.5 million to secure Franco-Nevada a couple NSR (net smelter return) royalties. Most directly, Franco-Nevada is to get a 3% NSR in Cliffs’ large chromite deposit, Black Thor.

Franco-Nevada: Chromite? Of course in the grand scheme of things Franco-Nevada is not that floored about chromite. This should come as no surprise. For, if getting the NSR on Cliffs’ old stomping ground is kind of nice –

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[Ring of Fire] Canada’s “Next Oil Sands Miracle” a Bust – by Rich Duprey (The Motley Fool – March 26, 2015)

http://www.fool.com/?source=illsitima0000001

Once billed as the economic equivalent of Canada’s oil sands industry, the vast oil deposits in the country’s western provinces of Alberta and Saskatchewan, where 97% of its oil reserves reside, Ontario’s Ring of Fire chromite region held the promise of being an engine of economic growth in its own right worth somewhere north of $120 billion.

Unfortunately it was also mired in parochial biases and competing interests that served to quench any fire for success.

A fraction of its value

Cliffs Natural Resources (NYSE: CLF ) was once thought to hold the key to unlocking its potential, but after suspending work in 2013 on its $3.3 billion Black Thor chromite deposit, it gave up all hope of the region ever being developed and began an orderly exit from Canada. That culminated earlier this week with the sale of all of its chromite projects to one of the Ring of Fire’s other interested parties, Noront Resources (NASDAQOTH: NOSOF ) .

Six years ago the two had engaged in a protracted bidding for the rights to the chromite properties with Cliffs emerging victorious and agreeing to pay about $240 million.

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Cliffs Natural Resources-Noront Resources deal puts new Sudbury smelter in limbo (CBC News Sudbury – March 24, 2015)

http://www.cbc.ca/news/canada/sudbury

Smelter plant hinged on yet to be negotiated power rates, tax dollars to access Ring of Fire

A proposal for a new smelter in Sudbury has been pushed further into limbo after Cliffs Natural Resources announced a deal to sell off its Ring of Fire assets.

The Cleveland-based company said Monday it had entered into a definitive agreement with Noront Resources to purchase its chromite deposits and associated claims for $20 million.

Then Sudbury MPP Rick Bartolucci announced in 2012 that Cliffs would be building a smelter in Capreol, north of Sudbury, to process the chromite it mined in the far north — along with hundreds of jobs. The company even started taking job applications.

However, the new plant hinged on yet to be negotiated power rates, as well as tax dollars, to access the remote Ring of Fire. Neither issue has been settled since. With the sale of Cliffs’ chromite assets and associated claims to Noront Resources, the ball is effectively in Noront’s park.

However, CEO Al Coutts said the company is focusing on mining at this point — not smelting.

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Crummy chromite investment – by Kip Keen (Mineweb.com – March 24, 2015)

http://www.mineweb.com/

Cliffs exits the Ring of Fire.

So ends Cliffs Natural Resources’ adventure in Northern Ontario with the miner announcing that it has a buyer for its Canadian chromite projects. It was an expensive one.

A half-decade ago Cliffs paid some C$350 million in cash and shares to buy majority control of a series of then newly discovered chromite deposits. They were heralded as world-class with potential to supply the North American steel markets especially.

In 2009 and 2010 Cliffs struck deals to buy the juniors involved in the discoveries. It bought Freewest Resources for about C$240 million (in shares at the time). Then it bought up Spider Resources in 2010 for C$125 million (cash).

These were the juniors that put the region on the map – the so-called Ring of Fire. The potential was often billed as huge – a nebulous ~$60 billion or so in deposit value.

The region garnered promises from the Ontario government especially for major spending on infrastructure. For it was remote and would require new road access hundreds of kilometres long through bush and First Nations territory.

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Noront president doesn’t rule out ferrachrome smelter for Thunder Bay – by Leith Dunick (tbnewswatch.com – March 23, 2015)

http://www.tbnewswatch.com/default.aspx

The president and CEO of Noront Resources is not ruling out a ferrachrome smelter landing in Thunder Bay. Alan Coutts on Monday said Monday nothing is written in stone, after his company spent $20 million to acquire more than 100 claims previously owned by a pair of Cliffs Natural Resources subsidiaries.

Cliffs had originally said Sudbury was its preferred location for the processing plant. “We haven’t settled on anything yet,” Coutts said in an interview with CKPR Radio, adding there is no guarantee the facility will even be built in the province.

“We would like to see that upgrading of the chrome wars happen in Ontario, but a smelter is a big investment. It’s a very energy-intensive process and you’d need to see some really good electricity rates as well.” Coutts said he plans to speak to the province about energy cost, but it’s far too soon in the process for nay firm decisions.

“But we’re looking at this from a fresh viewpoint and all options are open, essentially.” Noront is on record favouring an east-west corridor being built into the Ring of Fire, which would link to the project via Pickle Lake.

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Shaft Sinkers shakes off sinking feeling – by Allan Seccombe (Business Day Live – March 19, 2015)

http://www.bdlive.co.za/

SHAFT Sinkers, the essentially South African mine shaft development company, is poised to rise from near financial ruin, but it is unclear whether shareholders will benefit from the recovery.

It has put its main South African operating subsidiary into business rescue, after £10m in legal fees and a five-month platinum strike last year crippled the company and threatened to drag down the entire London-listed entity, which has valuable projects in India, the Democratic Republic of Congo, Kazakhstan and SA.

It has lost four, big shaft-sinking contracts in the local platinum sector, with Impala Platinum terminating three of those and Royal Bafokeng Platinum the fourth.

With the problematic South African company ring-fenced, Marius Heyns, previously CEO of construction company Basil Read for a decade, plans to resurrect the business by focusing on the mining subsidiary. Mr Heyns is executive chairman and acting CEO and chief operating officer.

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The platinum story nobody is talking about – by Patrick Cairns (Mineweb.com – March 9, 2015)

http://www.mineweb.com/

Reasons for optimism.

Most investors currently view South Africa’s platinum industry with a huge amount of scepticism. Platinum stocks on the Johannesburg Stock Exchange have been shedding value in an environment where their balance sheets are deteriorating and free cash flows are close to zero.

Impala Platinum and Anglo American Platinum have both announced that they are looking to sell non-profitable mines. Glencore also recently told its shareholders that it will be unbundling its stake in Lonmin, which suggests that there is little hope for finding a buyer.

This is all taking place at a time when the prices of platinum group metals (PGMs) have remained depressed, with even the CEO of Impala Platinum, Terence Goodlace, recently commenting that he expects above-ground stocks to keep the platinum price low for another two to two-and-a-half years. On top of this, the seemingly hostile labour environment, power shortages and regulatory uncertainty make South Africa’s platinum mining sector appear like a place few would fear to tread. However, there is another side to the story.

Consider that 35 kilometres north west of Rustenburg, there are three new platinum mines being developed on the western limb of the Bushveld Complex. In total, $3.5 billion worth of capital is going into these ventures, which are all more or less within eyesight of each other.

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Platinum in Your Car Set to Shrink Shiny Stockpiles: Commodities – by Andre Janse Van Vuuren (Bloomberg News – March 5, 2015)

http://www.bloomberg.com/

(Bloomberg) — Shrinking platinum stockpiles, growing demand from carmakers and new uses being trotted out in the energy field are stoking producers’ expectations that prices of the metal are poised to rebound from a five-year low.

Production of the shiny metal, used for jewelry and in catalytic converters in cars, will fall short of consumption this year by about 500,000 ounces, according to a January estimate by Credit Suisse Group AG. That’s prompting industry leaders to debate how long it will take for buyers to use up reserves and start paying more for a less available product.

Platinum is “in its strongest position” in a decade, said Chris Griffith, chief executive officer of Johannesburg-based Anglo American Platinum Ltd., the industry’s largest producer. “The fundamentals are that demand is increasing.”

Griffith said he believes prices will begin trending upwards relatively soon. Meanwhile, Terence Goodlace, CEO of Impala Platinum Holdings Ltd., the second-biggest producer, sees increases further out, estimating it will be two to 2 1/2 years for excess supplies to be depleted, with prices starting to recover in the second half of next year.

“The above-ground stocks for us is still a very, very big thing,” Goodlace told reporters at a media round table.

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Platinum CEOs say mechanisation not a panacea – by David McKay (MiningMx.com – February 27, 2015)

 http://www.miningmx.com/

THE mechanisation of mines has become a buzzword in the South African mining sector construed as something of a panacea for investors especially in the platinum sector where estimates suggest two-thirds of production is still cash negative.

For unions, however, mechanisation implies looming job cuts. According to Chris Griffith, CEO of Anglo American Platinum (Amplats), the Anglo American listed subsidiary, mechanisation is neither quite of these things entirely, although he acknowledges there’s a long-standing debate on the effect of mechanisation and the impact on jobs.

“[I]t is common cause that better productivity is better for the economy,” said Griffith in a presentation at the Mining Indaba conference earlier this month. “Jobs don’t get lost – they get created in new areas,” he said, adding that mechanisation was “… a social and economic imperative”.

Tell that to Lonmin shareholders who witnessed the efforts of former CEO, Brad Mills, who pioneered mechanisation from about 2007 at the group’s operations with the intention of taking mining costs down to 35% of total costs from 65% at that time. It failed and cost him his job.

Said Griffith in an interview with Miningmx: “Mechanisation is not universal panacea; sometimes it’s not the solution. At Lonmin, it was at an early stage of mechanisation but we’ve had a long history since then.

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Global ferrochrome market to be in 11,000-mt deficit in 2015: Yildirim – by Mayumi Watanabe (Platts.com – February 25, 2015)

http://www.platts.com/

Tokyo (Platts) – The global ferrochrome market will be in a deficit of 11,000 mt, as demand from the stainless steel sector outgrows production, Turkey’s Yildirim Group said Wednesday.

Yildirim’s subsidiary, ETI Krom, is the world?s largest high-grade lumpy chromium ore producer and combined with Vargon Alloys in Sweden, is the world’s second-largest high-carbon ferrochrome producer, according to the group’s website.

Global charge chrome and high carbon ferrochrome production in 2015 is expected to rise by 4% from 2014 to 11.69 million mt in total, slowing from the previous year’s 8.8% growth, Yildirim said in a research report. Production in 2014 was 11.23 million mt, it added.

China’s production fell by 330,000 mt in the second half of 2014 from the fist half, triggered by slowing demand from the steel sector. China’s production as a result was 4.4 million mt in 2014, up 10% from 2013.

In 2015, China is expected to produce 4.5 million mt, up a marginal 2%, Yildirim said. Production outside of China is seen at 7.2 million mt in 2015, up 5.2% from 2014.

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UPDATE 2-Glencore to spin-off Lonmin stake, cut spending to counter price rout – by Silvia Antonioli (Reuters U.S. – February 12, 2015)

http://www.reuters.com/

CAPE TOWN, Feb 11 (Reuters) – Miner and commodities trader Glencore will spin-off its stake in troubled platinum producer Lonmin and cut capital spending to help it cope with a plunge in commodity prices, it said on Wednesday.

Like peers, Glencore has been hit by a rout in prices of commodities such as copper, coal and oil in recent months. Its shares have fallen by about 9 percent this year.

“What this feels like to me is that Ivan (Glasenberg, Glencore’s CEO) is trying to get ahead of the story again, to make himself look proactive and everyone else reactive,” said Bernstein analyst Paul Gait, who rates Glencore “outperform”.

“Both of those measures fit the same strategic goal from a Glencore perspective: to show leadership, like they did with the buyback.” Last year Glencore was the first mining firm to deliver on promises to return cash to shareholders.

Responding to what it called a “volatile market backdrop,” Swiss-based Glencore said it would cut “sustaining and expansionary” capital spending for this year to $6.5-$6.8 billion, with reductions across its businesses. In December, it had forecast spending of $7.9 billion this year.

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Platinum fuel cells to power five-million Japanese homes – Ivanhoe – by Martin Creamer (MiningWeekly.com – February 11, 2015)

http://www.miningweekly.com/page/americas-home

CAPE TOWN (miningweekly.com) – Japan was building platinum-using fuel cells to provide clean electricity and heat to 5.3-million homes, Ivanhoe Mines executive chairperson Robert Friedland told the Mining Indaba on Wednesday.

Japan was also planning to run the Tokyo Olympics on fuel cells to showcase the arrival of the hydrogen economy. It had also become mandatory for all Japanese government cars to be hydrogen fuel cell driven to ensure cleaner air, which was a growing imperative in a world where 66% of people would be living in cities by 2050.

Platinum-group metals (PGMs) were absolutely critical to having cleaner air, Friedland said in outlining the progress being made at Ivanhoe’s rich Platreef PGMs and nickel project on the northern limb of the Bushveld Complex in South Africa’s Limpopo province, where Japanese government agencies are 10% shareholders.

To show the growing use of PGMs in everyday products, he flashed on to a large screen pictures of fuel-cell driven Toyota and Honda cars as well as fuel-cell-powered smartphone chargers, before going on to provide detail on Ivanhoe’s upcoming Platreef project, where a Stage 2 drilling programme has firmed up 78-million ounces of mechanically mineable PGMs and substantial nickel at a depth of 700 m.

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Mining in Albania [chromite mining] by Christopher Ecclestone (Investorintel.com – February 10, 2015)

http://investorintel.com/

Albania – Not Quite the Land that Time Forgot: In the not too distant past, with one of my other hats on, I was very involved with the mining scene in Albania. At the time I headed a company that desperately needed to diversify away from the mammoth country risk involved in doing business in Turkey (therein lies another story) and my glance turned to Albania for a couple of reasons.

Firstly it was a country with a very strong mining history (in fact its fate post-WW2 was directly linked to mining). Secondly, its major resource was chromite, for which I have a particularly soft spot (as evidenced by my recent writings on Tasman’s diversification into this metal). Thirdly it is geologically governed by the Eastern Ophiolite Belt which is a spur of the great Tethyan Copper Belt that stretches from the Carpathians in Slovakia, all the way through the Balkans, across, Turkey, Iran and ending in Afghanistan or Pakistan depending on your point of view.

I am more conflicted as to whether it is a positive or negative for the country that it is not currently a member of the EU.

Albania, with a population of approximately 3.5 million people, has had an open market economy since 1991 though the country’s potential (mineral and otherwise) remains largely untapped. The population of Albania is relatively young, (average age of 32) and the majority of people speak English, Greek and/or Italian. There is an ongoing effort in the country to improve infrastructure, sanitation facilities and wealth creation amongst its population as part of an overall bid to eventually join the European Union.

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Palladium Is Rarer Than Gold and, Thanks to Cheap Oil, Now Rarer Still – by Laura Clarke (Bloomberg News – January 20, 2015)

http://www.bloomberg.com/

America’s renewed love affair with the automobile is tightening global supplies of palladium, a metal rarer than gold.

While each car requires only a few grams of palladium, demand in 2015 will probably exceed supply for a fourth consecutive year, according to Johnson Matthey Plc, a maker of catalytic converters for automobiles that use the metal to reduce harmful tailpipe emissions. Global car sales rose 3.4 percent last year to a record 81.6 million vehicles, Macquarie Group Ltd. said in a report last week.

The lowest oil prices in five years and cheap bank loans are helping to extend a rebound in automobile sales that began in 2009, boosting demand for everything from catalytic converters to Alcoa Inc. (AA)’s aluminum sheets and Goodyear Tire & Rubber Co.’s wheels. Even after palladium prices soared to a 13-year high in September, Morgan Stanley and Deutsche Bank AG remain bullish because car parts account for 70 percent of the metal’s use.

“Palladium is an exciting place to be because of its exposure to gasoline,” Scott Winship, a fund manager at Investec Asset Management, which oversees about $112 billion, said by telephone from London. “U.S. auto demand is incredibly strong and might even surpass previous peaks that we saw before the financial crisis.”

Palladium, used mostly in gasoline-fueled vehicles that dominate markets in North America and China, is approaching a bear market after falling 3.3 percent this month to $770.75 an ounce in London.

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