MINEX Forum

Tag: mining

  • Mining Boom in Southeast Europe Sparks Global Interest and Sustainability Initiatives

    Mining Boom in Southeast Europe Sparks Global Interest and Sustainability Initiatives

    The Western Balkans and the broader Southeast Europe region are emerging as hotspots for international mining companies, drawing attention with their abundant mineral resources ranging from copper and gold to lithium and coal. As global demand for minerals intensifies, these regions are not only pivotal for traditional industrial needs but also play a crucial role in the green transition. International mining companies, including those from Canada, China, Russia, and the United Kingdom, are actively involved in exploration, new project development, and the modernization of existing mining operations.

    Market Presence

    Key players, such as Rio Tinto, known for its involvement in Serbia’s Jadar lithium project, and Zijin Mining, investing in the Čukaru Peki copper and gold mine in Serbia, showcase the region’s appeal to major global entities. Lydian International’s engagement in the Amulsar gold project in Armenia and Eldorado Gold’s Canadian investments in Greece further underline the diverse interest in Southeast Europe’s mineral wealth.

    Trends

    The region is witnessing a heightened focus on metals essential for the green transition, including lithium, nickel, and copper. With global shifts towards electrification and renewable energy, the Western Balkans becomes a focal area for exploration and investment. International companies not only explore new projects but also invest in modernizing existing operations to enhance efficiency, reduce environmental impact, and extend mine life. Scrutiny on environmental and social impacts is growing, prompting companies to adopt higher standards for community engagement, environmental protection, and corporate social responsibility.

    Regional Stability and Investment Climate

    The political and economic stability of the Western Balkans and Southeast Europe significantly influences international mining investments. Efforts towards EU integration and improved governance are positive signals for investors looking to establish a lasting presence.

    Perspectives

    The mineral resources of the Western Balkans hold strategic importance for Europe’s ambition to secure critical raw materials. Geopolitically, this aspect continues to drive international interest in the region. While the area presents substantial opportunities, challenges related to regulatory frameworks, environmental and social governance, and infrastructure must be addressed to unlock its full potential. Moreover, there is a unique opportunity for the region to leverage international investment for sustainable development, emphasizing green mining practices, community development, and contributing to the energy transition.

  • Korean Geologists Uncover $15.7 Billion Lithium Deposit in Kazakhstan

    Korean Geologists Uncover $15.7 Billion Lithium Deposit in Kazakhstan

    Korean Institute of Geoscience and Mineral Resources (KIGAM) reveals plans to exploit a lithium deposit in eastern Kazakhstan, covering an area of 1.6 square kilometers, as reported by Orda.kz citing The Korea Times. The region, previously mined for tantalum, has resources estimated at around $15.7 billion. KIGAM, responding to Kazakhstan government’s request, studied the area since May last year, considering the significance of tantalum coexisting with lithium and cesium. Lithium, a crucial mineral for electric vehicle and modern industries, is a key component in batteries. KIGAM aims to apply for drilling rights in the region, intending to commence lithium extraction next year.

  • Kazakhstan Canada Business Council Strengthens Ties at PDAC 2024 Convention

    Kazakhstan Canada Business Council Strengthens Ties at PDAC 2024 Convention

    The 6th plenary session of the Kazakhstan Canada Business Council (KCBC) unfolded within the framework of the annual international Prospectors & Developers Association of Canada (PDAC) 2024 Convention. Co-chaired by Mr. Meirzhan Yussupov and Mr. Tim Gitzel, representing Kazatomprom and Cameco Corporation respectively, the session fostered collaboration on key sectors.

    Preceding the plenary, three working groups convened in January and February, engaging over 250 participants in discussions on mining and metallurgy, agriculture, and education. Government and business representatives explored current challenges, cooperative solutions, priority areas, and potential projects to boost mutual trade and investment.

    With over 150 delegates from Canadian and Kazakhstani business circles, the plenary session covered diverse topics, including energy security, carbon neutrality, environmental sustainability, corporate governance, trade, investment attraction, and education. Led by Honourable Kanat Sharlapayev and Honourable Ahmed Hussen, the Kazakhstani and Canadian delegations emphasized bilateral cooperation.

    In the first panel, co-chairs Gitzel and Yussupov delved into uranium industry development, energy security, and environmental sustainability. Yussupov highlighted Kazatomprom’s global energy security contribution, while Gitzel underscored Cameco’s 35-year leadership and commitment to ESG issues. The discussion explored strategies for achieving net-zero emissions, reflecting on the future of both companies and the KCBC.

    Working group reports by Yerlan Galiyev, Margaret Skok, and Alibek Sagidulla addressed mining, education, and agriculture respectively. Representatives from JSC “NC “KazakhInvest,” Export Development Canada, and the government of Alberta contributed to the event.

    A dedicated session focused on the education sector, where Vice Minister Darkhan Akhmed-Zaki outlined Kazakhstan’s plans to establish an academic hub for higher education. The event concluded with a Networking Reception.

    The KCBC, a vital platform for Kazakhstan-Canada business relations, expressed gratitude to the Canada-Eurasia Chamber of Commerce (CECC) for organizing the event, supported by the Canadian and Kazakhstani Embassies and companies like Lotz & Company, Teck Resources, SIMSA, and Techgarden.kz.

  • Rio Tinto Takes Cautious Approach to Lithium Amid Price Volatility

    Rio Tinto Takes Cautious Approach to Lithium Amid Price Volatility

    Rio Tinto remains cautiously optimistic about the future of lithium, driven by increasing demand for batteries in electric vehicles, but CEO Jakob Stausholm has indicated that the company will not pursue major acquisitions in the sector. Instead, Rio Tinto plans to focus on improving lithium extraction technology, as reported by Reuters.

    While acknowledging the growth potential of lithium, Stausholm emphasized the volatile nature of the metal’s price. Despite this, Rio Tinto, known primarily as the world’s largest iron ore producer, is among the few major mining companies investing in lithium. In contrast, competitors like BHP have refrained from significant investments in the electric vehicle battery sector.

    The recent decline in demand for electric vehicles has led to a significant drop in lithium prices, with Benchmark Mineral Intelligence reporting an over 80% decrease in lithium prices over the past year. This downturn has forced many producers to halt production and cut jobs.

    Speaking at the annual Prospectors & Developers Association of Canada (PDAC) conference in Toronto, Stausholm reiterated Rio Tinto’s stance on the volatile nature of battery material prices.

    Rio Tinto’s current lithium projects include the Rincon project in Argentina, where the company plans to construct a lithium carbonate plant with an annual capacity of 3000 tons for battery production, expected to commence by the end of 2024. Additionally, Rio Tinto owns the Jadar lithium project in Serbia, although the project has faced challenges after Serbia revoked its license in 2022 due to environmental concerns.

    Stausholm also expressed optimism about decreasing inflation in Western countries, foreseeing potential cost stabilization for the company in the upcoming year.

  • Polymetal clarified the timing of the launch of underground mining at the Bakyrchik gold deposit

    Polymetal clarified the timing of the launch of underground mining at the Bakyrchik gold deposit

    It will begin in 2035, and preparations for it five years earlier.

    Polymetal will switch to underground mining at the Bakyrchik gold deposit in the Abay region in 2035. The head of the company, Vitaly Nesis, announced this during an online conference on production results for 2023 and its fourth quarter. Open pit mining at Bakyrchik has been carried out by Polymetal under the auspices of the Kyzyl project since 2018.

    “We planned to actually start underground ore mining at Bakyrchik in 2035. But the project itself will begin in 2030 in terms of building the surface infrastructure for the underground mine and the development workings that will be required to access the ore. I think it will last more than four years. Thus, despite the fact that from the point of view of total capital expenditures, the expenses will be very significant – presumably the current estimate is $200-250 million, they will not be critical from the point of view of the amount of total capital investments,” explained the head of Polymetal, commenting on the issue in business. kz.

    Let us remind you that earlier the media reported that Polymetal intends to begin the underground mining stage at Bakyrchik in 2030, in addition, other dates were announced – 2031.

    During his speech at the online conference, Vitaly Nesis also said that in addition to searching for objects for subsoil use in Kazakhstan, where the company may be interested in deposits of base metals – copper, zinc, lead, tin, Polymetal is now engaged in a country analysis of possible projects in Tajikistan. A similar assessment has already been carried out for Uzbekistan and Kyrgyzstan, however, nothing suitable has been found there yet.

    As is known, Chinese companies dominate the mining sector in Tajikistan. More than ten years ago, Kazzinc tried to enter there through a tender for the Bolshoi Konimansur silver deposit. This spring, Polymetal management plans to travel to the mountainous republic again to visit subsoil use facilities; perhaps, already in the third quarter it will become known about any projects in this country.

    As for Russian assets, the gold mining company plans to part with them by the end of the first quarter, as was promised to the Kazakh authorities; now there is a potential buyer for this within the Russian Federation. In Russia, the company continues to have difficulties with the sale of finished product reserves; a significant tightening of control over the export of precious metals has led to the accumulation of concentrates from Kyzyl, Albazino, Nezhdaninsky, Vorontsovsky and Maysky in seaports, Polymetal indicated in a release for the past quarter.

    “Our Russian subsidiary continues to make efforts to convert inventory into sales in Russia, which also affects sales from Kazakhstan, since a significant portion of the concentrate from Kyzyl is sold as a mixture with pure Russian concentrate. As a result, we are seeing an accumulation of concentrates from Kyzyl, Albazino, Nezhdaninsky, Vorontsovsky and Maysky in all directions in seaports. We continue to hope that this issue will be resolved in the first half of this year, obviously with a particular focus on Kyzyl. We inadvertently expect that the concentrate from Kyzyl this year will be much purer and will not require as much mixing as in 2023,” said Vitaly Nesis during a conference call.

    Let us remind you that high-carbon concentrate from Kyzyl is exported to China. In October, inbusiness.kz wrote that Polymetal faced logistical challenges when delivering gold-containing raw materials from Kyzyl to the Far Eastern harbors.

    It should be noted that in 2023, production at Kyzyl decreased to 316 thousand ounces of gold, 4% less than the 2022 production figure of 330 thousand ounces. The company explains this by a decrease in the content of precious metal in the ore of the deposit. When switching to underground mining, it can increase by 20-25%, Nesis believes.

    The decline in production at the Varvarinsky hub in the Kostanay region was even greater – by 20% from 211 thousand ounces in 2022 to 169 thousand ounces in 2023, which “is due to the lower content of Komarovsky ore in the cyanidation area and a decrease in the share of high-quality third-party ore in raw materials at the flotation section,” as specified in the Polymetal release. In total, the company produced 486 thousand ounces (approximately 15.1 tons) in Kazakhstan last year, which can hardly be called achieving the previously planned figure of half a million ounces. By the way, in the context of the unclear prospect of the withdrawal of capital expected from the upcoming sale of Russian mines and the planned capital expenditures for the Irtysh MMC, Polymetal was not able to completely free itself from the debt load of its Kazakh assets – at the end of 2023 they reached $171 million.

    Meanwhile, the cost of gold production in Kazakhstan began to be strongly influenced by tariffs for electricity and freight transportation by rail, growing from year to year.

    “The Company expects cash costs (TCC) of US$ 900 – 1,000 and all-in cash costs (AISC) of US$ 1,250 – 1,350 per gold equivalent ounce. The increase compared to the previous year is mainly due to a sharp increase in tariffs for electricity and rail transportation in Kazakhstan,” the final release states.

    Commenting on the publication’s questions about how the growing tariffs of KTZ and the electric power industry will affect the cost of production in Kazakhstan in the next five years, Vitaly Nesis noted that the company is not particularly trying to analyze tariffs on the railway due to uncertainty, but in energy supply it plans ensure your own generation.

    “From an electricity perspective, we believe tariffs will rise in real terms by at least 20% per annum over the next five years. Therefore, we continue to invest in our renewable energy facility: solar energy plus gas (gas piston station – approx.) at Varvarinsky, and then we have plans to do the same at Kyzyl. The only way to avoid significant increases in electricity prices in Kazakhstan is to switch from expensive coal power to renewable energy sources, which are much cheaper and more environmentally friendly, and this is our strategy in this regard,” Nesis noted.

    PS This material was adapted on February 2, 2024 at 18.30 after receiving updated information that the subsoil use contract for the Bakyrchik gold deposit was extended until December 31, 2030.

  • The Ministry of Industry of Kazakhstan has published several subsoil use contracts

    The Ministry of Industry of Kazakhstan has published several subsoil use contracts

    The Ministry of Industry and Infrastructure Development of Kazakhstan has published several electronic versions of subsoil use contracts, particularly for solid minerals, for the convenience of subsoil users. This documentation is available on the ministry’s website without detailed appendices, such as work programs, according to inbusiness.kz.

    Since the beginning of June, the relevant ministry has published 12 subsoil use contracts, including those for gold extraction at the Maikain “C” deposit (Pavlodar Region), copper-molybdenum ores at the Shatyrkul deposit (Zhambyl Region), copper and polymetallic ores at the Sokyrkoy deposit (Karaganda Region), gold-copper-polymetallic ores at the Abyz deposit (Karaganda Region), polymetallic ores at the Akbastau deposit (now Abay Region), copper ores at the Konrad, Sayak-1, and Tastau deposits (Karaganda Region), copper-containing ores of the Zhilandy group deposits (now Ulytau Region), polymetallic ores at the Kosmurun deposit (now Abay Region), the development of the Zhezkazgan copper ore deposit (now Ulytau Region), exploration and extraction of copper, gold, and associated metals on the territory of the Zhezkazgan Basin within the Sorukduk-Zhartas, Prisarysuisky, and Zhaman-Aibat sites (now Ulytau Region), exploration and development of the Nurkazgan gold-copper ore deposit (Karaganda Region), as well as exploration of copper, gold, and by-product components in the Spasskoye copper ore zone (Karaganda Region).

    In the press service of the Ministry of Industry, inbusiness.kz explained that the contracts are being published at the request of the Subsoil Use Department to facilitate the use of subsoil resources.

    Earlier in July, echo.kz reported that the former Ministry of Industry and Infrastructure Development had begun publishing subsoil use contracts for solid minerals. These contracts were disclosed with tracking changes but without appendices, according to the public association “Echo.” At the beginning of June, 11 subsoil use contracts for solid minerals were disclosed at that time.

    Civil society in Kazakhstan, particularly those involved in the Extractive Industries Transparency Initiative (EITI), played an important role in the publication of this data. They have engaged in negotiations with representatives of government bodies for a long time, advocating for the publication of contracts in line with the requirements of the EITI and Kazakh legislation, according to a statement from the non-governmental organization.

    Based on publicly available information, Kazakhstan has hundreds of subsoil use contracts for solid minerals, so the Ministry of Industry and Infrastructure Development still has a substantial amount of work ahead to publish them. The correspondent from inbusiness.kz could not find any published contracts for uranium, oil, and gas extraction on the Ministry of Energy’s website.

  • Kazakhstan cancels contracts for gold and titanium deposits development

    Kazakhstan cancels contracts for gold and titanium deposits development

    The Ministry of Industry and Infrastructure Development in Kazakhstan has recently shared information regarding the termination of 107 subsoil use contracts. The data, provided by LS in response to an editorial request, sheds light on the reasons behind these cancellations, with 29 contracts ending due to the expiration of subsoil use rights, four through mutual agreement, and 74 being terminated ahead of schedule due to non-compliance with obligations. It is worth noting that all these companies are residents of Kazakhstan.

    In the Akmola region, 15 contracts have been terminated, with seven expiring naturally and eight being terminated ahead of schedule. These contracts involved the exploration and extraction of various resources, including gold, iron, manganese, and solid mineral formations.

    The Karaganda region witnessed the premature termination of 16 contracts. Among them were deposits such as Koktenkol, Kaskyrkazgan, Itmurindy, Kozhattauskoye ore field, Mystobe, and others. Subsoil users in this region were engaged in the search for and extraction of resources such as tungsten, molybdenum, copper, gold, silver, coal, chrysoprase, jadeite, and more. Additionally, 11 contracts have expired in this region, including those related to deposits like Aktas-1 and 2, Tamdy-Sainbulak, Northern and Southern squares, Kyzyl Kazan-1, Borsheuken Akkens, Tesiktas, Borly, and Atbas.

    The document for the East Balkhash-1 deposit, located in the Karaganda and East Kazakhstan regions, has also expired.

    In the East Kazakhstan region, one contract for the Khamir square was mutually terminated, while 12 contracts were terminated ahead of schedule. These contracts pertained to the exploration and extraction of polymetals, gold, copper-molybdenum ores, coal, and other resources.

    The Kostanay region saw the premature termination of agreements for the Mayatas (gold, silver, platinum, copper, lead, zinc, yttrium, and rare metals), Eltay-4 (iron), Kutukhinskoye (gold), and Shevchenkovskoye (nickel, cobalt) deposits.

    In the Pavlodar region, three contracts were terminated ahead of schedule, involving coal and gold.

    The Aktobe region witnessed agreements with subsoil users on three documents, while another six contracts were terminated. These contracts were associated with the exploration and extraction of resources such as gold, bauxite, copper-porphyry ores, and phosphorites.

    The premature termination of the subsoil use contract for the Shugul deposit (potassium salts) occurred in the West Kazakhstan region. Similar actions were taken against subsoil users of four deposits (mineral salts) in the Mangystau region.

    In the Almaty region, the terms of three contracts for the Predgorny Ketmen, Dalabai, and Utegen-2 deposits have expired, and three more contracts were terminated ahead of schedule. Gold, silver, and copper were among the resources being searched for and extracted in this region.

    In the Zhambyl region, 12 contracts have been terminated, with five expiring naturally and seven being terminated ahead of schedule. These contracts involved the exploration and extraction of resources such as gold-bearing and barite ores, silver, gold, polymetals, iron, alluvial gold, coal, titanium, gold, and lead-zinc ores.

    Furthermore, four contracts were terminated ahead of schedule in the Kyzylorda region, where subsoil users were working on deposits such as Jaxi-Klychskoye 2 and 3 (sodium sulfate), Koskol (copper-gold-bearing ores), and Ak-Espe area (titanium-zirconium).

    In the Turkestan region, six subsoil use contracts have been terminated ahead of schedule since the beginning of 2022. Two of them expired naturally, and the remaining three were terminated prematurely. The resources being explored and extracted in these contracts included iron-copper ores, polymetals, barites, and iron.

    Additionally, two contracts were prematurely terminated in the Ulytau region.

    The Ministry of Energy has also shared that since 2022, 35 subsoil use contracts have been terminated across various regions, namely Aktobe, Atyrau, West Kazakhstan, Mangystau, Kyzylorda, Zhambyl, and Almaty. The main reasons behind these terminations were the expiration of subsoil use contracts and the failure of subsoil users to fulfill their contractual obligations.

    Minister of Energy Almasadam Satkaliyev has previously highlighted that, since 2022, 29 contracts have been terminated, with debts amounting to 1.9 billion tenge being repaid for nine of them. The returned subsoil plots areput up for auction to attract investments, and electronic auctions have proven successful in this regard. In fact, in July, 11 subsoil plots were sold, fetching a signature bonus of 3.4 billion tenge. These auctions encompassed both exploration and production contracts, as well as production contracts alone.

  • Exploring Sustainable Mining and Resource Practices in Europe: Germany and Finland’s Venture into IMARC 2023 Down Under

    Exploring Sustainable Mining and Resource Practices in Europe: Germany and Finland’s Venture into IMARC 2023 Down Under

    Germany, a nation lauded for its technological excellence and dedication to ecological sustainability, stands at a crucial juncture concerning the trajectory of its mining and resources sector.

    Throughout history, mining has been a cornerstone of Germany’s economy. However, today, this industry grapples with an array of challenges that necessitate a harmonious approach. Balancing the imperatives of economic expansion, environmental preservation, and reducing dependence on foreign resources is of paramount importance.

    Germany, renowned for its technological prowess and commitment to ecological sustainability, stands at a critical juncture in shaping its mining and resources sector’s future.

    Throughout its history, mining has been a linchpin of Germany’s economy. Nevertheless, the sector now confronts an array of challenges that necessitate a harmonious approach. Striking a balance between economic expansion, environmental preservation, and reducing reliance on foreign resources has become imperative.

    Juergen Wallstabe, representing the German-Australian Chamber of Industry and Commerce, points out that although mining activities have waned across Europe over several decades, Germany has expanded its global presence in the resources sector. High-tech METS companies in Germany are increasingly exporting innovative and technologically advanced solutions worldwide.

    Wallstabe is optimistic that IMARC will provide a platform for established and emerging German firms to enhance their reputation for technological excellence and innovation.

    “Germany’s leading position in engineering and manufacturing has resulted in a world-leading METS sector,” Wallstabe emphasizes. “We are convinced that on the one hand, German METS companies can support the Australian and other mining industry operators to reach their targets related to safety, productivity, efficiency, and decarbonization. On the other hand, Australia is a valuable partner for Germany’s resources needs.”

    IMARC has been highlighting the industry’s environmental impact and its role in fostering a sustainable, decarbonized economy in recent years. A particular focus has been on the often-unwelcome legacy of mining operations, which have left lasting scars on landscapes, disrupted ecosystems, and polluted water sources.

    Wallstabe highlights that IMARC offers an opportunity to showcase how Germany’s emphasis on environmental protection has led to stringent regulations for mitigating these legacy impacts.

    “Germany’s commitment to remediating and restoring abandoned mining sites demonstrates our dedication to healing environmental wounds. IMARC offers a chance to share our experiences and learn from others facing similar challenges,” he notes.

    Energy security is back in the spotlight in Europe, partly driven by the ongoing conflict in Ukraine and the need for reliable energy supply. Germany’s ambitious Energiewende (energy transition) plan aims to phase out nuclear power and significantly reduce carbon emissions by promoting renewable energy sources. Consequently, the focus has shifted towards sustainable mining practices supporting the production of materials crucial for renewable energy technologies, such as lithium for batteries and rare earth elements for wind turbines and solar panels. This presents an opportunity for the mining sector to contribute positively to Germany’s energy transformation.

    Wallstabe notes, “To manage the energy transition, Germany’s and Europe’s need for critical minerals will increase dramatically for the foreseeable future. Australia is already and will continue to be a key player in securing a steady supply of critical minerals. Wind turbines need steel, copper, and strong magnets with rare earths minerals. Batteries consist of a wide range of critical minerals like Lithium, Manganese, Copper, Nickel, Cobalt, and the hydrogen industry needs Platinum, Iridium or Scandium. All resources that Europe struggles to produce in sufficient quantities.”

    IMARC spokesperson Paul Phelan underscores the significance of Germany’s strong representation at the event. He believes that delegates can anticipate a showcase of Germany’s renowned innovation, particularly within the mining sector.

    “It is clear that Germany’s public and private sectors are investing in the long term, with its research institutions and companies actively exploring novel technologies to enhance resource extraction efficiency, reduce environmental impacts, and improve worker safety,” says Phelan.

    “Automation, digitalization, and artificial intelligence are becoming integral to modern mining practices, enabling better resource management and reduced ecological footprints. IMARC offers an opportunity to witness how a technological giant like Germany is leading the way.”

    Germany’s mining industry, like that of other advanced nations, is closely linked to global supply chains. Ensuring ethical sourcing and responsible procurement of minerals from abroad becomes crucial in upholding the nation’s commitment to sustainability.

    Finland, on the other hand, adopts a different approach to secure critical minerals, emphasizing e-waste recycling. Birgit Tegethoff, Senior Advisor at Business Finland Australia, highlights Finland’s leadership in e-waste recycling, with companies like Metso pioneering hydrometallurgical battery black mass recycling.

    “The Finnish mineral industry has the circular economy heavily ingrained in its DNA, giving it a competitive edge in the global market. By increasing the use of recycled components in battery production, we can reduce the carbon footprint throughout our battery supply chain and lessen our dependence on international supply chains,” notes Tegethoff.

    Developing strategic international partnerships in the green minerals sector is a top priority for Finland. Ilkka Homanen, the head of the Finnish delegation, has extended an invitation to Australian research institutes and the broader resource industry to engage at IMARC 2023 and join consortia aimed at solving green minerals value chain challenges.

    Rolf Kuby, Director-General of Euromines, asserts that the issues facing Germany and Finland are not unique but are felt across Europe. He emphasizes the need to build a degree of open strategic autonomy and future-proof value chains.

    Phelan highlights Europe’s profound energy transformation in alignment with the EU’s sustainability and innovation goals. He believes that events like IMARC provide a platform for leading economies to secure their “resources resilience.”

    In addition to the Germany pavilion, a 90-minute German Program will be featured at IMARC 2023, curated by the German delegation and Chamber within the Global Opportunities Theatre.

    Other programs featured at the event this year include Canada, Australia, Mongolia, Ecuador, Chile, Saudi Arabia, Quebec, Ontario, and South Korea.

  • Europe’s Gabon-exposed stocks slide after military coup

    Europe’s Gabon-exposed stocks slide after military coup

    MILAN, Aug 30 (Reuters) – Shares in European oil producers, miners and other companies with large exposures to Gabon plummeted on Wednesday after a military coup raised concerns over their operations in the resource-rich African country.

    London-listed oil producer Tullow Oil (TLW.L) fell as much as 12% in afternoon trading, while French energy companies TotalEnergies Gabon (EGAB.PA) and Maurel et Prom (MAUP.PA) and miner Eramet (ERMT.PA) all dropped by more than 20% at one point.

    “Shares are reacting to concerns over the backdrop in Gabon,” said Investec equity analyst Alex Smith in London.

    Military officers in Gabon said they had seized power on Wednesday and put President Ali Bongo under house arrest, stepping in minutes after the state’s election body announced he had won a third term.

    France, Gabon’s former colonial ruler which has troops stationed in the African nation, condemned the coup.

    Eramet, the world’s No.1 producer of high-grade manganese ore thanks to its Moanda mine in Gabon, said it had suspended all operations in the country as a “precautionary measure”.

    The German share price index DAX graph is pictured at the stock exchange in Frankfurt

    The German share price index DAX graph is pictured at the stock exchange in Frankfurt, Germany, August 30, 2023. REUTERS/Staff/File Photo Acquire Licensing Rights

    Timber company Woodbois (WBI.L) also said production at its facilities in the Gabonese city of Mouila were suspended, sending its London-listed shares almost 16% lower.

    However, Assala Energy, which current owner Carlyle (CG.O) has agreed to sell to Maurel, said its oil production in Gabon was unaffected.

    Tullow Oil also told analysts its production was continuing as normal.

    “Note Gabon production represents around 20% of group production. However, assets are based offshore and importantly oil revenue is dollar denominated,” said Investec’s Smith.

    Gabon produces about 200,000 barrels a day (bpd) of crude oil, making it the second-smallest OPEC producer.

    Oslo-listed Panoro Energy (PENR.OL) and BW Energy (BWE.OL) were down 5% and 7%, respectively, and U.S.-based Vaalco Energy (EGY.N) fell 13.8%.

    According maritime sources, at least 30 commercial ships dropped anchor on Wednesday around Gabon’s waters.

  • Mongolia harnesses surging mining exports

    Mongolia harnesses surging mining exports

    HIGH commodity prices and rising coal exports are propelling economic growth in Mongolia, allowing the country to develop its robust mineral resources, expand its services sector, and invest in green agriculture and energy.

    Mongolia exported 31.7 million tonnes of coal in 2022, an increase in volume of 102 per cent, or 16 million tonnes, from 2021 and an increase in export revenue of 135 per cent, or US$6.5 billion, due to higher coal prices, according to data from the Mongolian Customs General Administration.

    These figures undergirded economic growth of 4.7 per cent in 2022, with Mongolia forecast to grow by 5.2 per cent in 2023.

    As the world’s largest landlocked country, Mongolia relies on China for roughly 80 per cent of its exports, 60 per cent of its imports and 40 per cent of its GDP. It exported 29.8 million tonnes of coal to China in 2022, which was up 104 per cent from 2021 and accounted for 94 per cent of Mongolia’s total coal exports.

    China’s economic recovery in the first quarter of 2023 is enabling Mongolia’s cross-border trade with its southern neighbour to return to pre-pandemic levels. Mongolia exported 13.8 million tonnes of coal – of which 13.5 million tonnes went to China – from January to March, for a total of US$2.2 billion, up 232.2 per cent year-on-year.

    In February Mongolia also started conducting coal-trading contracts through auctions on the Mongolian Stock Exchange, ending the practice of direct contracts with foreign buyers. Using so-called border prices that factor in transport fees, the new electronic trading platform brings transparency and ease to the coal export process.

     

    New rail connections

    Recovery in coal exports has catalysed the construction of new railway projects to connect the country’s mines to the Chinese border.

    Last September Mongolia inaugurated a 233km railway from the Tavan Tolgoi coal field to the Chinese border that will have the capacity to transport 30 million to 50 million tonnes of coal to China per year and lower transport costs from US$32 per tonne using truck delivery to US$8 per tonne.

    In November the country commissioned the railway link from Zuunbayan to Khangi to transport coal, iron ore and other bulk commodities, including from multinational mining company Rio Tinto’s Oyu Tolgoi project.

    Several other shorter railway projects are also intended to facilitate cross-border trade with China.

    For instance, construction began in May on a 7.1-km railway from the Mongolia border point Shivee Khuren to the Chinese border, which is expected to be completed by October and will facilitate coal and copper shipments.

    Two other shorter border connections – from Gashuun Sukhait in Mongolia to Ganqimaodu in China and from Khangi to Mandula in China – are also mostly completed and will further facilitate cross-border trade.

    The construction of new railways is part of a larger strategy to link Mongolia to the broader region.

    In May 2023 China and Mongolia agreed on a series of economic and transport initiatives to bolster Mongolia as a trade route for China-Russia trade. Mongolia accounts for roughly 90 per cent of China-Russia freight, making a tri-nation economic corridor a key segment of Beijing’s Belt and Road Initiative.

    Mongolia relies on Russia for electricity, petrol, aviation fuel, liquefied petroleum gas and diesel, about 60 per cent of which comes from its northern neighbour. With the spike in prices since 2021, stronger links with its main energy supplier could improve its deficit.

     

    Diversification efforts

    In recent years Mongolia has taken steps to improve its domestic infrastructure to diversify its mining-based economy. Between 2016 and 2020 the government constructed a motorway system that connects all 21 provinces to the capital Ulaanbaatar.

    Western sanctions on Russia following its invasion of Ukraine in early 2022 led to difficulty importing key supplies, including food, as well as the loss of valuable airline navigation fees as airlines that formerly flew over Russia and Mongolia between Europe and Asia have been forced to fly over the North Pole or along a more southerly route.

    The conflict has caused a substantial rise in food prices, including for basic staples such as rice and flour, which are essential products for the country’s livestock herders.

    To address food insecurity and diversify its economy, the government is keen to encourage more foreign investment from China in non-mining sectors.

    In May Tuvdendorj Gendendorj, deputy minister of economy and development, called for greater investment in agriculture, including meat processing, dairy farming and raising goats for cashmere, as well as tourism.

    The agriculture sector reached a seven-year high of 12 per cent growth in 2022, supported by favourable weather conditions and increased livestock slaughter. The sector is forecast to grow by 0.9 per cent in 2023, 5.5 per cent in 2024 and 5.5 per cent in 2025, according to the World Bank. China may be incentivised to invest in agri-business in Mongolia given its rising demand for meat.

     

    Investment in sustainability

    Mongolia is also looking to harness green agri-business initiatives to address long-term food security. The Asian Development Bank (ADB) approved a US$448 million investment programme in March to support green and inclusive development.

    The programme seeks to promote a transformative model for green territorial development and green urban-rural linkages, with secondary towns becoming anchors of climate-smart agri-businesses that promote sustainable, resilient and low-carbon rangeland management. Rangelands cover more than 82 per cent of the country and are critical to the livestock industry.

    Another pressing concern is the intensification of the sandstorms originating in the Gobi Desert, caused by deforestation and higher regional temperatures. With China and Mongolia both suffering, the two countries have agreed to form a joint research team to study the problem this summer.

    Mongolia is also making a push into green energy. In April the country’s largest financial institution, Khan Bank, issued the first-ever green bond to spur the development of renewable energy, energy efficiency, green buildings, green mobility and climate-smart agriculture. The bond is valued at US$60 million, with the Dutch entrepreneurial development bank FMO providing US$35 million, the International Finance Corporation US$15 million and MicroVest Capital Management US$10 million.

    Although the country currently depends on coal and oil for more than 99 per cent of its energy needs, it has 12MW of installed hydropower capacity. In April Chinese engineering company PowerChina started construction on the 90MW Erdeneburen hydropower plant, which will provide power to five provinces in the western part of the country, with US$1 billion in financing from China.

    Mongolia’s vast tracts of rangeland offer ample space for solar and wind power. The country is estimated to have a combined wind and solar power potential of 2,600GW, more than enough to meet domestic demand.

    In 2020 the ADB loaned Mongolia US$100 billion to develop the country’s first utility-scale battery energy storage system, which should be ready in 2024.