SP Angel – Morning View – Friday 23 11 18
Manganese battery development by BASF
Alufer Mining – first bauxite shipment arrives in China
GoviEx Uranium (CVE:GXU) – Fully permitted uranium portfolio across Niger, Zambia and Mali
Lithium Australia (ASX:LIT) – Vertically integrated lithium technology company
Vision Lithium (CVE:VLI) – Junior spodumene lithium exploration company aiming to build off Nemaska asset
Solgold* (LON:SOLG) – Alpala mineral resource upgrade
Manganese / Nickel - BASF looking to manganese to replace nickel in longer term battery production
- In the scramble to secure long-term high-purity battery materials, Germany chemicals giant BASF is betting on a new recipe for rechargeable EV batteries which cut the dependency on nickel to help bring down costs and boost mass adoption.
- In rapidly evolving battery markets, majors including BASF and Belgium’s Umicore, are boosting the nickel content to allow more energy storage and replace expensive cobalt, which is largely mined from contentious sources in the DRC.
- But BASF are also developing plans to cut nickel content by more than half, while increasing the proportion of cheap and abundant manganese, the company report. The company envisage a cathode materials product made up of just 20% nickel and 70% manganese by 2021. The move is estimated to cut costs to just over $40/kWh of energy storage.
- The move follows a general trend of manufacturers lifting nickel content draw battery energy density – as Umicore highlight it has a leading position in high-nickel NMC-811, made up of 80% nickel, 10% manganese and 10% cobalt, and has said it is working to improve the product's durability over charging cycles and high voltage stability as well as focusing on recycling.
- Nickel, mostly used for stainless steel, costs about one fifth the price of cobalt. But BASF estimates that demand for high-grade nickel for electric vehicles will surge to 318,000t in 2025 from 25,000t in 2016. That would absorb 58% of global supply, in 2016 terms, compared with less than 5% in 2016.
- Materials suppliers as well as automakers, including BMW and VW, are wary of shortages and have been pursuing long-term supply contract security. Diversifying into manganese-dense batteries provides extra defence against nickel shortages and more flexibility against rising commodity prices.
Manganese prices are reported to be edging higher cif China this week as consumers look to restock ahead of the year-end
- Ferro-manganese prices are at Rmb7,300-7,500/t for 65% Mn in China.
- Higher grade 78% manganese grade concentrates rose in the US to US$1,300-1,375/t.
Antimony price falls 1.8% as traders offer into weak demand
- The Antimony metal price has fallen 1.8% to US$7,900-8,100/t into Rotterdam according to Fastmarkets MB.
- Antimony prices also fell in China by 0.7% to RMB50,000-50,500/t
- Antimony prices are now at their lowest level since August with little spot activity reported in the market.
- This is a difficult time for antimony producers with potential for further price erosion.
Ferro-vanadium prices pull back 1.9%
- Ferro-vanadium prices have come back 1.9% to US$130-135/kgV fob China.
- Vanadium prices are seen as taking a breather after hitting new high price levels last week.
Revolutionary Ionic wind plane takes first test flight in ElectroAeroDynamic flight
- A revolutionary electric plane that flies silently and has no moving parts has completed its first test flight, in what is being hailed as one of the most significant advances in flight since the early experiments of the Wright brother more than 100 years ago.
- The battery-powered plane, which was developed and tested by engineers at Massachusetts Institute of Technology in the US, is not kept in flight by propellers or a turbine but by an ionic wind system.
- Colliding electrically charged air molecules provide the thrust needed to make it fly, opening the door to new generation of emissions-free passenger aircraft and silent drones.
- The 16ft aircraft is completely silent.
Kevin the Carrot causes pre-Christmas chaos
- The toy carrots are being offered for sale EBay for £140 despite retailing in-store for £3.99.
- Pascal the Parsnip appears less popular, but then who would trust a parsnip called Pascal.
- Lesser known vegetables are Paolo the Potato, Carlos the Courgette, Stavros the Swede or Trevor the Turnip?
Dow Jones Industrials
HK Hang Seng
FTSE 350 Mining
AIM Basic Resources
US/China – The US urged its key allies to persuade local telecom companies to avoid using Huawei Technologies equipment on cyber security risks, the Wall Street Journal reports.
- The Company is the second largest maker of smartphones and is one of the biggest producers of equipment for running phone networks.
- US officials are said to have reached out to their counterparts and executives in countries including Germany, Italy and Japan hosting American military bases.
- The US has also suggested it may increase investments in telecommunications development in countries that shun Huawei equipment.
- While the Company is private, yield on the Company’s Eurobonds widened to the highest level since early July.
China – Tesla is reversing on its previous decision to hike prices for its EVs in China amid increasing competition in the market and slowing auto demand in the country.
- The automaker reduced its prices for Model S and Model X by 12% and 26%, respectively.
- “We are absorbing a significant part of the tariff to help make our cars more affordable for customers in China,” the Company said.
- The decision comes after Tesla guided it will raise prices by about 20% after the new tariffs on US imports have been announced in China undoing earlier cuts after the government lowered import duties on foreign vehicles.
Eurozone – Consumer sentiment weakened more than expected in the single currency zone as the index hit the lowest level since March 2017.
- Economic growth in the region slowed to the weakest pace in more than four years in the third quarter amid US/China protectionist policies and Brexit related uncertainty.
- Nov composite PMI hit near four year low with new business orders growth at the weakest since the start of 2015.
- Export orders recorded a second consecutive monthly decline across both manufacturing and service sectors.
- Employment growth meanwhile slowed in both sectors as well falling to a 22-month low overall with firms scaling back expansion plans amid weaker orders and gloomier prospects.
- The euro fell 0.3% on the back of poor economic news this morning.
- The ECB has been arguing the latest weakening economic data is a transitory matter and insisted on a gradual winddown of the QE programme.
UK – The UK and the EU have agreed a draft text for the Brexit agreement ahead of the summit due this weekend.
- The news helped the pound to climb nearly 1% on Thursday.
- The currency has been coming down since then with Spain threatening to withdraw support for the deal amid disputes over the future status of Gibraltar.
- The final Brexit draft excluded a previous clause that any post-Brexit agreement between the UK and the EU could only apply to Gibraltar if it was negotiated in a bilateral basis with Spain.
- A final deal will need to be approved by all EU member states and respective national parliaments.
South Africa – The rand climbed more than 1.5% on Thursday following the unexpected rate hike by the South Africa’s central bank.
- The benchmark rate was hiked by 25bp to 6.75% marking the first increase since 2016 against market forecasts for no change.
- The central bank has also lowered its economic growth estimates for this year (0.6%, down from 0.7%) while leaving2019-20 rates were left unchanged.
- Among risks to growth and the national currency SARB governor highlighted tighter global conditions, market volatility and a change in market sentiment towards emerging economies.
US$1.1385/eur vs 1.1406/eur yesterday Yen 112.86/$ vs 112.96/$ SAr 13.802/$ vs 13.914/$ $1.284/gbp vs $1.279/gbp 0.724/aud vs 0.724/aud CNY 6.945/$ vs 6.935/$
Gold US$1,223/oz vs US$1,228/oz yesterday
Gold ETFs 68.8moz vs US$68.8moz yesterday
Platinum US$844/oz vs US$846/oz yesterday
Palladium US$1,147/oz vs US$1,151/oz yesterday
Silver US$14.29/oz vs US$14.51/oz yesterday
Copper US$ 6,201/t vs US$6,254/t yesterday - Copper – concentrate market turning toward spot pricing (Fastmarets MB)
- Benchmark treatment and refining charges have been a feature of the Treatment & Refining ‘Tc/Rc’ market for as long as we can remember.
- But as with other markets, the trade in copper concentrates is now turning towards spot Tc/Rc pricing as the majors led by BHP shift to shorter-dated contracts.
- Concentrate Tc/Rc terms have fallen to US$80.8/8.08/lb for Antofagasta concentrates from the Los Pleambres copper mine which produces good quality concentrates.
- The pullback in Tc/Rc costs is symptomatic of the addition of copper smelting capacity in China and is despite the sudden and unexpected long-term closure of Vedanta’s giant Tutacorin smelter in India.
Aluminium US$ 1,945/t vs US$1,961/t yesterday
Nickel US$ 10,795/t vs US$11,025/t yesterday
Zinc US$ 2,545/t vs US$2,576/t yesterday
- Zinc prices remain propped up by bottlenecks at smelters across Asia, which has derailed an expected surge in refined zinc output following a clutch of new mine openings. Drastically falling prices have been temporarily halted, with benchmark zinc having tumbled over 35% in the seven months through mid-Sept, as the metals outlook is hurt by concerns global economic slowdown will hamper rustproof steel demand.
- Ytd losses currently sit around 20%, but are expected to be underpinned in coming months by issues that have cut refining capacity in China, India, South Korea and Australia. “The main problem is the low utilization rate at zinc smelters, especially at Chinese smelters, because they cut production in Q3 and early Q4”, according to CRU consultancy.
- China’s forced environmental cutbacks on waste output zinc slag and falling refined prices in the second quarter, prompted many smelters to cut production. “Some major smelters still need six months to stop their environmental problem, and then they can increase the utilization rate to full production capacity by May of next year”, CRU reported. “Prices will be supported in Q4 and next Q1 at least”.
- The extent of the backlog at Chinese smelters – accounting for half global zinc production – is reflected in a seven-fold surge in charges levied by smelters to refine ore into metal. Treatment charges have rallied from around $20/t of concentrate to more than $145/t; the highest in two years as rapidly rising mine supplies in Australia and South Africa have been lured onto the market by robust 2017 prices.
- Lower processing capacity in China has exacerbated an existing shortage of refined metal - reflected in the lowest zinc stocks in a decade at exchanges in London and Shanghai - along with production issues at plants elsewhere in Asia.
- Beyond the near-term tightness, analysts anticipate swelling mine supplies to trigger a gradual rise in refined metal output. Capital Economics add “we predict the price of zinc will fall further as more mine supply comes on stream. Chinese demand is also lacklustre owing to the slowdown in China’s manufacturing industry. As such we expect the price of zinc to fall to $2,300/t by the end-2019”.
Lead US$ 1,976/t vs US$2,002/t yesterday
Tin US$ 19,115/t vs US$19,320/t yesterday
Oil US$62.0/bbl vs US$63.0/bbl yesterday
Natural Gas US$4.247/mmbtu vs US$4.385/mmbtu yesterday
Uranium US$29.00/lb vs US$29.00/lb yesterday
Iron ore 62% Fe spot (cfr Tianjin) US$70.6/t vs US$70.6/t - Rio Tinto rolls out first heavy freight driverless rail network in outback
- Following the derailing of 238 wagons of iron ore in Australia earlier this month, Rio Tinto is rolling out the world’s first heavy freight driverless rail network in the Pilbara
- Three-quarters of its trains run without drivers as they carry ore from its network of 16 mines to ports, in a move that they are convinced is safer than driver-led operations.
- Rio Tinto expects to get close to 100% driverless trains by the end of the year.
- Let’s hope no teenage hackers don’t gain access to the system and start playing with Rio’s billion dollar train set.
Chinese steel rebar 25mm US$623.9/t vs US$627.2/t
Thermal coal (1st year forward cif ARA) US$83.9/t vs US$84.0/t
Coking coal futures Dalian Exchange US$197.5/t vs US$197.9/t
Cobalt LME 3m US$55,000/t vs US$55,000/t
China NdPr Rare Earth Oxide US$45,500/t vs US$45,569/t
Lithium - China Lithium carbonate 99% US$10,079/t vs US$10,094/t
- Unexpected difficulties to expand production at established major mine has Chile’s Soc. Quimica y Minera de Chile SA expecting lithium prices to remain firm into the fourth quarter. “The price that we have seen is a result of very strong demand, stronger than we originally anticipated, and also there has been a delay in some of the production promises”, CEO Patricio de Solminihac said during a conference call. “We are working with our customers for closure of contracts for next year, and so we don’t know yet what the direction of prices will be next year”.
- The world’s second-largest producer of lithium, a mineral essential to power electric vehicle batteries, reported third-quarter revenue and net income that missed analysts’ estimates as unexpected difficulties in ramping up an expansion project hit sales volumes. The delay will likely impact fourth-quarter volumes as well, with the company now expecting to sell about 45,000t of lithium in 2018, compared with the 55,000t estimate earlier this year.
- Benchmark Minerals note prices have retracted from all-time highs in May of $15,750/t to $14,375/t in October for lithium carbonate in South America, with prices expected to remain robust as demand is forecast to grow 25% this year.
- Difficulties in ramping up production capacity serves to highlight the complexities of the chemical processing, alleviating concerns of global oversupply reported earlier in the year.
Tungsten APT European US$275-295/mtu vs US$275-295/mtu
Bournemouth University develops new battery for wearable technology
- Bournemouth University, in collaboration with the University of Cambridge and China University of Geosciences, has developed a new method for improving battery life in wearable technology.
- The paper states that "the new architecture can be utilised as a binder-free electrode and presents extraordinary mechanical flexibility and outstanding electrical stability under external stresses".
- "The new method ... uses a novel 3D structure approach to bind the electronic materials to the clothing textiles," Associate Professor Amor Abdelkader from BU said.
- The new battery will be more effective than previous prototypes, while also being more sustainable and using less materials.
University of Delaware invention aims to improve battery performance
- A team at the University of Delarware has patented an idea to improve battery performance by introducing tapers into the polymer membrane electrolytes that allow the lithium ions to travel back and forth faster.
- Manipulating the taper also allowed the researchers to control the nanoscale structures that can be formed by the block polymers.
- By incorporating the tapers, Epps' team can create nanoscale networks that make the battery materials more conductive
Alufer Mining – first bauxite shipment arrives in China
- Alufer Mining run by Bernie Pryor and backed by Adonis Pouroulis have landed their first shipment of Bauxite in China.
- The Bel Air mine is due to produce 5.5mtpa of trihydrate bauxite 46% alumina
- The shipment of 203,009t delivered to Qingdao, China is destined for Chalco the Chinese alumina and aluminium producer.
- Several further shipments totalling 750,000t has been loaded, highlighting the project is well on its way to nameplate design capacity
- The shipments are destined for other customers and highlight the successful ship loading operation off the coast of Guinea.
GoviEx Uranium (CVE:GXU) C$0.18, Mkt Cap C$71.0m – Fully permitted uranium portfolio across Niger, Zambia and Mali
- Exploration and development of Africa-focused uranium portfolio, with aggregate holdings of GoviEx creating one of the largest uranium mineral resource bases among publicly-listed companies.
- Differentiating against peers, GoviEx’s key projects are already Mine Permitted with imminent development relying on improving fundamentals of the global uranium market and rising prices. The company are currently undertaking optimisation work of the process design and associated operating and capital costs of the flagship Madaouela project in Namibia, thereby reducing the incentive uranium price required to support project construction.
- The suspension of operations at the world’s largest uranium mine in February, Cameco Corp.’s McArthur River mine, and major cutbacks from the biggest national producer, Kazatomprom, have sparked a robust recovery in the market for the radioactive material; climbing +12% YTD.
- Demand, driven by global nuclear power capacity, faltered following the major Fukushima Daiichi power plant disaster in 2011. Since the energy source is deemed to be the only reliable, clean energy source to sustain swelling electrification requirements.
- More reactors are operating in 2018 than any other time in history. 55 projects are under construction, with a subsequent 151 planned. Consumption will be driven by significant growth in China, Japan and the Middle East as the nations move away from reliance on hydrocarbons.
- Optimisation work aims to feed into the DFS of the Madaouela project over the next 6 months, with the support of major shareholders including Canada’s largest listed uranium developer, Denison Mines, and Cameco Corp.
Lithium Australia (ASX:LIT) A$0.1, Mkt Cap A$45.0m – Vertically integrated lithium technology company
The suite of technologies owned by Lithium Australia drive sustainable developments throughout the looped energy-metal cycle:
- Converting mine waste to battery chemicals using SiLeach®
- Convert the chemicals to batteries using VSPC cathode powders
- Recycle the batteries to regenerate the chemicals RCARC
- Application of advanced technologies aims to capture waste streams as presently more lithium is discharged to waste streams than gets into the supply chain. Globally less than 10% of LiB consumption is returned for recycling.
- SiLeach technology relies on hydrometallurgical processing to efficiently digest and recover significant metal values from the minerals processed, and can be applied to a broad range of lithium feedstocks. While the method has yielded strong recoveries for lithium, it also generates significant by-product credits. Lithium Australia are advancing plans to develop a Large-Scale Pilot Plant in W. Australia relying on locally sourced lithium mica feedstock, targeting first production during 2020.
- Lithium Australia’s subsidiary, VSPC Ltd., has developed some of the world’s most advance cathode powders from its pilot plant operating in Brisbane, Australia. VSPC processing forms nano-scale complex metal compounds, utilising fewer steps than conventional cathode powder production, while enhanced control over particle size and composition yields improved performing materials.
- Expenditure of $30m and 15year development program has advanced Lithium Australia as the only Australian company manufacturing lithium-ion cells from primary materials. The company are progressing from end-user sample assessment in Sept. 2018 through to DFS in 2019.
- ‘Closing the loop’, Lithium Australia’s subsidiary, RCARC, employs pre-treatment of battery scrap to remove the polymer binders and recover a suite of energy metals. The company are currently finalising its hydrometallurgical flowsheet during the current calendar year with a view of pilot testing into the near future.
- The full synergy add enormous potential value to the recycled materials and provide a convenient shortcut back into the energy metal cycle.
Vision Lithium (CVE:VLI) C$0.14, Mkt Cap C$11.4m – Junior spodumene lithium exploration company aiming to build off Nemaska asset
- Acquisition of spodumene Sirmac Lithium asset from Nemaska Lithium, focused on a 1,500m preliminary drill programme consisting of 25 shallow holes targeting the main #5 Dyke outcrop zone. The best diamond drill holes returned indicate analogous dyke geological formation to flagship Whabouchi mine, with 22.4m @ 1.7% Li2O and 19.8m @ 1.6% Li2O.
- Vision Lithium have also announced exploration of a significant lithium mineralised dyke located more than 5km from the main No. 5 dyke. The zone appears to be several hundred metres in length and appears to host widespread spodumene crystals, the favoured lithium mineralogy due to simple processing to lithium hydroxide.
- Two grab samples from the area have been assayed with grades ranging 2.37% Li2O and 2.72% Li2O. A follow up channel sampling programme on the exposed area is underway to understand the extent of mineralisation, and subsequent exploration work focusses on identifying new targets on the 10,350ha property.
- In 2019, the company aim to bring the historical resource into NI 43-101 compliance with updated drill results, with subsequent metallurgical testwork to confirm the battery-grade lithium carbonate and hydroxide potential.
- Vision Lithium benefits from the experience and expertise of its largest shareholder Nemaska Lithium, who progress development of their lithium compounds processing plant in Shawinigan, Quebec.
Solgold* (SOLG LN) 37.3p, Mkt Cap £685m – Alpala mineral resource upgrade
- Solgold has released its anticipated mineral resource upgrade for the Alpala project located within the company’s Cascabel licence in Ecuador. Headline indicated resources of 2.05bn tonnes at an average grade of 0.6% copper equivalent, at a 0.2% cut-off and an additional 900mt classed as inferred at an average grade of 0.35% copper equivalent represents a major increase over the 1.08bt of indicated and inferred maiden resource estimate reported at an average copper equivalent grade of 0.7% which was announced at the beginning of the year.
- The new estimate is based on results from over 68,000 samples derived from over 133km of drilling in a total of 128 holes - significant increase over the approximately 27,000 samples from around 54,000m of drilling (45 holes) which underpinned the original estimate.
- The overall mineral resource estimate contains a higher grade core, defined at the 0.9% CuEq cut-off, of 420mt, of which 400mt are classed as indicated, at an average grade of 0.86% copper and 0.91g/t gold for a copper equivalent grade of 1.47%.
- The indicated portion of this core zone is now more than three times the scale of the 116mt reported in the initial estimate and at a similar, 1.48% CuEq grade.
- As previously reported, drilling is continuing at Alpala and further targets within the Cascabel licence area have been identified for follow up drilling at Alpala SE and NW, Trivinio and the Alpala West Limb during the 2019 campaign.
- Drilling is also planned in “11 other high priority copper gold targets throughout the 750 kilometre length of Ecuador” which are wholly owned by Solgold.
- Commenting on the “rapid and inexorable growth of this resource”, Solgold’s CEO, Nick Mather said that work on the “Preliminary Economic Analysis (PEA) is advancing and Feasibility studies will follow seamlessly. Our aim is to fast track towards development.”
Conclusion: The fruits of an intensive drilling programme at Alpala during 2018 are reflected in a substantial resource increase and an upgrading of the indicated portion of the high grade core of the deposit which is likely, in our view, to be the focus of the PEA work currently underway. Further drilling into 2019 is likely to generate further resource expansion as targets at Alpala SE and NW, Trivinio and the Alpala West Limb are followed up. We look forward to the preliminary economic results to provide an insight into the likely operating parameters, capital and operating costs and economic viability of the project.
*SP Angel acts as broker and advisor to Solgold