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Todays Market View - EU plans for zero emissions to boost demand for battery materials

Published: 13:15 28 Nov 2018 GMT

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SP Angel – Morning View – Wednesday 28 11 18

EU plans for zero emissions to boost demand for battery materials

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MiFID II exempt information – see disclaimer below

Altus Strategies* (LON:ALS) – High grade silver discovery at Daro, Ethiopia

Arc Minerals* (LON:ARCM) 2.8p, Mkt Cap £17.4m – Higher grade copper mineralisation to north of Kalaba open pit

Acacia Mining (LON:ACA) – Termination of South Hounde earn-in

Condor Gold (LON:CNR) – Regional exploration update

Element 25 (ASX:E25) – First high-purity electrolytic manganese metal (‘EMM’) produced from Butcherbird ore

Serabi Gold (LON:SRB) – Exploration targets identified in Sao Chico corridor

 

EU unveils plans to cut emissions to zero

  • The European Union unveiled its long-term vision on combating climate change in its most ambitious action just days after US President Donald Trump rejected his government’s warning on the economic costs of global warming.

  • The 28-nation bloc, responsible for 10% of global greenhouse-gas emissions, set a 2050 perspective to help give direction to member states, companies and citizens to anticipate costs in fighting temperature increases.

  • With this plan, Europe will be the world’s first major economy to go for net-zero emissions by 2050,” EU Climate and Energy Commissioner Miguel Arias Canete said. “It is necessary to meet the long-term temperature goals of the Paris Agreement. It is possible with current technologies and those close to deployment,” he said.

  • Going carbon-neutral will spur investments in European clean-energy solutions of up to almost €300bn ($339bn) a year,” Arias Canete said. “And overall, it will help grow our economy up to 2% of GDP by 2050.”

  • The EU currently has a binding target of cutting emissions by at least 40% by the end of the next decade. That’s not enough to meet the Paris objective of keeping global temperature growth well below 2 degrees Celsius, a move scientists say is needed to prevent catastrophic effects of global warming. “If we do not lead, nobody else will,” Arias Canete said. “And if nobody else acts, unrestrained climate change will severely impact Europe, as well as everybody else.”

  • In the drive to become carbon neutral, the EU will bolster its EV and energy storage capacity. The transition to an electrified economy will draw a significant raw material requirement, boosting European mine prospects.

 

Dow Jones Industrials

 

+0.44%

at

  24,749

Nikkei 225

 

+1.02%

at

  22,177

HK Hang Seng

 

+1.33%

at

  26,683

Shanghai Composite

 

+1.05%

at

   2,602

FTSE 350 Mining

 

+0.61%

at

  16,113

AIM Basic Resources

 

-0.20%

at

   2,132

 

Economics

US – President Trump criticised GM restructuring plan that involved closing down two car plants and two facilities that build engines in the US.

  • On Monday, the automaker unveiled a plan to save $6bn through a series of cost-cutting initiatives including cutting 15% of its North American salaried workforce, closing seven plants globally and elIMInate slow-selling saloons.

  • “A confluence of factors has triggered GM’s actions: a downturn in the important China market as well as a potential downturn in the North American market – the two are GN’s biggest markets; the dramatic shift by consumers from traditional cars to utility vehicles; and the impact of tariffs and trade issues,” Autotrader executive analyst commented on the news.

  • While the GM share price reacted favourably to cost-cutting news (+4.6% on Monday), Trump comments yesterday saw the stock giving up some of its earlier gains (-2.3%).

  • President threatened to cut “all GM subsidies, including for electric cars” while it was not immediately clear to what subsidies he was referring and whether he act unilaterally.

 

UK – The pound is trading lower this morning on reports the government had to back down on initial plan to prevent Parliament from changing the terms of May’s Brexit agreement.

  • Administration is reported to have dropped this tactic in the face of protests from politicians.

  • The move suggests Parliament may potentially alter the terms of the deal challenging current Brexit deadlines.

  • May is expected to put the Brexit deal to vote on December 11.

  • The government and the BoE Governor Mark Carney are set to step up their warnings today of a big hit to the economy from a no-deal Brexit, potentially helping PM May tackle deep opposition to her plan, Reuters reported.

 

Currencies

US$1.1274/eur vs 1.1310/eur yesterday  Yen 113.85/$ vs 113.56/$  SAr 13.978/$ vs 13.897/$  $1.274/gbp vs $1.274/gbp  0.723/aud vs 0.723/aud  CNY 6.956/$ vs 6.949/$

 

Commodity News

Precious metals:         

Gold US$1,213/oz vs US$1,220/oz yesterday

  • Gold retreats as investors weigh a slew of comments from the Federal Reserve officials on interest rates and the economy. Fed Vice Chairman Richard Clarida restated his support for continued gradual interest rate increases as U.S. monetary policy gets closer to its optimal longer-run setting. Chicago Fed President Charles Evans, Kansas City’s Esther George and Atlanta Fed President Raphael Bostic also weighed in. Meanwhile, Trump told the Washington Post he’s “not even a little bit happy” with his choice of Powell to head the central bank.

  • The comments mask the potential progress in the escalating trade war between the US and China, as Trump and Xi Jinping are due to meet over dinner on Saturday, marking a pivotal moment in rebuilding trade flows between the two largest economies.

  • The strong dollar narrative that is unfolding into year-end and possibly beyond is providing a significant headwind” for gold prices, Stephen Innes, head of Asia Pacific trading at Oanda Corp.

   Gold ETFs 68.9moz vs US$68.9moz yesterday

Platinum US$834/oz vs US$841/oz yesterday

  • Platinum is expected to remain in surplus into 2019 as the industry grapples with declining demand from the automotive sector, according to the latest World Platinum Investment Council. The group’s forecasts next year’s surplus at 455,000oz, down from 505,000oz in 2018.

  • Platinum, mostly used in auto-catalysts for diesel engines, has fallen out of favor as the vehicles lose market share to gasoline-powered cars. Makers of petroleum vehicles may be motivated to switch to platinum from palladium as the price difference between the two precious metals has increased. But that prospect isn’t likely to affect demand for next year because new catalyst formulations take time to be certified and reach the production line, WPIC says.

  • The industrial sector has been the main supporting factor for platinum this year, specifically petroleum refining and glass manufacturing. Demand will continue to rise as refining capacity in places including China and North America increase and with the chemical sector also forecast to boost loadings.

  • Investment demand is seen doubling to 250,000 ounces next year, driven by an expected increase in holdings for platinum-backed exchange-traded funds. Investors may take the view that the surplus has bottomed out and seek to add exposure while it remains cheap relative to gold and palladium.

  • Supply is set to remain stable, with WPIC expecting similar levels of operational disruptions at mines next year as in 2018.

Palladium US$1,156/oz vs US$1,142/oz yesterday

Silver US$14.14/oz vs US$14.19/oz yesterday

           

Base metals:   

Copper US$ 6,130/t vs US$6,111/t yesterday

Aluminium US$ 1,924/t vs US$1,938/t yesterday

Nickel US$ 10,815/t vs US$10,735/t yesterday

Zinc US$ 2,396/t vs US$2,427/t yesterday

Lead US$ 1,912/t vs US$1,922/t yesterday

Tin US$ 18,375/t vs US$18,705/t yesterday

           

Energy:           

Oil US$61.0/bbl vs US$60.1/bbl yesterday

Natural Gas US$4.190/mmbtu vs US$4.161/mmbtu yesterday

Uranium US$28.80/lb vs US$29.10/lb yesterday

           

Bulk:   

Iron ore 62% Fe spot (cfr Tianjin) US$63.8/t vs US$64.2/t

Chinese steel rebar 25mm US$585.7/t vs US$599.4/t

Thermal coal (1st year forward cif ARA) US$85.6/t vs US$85.5/t

Coking coal futures Dalian Exchange US$193.1/t vs US$192.0/t

           

Other:  

Cobalt LME 3m US$55,000/t vs US$55,000/t

China NdPr Rare Earth Oxide US$45,575/t vs US$45,618/t

China Lithium carbonate 99% US$10,064/t vs US$10,073/t

Tungsten APT European US$275-295/mtu vs US$275-295/mtu

 

Battery News

Biomega unveils radically simple electric vehicle

  • Biomega has announced its entry into the electric car game with SIN, a compact EV designed for city dweller which weighs just over 900kg.

  • The four-passenger vehicle has a skeletal black frame made from carbon fibre and perforated mesh seats. A piece of glass runs from its snub nose up around the top of the car and the doors are transparent, which is meant to give drivers an unobstructed view of the road.

  • The SIN’s lightweight construction, along with two engines and a modular battery housed in the floor, gives the car an estimated range of around 100 miles on a single charge.

  • The car is expected to go into production in 2021 and will cost around $23,000.

https://www.curbed.com/2018/11/27/18113604/biomega-electric-car-sin

 

Johnson Controls partnering with Toshiba on battery technology

  • Johnson Controls Power Solutions will partner with Toshiba Infrastructure Systems & Solutions Corp. to deliver low-voltage lithium-ion battery solutions, the companies announced on Tuesday.

  • The two signed an agreement that calls for developing and manufacturing lithium-ion batteries at JCI’s Holland, Michigan plant that can pair with existing lead-acid battery technology as part of dual-battery systems.

  • The systems require minimal powertrain changes, allowing automakers to incorporate them with a lower investment than other electrified power trains. They also deliver improved fuel efficiency over conventional systems, according to Johnson Controls.

https://www.biztimes.com/2018/industries/manufacturing-logistics/johnson-controls-partnering-with-toshiba-on-battery-technology/

 

UK’s lacklustre electric vehicle infrastructure threatens future growth

  • The UK is behind on electric vehicle infrastructure, with insufficient charge points to charge vehicles, or mechanics to fix them.

  • According to research from the Institute of the Motor Industry in the UK, there is a significant shortfall in electric vehicle charging points and mechanics that are trained to work on hybrid and electric cars.

  • The IMI states that only 3% of mechanics in the UK are qualified to work on electric cars, the vast majority of whom are based in franchised dealerships.  

  • Despite strong UK EV sales growth, infrastructure is severely lacking with only one public charging point available for every 8 hybrid and electric vehicles on the road at present.

https://www.power-technology.com/comment/uk-electric-vehicle-infrastructure/

 

Oil prices rise on North Sea outage and ahead of OPEC and G20 meetings

  • Oil prices rose by one percent on Wednesday ahead of an OPEC meeting next week at which the producer club is expected to decide some form of supply cut to counter an emerging glut.

  • The shutdown of Britain's largest North Sea oilfield for repairs also supported prices, traders said.

  • U.S. West Texas Intermediate (WTI) crude futures were at $52.11 per barrel at 0448 GMT, up 55 cents, or 1.1 percent from their last settlement.

  • International Brent Crude Oil futures were up 57 cents, or 1 percent, at $60.78 per barrel.

https://www.cnbc.com/2018/11/28/oil-markets-opec-g20-meetings-in-focus.html

 

Company News

Altus Strategies* (LON:ALS) 3.9p, Mkt Cap £6.9m – High grade silver discovery at Daro, Ethiopia

  • The Company announced a discovery of the Simret silver prospect at the 100% owned 412km2 Cu-Au-Ag VMS Daro project in northern Ethiopia.

  • Rock chip samples of quartz veins returned high grades of silver and gold including 944g/t and 540g/t Ag, 3.55g/t Au and 2.72% Pb.

  • Selected samples have also contained anomalous copper and zinc grades (0.33% Cu and 0.13% Zn) suggesting the potential for a VMS system.

  • The team is planning to follow up on the results with geological mapping and trenching.

  • The Simret prospect hosts an area of anomalous copper, lead and zinc approximately 2.8km in length and 0.5km in width.

  • Additionally, the Company completed a multi-spectral remote sensing analysis over the Daro license using Sentinel satellite data helping the team to identify a number of iron oxide occurrences across the area which may represent key VMS markers.

  • The team is reported to have visited VMS deposits in Eritrea and studied satellite data on those properties to identify analogous remote sensing signatures that could be applied in identification of similar mineralisation at Daro.

  • The Company is already following up on those targets at Daro.

  • The prospect is located around 3km south of the existing Teklil target where the Company mapped copper oxide mineralisation and discontinuous gossanous outcrop for over 900m in strike.

Conclusion: Initial exploration results at Simret point to a potential for a VMS system in the region hosting a number of similar type mineralisation deposits including Bisha (190km NW of Daro), Harvest and Adyabo (35km west of Daro) and Asmara (100km north of Daro).

*SP Angel acts as Nomad and Broker to Altus Strategies plc

 

Arc Minerals* (LON:ARCM) 2.8p, Mkt Cap £17.4m – Higher grade copper mineralisation to north of Kalaba open pit

ARC Minerals owns Casa Gold 99.4% of Casa Minerals and holds an effective 73% stake in Casa Mining’s Akayanga project

(ARC Minerals currently owns 66% of Zamsort which holds 100% of the Kalaba copper/cobalt mine and associated mineral licenses)

STRONG BUY

  • Arc Minerals reports results from a further six drill holes at the Kalaba copper, cobalt project in the West of Zambia.

  • Drill assays show good grades to the north of the Kalaba open pit in sulphide mineralisation.

  • Also, “Further high-grade Cobalt and Copper oxide mineralisation for the Commercial Scale Demonstration Plant ('CSD Plant') intersected at surface.”

  • Intersections include:

    • 7.12m at 0.87% Cu and 0.10% Co

    • 8m at 1.25% Cu and 0.19% Co

    • 115m at 0.67% Cu Eq. – disseminated mineralisation from surface

  • The long 115m intersection of disseminated mineralisation from surface is interesting from a mining perspective.

  • The whole hole offers potential for a larger scale mining operation though it might make sense to mine the first ~50m for the higher grade section with lower second half of the hole appearing to carry lower grade.

  • The highest grades are from surface to 12m which is good from an economic perspective indicating near zero waste to ore ratio

  • The latest assays add to other recent results which include:

  • 23m at 1.16% Cu Eq. from 2m

    • including from 13m; 10m at 0.81% Cu and 0.15% Co for 2.00% Cu Eq.

    • including from 17m; 4m @ 1.17% Cu and 0.22% Co for 2.90 Cu Eq.

  • 16m at 1.28% Cu Eq. from 9m

    • including from 13m; 9m at 0.83% Cu and 0.11% Co for 1.74% Cu Eq.

  • 15m at 1.29% Cu Eq. from 10m

    • Including from 14m; 6m at 0.51% Cu and 0.20% Co for 2.11% Cu Eq.

  • The Arc (Zamsort) technical team have completed the front end of the Commercial Scale Demonstration plant ‘CSD’ with the instillation of two crushers, screens, ball mill and conveyors with 10,000t per month capacity.

  • ‘The back end to of the plant is expected to be completed shortly with the commencement of commercial production thereafter.’

  • ‘The Company is currently conducting a series of metallurgical test works using two processes, final results from this testwork are expected shortly.’

Conclusion:  Drilling has produced further good results at Kalaba. The results should add significant value to this developing copper, cobalt project

*SP Angel acts as nomad and broker to Arc Minerals.

 

‘The copper equivalent values are estimated using current metal prices of $6200/t copper and $55,000/t cobalt and are presented for ease of interval comparison only. Metallurgical factors are assumed to be 100% although the recovery factors for the respective metals may vary significantly.’

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