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Today's Market View - Responsible battery metal mining extends to tin

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SP Angel – Morning View – Thursday 18 04 19

Responsible battery metal mining extends to tin

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MiFID II exempt information – see disclaimer below

 

Ferro-Alloy Resources Limited (LON:FAR) – Vanadium pilot plant expansion update

KEFI Minerals* (LON:KEFI) – £900k drawdown on Sanderson facility and issue of shares to pay bills

Kodal Minerals (LON:KOD) – Board appointment and issue of options

Shanta Gold (LON:SHG) – Q1 update: net cash position to be reached mid-20

 

Volkswagen Group targets 11.6m electric vehicles in China by 2028

  • Volkswagen Group’s electric offensive expands, with efforts focusing on the Chinese market as more than half of the 22m EVs planned by 2028 will be produced in China.
  • During a presentation at the Shanghai Auto Show, VW confirmed more than half of the vehicles will come from China – “Volkswagen Group aims to produce 11.6 million BEVs in China by 2028, more than half the group’s global objective of 22 million. Initiatives with all three Chinese vehicle production joint ventures – FAW-Volkswagen, SAIC VOLKSWAGEN and JAC Volkswagen – will enable this target to be reached,” reports CEO Dr. Stephen Wöllenstein.
  • The company will initially offer 14 EVs in China by the end of the year.
  • VW partners are scaling up EV production capacity, with two new factories adding “an additional 600,000 pure electric vehicles a year in China”.

 

Responsible battery metal mining extends to tin

  • International Tin Association (ITA) and the Responsible Business Alliance have announced signing of a memorandum of understanding aimed at promoting the responsible production and sourcing of tin.
  • The organisations add “both industry groups pioneered approaches to tackling minerals sourcing challenges from higher risk areas and intend that these experiences are used in setting a common direction for future activities promoting supply chain improvements appropriate to both the upstream and downstream industries.”
  • The collective mechanisms include the establishment of a joint task force, whose objective is to enable tin stakeholders at all levels to demonstrate compliance with regulations and wider expectations for responsible supply chains.
  • ITA’s sustainability manager explains work is underway to review tin smelter audit criteria and procedures designed to demonstrate company implementation of OECD due diligence. This would allow the organizations to be recognized by the European Commission under the new EU Minerals Supply Chain Due Diligence Regulation.
  • MIT report that tin is a fundamental metal to the battery revolution. In ITA's view, compliance with proper procedures is key to guaranteeing that the tin industry has the ability to respond to a predicted surge in demand driven by the lithium-ion battery market. Such an increase is expected to be of up to 60,000tpa by 2030.

 

Ferro-vanadium prices continue to fall as China fails to apply stricter regulations to smaller steel mills

  • Ferro-vanadium prices fell a further 4.9% this week to $43.5-44.5/kgV in Western Europe according to Fastmarkets MB.
  • The price reflects a lack of buying in Europe as Chinese traders continue to try to place metal in the region.
  • Ferro-vanadium prices are now 61.5% off from their peak of $130-140/kgV on 18 October last year.
  • We are told China is currently allowing smaller steel mills to avoid the addition of vanadium according to the new regulations, presumably as there is insufficient vanadium production to meet all the demand assuming full compliance of the new regulations which came into force late last year.
  • Chinese steel mills are reported to be delaying restocking of ferro-vanadium till after a 3% cut in the VAT paid to 13% from 1st April by Chinese manufacturers of metals and minerals.
  • Weak sentiment in Europe as Germany tries to avoid joining Italy in recession. While much may be blamed on Brexit, the ongoing impact of increasing competition from China coupled with the potential for delays to European construction projects and a probable collapse in UK and European auto sales for diesels does not help.

 

Dow Jones Industrials

 

-0.01%

at

  26,450

Nikkei 225

 

-0.84%

at

  22,090

HK Hang Seng

 

-0.59%

at

  29,947

Shanghai Composite

 

-0.42%

at

   3,249

FTSE 350 Mining

 

-1.15%

at

  20,595

AIM Basic Resources

 

+0.03%

at

   2,080

 

Economics

US – The Beige Book, a compilation of economic activity by each of twelve Federal Reserve districts, highlighted little change in the growth outlook among contacts in reporting districts with rspondents expecting “slight-to-modest” growth in the months ahead.

  • The report said prices have risen modestly since the last Beige Book driven by tariffs, freight costs and increasing wages.
  • Retailers generally had reported sluggish sales blaming unusually cold weather (data is collected through April 8).
  • Manufacturers and agriculture businesses continue to worry about the impact of Chinese tariffs, according to the report.

 

Eurozone – The euro is off 0.3% against the US$ this morning on the back of a raft of weak PMI data in April.

  • Growth slowed for a second consecutive month in April dragged down by very weak manufacturing sector readings.
  • “The eurozone economy started the second quarter on a disappointing footing, with the flash PMI falling to one of the lowest levels seen since 2014,” Markit report read.
  • In Germany, a robust service sector performance (55.6 v 55.4 in Mar) helped sustain expansion offsetting a sharp downturn in manufacturing (44.5 v 44.1 in Mar).
  • In France, the economy stagnated (50.0 v 48.9 in Mar).
  • The rest of the region posted the weakest growth rate since late-2013.
  • New order growth picked up only marginally, remaining close to stagnant while export orders dropped sharply down for a seventh straight month to continue the worst period of export performance since comparable data was first published in 2014.
  • Employment growth picked up slightly but remained among the weakest since 2016.
  • Expectations wise, businesses were the least optimistic since late-2014 with respondents highlighting the recent slowing demand and lower sales enquiries, as well as downgraded forecasts for economic growth.
  • “The persistence of the business survey weakness raises questions over the economy’s ability to grow by more than 1% in 2019.”
  • Markit Manufacturing PMI: 47.8 v 48.5 in March and 48.0 forecast.
  • Markit Services PMI: 52.5 v 53.3 in March and 53.1 forecast.
    Markit Composite PMI: 51.3 v 51.6 in March and 51.8 forecast.

 

Germany – The government slashes its 2019 growth forecasts to dismal 0.5% compared to the 2.1% growth rate it forecast a year ago.

  • Economy Minister Peter Altmaier said new car emissions tests and low water in the Rhine had caused industrial hold-ups and hurt German output amid trade conflicts and unresolved status of Brexit.
  • The growth prediction downgrade is the second in three months, after the ministry cut its 2019 forecast to just 1% in January.

 

UK – Retail sales offer welcome news amid gloomy eurozone economic data.

  • Sales volumes surged by the most in nearly 2.5 years in annual terms posting a 6.7%yoy increase in March, according to the Office for National Statistics.
  • Strong annual increase reflects low base as the country struggled with snowstorms and icy weather a year ago.
  • Nevertheless, mom numbers also came in stronger than forecast eking a 1.1%mom increase.
  • Retail Sales (%mom/yoy): 1.1/6.7 v 0.6/4.0 in February and -0.3/+4.5 forecast.

 

Venezuela – US to cut the Venezuela Central Bank from access to the US$ currency limiting its ability to conduct international financial transactions.

  • The move targets loopholes used by the government to seek US$ funding.
  • Unlike the rest of the government, the central bank does no need approval from the opposition-controlled National Assembly to take out a loan, NYT reports.
  • The loophole allowed the central bank to take a $500m loan from the Development Bank of Latin America in December.
  • Recently, the central bank has been selling its gold reserves to Russia, Turkey, Dubai as well as other Middle East nations.

 

Zimbabwe – Inflation likely to drive protests in near term

  • Rising consumer price inflation is causing tension in Zimbabwe.
  • The price of a loaf of bread jumped to 3.50 RTGS on Tuesday from 1.80 RTGS on Monday.
  • Other consumer goods and basic staples have also seen sharp price rises.
  • Observers are concerned that the sharp rise in bread and basic foodstuff prices is likely to cause civil unrest in the region.

 

Currencies

US$1.1297/eur vs 1.1315/eur yesterday  Yen 111.91/$ vs 111.98/$  SAr 14.031/$ vs 13.944/$  $1.304/gbp vs $1.306/gbp  0.718/aud vs 0.720/aud  CNY 6.697/$ vs 6.690/$

 

Commodity News

Precious metals:         

Gold US$1,273/oz vs US$1,279/oz yesterday

   Gold ETFs 71.8moz vs US$71.8moz yesterday

Platinum US$886/oz vs US$887/oz yesterday

Palladium US$1,388/oz vs US$1,362/oz yesterday

Silver US$14.98/oz vs US$15.07/oz yesterday

           

Base metals:   

Copper US$ 6,520/t vs US$6,520/t yesterday

Aluminium US$ 1,847/t vs US$1,859/t yesterday

  • The second-worst performing base metal could receive support as Chinese stockpiles decline and demand picks up.
  • Holdings of aluminium ingot fell to 1.64mt of April 11, according to data from Shanghai-based researcher SMM Information & Technology Co. Volumes dropped for a fourth week from 1.75 million tons on March 14.
  • Stockpiling around the Lunar New Year break in February was smaller than predicted as the industry focused on cutting run rates and capacity expansion has been slower than expected, said Liu Xiaolei, an analyst at SMM.
  • Flatlining aluminium prices in Shanghai and London lag behind other base metals with improving fundamentals, however China’s holdings could drop to around 700,000t by the close of 2019.

Nickel US$ 12,720/t vs US$12,990/t yesterday

Zinc US$ 2,780/t vs US$2,815/t yesterday

Lead US$ 1,936/t vs US$1,938/t yesterday

Tin US$ 20,390/t vs US$20,515/t yesterday

           

Energy:           

Oil US$71.4/bbl vs US$72.0/bbl yesterday

Natural Gas US$2.506/mmbtu vs US$2.577/mmbtu yesterday

Uranium US$25.95/lb vs US$25.90/lb yesterday

           

Bulk:   

Iron ore 62% Fe spot (cfr Tianjin) US$90.2/t vs US$91.9/t

Chinese steel rebar 25mm US$651.2/t vs US$651.8/t

Thermal coal (1st year forward cif ARA) US$75.4/t vs US$73.6/t

Coking coal futures Dalian Exchange US$182.5/t vs US$182.9/t

           

Other:  

Cobalt LME 3m US$35,000/t vs US$34,500/t

NdPr Rare Earth Oxide (China) US$39,945/t vs US$39,984/t

Lithium carbonate 99% (China) US$9,632/t vs US$9,641/t

Ferro Vanadium 80% FOB (China) US$48.5/kg vs US$48.5/kg

Antimony Trioxide 99.5% EU (China) US$6.3/kg vs US$6.3/kg

Tungsten APT European US$270-282/mtu vs US$270-282/mtu

 

Battery News

Sono Motors are building solar-powered Sion EV at SAAB’s former Sweden factory

  • German start-up Sono Motors announced it would build a crowdfunded solar-powered Sion EV at a manufacturing facility formerly owned by SAAB in Trollhättan, Sweden.
  • Sono has contracted the National Electric Vehicle Sweden holding company to produce 260,000 vehicles in an eight-year period, beginning the second half of 2020, and plans to use 100% renewable energy to power its factory.
  • The Sion is a small minivan-like electric car, starting at €25,000 with a 35kWh battery for 255km range.
  • The major solar panel on the roof of the car can provide ‘up to’ 34km of range per day (unclear which sunny city you’re driving through).

 

Researchers improve method to recycle and renew used cathodes from lithium-ion batteries

  • Researchers at the University of California San Diego have improved their recycling process that regenerates degraded cathodes from spent lithium-ion batteries.
  • The new process is safer and uses less energy than their previous method in restoring cathodes to their original capacity and cycle performance.
  • The new recycling method involves collecting cathode particles from spent lithium ion batteries and then mixing them with a eutectic lithium salt solution. The mixture is then heat treated in two steps: it is first heated to 300 C, then it goes through a short annealing process in which it is heated to 850 C for several hours and then cooled naturally.
  • Researchers used the method to regenerate NMC (LiNi0.5Mn0.3Co0.2), a popular cathode containing nickel, manganese and cobalt, which is used in many of today's electric vehicles.
  • "We made new cathodes from the regenerated particles and then tested them in batteries built in the lab. The regenerated cathodes showed the same capacity and cycle performance as the originals."

 

Company News

Ferro-Alloy Resources Limited (LON:FAR) 37.5p, Mkt cap £117m – Vanadium pilot plant expansion update

  • Ferro-Alloy Resources which is looking to expand its vanadium pilot plant operation in Kazakhstan updates the market today.
  • The company which listed at 70p in London on 28 March on the Standard list of the LSE (eg. not AIM) raised £5.2m.
  • Management are looking to expand the current pilot production plant to 1,500tpa of vanadium.
  • The team are also looking to significantly scale up the process to 22,500tpa through this will require the construction of a complete new plant and massive expansion of the mine infrastructure at Balasausqandiq.
  • Some equipment for the expansion of the pilot plant have arrived at site including a rotating pre-roasting oven, six new leach tanks for the acid leaching of the low-grade wastes, and a further receiving tank for roasted material from the main roaster
  • Engineering design work for the connection to the adjacent high voltage power line has been completed and contracts are being finalised for the expansion to lower cost and reduce power instability.
  • Design of a major extension to the current plant building and electrometallurgical and recrystallisation equipment has also been completed.
  • A 25t mobile crane and loader and three site transport vehicles have also been acquired
  • Balasausqandiq has a JORC 2012 reserve of 24mt of grading 0.68% vanadium, 13.6% carbon, 0.03% molybdenum, 0.009% uranium along with some rare earth metals, potassium, and aluminium. The mine also has an exploration target of 110mt of ore of similar grade.
  • Management are looking to expand the operations in two phases:
  • Phase 1 - $100m capex
  • Phase 2 - $225m capex
  • The ore requires the use of a new hydrometallurgical process which has been piloted at the mine and raises the capital cost of the plant development but is essential for the separation of the vanadium pentoxide and other commodities from the ore.
  • Vanadium pentoxide prices have pulled back over the past few months falling a further 6.9% last week to $10-11/lb in Rotterdam (Fastmarkets MB).
  • Pentoxide prices also fell 12% last week in China to $10.5-11.5/lb.

 

KEFI Minerals* (LON:KEFI) 1.5p, Mkt Cap £9.4m - £900k drawdown on Sanderson facility and issue of shares to pay bills

  • The Company issued 14.9m shares at 2p per share to cover fees to service providers (12.6m shares) and charges in respect of the drawdown fees for the loan facility (2.3m shares).
  • Shares issued to Sanderson with regards to the convertible loan facility amounts to 5% fee due on the first drawdown of £900k.
  • The remaining amount under the First Facility is £1.1m.

*SP Angel act as Nomad and Broker to KEFI Minerals

 

Kodal Minerals (LON:KOD) 0.15p, Mkt Cap £12.3m – Board appointment and issue of options

  • Lithium explorer, Kodal Minerals, announce the immediate appointment of Mr. Charles Joseland as an independent Non-Executive Director.
  • Mr. Joseland is a Chartered Accountant and has 32 years' experience with PwC including 20 years of experience as an audit partner, as part of its Energy, Utilities & Mining Group.
  • The Company has also entered into an option agreement with Mr. Joseland under which 10m options have been granted to him which will vest in three tranches, at both 0.14p and 0.25p.

 

Shanta Gold (LON:SHG) 6.7p, Mkt Cap £52.4m – Q1 update: net cash position to be reached mid-20

  • New Luika produced 22.4koz reflecting strong plant throughput and high grade feed from the underground.
  • Processing plant treated 172.6kt at 4.49g/t with 136.6kt at 5.72g/t mined from the underground (Q4/18: 158kt at 5.55g/t) and the balance coming from low grade surface stockpiles.
  • Surface stockpiles reduced to 139kt at 1.47g/t as open pit operations remained on stand by (Q4/18: 163.2kt at 1.48g/t).
  • At Ilunga, a third active source of high-grade ore, 5.8kt at 6.02g/t of development ore was mined during the quarter as the

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