#SouthAfrica - New 30% #BEE More cost and less productivity if implemented New black empowerment rules

#AngloGold Ashanti $AU  & #GoldFields $GFI are suffering 

From @Scotiabank 

 "South Africa: New Mining Charter More Unfavorable Than Expected (For AU & GFI)…:  The South African Department of Mineral Resources released its Reviewed Mining Charter this morning, which takes immediate effect. The final version of the Charter includes more stringent requirements for miners than both the Mining Charter previously in effect and the draft revised Mining Charter that was released last year. The South African Chamber of Mines, which represents the vast majority of the miners, characterized the new Charter as being unilaterally imposed on them and is commencing legal actions to suspend the implementation of the Charter. Scotiabank Senior Precious Metals Analyst  flagging the key details and impact of the new charter below.

 1)     Requirements of Revised Charter. i) Black ownership requirement: increased to 30% from 26%, and "once-empowered, always-empowered" concept removed; for green fields projects, the minimum is 50%+1 ii) Procurement: 70% of mining goods/80% of services must be sourced from black economic empowerment (BEE) companies and mineral samples must be processed in-country; additionally locally sourced mining goods must be manufactured in-country iii) Black employment requirement: certain minimum percentages of board members and employees at each organization level must be Black Persons, a portion of which must also be female iv) New 1% BEE Royalty: The 30% BEE owners are to receive a priority 1% gross royalty (not included in the draft).

 2)     Removal of "once-empowered, always-empowered" concept. In prior versions of the Charter, the BEE ownership requirements were only required to be met at one point in time (i.e. BEEs entities/people could sell their interests and use the proceeds as they pleased). Under the new Charter, a 30% minimum BEE ownership is required in perpetuity.

 3)     Miners' response: commencing legal action to suspend implementation of Revised Charter. The Chamber of Mines says that unlike for previous iterations of the Mining Charter, it was not substantively consulted in this process and the current version is unworkable. As a result, it plans to immediately commence legal proceedings to delay or reduce the impact of the new Charter, including seeking to suspend implementation of the entire Charter, pending court review of the requirements, and to challenge the removal of the "once-empowered, always-empowered" concept.

 4)     Impact to AngloGold Ashanti and Gold Fields: 26% of AngloGold Ashanti's (AU-US, SP, US$13.50, Tanya Jakusconek) and Gold Fields' (GFI-US, SP, US$4.00, Tanya Jakusconek) NAV are each related to South African operations. If implemented as-is, the most obvious impacts of to the companies are reduced ownership of and higher costs at their respective operations. At GFI, 10% of its South African operations is already owned by a BEE company, implying that an additional 20% could be required to be given to BEE groups (~$0.30/sh impact). For AU, Tanya understands that BEE groups do not currently have any direct ownership so they could be required to give 30% to BEE groups (~$1/sh). The more stringent procurement requirements in particular could cause costs to increase significant and could impact productivity if equipment selection is reduced".

 

#Palladium - Hitting 16-year highs - +40% ytd

"near-term pull-back likely before further gains in late 2017"

Below is a comment on Palladium from Metals Focus, June 13, 2017: 

Attachment 1 shows the long term chart of Palladium and attachment 4 the 1-year chart. Attachment 5 is the Point&Figure chart which shows how volatile this precious metal is.

Palladium has posted a remarkable rally over the last three weeks, hitting a 16-year high of $928 on 9th June, which represents a 23% increase from its recent trough in April. Moreover, with platinum's lacklustre price performance over the same period, the spread between the two fell to as low as just above $30 last Friday. Even though the rally soon lost momentum, palladium has so far managed to consolidate in the high $800s, making it by far the strongest performer in the precious metals complex.

Palladium's robust gains year-to-date have been assisted by a severe squeeze in physical liquidity in Western terminal markets. In spite of sizeable above-ground stocks (estimated at 15.3 Moz at end- 2016), signs of market tightness have emerged since late 2016; the market has seen moves into backwardation and securing metal in the spot market has been challenging. More recently, this backwardation in the Nymex futures has deepened, while inventories at the exchange now amount to a mere 42koz, their lowest level since 2003.

We believe that the biggest reason behind such tightness has been strong speculative demand for physical metal from Asian entities. Feedback from our field trips indicates that these heavy purchases have been fuelled by bullish price expectations as well as confidence that palladium fabrication demand will continue to strengthen in the coming years. This in turn has resulted in a major shift of stocks out of Western terminal markets.

Meanwhile, as palladium prices broke out above technical resistance levels, speculative interest from short-term investors seems to have picked up notably. As of 6th June, net managed money positions in Nymex futures stood at 1.18Moz, almost double their end-2016 figure and only a fraction below the peak recorded in August 2014 (when palladium last surpassed $900).

Looking ahead, as the palladium market is forecast to remain in a sizeable deficit in the foreseeable future, further price strength seems still justified. However, given the scale of the recent rally, we would caution that the white metal is vulnerable to heavy investor profit taking. After all, despite an apparent lack of short-term physical liquidity, palladium bullion stockpiles remain ample at present. More importantly, growth in global vehicle production is likely to slow down this year. Although the notable weakness in key car markets such as the US and China in recent months has so far little dampened investor confidence in palladium, this poses a downside risk to prices.

Ongoing macroeconomic uncertainties also cannot be ignored, which could weigh on investor sentiment towards industrial metals in general. Already in the US, expectations about economic growth have been scaled back, amid growing political turmoil and disappointing macroeconomic data. Related to this, we retain the view that a correction in US equities is looking increasingly likely.

Against this backdrop, we believe that $928 may well represent the peak for 2017. In the near term, the recent pull-back in prices may well continue, before renewed strength emerges later in the year.

Moreover, given that the palladium market is far smaller and hence less liquid, this renewed strength is likely to be accompanied by continued high price volatility".

Going deep for a rich #copper deposit, @RioTinto & @BHPBilliton pioneering #sensors & #AutonomousVehicles tech to data integration

Mining a Mile Down: 175 Degrees, 600 Gallons of Water a Minute

Steven Norton STEVEN.NORTON@wsj.com

June 7, 2017 10:31 p.m. ET

SUPERIOR, Ariz.—One of the world’s largest untapped copper deposits sits 7,000 feet below the Earth’s surface. It is a lode that operator Rio Tinto RIO 2.11% PLC wouldn’t have touched—until now.

Not that long ago, anabundance of high-grade copper could be mined out of shallower openpits. But as those deposits are depleted and high-grade copper becomestougher to find, firms such as Rio have been compelled to mine deeperunderground.
 ...
Advances in mining technology are making that possible—just as developments in oil and gas drilling heralded the fracking revolution. Now, using everything from sensors and data analytics to autonomous vehicles and climate-control systems, Rio aims  to pull ore from more than a mile below ground, where temperatures can  reach nearly 175 degrees Fahrenheit.
....
A 15-minute elevator ride 6,943 feet down Resolution’s No. 10 mine shaft leads to a dimly lighted cavern where warm water falls from the rocks like rain. Electrical gear buzzes constantly, and a  network of pipes pumps water out of the shaft at the rate of 600 gallons a minute. A ventilation system cools the area to 77 degrees.

Over the next few years, Rio plans to deploy tens of thousands of electronic sensors, as  well as autonomous vehicles and complex ventilation systems, to help it bring 1.6 billion tons of ore to the surface over the more than 40-year projected life of the mine.

 

Data coming from those sensors will be fed into analytics engines that will help monitor tasks  ranging from  underground blasts to the movement of autonomous vehicles.

...

Rio hopes analytics will help to break down organizational silos. Rather than one person viewing data about a specific part of the mining process, information from across the mine can be sent to a single place where experts can obtain a more holistic view of operations.

“It is taking a lot of the decision-making out of the hands of the operator and putting it into a group of specialists who can manage the whole system,” Mr. Stegman said. ..

Read the rest of the article here:Mining a Mile Down: 175 Degrees, 600 Gallons of Water a Minute:

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