January 13, 2023: Global News Roundup

Metal mania unfolds as governments and corporations rush to secure supplies

This post was originally published on IPEwithSBB.org.

The Global News Roundup collects news stories from entirely international (non-US) media sources on variety of pressing global issues and events.

A mad global rush to secure supplies of critical metals is underway, propelled by rising prices, macroeconomic and geopolitical shifts, increased militarization and defense spending, energy and climate policies, and technological change. From silver, gold, and lead to cobalt, copper, platinum, and lithium, governments and corporations around the world were fiercely competing this week for industrial metals and the associated revenues.

Let’s start in Africa, where demand for metals used in the manufacture of electric vehicles (EVs) is driving new trade and investment relationships: “At last year's [December 2022’s] U.S. Africa Leaders’ Summit in Washington, the U.S. signed an historic memorandum of understanding with Zambia and the Democratic Republic of Congo to develop an electric vehicle battery supply chain. At the summit, Zambian President Hakainde Hichilema also announced that Kobold metals, an exploration firm backed by billionaires Bill Gates, Jeff Bezos and Richard Branson, will invest US$150 million to develop a new mine in Zambia.” In Zambia, which has large reserves of both cobalt and copper, “[c]opper mining is crucial…and is responsible for three-quarters of Zambia's export earnings. “But”, reported AllAfrica—and echoing longtime concerns in Africa and across the global South about the highly uneven distribution of benefits from natural resource extraction, concerns that extend back to the colonial period—"while financial markets have celebrated such steps, many poor Zambians say they have yet to see the benefits.”

In Latin America, similar concerns were evident this week in news about the recent clash over copper mining revenues between the government of Panama and Canadian mining company First Quantum Minerals: “Panama has demanded that the Canadian group pay corporate tax of at least $375mn a year along with a profit-based mineral royalty of 12-16 per cent, a steep rise on the $61mn FQM paid to Panama on a project that raked in $1.4bn of gross profit in 2021.” First Quantum is threatening to close the mine—which accounts for 1.4% of global copper supplies—if the dispute isn’t resolved to its liking. Macau Business reported that “the Cobre Panama mine is considered the largest private investment in Panama’s history, making up four percent of its GDP and accounting for 75 percent of its export revenues”.

(Image: Serra Pelada (gold mine), Brazil. Photograph by Sebastião Salgado. 1986. Courtesy of the International Center for Photography, here.)

In the UK, copper, gold, zinc, lead, and silver mining is expected to resume “after more than a century” on Parys Mountain in Angelesy, Wales, demonstrating how rising metals prices are rendering previously unworkable mining ventures financially viable. Citing demand for metals for renewable energy storage and the “mass shift to electric vehicles”, North Wales Live reported that, “Should site owner Anglesey Mining green-light its plans, total output would exceed that of the mine’s heyday when Anglesey copper coated the hulls of Royal Navy warships, paving the way for the British Empire. It’s been estimated that between 1768 and 1904, some 3.5 million tons of ore were removed to give around 130,000 tonnes of copper metal.”

Likewise, in Canada, “A Toronto silver exploration company is sewing up ownership in a large property package of more than 16,000 hectares in the Temiskaming area that was once a historic mining camp.” Silver mining in this part of Canada was abandoned more than a century ago, and Bay Today cited rising silver prices (which are at an 8-month high) as the major factor motivating the revival. Further, cobalt—also used in EV (battery) production—is a “mineral byproduct” of silver mining in the Temiskaming area. “We believe the time is right to consolidate our interests in the Cobalt silver mining camp…,” said Kuya Silver president David Stein in a statement.  

But it’s not just metals demand from the “green” technology industry that’s motivating new mining and exploration. In Saudi Arabia, the government is working to reduce oil dependence by stepping up mining and extraction of other raw materials, with plans to increase the contribution of mining to Saudi GDP to at least $64 billion by 2030: “The Gulf Kingdom…awarded 210 metal industry permits and attracted more than 120 billion Saudi riyals ($32 billion) in domestic and foreign capital into the metals sector in 2022,” reported Zawya last week.

Shifting geopolitical realities are also part of the puzzle. The EU struck a deal with Chile last month for lithium supplies “in a bid to beat China”. Politico Europe noted that “the updated deal — which includes both trade and political upgrades — provides the EU with key access to the world’s biggest reserves of lithium in Chile’s Atacama salt flats.” As a means to build local capacity and retain a greater share of mining revenues, the Chilean government offered discounted pricing to the EU on both lithium and copper that is processed domestically in Chile. The EU is also trying to get further into the Australian metals industry, with a new deal in the works to revive an old nickel and cobalt refinery.

(Image: SQM’s lithium plant in the Atacama desert, Chile. 2016. Courtesy of the Financial Times, here).

Chinese companies are also moving in on Australian metals, including a proposed lithium deal expected to be closed soon with China-based Tianqi Lithium Corp following approval by Australian regulators. At the same time, Chinese state media noted that geopolitics are shaping, and will continue to shape, China’s access to metals supplies, “While the political environment seems to be improving for bilateral economic cooperation [with Australia], experts warned that Chinese companies need to have contingency plans for further changes in the global lithium industry. Those changes could include the establishment of a "lithium triangle OPEC" in certain Latin American countries and pressure from the US.” (See here for information on the OPEC-like cartel for lithium that Argentina, Bolivia, and Chile are working on.) Among other factors, China’s “reopening” is contributing to rising metals demand, following several years of housing market problems, recession, and covid-related economic closures.

And, in the US, the Department of Defense recently awarded $25 million to Perpetua Resources under the Defense Production Act to “secure an American source of critical minerals for missiles and munitions”, including “antimony trisulfide for the manufacture of small arms and medium caliber cartridges, as well as many other missile and munition items”. Halimah Najieb-Locke, Deputy Assistant Secretary of Defense for Industrial Base Resilience, said, “This action reinforces the Administration’s goals to increase the resilience of our critical mineral supply chains while deterring adversarial aggression.” The availability of raw materials required for the production of arms and munitions has recently become a major issue for the US, with supplies quickly depleting and production unable to keep up. Last June, President Biden authorized the use of the Defense Production Act to ensure adequate metals supplies, including platinum group metals used to make, among other things, jet engines, missile parts, and catalytic converters. (My catalytic converter was stolen this week, part of a wave of thefts in the US and Canada partly motivated by rising metals prices).

In related news, scientists just discovered that an alloy made from chromium, cobalt, and nickel is among the toughest materials ever discovered and gets tougher in the cold. The CES space fair held this week in Las Vegas featured the first ever 3D-printed object made from asteroid metals. And, it was announced last week that heavy metal band Iron Maiden will be featured for a limited time on commemorative stamps in Britain.

Things I’m keeping an eye on:

1.     Metals exchanges: The chairwoman of the London Metals Exchange (LME) just announced that she will step down once a replacement is found, following a tough year for the exchange after nickel trading was suspended amidst a massive short squeeze last March. Recall also that LME physical stockpiles are at record lows to start the new year.

2.     Riots in Brazil: Protestors and rioters stormed the presidential palace on Sunday in support of former president Jair Bolsonaro.

3.     US-Mexico relations: Mexican President López Obrador made some interesting comments to President Biden this week, following the North American Leaders’ Summit. “I hold that this is the moment for us to determine to do away with this abandonment, this disdain, and this forgetfulness for Latin America and the Caribbean,” said López Obrador according to El País (emphasis added).

4.     Property ownership restrictions: This week, Canada banned foreigners from buying residential properties as investments, citing rising housing costs as the major motivating factor: “The average cost of a home in Canada rose 44% between December 2019 and February 2022…”.

5.     Worker protests and strikes, and government responses: See here for rolling updates of strikes in the UK, including among teachers and ambulance workers. Nurses in New York City were also on strike this week, with a tentative agreement just reached yesterday for better wages and conditions. And, the government of Zimbabwe just made it illegal for healthcare workers to strike for longer than 3 days.