Tag Archives: Glencore

Deep-sea mining risks ‘irreversible’ harm, warns Greenpeace

A subsea mining machine under construction © Reuters

Campaign group intervenes over UK exploration licences for Lockheed Martin

Henry Sanderson| Financial Times | 3 July 2019

Deep-sea mining risks “severe and potentially irreversible” environmental harm and the UK should prioritise protecting the ocean rather than extracting minerals from it, Greenpeace, the campaigning group, said.

The government has awarded deep-sea exploration licences to a subsidiary of Lockheed Martin, which could lead to deep-sea mining despite Westminster being aware of the environmental risks, said Greenpeace.

David Cameron promised as prime minister in 2013 that deep-sea mining would generate £40bn for the UK economy over the next 30 years. But Greenpeace said it is unclear what this figure includes.

It pointed out that in 2017 the government’s deep-sea mining working group was shown a report by the National Subsea Research Initiative, a research body, warning of the environmental impact on the seabed.

“The activities involved in subsea mining could have detrimental impacts on localised populations as well as an impact on world oceans through the potential extinction of unique species which form the first rung of the food chain,” said the report, which was commissioned by Scottish Enterprise and seen by Greenpeace through a Freedom of Information request.

The UN-backed International Seabed Authority, which regulates all mineral activities in international waters, has given countries, including the UK, 29 licences to explore the oceans, covering an area of 1.3m sq km, or five times the surface area of Britain. But mining cannot begin until regulations, currently being negotiated, are agreed. The ISA expects to have finished them by July 2020.

The UK government in 2013 granted Seabed Resources, a Lockheed Martin subsidiary, the rights to explore 133,000 sq km of the ocean it had received from the ISA. Seabed Resources said it was waiting for the regulations to be approved before assessing the viability of mining at the sites.

Daniel Jones, a principal researcher at the National Oceanography Center, said scientists still do not know enough about life in the deep sea compared to life on land.

“We are finding out a lot more but we can’t answer how organisms will respond to disturbance from deep-sea mining without doing experimentation on the sea floor,” he said. “We are missing quite important information.”

A spokesman for the UK government said: “The UK continues to press for the highest international environmental standards, including on deep-sea mineral extraction. We have sponsored two exploration licences, which allows scientific marine research to fully understand the effects of deep-sea mining. We will not issue a single exploitation licence without a full assessment of the environmental impact.”

Deep-sea mining has had a chequered history. The first company to try to mine the deep sea, Nautilus Minerals, was delisted from the Toronto Stock Exchange in March after financial difficulties. The company had planned to mine around Papua New Guinea.

But last month Deep Green, a deep-sea mining start-up, said it had raised the bulk of the $150m it needed to press ahead with plans to collect mineral-rich nodules from the floor of the Pacific for metals such nickel and cobalt used in electric-car batteries. The company is backed by miner Glencore as well as shipping giant Maersk.

DeepGreen said “it is built with a deep appreciation and respect for ocean health and the earth’s environment”.

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‘Bodies are still under the rubble’: Death toll rises to 43 at TSX-listed Katanga Mining’s ‘Word Class’ Congo mine

A copper and cobalt mine in the Democratic Republic of Congo. PHOTO: SIMON DAWSON/BLOOMBERG

Reuters | June 27, 2019

At least 43 artisanal miners were killed on Thursday when part of a copper and cobalt mine owned by Glencore collapsed in southeast Congo, the provincial governor said.

The accident occurred in the KOV open-pit mine at the Kamoto Copper Company (KCC) concession, in which Glencore subsidiary Katanga Mining owns a 75 per cent stake, said Richard Muyej, the governor of Democratic Republic of Congo’s Lualaba province.

“It was caused by the clandestine artisanal diggers who have infiltrated (the mine),” he told Reuters. “The old terraces gave way, causing significant amounts of material to fall.”

“KOV is a delicate site and presents many risks,” he added.

Glencore said in a statement that it had confirmed 19 fatalities so far and was assisting search and rescue operations by local authorities.

Artisanal mining on the edge of commercial mine sites is a big problem across Africa. The rudimentary, outdated and unregulated practices miners employ can often compromise safety: mine disasters in Congo alone cost the lives of dozens a year.

Thousands of illegal miners operate in southern Congo, which produces more than half of the world’s cobalt, a key component in electric car batteries.

Glencore said an average of 2,000 illegal miners sneak daily onto the KCC concession, which spans a vast flat expanse on the outskirts of the city of Kolwezi near the Zambian border and is one of the country’s largest copper deposits.

Delphin Monga, provincial secretary of the UCDT union which represents KCC employees, said a crack in part of the pit had been noticed on Wednesday. He said KCC had put up red warning signs, but the diggers had ignored them.

This is not the first accident at the mine. In 2016, a 250-metre wall inside the KOV pit collapsed, killing seven mine employees.

Muyej said that the authorities were meeting to decide on new measures to secure large mines.

At least nine illegal gold miners died in Zimbabwe when they were trapped in a mine last month.

Twenty-two died in a previous Zimbabwean gold-mine flood in February, and 14 tin miners were buried alive in Rwanda after heavy rains in January.

In February, about 20 people died when a truck carrying acid to Glencore’s Mutanda Mine in DRC collided with two other vehicles.

Congo’s military deployed hundreds of soldiers last week to protect a copper and cobalt mine owned by China Molybdenum Co Ltd from illegal miners.

Shares in Glencore closed down 4.9 per cent, their worst day of trading since December. The company said the incident has not affected output.

BMO Capital Markets analyst Edward Sterck said if the incident is related to illegal mining, any impact may be relatively short-term beyond an investigative period.

“However, preventative action will likely be needed and it could impact Glencore’s social license to operate,” he added.

KCC produced a total of 152,400 tonnes of copper and 11,100 tonnes of cobalt last year. Glencore’s nearby Mutanda project produced 199,000 tonnes of copper and 27,300 tonnes of cobalt.

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Safety first: Investors take action on mine tailings disasters

A rescue worker walks between destroyed houses after another dam disaster in Brazil.

Payal Sampat | EarthWorks | June 12, 2019

In late January 2019, the collapse of two tailings dams at Vale’s Brumadinho iron ore mine in Brazil killed hundreds of workers and local residents in the state of Minas Gerais. Even more horrifying, the Brumadinho catastrophe was a tragedy foretold, with unheeded prior warnings from mine inspectors and Vale’s own workers. This disaster came on the heels of other tailings disasters, notably at the Mount Polley gold and copper mine in Canada and the BHP-Vale owned Samarco iron ore mine in Mariana, Brazil.

How did one of the world’s largest mining companies, Vale, ignore the risks identified by workers and mine inspectors, and fail to learn from its previous tailings disaster?  How many more ticking time bombs around the world are endangering communities, workers, and ecosystems at this very moment?

Independent research that analyzes decades of data on mine waste dam failures has shown that these catastrophic tailings dam failures are occurring more frequently and are predicted to continue to increase in frequency. This is attributed to multiple factors, including inadequate tailings facilities design, age of facilities, unanticipated weather conditions due to climate change, and mining companies tapping lower grade ores, resulting in larger volumes of mine waste.

And yet, very little is known about these tailings storage facilities (TSFs) – their location, size, scale, ownership, even how many exist around the world.

This is about to change.

In April 2019, the Church of England pension funds and the Swedish Council of Ethics, representing a group of 96 investors with over $10 trillion in assets, launched the Investor Mining & Tailings Safety Initiative.  They sent letters to 683 mining companies, asking detailed questions about ownership, operating status, physical size, construction and independent risk assessment at their TSFs. These companies were given 45 days to respond, and were required to post this information publicly on their websites.

This is the first time that investors have demanded transparency and disclosure of mining companies on this scale – and this may well be the game-changing move that’s needed to understand and mitigate risks at TSFs.

The investor action has lit a fire under some of the world’s largest mining companies, many of whom have swiftly responded, publishing their disclosures to meet the June 7 deadline.  The Swiss mining company Glencore’s disclosure indicated that 14 of its facilities carry “extreme risk” in the event of failure – many in Peru – and another 100 are considered high-risk. Australian miner BHP, the world’s largest mining company, disclosed that five of its tailings dams were at “extreme consequence of failure,” and has set up a tailings task force to improve safety.

In May, the investor group, Principles for Responsible Investment (PRI), took another important action. PRI, along with the United Nations Environment Programme (UNEP), which published a rapid response assessment on tailings dam safety in 2017,  and the International Council on Mining and Metals, an association of 26 of the world’s largest mining companies, launched a Global Tailings Review process. At UNEP’s invitation, Earthworks agreed to serve on the multi-stakeholder advisory panel to the Global Tailings Review, which is chaired by Professor Bruno Oberle, former Swiss Secretary of State for the Environment. Other advisory panel members include IndustriALL Global Union, Munich Re, the International Finance Corporation, and the Columbia University Water Center.

Earthworks believes that the strongest outcomes will result from a process co-governed by civil society members, particularly mining-affected communities and workers representatives. We support processes that embody this commitment to co-equal governance, such as the Initiative for Responsible Mining Assurance (IRMA). But this is an all hands-on-deck moment – and we will willingly pitch in to advance efforts that will shore up tailings dam safety, increase transparency, and protect people and the environment.

The world can no longer bear the costs of dragging feet, making excuses, or putting shareholder returns before people’s lives. Without exception, safety must be the leading priority at tailings dams and storage facilities around the world. Mining companies must act on the findings of their TSF reviews and ensure that risks to communities, workers and ecosystems are mitigated and managed as soon as possible.

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Time PNG govt exercised better control over its own resources

A Britten Norman Islander, the first plane to land at Frieda River in 1970. Kiap John Pasquarelli had discovered gold and copper in 1963. Now, 55 years later, the mine is still undeveloped and the object of great controversy

Gabriel Ramoi | PNG Attitude | 12 June 2018

Resources firm Pan Aust (wholly owned by the Chinese state company, Guangdong Rising Assets Management, GRAM), has lost its way with the Frieda River copper-gold project in Papua New Guinea’s Sandaun Province.

It is now time for the PNG government to exercise leadership and rein in control over the Frieda asset if the PNG is to sustain its free education and health policies and lift the rest of the country out of poverty, disease and ignorance.

The view from Frieda is now very different compared with the corporate carnage of 2013 following Glencore’s hostile takeover of Xstrata Mining. In that epic battle for world copper supremacy, Mike Davis’s Xstrata lost to Ivan Glasenberg’s Glencore and with it went a chunk of PNG’s national asset, the K260 billion Frieda mine.

Glasenberg has gone on to become the king of copper and head of the number one mining house in the world.

But then, for a deposit of just K80 million, little known Australian miner Pan Aust Ltd moved in and acquired Frieda from Glencore while PNG government advisers and ministers slept on the job despite warnings from industry that the government should exercise control and reclaim ownership over its strategic asset.

Pan Aust went on to the sell out to GRAM in 2015 for a reported K1.2 billion although officially the deal was closed at K450 million.

GRAM is owned by the municipality of the city of Guangzhau in southern China, although the deal maker in this transaction was a leading Australian Chinese billionaire Dr Chau Chak Wing, the subject of a current controversy because of allegations that he is an agent of the Chinese Communist Party.

Additionally, the influential South China Morning Post reported in September last year that the chairman of GRAM, Li Jinming, as well as the CEO and chief financial officer had been arrested and are facing prosecution in China for failing to account for a number of acquisitions made by GRAM in Australia, including Pan Aust, leading to a loss by GRAM of more than K3.2 billion.

None of these corporate maneuverings went unnoticed by the government of China and eventually Glencore was forced to sell a number of its copper assets to China in order to keep selling its copper ore to the communist country.

I suspect the sale of the Frieda copper mine may have been part of an arrangement between Glencore and the government of China for a number of its assets to be sold to Chinese-controlled companies.

But the question that now needs to be asked in PNG following the arrest of the GRAM directors is what can the PNG government do with Frieda?

Last week, the PNG Mineral Resources Authority reported that Pan Aust had advised it of the withdrawal of an application for the mine development license over Frieda that was filed in 2016.

I suspect the real reason for this is that Pan Aust does not have the required capital to follow through with the development of Frieda Mine since the arrest of the GRAM executives in China and the freeze on GRAM’s activities pending finalisation of court proceedings in China.

Pan Aust and its junior partner Highlands Pacific are already in arbitration over the issue of the costs relating to each partners contribution to the feasibility study.

In the wake of this total mess, an opportunity exists for the PNG government to open dialogue directly with the government of China to revisit the Frieda project.

Already two leading Chinese state companies – China Energy Engineering Ltd and China Railway Yunnan Construction & Development Ltd – have expressed interest in developing the infrastructure associated with the mine.

The PNG government and the provincial governments of West and East Sepik – the ministers of the two provinces in particular – should take the lead in opening dialogue with China on the Frieda project.

How the Frieda project will be developed is part of the unfolding resource war being waged worldwide between private capital (represented by figures such as Glasenberg, Donald Trump and Malcolm Turnbull) and powerful state actors such as the gvernment of China and other savvy emerging states such as Russia and Indonesia.

The leading US-based mining journal Behre Dolbear reported last week that the Republic of Congo, Ghana, Tanzania, Zambia and Mauritania have recently enacted new legislation apportioning greater revenues from mining in favour of the state to the rejection of Barrick Gold in Tanzania and Glencore in Congo.

Over the last six months we have also seen the rise of resource nationalism in Indonesia with a direct challenge to BHP Billiton and Freeport Copper to divest up to 51% of their interest in the Grasberg mine to the Indonesian state.

At the time of writing, BHP has agreed to sell its 40% stake to the state and current negotiations continue on the quantum of compensation for environmental pollution by Freeport.

While there is a much kneejerk reaction by our neighbours about Chinese checkbook diplomacy in the region, it must be remembered that China is Australia’s number one trading partner.

Despite just 70 years ago China being rolled over by Japan after a long period of being pushed around by colonial powers, it has emerged in recent times as a super power extending its hand of friendship to countries around the world as it builds a new world order with itself at the centre.

“Developing countries where 90% of the world lives are at a crossroad,” says the leading black African woman of our generation, Zambian economist, lawyer and banker Dambisa Moyo. “They are facing a choice between the United States model of democracy and private capitalism or the Chinese model of state capitalism and no democracy.”

This may be too unequivocal as many third world countries including PNG are now better poised to consider bartering our copper, gold and other mineral wealth for infrastructures such as roads, ports, railways, universities and hospitals rather than simply allowing private capital through direct foreign investment.

Our experience over 40 years has been dismal as highlighted by reports such as that by Jubilee Australia. As PNG struggles to build its next generation of mines, the young lawyers and technocrats advising our leaders must take it upon themselves not to repeat the mistakes of the past but to look at recent deals between China and a number of counties in Africa and negotiate a new mining development contract for PNG that we all can be proud of.

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Another ‘world class’ mining company in a corruption scandal

Glencore shares drop nearly 7% on report of SFO probe

Henry Sanderson | Financial Times | May 18, 2018

Shares in Glencore fell by their most in almost two years on Friday after a report said the miner may face a bribery probe by the UK’s Serious Fraud Office over its ties to Israeli billionaire Dan Gertler in the Democratic Republic of Congo. 

The SFO is planning to seek formal approval for a probe into Glencore’s dealings in the country with its former business partner Mr Gertler, Bloomberg News reported. Mr Gertler was sanctioned by the US in December for his “opaque and corrupt mining and oil deals,” in DRC. 

Mr Gertler previously owned stakes in Glencore’s two key projects in the resource-rich country, before Glencore bought him out for $960m in 2017. 

Glencore shares fell 6.8% per cent to 370.75p after the news. 

The reported possible probe is the latest setback for FTSE 100 member Glencore over its activities in the DRC. Last month the country’s state-owned miner Gecamines launched legal action against the company seeking to dissolve its joint venture Katanga copper mine, saying Glencore had drained it of money. 

Mr Gertler has also taken Glencore to court saying he is owed almost $3bn in royalties from its mining projects under previously agreed contracts. 

The SFO said it could neither confirm or deny the Bloomberg report. Glencore declined to comment. 

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Tanzania cancels license of Barrick, Glencore nickel project

Another example of a Nation standing up and dictating terms to the international mining companies 

Fumbuka Ng’wanakilala | Reuters | 13 May 2018

Tanzania has revoked a retention license for an undeveloped nickel project jointly owned by Barrick Gold Corp and London-listed miner Glencore Plc as part of enforcement of a new mining regime.

The license for the Kabanga nickel project in northwestern Tanzania was among 11 retention licences canceled by the government under the Mining (Mineral Rights) Regulations of 2018, which were approved in January.

A retention license is granted to holders of a prospecting license after they identify a mineral deposit within the prospecting area which is potentially of commercial significance but cannot be immediately developed due to technical constraints, adverse market conditions or other economic factors.

“The Mining Commission would like to inform all owners of retention licences that the licences have been canceled,” commissions chairman Idris Kikula said in a statement.

Barrick Gold Corp and Glencore Plc which own the 50-50 joint venture project were not immediately available for comment. Their license was due to expire in May 2019.

Other retention licences canceled by the mining commission target other nickel, gold, silver, copper and rare earth exploration companies.

Tanzania, Africa’s fourth-largest gold producer, is seeking a bigger slice of the pie from its vast mineral resources by overhauling the fiscal and regulatory regime of its mining sector.

Retention licences were previously granted for a period not exceeding five years, which was renewable.

Tanzanian President John Magufuli appointed the chairman and commissioners for the country’s new mining commission last month, paving the way for tighter regulation of the mining sector.

Magufuli sent shock-waves through the mining industry with a series of actions since his election in late 2015.

In July last year, he suspended the issuance of all new mining licences until the new mining commission was in place. 

The new mining rules state that “all retention licences issued prior to the date of publication of these regulations are hereby canceled and shall cease to have legal effect.”

“Consequent upon cancellation of retention license…rights over all areas which were subject of retention licences are hereby and without further assurance reverted to the government.”

Canada’s Barrick Gold Corp, the world’s biggest gold producer, is also the majority shareholder of London-listed Acacia Mining Plc, which is embroiled in a tax dispute with the Tanzanian government over mineral exports.

Barrick and Glencore have been looking for potential buyers for the Kabanga project since 2015 after lower global nickel prices derailed the project, according to mining sources in Tanzania.

The two miners have held the license for the project since 2009, which is estimated to have inferred resource of 36.3 million tonnes, grading 2.8 percent nickel.

Under legislation passed last Julyr, the mining commission has been given extensive powers to regulate and monitor the mining industry and mining operations in Tanzania.

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Global mining major needed to re-open Bougainville’s Panguna copper mine?

 Kevin McQuillan | Business Advantage | 18 July 2017

Moves to re-open the Panguna copper mine on Bougainville are gathering momentum. Funding the re-opening is a key concern, however, says Bougainville President, John Momis. Could one of the global mining majors get involved?

Bougainville Copper Ltd (BCL) is currently advertising for a local Bougainville-based manager, and are looking at the payment of K14 million in rent and compensation that was owed to the 812 customary clan groups who own the blocks of land within the mining lease areas.

Autonomous Bougainville Government President John Momis tells Business Advantage PNG, that over the next year, he expects BCL to open an office and ‘start dealing with some of the legacy issues, demonstrating BCL’s commitment, in a just and fair way, to some of the real issues that have been bothering the land owners.’

That includes, he says, the ecological, environmental, and health damage issues caused by former owner, Rio Tinto.

‘They have walked away, so now BCL has to address that.’

Momis says the Joint Steering Committee preparing for the mine’s re-opening consists of representatives from the nine official landowner groups, BCL, the national government, and the ABG, and is to be chaired by an independent chairman.

Funding

A key challenge is the cost of reopening the mine; back in 2012, BCL estimated it would be US$5 billion.

‘BCL has to demonstrate to us they have ability to solicit funds and attract a developer and I’m sure they are thinking about this,’ says Momis, pointing out that under Bougainville’s 2014 Mining Act, BCL has first right of refusal about re-opening the mine.

‘The Panguna mine is a “high-risk, high-return” investment.’

‘We are giving BCL the opportunity to get funds and to meet the conditions as per the mining law. If they fail, then other companies will have to apply and be put through this process.’

High-risk, high-return

Mining industry analysts describe the Panguna mine as a ‘high-risk, high-return’ investment, which only global miners would be interested in.

Greg Evans, KPMG’s Perth-based Global Leader, Mining Mergers and Acquisitions, believes there will be considerable interest.

‘If you look at what the resource is, and what it can deliver to both an owner and investor—and, probably more importantly, the local economy—it would have to be a definitive “yes”.

‘The copper price is heading in the right direction, the supply metrics are working in the favour of copper broadly and I would expect that BCL are being approached reasonably regularly by a number of metals traders.’

Evans points to growing demand for copper, noting that batteries in electric vehicles are likely to use 927,000 tonnes of copper a year by 2030, according to forecasts by Bloomberg New Energy Finance. That alone equates with 5 per cent of current production.

Global

Evans believes a global miner, ‘like Glencore or similar’, is likely to become involved.

‘KPMG just completed a survey around transaction activity across a bunch of sectors. In the mining sector, the preference of the majors was particularly for joint ventures at the asset level.

‘Batteries in electric vehicles are likely to use 927,000 tonnes of copper a year by 2030.’

‘To me, that would be the form that a transaction would likely take. BCL would ensure the social licence to operate, and look after stakeholder management, political and administrative management on the ground, with perhaps a partner coming in providing financial and operational support.

‘So, it is likely to be a large industry player used to dealing in remote locations, eliciting strong local community engagement, and creating local employment as an obligation and priority. All those things are going to be required.’

Risks

Satish Chand, Professor of Finance at the University of New South Wales and based at the Australian Defence Force Academy in Canberra, says risk assessment will be crucial.

‘There has been a history of conflict where a very small number within the population has the ability to stop a very large mine. That risk remains.

‘There is a contest over the distribution of proceeds and that has not yet been settled to my understanding. There is little that is known about the magnitude of the cost involved in the clean up.’

Chand notes that the Bougainville Mining Act says 51 per cent of the mine must be locally-owned. The non-binding referendum on Bougainville’s independence from PNG scheduled for 2019 must also be considered a ‘risk’.

Greg Evans agrees the local shareholding requirement makes the financing prospect ‘more challenging’.

‘The biggest successes that the majors have had in countries such as Africa and South America, have been where they’ve engaged local communities, shared the profits, and shared the benefits. The control over how those profits flow and are allocated is equally the challenge—as it is the solution.

‘You’ve always got to come back to the quality of the resource; which will always make it attractive.’

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