Glencore slumps to Australian nickel loss Peter KerResources reporter Aug 7, 2019 — 6.51pm Nickel might be enjoying a renaissance on the back of growing demand from the battery and electric vehicle sector, but that doesn't mean Australian nickel mines are suddenly printing money. That much was proved by mining giant Glencore on Wednesday, which revealed its Australian nickel division had suffered a 35 per cent slump in revenue and posted a $US31 million ($46.1 million) loss before interest and tax in the first six months of 2019. The loss was in stark contrast to the $US114 million ($214.2 million) profit before interest and tax recorded by Glencore's Australian nickel division in the first half of 2018. The timing of the revenue and profit slump may appear curious, given nickel prices have risen almost 40 per cent since the start of 2019, and given Glencore said on Wednesday that nickel supply would fall short of demand in 2019. It also came amid growing excitement about nickel, with rival miners like BHP and First Quantum showing renewed interest in their previously unloved Australian nickel assets. The poor financial return from Glencore's local nickel division, which is essentially the Murrin Murrin mine in Western Australia, was due to the fact prices for cobalt, a byproduct from Murrin Murrin, have slumped severely. Cobalt prices over the past six months were 58 per cent lower than in the same period of 2018, with Glencore saying markets were oversupplied with the commodity. There was no suggestion that Glencore would close Murrin Murrin on the back of the result, but workers at the Mutanda copper and cobalt mine in the Democratic Republic of Congo were not so lucky, with Glencore announcing plans to shut the operation on the back of weak prices. The weak performance of Murrin Murrin highlights how the business models for some Australian nickel mines are reliant on good pricing for cobalt, a niche commodity that has enjoyed (and endured) wild price volatility in recent years. The federal government will fast-track employee entitlements for sacked nickel workers. That price volatility has come as cobalt has increasingly been viewed as a battery mineral alongside the likes of lithium, graphite and vanadium. Glencore's poor return at Murrin Murrin will be food for thought for Canadian miner First Quantum, which is planning to restart Western Australia's Ravensthorpe nickel and cobalt mine in 2020. As part of the restart, First Quantum is considering selling Ravensthorpe's nickel and cobalt in different ways. ''We have been looking at separating the nickel and cobalt into two different concentrates, which would give us higher payability, which is the equivalent of a higher price,'' said First Quantum president Clive Newall on May 1. Ravensthorpe was once owned by BHP, which is also showing renewed interest in Western Australian nickel. The company said earlier this year that it would no longer look to exit its struggling Nickel West division, and BHP said last week that battery-related customers' share of its nickel sales from WA had risen from zero to about 80 per cent in the past four years. Nickel West Asset President, Eddy Haegel during a tour of BHP's Kwinana Nickel Refinery. Nickel West produces cobalt-nickel-sulphide products, and test work is under way to see if the division can produce cobalt-sulphates at its Kwinana refinery. Cobalt is also an important byproduct for Independence Group's Nova mine, which sells a concentrate product containing nickel, copper and cobalt. Cobalt was one of several of Glencore's products that suffered weaker prices over the past six months, and when combined with exceptional items, drove a 92 per cent fall in attributable profit to $US200 million. Thermal coal is Glencore's biggest exposure in Australia, and prices for top- quality thermal coal from NSW fell 31 per cent during the first six months of 2019. https://www.afr.com/companies/mining/glencore-slumps-to-australian-nickel-loss-20190807-p52evd
https://www.bnnbloomberg.ca/glencore-mine-boss-seized-at-zambian-airport-spells-trouble-1.1423263 Glencore Mine Boss Seized at Zambian Airport Spells Trouble Thomas Biesheuvel, Matthew Hill and Taonga Clifford Mitimingi, Bloomberg News (Bloomberg) -- Nathan Bullock was about to fly home to his family in Australia when authorities blocked his exit at Zambia’s Lusaka airport, bundled him into a police car, and drove him six hours through the night back to the mine he manages. Police later camped outside his home. Bullock is at the center of a rapidly deteriorating row between the southern African nation’s government and Glencore Plc, the world’s biggest commodity trader. The conflict flared last week when Glencore said it was temporarily closing its giant Mopani mines as they hemorrhaged cash following a collapse in the copper price. Zambia said Glencore didn’t follow the proper legal procedures and threatened to cancel its mining licenses. The stakes are high for both parties. Zambia, heavily dependent on copper revenues, is on the brink of a debt crisis. For Glencore, it’s the latest headache at its African copper and cobalt assets. Spanning the copper belt that stretches north into the Democratic Republic of Congo, the mines are supposed to be a major growth driver, but have been beset by problems. There are also wider implications. Glencore is one of the last major western miners to control copper and cobalt operations in Congo and Zambia. Gradually its rivals have quit the region to be replaced by Chinese companies. As the world moves toward an era of electric vehicles, China is gaining increasing dominance over the supply chain. The Mopani mines are on the outskirts of Kitwe, a city about 180 miles north of Zambia’s capital, Lusaka. The mines have been troublesome for Glencore, but that hasn’t stopped the company from spending billions of dollars on sinking new shafts to try and almost triple copper production, to about 140,000 tons a year. Still, Mopani was unprofitable even before the coronavirus pandemic led to a collapse in the copper price, convincing Glencore that its best option was to mothball the mines for at least three months. Tough Line Zambia responded with fury, detaining Bullock, chief executive of Glencore’s local unit. He had only been in the country since October, when he took over the Mopani unit. Bullock was released by the police, who on Friday camped outside his Kitwe residence “merely for his safety,” according to Richard Musukwa, the mines minister. Glencore declined to comment. Musukwa, who made the comments at a press briefing in Kitwe broadcast on local radio, asked for questions to be sent by text message, which he didn’t immediately respond to. It’s not the first time Zambia has taken a tough line with the companies that exploit its mineral wealth. Fifty years ago, Zambia’s first post-independence leader, Kenneth Kaunda, nationalized mines owned by Anglo American Plc and Roan Selection Trust to rally his political supporters. Now, the often-populist President Edgar Lungu may try to shore up support in the politically crucial Copperbelt province by fighting to keep Mopani operating. “Already under pressure, the mine closures would undermine President Edgar Lungu ahead of internal party elections and the 2021 national elections,” Eurasia Group analyst Connor Vasey wrote in a note. “They would also jeopardize Zambia’s broader economic stability.” A year ago, the government placed the local unit of Vedanta Resources Plc in provisional liquidation, accusing the company of lying about expansion plans and cheating on taxes. The belligerent approach has drawn criticism, including a letter this week from three former finance ministers and a central bank governor. “There is a growing image of Zambia as the ‘wild west’ where the application of the law and work of statutory bodies is arbitrary and political,” they wrote. “Who will invest in a country where assets can be seized, or contracts are irrelevant?” Resource Nationalism Zambia isn’t alone in pursuing resource nationalism. In neighboring Tanzania, President John Magufuli has spearheaded an aggressive drive targeting gold-mining companies, while Congo upset miners operating there by redrawing the mining code. The International Monetary Fund forecasts Zambia’s economy will contract by 3.5% this year, the worst performance in about two and a half decades. Copper production, which generates about 70% of the country’s export earnings, dropped to the lowest since 2015 last year. Glencore has faced repeated problems with its African operations, struggling to make them profitable. Yet the company unveiled a turnaround plan last year that would see the assets generate an annual profit of more than $1.5 billion. So far the program is working at Katanga, its best asset, but the closure of Mopani is a setback. Chinese companies including Jiangxi Copper Co. have shown a growing interest in Zambia’s copper industry. Last year, it bought a near-20% stake in First Quantum Minerals Ltd., the nation’s biggest producer. Mopani, which Glencore valued at $1.7 billion in December -- when copper prices were much higher -- has a smelter as well as mines. “Zambia can talk up confiscating licenses, but no one is going to step in and buy it,” said Ben Davis, an analyst at Liberum Capital Markets. “Except maybe the Chinese.”
Exclusively once but these days about 50% of my portfolio. I live in a state which is hugely involved with mining with many of the worlds largest mining co's operating here so news flows thick & fast on the subject.
Back in 2013-15 I bought RIG (Transocean LTD). Big mistake, I lost my shirt. Good thing I quit in 2015, RIG was traded ~$50 then, yesterday ~$1.