Engineering & Mining Journal

JAN 2019

Engineering and Mining Journal - Whether the market is copper, gold, nickel, iron ore, lead/zinc, PGM, diamonds or other commodities, E&MJ takes the lead in projecting trends, following development and reporting on the most efficient operating pr

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PROJECT SURVEY 2019 JANUARY 2019 • E&MJ 19 Corp. and Albemarle each have lithium processing operations in the area and are looking to expand. A newcomer, Piedmont Lithium, is looking to spend $500 million on a spodumene mine and process plant to produce battery-grade lithium hydroxide. In Latin America, there are invest- ments of $5.6 billion planned for lithium projects, representing 67 projects, and ac- counting for 25% of the worldwide invest- ment. Western Australia, with significant hard-rock deposits producing high-grade spodumene, is expected to meet more than 50% of the world's lithium carbon- ate demand. Australian hard-rock lithium is relatively more expensive to mine com- pared with its South American counterpart, where brine-based mining is undertaken. However, mining of hard-rock lithium con- sumes far less water and is easier to refine, making its battery grade higher. Two major players, Pilbara Minerals and Altura Min- ing, who recently commenced shipping spodumene to battery manufacturers in China and South Korea, are expected to produce a total of 700,000 metric tons (mt) of spodumene by mid-2019. While a lot of noise is being generated by lithium and other battery metals, build- ing block commodities, such as coal, iron ore and copper, will continue to garner the largest amount of expenditures, and ac- count for 70% of the project activity. There's about $1.19 trillion worth of active mining projects worldwide, which can be split into three segments. First is $178 billion currently under construction, representing an 8% increase from this time last year. This reverses a trend that has seen mining construction activity de- cline since peaking during the end of the mining boom in 2012. Secondly, there is $362 billion in the planning and en- gineering stages scheduled to begin con- struction in 2019. The remaining $650 billion is planned for 2020 and beyond. The top mining companies; Barrick Gold, BHP Billiton, Glencore, Newmont Mining, Rio Tinto and Vale, are continuing to spend more off the bottom of 2016, but looking out to 2020, these major firms are for the most part going to normalize spend- ing at around current levels. Most of these expenditures will be for a handful of pro- jects to replace depleting mine capacity or lower ore grades. There's a few grassroot projects being developed but most of the projects getting funded are expansions or additions at existing mines or brownfields. Iron Ore/Steel Global steel production rose about 5% in 2018 and is expected to increase 1%-2% in 2019. A shift in China's anti-pollution plan to limit production at heavy-polluting steel mills in populated metropolitan ar- eas will present further demand for higher grade iron ore such as what can be found in Australia. China's domestic reserves are largely low grade. The trend of moving away from blast-furnace iron making to the electric-arc furnace process is accelerating worldwide, and it will have a moderating effect for iron ore demand in the long-term. For the steel industry, as the world's largest steel producer, China plans to re- duce its production capacity by 40 million mt in 2019, by shutting down small blast furnaces and converters, and accelerating the construction of reduction and replace- ment projects. China has implemented a capacity-reduction replacement plan where 1 ton of new capacity is allowed only after closing 1.25 tons of old inefficient capacity. In India, the government has set a target of reaching 300 million mt/y of crude steel capacity by 2030 by putting weight behind the "Make in India" program, and plans to lift manufacturing's share of GDP to 25% by 2022. Annual production growth of 7-8% over 2018-2020 is expected. The five major steel manufacturers, which con- tribute more than 75% of steel production, are going through an organic and inorgan- ic expansion phase. This is good news for positive growth in the steel sector due to investments in the infrastructure, oil and gas, and automotive sectors. Australia dominates iron ore produc- tion as a major supplier to Asian mar- kets, with exports of approximately 860 million mt/y. Productivity enhancements and mine replacements are supporting the increased volumes at both the ma- jors, BHP Billiton and Rio Tinto. Mining at BHP's South Flank mine commenced in September 2018 with an additional capacity of 80 million mt/y, while Rio Tin- to is planning a $3 billion expansion at Koodaideri, adding 40 million mt/y in the Pilbara region, which includes significant upgrades at its Dampier export terminal. The agreement between U.S., Canada and Mexico on a new trade agreement, USMCA, which replaces NAFTA, has re- moved some market uncertainty going into 2019, but steel and aluminum tar- iffs remain. Section 232 and Section 301 tariffs continue to benefit primary steel producers in the U.S. at the expense of downstream steel processing and fabrica- tion companies, and consumers will pay higher prices for steel in 2019. U.S. steelmakers have seen project activity explode after years of postponing improvements due to market conditions. Since December 2017, project activity for steel manufacturers in the U.S. has almost doubled, jumping from $11.2 billion to about $20 billion. Nucor, U.S. Steel and others have announced numer- ous capex projects. Also, iron ore and metallurgical coal mining firms, including Cleveland Cliffs, are benefiting as major suppliers to the steel industry. Coal Coal consumption is expected to go side- ways for the next five years as developing nations exit coal use and Asian countries

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