As the ink dries on Whitehaven Coal’s $US4.1 billion ($6.5 billion) acquisition of two of BHP’s Queensland coal assets, movement on the ASX shows that stakeholders are mulling over the broader significance of the deal.
Following the announcement of the deal on Wednesday, Whitehaven opened on the ASX with a bang at $7.79 per share (up from $6.69 on Tuesday), its highest share price since the coal boom at the beginning of the year.
The purchase of BHP’s Daunia and Blackwater coal mines comes with a price tag of $US2.1 billion in cash up front, $US1.1 billion in cash over three years after completion and the potential for up to $US0.9 billion in a price-linked earnout payable over three years. This comprises a total sale price of around $6.48 billion, with completion of the deal expected in the June 2024 quarter.
Whitehaven chief executive officer and managing director Paul Flynn called the acquisition of the two metallurgical coal assets ‘transformative’ for the company.
Metallurgical and thermal coal differ in quality and carbon content. Thermal coal is traditionally burned to generate electricity, but as Australia and the world transition to cleaner energy, thermal coal is heavily regulated and arguably falling from relevance. Metallurgical coal, on the other hand, is a higher quality coal used in steelmaking with strong global demand.
The deal will mean 70 per cent of Whitehaven’s coal production will be metallurgical, giving the miner some much needed longevity in the heavily regulated realm of coal mining.
“Daunia and Blackwater produce metallurgical coal that is in high demand across Asia… where population growth and economic development is expected to drive strong demand for steel production and metallurgical coal through to at least 2050,” Flynn said.
The two mines also expand Whitehaven’s coal assets outside of NSW, where the company currently operates four mines in the Gunnedah Basin.
But BHP seems to feel differently when it comes to the longevity of Daunia and Blackwater – at least under its own capital investment model. The mining giant first flagged the two Queensland mines for sale so it could focus on producing higher quality metallurgical coal, a move it views as more sustainable.
“A key route for steelmakers to be able to reduce their carbon intensity will be through more efficient blast furnace operations. That requires the highest of quality coking (metallurgical) coal. And that’s what we have in assets like Peak Downs, Goonyella, Saraji and Broadmedow,” BHP said.
“And so those assets we see as having both sides through the energy transition. What we’re doing here is further concentrating our portfolio on the best of the best assets.”
Glencore has announced plans to close its Mount Isa copper operations in Queensland by the end of 2025, but said it will keep its other metal assets open.
Operating for over 60 years, the company’s copper mine life has already been extended six years past its original life expectancy.
All three copper mines at the Mount Isa operation – Enterprise, X41 and Black Rock – are set to close, as well as the company’s copper concentrator.
Other Mount Isa mines and operations will remain open, including the copper smelter, the George Fisher mine, the zinc-lead concentrator, the lead smelter in Mount Isa, as well as the copper refinery in Townsville.
Glencore said it has conducted a range of studies and reviews seeking to further extend the life of the underground copper mines, but the end of mine life has been confirmed.
Glencore’s Lady Loretta zinc mine, located 140km north-west of Mount Isa, which was a finite orebody with a seven-year mine life, will also close in 2025.
“We know this decision will be disappointing for our people, our suppliers, and the Mount Isa community,” Glencore Australia zinc asset chief operating officer Sam Strohmayr said.
“The reality of mining is that mines have a beginning, middle and end. And unfortunately, after 60 years of operation, Mount Isa’s underground copper operations have now reached that end.
“We want to give our people as much time as possible to consider the best options for them and their families, which is why we are notifying our workers and the community almost two years before these mines close.
“Our focus over the coming months will be to work closely with our people and contractors, our suppliers, and the Mount Isa community to provide support as we move towards closure of these assets.”
Glencore’s Mount Isa underground copper mines, copper concentrator and supporting services currently employ around 1200 people.
BHP’s acquisition of OZ Minerals is paying dividends, with operational records falling across its new copper district in South Australia.
The Carrapateena mine, located 100km south-east of BHP’s Olympic Dam operation, achieved record development metres in September, producing 14,100 tonnes of copper in the September quarter. This is a 21 per cent increase on the previous three months (11,700 tonnes).
Olympic Dam, which BHP owned before the OZ Minerals acquisition, mined 2.64 million tonnes (Mt) of material during the September quarter – its highest mark since the 2014–15 financial year (FY15).
This equated to record gold production of 53,028 ounces, the second time Olympic Dam has achieved this in three quarters.
Combined with a 48 per cent increase in copper production at Prominent Hill, BHP produced 71,700 tonnes from its South Australia copper operations – a 44 per cent uplift from the same quarter last year (bearing in mind it only owned Olympic Dam at this point).
BHP achieved a 11 per cent group copper production uplift from the third quarter of 2022, with the Escondida and Pampa Norte operations in Chile also delivering strong performances.
Iron ore production fell three per cent from the same quarter last year, which the major miner attributed to “tie-in activity for the Rail Technology Programme (RTP), the ongoing ramp up and maintenance at the Central Pilbara hub (South Flank and Mining Area C), and the timing of track renewal maintenance”.
BHP said South Flank remains on track to ramp up to full production capacity of 80 million tonnes per annum by the end of FY24.
The miner’s quarterly was released on the same day as the divestment of BMA’s Daunia and Blackwater coal mines was revealed, with Whitehaven buying the mines for $US3.2 ($5.02) billion.
BMA is a joint venture between BHP and Mitsubishi Development.
Canadian-based First Quantum Minerals has commenced a maiden diamond drilling program along the Yarramba Palaeovalley on the tenements of Boss Energy’s Honeymoon uranium project in South Australia.
Boss Energy first entered into an exploration earn-in agreement with First Quantum Minerals in February 2022. The agreement covers the base metals rights of five tenements at the Honeymoon project, which commenced mining operations last week.
“With a proven track record in discovering and developing deposits, Boss considers First Quantum Minerals an ideal partner in the exploration and potential development of any base or precious metal discoveries at Honeymoon,” Boss Energy said of the agreement.
The new drilling program will target basement-hosted base metal mineralisation below the Yarramba Palaeovalley and will cover three high-priority targets identified from extensive analysis and modelling of geophysical and geochemical datasets.
It will consist of at least five diamond core holes for a minimum of 1800m drilling. Global drilling company DDH1 – which was acquired by Perenti last week – will complete the 4–6 week-long drilling program.
The geochemical assay results are expected to return within 1–2 months after the program’s completion.
“This agreement is an outstanding opportunity for Boss and our shareholders,” Boss Energy managing director Duncan Craib said.
“We have a global leader in First Quantum Minerals funding base metals exploration at Honeymoon, giving Boss significant exposure to their success at no cost to us while we focus on our goal of becoming Australia’s next uranium producer.”
After the drilling program’s completion, First Quantum Minerals may choose to earn a 51 per cent interest in its agreement with Boss by spending $6 million on exploration within five years, as well as maintaining minimum annual expenditure on the project of $500,000.
If First Quantum Minerals follows this path, it will enter into a joint venture agreement with Boss Energy.
Taking a more holistic, long-term view of tailings technologies will benefit companies, communities and other stakeholders.
Mining companies are analysing more alternatives to tailings storage facilities (TSF) earlier for new projects as they respond to the global industry standard on tailings management (GISTM) and stakeholder expectations.
Launched in August 2020, the GISTM sets a global benchmark for environmental, social and technical outcomes from tailings management. The goal is zero harm to communities and the environment from tailings facilities worldwide.
The GISTM has been widely adopted by members of the International Council on Mining and Metals (ICMM). These companies had until August 2023 to conform to the GISTM for tailings facilities, with “extreme’” or “very high” potential consequences for not doing so. All other tailings facilities have until 2025 to conform.
Requirement 3.2 of the GISTM necessitates operators of new tailings facilities to undertake a multi-criteria alternative analysis of all feasible sites, technologies and strategies for tailings management. They should consider TSF alternatives over the project life cycle and address environmental, technical and socioeconomic impacts.
The goal is twofold: select a TSF alternative that minimises risks to people and the environment through the TSF life cycle, and minimise the volume of tailings and water placed in external tailings facilities.
Lack of planning can result in catastrophic TSF failure.
The GISTM requires the process to be reviewed independently and disclosed to stakeholders in order to aid public accountability.
SRK Consulting senior tailings engineer Sam Kendall said the GISTM’s requirement for the early evaluation of alternative tailings technologies and strategies has significant implications for new and established mining companies.
“In the context of GISTM compliance, there is increased attention being paid to the assessment of best available practices and/or best available technologies; however, some established mining houses have long been applying these principles,” Kendall said.
“Some miners are drawn to short-term capex (capital expenditure) and opex (operational expenditure) without sufficiently considering the longer-term, less tangible aspects of TSF design, which also derive value.
“For newer companies at the very early stages of project development, the initial selection of a low-cost, status quo tailings management solution can be appealing, particularly when considering time and budget constraints.
“During the initial stages of project development, it can be easy for project managers without specific tailings experience to favour selecting a familiar, cost-effective solution; however, with large-scale uptake of the GISTM, the industry is being encouraged to invest in optimising tailings management to find more sustainable, long term, cost effective solutions.”
A tailings dam on a mine site.
Kendall believes expectations are changing with the implementation of the GISTM and all miners developing new TSFs are expected to demonstrate that they are working towards a defensible evaluation of management options.
“This is an important consideration for mining companies, particularly those looking for early-stage investment from institutions which expect GISTM compliance,” Kendall said.
“More broadly, this process also influences perceptions from regulators, communities and the public. Companies should understand this change and be taking steps now to adapt to it.”
Sustainable growth
According to Kendall, the long-term benefits of comparing TSF alternatives can far outweigh the extra cost and risk, particularly when there are unique project drivers or TSF constraints.
“Examining alternative TSF technologies will help mining companies to implement the optimal result on mine-waste design, now and in the future,” he said.
“Fundamentally, it’s about being future-focused and open-minded about TSF technologies.”
Documenting and disclosing the process used to consider TSF alternatives has other benefits, Kendall said, including project transparency and stakeholder collaboration. Similarly, adopting this approach helps to demonstrate environmental, social and governance (ESG) principles in TSF and cultivate a more holistic view of tailings management going forward.”
Arguably, the main benefit of this approach is the potential to “future-proof” TSF design.
“Given life of mine is often 10-plus years, it is well worth exploring options that have the potential to improve the risk profile of the operation and licence to operate into the future,” Kendall said.
“Business-as-usual-type facilities might not be able to maintain acceptability, as ongoing public disclosure requirements set a high bar for the mining industry in general.”
Kendall acknowledges, however, that this approach adds extra cost and risk for smaller mining companies. Assessing more TSF alternatives requires greater internal resources or use of industry consultants. Documenting the process to select a TSF technology and strategy, and having it independently reviewed, adds other costs.
The main risk for smaller miners when selecting alternative tailings management approaches, such as large-scale filtration (reducing the amount of water transported from a processing plant to a TSF) or co-disposal (combining tailings and waste rock), is reliability and the potential for operational delays.
“These are important considerations that can be addressed with time,” Kendall said.
“Mining companies that don’t adhere to GISTM requirements around TSFs will find it increasingly hard to attract capital from investors or will have to pay a higher cost for that capital.”
Stakeholders have demanded more rigorous and stringent TSF processes after the catastrophic tailings dam collapse at Vale’s Córrego do Feijão mine in Brumadinho, Brazil, in January 2019.
“Investors are scrutinising TSFs in more detail than ever,” Kendall said. “They recognise the immense reputational risk that can arise from a tailings failure, and the potential destruction of mine value.”
Kendall believes it is a good sign that mining companies are starting to adopt GISTM principles for tailing facilities.
“Like many things in mining, change usually starts at the top and works its way down,” he said. “There’s no one-size-fits-all approach.”
The key is a different mindset.
“It’s easy to view a TSF as only a cost and focus mostly on its impact on project economics. It’s harder to identify and value the long-term, less tangible benefits of a successful TSF strategy and the damage caused if something goes wrong,” Kendall said.
“The GISTM provides an opportunity for mining companies to show stakeholders the process they went through to choose their TSF. That’s good for the company, communities, investors, and the environment.”
SRK Consulting is a leading, independent international consultancy that advises clients mainly in the earth and water resource industries. Its mining services range from exploration to mine closure. SRK experts are leaders in fields such as due diligence, technical studies, mine waste and water management, permitting, and mine rehabilitation.
Metso has chartered a new path in India after announcing plans to extend its manufacturing capacity of mobile track-mounted crushing and screening equipment.
The company will expand its manufacturing operations in Alwar in India. The Alwar facility will be 35 per cent bigger at 340,000 square metres.
The Alwar facility is one of Metso’s biggest manufacturing facilities. The site employees 1300 people with a production ramp up expected to continue into the next year.
The factory, which originally opened in 2008, was showcased on September 19 with the new expansion. Key features, according to Metso, include automated warehousing, automated assembly lines, modern painting lines and 13,000 solar panels installed to enable increased energy production. After the extension, solar energy covers 85 per cent of Alwar’s total power generation, which is the maximum permitted as per state government guidelines.
President of the Aggregates business area of Metso Markku Simula said the expansion was key for Metso.
”With the increased manufacturing capacity, Alwar becomes the major Metso site for increased domestic business in India and exports to Metso’s customers globally. Additionally, significant investment has been made in engineering and R&D resources, making it one of our key global engineering hubs,” he said.
The increased capacity in India will be used for the manufacturing of mobile McCloskey and Tesab equipment. At the same site, Metso is also producing wear parts and pumps for the aggregates and mining industries.
Private equity firm Resource Capital Funds (RCF) has announced the selling of Ausenco, a multinational engineering company, to three key US investment firms.
Resource Capital Fund VI (RCF VI), RCF’s fund that owns Ausenco, first acquired the company in 2016 for $153.7 million.
According to RCF, Ausenco has focused on delivering copper for the energy transition and constructing four major copper concentrators while under RCF VI’s ownership.
“These include Carrapateena, representing one of the largest copper reserves in Australia, Constancia and Mina Justa in Peru and Mantoverde in Chile, still under construction, for a combined annual copper capacity of more than 400,000 tonnes,” the firm said.
“In addition to copper, Ausenco has grown capabilities in sustainability, lithium and operational performance. Ausenco now has more than 3000 employees, up almost 1600 employees since RCF privatised the business in 2016.”
The transaction is expected to close in late 2023, subject to satisfaction of customary closing conditions.
“We extend our heartfelt gratitude to the Ausenco team, whose dedication and unwavering commitment have been the driving force behind its success during our ownership… This is a fantastic outcome for all parties involved, and we wish Ausenco continued success,” Resource Capital Funds managing partner James McClements said.
RCF head of private equity Martin Valdes said this transaction is a “natural step” that will mark “the next chapter in Ausenco’s journey”.
“The decision to sell Ausenco was made after careful consideration, with the belief that this transition will allow the company to further expand its reach and make an even greater impact in the growing engineering sector,” he said.
“Our relationship will continue as like-minded collaborators to deliver the necessary commodities to support the energy transition.”
Metso has announced an expansion of its process piloting capabilities in Finland to keep up with the needs of the battery industry.
This expansion has involved Metso modernising its pilot facility at the Metso Research Centre in Pori, Finland, with expanded capabilities for lithium hydroxide and other battery chemicals process testing.
Metso has also opened a battery materials precursor pilot plant as part of the expansion, which is now available for customer trials.
“Pilot run requests for battery minerals like lithium, nickel and cobalt have increased significantly during the last three years,” Metso director for hydrometallurgical research and development Janne Karonen said.
“Currently, we are working on several battery black mass recycling and precursor projects and have several lithium and other battery chemicals project pilots on our laboratory schedule.”
Metso said the pilot facility expansion complements its front-running piloting capabilities for minerals processing and metals refining, as well as enables minerals and battery industry customers to have end-to-end testing and having its piloting services and technology and equipment deliveries come from one supplier.
The Finland expansion ties into Metso’s 20 year experience in developing sustainable hard rock lithium soda leaching technologies.
The engineering company announced earlier in the week the opening of new manufacturing facilities in Alwar, India.
Mineral exploration expenditure in Tasmania has hit a new record, with the latest Australian Bureau of Statistics (ABS) figures showing $43.1 million was spent in the 2023 financial year.
The jump marks a 31 per cent boost in mineral exploration in the state, which Tasmanian minister for resources Felix Ellis said is the highest level on record.
“The mining and mineral processing sector is a key pillar of the economy and contributes more than $2.8 billion a year in exports and supports more than 5800 jobs,” he said.
“We know the world will need the key and critical minerals that Tasmania has to help power the global shift to renewable energy and to support defence manufacturing.”
Ellis pointed to programs like the Tasmanian Government’s exploration drilling grant initiative (EDGI) and geoscience initiative as examples of its commitment to growth in the industry.
“The EDGI grants provide co-funding for greenfield targets that may lead to the discovery of Tasmania’s next new mine,” he said.
“Since the program began, there have been eight rounds released, with funding provided facilitating more than 16,000 meters of drilling.
“It is pleasing to see that the greenfield exploration investment of $5.3 million is the highest in a decade.
“The $2 million geoscience initiative is providing new data to underpin and de-risk the next generation of mineral exploration.”
Resource production is ramping up in Tasmania with a recent feasibility study between the Tasmanian Government and the Rotterdam Port Authority marking the state as a potential green hydrogen powerhouse.
The state hopes to begin exporting green hydrogen by 2030, with the study confirming conditions in the island State for production, domestic use and export are world-class.
Renascor Resources’ Siviour graphite project is located on the Eyre Peninsula, South Australia.
With graphite demand outstripping supply, the market is bracing for a 777,000-tonne per year deficit by 2030. But movement in the mining sector – both traditional and innovative – may be set to change this.
One of the key raw materials in the green energy transition is graphite, but while Australia is a key producer of other battery metals such as lithium, nickel and manganese, there are no active Australian graphite mining operations.
Graphite is used as an input for anodes – one of two electrodes that make up a lithium-ion battery, with cathodes – made up of metals such as lithium, nickel and cobalt – the other electrode.
By 2030, demand for graphite is expected to hit four million tonnes (Mt) per year, roughly 75 per cent of which is for the lithium-ion battery market. Currently, the bulk majority of graphite comes from China.
The highest profile Australian-focused company in this sphere is Renascor Resources, which owns the Siviour battery anode material project in SA.
Siviour holds the second largest graphite reserve in the world, and the largest outside of Africa.
As recently as last week, the Renascor increased Siviour’s mineral resource by 25 per cent to an impressive 123.6Mt at 6.9 per cent total graphitic carbon (TGC), for 8.5Mt of contained graphite.
The company predicts the mine, when operational, to produce up to 150,000 tonnes per year for a 40-year life of mine.
“As the demand for graphite grows, long-life, high quality sources of new supply like Siviour are becoming increasingly important to the developing lithium-ion battery supply chain,” Renascor managing director David Christensen said.
In July this year, the company signed a Memorandum of Understanding with Mitsubishi Checmical Corporation for the potential sale of its graphite products from Siviour to the Japanese giant.
Founded in 2018, ASX-listed International Graphite was built on the premise that the industry would need more downstream processing capacity outside of China.
The company is developing a mine-to-market business model, whereby raw materials would be mined from its Springdale project in WA and fed into a downstream processing plant in the emerging renewable energy hub of Collie.
International Graphite similarly announced a significant increase to its graphite deposit at Springdale, which is the second largest in Australia behind Siviour.
The deposit grew from 15.3Mt to 49.3Mt at 6.5 per cent TCG.
Despite the 27 per cent increase, International Graphite managing director Andrew Worland said the company had only scratched the surface at Springdale.
“So far, exploration has been limited to approximately 10 per cent of the Springdale tenement areas. More than 80 per cent of the aeromagnetic anomalies on a portion of our tenure has yet to be tested,” Worland said.
Outside of Australia, interesting developments have been made.
New Zealand-based battery material company CarbonSpace recently secured an $18 million investment from a number of partners to commercialise production of what it calls ‘biographite’.
Biographite is produced from forestry and timber industry by-products, meaning a significant reduction in carbon emissions.
“Biographite has a carbon negative footprint, saving up to 30 tonnes of CO2 emissions per tonne of material compared to synthetic or mined graphite,” the company said.
“This investment represents a strong statement of support for sustainable sourcing of battery materials for global decarbonisation. With these partnerships, CarbonScape is another step closer to bringing biographite to market on a commercial scale.”
Renascor Resources’ Siviour graphite project is located on the Eyre Peninsula, South Australia.
With graphite demand outstripping supply, the market is bracing for a 777,000-tonne per year deficit by 2030. But movement in the mining sector – both traditional and innovative – may be set to change this.
One of the key raw materials in the green energy transition is graphite, but while Australia is a key producer of other battery metals such as lithium, nickel and manganese, there are no active Australian graphite mining operations.
Graphite is used as an input for anodes – one of two electrodes that make up a lithium-ion battery, with cathodes – made up of metals such as lithium, nickel and cobalt – the other electrode.
By 2030, demand for graphite is expected to hit four million tonnes (Mt) per year, roughly 75 per cent of which is for the lithium-ion battery market. Currently, the bulk majority of graphite comes from China.
The highest profile Australian-focused company in this sphere is Renascor Resources, which owns the Siviour battery anode material project in SA.
Siviour holds the second largest graphite reserve in the world, and the largest outside of Africa.
As recently as last week, the Renascor increased Siviour’s mineral resource by 25 per cent to an impressive 123.6Mt at 6.9 per cent total graphitic carbon (TGC), for 8.5Mt of contained graphite.
The company predicts the mine, when operational, to produce up to 150,000 tonnes per year for a 40-year life of mine.
“As the demand for graphite grows, long-life, high quality sources of new supply like Siviour are becoming increasingly important to the developing lithium-ion battery supply chain,” Renascor managing director David Christensen said.
In July this year, the company signed a Memorandum of Understanding with Mitsubishi Checmical Corporation for the potential sale of its graphite products from Siviour to the Japanese giant.
Founded in 2018, ASX-listed International Graphite was built on the premise that the industry would need more downstream processing capacity outside of China.
The company is developing a mine-to-market business model, whereby raw materials would be mined from its Springdale project in WA and fed into a downstream processing plant in the emerging renewable energy hub of Collie.
International Graphite similarly announced a significant increase to its graphite deposit at Springdale, which is the second largest in Australia behind Siviour.
The deposit grew from 15.3Mt to 49.3Mt at 6.5 per cent TCG.
Despite the 27 per cent increase, International Graphite managing director Andrew Worland said the company had only scratched the surface at Springdale.
“So far, exploration has been limited to approximately 10 per cent of the Springdale tenement areas. More than 80 per cent of the aeromagnetic anomalies on a portion of our tenure has yet to be tested,” Worland said.
Outside of Australia, interesting developments have been made.
New Zealand-based battery material company CarbonSpace recently secured an $18 million investment from a number of partners to commercialise production of what it calls ‘biographite’.
Biographite is produced from forestry and timber industry by-products, meaning a significant reduction in carbon emissions.
“Biographite has a carbon negative footprint, saving up to 30 tonnes of CO2 emissions per tonne of material compared to synthetic or mined graphite,” the company said.
“This investment represents a strong statement of support for sustainable sourcing of battery materials for global decarbonisation. With these partnerships, CarbonScape is another step closer to bringing biographite to market on a commercial scale.”
