Copper prices are heading up due to increased demand from energy transition and declining grades at existing mines, said Nolan Peterson, CEO of World Copper.
On Friday Peterson recorded Kitco Roundtable with Kitco correspondent Paul Harris and Mining Audiences Manager Michael McCrae. World Copper is a copper-focused exploration company operating within Chile.
"The average head grade of copper mines worldwide has dropped from about 1.6% to below 1% now," said Peterson. "That's been a steady decline over the last 30 years. [It] doesn't seem like a lot when you think about it, but you're basically moving twice as much material now."
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Can Norilsk Nickel reign in nickel prices?
4:25Red hot nickel may be coming back to earth, according to Reuters. On Saturday Michael McCrae recorded a solo Kitco Roundtable looking at the past week's metal and mining news. On Friday nickel prices jumped to their highest since 2011 on as a supply deficit ate into stockpiles and electric vehicles gain wider acceptance. Benchmark nickel on the London Metal Exchange (LME) was $22,400 a tonne.However, supply should be ramping up. Early last year Norilsk Nickel, the largest miner of the metal, said that two of its mines flooded, which crimped production. The miner said the issues is fixed and production is set to rise. The Russian miner is set to produce 205,000 to 215,000 tonnes of nickel this year compared with 190,000 to 200,000 tonnes last year.
Why miners are moving 'twice as much material' to produce copper
31:54Copper prices are heading up due to increased demand from energy transition and declining grades at existing mines, said Nolan Peterson, CEO of World Copper. On Friday Peterson recorded Kitco Roundtable with Kitco correspondent Paul Harris and Mining Audiences Manager Michael McCrae. World Copper is a copper-focused exploration company operating within Chile. "The average head grade of copper mines worldwide has dropped from about 1.6% to below 1% now," said Peterson. "That's been a steady decline over the last 30 years. [It] doesn't seem like a lot when you think about it, but you're basically moving twice as much material now."
What were 2021's top headlines, and next year's emerging trends?
33:30This week Kitco Roundtable panelists Michael McCrae, Paul Harris and Neils Christensen picked their top news story of the year, as well as emerging trends in 2022. McCrae is Mining Audiences Manager, Harris is a Kitco correspondent and Christensen is a Kitco editor.McCrae chose the large automakers investing electric vehicles as mining's top headline, due to a firm commitment to battery metals. Christensen said meme stocks and emerging silver were most impactful to him. Looking at top gold deals, Harris argued that Newcrest buying Pretium had the biggest implication for the precious metal space.
Golden Triangle's energy transition is a 'massive paradigm shift' - Skeena Resources
40:58The build out of hydroelectric power in the northwestern B.C. is fundamentally changing mining and exploration in the region, said Walter Coles Jr., CEO and president of Skeena Resources (TSX:SKE).On Friday Coles recorded Kitco Roundtable with Mining Audiences Manager Michael McCrae, Editor Neils Christensen and Kitco correspondent Paul Harris. Skeena is an exploration company focused on northwestern B.C., the Golden Triangle. The region has seen big developments, recently Newcrest's $2.8 billion Pretium purchase in November.Coles said that mine costs and environmental pressures are seeing rapid changes with miners being able to hook up to hydropower grids and give up on diesel."Tt's a massive paradigm shift on the cost side to be able to plug into cheap, clean hydro power, as opposed to using fossil fuels," said Coles.
Why battery metal M&A is more frothy
18:02While big deals in the gold space are getting done, the battery metal space is seeing more aggressive mergers and acquisitions, noted panelist Mining Audiences Manager Michael McCrae. On Friday McCrae recorded Kitco Roundtable with Kitco correspondent Paul Harris.For much of 2021 Wyloo Metals and BHP Billiton were in a bidding war for Noront Resources, which is advancing its Eagle’s Nest nickel, copper, platinum and palladium deposit located in Ontario. In October Sibanye-Stillwater beat several bidders and paid $1.0 billion for both the Santa Rita nickel mine and the Serrote copper mine in Brazil.The gold space has seen less competition. The year's biggest deal, Agnico Eagle-Kirkland Lake Gold, lacked a premium or other suitors. The overhang of expensive deals from the last decade weighs on gold miners. McCrae also said battery metal producers are paying more since they clearly see a lack of supply in EV space.
Why carbon credits are 'an incredible emerging asset class'
38:14While carbon credits have been around about 30 years, demand is finally surging, said Brett Heath, chairman of newly-formed Carbon Neutral Royalty. On Friday Heath recorded Kitco Roundtable with Mining Audiences Manager Michael McCrae and editor Neils Christensen. Heath is also CEO of Metalla Royalty & Streaming. Demand for carbon credits is estimated to increase by 15x by 2030 and by 100X by 2050, according to data compiled by Carbon Neutral Royalty. "Carbon credits have been around since the late nineties, so they're not a new invention, but it's the first time we've ever seen this global mass adoption," said Heath.
The gold sector is relatively small, but that can be a positive
45:00Technology giants dwarf mining giants, but that can also benefit investors, said Yamana Gold's executive chairman, Peter Marrone. On Friday Marrone recorded Kitco Roundtable with Mining Audiences Manager Michael McCrae, Editor Neils Christensen and Kitco correspondent Paul Harris. The largest gold miner, Newmont, has a market capitalization of $44 billion, compared to Apple's $2.57 trillion valuation. Fractionally, Newmont is 1.7% the size of Apple. Tech companies have also been attracting more investors. The Nasdaq Composite is up 22% year to date. The VanEck Junior Gold Miners ETF is down by nearly the same amount over the same period. Give the gold sector time, said Marrone. "Vacuums have to get filled. The broader investment community has to say: 'Where do I go to put my money?' And if the broader market is trading at 13, 14, 15 times cashflow and precious metals companies are trading at four to five times cashflow, I think it'll find a home. That's where the money will go," said Marrone. When favor returns to precious metal companies, any cash turned on the sector will have out sized impact due to the gold sector's relatively small size, said Marrone. "In some respects, I believe what's holding the sector back .... is relevance. Is it relevant to the broader investment community when everything else is doing well? But when everything else is so big by comparison, that's also the positive."
Gold miner M&A is on a roll
14:45There has been a succession of mergers and acquistions in the gold space, said mining audiences manager Michael McCrae. On Friday McCrae recorded a podcast with editor Neils Christensen and Kitco correspondent Paul Harris. This past week it was announced that Evolution Mining would buy Glencore's Ernest Henry Mining copper-gold mine in Queensland, Australia, for A$1 billion ($730 million).Earlier this month top ten Australian miner Newcrest picked up Pretium for $2.8 billion. In October there was the Agnico Eagle-Kirkland Lake tie up. If the merger is approved, Agnico Eagle will be a number three gold miner.
Central banks 'are stuck between a rock and hard place'
48:40Precious metals look good due to the central banks finding themselves stuck "between a rock and hard place," said Gwen Preston, who runs the Resource Maven. On Friday Preston recorded Kitco Roundtable with Mining Audiences Manager Michael McCrae and Kitco correspondent Paul Harris. Preston was commenting on Bank of England, which decided not to raise rates on Thursday. The bank had made hawkish statements in the face of wage and inflation pressures. "I think people are starting to realize that they're really stuck. We still need this liquidity in the global economy to try to keep things going otherwise the gears are just going to grind to a halt," said Preston. "It just underlines what I was saying: that they're stuck between a rock and hard place."
'I love his aggression' - Ian Telfer on Sibanye-Stillwater CEO
28:22The gold miners have not done themselves any favors with hiking dividends instead of acquiring more assets, said mining legend and entrepreneur Ian Telfer. On Friday Telfer recorded Kitco Roundtable with Mining Audiences Manager Michael McCrae and Kitco correspondent Paul Harris. Telfer has had a storied mining career and was foundational in the creation of Goldcorp and Wheaton Precious Metals. Telfer explained why he didn't favor buybacks or dividends by the gold miners. "The majority of the share buyers are not looking for dividends. They're looking for an increase in the price of gold. I think [the gold miners] should be using that cash to grow their assets and find more reserves and get larger," said Telfer. "The average share buyer I don't think cares about dividends in a gold stock."Panelists on the Roundtable contrasted the weak mergers and acquisition activity in the gold space with Sibanye-Stillwater's buying spree in the battery metals space. This past week Sibanye-Stillwater was top bidder for Santa Rita nickel mine and the Serrote copper mine in Brazil paying $1.0 billion. In September Sibanye announced that it would be spending $490 million to partner with ioneer on its Rhyolite Ridge Lithium-boron project located in Nevada, USA. Earlier in the year Sibanye acquired Eramet’s Sandouville nickel processing facilities in France for $76.82 million, and Sibanye invested $35.46 million in Keliber, a lithium project in Finland.Neal Froneman is CEO of Sibanye-Stillwater. "I love his aggression. One of my comments on our industry is that not enough people are doing mergers and acquisitions to grow their companies. Size matters, especially if want to attract larger investors," said Telfer"My observation of the mining industry--and especially the gold mining industry--is that companies are most successful run by one entrepreneur with one set of eyes and one vision," said Telfer, noting Robert Friedland and Lucas Lundin as examples.Big boards can slow a company's growth "... and the energy tends to go out of it.""Neals doesn't have that problem. He's had such success. His board lets him go where he wants to go and it's working perfectly for him."