Canadian Mining Review

Why Metals and Mineral Production is Renewable

In fact, it may be more renewable than other natural resource extraction activities

By Patrick Whiteway

Is metal and mineral production renewable?

The public thinks not. Politician think not. Metals and minerals are a finite resource, they say. You can't plant or grow more.

This is a fallacy. Metals and mineral production is just as renewable as other forms of resource extraction, such as forestry, and I will explain why here.

Consumption

One of the defining characteristics of metals and minerals that distinguish them from other natural resources such as wood, fish and wildlife is the fact that they are not consumed by us humans. Instead, they are used and re-used over and over again to make useful products. Once those products are no longer useful to us, we often re-cycle or re-use them (or their component parts). A very large percentage of the metals and mineral used by humans are treated this way. What doesn't get re-used or re-cycled typically gets tossed into landfills or is discipated in the environment.

What this means is that metals and minerals that have been extracted from the Earth are brought into use by society and remain in use for a very long time. They are not consumed as other natural resources are consumed. They remain useful. Their use can be renewed over and over again.

Demand

Metals and minerals are so useful more and more are in demand all the time. As population increases and incomes increase, people demand to have all the useful products that can be made from all materials, metals and minerals included.

Its this ever increasing demand that drives the mining industry to find and extract more and more metals and minerals. Without higher demand we would simply re-using and re-cycling what has already been mined.

Perhaps it is this perception of the accellerated global depletion of metals and mineral resources, as China, India and the other emerging economies grow at an accellerated pace, that causes the public to think that metals and minerals production is non-renewable.

 

 

 

 

 

 

Nickel Demand

Key Trends

Dr John Atherton, Director of the International Council on Mining and Metals spoke recently at the International Nickel Study Group annual meeting about the key trends in the mining industry.

Here's how he sees it:

Increasing public concerns

Intensifying political struggles over distribution of resource rents

Increased emphasis on corporate social and environmental practices

Increased NGO campaigning on a range of issues

Increasing complexity and breadth of issues facing the industry

Growing recognition that no single interest can address issues effectively

Nickel Pig Iron

China nickel pig iron production continues to rise

By Patrick Whiteway

Sven Tollin, Chief Statistician, Industry Advisory Panel of the International Nickel Study Group (INSG) presented recently at the annual meeting of the INSG in Lisbon.

He showed how imports of lateritic nickel ore to China from Indonesia and the Philippines has increased from near zero in 2005 to almost 5 million tonnes in 2011.

During those six short years, nickel pig iron production in China increased from near zero to 225,000 tonnes.

 

Nickel Recycle Rates and Corporate Social Responsibility

The rise of corporate social responsibility in the nickel industry.

By Patrick Whiteway

At the annual meeting of the International Nickel Study Group, held in Lisbon April 23, 2012, Heinz Pariser, a consultant, examined the question "What's new in stainless steel scrap?" The information he presented provides an interesting snap-shot of how well nickel resources are being used by society today. This information can also inform the work of policy makers which influences the environment in which the nickel industry operates so as to improve the utilization of this unique resource. Key among the factors that influence the management of nickel resources is the rate at which it is recycled in the so-called technosphere.

The rate at which stainless steel recycling is growing has increased to 7.9% per year compared with 3.6% for nickel, the most valuable ingredient in austenitic stainless steel.

During the same period (1960-2015) that we have witnessed this long-term success story, the global market environment has changed dramatically, however. Stainless steel production has shifted significantly from the U.S. and the EU to China. These two western economic powerhouses lost market share (from 40% each in 1960 to less than 10% for the U.S. and about 20% for the EU in 2011) whilst China has grabed the leading position in the market in just 20 short years, moving from near zero in 1990 to 40% of the market in 2011. Japan commands about 20% of the market, unchanged from that countrys market share in 1960.

Looking at the 17 largest stainless steel producing companies, Mr. Pariser pointed out that this prosperity has been largely profitless. The weighted average profit (rate of return on sales) for this group of 17 was a paultry 1.8% in the period 2008 to 2011. Jindal reported the highest profit during the period (about 14%) and Nippon Metal the lowest (a loss of about 5%). Noteably, three of the worst performers were European-based firms (Acerilnox, Outokumpu and ThyssenKrupp).

On the demand side, apparent consumption in China has increased recently from about 600,000 tonnes to 920,000 per month in the beginning of 2009 to the end of 2011. Meanwhile, in the U.S. demand has risen from about 100,000 tonnes per month in 2009 to 190,000 tonnes per month in 2011.

In terms of total crude stainless steel melting, China led the way in 2011 at 14,460,000 tonnes out of a global total of 34,089,000 tonnes. That country is expected to melt another 8.3% more in 2012 (15,689,000 tonnes of stainless steel) out of a global total which is expected to reach 35,820,000 tonnes, according to Mr. Pariser.

Europe is the largest source of stainless steel scrap (of the external kind). Since stainless steel is such a durable material, it remains in service of 15 to 20 years. Therefore the 'old' economies, those that have used stainless steel for the longest time, have the highest tonnage of stainless available for recycle because products have finally reached the end of their useful life. Of the 8,145,000 tonnes of stainless available for recycle in 2011 worldwide, about 3,181,000 tonnes came from Europe. China was next (at 1,677,000 tonnes) and NAFTA (at 1,338,000 tonnes).

Traditionally, the availability of stainless steel scrap has been strongly tied to the price of nickel, the most valuable component of stainless steel. So, when the price of nickel fell dramatically in 2009 during the global financial crisis, so to did the availability of stainless steel scrap. Since then, however, availability has outpaced the increase in nickel prices, In fact, availability has continued to grow (to near its pre-2009 peak of 2,400,000 tonnes) despite a steady fall in nickel prices in recent months (to below US$20,000 per tonne).

Stainless steel scrap typically contains about 8% to 10% nickel by weight, which accounts for 70% of the value of the stainless steel. In Euroe and the U.S., the amount of nickel in stainless steel scrap more closely tracks the price of nickel.

In terms of trends in the global trade of stainless steel scrap, South Korea is becoming a major importer (moving from 338,000 tonnes in 2010 to  423,000 tonnes in 2011) whilt competing with China (which moved from 94,000 tonnes to 128,000 tonnes in the same period). The EU and U.S. continue to be the largest exporters.

The recycle content of stainless steel made outside of China is increasing. In China, 37.9% of the total weight of the stainless steel produced in 2011 was derived from scrap. This compares with 49.3% in the stainless steel produced outside of China. Of the approximate 14 million tonnes of stainless steel scrap used globally to make new stainless steel in 2011, about 10 million tonnes were used by producers outside of China.

Producers within China have preferred to use nickel pig iron instead of stainless steel scrap, with negative impacts on the environment where nickel laterites are produced. Since 2005, the amount of nickel in pig iron used by stainless steel producers in China has increased from near zero to more than 200,000 tonnes (for a total growth rate of 82% per year). This accounts for about one-third of the total nickel units used by China's stainless steel producers. For comparison, scrap accounted for about 80,000 tonnes and nickel from 'other' sources (i.e. primary nickel mines) accounted for about 300,000 tonnes.

It is estimated that the cash cost of producing a tonne of nickel in pig iron is about US$20,000 per tonne. Therefore, should nickel prices fall below this, China's stainless steel producers would be pressed to use other sources.

 

 

 

Outlook for Nickel

Where are nickel markets and prices headed in 2012?

Demand, supply balance.

Growth markets.

Market threats.

The Origins of Deepsea Mining

Was the early interest in seabed mining really created by the CIA as a consequence of an attempt to conceal other, more important geopolitical ambitions?

By Patrick Whiteway

The intense interest in deepsea mining expressed by the world's leading mining companies in the early 1970s was the unintended consequence of an attempt by the United States to conceal an elaborate government program designed to raise a sunken Russian submarine from the floor of the Pacific Ocean. At least that's the opinion of Kenneth Sewell, author of the 2005 book Red Star Rogue.

 

 

Mineral Resource Supply Vulnerability

When China restricted exports of rare earths, it set off alarm bells around the world

By Patrick Whiteway

Globalization was supposed to give manufacturers a secure supply of raw materials, at competitive prices. But when one country dominates the supply of a particular material, all bets are off. China is one such country. It dominates the supply of several metals, including the rare earths. So when China imposes trade restrictions on these metals, other countries have to pay a higher price for them. That's not playing by the rules said the World Trade Organization, February 1.

Top 10 Nickel Stories of 2011

2011 was an interesting year for the Devil's metal

By Patrick Whiteway

Twenty-eleven was an eventful year for nickel, the steely grey metal that is so essential to high end stainless steels and finds a myriad of modern applications from rechargeable batteries to jet engines. The world of nickel had everything a mine engineer could ask for in 2011: Prices gyrated, supply and demand increased over 2010 and the organization that represents companies that mine and refine this 'envrio-metal,' the Nickel Institute, suffered a humiliating defeat in the courts of Europe.

2011 began with the price of nickel hovering above US$11 a pound and ended the year significantly lower at US$8.49. Demand from stainless steel producers in China, which use 25% of all nickel mined on the planet, continued to grow, although at a much slower pace than was anticipated at the beginning of the year by the most bearish of analysts. Meanwhile, nickel producers continued to build supply, thus dragging prices downward.

From where this mine engineer sits, the top nickel stories of 2011 were as follows:

1. Human health and environment classificaitons where upheld in Europe. In July, the European Court of Justice rendered a final decision on a case brought before it by the Nickel Institute. The decision neutered the industry's argument that Europe's reclassification of a wide range of nickel compounds is unlawful. The only winners in this very costly debacle were the over-priced lawers in London and Toronto. The millions wasted could have been used to increase our understanding of how nickel compounds impact human and environmental health;

2. Nickel laterite operations failed to meet expectations. Nickel laterite operations such as Sherritt International's Ambatovy project in Madagascar and Vale's Goro project in New Caledonia, for example, struggled to meet production and capital expenditure targets;

3. 'Social licence to operate' issues slowed new mine building in the developed world. Nickel developments in Canada encountered social challenges with Cliffs Natrual Resources and Noront, two companies in the so-called 'Ring of Fire' nickel-chromium development in northern Ontario, running into "social licence to operate" snags;

4. Supply and demand headed toward imbalance. Nickel prices fell over the 12-month period due to an increase in supply and a slower than anticipated increase in demand brought on by a slumping global economy;

5. Carbon taxes began their inevitable rise to prominence. Australia approved a carbon tax in October and authoritarian China, which is home to the environmental disaster that is nickel pig iron production, signaled it would bring in a carbon tax within the next five years;

6. The new kid on the block made waves. The world's largest metals trader, Glencore Inc., went public in June and signaled its interest in nickel by increasing its grip in Minera, operator of the Murrin Murrin mine, a profitable nickel laterite operation in Western Australia;

7. Cash-rich majors modernized existing operations. Norilsk announced major capital expenditures in Russia and Xstrata and Vale both announced major capital investment plans at their existing nickel operations in Canada: Xstrata announcing it will spend $200 million at Reglan mine in northern Quebec and Vale to spend an equal amount on the Clarabelle concentrator in Sudbury.

 

Towards Sustainable Mining

An initiative by the Mining Association of Canada promises to set a global standard for best practices

The Rise of Resource Nationalism

As the price of, and demand for, metals continue to rise, a wave of resource nationalism is washing across many parts of the world. As a result, Canada has become a vastly lower-risk place for mining companies to invest in exploration.