The Mining Executive’s Post

"Glencore-backed nickel miner fails to secure financing after rising costs." Horizonte Minerals looking at sale of Brazilian nickel mine as investors fear Indonesia is flooding the market. Glencore-backed Horizonte Minerals has failed to secure financing to complete its nickel mine in Brazil following soaring costs and rising investor concern that Indonesia is flooding the market for the electric vehicle battery and steelmaking ingredient. The London-listed group said in a statement on Monday that it was now exploring a sale, liquidation, or raising financing at the subsidiary level, following an 87 per cent increase in the estimated cost to build the Araguaia nickel mine, to more than $1bn. The collapse in the debt restructuring negotiations and fundraising marks a setback for Horizonte’s three largest shareholders: trading house Glencore, and mining finance specialists La Mancha Resource Capital and Orion Resource Partners. The catastrophic situation for Horizonte has underlined the challenge for nickel projects outside Indonesia — the world’s largest producer — to get up and running.

Useful for minerals price

The French government is offering about 200 million euros ($217 million) in relief on energy costs for the New Caledonian nickel industry, two of the people familiar with the matter said. Still, it’s not clear that will be enough: last November, French finance minister Bruno Le Maire put the total financing need of the territory’s three nickel companies at 1.5 billion euros. The New Caledonia plants, which have long struggled due to high energy costs and social unrest, have had to contend with a wave of new supply from Indonesian smelters that’s caused nickel prices to plummet. The drop has already forced higher-cost operations in Australia to shutter, despite growing demand for the metal from the electric-vehicle sector. Glencore is looking to remain a shareholder in Koniambo Nickel SAS, which owns nickel mines and a ferronickel plant in the territory.

It has been 12 months since I joined Milbank! In the spirit of year-end reflections, I am going to post about 12 issues in the field of international arbitration/public international law that have been on my mind during the past 12 months! [This is in no particular order of priority!] #12: Mining of critical minerals in the energy transition: I have historically served as counsel in a number of mining disputes, including, most recently, Westwater v. Türkiye (ICSID Case No. ARB/18/46), Alamos v. Türkiye (ICSID Case No. ARB/21/33), Agarwals and Mehta v. Uruguay (PCA Case No. 2018/4), Odyssey v. Mexico (ICSID Case No. UNCT/20/1), and commercial arbitrations concerning a West African government. Many of my matters have concerned metals and minerals such as iron ore, uranium, gold, copper, and silver. But, increasingly, clients are focused on potential mining disputes over the critical minerals that are relevant to the energy transition, such as cobalt, lithium, nickel, manganese and copper. Milbank is a powerhouse in project finance, including the financing of mining projects, and so I have been doing this work in collaboration with those partners. This year I have spent time focusing on ESG issues (including obtaining a social license from local stakeholders for mining development to move forward), commercial disputes (especially as commodity prices have increased significantly over critical minerals), and investment treaty disputes (especially as governments are contemplating measures that could impact existing rights of investors). It is safe to say that mining disputes are a major part of my practice. I suspect 2024 will have more of the same re this issue!

The OECD Center for Tax Policy and Administration Secretariat and the Intergovernmental Forum on Mining, Minerals, Metals, and Sustainable Development (IGF) have released a public consultation on a transfer pricing framework to determine the price of minerals. This practice note has been prepared to address the challenges that developing countries are facing in raising tax revenues from the mining sector. #transferpricing #tax #minerals

The intricacy of the global mining supply chain is just fascinating, especially when it comes to DRC copper and cobalt where Chinese money and mines mix well with western commodities traders... So here we have a Kazakh group, Eurasian Group, partnering with Glencore and Bank of China (London branch but still Bank of China) on a 150 million $ pre-export financing deal for copper cathode produced from ERG's Metalkol project in DRC. How then ask the DRC not to work with Chinese interests when, obviously, Western companies have no qualms doing just that? #Copper #CriticalMinerals #DRC https://lnkd.in/drB9e_9u

Western Australia Premier Roger Cook announced a nickel financial assistance program, which he said would give a 50 percent royalty rebate for 18 months, when prices were below $20,000 per tonne, repayable over 24 months. Australia wants to build a battery chemicals industry to reap more value from mineral wealth, but its nickel sector faces heavy job cuts after a jump in Indonesian supply saw prices drop 40% in a year. Federal Resources Minister Madeleine King placed nickel on the critical minerals list, meaning nickel companies will have access to financing under Australia’s $2.6 billion Critical Minerals Facility which offers low-interest loans, and related grant programmes. https://lnkd.in/eJS4_iqg

"A Canadian #graphite miner [Falcon Energy Materials plc — formerly known as SRG Mining Inc.] has moved its headquarters outside Canada [Abu Dhabi, #UAE] to attract new investment as the federal gov't raises the bar for certain foreign companies to buy into Canada’s critical minerals sector... Falcon is currently developing its Lola graphite project [in] the Republic of #Guinea. The company also intends to build a plant in #Morocco to refine the graphite extracted from that mine... It needed funding to meet that goal, so they announced a deal in July 2023 with #China’s Carbon One New Energy Group Co. Ltd. [but] terminated the deal in March, a day after [Canada's] Industry Minister said miners should not look to 'circumvent the rules' and that the government has a 'number of tools' to make sure 'Canadian law is upheld... Redomiciling means Falcon doesn’t require the Government of Canada’s approval for any agreements or deals that it intends to do. Falcon will still require the approval of the Toronto Stock Exchange, which has been very supportive, [Falcon's CEO] said.” #mining #InvestmentCanada #compliance Pilot Law LLP

ZAMBIA’S DIRECT COPPER TRADING STRATEGY TO RESHAPE ECONOMY In a strategic move set to transform Zambia’s copper industry, the nation plans to directly purchase and sell a portion of its copper production, challenging industry giants like Mercuria Energy and Glencore. Jito Kayumba, senior economic adviser to President Hakainde Hichilema, emphasized the aim of ensuring fairness and commercial viability for mining companies in this new approach. Zambia aligns itself with neighbouring countries such as Botswana and the Democratic Republic of Congo, seeking to maximize economic benefits from mineral resources by gaining direct access to commodities for sale. Despite holding…READ MORE HERE https://lnkd.in/dc66ZbK5

$9 BILLION dollar deal... how much is going to impacted First Nations? never mind how much has been made along the way...... Innovation, Science and Economic Development Canada | Innovation, Sciences et Développement économique Canada has made an announcement approving the sale by Teck Resources Limited to Glencore of the ELK Valley coal resource and business. A $9 BILLION transaction. I would LOVE to know what the impacted First Nations are receiving from the sale proceeds from TECK (is it anywhere near 5% of the transaction value?). And on a go forward basis how do the First Nations benefit with Glencore (do the First Nations earn a royalty on sales? do they have a meaningful equity position?)