Weekly Highlights! What major mining events occurred globally this week? (July 31 - August 6)
Time
2022-08-08 17:12
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The Futures and Derivatives Law officially came into effect on August 1, allowing upstream and downstream enterprises in major industrial chains such as energy and minerals to manage price risks through hedging and basis trading.
On August 1, CCTV reported that the Futures and Derivatives Law of the People's Republic of China officially came into effect. This law addresses the legal 'shortcomings' in China's futures and derivatives sector, with the biggest highlight being the inclusion of derivatives trading within the scope of legal regulation, and the establishment of three major functions: 'price discovery, risk management, and resource allocation.' This has boosted the confidence of market participants and attracted more hedgers and institutional investors to participate. Additionally, the implementation of the Futures and Derivatives Law provides stronger tools and mechanisms for futures to serve the real economy. Upstream and downstream enterprises in major industrial chains such as energy and minerals, especially small and medium-sized enterprises, can manage price risks through hedging and basis trading, achieving integrated operations of production, supply, and sales. Li Zhengqiang, a researcher at the School of International Trade and Economics of the University of International Business and Economics, stated that to enhance the pricing influence of bulk commodities, China needs to attract more overseas market participants to trade in the Chinese futures market, so that both domestic and foreign market participants can jointly trade a bulk commodity futures price denominated in RMB as a pricing benchmark for China's bulk commodities. In this process, a Futures and Derivatives Law is even more necessary as a guarantee.
Extend the deep processing industrial chain of renewable resources to promote the efficient recycling of steel, copper, aluminum, lead, zinc, nickel, cobalt, lithium, tungsten, and other materials.
On August 1, the Ministry of Industry and Information Technology reported that the Ministry of Industry and Information Technology, the National Development and Reform Commission, and the Ministry of Ecology and Environment jointly issued the 'Notice on the Implementation Plan for Carbon Peaking in the Industrial Sector,' which mainly involves mining content: First, guide the orderly transfer of production capacity in industries such as non-ferrous metals to areas rich in renewable energy and with resource and environmental carrying capacity. Second, extend the deep processing industrial chain of renewable resources to promote the efficient recycling of steel, copper, aluminum, lead, zinc, nickel, cobalt, lithium, tungsten, and other materials. Third, focus on controlling fossil energy consumption, orderly promote the reduction and substitution of coal in industries such as steel, building materials, petrochemicals, and non-ferrous metals, and steadily develop modern coal chemical industry to promote the efficient and clean utilization of coal. Fourth, improve the energy efficiency of key energy-consuming equipment, with a focus on promoting new energy-saving equipment such as rare earth permanent magnet motors. Fifth, focus on key industries and formulate carbon peaking implementation plans for industries such as steel, building materials, petrochemicals, and non-ferrous metals. Sixth, support the large-scale high-value utilization of industrial solid waste such as tailings, fly ash, and coal gangue.
In the first half of the year, the non-ferrous metal industry operated steadily, with primary nickel and lithium salt production increasing by 6.9% and 38% year-on-year, respectively.
On August 3, the Ministry of Industry and Information Technology reported that the Raw Materials Industry Department of the Ministry of Industry and Information Technology recently released the operational status of China's non-ferrous metal industry for the first half of the year. The main characteristics are as follows: First, production maintained steady growth. According to data from the National Bureau of Statistics, the industrial added value of the non-ferrous metal industry increased by 5% year-on-year in the first half of the year, which is 1.6 percentage points higher than the industrial average. The output of ten non-ferrous metals was 32.83 million tons, a year-on-year increase of 1%. Among them, the output of copper, aluminum, and lead increased by 2.5%, 0.7%, and 3.1% year-on-year, while zinc output decreased by 1.7%. Driven by the rapid development of the new energy industry, the output of primary nickel and lithium salt increased by 6.9% and 38% year-on-year, respectively. Second, prices rose first and then fell. According to data from the China Nonferrous Metals Industry Association, the average prices of copper, aluminum, zinc, nickel, cobalt, and lithium in the first half of the year were 71,750 yuan/ton, 21,435 yuan/ton, 26,012 yuan/ton, 206,000 yuan/ton, 514,000 yuan/ton, and 453,000 yuan/ton, respectively, with year-on-year increases of 7.7%, 23%, 15.1%, 57%, 48.5%, and 454%. In the second quarter, affected by factors such as tightening global liquidity and weak downstream demand, the prices of major products fell from their highs. On June 30, the prices of copper, aluminum, zinc, nickel, and cobalt decreased by 15.2%, 19.4%, 15.9%, 44.2%, and 32.5% from this year's peak, respectively. Third, both import and export volumes and prices increased. According to data from the General Administration of Customs, in terms of exports, China exported 3.509 million tons of unwrought aluminum and aluminum products in the first half of the year, a year-on-year increase of 34.1%, with an export value of 14.35 billion USD, a year-on-year increase of 72.4%. In terms of imports, China imported 12.481 million tons of copper concentrate in the first half of the year, a year-on-year increase of 8.6%, with an import value of 31.35 billion USD, a year-on-year increase of 13.6%; unwrought copper and copper products imports were 2.942 million tons, a year-on-year increase of 5.3%, with an import value of 29.8 billion USD, a year-on-year increase of 17.1%.
CATL signs a strategic cooperation framework agreement with the Chengdu government.
On August 1, CATL's official WeChat account reported that CATL signed a strategic cooperation framework agreement with the Chengdu government, and both parties will carry out comprehensive cooperation in battery swapping operations, research and development, resource utilization, key battery materials manufacturing, new energy, and energy storage. At the same time, CATL, Times Electric, and Times Yongfu signed cooperation agreements with the government of Xinjing District, Chengdu Jiaotou Group, and Chengdu Environmental Group, respectively. In terms of battery swapping cooperation, both parties will actively promote the research and application of battery swapping technology. In terms of research and development, both parties will conduct innovative technology research, product and scenario innovation development, and project incubation around new energy development and utilization, power batteries, new energy storage, and zero-carbon transportation. In terms of resource utilization, both parties will work to build the Chang'an Jingmai Industrial Park into a zero-carbon demonstration park and promote it nationwide. This signing is an important move for CATL's full industrial chain layout in Sichuan Province. In the future, CATL will leverage its comprehensive advantages to help Chengdu become an important source of innovation for the high-quality development of the lithium battery industry in the country and a leading demonstration city for interconnected battery swapping.
Huayou Cobalt and China ENFI sign a strategic cooperation agreement to conduct in-depth cooperation in nickel, cobalt, and lithium resource development.
On August 3, China Nonferrous Metals News reported that Zhejiang Huayou Cobalt Co., Ltd. and China ENFI Engineering Technology Co., Ltd. recently signed a strategic cooperation agreement. Both parties will fully leverage their respective advantages in industry, capital, technology, and market to conduct in-depth cooperation in the fields of nickel, cobalt, and lithium resource development, green refining, battery materials, and recycling. Both parties stated that they will inject strong momentum into the development of China's new energy materials industry and the realization of the national 'dual carbon' strategic goals through multi-level and all-round business models.
In response to the energy crisis, the UN Secretary-General proposed four recommendations, including imposing a 'windfall profits tax' on energy companies and increasing investment in clean energy.
On August 4, CCTV News reported that the United Nations Global Crisis Response Group (GCRG) recently released its third report, stating that global energy prices continue to rise due to the impact of the Russia-Ukraine conflict, exacerbating the cost of living for hundreds of millions of people. Meanwhile, major oil and gas companies worldwide have made huge profits from this situation. The report proposes four recommendations: first, to impose an "excess profit tax" on energy companies. It suggests that governments develop the most effective energy solutions, such as public funding for cash transfers and tax rebate policies to protect vulnerable communities while taxing large oil and gas companies for excess profits. Second, developed countries should save energy to avoid a potential "energy scramble." Third, countries should accelerate the transition to renewable energy. Fourth, increase investment in clean energy. According to statistics, in the most recent quarter, the combined profits of ExxonMobil, Chevron, Shell, and TotalEnergies reached $51 billion, nearly double that of the same period last year. In response, UN Secretary-General Guterres has called on governments to tax these excess profits and use the collected funds to help vulnerable groups. Notably, the UK announced last month that it would impose a 25% "excess profit tax" on oil and gas companies, and US lawmakers have also discussed similar measures, although the likelihood of Congress passing such a tax may be low.
Indonesia plans to release new nickel export tax regulations in the third quarter.
IMPORTANT NEWS
On August 1, Reuters reported that a senior official in Indonesia recently revealed that the country will release new nickel export tax regulations in the third quarter, proposing to impose export taxes on nickel and nickel iron. This move aims to increase the country's nickel export revenue while encouraging more domestic companies to produce higher-value nickel products. It is reported that Indonesia was once a major exporter of nickel ore. In 2020, the Indonesian government announced a ban on the export of unprocessed nickel, focusing on developing the country's nickel pig iron and nickel iron smelting industries and encouraging foreign investors to invest in the country's smelting industry. At the same time, the Indonesian government is actively utilizing its nickel ore resources to develop the electric vehicle battery industry and advocates for assembling electric vehicles domestically. Currently, Indonesia has signed investment agreements for batteries and electric vehicles with South Korean companies such as LG and Hyundai. President Joko also met with Tesla CEO Elon Musk during his visit to the US to discuss investment matters in the country. In addition, to ensure the sustainable development of the country's nickel industry, Indonesia plans to strictly control the number of nickel pig iron and nickel iron smelting plants, ensuring that the lifespan of the country's nickel ore remains at 25-30 years.
Zimbabwe will increase platinum and lithium tax rates, which may affect Chinese enterprises.
Bloomberg reported that Zimbabwe plans to increase the royalties for platinum producers starting January 1 next year and introduce royalties for lithium miners, which is part of the country's measures to boost its finances. Zimbabwe's Finance Minister Mthuli Ncube stated in a mid-term budget review report submitted to the country's legislative body that the tax rate for platinum mines will increase to 5%, and lithium miners will be subject to the same new tax rate. It is reported that Zimbabwe has the third-largest known platinum reserves in the world, after Russia and South Africa. With the increasing market share of electric vehicles and rising lithium prices, many Chinese companies have chosen to invest in mining in Zimbabwe. In May of this year, Shengxin Lithium Energy and China Minmetals Corporation established a joint venture in Zimbabwe, focusing on the exploration and development of lithium and platinum projects in the region. At the same time, Zhejiang Huayou Cobalt Co., Ltd. plans to invest $300 million to develop its newly acquired Arcadia project in Zimbabwe. The newly released tax policy may impact Chinese enterprises.
Australian lithium miner Pilbara completes eighth lithium concentrate auction, with a transaction price of $6,350 per ton.
According to China Securities Journal and Pilbara's official website on August 3, Australian lithium miner Pilbara announced that its auction platform held the eighth lithium concentrate auction on August 2. The final transaction price was $6,350 per ton, an increase of 2.6% compared to the transaction price of the seventh auction on July 13, and an increase of $5,100 per ton compared to the first auction price in 2021, a rise of 408%. A total of 5,000 tons of 5.5% grade lithium concentrate was auctioned, receiving 67 bids during the 30-minute auction process, with delivery expected in mid-September, equivalent to a landed price of about $7,012 per ton. Shanghai Steel Union stated that based on a freight cost of $90 per ton, the cost of battery-grade lithium carbonate exceeds 450,000 yuan per ton, with the produced lithium carbonate expected to circulate in December. Notably, the transaction price of Pilbara's lithium concentrate auction on July 13 was $6,188 per ton, marking the first decline in its auction history. Analysts believe that the recovery of the auction transaction price reflects the market's optimistic attitude towards lithium salt prices. Industry insiders pointed out that Pilbara's lithium concentrate auctions have always been a barometer for global lithium concentrate price trends, and each auction is not large in volume, creating a sense of scarcity amid the current huge global demand for lithium resources, thus making it easier to achieve higher prices and playing a role in boosting the current rise in lithium prices.
BHP will increase nickel exploration spending over the next two years.
On August 3, Bloomberg reported that the head of BHP's nickel business recently stated that the company will increase its spending on nickel exploration over the next two years to meet the growing market demand for nickel. Currently, BHP has signed nickel supply agreements with Tesla and Toyota through its subsidiary NickelWest and has reached an agreement with Ford. It is reported that the company owns 120,000 hectares of land in the Agnew-Wiluna area of Western Australia, which is the second-largest sulfide nickel resource base in the world, with nickel reserves exceeding 7.4 million tons, most of which are undeveloped. With the continuous heating of the power battery market, nickel ore, as one of the key raw materials for power batteries, has seen strong market demand in recent years. The company predicts that with a significant increase in demand for power batteries and traditional stainless steel, the market demand for nickel in the next 30 years will be 200%-300% of that in the previous 30 years.
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