Weekly Metals News Digest (Oct 16-20)
Rusal eyes closure of three plants
Rusal is considering shutting down three aluminium smelters in Volgograd, Novokuznetsk and Kandalaksha. This would result in it losing 0.5 million tons of its current annual aluminium production of 3.8 million tons.
Rusal's financial condition is under pressure due to a number of factors. First, aluminium prices at the London Metal Exchange are falling: in February 2022 the metal cost $3,395 per ton, while it is now around $2,190.
Secondly, the Russian government recently introduced duties on exports of industrial products at a rate of 4–7%, depending on the ruble exchange rate, and aluminium has fallen below them.
Rusal's alumina procurement and delivery costs have also risen sharply after it became impossible to obtain alumina from Australia and the Nikolayevsky alumina refinery in Ukraine.
Trigon Metals increases the capacity of Kombat
Canada's Trigon Metals continues the process of bringing the Kombat copper mine in Namibia to full capacity. The operation started producing copper concentrate in early August this year and is now at 70% of its planned capacity (this level is referred to as commercial production).
Kombat is one of the largest copper mines in Namibia. Production started in 1962 and continued until 2008, when the global economic crisis caused prices for copper and other non-ferrous metals to fall. Over the years, the operation has produced 12.5 million tons of copper ore.
Trigon Metals subsequently purchased Kombat and invested in its modernization. It has an underground mine, concentrator and tailings dam, while an open pit has also been established. The mine is close to the seaport of Wolfish Bay and the metallurgical plant at Tsumeb.
The open pit is currently operating and the underground mine is due to reopen in 2024, allowing Kombat to reach full capacity.
Rio Tinto ramps up aluminium production, remains cautious
In the third quarter of this year, international mining and metals giant Rio Tinto managed to increase primary aluminium output by 9% (compared to the same month in 2022) to 828,000 tons.
Nevertheless, Rio Tinto does not plan to significantly ramp up its production of the winged metal, which is forecast to be in the range of 3.1–3.3 million tons by the end of 2023. This in turn reflects emerging global aluminium market conditions: while in February 2022 the aluminium price on the London Metal Exchange was $3,395 per ton (an absolute record for the last 20 years), today it is in the range of $2,160–2,170.
Rio Tinto still has a chance to increase aluminium output, as key competitor Rusal may have difficulties in concluding new contracts to sell the metal in 2024 (for example, Novelis Europe refused to include Rusal in its list of potential suppliers). Therefore, the coming months could be very positive for Rio Tinto in terms of aluminium sales development.
Germany may start lithium mining
UK-based Zinnwald Lithium and Finland's Metso have completed the first phase of a programme of experiments as part of a project to develop a large lithium deposit in Germany.
As part of this project, a technological scheme for lithium ore beneficiation was developed, and further improvement of calcination and the hydrometallurgical processing of raw materials is planned.
The lithium deposit that Zinnwald Lithium plans to develop is located on the border between Germany and Saxony and has not been exploited before. Its reserves are estimated at almost 92,000 tons of lithium, but there are prerequisites for a significant increase.
If Zinnwald Lithium succeeds in mining and processing lithium raw materials, it will be able to supply them to European manufacturers of batteries for electric cars and trucks. This, in turn, will be in line with the course pursued by the European Union authorities for the development of production and expansion of the use of environmentally friendly motor transport. In turn, almost all European car manufacturers have their own projects for the development and production of electric vehicles.
Aurubis is pulling for batteries and hydrogen
Aurubis, Europe's largest copper producer, is looking for a site to build an electric vehicle battery recycling plant. The company is eyeing Germany, Spain, Portugal, France and Bulgaria as potential locations for the future plant.
Aurubis is not only concerned with logistics, but also with the possibility of obtaining cheap electricity from renewable sources, as it aims to completely decarbonize the production of copper and other non-ferrous metals and increase the use of waste. Its proposed plant would recover lithium, nickel, cobalt and manganese from batteries. These materials would then be sent to various customers across Europe.
Aurubis also intends to spend €45 million on refurbishing its anode copper smelting furnaces to enable them to use hydrogen as a fuel, replacing natural gas and thereby reducing both emissions and energy costs.
Aurubis is not alone in this desire, as many non-ferrous metals companies are considering hydrogen as a promising fuel with zero carbon dioxide emissions.
Forecast: Key players will switch positions in the global aluminium market
The information about Rusal's possible simultaneous closure of three aluminium smelters, which have high energy costs and are therefore unprofitable, is an important signal for the entire global market: one of its key leaders has serious problems that it has not yet managed to solve.
In principle, if Rusal were to shut down the three plants, it would reduce aluminium production by a relatively small amount – 0.5 million tons out of its 3.8-million-ton output. This would however be enough for global aluminium prices, which have been declining in the past year, to jump by 10–15%. The growth is expected to be short-lived and is unlikely to endure for more than a month.
Nevertheless, there will be fierce competition for the vacated niche between aluminium producers from North America, Europe, the Middle East and China, and the gap will most likely be plugged by Middle Eastern and Chinese companies.
