Weekly Metals News Digest (Oct 30 – Nov 3)

Russian oligarch Roman Trotsenko “escapes” from Zhelezny Kryazh

Famous Russian oligarch Roman Trotsenko has ceased to be the controlling shareholder of Siberian Goldfields, which owns the Zhelezny Kryazh gold mine. His son Gleb Trotsenko has now replaced him as the controlling shareholder.

The Zhelezny Kryazh deposit is located in Siberia and is a unique property, with high concentrations of gold observed in its iron ores. Today, gold reserves are estimated at almost 26 tonnes, but there are certain geological prerequisites for a multifold increase.

According to existing plans, a mining and processing plant is to be built at Zhelezny Kryazh, with investments of up to $100 million. The enterprise will produce iron ore concentrate and gold.

Roman Trotsenko is currently associated with the GeoProMining holding company, which owns enterprises for the development of copper, molybdenum and gold deposits in Russia and Armenia. Among them is the Zangezur copper and molybdenum plant in Armenia.

Roman Trotsenko’s loss of official control over Siberian Goldfields may be related to the US sanctions he was subjected to in 2022 and his fear of facing new restrictions from western countries.

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Impala Platinum is preparing to slash costs

The decline in global platinum prices has had a negative impact on the financial condition of South African mining company Impala Platinum. Its revenues have decreased, while its costs have increased.

In view of this, top-level management has been forced to take a very unpopular measure: it has begun to revise its previously planned operating and investment expenses. It is not yet known how much they will be cut by, but it can be assumed that spending on geological exploration will be reduced or some employees at the company’s enterprises will be laid off. A revision of the $2.65 billion capital expenditure programme is not being ruled out.

The depreciation of platinum and platinum group metals is the result of current stagnation in the global economy, which may turn into a full-scale crisis.

At the same time, Impala Platinum, like other South African platinum producers, suffers from two long-standing problems: the deterioration of the South African power system, which periodically leads to accidents and theft of cables from existing power grids. As a result, mines and smelters in South Africa shut down from time to time and their owners, including Impala Platinum, reduce platinum output and miss projected revenues.

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Rusal heads towards loss-making position

Rusal showed poor financial results for the first nine months of this year: its revenue was only $9.2 million compared to $785.4 million from January to September 2022. The Russian aluminium giant’s net profit also proved to be quite insignificant at $27.2 million, while in the same period of 2022 it was a much more impressive $787.7 million.

Although Rusal has not commented on why it is on the verge of loss, it is easy to guess the reasons for its difficult financial situation. First of all, aluminium prices on the London Metal Exchange are around $2,100–2,200 per tonne and there are no signs of any imminent increase. The global economy is currently stagnating, and threatens to turn into a genuine crisis. It is possible that Rusal will close three low-profit aluminium smelters: the Kandalaksha, Volgograd and Novokuznetsk smelters.

Secondly, in 2022 Rusal lost its Nikolaev alumina refinery in Ukraine and was left without alumina supplies from Australia, resulting in the loss of 4 million tonnes of alumina per year. As a result, Rusal has been forced to purchase the missing volumes of alumina on the free market at higher prices than it had previously, which also negatively affects its profitability.

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Glencore stockpiles low-carbon lithium

Glencore has transferred an advance payment to US company Sigma Lithium for another 20,000 tonnes of Triple Zero Green Lithium, which it produced as part of the Grota do Cirilo project in Brazil.

The Grota do Cirilo project includes the Greentech plant, which differs from similar plants by foregoing a tailings storage facility. By dry storing the waste and keeping it free of hazardous chemical compounds, Greentech will ensure environmental safety. Through its use of renewable energy, Greentech produces lithium with a low carbon footprint.

During the first phase of the Grota do Cirilo project, Greentech’s plant is expected to produce 270,000 tonnes of lithium per year. In the future, it is expected to increase production to 766,000 tonnes per year.

Glencore’s co-operation with Sigma Lithium shows its desire to capitalize on the so-called lithium race: lithium prices have risen strongly in recent years due to increased demand from car and electric battery manufacturers.

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Bears rule the nickel market

Nickel prices on the London Metal Exchange fell below $18,000 per tonne and the mood of participants is clearly bearish: there is an oversupply of nickel on the global market, which is being blamed on the growth of nickel production in Indonesia.

Indonesian companies have increased nickel output so much that by the end of 2023 its surplus is forecast to be 223,000 tonnes, and next year it may increase to 239,000 tonnes. For comparison, last year it was only 104,000 tonnes.

As a result, trading participants on the London Metal Exchange do not see any prospects for a nickel price increase and prefer to play for a decrease.

It should be taken into account, however, that in reality Indonesia produces mainly nickel pig iron, ferronickel and nickel hydroxide, which are classified by the London Metal Exchange as Class II nickel. Class I nickel, on the other hand, is a pure metal and is periodically in short supply on the market. That is why nickel surpluses are occasionally accompanied by a shortage whereby ferronickel, nickel pig iron and nickel hydroxide are plentiful on the global market, but pure metal is extremely scarce in traders’ warehouses and buyers may queue for it.

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Forecast: Lithium prices not expected to rise yet

The global lithium market is experiencing two directly opposing trends. On the one hand, projects to develop deposits and build lithium raw material processing plants are continuing. Moreover, new suppliers of lithium concentrates such as Kazakhstan can be expected to enter the market in the near future. Accordingly, we can expect a further continuation of the price decline that has been underway since January of this year.

On the other hand, the largest lithium producers remain optimistic about future demand for lithium: although there are concerns about a strong lithium surplus due to the scaling back of electric vehicle production expansion plans and rising interest rates on bank loans negatively affecting payback on investment projects, industry leaders believe that these are all short-term problems that will not hinder the long-term growth of the lithium market.

Despite their optimism, it can still be expected that global prices for lithium in the coming months will decline from the current level of $22,300 per tonne to $20,000 due to an excess of supply against the backdrop of a slowdown in the growth of production of electric cars among some automotive companies. icon

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