English (UK)
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November 2020
COVID-19 Highlights
THE NUCLEAR – URANIUM MARKET
Global Uranium Market and COVID
https://www.world-nuclear-news.org/Articles/Uranium-market-is-weathering-the-COVID-19-storm
World Nuclear News: Uranium market is coping with impact of the pandemic
08 October 2020
Uranium is one industry where risk mitigation strategies were adequate in face on COVID-19, causing not much market constrains.
The uranium market has so far managed the effects of the COVID-19 pandemic effectively, and is proving robust, despite some initial issues with mine production. There is general consensus that the crisis will not harm the future of nuclear power,
Few believe the pandemic has caused or will cause a large disruption in nuclear power operations, many agree that some demand reduction is inevitable. Some think that COVID-related issues will directly affect the timing of entries to the market rather than volumes.
What we need to know
Nuclear generation supplies around 10.5% of electricity worldwide and contributes to electricity generation in over 30 countries. Nuclear generation supplies around 10.5% of electricity worldwide and contributes to electricity generation in over 30 countries.
Kazakhstan is the top global uranium producer, accounting for 41 percent of world mine supply in 2018. The uranium producer said it remains committed to its 2020 delivery schedule and will draw down out of its inventory of 8,500 tonnes of uranium if a production halt impedes output.
L’Uranium en France
France uses this uranium to generate nuclear power, some of which is sold on to other European countries. According to Oxfam, over one-third of all lamps in France light up thanks to uranium from Niger.
Notons que le coût de l'uranium naturel constitue in fine seulement 5% du coût de production du kWh nucléaire
THE COPPER MARKET
https://voxeu.org/article/covid-19-and-new-age-copper
COVID-19 and the new age of copper: Opportunities for Latin America
07 October 2020
Driven by the two themes of digitalisation and green technologies, the COVID-19 economic recovery packages are expected to accelerate the arrival of the new age of copper. Stemming from green infrastructure development, the widespread adoption of electric vehicles and the long-anticipated roll out of 5G, a future copper boom offers producing countries a window of opportunity to harness greater benefits from their resources.
While demand in 2020 may yet fluctuate (as countries respond to the pandemic), the fundamentals of copper demand have changed for the better (Hall 2020).
Through the combined effect of shutting down existing operations and pausing new ones, COVID-19 has pushed back the delivery of thousands of tons of copper, just at a time when demand is beginning to pick up. Despite the global economic contraction, in July 2020 copper futures hit their highest level in two years (at $2.97 per lb) as Europe announced its recovery plans (Els 2020).
Governments around the world have launched economic recovery packages in response to the recession brought on by the COVID-19 pandemic. Two key themes feature prominently: investments in digitalization and green technologies. Both China and the EU have established reactivation plans supporting 5G telecommunications networks, big data, and artificial intelligence (Meinhardt 2020, European Council 2020). The EU has further committed its recovery to moving the region towards carbon neutrality by 2050, proposing a massive expansion of the electric car market and related charging infrastructure (European Commission 2020). These demand drivers are expected to accelerate the arrival of the age of copper (Taylor 2020). The red metal conducts both heat and electricity, and is a key input for global manufacturing, electrical equipment, industrial machinery, and construction. China’s post-pandemic rebound has already translated into higher orders. In June 2020, China recorded the highest ever monthly imports of copper (Reuters 2020). Are copper producers prepared to leverage this new era for their development?
These trillion-dollar, multi-year recovery plans require significant quantities of copper. This will accelerate the demand for the metal which has picked up steadily since 2016. This rise in demand is thanks in part to copper’s central role in the digital and green economy of the future. Clean energy is the fastest growing segment to support electrification, with solar panels and wind turbines requiring some 12 times more copper than previous generation methods (Copper Development Association 2020a). Further, electric vehicles use four times the amount of copper used in internal combustion engines (Glencore 2017). A Chinese national 5G network will require some 72,000 tons of copper (Mills 2020). COVID-19 has also brought copper to the forefront of the healthcare industry due to its antimicrobial properties, adding entirely new sources of demand
This boost in future demand is taking place against a backdrop of tightening supply in a globally concentrated industry, contributing to a likely copper deficit. Five countries – Chile, Peru, Indonesia, Australia, and Canada – export three quarters of traded copper concentrate. The two ‘Latin leaders’ – Chile and Peru – are by far the most important in terms of meeting the new demand since they account for close to half of the world’s supply. Chile is home to both the world’s biggest copper mine (Escondida) and the world’s single largest copper company (the state-owned CODELCO) (Chen 2019). This company alone accounts for 10% of the world’s copper.
ZAMBIA
We will need to look at the tax regime: a new mining tax regime in 2019 which has significantly increased the tax burden on mining companies, making the sector unsustainable and uncompetitive.
According to a source from an African consulting firm, Zambian mining companies faced one of the highest effective tax rates in the world, even before the new mining tax regime was introduced.
“When you consider the high cost profile of the average Zambian mine – several mines of which are more than 70 years old – and the introduction of several hidden taxes such as outstanding VAT refunds and surging power prices, then it’s easy to see why it’s no longer profitable to mine in Zambia,” the source points out.
THE GOLD MARKET
COVID-19’s impact on the global gold industry: Implications for the next normal and beyond
September 21, 2020 | Commentary
The COVID-19 pandemic has affected the gold-mining industry and its workers. Production and costs could hinder what should be near-record profits, and how each company reacts will determine its long-term success.
Supply shortages, and a lack of transportation have hiked costs at certain operations and reduced gold-mine supply. As a result, unit costs could increase by some 1 to 3 percent. Governments in Argentina, Canada, Mexico, Peru, and South Africa have imposed temporary mine closures. Some other operations have slowed production in response to a lack of supplies and an inability to transport specialist personnel. In general, we expect open-pit mines to suffer less from these types of disruptions than underground mines, which operate in more confined spaces.
Over the short term, the mining companies that most successfully avoid or contain the spread of the virus throughout their operations while maintaining production levels will emerge with a stronger cash position as they take advantage of high price levels and strong margins. In the longer term, the strong price of gold provides a window for mergers and acquisitions to consolidate the industry, because the acquisition price per ounce of resources and reserves of an operating gold mine is far below the current spot price. That offers high rates of return.
In addition, we view the strong price outlook as an opportunity to boost spending on exploration to counteract the industry’s gold-reserve crisis, discussed in a previous article. The shortage of reserves can be resolved only if additional sites where metal can be extracted at reasonable cost levels are discovered. This is also a big incentive to accelerate capital projects, especially those expected to come into production in the near future—one to one-and-a-half years—since high prices could significantly improve project economics.
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