Renewables Enabling Miners to Expand Horizons

According to an article by Glenn Dyer for ShareCafe, Rio Tinto may be more active in the renewables business like than previously thought. The mining giant has a trial plant which is currently operating in Canada and is testing ore from another Australian company.

Recent developments indicate that Rio Tinto is getting more serious about its lithium ambitions which are now focused on Argentina after a Serbian mine proposal had to be put on hold due to local opposition. The company surprised a few people in the sector with the update that it had started making spodumene concentrate at a plant in Quebec.

“We are seeing strong interest in the market for a North American supply of spodumene concentrate to support the production of lithium batteries and other renewables,” declared Stéphane Leblanc, managing director of Rio Tinto Iron and Titanium.

The Quebec plant was commissioned in June and produced its first ton of spodumene concentrate in July this year. In December 2021, the company also acquired Rincon Mining in Argentina for $US825 million with the goal of developing a large lithium brine project in the heart of Argentina’s “lithium triangle”.

Rio would test ore from lithium suppliers

Rio added that it would test ore from various local suppliers including Sayona which is an emerging lithium producer with projects in Québec and Western Australia. Sayona’s shares recently rose in the market following an announcement that it had moved closer to restarting production at its North American Lithium (NAL) operation. This will be achieved through a four-year contract with the mining contractor L. Fournier & Fills.

Under the new agreement, Fournier will take care of the supervision of all stripping and drilling, blasting, loading and transportation of ore and waste rock apart from the maintenance of mining roads and all other services related to operations.

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The value of this contract between Sayona and L. Fournier & Fils is to the tune of approximately $C200 million over four years. Sayona CEO Brett Lynch said that they were “…delighted to further advance NAL towards the recommencement of production in the first quarter of 2023, with the selection of a skilled and experienced mining operator a crucial step in this process.”

In Québec, Sayona’s assets also include the Authier Lithium Project and its emerging Tansim Lithium Project. Supported by a strategic partnership with American lithium developer Piedmont Lithium Inc., Sayona also holds a 60% stake in the Moblan Lithium Project in northern Québec.

In WA, Sayona has a large tenement portfolio in the Pilbara region prospective for gold and lithium. The company is exploring for Hemi‐style gold targets in this region while its lithium projects are subject to an earn‐in agreement with Morella Corporation.

MMG looking to revitalize Las Bambas for their renewables transition

In comparison to Rio Tinto, China’s MMG is looking to revitalize its huge but underperforming Las Bambas copper mine in Peru. Despite being one of the largest mines in the world, Las Bambas has unfortunately not been producing to potential.

It is important to note that Las Bambas can potentially produce 2% of the world’s copper – a mineral critical for the renewables or green transition and our electric future, especially in vehicles of all types. However, locals have been blocking roads, picketing, and organizing protests in the area for more than a year now.

The local resistance has restricted production and reduced exports apart from delaying expansion plans. This effectively means that MMG will have to spend a large amount of money and conduct massive PR campaigns to improve relations with the local population.

“To sustain the current operation, we are now investing more than $US2 billion over the next five years,” stated Las Bambas general manager Edgardo Orderique at the annual Perumin mining conference. The new investment is expected to cover a new pit, new tailings, and the relocation of current infrastructure.

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MMG would also like to develop the Chalcobamba open-cut pit which is located around 4 km northwest of the Las Bambas processing plant. Development of this pit would increase Las Bambas’ copper concentrate production to around 380,000 to 400,000 tons per annum in the medium term.

Las Bambas was hoping that the second pit would be finished to start production around December 2022 but work has been stalled due to opposition from the indigenous Huancuire community. MMG has previously stated that it would not go forward with the project until it could reach an enduring agreement with the indigenous residents.

The scale of Las Bambas’ problems can be gleamed from the fact that they have impacted Peru’s copper output which is still well below 2019 levels. According to an August release from The International Copper Study Group, production in the first half of 2022 was 8% below that of 2019 (pre-COVID).

If these production and expansion woes continue at Las Bambas, companies like Rio and BHP might be encouraged to explore major copper deals in Australia next year. BHP aims to boost output in 2022-23 by up to 16% to a range of 1.62 million to 1.82 million tons with production from Escondida rising by up to 18% to a top estimate of 1.18 million tons. In comparison, the mine has produced 1.004 million tons in 2022 till June 30.

Both BHP and Rio are reportedly looking at important copper prospects in Australia. Rio has the massive low-grade Winu copper-gold prospect in the East Pilbara region (near Newcrest’s Telfer mine) while BHP has a small version of its big Olympic Dam deposit in South Australia called Oak Dam.

BHP is also looking at OZ Minerals which, if the deal materializes, would add the West Musgrave project as well as the Carapateena and Prominent Hill mines to its portfolio.