(Bloomberg) — Amazon.com Inc. and billionaire financier Ken Griffin are among the backers anchoring a $500 million investment in small nuclear reactors, a burgeoning technology heralded as the next era for atomic energy.
The Seattle-based company has signed agreements to develop the new breed of reactors — dubbed small modular reactors, or SMRs — in both Washington and Virginia, investing in in X-Energy, a privately-held advanced nuclear reactor developer.
The financing will help pay for the development of more than 5 gigawatts of new power projects coming online across the US by 2039, X-Energy said in a statement Wednesday.
“It’s going to allow us to build smaller, self-contained power generation near data centers, near where we want in a completely safe and scalable way,” Matt Garman, chief executive officer of Amazon Web Services, said during remarks at the company’s offices in Arlington, Virginia.
Amazon’s announcement comes as technology companies are searching for new energy supplies to power massive data centers needed to run artificial intelligence systems. Alphabet Inc.’s Google announced Monday it was backing the nuclear power and signed an agreement with Kairos Power to construct a series of SMRs that use molten-salt cooling technology.
Data center expansion and other factors are expected to drive electricity demand up 15% to 20% over the next decade, according to the US Energy Department. Data centers could consume as much as 9% of the nation’s electricity generation annually by 2030, up from 4% in 2023, according to a report in May by the nonprofit Electric Power Research Institute.
Amazon has also signed agreements with Washington State-based utility Energy Northwest and Virginia’s Dominion Energy, Inc. to develop SMR projects. Amazon said the reactors — which will be constructed, owned and operated by Energy Northwest — were expected to generate roughly 320 megawatts, with the option to expand to 960 megawatts total.
In Virginia, Amazon said it had signed an agreement with Dominion to explore the development of an SMR project at the utility’s existing North Anna nuclear power station that could bring at least 300 megawatts of power to the region.
Unlike traditional nuclear reactors, which are enormous facilities that take years to build, SMRs can be built at factories, delivered by truck or train, and then assembled on-site, saving time and money. Utilities can install just one or bundle several together, expanding the potential market by including countries that don’t need a big conventional nuclear plant.
Still, the technology hasn’t yet been deployed at scale, commercially.
And SMR’s have their critics, including those who say the economics of nuclear power is flawed no matter what the size of the reactors. NuScale Power Corp. announced in November it was canceling plans to build a series of SMRs in Utah amid surging costs.
Meanwhile, surging demand for power is prompting utilities to build more natural gas-fired plants, undermining lofty environmental goals for both the industry and tech firms.
“Artificial intelligence may be new, but claims that the next revolutionary nuclear technology will solve our energy problems have been around since we first split the atom,” Johanna Neumann, an official with Environment America, said in a statement. “It’s time for Big Tech to recommit to solutions that work and pose less risk to our environment and health, including making data centers as energy efficient as possible and committing them to be powered by new renewable energy sources.”
(Adds comment from Amazon executive in fourth paragraph)
American consumers’ expectations about the risk of debt delinquency rose to the highest level in more than four years last month, while concerns about elevated inflation over the longer-term also increased, according to a report released Tuesday by the Federal Reserve Bank of New York.
The New York Fed’s Center for Microeconomic Data found that in its Survey of Consumer Expectations for September, the average probability of consumers not being able to make a minimum debt payment rose for the fourth consecutive month to 14.2% – the highest level since April 2020 when it was 16.1%.
That suggests some Americans are facing increased budget pressures as they look to manage their borrowing. At the same time, consumers’ perceptions and expectations for credit access improved in September for the fourth straight month.
Consumers’ inflation expectations were unchanged at 3% over the next year, but increased from 2.5% to 2.7% at the three-year horizon, and from 2.8% to 2.9% at the five-year horizon.
Consumers see inflation remaining elevated over the three- and five-year time horizons, per the latest New York Fed report. (Photo by FREDERIC J. BROWN/AFP via Getty Images / Getty Images)
The probability of losing one’s job in the next 12 months was flat in September when compared with August, though the probability of voluntarily leaving a job ticked up from 19.1% in August to 20.4% in September, the highest level since July.
Expectations of a higher unemployment rate one year from now approached the lowest level in 2024, with respondents putting the probability at 36.2%, slightly higher than the 36.1% in February.
The New York Fed’s report comes as the central bank is weighing how it will proceed with interest rate cuts. Fed policymakers lowered the benchmark federal funds rate by 50 basis points in September from a range of 5.25% to 5.5% to 4.75% to 5% amid progress in slowing the pace of inflation.
The New York Fed found that consumers viewed the risk of missed debt payments rose for the fourth straight month. (Photo by Spencer Platt/Getty Images / Getty Images)
The Labor Department’s consumer price index (CPI), a popular inflation gauge, slowed to 2.4% in September – closer to the Fed’s 2% target, though it remained higher than LSEG economists expected. Inflation has gradually cooled over the last few years after this inflationary cycle peaked at a 40-year high of 9.1% in June 2022.
Fed Governor Christopher Waller said Monday that recent data doesn’t show the U.S. economy slowing down that much, adding that “while we do not want to overreact to this data or look through it, I view the totality of the data as saying monetary policy should proceed with more caution on the pace of rate cuts than was needed at the September meeting.”
Federal Reserve Governor Christopher Waller on Monday noted that the U.S. economy hasn’t slowed significantly, prompting caution about further rate cuts. (Photographer: Bess Adler/Bloomberg via Getty Images / Getty Images)
Markets are currently pricing in a 25-basis-point rate cut by the Fed at its next meeting, which would lower the benchmark to a range of 4.5% to 4.75%. Interest rate traders see a 94.1% probability of the Fed cutting by that much next month compared to a 5.9% chance of leaving rates unchanged, according to the CME FedWatch tool.
Economic data released in the last two weeks, including the CPI data and a hotter than expected jobs report for September, has cooled markets’ expectations of more aggressive rate cuts at the Fed’s November meeting. A month ago, traders saw a 27% chance that rates would be lowered by an additional 50 basis points in Nov. to a range of 4.25% to 4.5%, per CME FedWatch.
VANCOUVER, BC / ACCESSWIRE / October 16, 2024 / Stillwater Critical Minerals Corp. (TSXV:PGE)(OTCQB:PGEZF)(FSE:J0G) (the “Company” or “Stillwater”) is pleased to announce the completion of a property-wide geophysical airborne survey and a breakthrough in 3D geologic modeling of the lower Stillwater Igneous Complex. This new data will drive continued advancement of the project including drill campaigns and the expansion of mineral resources, among other objectives at its flagship Stillwater West Ni-PGE-Cu-Co + Au project in Montana.
Highlights
Property-wide geophysical surveys completed in September 2024 informed the first-ever detailed 3D geologic model of the lower Stillwater Igneous Complex;
The model demonstrates continuity of mineralization across the 9.5-kilometer length of lower Stillwater Igneous Complex which hosts the Company’s current resources in five deposits at Stillwater West project;
Historically, continuity of mineralization across the entire surface expression of the magmatic layers of the Stillwater Igneous Complex has been demonstrated primarily by Sibanye-Stillwater’s J-M Reef deposit, a high-grade PGE-bearing nickel-copper sulphide deposit that spans more than 40km and supports the highest-grade palladium-platinum mines in the world, and;
Stillwater’s current resources of 1.6 billion pounds of nickel, copper and cobalt, and 3.8 million ounces of palladium, platinum, rhodium, and gold are hosted in five deposits that remain open for expansion along trend and at depth across 9.5-kilometers at the center of the 61-square-kilometer Stillwater West project, which is adjacent to Sibanye-Stillwater along approximately 32km of strike within the Stillwater Igneous Complex.
Stillwater’s President and CEO, Michael Rowley, said “The team’s work this year regarding both the airborne survey and also the detailed geologic model confirm the expansion potential we see in several possible mining scenarios at Stillwater West and inform our campaigns to reach that objective. Together we have successfully leveraged a substantial database including approximately 40,000 meters of drilling to date to complete the first ever geologic model of the lower part of this famously productive and metal-rich American mining district, with a focus on magmatic nickel-copper sulphide mineralization. That wealth of data, combined with Glencore plc’s backing and in-house expertise from similar geology in South Africa’s Bushveld Igneous Complex, has positioned us exceptionally well with robust inventories of nickel, copper, cobalt, platinum group elements and chromium in an active American mining district at a time when the US is aggressively looking to diminish the current heavy import reliance of nine of the commodities we have inventoried.”
“We look forward to further announcements with a focus on continued expansion at Stillwater West while also turning our attention to various studies relating to potential production scenarios. Updates on other initiatives, including pursuit of government funding, monetization of non-core assets, CO2 sequestration and geologic hydrogen studies are also expected.”
Property-Wide Airborne Geophysical Survey Expert Geophysics Ltd. has completed the geophysical surveys over the Stillwater West project as announced July 18, 2024. The surveys, designed and executed in collaboration with Glencore plc via the Stillwater West technical committee, totaled approximately 1,170 line-kilometers and included test surveys over the Chrome Mountain resource area for the purpose of comparing the TargetEM26 time-domain electromagnetic (“EM”) survey with the MobileMTm magneto-telluric (“MMT”) survey. Evaluation of these test surveys alongside the first generation DIGHEM airborne EM survey flown over the project in 2000, together with smaller surveys and extensive ground-based Induced Polarization (“IP”) and magnetic/VLF by the Company, resulted in the decision to fly the property-wide survey using the MMT system. The decision was based on the MMT system’s demonstrated ability to better distinguish and define multiple conductive targets, and to greater depths.
Stillwater, along with input from Glencore, is now fine-tuning multiple large-scale priority conductive drill targets across the 12-kilometer main resource area in addition to ranking additional large, untested conductive targets across the broader 61-square-kilometer property based on preliminary results of the 2024 survey. Detailed results of the approximately 178 and 992 line-kilometer EM and MMT (respectively) surveys, plus related VLF and magnetic surveys completed by Expert, will be the subject of a subsequent news release as final results become available.
Geologic Model The development of a new 3D geologic model of Stillwater West is a major milestone in the advancement of the project as it is the first time the lower portion of the iconic Stillwater Igneous Complex has been modeled in detail. Developed by the Company from over 40,000 meters of drill data in addition to recent mapping and geophysical surveys, it effectively connects the east and west ends of a large and world-class district and provides a roadmap to expansion of the Company’s resources and advancement of the overall project, which is focused on the lower Stillwater Igneous Complex.
Figure 1 presents a long section view of the 3D model, focused on 9.5 kilometers in area of the current resources, within the core of the 32-kilometer-long Stillwater West project. The highly prospective Peridotite Zone is shown hosting all deposits from the January 2023 Mineral Resource Estimate and demonstrating the expansion potential that remains untested to date in all directions: between deposits, down dip, and along strike. Strong correlations are shown between the Peridotite Zone, geophysical anomalies, and geochemical soil anomalies across the Stillwater West project, demonstrating exceptional expansion potential.
The surface expression of the J-M Reef deposit is also shown. In production since 1986, the J-M Reef deposit is a 40-kilometer-long high-grade PGE-bearing nickel and copper sulphide reef-type deposit that is located stratigraphically above Stillwater West. Currently mined in three locations by Sibanye-Stillwater, the J-M Reef is known as the highest-grade palladium-platinum deposit in the world. It has been drilled and mapped extensively since its discovery in the early 1970s and is an indicator of the continuity of mineralization across the parallel magmatic layers of the Stillwater Igneous Complex, including the adjacent Stillwater West project.
Vice-President of Exploration Dr. Danie Grobler, said, “Recent breakthroughs in our detailed geological model show pronounced continuity of the mineralized zones along strike in the layered Stillwater Igneous Complex. This is further enhanced by our understanding of the geometry and orientation of these units at depth, improving our confidence in completing successful intersections in future drill campaigns. Preliminary results from the latest geophysical airborne survey – which was designed to provide comprehensive coverage of the prospective lower Stillwater Igneous Complex – indicates strong electromagnetic anomalies along the footwall contact zone of the Stillwater West project which are consistent with the massive sulphide and contact-style Ni-Cu sulphide-rich bodies that we targeted with the survey. These anomalies form important Platreef-contact-style targets for testing in planned upcoming drill campaigns.”
Dr. Grobler continued, “It is further anticipated that the survey will open the remainder of the strike length held by the Company for exploring high confidence discovery targets in the future. This season also included a follow-up confirmatory investigation by our technical advisor, Professor Wolfgang Maier, who is in the process of completing a detailed collaborative scientific paper on the Peridotite Zone of the Stillwater Igneous Complex, as first author. This work has enhanced our understanding of the geochemistry and mineralization styles and controls of the lower Stillwater Igneous Complex stratigraphy.”
Government Funding The Company is now partner to USD 2.75M in funding from the U.S. Department of Energy (“DOE”) via two grants under the Advanced Research Projects Agency program via collaborations with Cornell University and Lawrence Berkeley National Laboratory, as announced February 14, 2023, and August 15, 2024, in addition to work with the US Geological Survey and state organizations.
The Company has been partnered with the US Geological Survey at Stillwater West for over six years, continuing their multi-decade interest in the Stillwater Igneous Complex.
Stillwater is pursuing additional US government funding, including recent applications in response to announced opportunities available through the Department of Energy and the Department of Defense.
Parallels With the South Africa’s Bushveld Complex The Stillwater Igneous Complex is well-known to parallel South Africa’s Bushveld Igneous Complex, and developments at the Stillwater complex have generally paralleled those at the Bushveld, highlighting their significant geologic similarities. For example, Sibanye-Stillwater’s high-grade J-M Reef deposit was discovered by the direct application of geologic models developed during discovery of the high-grade Merensky reef deposit in the Bushveld.
More recent developments on the Bushveld have focused on the Platreef deposits, in the northern limb of the Bushveld, which depart from the conventional narrow reef-type mines that dominate global platinum group element mining with the occurrence of thick mineralized horizons that support bulk mining techniques and include much higher battery metal content. The mines of the Platreef are among the largest and most profitable in the world, and their mix of commodities offers an attractive internally hedged suite of in-demand critical minerals that is globally very rare. Starting with 1 Anglo American’s PGE-Ni-Cu Mogalakwena mines in 1993 and continuing today with 2 Ivanhoe’s underground Platreef mine, these mines have demonstrated the world-class nature of these bulk-tonnage, critical mineral systems within the Bushveld complex. With more than 20 billion pounds of nickel and copper in sulphide mineralization, and over 200 million ounces of platinum group metals and gold, these two mines are known primarily as platinum group element mines yet are also the largest nickel mines in South Africa.
Platreef-style deposits also compare very favorably in an environmental sense as they contain nickel sulphide mineralization that is capable of producing nickel metal with a much smaller footprint than nickel recovered from laterite deposits, which currently provides the majority of global nickel supply. Additional environmental benefits are possible through reaction of atmospheric carbon dioxide with certain ultramafic rocks present in Platreef-style deposits, and the production of hydrogen from those rocks. Testwork is underway to evaluate the potential for commercial-scale carbon sequestration and hydrogen production during a possible mining operation Stillwater West.
Footnote 1. Anglo American Mineral Resources and Reserves Report 2022: Measured and Indicated Mineral Resources: 1,665.40 MT at 2.29 4E g/t, Inferred Mineral Resources: 423.8 MT at 2.18 4E g/t.
Footnote 2. Ivanhoe Mines Ltd, Platreef Feasibility Study, March 2022: Indicated Mineral Resources; 2 g/t Cut-off 3PE+Au 346 MT at 1.68 g/t Pt, 1.70 g/t Pd, 0.28 g/t Au, 0.11 g/t Rh, 0.16% Cu, 0.32% Ni Inferred Mineral Resources; 2 g/t Cut-off 3PE+Au 506 MT at 1.42 g/t Pt, 1.46 g/t Pd, 0.26 g/t Au, 0.10 g/t Rh, 0.16% Cu, 0.31% Ni.
Upcoming Events Stillwater’s President and CEO, Michael Rowley, will be available for meetings and presenting at the following events:
Red Cloud Fall Mining Showcase – Toronto, ON, October 16-17. To register, click here.
Commodities Global Expo 2024 – Fort Lauderdale, FLA, October 20-21. For more information and registration, click here.
Precious Metals Summit – Zurich, CH, November 11-12, 2024. For more information, click here.
121 Mining Events – London, UK, November 14-15. For more information, click here.
About Stillwater Critical Minerals Corp. Stillwater Critical Minerals (TSXV:PGE)(OTCQB:PGEZF)(FSE:J0G) is a mineral exploration company focused on its flagship Stillwater West Ni-PGE-Cu-Co + Au project in the iconic and famously productive Stillwater mining district in Montana, USA. With the addition of two renowned Bushveld and Platreef geologists to the team and strategic investments by Glencore plc, the Company is well positioned to advance the next phase of large-scale critical mineral supply from this world-class American district, building on past production of nickel, copper, and chromium, and the on-going production of platinum group, nickel, and other metals by neighboring Sibanye-Stillwater. An expanded NI 43-101 mineral resource estimate, released January 2023, positions Stillwater West with the largest nickel resource in an active US mining district as part of a compelling suite of nine minerals now listed as critical in the USA. To date, five Platreef-style nickel and copper sulphide deposits host a total of 1.6 billion pounds of nickel, copper and cobalt, and 3.8 million ounces of palladium, platinum, rhodium, and gold at Stillwater West. All of these deposits remain open for expansion along trend and at depth.
Stillwater also holds the high-grade Black Lake-Drayton Gold project adjacent to Nexgold Mining’s development-stage Goliath Gold Complex in northwest Ontario, currently under an earn-in agreement with Heritage Mining, and the Kluane PGE-Ni-Cu-Co critical minerals project on trend with Nickel Creek Platinum‘s Wellgreen deposit in Canada‘s Yukon Territory.
FOR FURTHER INFORMATION, PLEASE CONTACT: Michael Rowley, President, CEO & Director – Stillwater Critical Minerals Email: info@criticalminerals.com Phone: (604) 357 4790 Web: http://criticalminerals.com Toll Free: (888) 432 0075
Quality Control and Quality Assurance Mr. Mike Ostenson, P.Geo., is the qualified person for the purposes of National Instrument 43-101, and he has reviewed and approved the technical disclosure contained in this news release.
Forward-Looking Statements This news release includes certain statements that may be deemed “forward-looking statements”. All statements in this release, other than statements of historical facts including, without limitation, statements regarding potential mineralization, historic production, estimation of mineral resources, the realization of mineral resource estimates, interpretation of prior exploration and potential exploration results, the timing and success of exploration activities generally, the timing and results of future resource estimates, permitting time lines, metal prices and currency exchange rates, availability of capital, government regulation of exploration operations, environmental risks, reclamation, title, and future plans and objectives of the company are forward-looking statements that involve various risks and uncertainties. Although Stillwater Critical Minerals believes the expectations expressed in such forward-looking statements are based on reasonable assumptions, such statements are not guarantees of future performance and actual results or developments may differ materially from those in the forward-looking statements. Forward-looking statements are based on a number of material factors and assumptions. Factors that could cause actual results to differ materially from those in forward-looking statements include failure to obtain necessary approvals, unsuccessful exploration results, changes in project parameters as plans continue to be refined, results of future resource estimates, future metal prices, availability of capital and financing on acceptable terms, general economic, market or business conditions, risks associated with regulatory changes, defects in title, availability of personnel, materials and equipment on a timely basis, accidents or equipment breakdowns, uninsured risks, delays in receiving government approvals, unanticipated environmental impacts on operations and costs to remedy same, and other exploration or other risks detailed herein and from time to time in the filings made by the companies with securities regulators. Readers are cautioned that mineral resources that are not mineral reserves do not have demonstrated economic viability. Mineral exploration and development of mines is an inherently risky business. Accordingly, the actual events may differ materially from those projected in the forward-looking statements. For more information on Stillwater Critical Minerals and the risks and challenges of their businesses, investors should review their annual filings that are available at www.sedar.com.
Neither the TSX Venture Exchange nor its Regulation Services Provider (as that term is defined in the policies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this release.
The Guangzhou Futures Exchange (GFEX) is expected to launch its first platinum and palladium futures contracts in China in the first quarter of 2025, Weibin Deng, head of Asia Pacific at the World Platinum Investment Council, told a conference.
The contracts will be the first domestic price-hedging mechanism for platinum and palladium in the world’s second-largest economy, where the metals are used by auto makers and other industries, including jewellery and investment products.
The GFEX declined to comment.
The World Platinum Investment Council, whose five members are major platinum producers, hopes hedging will help revive demand for platinum jewellery, Deng told the London Bullion Market Association’s annual conference in Miami on Monday.
Hedging by jewellery makers could reduce the premium they charge clients and the discount on buybacks of jewellery and platinum products, which could boost demand, the council said.
While China is the key market for platinum group metals, platinum jewellery demand in the country has slumped 79% from a peak of around 2 million troy ounces in 2014 amid a downturn in consumer preference for the metal.
Google is adding nuclear plants to its seemingly ever-growing portfolio. The company has partnered with Kairos Power to back the construction of seven small nuclear reactors in the U.S. It’s the first agreement of its kind.
The first plant is expected to come online by 2030, the company announced in a blog post. Other reactors will be deployed by 2035. All totaled, the deal will funnel 500 megawatts of power to the company’s AI technologies—enough to power a midsize city.
“Nuclear solutions offer a clean, round-the-clock power source that can help us reliably meet electricity demands with carbon-free energy every hour of every day,” Google wrote in the blog post. “Advancing these power sources in close partnership with supportive local communities will rapidly drive the decarbonization of electricity grids around the world.”
The smaller reactors created by Kairos, a nuclear-energy startup, are different from the towers most people think of when they conjure up an image of a nuclear reactor. The company uses a molten salt cooling system (much like the one that will be used for the on-site reactor being built on the campus of Abilene Christian University), which operates at a lower pressure. The company broke ground on a demonstration reactor, which will be unpowered, earlier this year in Tennessee.
Google did not unveil the cost of the partnership. The project site (or sites) have not yet been determined.
Google’s announcement comes weeks after Microsoftannounced a partnership with Constellation Energy that will see the undamaged reactor at Three Mile Island, the site of the worst nuclear accident in U.S. history, resume operations to power Microsoft’s AI data centers.
Experts have warned data centers could become a big strain on the U.S. power grid, with the nine-year projected growth forecast for North America essentially doubling from where it stood a year ago. Last year, the five-year forecast from Grid Strategies projected growth of 2.6%. That number has since nearly doubled to 4.7%—and planners expect peak demand to grow by 38 gigawatts. In real-world terms, that’s sufficient to power 12.7 million homes.
Jakob Stausholm, Rio Tinto’s CEO since January 2021. (Image courtesy of Rio Tinto.)
A little over a decade ago, Rio Tinto Group was reeling from the impact of disastrous investments. First, the bruising top-of-the-market purchase of aluminum group Alcan Inc., and then the ill-conceived swoop for Mozambique-focused coal outfit Riversdale Mining Ltd. The commodities boom cooled, top managers were pushed out and writedowns piled up.
Now — after billions in charges, cost cuts, plus several chief executives and multiple false starts — the miner has returned to the M&A fray, announcing the agreed $6.7 billion acquisition of Arcadium Lithium Ltd. this week.
Modest by comparison with past splurges, the all-cash deal is a significant and long-awaited expansion of Rio’s bet on lithium, a metal other diversified miners have stayed away from, worried about geological abundance among other factors.
It also marks a clear step back toward acquisitive growth.
“The development of the Arcadium acquisition was years in the making,” said Kaan Peker, analyst with RBC Capital Markets LLC. “Eventually, as we’ve seen over the course of the last couple of months, it was driven by a cyclical bottoming of the lithium price.”
The mining sector across the board is only just beginning to shift its focus to expansion and deals. For years after the last frenzy soured, shareholders demanded only better returns. But while rival BHP Group tested the waters since 2022, with the move for OZ Minerals Ltd. — and eventually bid unsuccessfully for Anglo American Plc, earlier this year — Rio has held back.
People familiar with the matter have long pointed to cumbersome internal structures and a conservative approach from chief executive officer Jakob Stausholm, who was chief financial officer until the 2020 ousting of his predecessor provided an unexpected opening at the top. Public comments pointed away from deals.
But it’s also true that the miner struggled with an issue that has dogged other large peers like BHP. When profit comes overwhelmingly from vast iron ore mines, it is hard to find additions that are lucrative — and sizeable — enough to move the needle. Copper is expensive and hard to find. Energy-transition friendly metals like lithium, used in batteries, tend to be smaller scale, with plenty of value in the processing and not just extraction.
Even with China’s sputtering economy, the profit margin for Rio’s Pilbara iron ore operations was 67% in the first half of 2024.
Battery bet
Rio has significant additional copper and iron production due from Oyu Tolgoi in Mongolia and Simandou in Guinea, respectively. Still, its answer to the question of where new, greener growth will come from has been lithium.
The path has not been smooth. Efforts to invest in new materials through private equity-inspired unit Rio Ventures, starting in 2017, went virtually nowhere and attempts to buy into lithium heavyweight SQM around that time were also thwarted. Projects too have stumbled, with Jadar in Serbia, Stausholm’s early bet, turning for a time into a local cause celebre.
“There were some people in Rio that were very disappointed they didn’t buy the stake in SQM. If you look back at Rio in those days they weren’t really ready,” said George Cheveley, portfolio manager at Ninety One UK Ltd.
“Since Jakob became CEO, he has been fixing internal problems and projects that were stuck. Operationally, we’ve seen them hit their targets. Now to be moving into lithium and getting back to M&A is the obvious next step. You can see him rebuilding the company back to where it was.”
Rio completed its $825 million purchase of the Rincon project in Argentina in 2022, but it was the collapse of lithium prices since the end of that year that opened up more avenues for M&A, with many new suppliers struggling to stay afloat.
The second-largest miner has seized the opportunity, and investors are cautiously welcoming a move that brings future production — Arcadium is projected to be the world’s third-largest producer by 2030 — but also technological nous, particularly in direct lithium extraction, or DLE, which could turbocharge output.
“We are happy Rio’s CEO Jakob Stausholm showed discipline and waited for the right time; makes a lot of sense and Arcadium is a nice add-on,” said Matthew Haupt, a portfolio manager at Wilson Asset Management Ltd. in Sydney, who holds both Rio and Arcadium.
Others echoed the sentiment — even with a premium to the undisturbed price of 90%, hefty despite the halving of Arcadium shares this year.
“You could almost say it’s akin to what BHP did last year when they bought OZ Minerals. Go out there, do a deal that is a small percentage of your market cap, execute it and prove that you can buy well,” said Barrenjoey analyst Glyn Lawcock. “The question now is whether there’s more to come down the pipe after this.”
Still, Rio has work to do when it comes to convincing all its investors that it’s ready to get back to spending.
“If they indulge in large scale M&A, it’ll be a negative thing,” said Prasad Patkar at Platypus Asset Management. “I’m a little bit more comfortable with this transaction than I would’ve been with anything larger. Or any top-of-the-market stuff.”
A Rio spokesman pointed to Stausholm’s comments this week committing to remain disciplined in capital allocation, but declined to comment further.
At a closely watched briefing on Saturday, the finance ministry did pledge more help for the crisis-wracked property sector — a keystone of raw materials demand in China — and heavily indebted local authorities, as well as hinting at expanded government borrowing. But the measures weren’t accompanied by concrete spending proposals, which investors had hoped could run to as much as 2 trillion yuan ($283 billion).
Iron ore futures in Singapore fell 0.7% to $105.50 a ton in Singapore as of 8:01 a.m. local time. Futures of the steel-making material have been on a roller-coaster this year, climbing above $140 a ton in January before sinking below $90 last month.
The copper market has followed a similar trajectory, hitting a record north of $11,000 a ton in May before retreating. In early trade, the three-month contract on the London Metal Exchange was 0.7% lower at $9,719 a ton. Brent crude oil futures also fell 1.8%. China is the world’s biggest importer of all three commodities.
Metals had rallied in recent weeks after Beijing launched a barrage of monetary interventions to support growth. But commodities investors have clamored for further measures on the fiscal side of the equation, which has a more direct impact on consumption of materials, and is needed to replace demand lost to China’s prolonged real estate slump.
As such, the government’s focus on plans to right the property sector will be welcomed by markets, not only through demand for raw materials but because housing is such an important store of wealth for Chinese people.
Housing Crisis
The housing crisis has of necessity shrunk the sector’s importance to Chinese steel mills, with construction accounting for 24% of consumption in 2023 from 42% in 2011, according to mining giant BHP Group Ltd. Machinery-making by contrast has gone from 20% to 30% in that time, while steel exports have risen sharply over the past two years.
Copper benefits from more widespread applications than steel and has a starring role in the energy transition, although construction still accounts for almost a fifth of the market, according to Citic Securities Co. Prices of other metals such as aluminum and zinc, and fuels like diesel, are also influenced by the level of activity on building sites, as well as the purchases of durable goods that typically accompany a new home.
It’s the emphasis on boosting consumption which is expected to steer the government’s fiscal response to its economic woes. Decades of urbanization have saturated the space for metals-intensive state investment in infrastructure, which has become much less reliable as a driver of growth. But, again, the finance’s ministry’s briefing contained few new pointers on how the government plans to lift spending among its citizens.
The extent of China’s challenges on that front were laid bare once more by price data on Sunday, which showed the economy heavily beset by deflationary pressures. Consumer prices rose less than forecast in September, while at the factory-gate they fell for a 24th straight month, underscoring the need for further policy support.
Details — and a price tag — for enhanced fiscal measures could still be forthcoming, perhaps when Chinese legislators meet later in the year. But in the meantime, commodities bulls are likely to draw in their horns until the scale of the government’s support is revealed.
Integrated Mine Plan Complete with Estimated Net Present Value of $1.6 billion
Average Annual Production of 4.7 Million Tons at First Quartile Cost and Mine Life of 25+ years
ST. LOUIS, Oct. 11, 2024 /PRNewswire/ — Peabody (NYSE: BTU) today provided an investor presentation on project development and the related integrated mine plan at Centurion, the Company’s premium low volatile hard coking coal project located in Australia’s Bowen Basin. The Company will hold a conference call on Monday, October 14, 2024, at 3:00 p.m. CST to share a comprehensive update on Peabody’s development of Centurion. To watch the event live or access a replay, please visit www.peabodyenergy.com.
Centurion is quickly becoming the cornerstone metallurgical coal asset in Peabody’s global coal portfolio, unlocking substantial, untapped reserves and repositioning Peabody as primarily a metallurgical coal producer. “The development of Centurion is a key strategic priority to maximize shareholder value and reweight our portfolio and long-term cashflows to metallurgical coal,” Jim Grech, Peabody’s President and Chief Executive Officer, said. “Combined with Peabody’s diversified portfolio, resilient balance sheet, fully funded reclamation obligations and robust shareholder return program, Peabody is uniquely positioned as a leading global coal producer.”
Thus far, two continuous miner units have been commissioned and the mine successfully produced its first development coal in June. The prep plant successfully washed its first coal and moved it to stockpile via the overhead belts in September. Peabody expects to commission a third continuous miner and ship the first cargo of coal in the fourth quarter.
Centurion is set to significantly enhance Peabody’s metallurgical coal production with average volume of 4.7 million tons per year at expected costs of $105 per ton over the twenty-five plus year life of the mine. Centurion will also reposition the metallurgical coal portfolio toward higher quality premium met coals.
“We anticipate demand for premium hard coking coals to grow significantly,” Malcolm Roberts, Peabody’s Chief Marketing Officer, said. “While demand for this product continues to grow, new projects are increasingly rare, making Centurion’s product highly sought after.”
At September 30, 2024, Peabody has completed approximately $250 million of the anticipated $489 million of initial development capital to achieve longwall production in March 2026. With a $210 per metric ton benchmark price assumption, Centurion has an estimated net present value of $1.6 billion and a 25 percent internal rate of return.
“Peabody is committed to increasing shareholder value through a balanced approach of maximizing shareholder returns and developing Centurion,” Mark Spurbeck, Peabody’s Chief Financial Officer, said. “Centurion provides increased optionality to tightening metallurgical coal markets and will be a strategic asset in Peabody’s global coal portfolio for decades.”
Concurrent with this release, Peabody has issued a presentation on the Centurion project that can be found on the investor section of www.peabodyenergy.com.
Peabody (NYSE: BTU) is a leading coal producer, providing essential products for the production of affordable, reliable energy and steel. Our commitment to sustainability underpins everything we do and shapes our strategy for the future. For further information, visit www.PeabodyEnergy.com.
This press release contains forward-looking statements within the meaning of the securities laws. Forward-looking statements can be identified by the fact that they do not relate strictly to historical or current facts. They often include words or variation of words such as “expects,” “anticipates,” “intends,” “plans,” “believes,” “seeks,” “estimates,” “projects,” “forecasts,” “targets,” “would,” “will,” “should,” “goal,” “could” or “may” or other similar expressions. Forward-looking statements provide management’s or the Board’s current expectations or predictions of future conditions, events or results. All statements that address operating performance, events, or developments that may occur in the future are forward-looking statements, including statements regarding the shareholder return framework, execution of Peabody’s operating plans, market conditions, reclamation obligations, financial outlook, potential acquisitions and strategic investments, and liquidity requirements. They may include estimates of sales and other operating performance targets, cost savings, capital expenditures, other expense items, actions relating to strategic initiatives, demand for the company’s products, liquidity, capital structure, market share, industry volume, other financial items, descriptions of management’s plans or objectives for future operations and descriptions of assumptions underlying any of the above. All forward-looking statements speak only as of the date they are made and reflect Peabody’s good faith beliefs, assumptions and expectations, but they are not guarantees of future performance or events. Furthermore, Peabody disclaims any obligation to publicly update or revise any forward-looking statement, except as required by law. By their nature, forward-looking statements are subject to risks and uncertainties that could cause actual results to differ materially from those suggested by the forward-looking statements. Factors that might cause such differences include, but are not limited to, a variety of economic, competitive, and regulatory factors, many of which are beyond Peabody’s control, that are described in Peabody’s periodic reports filed with the SEC including its Annual Report on Form 10-K for the fiscal year ended Dec. 31, 2023 and Quarterly Report on Form 10-Q for the quarter ended Jun. 30, 2024 and other factors that Peabody may describe from time to time in other filings with the SEC. You may get such filings for free at Peabody’s website at www.peabodyenergy.com. You should understand that it is not possible to predict or identify all such factors and, consequently, you should not consider any such list to be a complete set of all potential risks or uncertainties.
LAKE KARIBA, Zambia (AP) — Tindor Sikunyongana is trying to run a welding business which these days means buying a diesel generator with costly fuel he can’t always afford.
Like everyone in Zambia, Sikunyongana is facing a daily struggle to find and afford electricity during a climate-induced energy crisis that’s robbed the southern African country of almost all its power.
“Only God knows when this crisis will end,” said Sikunyongana. His generator ran out of diesel and spluttered to a halt as he spoke. “You see what I mean?” he said.
Zambia’s worst electricity blackouts in memory have been caused by a severe drought in the region that has left the critical Kariba dam, the source of Sikunyongana’s woes, with insufficient water to run its hydroelectric turbines. Kariba is the largest man-made lake in the world by volume and lies 200 kilometers (125 miles) south of Lusaka on the border between Zambia and Zimbabwe.
The massive dam wall was built in the 1950s and more than 80 workers died during construction. It was meant to revolutionize the countries’ energy supplies by trapping the water of the Zambezi River, turning a valley into a huge lake and providing an endless supply of renewable hydroelectric power.
That’s not the case anymore as months of drought brought by the naturally occurring El Nino weather pattern and exacerbated by warming temperatures have put Zambia’s hydroelectric station on the brink of completely shutting down for the first time.
The water level is so low that only one of the six turbines on Zambia’s side of the dam is able to operate, cutting generation to less than 10% of normal output. Zambia relies on Kariba for more than 80% of its national electricity supply, and the result is Zambians have barely a few hours of power a day at the best of times. Often, areas are going without electricity for days.
Edla Musonda is so exasperated that she’s taken to lugging her entire desktop computer — hard drive, monitor, everything — to a local cafe so she can work.
Musonda and others cram into the Mercato Cafe in the Zambian capital of Lusaka, not for the sandwiches or the ambiance but because it has a diesel generator. Tables are cluttered with power strips and cables as people plug in cell phones, laptops and in Musonda’s case, a home office. This is the only way her small travel business is going to survive.
Less than half of Zambia’s 20 million people had access to electricity before Kariba’s problems. Millions more have now been forced to adjust as mothers find different ways to cook for their families and children do their homework by candlelight. The most damaging impact is during the daylight hours when small businesses, the backbone of the country, struggle to operate.
“This is also going to increase poverty levels in the country,” said economist Trevor Hambayi, who fears Zambia’s economy will shrink dramatically if the power crisis is prolonged. It’s a warning call to the Zambian government and the continent in general about the danger to development of relying heavily on one source of energy that is so climate dependent.
The power crisis is a bigger blow to the economy and the battle against poverty than the lockdowns during the COVID-19 pandemic, said Zambia Association of Manufacturers president Ashu Sagar.
Africa contributes the least to global warming but is the most vulnerable continent to extreme weather events and climate change as poor countries can’t meet the high financials costs of adapting. This year’s drought in southern Africa is the worst in decades and has parched crops and left millions hungry, causing Zambia and others to already declare national disasters and ask for aid.
Hydroelectric power accounts for 17% of Africa’s energy generation, but that figure is expected to rise to 23% by 2040, according to the International Energy Agency. Zambia is not alone in that hydroelectric power makes up over 80% of the energy mix in Mozambique, Malawi, Uganda, Ethiopia and Congo, even as experts warn it will become more unreliable.
“Extreme weather patterns, including prolonged droughts, make it clear that overreliance on hydro is no longer sustainable,” said Carlos Lopes, a professor at the Mandela School of Public Governance at the University of Cape Town in South Africa.
The Zambian government has urged people and businesses to embrace solar power. But many Zambians can’t afford the technology, while the government itself has turned to more familiar but polluting diesel generators to temporarily power hospitals and other buildings. It has also said it will increase its electricity from coal-fired stations out of necessity. While neighboring Zimbabwe has also lost much of its electricity generation from Kariba and blackouts there are also frequent, it gets a greater share of its power from coal plants.
At Kariba, the 128-meter-high (420-feet) dam wall is almost completely exposed. A dry, reddish-brown stain near the top marks where the water once reached in better times more than a decade ago.
Leonard Siamubotu, who has taken tourists on boat cruises on the picturesque lake for more than 20 years, has seen the change. As the water level dropped, it exposed old, dead trees that were completely submerged for years after the wall was built. “I’m seeing this tree for the first time,” he said of one that’s appeared in the middle of the lake.
The lake’s water level naturally rises and recedes according to the season, but generally it should go up by around six meters after the rains. It moved by less than 30 centimeters after the last rainy season barely materialized, authorities said. They hope this year’s rains, which should start in November, will be good. But they estimate that it’ll still take three good years for Kariba to fully recover its hydroelectric capability.
Experts say there’s also no guarantee those rains will come and it’s dangerous to rely on a changing climate given Zambia has had drought-induced power problems before, and the trend is they are getting worse.
“That’s not a solution … just to sit and wait for nature,” said Hambayi.
___
Associated Press journalist Taiwo Adebayo in Abuja, Nigeria contributed to this report.
The Associated Press receives financial support for global health and development coverage in Africa from the Gates Foundation. The AP is solely responsible for all content. Find AP’s standards for working with philanthropies, a list of supporters and funded coverage areas at AP.org.
___
The Associated Press’ climate and environmental coverage receives financial support from multiple private foundations. AP is solely responsible for all content. Find AP’s standards for working with philanthropies, a list of supporters and funded coverage areas at AP.org.
FILE PHOTO: A man walks in the Central Business District on a rainy day, in Beijing · Reuters
Fri, October 11, 2024 at 11:24 PM EDT
SINGAPORE (Reuters) – China said on Saturday it will “significantly increase” government debt issuance to offer subsidies to people with low incomes, support the property market and replenish state banks’ capital as it pushes to revive sputtering economic growth.
Without providing details on the size of the fiscal stimulus being prepared, Finance Minister Lan Foan told a news conference there will be more “counter-cyclical measures” this year.
Global financial markets have been keenly awaiting more details on China’s stimulus plans, fearing its 2024 economic growth target and longer-term growth trajectory may be at risk if more support is not announced soon.
Here are some comments from investors and analysts on the press briefing from China’s finance ministry:
RONG REN GOH, PORTFOLIO MANAGER, EASTSPRING INVESTMENTS, SINGAPORE
“Investors were hoping for fresh stimulus, accompanied by specific numbers, to be announced at the MOF presser, including the size of these commitments. From this perspective, it turned out to be somewhat of a damp squib given only vague guidance was provided.
“That said, there were meaningful measures announced. The MoF affirmed room for the central government to increase debt, more support for housing markets, and increased local government debt quotas to alleviate refinancing woes.
“However, with markets focused on ‘how much’ over ‘what’, they were invariably set up to be disappointed by this briefing.”
HUANG XUEFENG, CREDIT RESEARCH DIRECTOR, SHANGHAI ANFANG PRIVATE FUND CO, SHANGHAI
“The focus seems to be around funding the fiscal gap and solving local government debt risks, which far undershoots expectations that had been priced into the recent stock market jump. Without arrangements targeting demand and investment, it’s hard to ease the deflationary pressure.”
ZHAOPENG XING, SENIOR CHINA STRATEGIST, ANZ, SHANGHAI
“MOF focused more on derisking local governments. It will likely add new quotas of treasury and local bonds. We expect a 10 trillion yuan ($1.42 trillion) implicit debt swap in the next few years. Official deficit and local bond quotas may both increase to 5 trillion yuan going forward. But it looks (to be) not much this year. We expect 1 trillion ultra-long treasury and 1 trillion local bonds to be announced by NPC this month end.”
BRUCE PANG, CHIEF ECONOMIST CHINA, JONES LANG LASALLE, HONG KONG
“The message released from today’s press conference is actually quite in line with the expectations of those familiar with China’s policy-making process and state structure. The officials have given answers to questions of ‘how’ but no details of ‘when’, yet.
“I will expect more details and number of the previewed fiscal stimulus to be published only after the upcoming meeting of the NPCSC to approve a plan to increase treasury issuance and provide a mid-year revision to the national budget. And it would be reasonable and practical to keep room for policy manoeuvring to prepare for external shocks and uncertainties.”
CHRISTOPHER WONG, CURRENCY STRATEGIST, OCBC, SINGAPORE
“There was mention of 2.3 trillion yuan and some details on local bond issuance that can support housing … but it stopped short of a big surprise factor. That said, we shouldn’t lose sight of the bigger picture and that is policymakers acknowledged the issues and are putting in genuine effort to tackle those issues.
“More time may be needed for more thought-out and targeted measures. But those measures also need to come fast as markets are eagerly waiting for them. Over expectations vs under-delivery would result in disappointment and that can manifest itself into Chinese markets.”
TIANCHEN XU, SENIOR ECONOMIST, ECONOMIST INTELLIGENCE UNIT, BEIJING
“Our overall take is quite positive in that MoF is willing to tackle China’s many economic challenges by leveraging its borrowing room. The immediate benefits to the economy will be limited, as the MoF avoided large-scale direct cash handouts to households. However, its commitment to restoring local public finances through fiscal transfer and debt replacement is highly commendable.
“In the medium term, it will put an end to the aggressive deleveraging by local governments and ease the resulting deflationary pressure. And as their financial position stabilises, local governments will be better positioned to support the economy by providing public services and embark on public investments.
“The Chinese government’s determination to provide a backstop to the ailing property market and economy came through clearly in the press briefing by the MoF. However, specific numbers with regards to initiatives announced was lacking. The lack of a big headline figure may also disappoint some investors who were hoping for the government to announce a sizeable 2 trillion yuan in fresh fiscal stimulus to shore up the economy and boost confidence.
“Investors were hoping for more measures targeted at households instead of only the real estate sector. While today’s measures were focused on local governments and helping them to purchase unsold homes, it is unclear if this will translate into action as local governments have been reluctant so far to participate in the home purchase program for fear that home prices could fall further.
“Nevertheless, investors will take some comfort from the Finance Minister’s pronouncement that the central government has room to increase debt and the deficit, and that it has other tools in consideration to use in future. This offers hope that more can and will be done, although investors hoping for a big bang fiscal bazooka today will probably be disappointed.
($1 = 7.0666 Chinese yuan renminbi)
(Reporting by Asia markets team and China economics team; compiled by Ankur Banerjee; Editing by Kim Coghill)
