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Ma’aden eyes fertilizer, copper investment

Mining Indaba update.
South32 CEO Mike Fraser says Eskom needs an equity investment from the government, as well as aggressive cost reduction in the short term. Picture: Moneyweb

Executives, investors and government officials meet in Cape Town this week at the African Mining Indaba, the continent’s biggest gathering of one of its most essential industries.

The gold sector will be a hot topic this year, after two giant deals reignited interest in bullion producers, prompting speculation over who might be next. Investors attending the event will be looking for indications of progress in industry disputes with the governments of countries including Tanzania, the Democratic Republic of Congo and Zambia. Tailings dams are also in the spotlight, after Vale SA’s disaster in Brazil.

Read: Gold miners get their mojo back as giant deals revive allure

Here are the latest developments, updated throughout the day. (Time stamps are local time in Cape Town.)

Ma’aden likes copper (1:15pm)

Saudi Arabian Mining Co. would “carefully” look at investing in fertilizer assets outside the Kingdom and is also interested in copper opportunities, said Chief Executive Officer Darren Davis.

“We love copper, we think copper’s a great mineral to be in,” he said. Back home, “we still believe that Saudi Arabia has lots more to give geologically,” Davis said. “There’s a lot more upside, not just for us, but others as well.”

B2Gold on political risk (1:00pm)

Mining companies must earn the trust of their host governments by keeping their promises, said B2Gold Corp. CEO Clive Johnson. While it’s not always the case, he suggested that some producers have brought trouble on themselves by failing to do so. One of the contributors to B2Gold’s success at its Fekola mine has been a good relationship with the government of Mali, he said.

“If you disappoint a government you are disappointing a country,” Johnson said. “It really is paramount that we show these governments that we are worthy of their trust.”

Commenting on the potential for mergers and acquisitions, Johnson said the company is more focused on its existing growth prospects.

Turning point for gold? (12:20pm)

Investor interest in gold has increased this year and there are signs of safe-haven flows returning to the metal, said World Gold Council Chief Market Strategist John Reade. Gold has become less connected to the dollar and buying in futures markets and exchange-traded funds has helped drive the metal higher, he said.

Randy Smallwood, CEO of Wheaton Precious Metals Corp., agreed with Reade. “There has been a turn on investor interest on the gold side,” he said. “We have seen a change in the market and things are looking very promising.”

South32 on Eskom (12:00pm)

South32 believes struggling South African power utility Eskom needs an equity investment from the government, as well as aggressive cost reduction in the short term, the miner’s chief operating officer, Mike Fraser, said. South32, which is one of Eskom’s key coal suppliers, is looking for a buyer for its thermal-coal operations in South Africa. The emphasis is on ensuring the local business is black-owned, which will give it an advantage in securing coal-supply contracts and mining rights, Fraser said.

Anglo says survival depends on change (11:00am)

Anglo American wants to reach a point where it can operate without tailings, a waste product from mining, said Chief Executive Officer Mark Cutifani. Changing the way Anglo mines is a matter of survival, he said.

The company is developing new ways to crush ore before it separates metal from waste rock that uses less water.

“We have to turn having a mine in a community from being a negative to being an unarguable positive,” he said. Otherwise, “we won’t be given the opportunity to develop the resource.”

Rio Tinto relooks at tailings safety (11:00am)

Rio Tinto Group’s technical teams are working to consider what more the company can do to ensure the safety of its tailing dams following the disaster in Brazil, said Simone Niven, the miner’s head of corporate relations. Niven said the company issued new tailing standards in 2015 and its dams are subject to independent third party reviews. The company operates about 30 tailing dams.

Barrick on Congo (10:30am)

Barrick Gold Corp., Chief Executive Officer Mark Bristow said the miner has already started engaging with the new administration in the Democratic Republic of Congo, after President Felix Tshisekedi was sworn in late last month. Mark Bristow met Tshisekedi’s chief of staff and his advisers on January 29 and discussed the country’s new mining rules that were introduced by the president’s predecessor and have been strongly opposed by the industry.

They addressed “the ongoing debate about what is the appropriate mining and fiscal regime for the country as a whole and the different regions,” Bristow said at a press briefing. “We’ll find a solution. I have no doubt.”

No update on Acacia dispute (10:30am)

Barrick’s Bristow said he’s still expecting to break a deadlock with Tanzania that’s crippled the company’s Acacia Mining unit, but refused to give a timeline for any deal.

‘’We’ll bring this standoff to an amicable resolution,’’ Bristow said. ‘It’s important to do that.’’

Bristow said he expects the agreement to fit within an earlier framework hammered out by Barrick Executive Chairman John Thornton and the country’s president that involves a $300 million payment to Tanzania and an equal split of the economic benefit from its gold mines.

Barrick on tailings (9:30am)

Barrick Gold is “paranoid” about its tailing dams after Vale SA’s recent disaster in Brazil, chief executive officer Mark Bristow said at a press briefing. The Vale dam collapse killed at least 110 people and levelled part of the city of Brumadinho in Brazil. Barrick reviews all its sites quarterly and believe its tailings dams are in reasonable shape, Bristow said.

It’s essential that authorities get to the root of the problem as soon as possible and review the best practices for tailings, Bristow said. Having third parties inspect and sign off on things such as tailings dams doesn’t abdicate management from responsibility. “The responsibility never leaves the executive team” Bristow said.

South Africa’s shrinking sector (8:30am)

Employment in South Africa’s mining sector shrunk by 11%, or 56 366 jobs, in the past five years, according to lobby group Minerals Council South Africa. That includes a net loss of 11 217 in 2018, largely thanks to cuts in gold and platinum workforces, according to the group’s latest Facts and Figures publication, published Monday. The sector’s costs rose by an average of 6%.

© 2019 Bloomberg L.P


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