Ground Breakers: Are we in a mining boom? If we are, it ain't like the last one

Mining capex estimates have been amped up for 2022/23, but they can’t compare to the early 2010s boom
Talga says resource at Swedish graphite project could supply 60 million EVs
Sayona taps investors for $190 million to revive Canadian lithium mine

We’ve been asking in recent weeks where we’re at in the new mining boom.

The figures pointing to a new peak are certainly coming together, but whether we are there or not yet remains to be seen.

Some new figures from the boffins at the ABS suggest the sector is still growing and we haven’t quite seen the peaks of the last cycle just yet, if we ever will.

While commodity prices are at or near record highs for a number of metals and energy sources, including coal, gold, lithium, gas and iron ore, miners have been shy to spend the big bucks in new projects and capex after the dizzying debts left behind at the end of the last cycle.

At the moment it seems most major miners are happier to toss their spare cash into dividends for shareholders after they were run over the coals for wasting their money on mega projects and acquisitions in the last boom.

Plus, no one really wants to see Port Hedland house prices hit $1 million again.

ABS figures today showed mining industry earnings grew 4.1% $6.4 billion in 2020-21, a year which coincided with some of the biggest dividend payments on record by the iron ore majors.

To be fair, there were lifts across the board, with professional, science and tech growing 19.2% or $6.4b, retail trade up 19.8% or $6.1b, and ag earnings growing $5.7b (36.4%).

What makes mining’s earnings lift more remarkable than it would otherwise seem was that Australia’s resources sector wasn’t heavily impacted by the first Covid wave, with operations largely unrestrained while the lockdowns began.

Capex estimates from yesterday show mining capex slid 0.3% in the first quarter of 2022, with the second estimate for mining and non-mining capex for 2022/23 up 11.8% to $130.5 billion and mining capex intentions up 18% against last year.

But that pales in comparison to last cycle’s peak.

Great to see 2nd estimate for 2023 mining capex intention up 18% versus same estimate last year but resource companies still hardly embracing the supercycle theme. Capex intentions are still down 65% from the peak of the resource boom in 2013. pic.twitter.com/InB1PVWIPp

— Robert Rennie (@Robert__Rennie) May 26, 2022

We may be seeing silly money on offer for greenhorn mining jobs in WA’s resources heartland but are in full bogan boom mode yet? Not quite.

Talga and Sayona among mid-tier gains

Mark Creasy-backed Scandinavian graphite play Talga (ASX:TLG) has its tail up this morning after announcing a 54% increase in the graphite resource at the Vittangi project in Sweden.

It’s the latest winner for Creasy, who has enjoyed a major charge in the value of his exploration stock Galileo Mining (ASX:GAL) on the back of its Callisto platinum group elements discovery in WA.

Vittangi now hosts 30.1Mt of graphite ore at 24.1% contained graphite.

With 7.2Mt of contained natural graphite the $440 million capped Talga says the deposit could support the production of lithium ion battery anode material for the production of 60 million EVs.

Talga recently opened the first li-ion battery anode plant in Europe and is in the permitting process for its initial 19,500t commercial scale operation.

“Currently, there is more than 960GWh of Li-ion battery capacity using graphite anode technology planned in Europe,” MD Mark Thompson said.

“In boosting our graphite mineral resource, we are also boosting our ability to supply sustainable anode products and setting Talga up to become a major supplier to the world’s fastest growing Li-ion battery markets.”

Fellow battery metals play Sayona Mining (ASX:SYA) has looked a little under the weather since a tepid response from the market to a PFS on its proposed North American Lithium operation earlier this month.

But Sayona shares lifted 6.1% this morning to 21.75c after the $1.5 billion lithium stock announced the completion of a $190 million capital raising to support the development of the NAL project.

75% owned by Sayona and 25% owned by fellow ASX-listed lithium company Piedmont (ASX:PLL), the project will be the subject of a larger DFS in the second half of 2022 including both NAL and Sayona’s nearby Authier resource.

The cash will largely be used to refurbish the mothballed NAL concentrator, with commissioning due late Q3 or early Q4 and production expected to resume early next year, making NAL Canada’s first operating hard rock lithium mine.

At 18c the capital was raised at a 12.2% discount to Sayona’s last closing share price.

Sayona also announced the appointment of a local team and Quebec based CFO to support the development of NAL and Authier.