Ground Breakers: Bellevue takes path less travelled to create gold market’s ‘green premium’
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Bellevue Gold (ASX:BGL) will bypass the tried and tested orthodoxy of the West Australian gold trade for bullion from its high grade, low emissions Bellevue Gold Mine in the Northern Goldfields, inking a refining deal that will allow it to separate its gold bars in the hope of attracting a so-called ‘green premium’.
Along with a power purchase agreement that will see Zenith Energy build an 88MW wind, solar, battery and thermal hybrid that will supply over 80% of the 200,000ozpa mine’s annual power supply from renewable sources over an initial 15-year term, Bellevue will eschew gold sales through the WA Govt’s Perth Mint and refine its product through privately-owned ABC Refinery.
The phrase ‘gold is gold’ is often heard to describe the relative simplicity of the process of getting gold from the mine to the customer, with the ubiquity of the gold refining process meaning there is little in the way of the customer-specific quality specification that can cause commercial headaches for nickel miners and lithium producers.
It means gold is normally blended in the refining process. But in a world of supply chain provenance and net zero, that is not always going to be fit for purpose.
ABC will separate Bellevue’s gold and sell it separately. Once Bellevue has achieved Net Zero status — it has an ambitious 2026 target backed by linked performance rights from its board down to the goldie’s entry-level fieldies, trade assistants and mill operators — it will attempt to market the gold bars at a ‘green premium’.
“The green gold is still a couple of years away, but we’re not net zero yet,” Bellevue’s MD Darren Stralow said.
“What we’ve got with them is an agreement to seek customers for mutual benefit that could potentially pay a premium for green gold.
“It’s a market that doesn’t exist yet because no one’s producing it. We’re taking the philosophy of ‘if you build it, they will come’ (ED: Thanks Kevin Costner).
“The fallback really is if you can’t sell it for a premium, you’re just selling it for spot anyway, which is what you do regardless.
“But the view that we have is every $5 extra on 200,000oz a year is worth a million bucks. So it’s worth us running down every rabbit hole looking for the customers that are going to want that premium.”
Bellevue, which will produce its first gold doré in the December quarter, is the latest to sign up with Zenith, which is also building a 95MW power plant at Liontown Resources’ (ASX:LTR) nearby Kathleen Valley lithium mine.
Stralow says each of its major components, wind, solar and thermal, would be able to supply 100% of the mine, camp and processing plant’s power requirements with battery back-up to enable switching between modes depending on the resource available at the time.
It means that Bellevue will be able to operate at times with 100% renewable power and keep its thermal back-up ‘engine off’ in times of high sunshine or wind generation.
Other parts of the mine will take longer to switch from fossil fuels, like its haulage, mine fleet and transport.
Bellevue has joined the Electric Mine Consortium, a collective of 20 ASX-listed and private mining and services companies seeking solutions to decarbonise the industry.
“We’re still a few years away from a fully electrified mining fleet. There is a plan together about how we’re going to do it and there is certain equipment that’s being trialled at the moment,” Stralow admitted.
“So what we’re doing is we’re starting with the smaller gear, so there’s a few electric LVs that are starting to penetrate the market and several trials underway to look at that.
“Then you go up to the bigger gear like your ancillary equipment, jumbos, drills, charge up rigs, and then we’ll get to the bigger equipment which leads to higher energy density later down the track when technology improves.
“But across the EMC there are several equipment trials that have been completed or are currently under way trying different types of electrical equipment at mines all around Australia.
“And that’s the power of having a consortium of all those different companies is that you can do lots of different trials, get lots of data back and really optimise what technology and what equipment you go with.”
Australia’s net zero ambitions have accelerated with the victory of the Labor Albanese Government over the previous Morrison Liberal-National Coalition, with the legislation of a 43% emissions cut against the 2005 baseline last year.
That has come alongside a stricter safeguard mechanism, putting pressure on Australia’s biggest polluters to rein in their CO2 emissions.
A number of mining companies have adopted emissions reductions targets that simply fall into line with regulatory policies or positions, such as nebulous 2050 net zero targets.
But Stralow said adopting measures to hit Net Zero (at least where its scope 1 and 2 emissions are concerned) early helped future-proof the business.
“I think that there are some really tangible benefits of being positive on ESG and positive on carbon mitigation in the current environment, and it’s going to drive people to do it,” he said.
“One, you’re mitigating that carbon risk, you’re protecting yourself against a future carbon price, and that is something that may be on the agenda going forward.
“Lots of companies are factoring in a potential future carbon price when they’re looking at projects that create emissions.
“Investors want it, so it increases your investor appetite, which could potentially lead to higher company valuation.
“It does have the option of decreasing the operating costs. If you have mine life duration, you can decrease operating costs through renewables.”
More important, Stralow said, was the ability to attract young employees who want to work in mining and have a positive impact on the environment at the same time.
“The biggest one for us is attracting employees,” he said.
“So if companies don’t put their best foot forward from an ESG perspective, I believe that they’re going to have a lot of trouble attracting the future workforce that they need.
“And I don’t think it’s a coincidence that Bellevue has stuck its neck out with a positive ESG strategy and also has no staff attraction or retention issues, because the next generation of mining professionals that comes through the system, they want to believe in something.
“They want to be a part of something that’s doing something positive for the environment, and we get that direct feedback from our employees as we’re ramping up our workforce.”
Sandfire Resources (ASX:SFR) will run hard to deliver a rapid expansion from 3.2Mtpa to 5.2Mtpa at the Motheo mine in Botswana after producing its first copper concentrate from the Kalahari belt development.
The new mine will by 2025 see SFR produce more than 100,000t of copper metal plus other by products along with its MATSA complex in Spain, with Motheo to hit a 50,000tpa copper metal producing run rate by FY25.
It expects to hit a 3.2Mtpa processing rate by the September quarter of FY24, new MD and CEO Brendan Harris said, with an expansion to 5.2Mtpa due in early calendar 2024.
The news could have been timed better. Copper fell 2.5% to drop below US$8000/t on fears China’s growth won’t support the market as expected post-Covid.
“Supply side issues which were providing some support earlier in the year have also subsided. First Quantum Minerals ended a months-long dispute with the Panamanian government,” ANZ’s John Bromhead said in a note.
“Copper stocks held in the Democratic Republic of Congo are also set to hit the market after being held up by a dispute over royalties.
“Short sellers have surged to record highs, with speculators net short in LME copper for the first time since 2000.
“Nevertheless, the outlook remains positive. We expect global demand growth to reach 4.1% this year as investment in the energy transition accelerates.”
Lower gold prices on a stronger US dollar and a drop in iron ore futures to six-month lows also weighed on the materials sector, which slid 1.51% in morning trade.