Rio’s US$2.4 billion Jadar lithium mine is dead in the water after Serbia’s ruling party put the shoe on the other foot and booted the mining giant from the Balkan country amid protests against the project.
Serbian PM Ana Brnabic told reporters “all decisions and all licences have been annulled” according to Reuters, declaring “this is an end” to the Jadar development.
Serbia’s populist and neoliberal leaning Serbian Progressive Party has been under pressure to nix the mine as noise from protesters against the project’s alleged environmental impacts has grown in recent months.
With an election on the horizon, Rio’s position was arguably weakened by the diplomatic incident Australia and Serbia over the deportation of unvaccinated tennis star and national hero Novak Djokovic.
That sparked wild conspiracy theories on Twitter that the cancellation of his Visa was payback for some veiled comments he may have made in support of protesters on Instagram.
Canberra is petty, but not that petty … we think.
The very obvious Rio has been deported quips have already begun.
Back to reality
It came after Rio said its regulatory struggles in Serbia would push back the start date for Jadar by a year to 2027.
Barring a change in mood or a new government with a more sympathetic ear to Rio’s management, that now appears a flight of fancy.
A Rio spokesperson said it is reviewing the “legal basis of this decision”.
“Rio Tinto is extremely concerned by the statement from the Prime Minister, Ana Brnabic, about cancelling the spatial plan and revoking licences related to the Jadar Project,” they said.
“Throughout our work on the Jadar Project we have always operated in compliance with the laws of the Republic of Serbia. Rio Tinto is reviewing the legal basis of this decision and the implications for our activities and our people in Serbia.”
There is a sense in the investment community Rio had already been preparing for an outcome like this.
In December it paid US$825 million for the Rincon lithium project in Argentina, which is probably where it will have to focus its attention now in a bid to gain a foothold in the booming lithium and electric vehicle supply sector.
But Jadar’s cancellation will be disappointing to Rio internally given how long it has worked on the project.
The company discovered jadarite, a mineral which contains rich lithium and boron reserves and bears a similar chemical composition to Superman’s fictional kryptonite, back in 2004.
It has worked in a lab in Melbourne to develop a breakthrough process specific to the mineral which it would have used to extract up to 58,000t of lithium carbonate a year, making Rio one of the world’s 10 largest lithium miners and the largest in the key European EV market.
Rio dropped 3.47% as of midday AEDT as the bulk of the materials index got clobbered, shaving 2.9% on a bad day for the market in general.
Junior Serbian lithium explorer Balkan Mining and Minerals (ASX:BMM) fell more than 17% by noon on the Rio news.
Rio Tinto share price today:
Centaurus taps nickel excitement for $75 million
It is hardly surprising the first mega raising of 2022 sees instos pump $75 million into a nickel sulphide developer, after prices topped US$24,000/t overnight.
$440 million capped Centaurus Metals (ASX:CTM) emerged from a trading halt this morning with fresh cash to splash on a DFS and 90,000m drilling program at the big Jaguar project in Brazil including new investors and existing shareholders including Sprott, Dundee Goodman, former WA Governor Malcolm McCusker and nickel rich lister Kerry Harmanis.
Jaguar contains 80.6Mt at 0.91% nickel for 730,700t of contained metal.
It wants to invest in drilling to maximise the measured and indicated portion of those resources ahead of a DFS due by year’s end, pre-development and financing activities ahead of an FID. That is due in the third quarter of 2023.
LME nickel briefly touched US$24,435/t amid a mix of supply issues including low warehouse stocks, Indonesian export restrictions and the shutdown of a Chinese nickel plant in Myanmar due to apparent sabotage by resistance forces.
It settled up 2.8% at US$23,795/t, the highest close in 11 years, a mark that has been set numerous times over the past week.
Centaurus, which now has $83m in its kitty, wants to fill part of a major looming supply shortfall for battery market nickel with 20,000tpa of nickel in sulphate from targeted measured and indicated MRE of 500,000t.
MD Darren Gordon said the strong interest in the Argonaut and Sprott led raise reflects the scale and quality of Jaguar and its ESG credentials.
“It also reflects the strong macro environment for the nickel, which recently hit 11-year highs on the strong
demand outlook from the burgeoning EV, renewable energy and lithium-ion battery sectors,” he said.
“Nickel is an extremely valuable and very strategic metal, and yet supply globally is constrained in part because of the scarcity of major new projects coming on stream, particularly nickel sulphide projects.”
“We have one of the most significant new nickel sulphide projects anywhere in the world, and we are really looking forward to maximising its potential for our shareholders in the months and years ahead.”
Centaurus Metals share price today:
Whitehaven savaged on production downgrade
Covid and wet weather have eaten 1Mt of coal out of Whitehaven’s (ASX:WHC) production guidance for FY2022, sending its stock price down despite expectations all time prices will continue in the near term.
Whitehaven saw ROM production across its Narrabri, Maules Creek and Gunnedah mines drop 37% year on year in the December quarter from 5.14Mt in 2020 to 3.24Mt in 2021, with managed coal sales down 11% from 4.46Mt to 3.97Mt.
On a year to date basis WHC has seen managed coal sales drop 18% from 10.5Mt in the first half of FY21 to 8.62Mt in FY22, or 7.17Mt on an equity basis.
But WHC was shielded by super high prices, fetching an average $211 on every tonne sold in the December quarter, up from $94/t across FY21 and $86/t in the same quarter a year earlier.
Whitehaven estimated it lost 600-700,000t of production at Maules Creek and 100-200,000t at Gunnedah due to flooding, with another 200,000t deferred due to Covid self-isolation measures across its workforce.
ROM production guidance has been lowered from 20-21.5Mt for FY22 to 19-20.5Mt, with sales guidance falling from 18-18.6Mt to 17.2-17.8Mt with costs to rise from $72-76/t to $79-84/t.
MD Paul Flynn and CFO Kevin Ball told analysts on a call today they should see a “cracking” second half with the worst of La Nina and the Covid outbreak likely passed and still elevated prices keeping Whitehaven on track to enter a net cash position by March.
While an Indonesian export ban that Whitehaven says has ripped 10Mt out of the seaborne market this month is likely to be unwound, the market is expected to remain tight.
“That is easing, that Indonesian withdrawal from the export market, although it’s not clear the pace at which that will occur,” Flynn said.
“So we see further tightness, our customers really are screaming out for coal, so we’d love to have a bit more, and I think that underpins a good market going forward.”
“It’s definitely a much improved market from what we’ve seen in the past. You just look at those average revenue numbers a year ago versus now and that is quite a considerable change.”
Thermal coal prices were at extremely high levels of US$226/t this morning.
“Newcastle coal futures extended gains despite reports of Indonesia’s export ban easing,” ANZ’s David Plank said.
“Authorities revoked the coal export ban on mines that have completed 100% of their domestic market obligations.
“However, with much uncertainty around export volumes in the short term, prices are likely to remain well supported.”
Whitehaven Coal share price today:
Heat comes out of iron ore wonder child Fenix
Fenix Resources (ASX:FEX) was the poster boy for the junior iron ore sector early in 2021, posting a bumper $49 million profit and paying a $24.8m dividend in its first year of operations at the Iron Ridge mine in FY21.
But it has been challenged by lower prices, losing around a quarter of its value today after revealing margins at its Iron Ridge mine plunged into the red in the December quarter.
Fenix, which has shielded some of the impact of lower iron ore prices by hedging 50,000t a month at $230.30/dmt, sold at an average of US$55.96/dmt ($77) FOB against an average Platts 62% price of US$109.60/t.
Fenix saw costs rise from $86.80/wmt in the September quarter to $94.10/t in the three months to December.
It saw cash outflows of $11.1m in the quarter with unaudited margins flipping from $73/wmt FOB in the September quarter to -$26/wmt FOB in the three months to December 31.
Iron ore cargoes are typically traded on an FOB basis, meaning shipping and transport costs to Asia are not included.
Small miners like Fenix, which shipped a record 357,000t from Geraldton port, have been disproportionately impacted by high freight rates, which rose to over $40/t in November before settling to $24-28/t in the month of December, the company said.
Higher prices for iron ore, lower freight costs and access to higher grade ores following waste stripping at Iron Ridge will likely lead to improved operating conditions in the months ahead, Fenix MD Rob Brierley said.
“We generated an outstanding production performance which unfortunately was accompanied by lower iron ore prices and higher ocean freight costs. Pricing adjustments from the September 2021 quarter also impacted cashflows,” he said.
“However, we have stayed the course with our mine plan and continued to accelerate waste stripping to ensure we have orderly access to high grade ore sources, with the benefits of this strategy to be yielded in the June 2022 quarter and beyond.”
“The current quarter has started positively with higher iron ore prices and lower freight rates, and the high likelihood that pricing adjustments will result in cash inflows.”
“We finished the quarter with a strong balance sheet with net cash of $54.9m, equal to 11.0c a share, and expect to build on this solid position during the second half of the financial year.”
Fenix Resources share price today: