Monsters of Rock: Aluminium production woes for Alcoa, a nickel study delayed and China coal news powers Coronado
There have been few industries more difficult to tame since last year’s energy price boom than aluminium production.
The process is extremely energy intensive – aluminium smelters are often the larger single energy consumers in electricity grids – making them extremely sensitive to price rises.
Russia is also a major producer and overseas investors in aluminium smelting, making overseas operations owned by its State producer Rusal a target of sanctions in the West, with the adjustment since the invasion of Ukraine a tough one for the global supply chain.
It now says its aluminium-refining capacity will be cut from 95% to 75% at its 358,000tpa Portland smelter in Victoria.
The reasoning is process instability and issues related to the production of rodded anodes. Those carbon-based products are used to convey electricity into Portland’s 408 smelting pots.
Alcoa’s stake in Portland amounts to around 197,000tpa, a 55% share alongside 22.5% owners CITIC and Maurbeni Aluminium.
The company itself is 60% owned by Alcoa’s American parent at 40% by ASX-listed Alumina Limited (ASX:AWC).
Alumina reported a US$104 million NPAT for 2022 but decided not to offer a final dividend to shareholders at its full year results last month.
Its CEO Mike Ferraro blamed an export ban on alumina to Russia for impacting alumina prices, while higher energy and caustic soda prices contributed to a fall in margin from US$85/t to US$67/t from 2021 to 2022.
Despite today’s news, Alumina was up 1.8% at 3.45pm AEDT.
One of a handful of companies on the ASX that could become a nickel sulphide producer of scale, Centaurus Metals (ASX:CTM) shares fell 4.4% today after the Brazilian developer revealed it would not be able to make a final investment decision to construct its Jaguar nickel mine until the third quarter of 2024.
A DFS has been delayed to the end of 2023 accounting for delays in completing test work and processing design for its refinery.
Piloting will continue to the end of April due to the unavailability of test facilities at the ALS lab in Perth. Two of four phases of mineralogical test work have now been completed with a third under way.
Flotation testwork has demonstrated over 94% sulphide nickel recovery to concentrate (equivalent to 78% on the head grade of its mineral resource), with leach extraction of nickel at 98.6% and over 99% zinc and calcium extracted from its leach solution with only small losses of nickel.
“We are seeing very high levels of metal extraction from the refining of flotation concentrates in pilot testwork, with nickel extraction in the leach circuit of over 98%,” Centaurus managing director Darren Gordon said.
“With this we expect to see a very high nickel recovery from concentrate to sulphate once piloting work is complete.
“Efficient separation of zinc will further enhance the project economics at Jaguar from by-product revenue generation as it is likely that a zinc hydroxide product will be produced for delivery to the zinc smelter market.
Further, Phase 3 of the pilot program – which is currently underway – is expected to produce a cobalt hydroxide product, further adding to the by-product revenue streams from Jaguar.”
Gordon called delays to the DFS schedule “regrettable”, but said the $350 million capped developer’s focus was on the long-term value of the asset.
“The resource industry globally, including all of the consultants and service groups that support it, are currently working at capacity, and we have to be pragmatic about this, while also ensuring that we never compromise on the quality of work undertaken for this very important phase of the DFS for the sake of timelines,” he said.
“The team is confident that we can meet the revised timeline of late Q4.”
Jaguar contains a mineral resource across a host of deposits of 108Mt at 0.87% Ni for 938,500t of nickel metal, 730,000t of which is in the measured and indicated categories.
We come towards the end of the day with mining and energy stocks looking healthier than they have over the past couple of trades.
All the iron ore miners finished as green as a slime-covered child star at the Kids’ Choice Awards (does Nickelodeon still do that, does it even exist?)
Meanwhile coal miners were like pigs in very sooty muck, Coronado (ASX:CRN) up a very impressive 6.02% after Bloomberg reported China would allow all domestic companies to resume buying Aussie coal.
CRN is a steelmaking coal miner, the kind Chinese steel producers are very keen to get back into the country. Thermal coal is considered less of a focus since China is such a large domestic producer it fulfils most of its own needs.