Global Wrap: Glencore, Canada and more

IN Global Wrap: Glencore copper output drops; Canada's mining industry competitiveness in decline; Tianqi downgraded; and Teck going carbon neutral.
Global Wrap: Glencore, Canada and more Global Wrap: Glencore, Canada and more Global Wrap: Glencore, Canada and more Global Wrap: Glencore, Canada and more Global Wrap: Glencore, Canada and more

Staff reporter

Glencore has reported lower copper production for 2019 and made a high-profile board appointment who has "substantial" experience in the Democratic Republic of Congo.

Glencore announced it had appointed former China Molybdenum International CEO Kalidas Madhavpeddi as an independent non-executive director, with chairman Tony Hayward saying the company looking forward to benefitting from his experience and insights, which included substantial business dealings in the DRC.

The company maintained its lowered copper and cobalt outlook as outlined in December, when CEO Ivan Glasenberg also announced the remaining old guard of management would be transitioned out and he would then follow.

The company's own-sourced copper production for 2019 at 1.37 million tonnes was 6% lower than in 2018.

Glencore put about half the change down to its African assets, where Katanga's ramp-up partially offset Mutanda's mothballing and Mopani's extensive smelter refurbishment shutdown.

Cobalt was 10% higher than the previous year at 43,600t, reflecting Katanga's ramp-up after the company moved to address unacceptable levels of uranium found in its cobalt hydroxide.

Nickel was 3% lower mainly due to maintenance stoppages at Koniambo in New Caledonia.

Attributable ferrochrome production was down 9%, coal was up 8% due to acquisitions and entitlement interest oil production was 19% higher, thanks to a drilling campaign in Chad and first oil from the Bolongo field in Cameroon, Glencore said.

Data in the Mining Association of Canada's (MAC) 2019 annual report paints a diminishing picture of Canada as an attracting target for foreign direct investment, with macroeconomic trends set to continue buffeting the country's economy in 2020.

FDI to Canada is down 26% since 2010, now at one-third the peak levels of 2007 and Canadian capital investment is now under 10% of GDP, its lowest level since the global financial crisis.

For the 10-year period between 2019 and 2029, the value of mining projects planned and under construction was projected at C$80 billion, well below the $160 billion estimated in 2014. Between 2007 and 2018, Canadian mining direct investment abroad increased more than threefold to $80 billion while mining foreign direct investment into Canada remained largely stagnant at $24.5 billion.

Capital investment increased a modest 5% to $12.9 billion year-over-year in 2018, following five consecutive previous years of decline. Canada's global share of non-ferrous exploration investment was 15% in 2018, up 1.3% from 13.7%, but well below the peak of 20.8% in 2008.

Further, while showing growth of 5% (or $8 billion) year-over-year, Natural Resources Canada's 10-year projected value of mining projects planned and under construction remains 50% below 2014 levels, from $160 billion to $80 billion. Only five new mining projects were submitted for federal environmental assessment review in 2019, well below average levels seen from 2012-2014.

Moody's Investors Service has downgraded Tianqi Lithium Corporation's corporate family rating to B2 from B1 with a negative ratings outlook.

"The ratings downgrade reflects Tianqi Lithium's reduced financial flexibility as a result of its weakened capital structure, which in turn will raise refinancing risk, in particular with regard to the November 2020 maturity of part of the loan associated with its acquisition of a stake in Sociedad Quimica y Minera de Chile S.A.," Moody's vice president and senior credit officer Gerwin Ho said.

Earlier this week, Tianqi said it expected to post a net loss of 2.6-3.8 billion RMB for 2019 due to a 2.2 billion RMB impairment on the SQM stake.

It previously guided an 80-120 million RMB profit.

Moody's said Tianqi's leverage would remain elevated at 8.5x, cashflow would be weakened by lithium market volatility and liquidity was weak.

Diversified miner Teck Resources has unveiled its "ambitious objective" to be carbon neutral across all operations and activities by 2050.

"Setting the objective to be carbon neutral by 2050 is an important step forward in our commitment to reducing emissions and taking action on climate change," president and CEO Don Lindsay said.

"Climate change is a global challenge that our company and our industry need to contribute to solving."

Teck said its carbon neutral goal was in step with the Paris Agreement to limit global temperature increase and aligned with commitments by both Canada and Chile - home to the majority of Teck's operations - to be carbon neutral by 2050.

The company said it had implemented projects since 2011 to reduce greenhouse gas emissions at its operations by 289,000 tonnes, which it said was equivalent to taking 88,000 combustion engine cars off the road.

Among its plans, Teck said it would increase procuring electricity from clean energy sources, invest in the metals needed for the transition to a low-carbon economy via its QB2 copper expansion project in Chile, and would use low-carbon alternatives to move material at sites, such as replacing diesel haul trucks with electric or low-carbon options, or using electricity-powered conveyors.