This morning in metals news, a Canadian miner is teaming up with a Japanese company on a major mine expansion effort in Chile, the U.K. steel sector is struggling with power costs and an Illinois steel plant is on the move.
Teck Resources to Work with Sumitomo on Mine Expansion
Canadian miner Teck Resources announced it will team up with Japan’s Sumitomo on a planned copper mine expansion in Chile.
The expansion is set to come in at a cost of just under $4.8 billion.
“QB2 is one of the world’s premier undeveloped copper assets and this transaction further confirms the value of the project,” Teck Resources President and CEO Don Lindsay said. “This partnership significantly de-risks Teck’s investment in the project, enhances our project economics and preserves our ability to continue to return capital to shareholders and reduce bonds currently outstanding.”
U.K. Steel Sector’s Power Struggle
According to an industry report cited by Reuters, the U.K. steel sector is faced with much higher power costs than operators in neighboring countries.
According to the report, U.K. steel firms pay 50% more for power than French competitors and twice as much as German firms.
MetalMiner’s Take: The UK steel sector is facing a host of challenges — a report by Reuters that British steelmakers pay 50% more for electricity as their French competitors and twice as much as their German rivals is only part of the problem.
Brexit, as an upcoming article of ours will explain, is unraveling before our very eyes. This is dissuading continental consumers from placing 2019 contracts with British steelmakers, for fear of delayed deliveries and, possibly, the imposition of E.U. import tariffs if the U.K. crashes out (as opposed to achieving some kind of free trade agreement).
The U.K. power sector is itself challenged by lack of spare capacity, so there is little appetite for cutting big consumers like steel, cement or aluminum a low price deal.
Since 2000, E.U. rules have forced the U.K. to close over 15 large power stations and build thousands of wind turbines and solar panels to generate electricity in a bid to meet climate change targets — diktats that other E.U. states have simply chosen to ignore.
Alliance on the Move
An Illinois steel company is moving just across the Illinois-Indiana state line.
Alliance Steel — based in Bedford Park, a southwest suburb of Chicago — is making a move to Gary, Indiana, the Chicago Sun-Times reported.
MetalMiner’s Take: Alliance Steel might not be the first or the last steel operation to consider relocating to northwest Indiana.
Without a doubt, the decision to move to northwest Indiana has everything to do with high taxes in Illinois, a new governor whose budgetary and tax plans remain unclear, and the attraction of drawing a similar, if not the same, workforce with a much lower operating cost structure.
A quiet revitalization of Gary has been ongoing, including new airport enhancements and investment in neighboring communities. Midwest buying organizations should expect more such moves.