Before we head into the weekend, let’s take a look back at the week that was and some of the metals storylines here on MetalMiner, including stainless steel consumption’s impact on nickel prices, surging aluminum prices and much more:
This morning in metals news: U.S. Steel released its third-quarter guidance yesterday; U.S. petroleum exports just edged out imports in the first half of the year; and, lastly, unemployment rates fell in 15 U.S. states in August.
“We expect the third quarter to be a quarter of records for U. S. Steel,” U. S. Steel President and CEO David B. Burritt said. “Supported by strong reliability and quality performance, sustained customer demand, and continued increases in steel selling prices, we expect our Best for All℠ business model to generate record quarterly adjusted EBITDA and EBITDA margins, demonstrating the power of our strategy.”
Burritt added U.S. Steel is bullish that market fundamentals “will support a stronger for longer steel market.”
Higher steel prices into adjusted contracts and spot selling prices, plus strong customer demand, will contribute to record EBITDA in the company’s flat-rolled segment, the guidance report indicated.
A deal is not a deal until it is done, goes the old adage.
Mining projects are notorious for falling afoul due to presuming agreed terms will be played out as expected.
The Financial Times reports on the conundrum BHP and Rio Tinto face in developing the Oak Flat copper ore body in Arizona.
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Oak Flat copper project faces challenges
Oak Flat, 65 miles east of Phoenix, is home to a giant underground ore body. The ore body holds enough copper to satisfy 25% of U.S. demand for 40 years, the Financial Times reports.
That is a very sizeable asset to the U.S. economy and a strategic resource if ever there was one in a world of increasingly strident resource nationalism.
But Resolution Copper, a joint venture between Rio and BHP that wants to mine it, has been facing opposition from the San Carlos Apache Tribe, for whom the site is said to have special religious significance.
That is not an unusual situation in democracies the world over, with indigenous tribes whose rights are respected and enshrined in law.
Nor, it must be said, does Rio have a great track record here.
Just last year, it wilfully destroyed a 46,000-year-old sacred Aboriginal site in Australia to make way for a mine extension. For Rio, the action became a public relations disaster (not to mention an archaeological disaster). It is something that will takes years for it to overcome.
However, in this instance, the joint venture Resolution Copper, 55% owned by Rio and 45% by BHP, had an agreement signed in 2014 that would grant the miners right to develop the resource. That deal includes some 2,400 acres of national forest land including Oak Flat, in exchange for 5,400 acres of land owned elsewhere.
The problem is, in part, that the recipients of this land swap is not the tribes, but Uncle Sam.
According to National Geographic, early this year the government receives the 5,400 acres considered of equal monetary value. However, there appears to have been no account of the area’s historical significance to local people. That land swap was contingent, the Financial Times reports, on the U.S. Forest Service completing a Final Environmental Impact Study (FEIS), which would assess the potential effects of the mine development. Again, though, it doesn’t appear to have considered the loss of the tribal lands.
The FEIS released the report and gave its approval in the final days of the Trump presidency. That approval, however, now been rescinded by the Biden administration. As such, the development is now in jeopardy as the government considers the concerns raised by tribes and the public.
Tribal, public opposition
Both tribal and public opposition remains widespread.
The underground mine is some 7,000 feet below the surface. The gradual removal of the ore body over 40 years — although mined via shafts underground, not open cast — would still result in a two-mile wide crater and the loss of water resources in the area, according to ABC15 news, As such, it could potentially devastate the local environment, opponents say.
Unfortunately, ore bodies can only be mined where they exist. There is only so much high-grade copper in the world. Compromises often must be made. Whether a solution will be found in the case of the Oak Flat copper project that will allow the massive ore body’s eventual exploitation remains to be seen.
Rio and BHP have invested $2 billion into survey work so far. They may have to invest much more before the project sees the light of day.
LG Energy Solution signs cobalt, nickel access deal
Last month, LG Energy Solution announced it had signed an agreement that will give it access to nickel and cobalt supply from Australian Mines Ltd.
“LG Energy Solution has secured 100% rights to battery-grade nickel and cobalt materials from Australian Mines Limited amid growing concerns about future supplies of raw materials,” LG said.
“LG Energy Solution announced Monday it has entered into a binding long form offtake agreement with Australian Mines Ltd. for nickel and cobalt, which will be supplied in the form of mixed hydroxide precipitate (MPH) from the Sconi Project in North Queensland.”
The battery maker will have access to 71,000 tonnes of nickel for six years starting from the end of 2024. For cobalt, the total is 7,000 tonnes.
LG said the supply of nickel and cobalt will allow it to manufacture batteries for 1.3 million “high-performance electric vehicles.”
The battery materials will come from Australian Mines’ Sconi Project, which is currently under development.
This morning in metals news: the U.S. steel capacity utilization rate rose to 85.3% for the week ending Sept. 11; Norsk Hydro signed an energy deal; and, lastly, aluminum prices have continued to skyrocket.
Germany’s federal environment minister has pledged €55 million ($65 million) towards ArcelorMittal Hamburg’s planned construction of a demonstrator directed reduced iron (DRI) plant, which will eventually use green hydrogen, the Luxembourg-headquartered group stated.
Svenja Schulze pledged the government’s support Sept. 7 while visiting the Hamburg plant, ArcelorMittal noted.
Germany to offer half of funding for new ArcelorMittal plant
That amount represents half of the projected €110 million ($130 million) cost for the plant, ArcelorMittal said. However, funding is contingent on European Commission approval.
A spokesman for the group declined to say when the European Commission would give its approval. The spokesman expressed hope that approval would come “soon.”
The demonstrator plant will have a DRI capacity of 100,000 metric tons per year and is due to come on stream by 2025. The spokesman noted that it would at first use grey hydrogen to produce DRI, rather than green.
“Once available in sufficient volumes and at an affordable price, green hydrogen – made from the electrolysis of water using renewable energy – will be used,” ArcelorMittal stated in its Sept. 7 announcement.
SSAB to collaborate with European auto groups on potential fossil-free steel supply
The flats and specialty steelmaker said Sept. 2 that it has agreed to collaborate with French company Faurecia on fossil-free steel to equip its automotive seating structures from 2026.
Faurecia has its headquarters just west of French capital city Paris. Besides auto seats, the company designs and manufactures exhaust systems, as well as interior systems that include dashboards, center consoles, door panels and acoustic modules.
SSAB also jointly announced with Mercedes-Benz on Sept. 1 that it would supply fossil free steel for the German group’s auto bodies, the specialty steelmaker said.
The first fossil-free steel prototypes for the auto group are due to be ready by 2022. Mercedes-Benz plans to become carbon-neutral by 2039 along its entire value chain, the companies stated.
An SSAB official declined to indicate the prospective volumes of steel that the steelmaker could supply to Mercedes-Benz, citing confidentiality agreements.
The collaboration announcements follow SSAB’s Aug. 16 announcement that it has produced the first batch of fossil-free steel at its Oxelösund site. DRI used in the fossil-free steel came from a pilot plant at the company’s Luleå works in central Sweden.
The pilot plant uses HYBRIT technology, which replaces coking coal with hydrogen to reduce iron ore and thus cuts emissions, information from the group stated.
However, retail sales declined by 39.6% on a year-over-year basis. Total sales fell by 33.1% year over year.
Ford truck and SUV sales fell by 35.7% and 30.4%, respectively.
The automaker also touted a record August for electric vehicle sales.
“Electrified vehicle sales were up 67.3 percent over last year for a total of 8,756 vehicles,” Ford said. “Electrified vehicles are bringing in new customers to Ford at a rate that is more than 8 points higher than Ford’s overall conquest rate.”
Meanwhile, General Motors, which reports on a quarterly basis, in July reported Q2 sales rose by 40%. In a letter to shareholders last month, CEO Mary Barra underlined the automaker’s effort toward achieving zero emissions. In addition, she said GM aims to develop “a full EV portfolio that doesn’t depend on partial solutions like hybrids and ‘electrified’ ICE vehicles.”
Honda, meanwhile, reported August sales fell by 15.6%, citing “industrywide parts supply issues.”
One of India’s foremost steel companies, Jindal Steel & Power Ltd., has announced plans to invest U.S. $2.4 billion to increase capacity over the next six years as recovery from the COVID-19 pandemic boosts steel demand.
“Domestic steel prices have recovered from the lows of the COVID-induced volatility and are increasing spurred by improving demand prospects,” the firm said in its August investor presentation.
The steelmaker will increase its total capacity to 15.9 million tons (MT) by March 2025 from 8.6 MT, it said in an investor presentation recently. According to the statement, the company plans to more than double pellet production capacity to 21 million tons by 2024.
On Monday, in a statement to the stock exchanges, the steel company announced that its board had approved fundraising measures that include issuing non-convertible, senior, unsecured, fixed rate or LIBOR notes worth U.S. $1 billion.
JSPL’s plan includes raising money as part of its long-term goal of becoming debt-free and increasing production capacity to 15.9 MT by FY 2024.
This morning in metals news: U.S. steel capacity utilization dipped to 84.9% last week; North American Stainless said it is maintaining fuel surcharge; and, lastly, RUSAL earlier this month reported its interim H1 2021 results.
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Steel capacity utilization dips to 84.9%
U.S. steel capacity utilization dipped to 84.9% for the week ending Aug. 28, the American Iron and Steel Institute reported.
Steel output during the week reached 1.87 million net tons. That weekly total marked a decline of 0.2% from the previous week. However, output increased by 26.9% on a year-over-year basis.
For the year to date, steel production reached 62.0 million net tons. Capacity utilization during that period reached 80.5%. During the same period in 2020, the rate reached just 66.6%, with output at 51.7 million net tons.
NAS updates fuel surcharge
North American Stainless (NAS) today said it will maintain its fuel surcharge of 27% for stainless flat and long products.