Nick Wright of S&P Global Mining Intelligence notes that “some weakness in positive project status changes in the March quarter reflects recent signs that a perceived recovery in the mining industry struggled in the first three months of 2017. However, the number of negative milestones also declined. The slippage in reported positive project milestones was matched by first-quarter downturns in mining project financings and exploration drilling results, two other measures of industry health tracked by S&P Global Market Intelligence in its monthly and quarterly Industry Monitor reports.
“Production startups at new mines, expansions and re-openings fell to seven from 16 in the December quarter and were down from 10 in the year-ago quarter. However, the number of mines temporarily halting or significantly reducing production only increased to three from two in the December quarter and was still down from seven in the March 2016 quarter. In addition, no mines were reported to have closed in the March quarter, compared with three closures in the December quarter. In a further sign of momentum, four new mines or expansions began preproduction work for the second consecutive quarter.
“Primary gold projects accounted for eight of the 13 positive milestones in the March quarter, including four out of seven production startups or mine re-openings, and all four of the projects entering preproduction for new mines or expansions. One copper, one platinum and one silver mine accounted for the other three startups or re-openings.
“Copper accounted for two of the four negative milestones, with one mine temporarily halting production and one project delaying preproduction work for an expansion. One gold and one silver mine also cut back or suspended production.
“The largest positive status change in the March quarter by in situ value of all metals in reserves and resources was the beginning of feasibility studies for a new mine at Horizonte Minerals Plc’s Araguaia nickel laterite project in Para, Brazil. Drilling, permitting and environmental studies are under way to determine the feasibility of a mine producing 14,500 t/y of nickel over 28 years from measured, indicated and inferred resources containing 1.6 Mt of nickel. The feasibility study is expected to be completed by the end of 2017.
“The largest negative status change was Freeport-McMoRan Inc.’s announcement that it is delaying preproduction work for the Block Cave underground mine expansion at its Grasberg copper-gold operations in Indonesia. While the announcement may just be a tactical move in high-stakes negotiations, with the Indonesian government over a new Contract of Work, the company has demobilized about 10% of its workforce, precipitating strikes which have lowered production, and plans to shed another 5,000 workers as a result of the ongoing permitting dispute. The company has also cut investment in the project and is reviewing its development in light of persistently weak copper prices, as well as the uncertain regulatory environment.”
