Prime Meridians – Did Rio Tinto Just Launch A Secret Rush For This Metal?

This week in Pierce Points:

India’s gold demand hit a 13-year low. Imports fell 44% in 2016 according to preliminary stats. And the coming year might be worse

China grabbed control of green energy. Beijing plans to spend $361 billion by 2020 to dominate the industry.  

Rio Tinto and Minnesota backed copper. The major wants more exploration in the state, where officials are acting very pro-mining.

Indonesia’s mineral exports halted. Lawmakers failed to amend a deadline for concentrate shipments, leaving an uncertain future for miners.

Deepwater oil and gas rebounded. Industry experts Wood Mackenzie say project activity this year could rival pre-oil crash levels.

Did Rio Tinto Just Launch A Secret Rush For This Metal?

Further to the second and third items above, the global clean energy movement and Minnesota mining might be closely related.

Because of one metal. That appears to be gearing up for a major exploration and development push. 

Cobalt.

There’s been a growing buzz on cobalt around “the street” in recent months. Based on the observation that this minor metal is needed in lithium ion batteries that support green energy development. 

The world’s big move to clean power has already boosted the lithium sub-sector substantially. With many stocks of lithium explorers and developers up nearly ten-fold in the last few months. (We’ll see how many of them actually find any significant deposits — but that’s another story.)

And indications are the same enthusiasm is spreading into the cobalt space. 

Just look at the chart below, from the most recent monthly report of the London Metal Exchange. Showing a massive spike in trading volume in cobalt during November and December 2016.

Screen Shot 2017-01-11 at 12.34.42 AM

Trading volumes in LME cobalt saw a huge rise during November and December

And the rising market for cobalt may explain Rio Tinto’s move this week to expand exploration in the state of Minnesota. 

One thing about cobalt: it’s not easy to find. Half the world’s production comes as by-product from copper in the Democratic Republic of Congo. And a significant portion is produced from nickel mines in places like Canada, Madagascar and New Caledonia. 

And Minnesota just happens to host both copper and nickel — associated with notable amounts of cobalt. 

The U.S. Geological Survey notes that Minnesota is far and away the best place for cobalt in America. Even though the state currently doesn’t produce any of the metal.

That’s mostly consequence of a lack of recent mineral development in the state. A trend Rio Tinto’s subsidiary Kennecott is trying to change — this week applying for an extended exploration land package here. 

Kennecott has been working on the Minnesota concept for almost a decade. And has already made some discoveries — including the Tamarack deposit, which hosts a current global mineral resource of over 7 million tonnes grading 2.5% to 3% combined nickel and copper. 

Tamarack also holds cobalt — at an overall grade of around 0.05%. 

The size and grade of this deposit is a little skinny for a major like Rio Tinto (cobalt deposits in the DR Congo, by comparison, grade around 0.5%). Prompting the company to joint-venture Tamarack to junior developer Talon Metals in 2014. 

But this week’s news shows the major still believes there’s big discovery potential in Minnesota. And is continuing to look — perhaps spurred on by the significant credits cobalt might offer here (the cobalt price has gained nearly 50% this past year, to a current $15/lb). 

That’s an important point of note for the exploration business. There are a lot of copper and nickel targets globally, but far fewer that come with cobalt — a fact that might be critical as the green energy revolution continues to shift global metals demand. 

Here’s to the star of the north,

Screen Shot 2015-10-13 at 8.54.15 PM

Dave Forest

Add a Comment

Your email address will not be published. Required fields are marked *