Prime Meridians – 3 Surprising Facts About Metals Production Right Now

This week in Pierce Points:

Protesters targeted Iran’s oil plans. Citizens gathered outside the energy ministry, shouting “give us back our oil”.

Freeport battled Indonesia’s government. The copper miner lost its export license, and may have to pay $530M to get it back.

Zimbabwe called in Impala’s platinum lands. The government has asked the world’s #2 miner to return half its operations.

Major oil producers converged in Uruguay. Statoil will buy a 15% stake in an offshore block, joining Total and ExxonMobil.  

India proposed a unique exploration scheme. Winning bidders won’t get mining rights, but could be reimbursed if they fail.

3 Surprising Facts About Metals Production Right Now

Further to the item above about Impala’s problems in Zimbabwe, it’s interesting to wonder why the world’s #2 platinum producer continues to operate in a country where the government seems intent on squeezing miners.

But some brand-new data from the U.S. Geological Survey (USGS) gives insight here. In the case of platinum, Impala doesn’t have much choice.

Late in January, the USGS released its 2016 mineral commodities summaries. One of the most comprehensive documents on global production trends for 84 different metals and industrial commodities — from abrasives to zinc.

This is one of the only sources on the planet tracking production from all nations around the world. In many cases, the numbers are estimates — especially for hard-to-discern locations like China — but they’re still some of the best figures we have on what’s happening in the worldwide minerals industry.

The new document reveals production data for 2015. Showing who cut back and who ramped up during the past year for some of the most critical commodities going.

And when it comes to platinum, the numbers tell a clear story: there just aren’t a lot of choices for producing districts.

As the chart below shows, platinum production in 2015 came primarily from five nations on Earth. Zimbabwe (the blue slice) was the world’s third-largest producer — and combined with Russia and South Africa, accounted for 90% of global platinum output.

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Source: USGS

Contrast this with a similar metal covered by the USGS: gold.

The chart below shows the new data on gold production for 2015. Even though output from world-leading producers China and Australia edged up during the past year, the overall production profile is still very diversified globally — with no nation holding more than 16% of total output.

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Source: USGS

What else do the new USGS numbers show? Below are three other interesting trends revealed by the data, which many observers in the metals space may not be aware of yet. 

China Stalling Out

China is the world’s largest producer of many commodities. In fact, as the map below from the USGS report shows, China is the major supplier for America of between 19 and 24 minerals where the U.S. is import-reliant. 

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Source: USGS

But the news of late has made it painfully aware that significant economic retrenchment is underway in China. And that hit a number of the country’s mineral sectors hard during 2015. 

One of the most obvious spots was iron ore — where China’s output dropped 14.5% the past year, to 264 million tonnes. 

But the cutbacks didn’t stop there. China also saw its production of strategic metal indium (a key component of flat-screen electronics) fall by 24% in 2015. Which led to a global production decline of 10.5% for this metal. 

China’s titanium producers also made big cuts last year. With overall production dropping 27% in 2015. 

U.S. Strategic Metals Production Is Faltering

There’s been a lot of press the last few years about America securing domestic supplies of so-called “strategic metals” — those critical in advanced industrial applications like aerospace and electronics. 

But 2015 was a tough year for the U.S. in this department. With output of a number of minor metals taking a big dive. 

Molybdenum was a case in point. Where America’s output dropped 17% the past year as several mining operations closed due to lower prices. 

Interestingly, this was a metal where most other nations (including China) didn’t see big cutbacks in 2015. In fact, Peru’s 2015 molybdenum output rose 6.5%, cementing it as the world’s fourth-largest producer (after China, the U.S., and Chile). 

Another sector where American mining suffered was rare earth elements. With production here dropping 24% in 2015 — putting the U.S. at risk of being overtaken by Russia and Thailand for the world’s #3 producing spot (after China and Australia). 

There’s A Major Shuffle Going On In Tin

A final key trend from the USGS data is a big shift happening in the global tin production profile. With the world’s second-largest producer, Indonesia, seeing a huge drop in output during 2015.

Indonesian miners saw their production fall by a stunning 34% the past year. Reportedly because of mine closures due to falling prices in this market. 

USGS analysts attributed that price decline to surging output from the newly-opened nation of Myanmar. Where tin production has reportedly doubled since 2013 — vaulting it into the position of #3 world producer. 

Myanmar’s tin production was up 25% in 2015. And this will be a critical trend to watch during the coming year, perhaps signalling emerging opportunities here if other big producers like Indonesia continue to cut back. 

All things to consider as we plan our next moves for 2016. Keep watching the numbers. 

Here’s to the dedicated staff at the USGS,

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Dave Forest

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