Prime Meridians – The Year’s Top 5 Stories In Resources

This week in Pierce Points:

Myanmar adopted a new mining code. The nation holds great potential for copper and gold, and might now see more exploration.

A surprise bidder emerged for a Glencore mine. Chilean energy and forestry firm Copec wants to buy the Lomas Bayas copper operation — cheap.

Woodside hit in the Myanmar offshore. A significant natural gas discovery opens up a major new petroleum system.

Oman and Chinese insurance companies invested. New funds for mining and energy are a source of billions for project developers.  

Argentina rewarded oil producers. The country said it will buy domestically-produced crude at double the world price this year.

The Year’s Top 5 Stories In Resources

I get asked a lot of questions (keep ’em coming) — but the most common by far is, why do you write the Pierce Points advisory?

The answer is: you.

Over the years, I’ve been privileged to meet and work alongside some of the best minds in mining, oil and gas, and renewable energy. And these daily writings emerged as a way to keep in touch with all of you, and share ideas on developing trends in resources, and new projects that can profit.

I love the writing — and equally, I enjoy the responses I get. Today, Pierce Points is read daily on every continent, by professionals from organizations including BP, Rio Tinto, Repsol, Barrick Gold, GDF Suez, Platts, and the UN — just to name a few.

The direct feedback from a network like that is worth all the time and effort that goes in. And sometimes the indirect information that comes back from all of us is equally intriguing.

That’s certainly been the case this week, which I’ve spent going through the hundreds of advisories published during the past year — to see which stories received the highest response during 2015.

The e-votes have now been tallied, and below are the top five stories that got the strongest reactions from you — on the issues that intrigued, amazed, and sometimes horrified the natural resources world this year.

Without further ado…

5) This Huge Oil Buyer Is Appearing Nextdoor To The U.S. (February 23)

This piece reported on a formal request from 21 U.S. senators to the Secretary of Commerce to consider allowing crude oil swaps between America and Mexico.

At the time, this was a big deal — as crude exports to Mexico were banned by law (and there was still no certainty that the export ban would be lifted).

These trades did become reality during 2015, with crude swaps to Mexico being approved in August. Such deals have since been rendered a relatively moot point due to the lifting of the crude export ban — but they were an important early indicator that changes were afoot in the U.S. oil export picture.

4) Russia Just Locked Down Control Of This Key Mining Nation (October 19)

Stories about Russia consistently got a lot of response in 2015. And this was no exception — reporting on the approval of Phase II for a $3 billion “platinum complex” being developed in Zimbabwe by Russian firms.

Russian Deputy Minister of Industry and Trade Georgy Kalamanov announced that Phase I of the project — which includes platinum mines and processing facilities — is on schedule. And Phase II will begin in March 2016.

The story didn’t get a lot of global attention — but it should have. Given that Russia already controls 30% of the global platinum and palladium market, and could grab another 6% if it cements control of Zimbabwe, the world’s fourth-largest producer.

3) Here’s A Big Casualty Of The Oil Price Rout (January 22)

This story broke when oil had plummeted to an unthinkable $45 per barrel (how we dream of those days now). Forcing major producer Shell to consider divesting a key asset — 300,000 barrels per day of production from the Bijupira and Salema fields in Brazil.

The retreat of Shell from a prime exploration ground like Brazil was one of the first signs of big oil pulling in its horns at lower prices. A trend which accelerated throughout 2015, with majors and mid-tiers pulling out of spots like Alaska, the North Sea, and South America.

The question for 2016 will be: which spots will survive in terms of upstream investment? News this week suggests Argentina and Myanmar may be winners — and offshore Ireland, Australia, and a next generation of private equity-backed U.S. shale producers are also looking like candidates.

2) Prime Meridians – 1.67 Billion Ounces Of Gold (February 7)

Being a longer and more theoretical musing, Prime Meridians usually gets a lower response rate than the weekly Pierce Points dispatches (not to mention that it comes on Saturday — when even the most dedicated of us have other pastimes like college basketball and hangovers to keep up with).

But the possibility of 1.67 billion of ounces in gold discoveries got everyone’s attention.

The piece reported on new research from Professor Hartwig Frimmel of the University of Cape Town and Dr. Quinton Hennigh of exploration firm Novo Resources — showing that some of the world’s largest gold deposits called paleo-conglomerates, formed because of the appearance of life on Earth.

The research focused on South Africa’s Witwatersrand gold deposit (which has produced an estimated 1.67 billion ounces of gold during its considerable lifetime). And provided several intriguing clues on where other such deposits might be found globally.

1) This Giant Gold Deposit Could Now Be Lost Completely (January 23)

Gold was very much on our minds this year, with the top two items for 2015 coming in the yellow metal. And this advisory was big news — reporting on regulators in Chile contemplating stripping permits for Barrick Gold’s massive Pascua Lama mine due to alleged environmental infractions.

The government didn’t follow through on the threat, but such regulatory headaches played a role in the massive project (15.4 million ounces gold) staying mothballed during the past year.

Going into 2016, Barrick says it plans to continue the transition to care and maintenance at Pascua Lama. Likely meaning this giant will stay undeveloped until we see a protracted rise in gold prices.

This development also underscored another rising trend — the increasing difficulty of mine permitting, even in “friendly” jurisdictions like Chile.

Such concerns also arose in go-to locales like British Columbia, following the breach of tailings dams at the Mount Polley mine in late 2014. As well as in Nevada, with new regulations around protection of the sage grouse looking to make mine permitting more difficult here going forward.

All of which suggests that challenges as well as opportunities are going to lie ahead in 2016.

I’m optimistic for the coming year (geologists always are, right?) — mostly because the more things change, the more they stay the same. Well-considered exploration programs, with a chance of discovering a world-class deposit with lowest-quartile costs, will continue to get funded. The marginal projects — from people who want investors to fund their global camping trips — are going to struggle.

For those who can come up the right ideas, this is a great time. There’s little competition for ground, top people are coming available daily, and the world still needs crude, copper, gold, and natural gas (although maybe not in that order). Thanks to all of you for making 2015 another year of discovery — can’t wait to build on it during 2016.

Here’s to a new year and new finds,

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Dave Forest

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