CHILE’S NEW LITHIUM POLICY: HALF-BAKED OR READY TO SERVE? / 2-3 Geotech_Earlug_2016_Alt2.pdf 1 2016-06-24 4:27:20 PM
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Colonial boss scores two kicks at same coal can for billions in B.C. M&A |
Met coal projects attracting interest
Mexican President Andrés Manuel López Obrador (centre) with senators on Apr. 28. LOPEZ OBRADOR/TWITTER
Mexico’s ‘shock’ new mining law hurts juniors most LEGISLATION
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| Reforms follow nationalization of lithium sector in April
BY HENRY LAZENBY
anadian juniors in Mexico were blindsided by a new mining regime on Apr. 29, after the Mexican Senate rushed through a contentious bill that experts say will deter investment. Under the new mining law, companies will have to deal with an increased burden of pre-consultation, impact studies and water concessions, among other regulations. The new law also requires financial commitments (bonding) that will be difficult to meet for junior explorers. It also allows authorities to cancel exploration concessions after two years if no work is completed on them. The “aggressive” move by the government is “extremely damaging” to Mexico’s mining industry, says mining entrepreneur Ross Beaty, who’s made a career of investing in high-risk jurisdictions across Latin America, including Mexico. “It’s a very significant negative to Mexico’s previously good investment climate for mining.” It comes just a month after Mexico nationalized its lithium sector, although the country doesn’t have any producing mines. The Senate unanimously and with little debate approved two constitutional reforms and a new mining law which the Mexican mining chamber and the Canadian federal government had rebuked as recently as Apr. 26. Reuters reported at the end of April that Senators approved the laws in an accelerated process without opposition legislators present. Morena party legislators convened outside the chamber’s usual voting location after the opposition occupied the chamber trying to prevent the session.
Mexico’s federal government is led by the Morena party under President Andrés Manuel López Obrador (AMLO), a charismatic populist elected in a landslide victory in 2018. Since then, no new mining concessions have been issued in Mexico. Investments ‘at risk’ The reforms appear to be most damaging to junior explorers as they make it harder to obtain a new concession, says Joe Mazumdar, an analyst with the junior mining newsletter Exploration Insights. “Therefore, those not currently working in Mexico may think twice before entering this jurisdiction.” Chief among the concerns regarding the mining reforms is a shortened tenure of mining concessions, reducing the duration from 50 years to 30 years, with only a one-time 15-year renewal possible. Applications for new concessions filed up to Apr. 20 will be rejected without further action, while Mazumdar believes that those with granted applications will be grandfathered in. Beaty argues that future investments are at risk. He explains that due to investment capital being mobile, he can’t see any Mexican or international companies wanting to invest new risk capital in the jurisdiction’s exploration and mining industries because of these new laws. “They are hostile to the industry and utterly uncompetitive with other mining jurisdictions,” Beaty said. “It’s a real shock.” He says that responsible mining by Mexican and foreign mining companies has been a massive boon to many communities in Mexico that rely on the jobs, demand for services and community benefits
mining provides. “These will dry up because the new rules are so draconian and hostile to new investment,” he says. He questions the motivation of the Morena party for the move, which in his view, will spell the end of mining investment in Mexico until the laws are modified to make them more competitive with other mining countries. Mazumdar expects mining companies to argue the unconstitutionality of these reforms, given the nature of their rollout to the public. “I don’t think this will be a quick process but note that AMLO’s presidency is limited to one term, which ends in September 2024.” The new law also tightens water extraction permits and requires some mining profits to be returned to local communities, among other modifications. Another key change means mineral concessions will now be granted through public auction, and not via a first applicant priority process. Jobs impacted Under the new rules, juniors will be required to present more studies and work along with funds upfront to be held as bonds before obtaining the concessions amid the uncertainty of getting them due to the public auctions. This, says Mexico’s national mining chamber, Camimex, could cost the country some US$9 billion in investments and up to 420,000 jobs. “As far as I can tell, within 12 months, concession holders will have to provide financial assurances for the potential environmental impacts of the mining project, without knowing what kind of mining project it would be as the See MEXICO / 2
Colonial Coal is hoping to sell two metallurgical coal projects in northeastern British Columbia. COLONIAL COAL INT’L BY COLIN MCCLELLAND
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avid Austin has already sold what may be the largest undeveloped metallurgical coal land package in western Canada for several billion dollars. Now, in a strange twist of fate, he’s planning to sell some of the same properties again for billions more after a record year for the steel-making commodity. Colonial Coal International (TSX: CAD), founded by Austin, has about 700 million tonnes of measured, indicated and inferred metallurgical coal across its Huguenot and Flatbed properties in northeast British Columbia, according to respective preliminary economic assessments in 2020 and 2018. For the past year, 16 of the world’s largest steelmakers, miners and met coal brokers — mostly from Japan, India and China — have been under non-disclosure agreements to pick through Colonial’s books and development plans. Colonial is riding on the enhanced publicity of Glencore’s (LSE: GLEN) pursuit of Teck Resources’ (TSX: TECK.A/ TECK.B; NYSE: TECK), which has four met coal mines in B.C. producing about 27 million tonnes a year. “Teck has basically put a magnifying glass on coal assets in British Columbia,” Austin said by phone from Vancouver. “And that’s really helped us because it’s allowed a lot of companies who haven’t really paid much attention now saying ‘hey, there’s an opportunity there.’”
GOLD FIELDS FINDS ITS ENTRY INTO CANADA WITH OSISKO’S WINDFALL / 5
The prospective buyers for Asia’s steel plants want to secure supplies of metallurgical coal, also known as coking coal, the world’s best performing commodity by value last year when it nearly quadrupled in price to US$660 per tonne. Prices have fallen to See COAL / 10 PM40069240