Q&A: Ramaco adding production, sees market growth

  • Spanish Market: Battery materials, Coal, Coking coal, Feedgrade minerals, Metals
  • 16/04/24

Randall Atkins is a founder and chief executive of metallurgical coal producer Ramaco Resources. He also has been involved in energy-related investment and financing activity for over 40 years. In this Q&A, edited for length and clarity, he discusses effects from the Francis Scott Key bridge collapse, his outlook for coal and the company's research projects.

What effect has the Key bridge collapse and Port of Baltimore closing had on Ramaco and the US coal industry in general?

Like most things of that tragic nature, it is going to take longer than everyone expects to actually solve the problem.

I think where it is going to impact producers probably more is on the rails. There will be a need for...producers to rearrange stockpiles and to rearrange where they are going to try and ship, even at reduced levels. Particularly, CSX is going to have an immense logistical complexity to deal with over the near-term.

We do not ship from Baltimore. We have not seen any problems, knock on wood, with our rail shipments post the incident.

What are your long-term projections for metallurgical coal given expectations that low-volatile coal reserves will shrink in coming decades and the steel industry could be in oversupply?

Low vol coal has traditionally been the highest priced coal and the dearest, if you will. High vol A coal has over the last few years grown in importance, and to the extent that there is any new increase in production in the US, it's high vol. What we perceive is that there is going to be a crowding in the high vol space. As a result, our increase in production is primarily in low vol.

As far as the demand side is concerned, we do not believe that blast furnace steel demand is going to decline anytime soon. There's a lot of noise from the green community that hydrogen is going to replace coal in blast furnaces. We took some advice on that from the IEA…and when that question was posed (to IEA), the answer that was given was it would take about $1.5 trillion to build a pilot plant using hydrogen by 2035 and probably about another equal or greater sum to build a commercial facility by 2040. So, I don't lose a lot of sleep on the demand for coal for blast furnaces.

What I do see shifting, however, is the US has held relatively steady at about 20mn short tons (18.1mn metric tonnes) of met coal demand over the last 10 to 15 years. The growth is clearly overseas, and the growth is clearly at the moment in Asia.

When we started back in 2017, and 2018 was really our first year of production, we predominantly sold coal domestically; I think 80pc of our coal went to US steel mills. Now that is almost reversed. We're going to sell probably this year, 70pc overseas, and about a third or less domestically.

With Europe moving towards electric arc furnace technology and significant new blast furnace capacity coming online in Asia, what kind of role will the US play as a coal supplier over the coming years?

It is cheaper to use a blast furnace than electric arc. And the steel that they (Asian companies) mostly require is the heavier steel for cars and buildings and things of that nature. So, they have a bias towards blast furnace capacity.

The US and Europe are very developed economies that are trying to go and wean away from coal, (while) the rest of the world is aggressively moving further into coal. People will shake their heads at the cost that European and American consumers will start to have to pay for that privilege.

We see market growth is still there, but it's a different kind of growth. It will be more in the Asian markets, predominantly some in Europe, some in South America and Africa.

The low vol coal demand in Asia is extremely strong because while they are able to buy high vol product from Australia very inexpensively, they do not have the low vol production. They need that to blend up to get the proper mix in their blast furnaces. There is a very good future for low vol, and that is the direction we are positioning ourselves.

How confident is Ramaco about securing its investments in the longer run given the emphasis on ESG?

What I see is sort of a dichotomy.

In the thermal coal business, there's not a lot of investment in new mining there for the obvious reason that their customer base is declining.

On the met side, it is a bit shortsighted from an investment standpoint because of the composition of the ownership of met coal companies. Virtually every major metallurgical coal producer except for us went through bankruptcy and post-bankruptcy proceedings. Their board composition became essentially distressed debt investors...Their interest was not developing a long-term coal company. Strategically their vision was: "How can we most quickly get money back out of that coal company?"

We are certainly the only coal company that is doubling in size. We produced a little under 4mn st last year. We will be at about 4.5mn st this year. We can maybe go higher, depending upon the market. The market is not strong right now.

The other issue (for coal producers) even when they weren't doing special dividends, is they've now shifted to doing large-scale share buybacks.

You are starting to see the cost curve increase for most domestic coal producers. What you haven't seen, but I think you will probably find over the next probably 18 to 24 months, is you will begin to see depletion kick in. The amount of coal that they are able to produce from their existing operation will begin to decline. And that is strictly a result of not investing in new mine production.

My approach was to kind of be a little bit of an outlier and then approach coal to products as an alternative use, certainly for thermal coal. And that, of course, brought us to rare earth (mineral extraction).

Do you have funding for Ramaco's rare earth materials projects?

Let me step back one step.

We introduced the idea that we actually had rare earth (deposits) in May 2023….When we sent the samples to be tested, they tested them as if they were hard minerals. In other words, they did not combust off the organic material. What we have done since then, is we went back and we had samples that were probably 200-300 parts per million. From a commercial standpoint, we have kind of crossed the Rubicon that this is indeed sufficiently concentrated that it makes commercial sense. Now what we are doing is we are going through a process of further chemical analysis and testing to determine what is the best extraction and refinement technique.

And the last point you raised was financing. We have a very nice growing mining metallurgical business, which can provide the funding to do whatever we want to do on rare earth. I am not too concerned about our financing capability.

Any updates on your coal-to-carbon product projects?

We have looked at a number of different things with the national labs. We started looking at carbon fiber, which could be made from coal and we have got some patents around some very interesting processes.

The areas that we are now focusing on...are using coal to make synthetic graphite. The other thing we are working on is using coal for direct air capture.

We are considering going into a pilot phase sometime starting later this year with Oak Ridge National Laboratory on a synthetic graphite plant. As far as direct air capture, we probably have more work to do. We are also working on that with Oak Ridge. But I would hope that sometime by 2025, certainly 2026, we would perhaps have our first product, quote unquote, to be able to offer into the market. And it would be delightful if it was synthetic graphite.


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23/05/24

RE monazite demand shifts mineral sands supply chain

RE monazite demand shifts mineral sands supply chain

London, 23 May (Argus) — Interest in monazite as a feedstock for rare earth (RE) processing is rising as producers look for sources outside China, bringing mineral sands projects into the RE supply chain. Deposits of RE elements are typically found in rock formations including carbonatites and granites, in calc-silicate sequences and ionic adsorption clay deposits — primarily in China and surrounding countries. But as downstream consumers and governments increasingly look to diversify their supply chains, monazite is becoming attractive as an alternative source. Monazite is a phosphate mineral that contains about 55-60pc RE oxides. It contains 17 RE elements, including cerium, neodymium, lanthanum, thorium and yttrium. Reflecting this, US-based uranium and rare earths producer Energy Fuels is acquiring Australia-based mineral sands developer Base Resources to gain access to the monazite stream from its Toliara project in Africa as an RE feedstock. The Toliara heavy mineral sands project in Madagascar plans to produce monazite as a by-product of its primary titanium and zirconium output. The acquisition marks Energy Fuels' entry into the mineral sands business as it invests in operations in Australia, Brazil and Madagascar to supply RE concentrate. Toliara's monazite stream will provide the feedstock Energy Fuels needs for RE oxide production at its White Mesa uranium and vanadium mill in Utah. The facility will also process the uranium content from the feed and if needed, it can recover thorium. The mill has been processing monazite to produce a mixed RE carbonate, which it has been selling commercially since 2021. "We're putting together two pieces of the puzzle that nobody has put together," Energy Fuels president and chief executive Mark Chalmers said at the recent Metal Events Rare Earths conference in Singapore. "We're putting together the physical metallurgy and the hydrometallurgy." White Mesa has been processing monazite supplied by US titanium dioxide producer Chemours. But its output has been limited as there is not enough monazite in the feed, Chalmers said, whereas Toliara contains more than 1mn t of monazite and has about 1.5mn t of existing tailings capacity. Energy Fuels is in the process of commissioning its Phase 1 neodymium-praseodymium (NdPr) separation facility, which is scheduled to start production by the end of the first half of 2024. It plans to produce 35t of NdPr oxalate in 2024. Phase 1 will have the capacity to process 8,000-10,000 t/yr of monazite to produce up to 800-1,000 t/yr of NdPr oxide. The company plans to increase its NdPr capacity to 3,000 t/yr in 2026-27 and add heavy RE processing in 2027-28. It is starting to pilot heavy RE separation and is exploring moving downstream into metal and alloy production. The first stage of Base's Toliara project, scheduled for September 2027, aims to produce an average of 17,400 t/yr of monazite. The second stage would ramp up to 26,100 t/yr. Energy Fuels also owns the Bahia project in Brazil, which could supply 4,000-5,000 t/yr of monazite to White Mesa Mill to produce 400-500 t/yr of NdPr oxide and 20-25 t/yr of dysprosium and terbium oxides. Energy Fuels has the potential to produce 4,000-6,000 t/yr of NdPr oxide, 150-225 t/yr of dysprosium oxide and 50-75 t/yr of terbium oxide, which would supply enough magnetic RE oxides to supply 3mn-6mn electric vehicles (EVs) per year. RE oxides are in demand from US, European and Asian EV, wind energy and other clean energy manufacturers, as well as emerging commercial metal-making, alloying and magnet-making facilities that are under development in the US. The US defence industry could include offtake of other non-magnetic oxides contained in monazite. Developments at other mineral sands producers outside China also indicate that demand for concentrate for its monazite content rather than zircon or titanium is on the rise. Indonesia-focused zircon producer PYX Resources said last week that it has made its first shipment of monazite-rich zircon concentrate to a customer in Hainan, China, exporting 750t. PYX expects to report further exports in the future. Mineral sands producer Iluka is also moving into the RE market using its monazite by-product. The company has stockpiled monazite since the 1990s at its Narngulu Mineral Separation Plant in Eneabba, Western Australia. Iluka is now developing RE production at Eneabba, commissioning a concentrator plant to process the stockpiled material. It will separate the monazite and additional zircon to produce a 90pc concentrate to feed its RE refinery. The company aims to produce neodymium, praseodymium, dysprosium and terbium oxides from 2026. It holds other mineral sands deposits that could feed the RE refinery, and it will be able to handle third-party deposits if it requires additional feedstock. Companies had stopped processing monazite owing to the high cost of disposing radioactive thorium. But thorium is now becoming attractive for advanced nuclear reactor design and medical isotopes, which could drive offtake. By Nicole Willing Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.

Record-high EU antimony prices in 'uncharted territory'


23/05/24
23/05/24

Record-high EU antimony prices in 'uncharted territory'

London, 23 May (Argus) — European antimony prices hit fresh record highs this week after a prolonged period of supply constraints, and the latest hikes are drawing concern from even the most experienced traders as they navigate an increasingly opaque and speculative spot market. Prices for regulus grade II and trioxide in Europe were assessed at $18,500-19,500/t today, up by 14pc from a week ago and 55pc higher than this time last year, when prices were $12,000-12,400/t. Higher price indications are emerging daily, with some offers heard as high as $20,000/t in Rotterdam this week. The upswing has gathered pace significantly since 9 April, underpinned by depleting domestic resources in China and limited concentrate coming into Europe from various parts of the world. The continuing war in Myanmar (Burma) — a major source of antimony ore, most of which is exported to China — is exacerbating the supply tightness. Meanwhile, Oman-based strategic and precious metals firm SPMP suspended production at its Oman Antimony Roaster plant at the start of 2024 and is still not offering material, chief executive Joel Montgomery told Argus this week. The reasons for the suspension have not been disclosed. The status of Russian producer Polyus remains unclear, but the firm is not delivering as much raw material as in the past, Argus understands. And Tajikstan is currently producing more antimony ingot and selling less ore, according to market participants. "The market is becoming more opaque, with less information on the largest players," consultancy firm Hallgarten's principal and mining strategist, Christopher Ecclestone, told Argus . He added that supply of ore — or concentrate — is inelastic, as artisanal producers are currently operating at maximum capacity. On the demand side, China is directing significant volumes of antimony trioxide and antimony selenide toward its manufacturers of solar photovoltaic glass. With a container to Europe now costing around half a million dollars, traders have largely stepped back from the spot market, waiting for the current volatility to ease, and minimal stocks are available in Rotterdam for spot bookings. A significant volume of antimony arrived in Rotterdam recently and has already been locked into long-term contracts, but this has not stunted the rally, a market source told Argus . "Antimony is becoming a crazy dangerous market," a trader told Argus . It is hurting the industry, causing irreparable damage," he added, noting that consumers are getting hit by the higher prices and reduced availability. Antimony is largely used as a flame retardant in electrical and electronic equipment and textiles, alloys (lead-acid batteries), wires and cables, ceramics, and glass. With prices at record highs, market participants are looking for ways to ease the supply crunch or their consumption rates, but there are no easy options available. On the supply side, recycling streams are already heavily utilised after a major push in 2011, when prices hit their previous record high of around $17,100/t. Around a quarter of global antimony supply is currently produced through the recycling of antimony-bearing metal alloys. On the consumption side, demand from the flame-retardant sector fell by around 20pc in 2023 because of the weak macroeconomic environment, according to one buyer. It is difficult to develop alternative materials that can act as a substitute. Zinc borates and zinc stannates can sometimes substitute antimony trioxide, but only in specific formulations. Antimony substitutes can run into performance issues in various applications, especially in flame retardants because of the weakening of the polymer, sources said. "Antimony could be replaced in solar uses, but that is still a small portion of the market, even though it is growing," Ecclestone said. For now, speculation remains rife as to how high prices are likely to go before hitting a ceiling. "When the increase is supply driven, there is a moment when it falls [...] It cannot stick for too much longer," a trader said. Some sources expect the price rally to run out of steam in July-August because of the summer demand lull. Producers of flame-retardant products typically pause operations in June-July, and there could be a two-week period of maintenance, Argus understands. "The bubble is going to burst once it reaches $20,000/t," another trader estimated. By Cristina Belda Antimony trioxide Europe vs China $/t Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.

Indonesia’s nickel mining quotas fall short of demand


23/05/24
23/05/24

Indonesia’s nickel mining quotas fall short of demand

Singapore, 23 May (Argus) — Indonesia's ministry of energy and mineral resources has approved 204 nickel mining work plans for exploration and production, according to market participants, with a combined quota of 220.7mn t. The approved quotas, also known as RKAB work plans, allocated to the production segment is unknown. But participants said that the quotas may not be enough to meet expected demand this year because more than 90pc of the production RKABs are expected to have been approved. Nickel ore demand is forecast to reach 220mn t in 2024 based on projected nickel output, according to data compiled by Argus. Indonesia's nickel ore output was 175.6mn t in 2023. A large portion of the approvals was granted to the Morowali region, participants said, while the approval rates for RKABs in other regions, such as Sulawesi and Weda Bay, were significantly lower. This could potentially lead to a regional shortage of nickel ore. Nickel consumption is trending higher with an influx of overseas investment into Indonesia. Indian steel producer Jindal Stainless is planning a 1.2mn t/yr stainless steel melt shop , while Chinese battery metals and materials manufacturer Green Eco-Manufacture is building a 30,000 t/yr battery cathode precursor plant . But nickel intermediate supplies have been tight, dampened by tighter spot availability and lower term-contracted availability from Indonesia-based plants with a bearish nickel-cobalt-manganese battery precursor market. Civil unrest in New Caledonia has sparked concerns of a further tightening of supplies, pushing London Metal Exchange nickel prices on 20 May to their highest level in nine months at $21,625/t. Several businesses in the French-controlled territory's nickel value chain were disrupted during the riots, affecting production and transportation. Nickel prices will likely remain volatile in the coming months, depending on the approval rates of new RKABs, availability from swing suppliers such as New Caledonia and the growth rate of Chinese stainless steel and electric vehicle demand. By Sheih Li Wong Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.

Anglo American rejects BHP’s third takeover proposal


23/05/24
23/05/24

Anglo American rejects BHP’s third takeover proposal

Singapore, 23 May (Argus) — UK-South African mining firm Anglo American has rejected a third £38.6bn ($49.1bn) takeover proposal from Australian resources firm BHP, although it gave it until 29 May to make a firm offer. BHP's latest offer represents a total value of around £31.11 per Anglo American ordinary share, including £5.40 in Anglo Platinum shares and £4.23 in Kumba shares, BHP said on 22 May. The takeover proposal also came with the same requirement for Anglo American to complete two separate demergers of its entire shareholdings in Anglo American Platinum and Kumba Iron Ore, its assets in South Africa, to Anglo American shareholders. Anglo American "continues to believe that there are serious concerns with the structure, given that it is likely to result in material completion risk and value impact that disproportionately falls on Anglo American's shareholders", its board of directors said. The complex process proposed by BHP is likely to take at least 18 months to complete and involves significant execution and completion risks, it added. Anglo American said it remains confident in its standalone prospects and believes it had "set out a clear pathway to deliver the acceleration of its strategy detailed on 14 May 2024". It was likely referring to its plans to exit its coal, platinum, nickel and diamond businesses , shortly after rejecting BHP's second £34bn offer on 14 May because it "continues to significantly undervalue Anglo American and its future prospects". Anglo American also rejected BHP's first £31bn all-share offer in April for the same reason. By Tng Yong Li Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.

Australia’s Origin to keep Eraring coal plant on line


23/05/24
23/05/24

Australia’s Origin to keep Eraring coal plant on line

Perth, 23 May (Argus) — Australian utility firm Origin Energy and the New South Wales (NSW) state's Labor government have agreed to keep the nation's largest single power facility open for at least two more years. The deal involves Origin shelving plans to close the 2,880MW Eraring coal-fired power plant near the NSW city of Newcastle next year, and operating the generator until 19 August 2027 and potentially until April 2029. A generator engagement project agreement has been signed, under which Origin will receive compensation covering the cost of running the 40-year old plant, while aiming for the plant to generate at least 6TWh for the two additional fiscal years it will run. Eraring produced 12.15TWh last year, Origin's 2023 annual report showed. The firm must decide by 31 March in 2025 and 2026 whether it will enter the underwriting arrangement for the following financial year. If Origin profits from its Eraring plant during these years it will pay NSW 20pc of the proceeds, capped at A$40mn/yr ($26.5mn/yr), but no compensation will be paid after 30 June 2027. Origin can claim no more than 80pc of Eraring's financial losses each year from NSW and the compensation is to be capped at A$225mn each year, if it does opt in. Origin spent A$147mn for generation maintenance and sustaining capital on Eraring in 2023, with A$69mn owing to costs associated with the facility's ash dam. Eraring provides around 20pc of NSW's delivered electricity and was scheduled to be replaced by the 2,200MW pumped hydro scheme known as Snowy 2.0 — which has experienced significant delays and will not be on line until 2029 — and the 750MW Kurri Kurri gas-fired power station also being developed by federal government-owned Snowy Hydro, which is to be commissioned later this year. Coal-fired power generation The viability of coal-fired generators has been declining for some time as Australia's renewable power generation grows to nearly 40pc of the total grid capacity. Widespread rooftop solar is driving electricity prices into negative territory during daylight hours and disrupting the profitability of large-scale generators. Origin has committed to a 460MW battery energy storage system (BESS) at the site of Eraring, which it says will provide two hours of firming capacity to the national electricity market. Australia's Clean Energy Council said the announcement must be backed by measures to integrate new renewable generation and storage into the NSW grid with "clear signals and support" to rapidly transition to renewables. Planning issues and rising costs have stymied the federal and state governments' plans to increase Australia's dependence on large-scale wind, solar, pumped hydro and BESS projects to replace coal generators. Canberra is aiming for an 82pc renewables share for Australia's electricity production by 2030. Coal-fired generation increased on the year for January-March because of a warmer-than-average summer and increased availability. By Tom Major Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.

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