AngloGold Ashanti Inks Gas Pipeline Deal in Western Australia
AngloGold Ashanti (GSE: AGA) has signed a $140 million deal to build a natural gas pipeline for its Sunrise and Tropicana gold mines in Western Australia.
The agreement with APA Group calls for construction of a new 292km pipeline that will connect to the existing 1380km Goldfields gas transmission pipeline, which currently connects to Alinta Energy’s Newman power station and services Glencore’s Murrin Murrin nickel mine.
The deal will help the AngloGold save millions of dollars in energy costs at its remote mines.
“Gas power generation is expected to reduce cash operating costs at both sites by between $25 and $30 per ounce," AngloGold senior vice president Australia Michael Erickson said.
"The pipeline and gas transportation agreement will also provide continuity of fuel supply, reduce exposure to diesel price volatility and significantly reduce the number of trucks on the road.”
The agreement will provide both mines with 100 percent natural gas while retaining diesel backup capacity.
According to APA managing director Mick McCormack, the pipeline can be expanded in the future to service other mines in the region. "Access to natural gas, a reliable and cost competitive energy supply will assist our new and existing customers in reducing costs at their mining operations.”
AngloGold isn’t the first miner turning to natural gas. Earlier this year Fortescue Metals Group announced a similar signing for long-term gas transportation, helping the company reduce costs.
As the world’s third largest gold producer, AngloGold Ashanti owns 100 percent of the Sunrise mine and a 70 percent stake in Tropicana.
Construction on the project is slated to start February 2015 with the first gas scheduled for the Tropicana mine in January 2016.
Lithium producers bullish as EV revolution ramps demand
Rising demand for lithium is stoking prices for the electric vehicle battery metal, fueling long-delayed expansions that still may not produce adequate supplies that automakers need to meet aggressive production plans.
Growing industry optimism from higher lithium prices is a change from last year when funding for mines and processing plants dried up during the pandemic.
Albemarle Corp, Livent Corp and other producers are scrambling to make more lithium, but some analysts worry the recent price jump will not spur a big enough expansion to meet a planned wave of new EV models by mid-decade.
Since January, General Motors Co, Ford Motor Co LG Energy Solution and SK Innovation Co, along with other automakers and battery parts manufacturers, have said they will spend billions of dollars on EV plants.
U.S. President Joe Biden has proposed spending $174bn to boost EV sales and infrastructure. The European Union has similar plans, part of a rush to catch up with global EV leader China.
Those moves have helped an index of lithium prices jump 59 percent since April 2020, according to data from Benchmark Mineral Intelligence, a commodity pricing provider.
The rising demand “reflects what feels like a real and fundamental turning point in our industry,” said Paul Graves, chief executive of Livent Corp, which supplies Tesla Inc. On Monday, it said it would more than double its annual lithium production to 115,000 tonnes.
Graves warned, though, that “it will be a challenge for the lithium industry to produce sufficient qualified material in the near and medium term.”
Albemarle, the world’s largest lithium producer, aims to double its production capacity to 175,000 tonnes by the end of the year when two construction projects are complete. Albemarle's Q1 profit beat expectations thanks to rising lithium prices. Chile’s SQM, the No. 2 producer, said its goal to expand production of lithium carbonate by 71 percent to 120,000 tonnes should be complete by December.
Australia’s Orocobre is paying $1.4 billion for smaller rival Galaxy Resources, a strategy designed to boost scale and help it grow faster in regions closer to customers.
“The next few years are going to be critical in terms of whether there’s enough available lithium supply, and that’s why you’re starting to see commodity prices start to ramp,” said Chris Berry, an independent lithium industry consultant.
The price gains helped Albemarle and other major producers, including China’s Ganfeng Lithium Co and SQM, post big gains in first-quarter profit and boost forecasts for the year.
Even China’s Tianqi Lithium Corp, saddled with debt due to years of low lithium prices, signaled that recovering demand should help it swing to a profit this year.
Forecasts call for demand for the white metals to surge from about 320,000 tonnes annually last year to more than 1 million tonnes annually by 2025, when many automakers plan to launch new EV fleets, according to Benchmark.
Still, demand is expected to outstrip supply in 2025 by more than 200,000 tonnes, so lithium prices may need to rise to encourage producers to build more mines. That could boost the prices consumers pay for EVs. “Companies across the lithium-ion supply chain are in the best position they’ve been in for the last 5 years,” said Pedro Palandrani of the Global X Lithium & Battery Technology ETF , which has doubled in value in the past year.