Resource World Magazine

20 www.resourceworld.com D E C E M B E R / J A N U A R Y 2 0 2 0 ket conditions, impeding overall growth in the diamond sector coupled with a transi- tion from open-pit to underground mining at the company's South African Venetia Project and lower volumes from its various African and Canadian projects. They are also concerned about the mounting threat to profit margins posed by the lab-grown diamond sector although the company itself has a foothold in this market. Last year De Beers launched its Lightbox lab-grown diamond line through which it sells synthetic diamonds that are gently toned pink, blue and white for roughly US $900/carat. Despite the new and old challenges facing the evolving diamond sector, De Beers remains committed to advancing its diamond mining techniques and is invest- ing US $468 million into its Debmarine Namibia outfit to recover diamonds from the seabed off the coast of Namibia. De Beers say the future of the diamond sec- tor lies beneath the water off the coast of Southwest Africa, from where the com- pany believes as much as 95% of future diamond production will come. In 2015, 1 million carats were mined from the same seafloor area. MANGANESE In the first half of 2019, manganese ore prices remained unexpectedly high. For more than a year, there has been a wide- spread expectation in the market that rising supply would drag prices back down to a more normal level. This is yet to happen to any significant extent though they have softened slightly since the end of 2018 and benchmark prices for high- grade ore remain resistant to falling much below the US $6.50/tonne mark. There has been a tremendous increase in manganese ore output over the past three years, much of it as a result of significant growth in South African production. Since 2016, global manganese ore output has risen by about 30% on a contained metal basis, and now exceeds 19Mtpy. Despite this, there is widespread disagreement as to how significant the current oversup- ply in the market is, if indeed there is any oversupply at all. The unexpectedly high level of ore prices at the present time, in contrast to the rather low level of manga- nese alloy prices, adds to the confusion. One significant factor, over the past year, has been the growth in demand for manganese per tonne of steel in China, as a result of the stricter rebar standards which were imposed by the Chinese government in 2018. This came as a surprise to the market, following several years of declin- ing manganese intensity per tonne of steel. The demand for manganese is overwhelm- ingly driven by steel output, accounting for well over 90% of global manganese consumption. Though steel will continue to domi- nate manganese demand, consumption of manganese in batteries is expected to grow rapidly over the next decade. There remains many uncertainties concerning how fast the growth of manganese con- sumption in batteries will be and which manganese products and production pro- cesses will be required to fulfil the demand from lithium-ion batteries. LITHIUM Demand for lithium is expected to increase five-fold over the coming decade, driven mainly by demand for lithium-ion batter- ies and their use in electric vehicles, energy storage systems and portable electronics. Lithium demand is forecast to increase by over 20%py, with demand from battery applications increasing by over 25%py through to 2028. Meanwhile, increased demand for lithium for industrial applica- tions such as ceramics, greases and glass is also expected, albeit at a more modest rate of 2-3%py. With this backdrop the lithium industry will require significant investment in additional supply from new mines, process plants and from the nascent recycling industry. Although new capacity has been brought online at several operations, there have also been a number of set-backs. Recently there have been capital expen- diture blowouts, delays in mine ramp ups and the bear market in lithium equities has curtailed investment in greenfield projects. Longer term, the addition of capacity at existing and new operations will be criti- cal to meet forecast demand growth over the coming decade, whether from lithium brine or lithium hard rock/mineral conver- sion operations. POTASH The global potash market of around 65M tonnes/year has rallied since mid-2016, boosted in part by idled capacity in North America and robust demand from Brazil and China but now BHP sees a slowing momentum for the crop nutrient, with demand growing by an uninspiring 2-3% a year through the 2020s despite support - ive global trends of a rising population, changing diets and the need for "sustain- able intensification of agriculture." But BHP said in its recent half-year report that the outlook for potash prices was positive with demand exceeding available supply from existing and forthcoming capacity by the mid-to-late 2020s. Over the past year, the price of potash has risen by close to 25%, reaching $350/ tonne. BHP expects the price to continue ris- ing, perhaps getting back to the $525/ tonne reached in 2010 when the com- pany made its first attempt to enter the potash business with a controversial $39 billion takeover offer for Canada's pot- ash champion, the Potash Corporation of Saskatchewan, which has since merged with Agrium to form a new business called Nutrien. After BHP's bid for Potash Corporation was rejected by the Canadian Government the Australia-based miner resorted to a back-up plan – development of a new mine. Work on the Jansen Mine started just as the potash price started to fall, forcing BHP to go slow on its develop- ment. But with potash prices improving, the company is now moving to the point of deciding when would be best to start production. BHP's indecision is making life tough for smaller potential entrants in the potash business because the size of Jansen means it could easily satisfy most expected new COMMODITIES OUTLOOK

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