Feature: UK set for mining ‘revival’ post-Brexit, if overseas investment flows: developers

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Highlights

Mining giant Anglo American steps in

Battery high on the list


London —
UK mining is set for growth after being largely forgotten as a investment destination for decades, mine developers said this week.

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However, much of the latest funding is coming from abroad, notably , and not from the UK.

Investor interest in new or disused mine projects – both in industrial and metals – is resurfacing after laying dormant for 30 years, amid signals that “metals are the facilitator of the transition to a zero-carbon economy,” said Jeremy Wrathall, founder and CEO of Cornish Lithium, told S&P Global Platts in an interview. Cornish Lithium is reviving a lithium brine project in Cornwall, the country’s sole lithium project.

Wrathall’s assertion follows last week’s GBP386 million ($505 million) bid by mining giant Anglo American for Sirius Minerals’ Woodsmith polyhalite mine project in North Yorkshire. The export project would be Anglo’s first in the UK and the nation’s biggest-ever mine, requiring a potential investment of $4 billion for a 10 million mt/year complex. Reports indicate the sale will proceed, even after Sirius’ 2019 failure to raise $500 million in financing. Broker SP Angel said a go-ahead would be “a massive and very welcome favor to the at Woodsmith and the UK government.”

Other new or revived mine projects underlining the UK’s mineral potential include the TSX-listed Dalradian Resources’ Curraghinalt gold project in Northern Ireland, purchased by -based Orion Mine Finance in late 2018 for around $600 million; Australia-headquartered Scotgold Resources’ Cononish gold project in Scotland; Strongbow Exploration’s South Crofty tin project in Cornwall, where there is also a tungsten/tin project set for development by London-listed Strategic Minerals at Redmoor; while in Devon, the Drakelands tungsten/tin project is expected to be developed by a consortium set to buy Wolf Minerals, formerly listed in Australia and which entered voluntary administration in 2018 after its international financial backing dried up.

TSX-listed Strongbow’s South Crofty underground mine, which has produced in the past and considered well-positioned to capitalize on the demand for “clean” tin, is still in feasibility studies, but has received planning permission to construct a processing plant and claims to have “strong local support to resume production.”

After receiving a water discharge permit in October 2017, the project is fully permitted. “The UK government is very supportive of the development of new mines,” Strongbow said.

Nonetheless, the funds for this project are coming from outside the UK. “To be frank: there might be a revival of interest in mining in the UK, and perhaps from investors, however that doesn’t necessary mean there is a revival of interest in in mining in the UK. From the UK-based investor at least. All the money that we see coming in is from Canada,” Strongbow communications manager Irene Dorsman told Platts.

This week Strongbow announced plans to raise $2 million via a private placement to advance South Crofty’s drilling program and feasibility studies, with $1 million to be taken up by Canadian gold smelter Osisko Gold Royalties.

Coking coal mine goes ahead

Following approval from the local council, UK-based West Cumbria Mining expects to start construction early this year at Woodhouse Colliery, a 3.1 million mt/year capacity, GBP165 million coking coal mine project in Whitehaven in the north of England, the UK’s first significant new coal mine venture for decades. Slated for 2021 startup, the colliery has gained support at a time when nations including Germany are turning their backs on coal. It is nonetheless expected to supply coal to European and UK steelmakers.

“There is still a UK market,” a West Cumbria Mining spokeswoman said.

A century ago, the UK was a major coal miner and a significant copper producer. Production declined due to the impacts of deindustrialization and globalization, making it hard to achieve economies of scale, however, it still produces considerable tonnages of industrial minerals such as clay, sand, gravel and slate.

New mining “opportunities” may however be increasingly in higher-value products: gold and new energy (battery) metals including lithium and tin.

Cornish Lithium has managed to raise $3.4 million over a two-year period for its lithium project, showing “market confidence” in so-called green production of lithium from geothermal waters, Wrathall said. It’s also gained a GBP500,000 government grant for development of this project, whose priority would be sales in the UK. The project is however still at the exploration stage and may need another five years to bring to production.

“The government wants to generate new industries after Brexit … It’s looking for new value-added opportunities,” Wrathall said.

In terms of licensing, the UK government has not hindered any new mining project, and is aware that mining can today be environmentally-friendly, he said.

Scotgold, sited in the Scottish Highlands, and Sirius Minerals, which is in a national park, have faced only a “minor level” of environmental opposition, he said. The UK government approved the Woodhouse Colliery project despite some local protests. The colliery will create 500 new jobs and replace some imports.

In keeping with the new push to support UK mine development, UK-based production of battery metals should in future be mainly aimed at local battery production, according to Wrathall, who noted the government “is keen to secure a mega battery factory here in the UK to support” .

The UK Department for Business, Energy and Industry Strategy had no comment Friday on the mining strategy it intends to adopt after Brexit.

Source: Platts

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