Australia Mining Outlook 2021: Reliance on Local Partnerships to Continue

Last year might have been full of uncertainty for Australia, but analysts think the Australia mining outlook for 2021 could be brighter.

Click here to read the previous Australia mining outlook.

Uncertainty dominated the Australian mining space in 2020 as the coronavirus hit the world.

Prices for gold and iron ore supported resource exports in the country, and even though tensions with trading partner China escalated, many are optimistic about what 2021 could bring for mining.

Here, the Investing News Network (INN) looks at the Australia mining outlook for the coming year.

Australia mining outlook: Developing local partnerships

Following a chaotic 2020 that proved how resilient the resource industry is, Paola Rojas of Synergy Resource Capital told INN that the current bull market could last until sometime in mid-2021.

“Companies listed locally, but holding mining projects in other countries, resorted to adding local assets to their portfolio,” she said, noting that this was logical given that many company executives have been locked out of their target countries due to pandemic-related restrictions. “That has been a very sensible approach and we applaud the flexibility. I think this will continue.”

Another mining trend Rojas sees into 2021 is a greater reliance on local networks and partnerships.

“If you can’t travel, you depend even more on local teams, partners and advisors,” she said. “Relationships become even more valuable and critical to success.”

For Rojas, Australia is also ideally positioned to take a central role as the electrification trend continues to gain steam, not only regionally, but globally.

“We have the resources, technology, capital and the business savvy, and I hope we can have the strategic foresight,” she said, adding that some players are already in place, such as Lithium Australia (ASX:LIT).

“Electric vehicles (EVs) are at the heart of the transition towards a cleaner future, and if we support this fully, it could revolutionise the country and beyond,” she said. “We still need to do a lot more locally, including at the government level — infrastructure, as well as increasing EVs sold.”

Some of Synergy Resource Capital’s private company holdings in this space, such as Chilean Lithium Salars, are gaining momentum, and Rojas thinks the arena is going to get hotter. Many Canadian companies are rocking the boat as well, Rojas added, including Millennial Lithium (TSXV:ML,OTCQX:MLNLF) and Global Energy Metals (TSXV:GEMC,OTC Pink:GBLEF).

“More partnerships with TSXV-listed companies could certainly pop up considering travel restrictions,” Rojas said. “The perspective of Australian Canadians and Australians is so different — while working in the same business, there could be some great ‘nuggets’ to be found.”

Australia mining outlook: Trading relationship with China

As the new year begins, annual resource and energy exports from Australia are forecast to remain at over a quarter of a trillion dollars in 2021 — at AU$279 billion in 2020/2021 and AU$264 billion in 2021/2022, according to the country’s Office of the Chief Economist (OCE).

But the OCE also highlights that one downside risk is for substantial delays in the successful rollout of COVID-19 vaccines to a large number of the world’s working population; another downside risk is the extent of further disruptions to Australian trade with China.

Tensions between the two began early in 2020, after Canberra backed calls for an international investigation into the spread of the COVID-19 pandemic from China.

The Asian country imports 60 percent of iron ore from Australia, which is the world’s top producer. Coal exports to China could also suffer, while other products, including barley, sugar, red wine, timber and potentially copper, are being caught up in the disputes.

“It is definitely worrying to see how everything escalated so quickly, and how two countries that have relied on each other as extensively can become alienated,” Rojas said.

“It definitely makes things harder for Australia as a supplier, but I do believe having a new occupant at the White House will help assuage the tensions.”

The Synergy Resource Capital founder said she expects to see improvements in the relationship soon.

“But at the same time, this highlights the need to have a plan B, not to replace but to complement the China-Australia trade,” Rojas said. “I have been saying for awhile that Australia needs to diversify by strengthening links with other regions.”

For Rojas, the obvious alternative is Latin America, and she said that 2021 could bring a great opportunity for this connection to develop.

Australia mining outlook: Commodities and factors to watch

When asked about what commodities could have the biggest upside in 2021, Rojas said gold will remain strong given the ongoing global uncertainty.

“Although I don’t think we will see a significant spike, dancing around US$2,000 (per ounce) … every time it climbs, investors quickly get some gains, pulling the price back down,” she said. “We still remain bullish on gold, copper — which will in my view have a brilliant year — silver, plus everything needed for batteries, from lithium to cobalt and nickel.”

Aside from resources, Rojas added that another asset class to be aware of is cryptocurrencies and other aspects of the tech world. “Mining companies have been traditionally (been) roughly about 30 percent of listed companies locally. I expect this trend to continue, but there seems to be quite a push from tech and health (part of which is health tech),” she explained.

Rojas continued, “Both sectors are winners with the current pandemic, since A) we rely even more on technology to conduct our daily lives, and B) high numbers of people falling sick, regardless of what ails them, mean obviously more patients.”

Another trend that investors should keep in mind is the use of technology in mining.

“More companies are combining mining and technology in ways that provide them avenues to reach cash flow on their own for at least part of their capital requirements,” Rojas said. “If this continues, we may be seeing less dilution and stronger firms, which would be nice to see.”

She mentioned Sensore, which is seeking a listing later this year, as worth keeping an eye on.

“Junior mining should be less about blind luck and more about business sense. Producing cash flow should be at the top of the list,” Rojas said. “Don’t be surprised if we see a generation of new companies who are more pragmatic about how they start and how they raise money.”

Don’t forget to follow us @INN_Australia for real-time updates!

Securities Disclosure: I, Priscila Barrera, hold no direct investment interest in any company mentioned in this article.

Editorial Disclosure: The Investing News Network does not guarantee the accuracy or thoroughness of the information reported in the interviews it conducts. The opinions expressed in these interviews do not reflect the opinions of the Investing News Network and do not constitute investment advice. All readers are encouraged to perform their own due diligence.

GEMC:CA
Featured

On 2 March 2021 the Australian Taxation Office issued Rio Tinto Limited with amended assessments related to the denial of interest deductions on an isolated borrowing used to pay an intragroup dividend in 2015. The borrowing was repaid in 2018. The ATO has today issued further assessments in relation to the same transaction levying penalties of A$352m and reducing the original interest assessment from A$47m to A$27m …

On 2 March 2021 the Australian Taxation Office (ATO) issued Rio Tinto Limited with amended assessments related to the denial of interest deductions on an isolated borrowing used to pay an intragroup dividend in 2015. The borrowing was repaid in 2018.

The ATO has today issued further assessments in relation to the same transaction levying penalties of A$352m (US$257.9m) and reducing the original interest assessment from A$47m to A$27m (US$19.8m).

read more Show less

Ioneer Ltd is pleased to announce that the Company has reached an agreement to establish a joint venture with Sibanye Stillwater Limited to develop the flagship Rhyolite Ridge Lithium-Boron Project located in Nevada, USA . Under the terms of the agreement, Sibanye-Stillwater will contribute US$490 million for a 50% interest in the Joint Venture, with ioneer to maintain a 50% interest and retain operatorship. ioneer …

Ioneer Ltd (“ioneer" or the “Company") (ASX: INR) is pleased to announce that the Company has reached an agreement to establish a joint venture (the " Joint Venture “) with Sibanye Stillwater Limited ( “Sibanye-Stillwater" ) to develop the flagship Rhyolite Ridge Lithium-Boron Project located in Nevada, USA (the “Project" ). Under the terms of the agreement, Sibanye-Stillwater will contribute US$490 million for a 50% interest in the Joint Venture, with ioneer to maintain a 50% interest and retain operatorship. ioneer has also agreed to provide Sibanye-Stillwater with an option to participate in 50% of the North Basin 1 upon the election of Sibanye-Stillwater to contribute up to an additional US$50 million subject to certain terms and conditions.

read more Show less

Perth, Australia – Australia’s next rare earths producer Hastings Technology Metals Ltd is pleased to announce that it has received the commendation of Premier Mark McGowan and the Western Australian Government for the Company’s development of the Yangibana Rare Earths Project in the State’s Gascoyne region. Premier McGowan said Hastings’ development of Yangibana was expressly aligned with the State’s Future Battery …

Perth, Australia (ABN Newswire) – Australia’s next rare earths producer Hastings Technology Metals Ltd (ASX:HAS) (FRA:5AM) is pleased to announce that it has received the commendation of Premier Mark McGowan and the Western Australian Government for the Company’s development of the Yangibana Rare Earths Project (Yangibana), in the State’s Gascoyne region.

Premier McGowan said Hastings’ development of Yangibana was expressly aligned with the State’s Future Battery Industry Strategy, which aims to expand the range of future battery minerals that are extracted and processed in Western Australia. Appendix 1 provides a copy of the public commendation that Hastings has received.

The Premier’s commendation follows the West Australian Department of Jobs, Tourism, Science and Innovation (JTSI) acknowledging that the Yangibana Project represents a strategic opportunity for investment and growth to position the State as a reliable supplier of speciality rare earth minerals.

read more Show less

Gold isn't all that glitters in the land down under — silver in Australia is a major industry, and the country is home to both large and small players.

When it comes to precious metals, Australia has long punched above its weight — the nation was born riding the wave of a gold rush.

Gold isn't all that glitters through — Australia is also a major global producer of silver. It's among the 10 top producers, and was ranked seventh in 2020, with 1,300 tonnes coming from the many operational mines in the country. By comparison, the world's top producer, Mexico, produced 6,300 tonnes that same year.

Other key players in the silver market are Peru, China and Russia, which produce more silver than Australia, and the US, Argentina and Bolivia, which produce less.


Australia is sitting on quite a lot of the precious metal, with the world's second largest reserves, behind only Peru.

According to Geoscience Australia, one of the country's first mines was a silver-lead mine near Adelaide. Since then, the entire continent has been combed over with a fine-toothed comb, with deposits identified in every state and territory and active mines in every jurisdiction but one (Victoria).

Overall, Australia is well explored when it comes to silver, and since the mid-1800s it's had a constant stream of silver production. Aside from that, the country boasts metals-processing facilities in South Australia that separate the precious metal from its commonly mined counterpart metals, lead and zinc.

Silver companies in Australia

Those looking at the Australian silver market have options. There are plenty of big players with interests in Australian silver, and many smaller players for investors to consider researching too.

Most silver comes from mines dedicated to other metals — Glencore's (LSE:GLEN,OTC Pink:GLCNF) Mount Isa in Queensland produces mainly copper, zinc and lead, but silver is separated by the company's integrated processing streams. Glencore also operates the McArthur mine in the Northern Territory, which is primarily zinc, but between its copper and zinc assets, Glencore produced 7,404,000 ounces of silver in Australia in 2020 — over 200 tonnes.

Elsewhere, BHP (ASX:BHP,NYSE:BHP,LSE:BLT) produces a lot of silver as well at the Olympic Dam operation in South Australia. Perhaps best known for the production of uranium and copper, it also yields significant silver resources to the tune of 984,000 ounces in 2020 (or almost 28 tonnes).

According to Geoscience Australia data from 2016, over 20 mines in Australia produced silver in that year, while there are dozens of other resources identified in each state.

A primary producer of silver is the Cannington mine in Queensland, where South32 (ASX:S32,OTC Pink:SHTLF), a company that was spun off from BHP in 2015, mines silver and lead. Cannington is a big one, producing 11,792,000 ounces in 2020, or 334 tonnes of silver.

Tasmania boasts the Rosebery mine, which has seen 85 years of continuous operations and is currently owned by MMG (ASX:MMG,HKEX:1208). Rosebery, like all the others here, is polymetallic, and besides silver also produces copper, zinc, lead and gold. MMG also has the Dugald River mine in Queensland which also produced silver.

Getting into smaller companies, there are those like New Century Resources (ASX:NCZ) which restarted the Century mine in the Northern Territory for zinc and silver.

The future of silver in Australia

So, you get the picture — there's a lot of silver to be mined in Australia by way of mining everything else.

It's worth noting that because silver operates both as a precious and an industrial metal, and is mined most often alongside base metals, it can be pulled in many directions. However, it traditionally follows (and lags behind) its precious metal sibling, gold, making it a valuable investment commodity to keep an eye on.

Looking forward, the future of the commodity in the land down under — especially given Australia's significant reserves and operator diversity — is as bright as you'd like it, and depends on what investors are most interested in, given the by-product nature of the metal.

Don't forget to follow us @INN_Australia for real-time updates!

Securities Disclosure: I, Scott Tibballs, hold no direct investment interest in any company mentioned in this article.

Australia took a stand against Facebook and Google earlier this year, and the move could have long-term implications for tech investors.

It was a ban that sent Australians wild and had the whole world watching.

Back in February, Facebook (NASDAQ:FB) stopped users in Australia from posting news in a week-long blackout, reacting to proposed legislation that would have forced the social media behemoth to pay publishers for content.

What prompted Facebook to "friend" Australia again, and what are the potential long-term implications of the squabble? Read on to learn what tech-focused investors in Australia should know about the situation.


Australia squares off against Facebook

On February 25 of this year, Australia's federal government passed the News Media and Digital Platforms Mandatory Bargaining Code. It was developed after extensive analysis by the Australian Competition and Consumer Commission, and is aimed at ensuring that news media businesses are fairly remunerated for their content.

It stipulates that digital platforms such as Facebook and Google (both named in the documentation) must pay news outlets whose content they feature — for example, if content is shared on Facebook or shows up in Google search results. The idea is that this will help to sustain journalism in Australia.

Unsurprisingly, Facebook and Google didn't react well to the code, which was first introduced in 2020.

Google didn't make any moves after it passed, but Facebook quickly made it impossible for Australian users to share news content, and pages for both local and international news organisations went blank — a major concern given the COVID-19 and wildfire concerns that were circulating at the time.

Australian Prime Minister Scott Morrison was scathing about Facebook's decision — which he ironically shared in a Facebook post — declaring the tech giant's actions "as arrogant as they were disappointing." He added, "These actions will only confirm the concerns that an increasing number of countries are expressing about the behaviour of BigTech companies who think they are bigger than governments and that the rules should not apply to them."

Despite strong feelings from both Australia and Facebook, the dispute was resolved fairly quickly, with the country agreeing to make four amendments to the legislation and Facebook restoring Australian's access to news.

Implications for Big Tech and news organisations

Both Australia and Facebook have claimed victory in the dispute, with a Facebook representative saying the company will be able to decide if news appears on the platform — meaning it won't automatically have to negotiate with any news businesses. Changes were also made to the arbitration process.

Tech experts have pointed out that larger news companies may ultimately benefit from the changes, but smaller ones could be pushed to the side. Major publishers that have struck agreements with tech giants, such as News Corp, Nine Entertainment (ASX:NEC,OTC Pink:NNMTF), Seven West Media (ASX:SWM) and Guardian Australia, may be able to increase their market share while smaller independent players lose out.

A business that is in full support of the laws is Microsoft (NASDAQ:MSFT). During the conflict, President Brad Smith came out loudly in favour of Australia's law, and advised that his company is willing to step up with search engine Bing should Google and/or Facebook pull out of the Australian market.

"In Australia, Prime Minister Scott Morrison has pushed forward with legislation two years in the making to redress the competitive imbalance between the tech sector and an independent press. The ideas are straightforward. Dominant tech properties like Facebook and Google will need to invest in transparency, including by explaining how they display news content," he said in a blog post.

"The United States should not object to a creative Australian proposal that strengthens democracy by requiring tech companies to support a free press. It should copy it instead."

Global reach and tech investor impact

Six months down the road from Australia's landmark legislation, it's tough to say what the long-term impact may be.

That said, market watchers do believe the country is part of a new precedent of forcing Big Tech into paying for journalism — something giants Facebook and Google are not used to.

Countries looking to pursue similar legislation include Canada, where Facebook agreed in May to pay 14 publishers to link to their articles on its COVID-19 and climate science pages, as well as other unspecified use cases. Canada is pursuing other avenues too. Meanwhile, in France, Google said it will pay publishers for news content after the country took up new EU copyright laws that make digital platforms liable for infringements.

For investors, the takeaway is perhaps that while companies like Facebook and Google may seem too big too fail, they too can fall subject to new regulations that can change how they do business. As nations around the world look to take back control from these mega companies, it's important to be aware of possible effects on their bottom lines.

Don't forget to follow @INN_Australia for real-time updates!

Securities Disclosure: I, Ronelle Richards, hold no direct investment interest in any company mentioned in this article.

Top News