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BHP Wins Canadian Oil Exploration Licenses

BHP’s winning bid for the two oil blocks was for US$859 million and marks the company’s first Canadian project.

Anglo Australian energy producer BHP Billiton (ASX:BHP,NYSE:BHP,LSE:BLT), has successfully won a bid to acquire two exploration licenses in the offshore Orphan Basin of Eastern Canada.

The licenses, which were awarded from the Canada-Newfoundland and Labrador Offshore Petroleum Board (C-NLOPB), will give the international oil major full ownership and operatorship of blocks 8 and 12 in the basin.

BHP’s winning bid for the two sectors was US$859 million.

“This frontier opportunity has large oil resource potential which we identified through our Global Petroleum Endowment Study in 2016 and is in a low risk country, with competitive fiscal terms,” Steve Pastor, BHP president operations petroleum, said in the press release.

“This opportunity delivers on our exploration focus in conventional petroleum and will leverage our global deep-water development and operational expertise.”

The C-NLOPB, which oversees the allocation of offshore oil projects, called for bids on 16 parcels of land in the Canada-Newfoundland and Labrador Offshore Area as part of its 2018 call for bids initiative.

Canadian oil producers Husky (TSX:HSE), Suncor Energy (TSX:SU) and private company Equinor Canada were also bid winners. Husky and Equinor will team up for parcel 14 while Equinor and Suncor will partner for a 60 percent/40 percent stake at parcel 15.

The combined grand total raised from all 4 bids was C$1,334,274,381.

Although the acquisition of parcels 8 and 12 is BHP’s first foray into Canadian exploration, the company is confident the project will be lucrative. The company has earmarked US$140 million for exploration work programs as part of the initial planned capital expenditure.

As long as the C-NLOPB signs off on the outlined conditions, BHP expects the finalized license agreements will be issued in December of this year and be effective in January 2019.

Shares of BHP remained flat on Thursday (November 8), trading at AU$33.33.

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

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

Featured

The mining and resources sector now sets its sights on Australia’s largest mining investment forum, Mines and Money @ IMARC, co-located with IMARC from January 31, 2022, to February 2, 2022, at the Melbourne Showgrounds.

It was gold price, lithium demand and China’s appetite for copper that dominated much of the discussion at Mines and Money Online Connect @ IMARC this week at the virtual event running from the 19th to the 21st October.

Mines and Money Online Connect saw 90 mining companies, 600+ investors and more than 2,000 participants log-on to hear mining executives and analysts discuss the next big thing for savvy investors in 2022.

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Rio Tinto Iron Ore Chief Executive, Simon Trott and Rio Tinto Managing Director of Port, Rail and Core Services, Richard Cohen, joined community members, local businesses and representatives from local government to celebrate the official opening of its new community ‘Hub’ in Karratha. Located on Ngarluma country in the heart of Karratha’s CBD, the new Rio Tinto Karratha Hub will make it easier for local …

Rio Tinto Iron Ore Chief Executive, Simon Trott and Rio Tinto Managing Director of Port, Rail and Core Services, Richard Cohen, joined community members, local businesses and representatives from local government to celebrate the official opening of its new community ‘Hub’ in Karratha.

Located on Ngarluma country in the heart of Karratha’s CBD, the new Rio Tinto Karratha Hub will make it easier for local people to connect with our busines.

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Rio Tinto is progressing an innovative new technology to deliver low-carbon steel, using sustainable biomass in place of coking coal in the steelmaking process, in a potentially cost-effective option to cut industry carbon emissions. Over the past decade, Rio Tinto has developed a laboratory-proven process that combines the use of raw, sustainable biomass with microwave technology to convert iron ore to metallic …

Rio Tinto is progressing an innovative new technology to deliver low-carbon steel, using sustainable biomass in place of coking coal in the steelmaking process, in a potentially cost-effective option to cut industry carbon emissions.

Over the past decade, Rio Tinto has developed a laboratory-proven process that combines the use of raw, sustainable biomass with microwave technology to convert iron ore to metallic iron during the steelmaking process. The patent-pending process, one of a number of avenues the company is pursuing to try to lower emissions in the steel value chain, is now being further tested in a small-scale pilot plant.

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kangaroos in front of the sunrise

Silver is on the rise in Australia, with new silver mines opening, production potential booming and the precious metal's valuation reaching new heights.

Analysts have been bullish on gold for the better part of the past decade, but now it's silver's time to shine. While the price of silver tends to rise and fall alongside that of gold, silver's valuation is generally more volatile — slower to move in either direction, but more prone to abrupt spikes and plunges.

Considering the market's longtime gold rush, silver is due for a major price hike. In 2020, silver hit a seven year high with 27 percent year-over-year growth, climbing faster than gold. Silver was on the rise again in February 2021, bolstered by WallStreetBets fervour. Though prices have stabilised since, they remain elevated compared to the past decade. Additionally, at only a fraction of gold's valuation, silver is a much more attainable buy.

Shrewd investors are looking to Australia for their silver picks. A country whose silver mines continued to flourish even when most of the world was in a precious metal slump, Australia has emerged from the COVID-19 pandemic as a major player in the global silver market.


A look at Australia and silver mining

When you think of mining in Australia, you may not think of silver, especially since the country is a top global producer of several other metals, including gold and iron ore. Nevertheless, silver is on the rise in Australia, with new silver mines opening, production potential booming and the precious metal's valuation reaching new heights.

This may be surprising news, especially since 2020 was an erratic year for silver. Global silver-mining production plunged by 5.9 percent in 2020 — its biggest drop in over 10 years —⁠ following four years of steady decline.

Output from primary silver mines plummeted by 11.9 percent year-over-year, while silver by-product suffered a more modest drop, with production from gold and lead-⁠zinc mines falling by 5.7 percent and 7.4 percent, respectively. Note that silver is largely produced as a by-product of other metal-mining processes, with 72 percent of silver production taking place at non-silver mines.

This production downturn was the result of COVID-19 restrictions that forced mines to suspend operations temporarily. Silver mine closures hit certain places harder than others, with extended closures in top silver-producing countries such as Peru, Mexico, Argentina and Bolivia causing major production drops.

Australia, however, was an exception to this rule, with production increasing by 3 percent. The reason for Australia's success is that it remained relatively untouched by COVID-19 restrictions. While other countries were forced to shut down production facilities, Australia was able to avoid these closures, continuing — and even upgrading — regular operations.

Australia is now the fifth largest silver producer globally, with an annual output of 43.8 million ounces in 2020. While the output of silver-mining giants such as Mexico and Peru (178.1 million and 109.7 million ounces produced in 2020, respectively) continues to far exceed that of Australia, global demand for silver is on the rise, hitting 900 million ounces annually and making room for a new silver-mining powerhouse.

What should investors know about silver investing in Australia?

Silver remains a relatively untapped resource in Australia, which means that investors have plenty of major mining companies to choose from.

Australia's largest mine is the Cannington mine owned by South32 (ASX:S32,OTC Pink:SHTLF). It is ranked as the ninth largest silver-producing mine worldwide, with 11.6 million ounces produced in 2020.

The country's second biggest silver-producing mine is the Mount Isa zinc mine. It is owned by Mount Isa Mines, a subsidiary of Glencore (LSE:GLEN,OTC Pink:GLCNF), and produced around 5.8 million ounces of silver in 2020. The Tritton copper mine, owned by Aeris Resources (ASX:AIS,OTC Pink:ARSRF), followed closely behind with nearly 4.5 million ounces produced in the same year.

Other notable Australian silver mines include the Golden Grove mine, which is owned by 29Metals (ASX:29M), and the Dugald River mine, which is owned by Metallic Minerals (ASX:MMG,TSXV:MMG,OTCQB:MMNGF). In 2020, these mines produced around 2.9 million and 2 million ounces of silver, respectively.

Australia's impressive silver-mining industry is well-positioned for further expansion, with Silver Mines (ASX:SVL,OTC Pink:SLVMF) planning to launch its Bowden silver project in 2023. This New South Wales-based silver mine is projected to produce around 6 million ounces of silver annually, which would make it the country's new second largest producer. The company hopes to capitalise on the promising solar panel market, which currently accounts for about 5.5 percent of all silver demand worldwide.

Moreover, Australian company Thomson Resources (ASX:TMZ,OTC Pink:TMZRF) bought the New South Wales-based Webb and Conrad silver projects from Silver Mines earlier this year in a transaction worth around US$8.6 million. The deal closed on March 31, and will enable Silver Mines to concentrate on its flagship Bowden project.

Investing in silver in Australia

There are many ways to invest in silver, including physical silver, stocks, exchange-traded funds (ETFs), mutual funds, options and futures. Choosing which investment route to take is all about balancing risk and reward.

Investing in physical silver is the most straightforward option: you simply buy a tangible piece of the precious metal in the form of bullion, official coins or medallions. Bullion is a bar or 1 ounce coin of solid silver with at least 99.9 percent purity. Official silver coins are currency produced by a government mint, while silver medallions resemble coins, but lack monetary value, .

The price of physical silver rises and falls alongside the metal's market value. Physical silver is a relatively safe investment, since its value can't be affected by third-party interference or bad business practices (risks characteristic of mining stocks). However, if you plan to trade often, the added costs of buying, selling and storing physical silver may make the investment not worth your while.

Investments in physical silver rose by 8 percent last year, boosted by silver's status as a safe asset and market bullishness on gold. In Australia, coins and medals fabrication increased by 35 percent year-over-year, making physical silver a smart choice for any risk-averse investor.

Of course, low risk often means low reward. If you're looking for a bigger payday, consider investing in silver-mining stocks instead. After all, when silver's market price goes up, it is often the case that the value of a mining stock could spike far higher than that of the physical metal. The disadvantage is that mining stocks are always risky — even when the silver market is strong, a mining endeavour can fail to pan out.

ETFs offer investors the best of both worlds. ETFs are a basket of varied equities, including physical metals and shares in mining companies. Much like individual stocks, they are liable to rise or fall in price according to the market, though they tend to be less risky than stocks.

In 2020, ETF investments were at an all-time-high, though Australia only has one silver ETF that includes the physical precious metal. Stocks are a much more common means of investing in silver in Australia. The country boasts over a dozen silver-mining companies, including South32 and Silver Mines, as well as Newcrest Mining (ASX:NCM,TSX:NCM,OTC Pink:NCMGF), Golden Deeps (ASX:GED) and Investigator Resources (ASX:IVR).

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

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

carbon emissions

Following international pressure, the Australian government has promised to reach net zero emissions by 2050.

In a last-minute commitment after months of debate, the Australian government has promised to reach net zero emissions by 2050, expecting to meet the goal largely through technology development.

The move comes following international pressure as Australia had previously refused to join countries in pledging to meet the target ahead of the United Nations' COP26 climate conference in Glasgow.

However, the plan unveiled on Tuesday (October 26), which includes a government investment of AU$20 billion, does not strengthen the target set for 2030, with Prime Minister Scott Morrison saying Australia is on track to beat its Paris Agreement goal, cutting emissions by 30 to 35 percent by that decade.


"We will do this the Australian way," Morrison said ahead of a press conference, announcing investments in new energy technologies like hydrogen and low-cost solar.

An Australian hydrogen industry could be worth more than AU$50 billion in 2050, according to the government. Meanwhile, expanding production and processing of metals like lithium, nickel, copper and uranium could together be worth around AU$85 billion in exports in 2050.

That said, Australia will continue to be heavily dependent on fossil fuels as the plan will not shut down coal or gas production. The country is a major coal player, with the third largest reserves in the world, but its reliance on coal-fired power makes it one of the world's largest carbon emitters per capita.

"We want our heavy industries, like mining, to stay open, remain competitive and adapt, so they remain viable for as long as global demand allows," Morrison said. "We will not support any mandate — domestic or international — to force closure of our resources or agricultural industries."

Australia's desire to achieve net zero emissions by 2050 is a step in the right direction, Prakash Sharma, Wood Mackenzie's Asia Pacific head of markets and transitions, said.

"Our analysis shows that Australia can reach net zero emissions by 2050," he said. The country's major trading partners — China, Japan and South Korea — are already in transition towards that goal.

According to Wood Mackenzie, nearly 83 percent of Australia's power generation will come from solar and wind by 2050, as compared to about 20 percent last year. Natural gas, bio energy, geothermal and small modular reactors will supply the remaining 17 percent in power output. Coal into power is expected to be phased out by 2035.

"Although the pathway requires complete transformation of its traditional energy and export sectors, there are significant opportunities to capitalise on and protect future revenues," Sharma said.

"This will require Australia to become a significant player in low-carbon hydrogen trade as well as being able to offer carbon storage and offset services."

Meanwhile, the Australian Conservation Foundation has welcomed the prime minister's commitment to reach net zero by 2050, but said the mid-century goal is only meaningful with deep cuts to climate pollution this decade.

"Unless the government sets the wheels in motion to cut our emissions in half by 2030, it is making climate change worse and turning its back on the opportunities," said Chief Executive Kelly O'Shanassy.

"Australia can become a global clean energy superpower in the next decade by replacing coal and gas with renewable energy," she added. "We have abundant clean energy, tools and talent, but we cannot delay any longer."

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.