THE BOURSE WHISPERER: Vimy Resources (ASX: VMY) threw virtual confetti in the air as it welcomed the statement by Western Australia Minister for Mines and Petroleum Bill Johnston regarding the State Labor Party’s uranium policy.

Johnston announced that WA uranium mines approved in the final weeks and months of the Barnett government will be allowed to proceed, although the government will maintain its policy of banning any new uranium mines.

Vimy Resources said that the announcement confirms the company’s Mulga Rock project has State Ministerial Approval and will be legally entitled to obtain all secondary approvals.

Vimy added that the statement provided clarity and demonstrated consistency in the approach by Premier McGowan and his Cabinet.

Vimy considers the Government’s statement to have provided absolute assurance the Mulga Rock project will be allowed to proceed as it moves through to development, as it is entirely consistent with the policy that was adopted by Premier Mark McGowan when he first became Leader of the Opposition in 2012, and the position announced by Minister Johnston on ABC Radio on 27 March 2017.

“Cabinet endorsement of Premier McGowan’s long standing policy position on uranium refutes claims by those who sought to misrepresent the Premier’s position and argue that Vimy had not achieved the necessary approvals,” Vimy Resources managing director and CEO Mike Young said in the company’s announcement to the Australian Securities Exchange.

“This announcement puts the issue beyond doubt.

“We look forward to working with Minister Johnston in becoming WA’s first uranium mine and in the process, not only create new jobs in Western Australia but contribute to an industry that represents a real solution to the problem of global carbon emissions.”

Email: info@vimyresources.com.au

Website: www.vimyresources.com.au

A revolution is about to occur in metal demand as the world economy embraces electric vehicles. By Stephen Bartrop

While we are all familiar with electric vehicles and hybrids, a large part of the population does not realise that their purchase of a new car in the next few years will likely be an electric vehicle.

Indeed, confronted with the choice of purchasing a new petrol or diesel car that may depreciate rapidly rather than a new electric vehicle, it will come down to simple economics.

Why do we think this will be the case? Look at these facts:

One of Germany’s legislative bodies has already moved to ban petrol-powered cars in favour of electric vehicles by 2030.

While seems a long way into the future, it sets a target that will potentially apply across the EU.

Indeed, many German car brands, including BMW, Mercedes-Benz and Volkswagen, are already rolling out battery-powered vehicles.

BMW launched its first fully electric production car, called the BMW i3, back in 2013, while Audi unveiled an all-electric version of its R8 supercar, the Audi R8 e-tron, in 2015.

Recently Daimler has commenced a €500 million expansion of lithium-ion plant in Germany and is following through with plans to aggressively develop 10 new electric vehicles to market by 2020.

The investment is planned to quadruple existing battery capacity at the site with is run by Accumotive, a subsidiary of Daimler.

Meanwhile in the US electric vehicle (EV) sales in the U.S. in January 2017 indicate a 70 per cent year-on -year increase in monthly sales and maintain strong momentum from 2016.

Overall U.S. EV sales jumped by 37 per cent in 2016 and by year-end there were about 30 different EV offerings, with total sales of 159,139 vehicles.

Five different models sold at least 10,000 units in 2016, namely, Tesla Model S, Tesla Model X, Chevrolet Volt, Nissan Leaf, and Ford Fusion Energi.

More than half of all EV sales took place in California, driven by the state’s zero-emission vehicle (ZEV) mandate, which requires that a certain percentage of an automaker’s sales must be ZEVs. California’s goal is to put 1.5 million ZEVs on the state’s roads by 2025.

In China, the government is pushing for more electric cars on its road, proposing that all carmakers ensure new energy vehicles account for eight per cent of their fleet by next year and while it has drawn some criticism from its industry, it has demonstrated the Government’s commitment to electric vehicles.

In 2014, public charging stations still didn’t exist in Beijing but today there are thousands of public electric car charging stations.

However, there is a significant impetus for Chinese citizens to purchase electric cars as any local in places like Beijing can purchase one while there are restrictions on petrol and diesel car ownership and you must sometimes wait years in the ‘car lottery’ to be able to purchase one.

The relative ease of buying electric vehicles is part of a national push to put 5 million electric vehicles on China’s roads by 2020.

In 2016 alone China produced almost 500,000 while there were sales of 28 million cars, electric vehicles accounted for less than two per cent of sales.

Since 2012 China has spent billions of renminbi subsidising its electric car industry.

Both consumers and carmakers receive generous subsidies and tax exemptions and incentives.

The government is also investing heavily into infrastructure by building 100,000 new public charging stations in 2017.

The government is on a quest to become a world leader in electric vehicle production which also helps solve pollution issues in Chinese cities.

Battery technology is steadily improving, but there is a concern that expectations are too high but nevertheless the government has set a clear strategy for the future.

So how does it affect our investment strategies?

At Breakaway Research, we see a number of changes that will occur.

Apart from fewer service stations, less mechanical repairs, lower oil prices, declining second-hand car market, etc. our main focus is on the potential changing demand in commodities.

In particular, we see an unexpected increase in demand for certain base metals, lithium, rare earths.

Recently Glencore highlighted some of these aspects at a Merrill Lynch Conference where CEO Ivan Glasenberg noted that the electric vehicle revolution is happening and its impact is likely to be felt faster than expected.

He outlined the metal consumption in electric cars across batteries, charging points and the car itself. Glencore estimates that in copper alone, the consumption is around 160 kilograms per vehicle.

Glencore estimates that demand for copper and nickel could increase as follows:

2020 – additional 373,000 tonnes copper, and an additional plus-40,000 tonnes nickel

2205 – additional 1.65 million tonnes copper and an additional 210,000 tonnes nickel

2035 – If a rapid adoption scenario where 95 per cent of global vehicles are electric vehicles, this would require an additional 20 million tonnes copper, 1.8 million tonnes nickel and 679,000 tonnes cobalt

Of course, a downside is that there will be a decline in demand for platinum group metals (UBS forecast a 53 per cent decrease in demand).

Breakaway Research believes that the market will start to acknowledge these demand changes where base metals, lithium and REE are the winners and perhaps iron ore, coal and oil are the losers.

Also within the base metals complex there will be winners and losers as copper, nickel and cobalt look exciting while lead is less so.

Interestingly zinc is experiencing a supply short fall and is more likely to experience a surge from increased construction activity – perhaps President Trump’s rebuilding of America!

Breakaway Research is an authorised representative of the Breakaway Investment Group Pty Ltd (AFSL 290093).

Breakaway Research screens companies for suitability and merit prior to issuing a mandate for a Company Commissioned Research Report – hence there is a bias in our recommendations.

For enquiries, please contact:

Rachel Szabo

Manager Client Services

+61 2 9392 8032

THE CONFERENCE CALLER: The old joke used to go something along the lines of ‘would the last person leaving Adelaide, please turn out the lights’.

This became less of a joke in recent times when the Croweater’s power woes became a national discussion.

However, opening the Paydirt 2017 South Australian Resources and Energy Investment Conference, South Australia Minister for Mineral Resources and Energy, Tom Koutsantonis moved to allay any concerns.

Koutsantonis said the state government was introducing a major reform on the power front in the shape of its Our Energy Plan, which aims for the state to take back greater control of South Australia’s energy security.

Explaining the elements of the plan, Koutsantonis said it incentivises local exploration for more gas supplies to feed new generation while allowing South Australia to remain on the forefront of renewable energy including the next generation of storage technology.

The implementation of the Our Energy Plan is already underway, Koutsantonis said,being underpinned by six initiatives:

Battery Storage and Renewable Technology Fund;
New Generation and More Competition driven by the State Government’s bulk-buying power;
A State-Owned Gas Power Plant to provide emergency stand-by power;
Gas Incentives such as PACE Gas and the Australian-First PACE Royalty Return Initiative;
Local powers over the national electricity markets; and
An Energy Security Target that will increase South Australia’s energy self-reliance.

$48 million is allocated to PACE Gas, with the first round on grants already approved and a second round open for applicants.

“South Australia has enough gas in the ground to power the grid for centuries, it’s a question of measures to extract more of it, faster and competitively,” Koutsantonis declared.

“Gas extracted through the grant scheme will be offered to South Australian electricity generators first, increasing the affordability of supply and putting downward pressure on prices.

“The first grant round of $24 million is expected to generate $174 million in new investment by oil and gas companies in local production projects.”

The Minister’s speech was given a warm welcome and received some back up later on in the conference when respected SA energy market commentator, Kallis & Co principal, Mr Terry Kallis took to the stage.

Thumping the podium, Kallis said a range of solutions – not just a limited project approach – needs to be adopted if South Australia is to resolve its regional power industry issues.

Among the options that have been thrown into the mix for additional interconnector capacity, Kallis identified a 300 megawatt connection into New South Wales as the best such interconnector option at present as it represented a reasonable cost and geographically diversifies the State’s sources of generation.

However, Kallis conceded that SA’s energy future for baseload generation is inextricably linked to gas, the security of its supply and a competitive gas price regime.

“Part of the SA solution is for the State to access reasonably priced gas but I acknowledge this will be difficult without the co-operation of the incumbent gas suppliers – but such a stance is crucial to SA’s economic well-being,” he said.

“Additional baseload renewable generation also needs to come into the mix, and this brings with it some rural district advantages, sourcing such generation from biomass or extra wind and solar power generation coupled with storage capability.

“There are large-scale storage options emerging and these need to be explored and incorporated such as battery farms and Compressed Air Energy Storage (CAES).

“Industry and government should also be looking at options to combine technologies such as wind and gas to produce firmer energy supply products.”

Kallis noted reforms in the National Electricity Market covering such issues as capacity contracts and interconnector rules, which he considers will further assist SA’s move to greater energy stability as would a price on carbon – most likely through an Emissions Intensity Scheme.

He said nuclear energy should not be ruled out as a long-term contributor to SA’s baseload power case – through a supply chain building up incrementally to 500MW.

Kallis also pointed to the option for the SA Government to “split” its recent commitment to a new $500 million 250MW gas turbine power station.

“Some 100 megawatts of this capacity should be regionally spread over SA with say a 30 megawatt plant in Pt Lincoln, a 30 megawatt plant in Port Augusta and a 40 megawatt facility in Mount Gambier, leaving a balance of 150 megawatts capacity provide supply insurance for the rest of the State” Kallis said.

“This approach would better help protect some of our regional areas in the event of future supply constraints.”

Kallis’ uranium baton was picked up by the Minerals Council of Australia’s executive director – uranium Daniel Zavattiero.
 
“There remains strong potential for nuclear energy in Australia’s power mix,” Zavattiero said.

“We have a well-established Australian uranium industry and we have a platform for a bigger conversation around harnessing this baseload energy opportunity.

“Critically, Australian uranium remains an important component of Australia’s energy exports and is of strategic importance to our major trading partners.”

Zavattiero said the MCA supported the conclusion reached by the South Australian Nuclear Royal Commission that it would be wise to plan now for the possible need for nuclear power in Australia in the future.

He agreed with the SA Nuclear Royal Commission that while it was not clear whether nuclear power would be the best choice for Australia beyond 2030, it would be prudent for it not to be precluded as an option.

“Australia should position itself to be able to take advantage of all the potential options. It would be wise to facilitate a technology neutral policy for Australia’s future electricity generation mix,” he said.

“Regarding nuclear power in Australia, the Royal Commission noted that while it did not find it was viable in SA currently, some of the modelling suggested that nuclear might well be viable elsewhere now as the challenges facing baseload generators in SA were not shared with other NEM regions.

“This is the strongest possible argument for the immediate removal of prohibitions on nuclear energy in Australia.”

OUT AND ABOUT: The Gold Industry Group (GIG) has struck a new community partnership with mental health charity LIVIN.

The Gold Industry Group said the partnership was aimed at raising awareness of mental health and changing the way the mining industry and society understands, perceives and interprets mental illness.

According to a recent audit conducted by the Department of Mines and Petroleum into the psychosocial harms in the mining and resources industry, there is much to be done to protect staff with an improvement in the level of consultation with the workforce on mental health and wellbeing being identified as needing to be addressed sooner rather than later.

The Gold Industry Group is a not-for-profit, member-based industry association representing gold producers, explorers, prospectors and service providers.

The new partnership will entail the Group and its members working with LIVIN to raise awareness of mental health and engage workers and the community.

“We are proud to partner with LIVIN in an effort to connect, support and inspire others to speak up and seek help,” Gold Industry Group chairperson and Perth Mint chief executive officer Richard Hayes said.

“We are looking forward to coordinating a GIG LIVIN Tour with our members and the Goldfields community next month, from 12 to 19 June.”

The highlight of the GIG LIVIN Tour will be a free community event to be held in Kalgoorlie on Wednesday 14 June with the City of Kalgoorlie-Boulder to deliver a youth engagement project and a workshop for employees.

Mental health statistics in Australia present a frightening reality with one in four people affected by a mental health condition in their lifetime.

Suicide is the leading cause of death for Australians aged 15 to 44.

The alarming side to this being Indigenous Australians recording the highest rate of suicide in the world, an issue that requires the community to work together to support each other and raise awareness.

“In partnership with the Gold Industry Group, we aim to increase mental health literacy by giving people the basic tools and understanding to seek help and to support others in need,” LIVIN co-founder and Survivor contestant Sam Webb said.

Webb co-founded LIVIN with Casey Lyons in 2013, in honour of close friend Dwayne Lally and other close friends and family who took their own lives after suffering from a mental illness.

“It’s about LIVIN your life at the top and destroying the stigma attached to mental illness,” Webb continued.

“We want men and women to know that they are not alone and ‘It Ain’t Weak to Speak’.”

That adage is the core of LIVIN’s mission, which it hopes will encourage and inspire people to speak up and seek help.

LIVIN wants to break down the stigma surrounding the false perception that mental health issues are a form of personal weakness.

A stigma that has meant sufferers are often silent about their challenges — both to avoid the shame of having a personal or mental weakness, and for fear of being seen as a problem employee that needs to go. 

The consequences surrounding this false perception have been devastating and many people continue to suffer, with an increasing number being lost through suicide.

“For too long mental illness and suicide has been perceived as a weakness, but mental illness is no different to other illnesses such as cancer, heart disease and diabetes. We will change this,” Webb’s LIVIN partner Casey Lyons said.

Through education and the use of fashion, social media and well respected people, LIVIN influences generational change with a fresh, new approach to mental health.

Following an audit of 140 resources and mining companies, the Department of Mines and Petroleum said it was important to address physiological risks within an overall safety and health management system.

“It is important that the prevention of work related stressors is incorporated into all health and safety procedures and these results have shown that there is still much to be done in this space as well,” DMP resources safety Executive director Simon Ridge said.

“Risks to psychological and physical health due to work should be viewed in the same manner as other workplace risks.”

Gold Industry Group members championing the tour include The Perth Mint, The City of Kalgoorlie-Boulder, Gold Road Resources, Ramelius Resources, Kalgoorlie-Boulder Chamber of Commerce and Industry and Cannings Purple.

The GIG LIVIN community event will be held in Kalgoorlie on Wednesday 14 June:

 www.goldindustrygroup.com.au/events/2017/6/14/kalgoorlie-gig-livin-community-event