KWG kills its planned chrome-based crypto currency; looks to warrant trading

KWG won’t have a chrome-based crypto currency after all; the company proposed to create a blockchain-contract offering of a crypto currency, to be called the ‘Ferro’, backed by the Ring of Fire’s chromite discoveries.

However, as the cost and complexity of access to this capital markets innovation in that manner proved to be daunting, KWG decided not to proceed at this time with the creation of its originally contemplated crypto-currency but has instead recently focused on first creating and distributing a chrome delivery warrant, the terms and details of which are not yet determined.

KWG has received preliminary confirmation from the Canadian Securities Exchange that it should be able to list the proposed warrants for trading on the Canadian Securities Exchange. KWG is now considering the requirements for distribution of such a warrant issue, possibly as a return of capital dividend to its shareholders, in order to ensure compliance with applicable securities laws.

The company also continues to research the utility of the blockchain-contract provenance and safety attributes, for possible future use in the trading of such listed delivery warrants and options, as an analogue to the London Metal Exchange inventory tracking systems.

A slap down on Canadian chrome

KWG Resources has been requested by staff of the Ontario Securities Commission to publish the following clarification of information contained in its Press Release No. 276 dated March 5th, 2018:

  • Anticipated future production of chromium ores from the Ring of Fire properties is hypothetical and has no basis in any mining study; and
  • Chromium resources in the Ring of Fire area are only mineral resources and economic viability has not been demonstrated.

Development of Corridor Claims

KWG has previously stated that its subsidiary, Canada Chrome Corporation (“CCC”), staked and assessed more than 200 mineral claims along a lineament covering high ground where a road or railroad might be built linking the Trans-Canada east-west transportation corridor at Exton, Ontario, to the Ring of Fire in the James Bay Lowlands.

Such claim-staking does not confer the right-of-way for a railway or any other similar infrastructure.

The Company believes that CCC’s prior right to enter upon, use and occupy the surface to prospect, explore, develop and mine those claims, or make any application under the Public Lands Act (Ontario) in respect of any use of the surface rights over them, or for the grant of a lease under the Mining Act (Ontario), would provide sufficient tenure needed for purposes of seeking to develop its mineral assets.

Accordingly, at an appropriate time, CCC intends to apply for an easement over the surface of those claims and, in the interim, on any application by any other person for an alternative use, CCC intends to participate in that process to protect its interest and ensure that such interests are afforded the considerations and protections provided by the Mining Act (Ontario).


And now you can add uranium to the 232 list

US Secretary of Commerce Wilbur Ross announced launched an investigation into whether the present quantity and circumstances of uranium ore and product imports into the US threaten to impair national security.  The investigation will canvass the entire uranium sector from the mining industry through enrichment, defense, and industrial consumption.

“Our production of uranium necessary for military and electric power has dropped from 49% of our consumption to 5%,” said Secretary Ross.  “The Dept. of Commerce’s Bureau of Industry and Security will conduct a thorough, fair, and transparent review to determine whether uranium imports threaten to impair national security.”

This decision follows a petition filed by two US uranium mining companies, UR-Energy and Energy Fuels, and comes after consultation with industry stakeholders, members of Congress, the Depts. of Defense and Energy, and other administration partners.

Key considerations prompting the investigation:

  • Uranium powers 99 U.S. commercial nuclear reactors that produce 20% of the electricity for the US electric grid, a key element to US critical infrastructure.
  • Uranium is a required component of our nuclear arsenal and is used to power the Navy’s nuclear fleet of submarines and aircraft carriers.
  • US uranium production had been 49% of US requirements in 1987.  Today, US uranium production has dropped to only 5% US requirements.

Jupiter’s CEO gets a stock bonus of 10,650,530 shares

Jupiter Mines issued 10,650,530 fully paid shares to the company’s CEO, Priyank Thapliyal, in satisfaction of a bonus following the company’s successful admission to the ASX pursuant to the terms of his employment agreement with the company.

Merafe’s profit and production drops in 1H 2018; cash drops by about 50%

Merafe, which has a 20.5% interest in the Glencore/Merafe joint ferrochrome venture, reported production of 211,000 mt in the first half of 2018 vs. 216,000 mt in the same 2017 period, down 2.3%.

Merafe expects to report basic earnings per share and headline earnings per share of between ZAR16¢ and 18¢ for the six months for the first half of 2018, compared to ZAR19.4¢ for the previous comparative period, which amounts to a decrease of between 7.2% and 17.5%.

The decrease in basic and headline earnings, period on period, is a function of lower net CIF ferrochrome prices, a stronger average Rand Dollar exchange rate, a higher depreciation charge and higher costs of goods sold, partially offset by higher ferrochrome sales volumes and higher foreign exchange gains.

The company’s net cash fell to ZAR331-million (ZAR256-millioon at the Merafe level and ZAR75-million in Merafe’s 20.5% of venture’s cash) in the first half of 2018 vs. ZAR672-million in the same 2018.

The decrease in net cash and cash equivalents is mainly as a result of an increase in trade and other receivables and inventories.

Jefferies: Analysis of new EC safeguards, higher 2H prices


Key Takeaway

The EC has been dragged down the route of increased protectionism, and local steelmakers are likely to benefit from rising steel prices through H2. Prelim measures were largely in-line with expectations, though there is some disappointment w/o quarterly caps. Near-term, there could be a rise in imports as suppliers race to beat quotas, but we expect policy to catalyse Euro steel prices toward YE as caps are hit. Top EU picks: MT, SSAB, TKA, VOE, APAM, OUT1V.


Safeguard measures broadly in-line with expectations. The European Commission (EC) this morning formally enacted preliminary safeguard measures aiming to prevent negative blow-back to the EU steel market from US Section 232 trade protections, entering into force as of 19 July. As discussed in our past research (link HERE), the EC has utilised tariff-rate quotas (TRQ), which act as “soft caps” to disincentivise imports. Quotas are structured on a product basis and in-line with the 2015-17 average. Above this level, imports are still allowed but are subject to a 25% tariff. At this point, preliminary safeguard duties are not on a country basis, though the remainder of the investigation “will determine whether an allocation of quota by exporting country is desirable.” Preliminary measures will be in place for 200 calendar days vs a typical final investigation period of six months.
23 of Initial 28 Product Categories. Prelim measures have been levied against 23 of the 28 investigated products. The five notable exclusions were stainless plates, GOES, railway material, carbon cold finished bars and “other” seamless tubes, which combined for c1Mt or 3% of total imports in 2017. Slabs were never part of the investigation and its exclusion likely benefits re-rollers in Europe (eg Marcegaglia and NLMK), whereas Section 232 has placed stress over companies in the US without upstream capacity.
Developing Country Exemptions. Developing countries will be excluded from safeguard duties, provided their share of an imported product does not exceed 3% and developing countries cumulatively do not exceed 9% share for the respective products. Further, the developing countries are only exempt for certain products. The EC has clearly provided exemptions only where there are either AD/CVD duties in place or the country exports a small amount of material to the EU. To stress, the developing country exemption only applies if they remain below a 3% share of imports for the particular product. While Indonesia is notably exempt for HR and CR stainless flat products, this import share cap should assuage fears over the ultimate increases in Indonesian import flows.
Key winners from new safeguard measures. Broadly, the preliminary measures cover the vast majority of total steel imports into Europe and have sensibly granted (or not) product level exemptions to certain developing countries. Relative to the 3-year average, we see the 2018 run-rate for long products running 52% and flat products 13% ahead of quota levels. We identify rebar (+87%), welded tubes (+67%), stainless CR (+36%) and coated (+28%) as key product areas at run-rates well above the quota caps for the next 200 days. While the 9% import share for developing countries would provide modest downside to these figures, a reduction in imports is still clearly necessary to come in at-or-below quota caps. Without quarterly enforcement of quotas, this could create somewhat of a rush to import ahead of being hit with tariffs, though ultimately drive tightness into year-end.
No “Double Remedies.” Similar to 2002, there is no double counting of in-place AD/CV duties and safeguard measures. Rather, the tariff above quota levels will be the higher of safeguard measures or AD/CV duties. For example, imports of Russia CRC will remain at the AD rate of 36.1% above quota limits. While somewhat disappointing this prevents a bullish double-tariff environment, it will still meaningfully increase tariff risk for countries previously only hit by low tariffs (e.g., stainless from Taiwan at 6.8%).
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EC safeguard measures on steel

Low-carbon FeCr sales boost Ferbasa in June

Brazil’s Ferbasa sold 19,743 mt of ferroalloys in June 2018, up from only 11,477 mt in May. Sales were 12,751 mt of ferrochrome (low and high carbon) and 6,992 mt of ferrosilicon. In May 2018, sales were compromised of 6,543 mt of ferrochrome and 4,934 mt of ferrosilicon. There was a significant increase in low-carbon sales in May.

Production was 22,498 mt of all ferroalloys in June vs. 21,134 mt in May and 18,663 mt in June 2017.

In June 2018, Ferbasa’s net revenues were R$122.010-million vs. R$68.363-million in May. Revenues were helped by more sales and by the average effective US dollar exchange rate; R$3.66 in June 2018 vs. R$3.46 in May.

GSM stock prices loses ground

Ferroglobe (GSM) saw its stock price return to the negative territory, with shares falling 0.62% to $8.06 per share today. The daily high was $8.18 and the low was $8.02. On the bright side, its cheaper for the company to buy back its shares.

If you are waiting for a 232 exclusion, it’s going to take a LONG time

The US Dept. of Commerce has approved 220 requests for exclusions of steel and aluminum and denied 175, according to CNBC. The rest are being processed. More than 26,400 exclusion requests have been submitted.

Commerce Secretary Wilbur Ross says the Treasury has already collected $1-billion in tariffs, according to Commerce Secretary Wilber Ross.