Our periodic mini-bite series contain news stories, articles and light reports about Bargate or other activities in the industries that we cover.
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Small (and viable) Gas Plays in Nigeria?
The global shift away from fossil fuels is well and truly on. Big IOCs are falling over themselves to show who is more intent on going green (with a particular penchant for solar and wind power technologies), and international development finance institutions are announcing one after the other that they will no longer provide financial support to overseas fossil fuel energy projects. They, however, mostly mean oil.
Gas, on the other hand, mainly because it is cleaner and is considered a “transition fuel”, still has a fair bit of traction and will do for some time yet. And Nigeria has this in spades.
This very brief note invites the reader to consider just one component of the gas story in Nigeria: the bit that gets flared. According to the Department of Petroleum Resources, about 19% of the 1,7 tscf of gas produced in 2018 was burnt.
That is a fair bit of commercial asset that can be compressed and transported in road tankers, or that can be piped to a power station. Moreover, utilising this gas instead of flaring is a cleaner approach.
The government thinks there is a lot of value to be extracted from this. This is largely why they embarked on a (rather stuttering) gas flare commercialisation programme. The aim of the exercise is to get interested parties to come round and propose commercially viable technologies to utilise these flared gas volumes.
We also think there’s value here (not necessarily in the programme itself which, for reasons mainly surrounding process and logic, has stalled). Small and mid-scale projects are increasingly more commercially viable, particularly with regard to gas-to-liquids (GTL) and small scale liquefied natural gas (LNG) projects. It could be power. It could be methanol. It could be fertiliser. It could even be base oils from a complex GTL process. Associated gas offers an increasing number of opportunities and project development options for low CAPEX projects, particularly from all the stuff currently being burned off at the tip of the gas flare stacks littered across the Niger Delta.
We’d love to discuss, and advise on, these opportunities from soup to nuts. Do get in touch.
Mining and metals
According to the World Bank, production of minerals like lithium and cobalt could grow by 500% in the next 30 years as demand for clean energy technologies continues to grow. For example, a 3MW- capacity wind turbine requires 4.7 tonnes of copper. It is evident that as the world continues its pursuit for cleaner energy, the importance of mining and metals cannot be overemphasized. Africa has a big part to play: Cobalt is one of the core components for the manufacture of batteries for electric vehicles (and those used to store solar power). Around 70% of the world’s cobalt supply is produced in the Democratic Republic of Congo (DRC). The Copperbelt, which lies between Zambia and DRC produces approximately two-thirds of the world’s copper.
Last month, our Managing Director, Ugo Isiadinso, joined Nouman Khalid Al Sayed of the High Aspirations podcast, where the pair discussed mining in sub-Saharan Africa with a focus on Nigeria. This light discussion is accessible to both mining and non-mining professionals. Watch the video here
We are pleased to welcome Nigel Walls as the newest member of Bargate's Advisory Board. Nigel joins with over 30 years' experience in the mining industry and will support Bargate's aggressive growth strategy into the mining industry in sub Saharan Africa. Read his profile here
Rhodium: Is something unusual going on?
Rhodium prices tell an interesting story that is attention worthy. Around this time a year ago, at the close of trading on 21st January 2020, rhodium prices were at US$9,400/troy oz. Just three months earlier, a troy ounce sold at US$5,550. As at the close of trading on 15 January 2021, the price of rhodium is US$21,500/troy oz, twice its price a year ago.
Prices have increased at a monthly average rate of 11% since January 2020, the highest month-on-month average growth occurring in February of 2020 at 33.5%. Average prices so far this month have grown 14.3% from the December 2020 average.
What is rhodium and what is it used for?
Rhodium is one of the six-member family of Platinum Group Metals (PGMs) which include palladium, platinum, iridium, osmium, and ruthenium. Its most common use is for the production of catalytic converters and emission control catalysts particularly in motor vehicles. Typically, about 80% of the mined metal consumed globally is used in the automotive industry and mainly for the reduction of nitrogen oxides in exhaust gases.
Other uses include:
For glass manufacturing, the second most common use for the metal, particularly in producing flat-panel glass and fiberglass;
Electroplating and coating (‘rhodium flashing’) on platinum or gold to provide a reflective surface, or on silver to protect it from tarnishing;
As an industrial catalyst, particularly in chemical reactions of acetic acid, nitric acid, and hydrogenation reaction;
For the creation of alloys, where it is used as an agent with other PGM metals such as palladium and platinum to make the alloys tough and resistant to corrosion;
For optical instrument manufacturing, where plated rhodium is applied;
In mammography systems, as a filter in X-ray production; and as
Neutron detectors in nuclear reactors.
Where do you find it?
South Africa is the largest producer, accounting for over 80% of global supply. Russia is the second largest producer, accounting for under 10%.
Why are prices on the up?
Mining output from PGMs is a main contributor to the price increase. In particular, disruptions in South African production have caused output to drop significantly.
It is estimated that 2020 output from South Africa alone dropped by around 20%, forcing producers to participate more actively in the open market as buyers in order to meet contracted volumes.
Another contributing factor, despite the negative impact of global economic restrictions in response to the Covid-19 pandemic, has been an increase in demand for catalytic converters in the automotive industry. Stringent emission regulations across the globe and growth in automotive manufacturing in Asia have been major contributing factors.
Rhodium prices are known to be volatile. This is not the first time that prices have experienced such spikes, albeit not to current heights even when adjusted for inflation. Its rarity and output dominance by one country imply that any disruptions in South African production could significantly affect supply and prices. Another factor worth tracking is the transition away from fossil fuels, particularly in the automotive market. A faster growth in the manufacturing of electric cars, in addition to more aggressive climate change policy on internal combustion engine emissions, will reduce the demand for rhodium and apply some downward pressure on prices.