VANCOUVER, British Columbia, Aug. 27, 2020 /PRNewswire/ -- USA News Group – While it may be hard to conceive that a single mineral could be responsible for over 80% of the inhalers in current use, it's even harder to swallow that a single mine in Mexico is currently jeopardizing the supply chain for fluorite.
The US Government declared Fluorspar (also known as fluorite) and a number of other minerals as strategic and critical materials in the United States in 2018. As a result, a number of resource and mining companies are in a unique position to provide these materials at a premium. Leaders in this group include prominent miners the Mosaic Company (NYSE: MOS), Orbia Advance Corporation, S.A.B. de C.V. (OTCPK: MXCHF) and BHP Group Ltd (NYSE: BHP).
Junior miner Ares Strategic Mining Ltd. is a natural resource company focused on bringing active domestic US Fluorspar into production within the next twelve months. Ares Strategic Mining (TSXV: ARS) (OTCQB: ARSMF) recently acquired the Lost Sheep Fluorspar Project consisting of 1,447 acres over 67 Claims in the Spor Mountain area, Juab County, Utah, approximately 214 kilometers south-west of Salt Lake City. The site is fully permitted - including mining permits - and a NI 43-101 Technical Report identified extensive high-grade fluorspar with low levels of impurities.
At present, Ares Mining's Lost Sheep Mine is the only fully permitted and producing fluorspar source in the United States. Notably, Ares' Lost Sheep mine holds the highest naturally occurring fluorspar-grade in the US with no contamination from sulphides or arsenic.
Production Halted at the Mine Supplying Minerals Crucial for 80% of all Inhalers
In order to curb the spread of the potentially deadly virus, the Mexican government ordered a stop to all non-essential activities for a month. Mining is considered non-essential. The problem is one of the key ingredients in Ventolin - the best-known brand name of the drug used to treat asthma attacks – comes from a mine in San Luis Potosí.
A mine located in this state in northern Mexico holds 20% of the world's fluorite. Fluorite comes from pinkish-brown rocks about the size of tennis balls. The rocks are turned into a gas that powers inhalers used by patients with respiratory diseases, such as asthma or Covid-19. About 80% of the inhalers in the world, estimates Orbia, the company that owns the mine, use the fluorite produced there.
When Mexico suspended all non-essential activities for a month, it threatened a sudden stop to the global supply chain of the essential gas. Of the approximately 6,000 tons of ore mined per day, a significant portion is sent to a plant in Matamoros, near the border with the United States, for conversion to hydrofluoric acid.
The next stop is another factory U.S. Louisiana, where the fluorite is transformed into refrigerant gas. From there, it heads to the United Kingdom where it is purified until reaching medical standards. The finished product is then sold to inhaler manufacturers all over the world.
The 8,000 tons of gas the company produces annually is enough for 400 million inhalers, according to its estimates. Its fluorine business reports sales of approximately $800 million a year.
Problems Have Spurred on New Domestic Solutions
As always happens, when there's a problem, new and innovative companies jump onto the opportunity to solve it. This time, one of the companies trying to resolve the supply chain disruption is Ares Strategic Mining Ltd. In February, Ares acquired the Lost Sheep Mine project, which experts believe has the potential to produce Acidspar, a more expensive, higher grade of fluorspar than what was coming from Mexico.
Acidspar is a premium product with wide applicability. Not only is it a component in inhalers, it's also used for refrigerants, pharmaceuticals, electronics, and lithium-ion batteries.
Now, Ares is focused on speeding the timeline of its project. In February, it closed a private placement that raised $1.97 million for exploration and engineering. More recently, it closed another private placement of about $1.18 million. This puts Ares is a position to become the lone U.S. producer of the mineral.
Cipla, which is based in India and is the second largest manufacturer of inhalers in the world, and Glaxo, which is based in Britain and produces Ventolin, have called the Mexican mine critical to their business.
The global supply chain for fluorite is not flexible. The Mexican plan supplies 20% of the world's fluorite. Manufacturers of inhalers don't have fluorite stockpiled in order to continue working if the Mexican mine stops supplying fluorite.
"Without the mineral, the medical supply chain is dead," says Sameer Bharadwaj, the president of Koura, the Orbia branch that deals with the fluorite business. "When a plant in the chain is qualified, you cannot change the source. You can't go to China, buy gas and send it to the UK." Bharadwaj adds one more element to the mix: an increase of at least 10% in orders. "Many of our customers are out of stock and we are receiving more orders because they are anticipating increased demand for Covid-19," he says by phone from the Boston office.
This serious situation further demonstrates the vulnerability of the critical minerals group and the need for strategic supply reserves, especially sourced in the US. Companies that can add to the strategic mineral supply chain in this period could see an increase in value and major gains in market share including:
The Mosaic Company, through its subsidiaries, produces and markets concentrated phosphate and potash crop nutrients in North America and internationally. The company operates through three segments: Phosphates, Potash, and Mosaic Fertilizantes. The company recently announced petitions seeking U.S. countervailing duties on Phosphate Fertilizer imports from Morocco and Russia.
Orbia Advance Corporation, S.A.B. de C.V. provides specialty products and solutions for agriculture, infrastructure, telecommunications, healthcare, and others worldwide. Orbia recently indicated that it has adapted its manufacturing processes and streamlined prototyping timelines to produce and deliver essential medical equipment and materials, including tens of thousands of inhalers that use Orbia's medical propellants, flexible critical care infrastructure, rapid COVID-19 testing devices, sanitation tents and intelligent health assessments and medical-grade personal protective equipment made from its plastics.
BHP Group Ltd engages in the natural resources business worldwide. It operates through Petroleum, Copper, Iron Ore, and Coal segments. The company engages in the exploration, development, and production of oil and gas properties; and mining. The world's biggest listed miner met guidance for its iron ore production of a record 67 million tonnes for the quarter, up 4%, and 248 million tonnes for the financial year, reflecting strong demand from top consumer China.
For a more on the fluorspar and strategic materials market activity, view the report at USA News Group: https://usanewsgroup.com/2020/08/16/a-beginners-guide-to-mining-stocks/
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