Base Metals Weekly Round-Up: Zambia Looms, Ecuador Booms

Base Metals Investing
Base Metals Investing

Big news items over the week consisted of mainly copper developments, from the positives of Ecuador to the negatives of Zambia.

In the base metals world this week, all the metals were up after a few months of downward trends — though not by much.

News pushing the commodities around seemed to be pegged to Chinese data on manufacturing and investment, with copperrising on Wednesday (June 12) with positive government infrastructure news, but sliding on Friday (June 14) on poor data.

Commodities news around the rest of the world was focused on oil, with US President Donald Trumpblaming Iran for attacks on two tankers in the Strait of Hormuz, triggering fears of a confrontation in the oil-rich neighbourhood.

As mentioned, in terms of price, each base metal was on the up this week by meager amounts.

Copper increased in value by 2 percent through the week to reach US$5,797 a tonne, zinc was up a similar percentage to US$2,603 a tonne and lead was also up — though not by as much as last week — to US$1,902 a tonne.

The standout this week was nickel, which increased by 2.8 percent to US$11,915 a tonne.

Base metals top news stories

Big news items over the week mainly consisted of copper news, from the positives of Ecuador to the negatives of Zambia.

1. Zambia Denies Looming Over First Quantum

Canada’s First Quantum Minerals (TSX:FM,OTC Pink:FQVLF) has nothing to worry about when it comes to resource nationalism if sources close to the government of Zambia are to be believed.

Zambia is the same government that is currently wrestling with Vedanta (NYSE:VEDL) over control of Konkola Copper Mines (KCM), though sources have said First Quantum is a different kettle of fish.

For First Quantum, avoiding the fate of KCM and Vedanta will be a key priority, as Zambia is home to the lion’s share of the Canadian company’s operating assets.

2. VIDEO — Nickel and Cobalt are Going in Different Directions

At this year’s Lithium Supply & Markets Conference in Chile, the Investing News Network caught up with Ken Hoffman, basic materials expert at McKinsey, to talk about the future for lithium-ion batteries and raw materials such as cobalt and nickel.

“One of the trends we’ve seen in the past year has been the collapse of lithium and cobalt prices,” he said. “However, we’ve seen phenomenal demand for the product.”

By 2030, McKinsey believes that between 18 and 27 percent of the vehicles sold globally will be electric.

3. Ecuador Talks Up Cascabel’s Copper Potential

The Cascabel copper-gold project in Ecuador has a bright future, with the potential to be one of the world’s largest copper, silver and gold mines, as per a study by the Ecuadorian government.

The advanced exploration project, which is located north of Quito and owned by SolGold (TSX:SOLG,LSE:SOLG,OTC Pink:SLGGF), was the focus of a preliminary study by the government. The country is looking to help encourage the development of mineral resources.

According to the Ecuadorian Energy Ministry, Cascabel will produce 207,000 tonnes of copper per year for its first 25 years in operation — numbers that would put it among the top 20 copper mines globally.

Also in the news

There was plenty of other base metals drama this week, with a series of interesting stories breaking.

Unions voted to strike at Chile’s Chuquicamata mine on Thursday (June 13) after a labor deal fell through. The unions, which represent over 80 percent of the mine’s workforce, said workers would put down tools on Friday. Chuquicamata is state miner Codelco’s third largest copper mine, with a 2018 output of 330,744 tonnes of copper.

Meanwhile, in the US, the small town of Florence, Arizona has been ordered to pay Canadian miner Taseko Mines (TSX:TKO) US$1.7 million in legal fees over a dispute over the company’s right to mine on its land after a change to local zoning laws.

Back in Zambia, President Edgar Lungu turned the screws on miners, threatening to fine any that break the law in an escalation of his country’s dispute with Vedanta.

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

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