Base Metals Weekly Round-Up: Metals Slump as Trade Talks Linger

As the world continues to watch and wait on a possible China-US trade deal, tariff tensions took center stage on Friday (May 10) as base metals capped a downward week.

Negotiations between the two major nations continued this week in Washington, but were dampened on Friday when US$200 billion worth of tariffs went into effect on Chinese imports. Despite the less than savory timing, US President Donald Trump stated on Twitter that the talks with China are continuing in a “very congenial manner.”

As the London Metal Exchange (LME) was closed for trading on Monday (May 6), Tuesday (May 7) saw most base metals hit their weekly highs. Nickel, which peaked at US$12,045 per tonne on Tuesday, plunged to US$11,700 by Thursday (May 9). Zinc also saw a weekly high of US$2,834 per tonne on Tuesday, falling later to US$2,724.50 by Thursday.

Lead felt some minor damage this week as the base metal peaked on Tuesday at US$1,865 per tonne only to fall to US$1,853 by Thursday. In the case of copper, however, the red metal made a small bounce back after hitting its weekly low of US$6,102.50 per tonne on Wednesday (May 8). It went on to reach US$6,110 by Thursday.

Iron ore saw fluctuated growth, as it peaked on Tuesday with a closing price of US$94.75 per tonne, up from Monday’s US$93.51 close. The base metal was down 0.24 percent as of 2:38 a.m. EDT on Friday, when it reached US$94.01.

Base metals top news stories

1. BHP, Vale Face Further Iron Ore Woes in Brazil

Major miners Vale (NYSE:VALE) and BHP (ASX:BHP,LSE:BHP,NYSE:BHP) have both had a tough week regarding their iron ore businesses, as each company faces legal struggles looping back to operational dam collapses in Brazil.

Starting with Vale, the company announced on Monday that it will be re-closing its Brazilian Brucutu mine for the time being. The mine has faced a turbulent few months, having been originally shuttered in February after a deadly dam disaster at Vale’s Córrego do Feijão mine in late January.

While Vale received a green light to reopen Brucutu in March, the celebrations were short-lived as the company was court ordered to halt operations at 13 of its dams less than a week later, including Brucutu.

2. Heron’s Woodlawn Zinc-Copper Mine Starts Production

Heron Resources (ASX:HRR) has finally cut the red ribbon on its Woodlawn zinc-copper mine in New South Wales, Australia, with the official start of production.

With ore processing at the project now underway, Heron’s focus has shifted to a ramp up program with the goal of increasing throughput to Woodlawn’s nameplate capacity of 1.5 million tonnes per year.

Woodlawn is expected to produce three concentrates at an average annual rate of 40,000 tonnes of zinc, 10,000 tonnes of copper, 12,000 tonnes of lead, 900,000 ounces of silver and 4,000 ounces of gold over an initial 9.3 year mine life. Heron also believes there is “significant potential” for the mine life to be extended through further exploration and underground resource conversion.

3. Aquila’s Back Forty Permit Upheld by State of Michigan

After a lengthy court battle, Aquila Resources (TSX:AQA,OTCQB:AQARF) has been issued a final decision and order from the State of Michigan that upholds the mining permit for the company’s Back Forty zinc-gold project.

The company met local conflict in February 2017 when the Menominee Indian Tribe of Wisconsin and an individual owning property near the project site contested the mining permit’s issuance on the grounds of environmental concerns.

An evidentiary hearing began in April 2018 and ran until October of that year; this past Friday (May 3), after 30 days of cumulative testimony, a judge gave a final decision on the matter.

Also in the news

This week also saw Rio Tinto Exploration Canada sign a $30 million option agreement with Forum Energy Metals (TSXV:FMC) to form a joint venture on the Janice Lake copper project in Saskatchewan. Rio has the option to acquire up to 51 percent of Janice Lake in exchange for spending $10 million in exploration over four years, among other funding requirements.

Days after entering a US$115 million funding agreement, Nevada Copper (TSX:NCU) announced the details of a planned C$40 million public offering and private placement. The public offering will entail selling 61.9 million common shares of Nevada Copper at C$0.40 a piece to raise C$24.8 million; the remainder of the expected funds will come from the private placement.

Meanwhile, SolGold (TSX:SOLG,LSE:SOLG,OTC Pink:SLGGF) gave an update on exploration activities at the company’s Coangos project in Ecuador, reporting “very high potential” for a significant copper-gold porphyry project in the asset’s tenement area.

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Securities Disclosure: I, Olivia Da Silva, hold no direct investment interest in any company mentioned in this article.

Editorial Disclosure: Nevada Copper and Forum Energy Metals are clients of the Investing News Network. This article is not paid-for content.