Base Metals Weekly Round-Up: Iron Fights and Quarterlies Galore

- October 26th, 2018

In base metals this week, Clive Palmer was back in court with CITIC, and Antofagasta gave its copper guidance a little trim off the top. BCI Minerals offloaded an iron asset in its journey towards being a salt and potash miner.

In the news this week, it’s been mostly September quarterly reports across the board, with a few non-quarterly stories floating around.

Outside of the resource world, nobody likes Saudi Arabia anymore, a nutcase has been sending pipe bombs to politicians and public figures in the US, the markets are on their way down (the worst losing streak in five years, according to reports) and the US/China trade war grinds on.

Looking ahead, in the US the midterms are almost here, while the weekend will reveal the winner of the Brazilian presidential election, due to be held on Sunday.

Getting back to the markets and commodities, copper was down this week after starting at US$6,283 per tonne on Monday (October 22) and reaching US$6,209 by Thursday (October 25).

Zinc appears to have leveled out a bit after recovering some value over the last month, though it is trending up this week. It was trading at US$2,703.5 per tonne on Thursday, marginally higher than where it was this time last week.

Nickel on the other hand had an ugly week, spending each day heading downward with no upward corrections: it started the week valued at US$12,450 per tonne and was down at US$12,130 by Thursday, a new yearly low. Scroll down for the top stories this week in the base metals space.

Base metals top news stories

In base metals this week, Clive Palmer was back in court with CITIC (HKEX:0267), Antofagasta (LSE:ANTO) gave its copper guidance a little trim off the top, while BCI Minerals (ASX:BCI) offloaded an iron asset in its journey towards being a salt and potash miner.

1. CITIC and Mineralogy Go to Court Over Sino Iron (Again)

Clive Palmer’s Mineralogy and Chinese state-owned CITIC are wheeling out the artillery, launching separate legal actions within days of each other over the Sino iron project in Western Australia where they are partners — Minerology holds the tenements and CITIC owns and operates the project. The new battle is unrelated to a previous royalties claim.

In an October 19 release, CITIC said that it wants to expand operations as Sino iron is at capacity. It needs Palmer and Mineralogy to play ball, and launched its action against them to “compel the approval and submission of proposals” necessary to achieve that goal.

Palmer, the owner of Minerology, launched his own legal action against CITIC days later, accusing the company of not investing any money into remediation schemes at the mine.

“So the people of Western Australia have got no protection against the environmental damage that they’ve done at Cape Preston,” he said. “Now we’ve got to go to court to enforce that.” Palmer says that CITIC should have put AU$500 million into a remediation fund for the project (so far).

2. Antofagasta Gives Copper Guidance a 15,000-tonne Haircut

Chilean copper miner Antofagasta has released its Q3 production results, revealing that while copper production was up over the previous quarter, it still needs to trim a little off its yearly guidance.

Copper guidance has been revised to 705,000 to 725,000 tonnes for the year, with 15,000 tonnes taken off the total as Antofagasta heads into the final quarter.

Staying true to the company’s optimism that the second half of 2018 would be better than the first, production from Antofagasta’s four operating mines was 188,300 tonnes for the quarter, up 15.4 percent on Q2’s 163,200 tonnes. Q2 output was hampered by a blockage at the Los Pelambres mine in Chile.

3. Salt Over Iron: BCI Sells Kumina Project to Mineral Resources

Australia’s Mineral Resources (ASX:MIN) has announced a binding agreement to purchase the Kumina iron ore project in the Pilbara from BCI Minerals, which has been working to divest its iron ore assets since August to focus on salt and potash.

The AU$35-million transaction will see Mineral Resources acquire the Kumina part of BCI’s Buckland project in the iron-rich Pilbara region of Western Australia.

Kumina is described by BCI as having an inferred mineral resource of 78.3 million tonnes of iron ore graded at 59.1 percent, with “potential to upgrade ore above 60 percent iron and for lump ore production” — as per the current owner’s maiden mineral resource estimate, released in June.

Funds from the sale of the assets will go towards the Mardie salt and potash project’s definitive feasibility study, and will ensure the company can maintain 100-percent ownership through to a final investment decision due in late 2019.

In other base metals news

This week in other news started out hot, with Lourenco Goncalves, CEO of US iron producer Cleveland-Cliffs (NYSE:CLF), spectacularly losing his cool with analysts on a conference call, accusing them of not being able to read numbers and not understanding their own industry.

When asked about his company’s share price falling, he turned his ire on stock brokers.

“If the stock continues to go down based on these kids that play with computers and somebody else’s money, we are going to buy back stock … we are going to screw these guys so badly that I don’t believe that they will be able to only resign. They will have to commit suicide … you are messing with the wrong guy,” Goncalves said.

Tell us what you really think, Lourenco. Listen to the recording here.

Meanwhile, Glencore (LSE:GLEN) CEO Ivan Glasenberg told investors this week that he plans to retire within the next three to five years in order to make way for fresh blood.

According to reports, Glasenberg is currently training three or four suitable individuals to take the wheel at Glencore, which Glasenberg is credited with turning into a force to be reckoned with in the copper and cobalt spaces.

Speaking of cobalt: the source of much of the world’s supply, the Democratic Republic of Congo, is continues to be a source of angst for Glencore, which has been requested to hand over documents about intermediary businesses there by the US Department of Justice.

It’s also been asked to hand over information about intermediary businesses associated with Glencore in Venezuela and Nigeria. The enquiries are reportedly not directed at Glencore’s activities or its executives, but that didn’t stop the Switzerland-based company’s shares from taking a dip with the news.

Getting away from the majors, Canadian miner Nevsun Resources (TSX:NSU) gleefully announced this week that Zijin Mining (HKEX:2899) has cleared some regulatory hurdles on its way to acquiring Nevsun and its Serbian copper project. Zijin has received approval from China and Canada to proceed.

Returning to an older story, this week local media in India reported that Vedanta Resources (NSE:VEDL) has petitioned the federal government of India to reopen the Sterlite copper smelter in Thoothukudi, which has been closed since May after protests turned deadly.

It’s very much Q3 time, with many companies putting out their quarterly reports. Unfortunately we didn’t get the chance to cover them all, but here are some of the major releases this week: Freeport-McMoRan (NYSE:FCX), Vale (NYSE:VALE), Fortescue Metals (ASX:FMG) and Glencore (LSE:GLEN).

Don’t forget to follow us @INN_Resource for real-time updates!

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

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