Base Metals Weekly Round-Up: Mid-week Rallies Simmer by Friday

After spending the week trending upwards, nickel hit a snag near the end of the week that was further amplified on Friday (March 8) by Chinese trade data suggesting a slowing economy.

Nickel started the week at US$13,155 per tonne on the London Metal Exchange, growing to US$13,605 by Wednesday (March 6). Thursday (March 7) saw the commodity tumble to US$13,370 with fellow base metal zinc also teetering around US$2,784.5 per tonne, down from its Wednesday high of US$2,800.5.

Exports from China took their biggest plunge in three years in February, with imports also dropping for the third month in a row, according to Reuters. The trade data suggested that China’s economy was continuing to simmer, which the outlet said was at its weakest point in almost 30 years.

“The optimism that has been built up from an upcoming trade war deal has dissipated as underlying data shows that the picture isn’t as optimistic as everybody expected,” BMO Capital Markets Analyst Kash Kamal said.

As for lead, the base metal had a fairly stagnant week as it hovered around the US$2,090 per tonne mark, coming in at US$2,095 on Thursday. Meanwhile, iron ore prices dropped to US$83.44 per tonne on Friday, down from Monday’s closing price of US$85.42.

Also on a downswing was copper, which bounced back mid-week from Monday’s (March 4) US$6,419.5 per tonne price point, but eventually cooled down to US$6,370.55 by 10:03 a.m. EST.

Top News Stories

1. Vale: The Politics and Consequences of Córrego do Feijão

A rash of senior executives at Brazilian iron ore mine Vale (NYSE:VALE) have been stood aside in the aftermath of January’s Córrego do Feijão tailings dam collapse near Brumadinho in south-eastern Brazil, which could have claimed up to 300 lives.

Speaking with the Investing News Network, Senior Director at Americas Market Intelligence Remi Piet said that even though the upper levels of Vale had denied any knowledge of issues with the tailings dam in the lead up to the disaster, having them step aside was “completely understandable.”

“When a tailings dam bursts, it’s unacceptable for mining for any company because its a major security flaw — in the case of Vale, it’s even more important because of Samarco in 2015,” which the company is still paying reparations for, 4 years later.

2. OZ Minerals Eyes Carrapateena Copper Project Expansion

Following the completion of a scoping study, OZ Minerals (ASX:OZL,OTC Pink:OZMLF) believes it can double mine throughput and increase life-of-mine (LOM) average copper production at its Carrapateena asset.

The study explored the option of replacing the lower half of Carrapateena’s sub-level cave with a block cave from 2026, which found that the conversion would boost mine throughput from 4.25 million tonnes per annum (Mtpa) to 10 to 12 Mtpa. Additionally, LOM average copper production would grow from 65,000 tonnes per annum (tpa) to a range of 105,000 to 125,000 tpa.

“The Carrapateena block cave expansion work showed the conversion to a block cave to be the most value accretive next step for the Carrapateena resource and conceptually for the entire province, as it potentially enables a series of future add-on block caves, which themselves will now be the subject of a Carrapateena Life of Province Plan scoping study,” OZ Minerals CEO Andrew Cole said in a statement.

3. Wood Mackenzie: Watch Zinc Smelters, Not the Miners

After facing a tumultuous 2018, Wood Mackenzie Senior Research Analyst Rory Townsend feels that zinc smelters — not the miners — will push the battered commodity forward this year.

In a presentation given at the Prospectors and Developers Association of Canada convention in Toronto, Canada, Townsend started by explaining some of zinc’s 2018 ups and downs.

“After reaching the highs of about US$3,600 in mid-February, [it] then fell to subsequent lows below US$2,300 in September. While we do feel that the peak in the price was premature, we don’t feel that the dramatic fall in the price was supported by fundamentals as metal stocks continued to fall through the year,” he said.

Also in the news

Also making headlines this week in base metals was Cornerstone Capital Resources (TSXV:CGP, OTC Pink:CTNXF) who rejected a hostile takeover bid from SolGold (TSX:SOLG,LSE:SOLG,OTC Pink:SLGGF). The rejection came on the basis that the SolGold’s offer was “not in the best interests” of the company’s shareholders.

Friday also saw an approval from Indonesia’s government regarding one-year export allowances for copper concentrate for miners PT Freeport Indonesia and PT Amman Mineral Nusa Tenggara. According to Reuters, Freeport will receive an allowance of 198,282 wet tonnes of copper concentrate, while Amman will get 336,100 wet tonnes.

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