Base Metals Weekly Round-Up: Sales, Top Stocks and Deals

This week in base metals, copper stole the show, with plenty of news from around the world, while outside resources in the wider world of economics, US President Donald Trump made the markets skip a beat by announcing that he was a ‘tariff man’ — as if the world didn’t know already.

Meanwhile, relations between China and the US have taken another turn — possibly for the (much) worse, with Huawei’s (SZSE:002502) chief financial officer arrested in Canada for extradition to the US.

While the reasons for her arrest have not been released (though it may have something to do with Iran), a growing group of countries have been giving telecommunications giant Huawei another look over concerns over Chinese state influence and interference, putting the arrest front and centre as the trade war rages.

Back in the world of commodities, copper has managed to stay above US$6,000 a tonne this week — though if it keeps trending downwards like it has been, the red metal could find its value starting with a 5 again. By the middle of the week it was trading at US$6,162 after beginning the week above US$6,300.

In base metals other than copper, nickel seemed to be climbing back up above US$11,000 a tonne this week before it turned around and hit US$10,850 by Thursday (December 6) — not quite as low as the lows reached at the end of November, but a turnaround on what was looking like a recovery.

Zinc pulled the same trick, having looked like it was on the up, reaching US$2,739 a tonne on the LME before turning back down to US$2,691 by Thursday — mostly wiping out any gains it had made. Between Monday (December 3) and Thursday, and unloved base metal was up less than 1 percent.

Base metals top news stories

In base metals news this week, Teck ( TSX:TECK.A,TSX:TECK.B,NYSE:TECK) found itself a partner to tango with in Peru, while the Investing News Network (INN) took a look at the top-performing copper stocks of 2018, and Codelco struck a deal with workers at its Ministro Hales operations in Chile.

1. Teck Sells 30 Percent of Quebrada Blanca Expansion to Sumitomo

Teck Resources finally revealed who would be its partner at its Quebrada Blanca phase 2 expansion in Peru this week, drawing to a close a long search for a fellow miner to share the load.

On Tuesday (December 3), Teck said it would carve off a 30-percent slice of its copper mine expansion for Sumitomo Metal Mining (TSE:8053).

With full construction now approved thanks to the US$1.2-billion deal, Teck said it would be aiming for first production from the expansion by the second half of 2021.

2. Top Copper Stocks of 2018

As 2018 draws to a close, INN took a look at the top-performing copper-focused companies on the Toronto exchanges.

On the TSX, Trilogy Metals (TSX:TMQ,NYSEAMERICAN:TMQ), Nevsun Resources (TSX:NSU,NYSEAMERICAN:NSU), Atalaya Mining (TSX:AYM,LSE:ATYM), Ero Copper (TSX:ERO) and Sierra Metals (TSX:SMT) made the cut, with drill results, takeover bids and acquisitions the reasons behind their performance.

On the TSXV, junior miners Xiana Mining (TSXV:XIA), Oroco Resource (TSXV:OCO), Yellowhead Mining (TSXV:YMI), Serengeti Resources (TSXV:SIR) and Kintavar Exploration (TSXV:KTR) rounded out the top five for 2018.

For top copper stocks on the TSX, all year-to-date and share price information was obtained on December 5, 2018 from TradingView. All companies listed had market caps above C$50 million at that time. For TSXV copper top stocks, all year-to-date and share price information was obtained on December 6, 2018 from TradingView. All companies listed had market caps above C$10 million at that time.

3. Copper Giant Codelco Strikes Deal with Workers at Ministro Hales

Number-one copper producer Codelco announced on Saturday (December 1) that it has reached an agreement with workers at its Ministro Hale operations in the Antofagasta region of Chile, saying that 53 percent of workers at the mine voted to accept a wages offer, which took effect on that day.

The collective bargaining agreement, which takes effect is valid for 36 months, and includes a pay rise of 1.2 percent and a collective bargaining bonus of up to 7 million pesos — or around US$10,000 for workers at Codelco’s newest and most advanced copper mine.

In other base metals news

Starting with copper, as there was quite a lot of news from the vital base metal, Democratic Republic of Congo (DRC) state miner Gecamines announced on Monday that it had signed a production-sharing deal with China’s HongKong Excellen Mining.

In India, Vedanta’s (NSE:VEDL) shuttered Thoothukudi Sterlite copper smelting operations were thrown a lifeline in the form of a committee formed by the Indian National Green Tribunal, which found that the closure of the plant was unsustainable.

Diversified miner and copper giant Glencore (LSE:GLEN) had a reshuffle of the upper crust this week, with its copper chief being shuffled out as dark clouds hang over the company and its dealings in the DRC.

In Peru, the Peruvian Ministry of Energy and Mines has reported that national copper output was down in October, while in Serbia, the government has predicted that copper production could account for 5 percent of the national economy by 2023 off the back of significant investment in 2018.

Closer to home, Yellowhead Mining (TSX:YMI) has signed an agreement with Taseko Mines (TSX:TKO,NYSEAMERICAN:TGB) to be acquired for C$15.1 million, giving Taseko control of the Harper Creek copper project in British Columbia.

Moving away from copper (though not far), in Brazil, President-elect Jair Bolsonaro has named his new minister for mines and energy — Bento Costa Lima Leite de Albuquerque Junior — who is a navy admiral.

In Australia, Fortescue Metals (ASX:FMG) is preening itself over signs that Chinese demand is shifting back towards cheaper, lower-grade iron ore resources; Fortescue’s forte.

Staying with iron, engineering and mining services contractor SIMPEC, a subsidiary of WestStar Industrial (ASX:WSI) has snagged itself an AU$4 million contract at Rio Tinto’s (ASX:RIO,NYSE:RIO,LSE:RIO) West Angelas JV in Western Australia where it’s gearing up for a replacement mine splurge.

Still in the land down under, a report found that Western Australia was leading mineral exploration expenditure across the Australian states (though this is to be expected as Western Australia makes up a third of Australia’s landmass), while there’s a push to introduce a national program that would see royalties from mining returned to regions.

Finally, beleaguered zinc miner and smelter Nyrstar (EBR:NYR) has gotten its hands on some extra cash through the previously reported working capital facility from a major shareholder. The funds will help with what analysts have noted could be serious liquidity issues given the low zinc price.

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