Base Metals Weekly Round-Up: Unions, Deals and Estimates

- August 3rd, 2018

Workers at Escondida vote on strike action, Gina Rinehart wins the Atlas Iron war and Ivanhoe Mines shows off a new estimate for Kipushi in this week’s base metals round-up.

Nevermind the uptick in base metals prices reported last week, a hit of fresh sanctions fears have jolted the sector back downwards, with not even a strike threat at Escondida maintaining copper’s short-lived recovery.

Watch the video above for a recap on the two biggest stories for the month and a look at base metals prices performance during July.

Over the past week, copper started out at US$6,180 per tonne and, despite the last gasp of last week’s shift upwards, was down at US$6,062.5 as of Thursday (August 2) as it heads back on down towards sub-US$6,000 territory.

More noises from tariff-happy Donald Trump appear to be behind the interrupted recovery of the copper price, with the US President reportedly considering a 25-percent tariff on an additional US$200 billion worth of goods from China.

Lead had a different story, starting at US$2,132.5 per tonne and reaching US$2,142 on Thursday—a modest gain.

Zinc also enjoyed a gain for the week, up a percentage point to US$2,616 per tonne, while nickel had two weeks worth of gains undone in a day, falling from US$13,775 per tonne to US$13,220 between Wednesday (August 1) and Thursday (August 2—a 4 percent fall.

Scroll down for the top news stories this week.

Base metals top news stories

1. Oh No They EsconDIDN’T: BHP Stares Down Barrel of Strike Action

It’s happened in Q3 rather than Q1, but workers at BHP’s (ASX:BHP,NYSE:BBL,LSE:BLT) Escondida copper mine in Chile are (looking to be) downing tools again in a bid to bend the Anglo-Australian miner’s resolve in a repeat of 2017.

Workers are demanding a hefty bonus and a 5 percent pay rise, but BHP offered them half the bonus and a pay rise linked to inflation rates, a counter-offer that led to threats of strike action.

Not all is lost though, the union representing workers has given BHP until August 6 before it gets serious and workers down tools.

The company has lots of work to do though, with almost 84 percent rejecting its ‘final offer’.

It’s clearly strike season, with Chile’s state miner Codelco suffering a walk-off at its Chuquicamata mine on Monday (July 30).

2. Rinehart’s Redstone Over Finish Line, Pips Fortescue for Atlas Iron

Atlas Iron (ASX:AGO) has a new owner, and it isn’t Mineral Resources (ASX:MIN)—which had an agreement to merge with it, or Fortescue Metals (ASX:FMG)—which stepped in to block MinRes’ plans, but Redstone Corporation, a company created solely by Gina Rinehart’s Hancock Prospecting to snatch the smaller miner from the jaws of its competitors.

Redstone’s AU$390-million offer, which is due to close today (August 3), was for AU$0.042 for Atlas’ shares and was declared unconditional on Tuesday (July 31).

In its release, Hancock Prospecting reiterated that the leadership of Atlas was in favor of the takeover and had encouraged shareholders to accept.

CEO of Hancock, Garry Korte said, “in recommending that shareholders accept the offer, the chairman of Atlas made explicitly clear in his letter in the target’s statement that the offer price represents a premium to Atlas’ historical trading values and provides certainty of value.”

3. Ivanhoe Boasts Improved Kipushi Resource Estimate

Ivanhoe Mines (TSX:IVN) has now spent the last few months strengthening its position in the base metals space with a huge injection of funds through a deal with Chinese mega conglomerate CITIC (HKEX:0267), and this week it released a resource estimate for its Kipushi zinc-copper mine that drastically improved its numbers.

The new estimate has increased Kipushi’s measured and indicated zinc-rich resources by 16 percent, from 10.2 million tonnes to 11.8 million tonnes, with an increase in zinc grade from 34.89 percent to 35.34 percent,” said the company in its release on Monday (July 30).

The new estimate will inform the project’s definitive feasibility study, which investors can expect in late 2018 or early 2019.

Scroll down for even more stories in base metals.

In other base metals news

There’s been plenty of other news around the world this week—after all, it’s quarterly report time so everyone has something to say.

Glencore’s (LSE:GLEN) report is due on August 8, while Anil Agarwal’s Vedanta (LSE:VED) has delayed its report until August 6 while Agarwal himself strategizes on his plan to buy out minority shareholders in the company for a billion dollars and delist the company from the London Stock Exchange.

Explorers will have more room to play in Brazil, with Brasilia telling Reuters on Monday (July 30) that it was considering releasing 6 unexplored areas with copper-gold potential.

The areas would be auctioned in 2019, with the government saying the market was “demanding” the auctions.

Russia’s Nornickel (MCX:GMKN) released a report that revealed its output year-on-year was flat, producing 49,460 tonnes of nickel in Q2 2018.

Staying in the former Soviet Republics, central Asian-focused Kaz Minerals (LSE:KAZ) splashed US$900 million to buy a copper project in Russia part owned by Chelsea soccer club owner Roman Abramovich.

For its troubles, it was rewarded with a 30-percent share price drop on the London Stock Exchange.

In Alaska, the Northern Dynasty’s (TSX:NDM) is still kicking despite the kick in the teeth it received from First Quantum (TSX:FM) in May, with the US Army Corps of Engineers proceeding with an environmental review of the contentious copper-gold project.

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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