Base Metals Weekly Round-Up: Deals on the Edge and Low Prices

Prices have kept on sliding in the land of base metals, as trade wars and posturing from US President Donald Trump shakes up sentiment.

Copper has continued its slide, falling to US$6,172 a tonne by Thursday (July 12) on the London Metal Exchange. It started the week with a feeble uptick in value, with Monday’s (July 9) value of US$6,382, 0.82 percent higher than last week’s closing price. But as the week wore on, the red metal fell 3.82 percent with the week still not finished.

Fellow base metal nickel spent most of its week aping copper, starting at US$13,965 (again, higher than last week’s close) and falling down to US$13,620 on Wednesday (July 11) —a 2.47 percent fall. But in a twist, on Thursday the increasingly important battery metal jumped back to US$14,050—a 0.6 percent gain compared to Monday. Friday’s fortunes are yet to be explored.

Zinc also trended downwards, losing 4.48 percent and going from US$2,719 to US$2,597 over the week with a low of US$2,573 in between.

Base metals top news stories

This week two big deals (both in value and importance) oozed towards conclusion, BHP (ASX:BHP,NYSE:BBL,LSE:BLT) got the go-ahead to make itself comfortable in the Pilbara and plenty more.

1. Ivanhoe, CITIC Closer to C$723-million Deal

Following on from the news Canada’s Ivanhoe Mines (TSX:IVN) and China’s CITIC (HKEX:0267) would be doing a deal, this week started off with news that the Chinese company had given itself the go-ahead to invest.

CITIC will be Ivanhoe Mines’ largest stakeholder after the deal is closed, with Robert Friedland sharing the position of chairman with a CITIC-appointed co-chair.

The money will go towards advancing the company’s three projects in southern Africa, while additional money from Zijin Mining (HKEX:2899) thanks to an anti-dilution clause will bring the total cash splash on projects to over C$800 million.

2. Grasberg Ownership Question Grinds Over Horizon

Indonesia is tantalizingly close to securing a controlling stake in the world’s second largest copper mine, Grasberg.

In a Thursday announcement, current owner and operator Freeport McMoRan (NYSE:FCX) released details about work-in-progress restructure talks intended to bring Grasberg into line with Indonesian policies on extractive industries, in that resources remain majority state-owned.

In short, Freeport’s current JV partner Rio Tinto (ASX:RIO, NYSE:RIO, LSE:RIO) will sell its share for US$3.5 billion, and Freeport will relinquish part of its share to bring Jakarta’s ownership to 51 percent.

Talks are ongoing, and both Freeport and Rio have stressed that the heads of agreement signed this week is non-binding, and the complexities in negotiations ahead could prevent the deal from closing at it currently stands.

3. Get Comfy: BHP Gets Century’s Worth of EPA Approvals

On Tuesday (July 10) iron ore giant BHP received a green light from the Environmental Protection Agency in Western Australia for its next 100 years of mines and projects in its base of operations, the Pilbara.

A six-year review by the EPA outlined the environmental protection conditions that would be applied to each of 17 different sites of activity put forward by BHP as being possible targets for expansion in the next 50-100 years.

The EPA completed its report and recommended the Government of Western Australia approve BHP’s long-term strategic proposal that included the sites

It’s not a blank check though, in its release the EPA explained that each individual site would need to be re-assessed as they came closer to development, construction, and operation.

The Western Australian minister for Environment will have the final say following a two-week period where the report is open to public appeal. The public appeal period will close on July 23.

In other base metals news

In news around the world of base metals, BHP’s Escondida is still making daily headlines as wage negotiations continue at the Chilean mine. The most recent news is that BHP has made an offer that falls US$17,000 short of what the union is demanding to be paid as a bonus to workers. It’s a bold move, let’s see how it pays off.

Australian company Tiger Resources (ASX:TGS) cancelled a planned selloff of its assets in the Democratic Republic of Congo (DRC), revealing negotiations with China’s Sinomine had produced terms that were “not acceptable”.

Speaking of the DRC, Glencore (LSE:GLEN) is still running into trouble in relation to its operations, with news about a US subpoena spinning off its own little complications, such as its own shareholders considering suing the company in response to the legal action, which they contend is lowering the value of their investment. Earlier in the week, Glencore set up a committee to respond to the subpoena.

There’s more mining movement in Greenland, with North American Nickel (TSXV:NAN) securing itself some more mining licenses in the vast, but yet underexplored country. The company currently has an active nickel-copper-cobalt-PGM project there, and the new mining licenses represent an expansion of its scope.

More undersea mining news, but this time from the conservation side with a study released identifying potential targets that should be labelled as no-mining zones.

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