Base Metals Weekly Round-Up: Fines and Trends

In the news this week, base metals are looking like a mixed bag, with copper down, zinc up and nickel all over the place in the last few days.

Meanwhile, world news has been occupied by falling stock markets and what’s starting to look more and more like a bear market.

US President Donald Trump is making a whole lot of noise about shutting down the US government over his wall by refusing to sign any budget measures that don’t include funding, while during the week the nations of the Five Eyes alliance pointed the finger at China over espionage — a development that won’t help cool down relations in the trade war.

Looking at commodities, during the week copper was down 1.3 percent at US$6014.5 a tonne by Thursday (December 21), after just slipping below the US$6,000 mark on Wednesday (December 20).

After a bit of a fall last week, zinc was up less than 1 percent, trading at US$2,598 a tonne.

Nickel moved even less, but in the other direction, falling 0.45 percent to US$10,880 a tonne — though it had dipped all the way down to US$10,760 on Wednesday.

Base metals top news stories

In the news this week, the Democratic Republic of the Congo (DRC), Glencore (LSE:GLEN), Katanga Mining (TSX:KAT) and Canadian regulators shared a story yet again, we looked back at trends in zinc and nickel and Orion Minerals (ASX:ORN) showed off plans for Prieska.

1. Katanga and Canadian Regulator Near Settlement

The Ontario Securities Commission announced it would be considering whether to move forward with a settlement between itself and Glencore’s Katanga Mining over its business dealings in the DRC.

The commission said on Monday (December 17) that it would be conducting a hearing to “consider whether it is in the public interest to approve a settlement agreement” with Katanga and several executives associated with the DRC-focused company and its majority owner Glencore, reportedly to the tune of C$30 million, according to the Wall Street Journal.

In a statement of allegations, the commission alleged that Katanga’s leadership team undermined its own corporate guidance, and as a result the company made misleading financial disclosures that were against public interest.

Later in the week, it was reported that the company and executives agreed to pay C$28.5 million to settle the allegations at the hearing.

2. Nickel and zinc trends in 2018

Take a journey down memory lane with a look at where zinc and nickel have meandered in 2018.

In our zinc trends article, we bring together stories from the year and look at what drove prices, stockpiles and sentiment down for what was called the market’s “least-loved” metal.

For fellow base metal and increasingly important battery metal, nickel, the journey was slightly different in that it was still riding high on momentum that began in 2017 — at least until the trade war hit and investors and analysts started asking more questions about when the electric vehicle boom would take off. Spoiler alert: not in the short term.

3. Orion Upgrades Prieska Resource, Plans to Fast Track Work

Orion Minerals has updated the deep sulfide mineral resource estimate at its Prieska zinc-copper project in South Africa’s Northern Cape.

Prieska’s deep sulfide resource is now measured at 28.73 million tonnes grading 3.77 percent zinc and 1.16 copper, with 18.51 million tonnes grading 3.6 zinc and 1.17 percent copper upgraded to the indicated category.

“This pivotal resource upgrade provides a strong foundation for our strategy to fast-track the development of a state-of-the-art base metals operation at Prieska next year,” Orion Managing Director and CEO Errol Smart said in a statement.

In other base metals news

In other news from around the world, it’s the season for giving; Australia’s BHP (ASX:BHP,NYSE:BHP,LSE:BLT) announced this week that it has completed a US$5.2-billion share buyback, announcing a US$1.02-per-share special dividend at the same time.

BHP joined Fortescue Metals (ASX:FMG) and Rio Tinto (ASX:RIO,NYSE:RIO,LSE:RIO) in showering shareholders with cash after a number of high-profit transactions.

Over in Zambia, plans to increases taxes in mining are going as well as you’d expect, with the government responding to reports operators there would cut jobs to maintain profitability by expelling foreign workers.

Canada’s First Quantum Minerals (TSX:FM) said on Friday that it would be firing 2,500 workers anyway.

The African nation may be in for more pain as it attempts to offset unsustainable debt, with a mining body there saying this week that the new taxes price Zambia out of the copper industry.

Speaking of risk, Americas Market Intelligence published a report this week on managing risk while investing in Latin America; well worth a read.

Sticking with South America, Australia’s Newcrest Mining (ASX:NCM) increased its stake in Solgold (TSX:SOLG), keeping it ahead of fellow Australian BHP as a major shareholder in the company, which has copper-gold assets in Ecuador.

BHP appeared in copper news a lot this week, with the company reportedly hitting higher grades of copper at its Olympic Dam operations in South Australia.

One of BHP’s iron ore competitors, Fortescue, has made its first shipment of “West Pilbara Fines,” a new product grading 60.1-percent iron targeted squarely at Chinese smelters looking to save money.

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