Base Metals Weekly Round-Up: Sales, Challenges and Fires

In the news this week, global headlines were dominated by US President Donald Trump having a mutual (or not-so-mutual depending on who you believe) chuckle with the UN, while his trade war is sending jitters deeper through the markets.

News in base metals was all about fire: Freeport-McMoRan (NYSE:FCX) put out the fire that was an ownership dispute over Indonesia, and First Quantum Minerals (TSX:FM) had one lit under it in the form of an unhelpful Supreme Court ruling in Panama that cast a shadow over its Cobre Panama project.

Meanwhile, BHP Billiton’s (ASX:BHP,NYSE:BHP,LSE:BLT) Australian nickel smelter literally caught on fire.

Looking over to prices, copper spent this week sliding back downwards, but at a lesser clip than previous weeks after a healthy boost in value last week.

On Monday (September 24), it was trading at US$6,318 a tonne and by Thursday (September 27) it was down to US$6,221.50 — a modest 1.5-percent decline.

The opposite was true for zinc, which rose 0.83 percent over the week from US$2,530 a tonne on Monday to US$2,551 on Thursday.

Nickel was having a fairly plain-looking week before losing 2.13 percent of its value between Wednesday (September 26) and Thursday, dropping to US$12,615 a tonne, while lead spent the entire week in decline, falling to US$1,974.5 a tonne with a 2.63-percent fall from Monday.

Base metals top news stories

1. Jakarta Plants its Flag: Grasberg Comes Under Government Control

Closing out a chapter of uncertainty for the world’s second-largest copper mine, Jakarta, Freeport-McMoRan and Rio Tinto (ASX:RIO,NYSE:RIO,LSE:RIO) signed a deal on Thursday that will see the Southeast Asian country take control of Grasberg.

Rio Tinto is out (but with a US$3.5-billion parting gift), Freeport-McMoRan gets to stay on as operator and Jakarta is the new management team with 51.23-percent ownership.

The mine’s operating permit has now been extended out to 2041, and the shifting environmental issues that have dogged the mine will now be dealt with under a “roadmap” being developed by Freeport-McMoRan under the watchful eye of the government.

2. Cobre Panama Could Face Hurdle at Finish Line

More government news, this time in Central America. The Supreme Court of Panama has ruled that the law used to allow the granting of mineral concessions for the asset that became the Cobre Panama copper project was, in fact, unconstitutional.

For owner First Quantum, that announcement was as much music to its ears as nails on a chalkboard — the Cobre Panama project has had billions of dollars sunk into it, is almost near completion, is within sight of the finish line and gearing up for production and would deliver 380,000 tonnes of the red metal annual when fully ramped up.

But the Canadian company released a soothing press release on Tuesday (September 25), noting that by its understanding, the Supreme Court’s ruling applies to the law, and not the mineral concessions themselves — meaning the project could proceed unhindered.

Despite the assurances, the company said it is in the process of getting its hands on the ruling so it can go over it, and “is working with the appropriate parties to identify suitable legal remedies. Such remedies would need to be analyzed by the Supreme Court.”

3. BHP’s Kalgoorlie Nickel Smelter Damaged in Fire

An integral part of BHP’s Nickel West operations came to a shuddering halt this week, with a fire tearing through its nickel smelter in the Western Australian town of Kalgoorlie-Boulder.

An estimated AU$10 million in damage was done to the facility, which processes nickel concentrate from concentrators at Mount Keith, Leinster and Kambalda into nickel matte, with another facility processing it further to premium-grade nickel powder and briquettes containing 99.8-percent nickel.

In 2017, Nickel West produced 91,000 tonnes of nickel. On Friday, local media reported that BHP could take between two and three weeks to repair damages and bring the plant back online.

In other base metals news

In other news this week, First Quantum released a comment on proposed changes to Zambian royalties that would increase the all-in sustaining costs at its operations there.

Rio Tinto was fairly happy with its US$3.5-billion parting gift from Grasberg, saying in a release that the funds will go towards corporate purposes.

Trevali Mining (TSX:TV) issued a release defending its Santander mine in Peru after a local blockade temporarily halted operations. The company says that production and sales will be negatively impacted, and it is engaging with local officials to ensure it doesn’t happen again.

Heron Resources (ASX:HRR) passed a new milestone this week: its weekly drip-feed of updates yielded news that it is beginning underground operations at its Woodlawn zinc mine near Canberra in Australia, with the mine set to go into commissioning later this year.

Meanwhile, Bezant Resources (LSE:BZT) released its quarterly report for Q2, saying it is looking to maximize the value of its Mankayan copper-gold project in the Philippines. The country’s president, Rodrigo Duterte, hasn’t refreshed his wish to shut down all mining in the Philippines this week, so a good week to announce that news.

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

Editorial Disclosure: Trevali Mining is a client of the Investing News Network. This article is not paid-for content.