Base Metals Weekly Round-Up: Nevada Copper Pulls the Trigger

This week, free-trade has been talk of the town as the US and Mexico hammer out a deal that excludes Canada, while US President Donald Trump plays hardball with Ottawa.

Looking at base metals prices, after bottoming out two weeks ago copper appears to be on a bit of a rebound, touching a high of US$6,117 per tonne this week.

Nickel hit a high on Monday (August 27) as well, but by Wednesday (August 29) was back to where it finished last week at US$13,280 as it continues its roller-coaster journey to the end of August.

Lead has avoided a continuous downward trend over the week to basically plateau between US$2,060 and US$2,070 a tonne, while zinc has stayed with its base metal compatriots, and slid downwards from a high on Monday of US$2,534. Scroll down for some of the top stories this week.

Base metals top news stories

1. Full-scale Construction to Proceed at Nevada Copper’s Pumpkin Hollow

It’s been a period of big news for Nevada Copper (TSX:NCU): the company did the numbers and decided to go ahead with full-scale construction works at its flagship Pumpkin Hollow underground copper project in western Nevada.

The company plans for Pumpkin Hollow, which it describes as the “only major, shovel-ready and fully-permitted copper project in North America,” to achieve first production in the fourth quarter of 2019 — at a time of “growing copper supply deficits.”

In an announcement on Tuesday (August 28), the company said that the decision came hot on the heels of the completion of a successful C$108.5-million public offering in July.

The underground project will have a capacity of 5,000 tonnes per day of throughput grading 1.81 percent copper for an average annual copper production of 50 million pounds. It would also produce 8,000 ounces of gold and 150,000 ounces of silver annually over a 13.5-year mine life.

2. Vale Ties Higher Iron Production to Higher Price

Brazilian miner Vale (NYSE:VALE) has put a self-imposed cap on its iron ore production well below its stated capacity.

In a wide-ranging interview with Estado de S. Paulo on Sunday (August 26), Vale CEO Fabio Schvartsman said that the company would limit its annual iron ore production to 400 million tonnes, despite a company-wide capacity of 450 million tonnes.

Schvartsman said that only if the iron ore price increased again would the company increase its production, but until then it would take it easy.

Most analysts recently polled by FocusEconomics for their August consensus report saw iron prices ending the year lower than where they stood at the beginning of August (around US$67 a tonne) — based on those predictions, Vale is unlikely to be increasing production in the near term.

3. Australian Miners Tell Canberra: Get on with Your Job

Nobody was having fun in the government of Australia last week, with the leadership of one of the world’s premier mining destinations descending into a state of intraparty warfare over energy policy, culminating in the removal of a sitting prime minister.

Miners across Australia were quick to release statements encouraging the government to quit naval-gazing and get on with its job of making businesses easier to do.

“The Australian minerals sector encourages stable government following the Liberal Party leadership change,” said the Minerals Council of Australia on Friday (August 24), the day new Prime Minister Scott Morrison took power.

The council, which is Australia’s top mining lobby group, strongly implied that it would like the government to return to matters at hand that it wanted to talk about, like “a competitive investment environment and less red tape” instead of engaging in anything like the last week in Australian politics, wherein the government was consumed by infighting and not actually running the country.

In other base metals news

Q2 and annual report season is winding down as we reach the end of August. There was still plenty of news from Africa, Europe and on the tariffs front though.

In the Democratic Republic of the Congo, miners have banded together to form the Mining Promotion Initiative to push back against an increasingly rapacious government in Kinshasa that has so far not shown any interest in listening to miners.

Last week, Serbia revealed it had received qualifying bids for a stake in its unloved RTB Bor complex in the east of the country—and this week Belgrade announced that China’s Zijin Mining (HKEX:2899) had won the crown.

RTB Bor has been neglected for years, first during the Yugoslav wars and then afterwards in an economic slump. The International Monetary Fund, as part of a program to assist the Balkan country to untangle and tidy its books recommended state assets be sold off: and now Belgrade has done just that.

Chile’s Codelco released its numbers for the first half of 2018, revealing that it had an output of 875,000 tonnes of copper so far this year, putting it on track to meet its expected production target of 1.7 million tonnes for 2018.

Meanwhile, analysts are warning China-US trade war tensions will ‘shackle’ copper prices, as we witness more flow-on effects of the American president’s tariffs on trading partners.

In Australia, Mineral Resources (ASX:MIN) secured its ownership on the Koolyanobbing iron ore assets in Western Australia.

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

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