Base Metals Weekly Round-Up: Vale’s “Human Tragedy” in Brazil

This week in global news, eyes were mostly in Venezuela and its two presidents, with the world’s nations backing each side along the usual lines of allegiance, and the prospect of potential US military intervention refusing to go away.

Brexit is still shambling along, with uncertainty in whatever form an exit would take causing manufacturers from the industrial sectors to the food, services and medical sectors to stockpile critical components for their operations.

Looking over into the resources sector, copper, zinc and nickel spent the week on the up, while gold is still up in light of wavering economic outlooks.

The red metal rose by 2.5 percent, jumping back above the US$6,000 mark to US$6,146 a tonne by Thursday (January 31), while nickel was up by a handsome 4.56 percent to US$12,375 a tonne.

Base metals top news stories

In top news this week, Vale (NYSE:VALE) suffered a catastrophic failure at a tailings dam in Brazil — and the government is asking a lot of questions. Vendetta Mining (TSXV:VTT) released its preliminary economic assessment for a new lead-zinc project in Queensland, and Brian Leni talks nickel demand with INN.

1. Vale Dam Collapse Kills 60; 300 Missing in Brazil

Disaster has struck again at a Vale facility, when on Friday (January 25), Dam 1 of the Córrego do Feijão mine near Brumadinho in south-eastern Brazil collapsed in what CEO Fabio Schvartsman called “a complete surprise.”

Newly minted President of Brazil Jair Bolsonaro said on Twitter that the government would be working to “meet the victims, minimize damage, ascertain the facts, seek justice and prevent new tragedies … for the good of Brazilians and the environment.”

Schvartsman said in a press conference that Córrego do Feijão was “a human tragedy” compared to the environmental destruction wrought by the Samarco tailings dam collapse in 2015 — a disaster for which Vale is still paying the price.

2. Vendetta Releases PEA for Pegmont Lead-Zinc Project

Vendetta Mining has released a preliminary economic assessment (PEA) for its Pegmont lead–zinc project in Queensland, setting its lifespan at 10 years.

The PEA also lays out the project’s financials, including an after-tax net present value of $124 million and an internal rate of return of 24 percent. The after-tax payback period is currently docketed at 3.5 years, with pre-production capital set at $170 million and life-of-mine sustaining capital at $59 million.

Pegmont is set to annually produce 124 million pounds of lead, 50 million pounds of zinc and 298,000 ounces of silver; it is also expected to process 3,000 tonnes of material per day.

3. Brian Leni: EV Demand is the Icing on Nickel’s Stainless Steel Cake

The current excitement around nickel has been driven by the electric vehicle market and how the metal is used in the burgeoning battery industry, but for a mineral that is mostly used up by stainless steel, the EV narrative can seem a little overblown.

According to Brian Leni of Junior Stock Review, the focus on EV is because of how disruptive it has the potential to be, despite just being “the icing on the cake” when it comes to current demand.

In other base metals news

Glencore’s (LSE:GLEN) Katanga Mining (TSX:KAT) released its end-of-year production results on Thursday (January 31), detailing an increase in copper and cobalt production from Q3 through Q4 as operations ramped back up after a tumultuous year. Cobalt exports remain suspended, however.

Canada’s First Quantum (TSX:FM) announced that it had resumed production at its Cobre Las Cruces operations following a land slippage at the Spanish mine in late January.

Ivanhoe Mines (TSX:IVN) was quite chuffed this week too, reporting an “unprecedented” intersection of 13.05 percent copper at its Kamoa-Kakula project in the Democratic Republic of Congo.

In Australia, Fortescue Metals (ASX:FMG) reported that its Pilbara fines iron ore product was a hit in China, after publishing its December quarter numbers this week and calling initial customer feedback “excellent.”

It’s very much quarterly report time (again), with reports from Hammer Metals (ASX:HMX), Heron Resources (ASX:HRR) and Cassini Resources (ASX:CZI) among all of the others hitting inboxes.

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.