Base Metals Weekly Round-Up: Copper, Zinc Prices Climb

- March 29th, 2019

What happened in the base metals space this week? Here’s a look at the top stories covered by the Investing News Network.

After American and Chinese officials met this week in an attempt to resume trade talks, copper and zinc prices grew on optimism surrounding a potential trade deal between the two nations.

Starting the week at US$6,327.50 per tonne on the London Metal Exchange (LME), the red metal zigzagged through the week but ultimately traded upward, landing at US$6,380 by Thursday (March 28). Meanwhile, zinc experienced a more gradual yet consistent climb, beginning the week at US$2,838 per tonne and ending Thursday at US$2,948 on the LME.

Also contributing to zinc’s growing price were low inventories, with stockpiles opening at 56,425 tonnes on Wednesday (March 27). According to Reuters, this was the lowest point for zinc stocks since 1991, with a note from Jinrui Futures obtained by the outlet saying ingot inventories were “extremely low.”

Meanwhile, US Treasury Secretary Steven Mnuchin tweeted early Friday morning (March 29) that he and US Trade Representative Robert Lighthizer had concluded “constructive” trade talks in Beijing. Though an official deal has yet to be reached, Mnuchin added that he is looking forward to continuing the discussions in Washington next week.

“If they can make further progress, it removes one of the headwinds to further rallies given that the fundamentals are still pretty sound,” Robin Bhar, head of metals research at Societe Generale (EPA:GLE) in London, told Reuters. “Inventories are falling, and they are critically low in zinc and nickel, while there are supply constraints in copper and zinc.”

Nickel inventories opened at 183,102 tonnes Thursday on the LME as prices plunged to US$12,775 per tonne from Wednesday’s weekly high of US$12,985. Lead prices took a nasty tumble to US$1,977 per tonne by Wednesday, but rebounded back above the US$2,000 mark by Thursday to US$2,009.50.

Iron ore prices were down 1.36 percent to US$84.49 per tonne as of 3:15 a.m. EST on Friday.

Base metals top news stories

1. Vale to See Iron Ore Sales Loss of 50 to 75 Million Tonnes

Despite efforts to get back on its feet, Vale (NYSE:VALE) CFO Luciano Siani said the company can expect to see losses in iron ore sales of anywhere between 50 and 75 million tonnes this year.

In a conference call to investors and analysts alike, the Vale executive provided an update on the company’s sales as well as its operational and community activity.

The call comes after a dam collapsed two months ago at Vale’s Córrego do Feijão mine in Brazil, killing what’s estimated to be hundreds of people and leading to both corporate and local chaos.

2. Codelco Tears Up Contract with SNC-Lavalin

State-owned Chilean copper miner Codelco has torn up its US$260-million contract with Canadian engineering and logistics firm SNC-Lavalin (TSX:SNC,OTC Pink:SNCAF), accusing the company of “serious, repeated and evident breaches” in works at the Chuquicamata mine.

In a release on Monday (March 25), Codelco said it is terminating the agreement it signed with SNC-Lavalin in 2016 for upgrades to be carried out at Chuquicamata’s smelting facilities, though the Canadian company has been working at the mine since 2012.

“Among the non-compliances are the delays in payments to its subcontractors, delays in the execution of the project and problems in the quality of the works, among others,” said Codelco in its release.

3. CanAlaska to Buy Manibridge Nickel Mine from Pure Nickel

CanAlaska Uranium (TSXV:CVV,OTCQB:CVVUF) is broadening its base metal assets by purchasing the past-producing Manibridge nickel mine in Manitoba, Canada.

Owned by Pure Nickel (TSXV:NIC,OTC Pink:PNCKF), the mine is situated in Manitoba’s Thompson Nickel Belt, which CanAlaska says is the fifth-largest and third-highest-grade sulfide nickel belt in the world.

The agreement will see CanAlaska issue 300,000 shares of the company to Pure Nickel and 100,000 two-year warrants exercisable at $0.28 per share. CanAlaska will also pay $25,000 to gain full ownership of the Manibridge claims, which span 270 hectares.

Also in the news

As the company continues to make progress on its Rosemont copper project, Hudbay Minerals (TSX:HBM,NYSE:HBM) approved a $122-million early works program on Friday. With the program set to run simultaneously with financing activities, the company expects Rosemont construction to begin by the end of 2019, with first production docketed for the end of 2022.

In Russia, Norilsk Nickel (OTC Pink:NILSY) announced that it will be investing a combined total of 90 billion rubles (US$1.38 billion) into two prospective growth projects over the next four years. The work will entail expanding and reconstructing the Talnakh concentrator and developing the South Cluster project.

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Securities Disclosure: I, Olivia Da Silva, hold no direct investment interest in any company mentioned in this article.

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