Base Metals Weekly Round-Up: New Friends and New Mines

Base Metals Investing

In this week’s base metals round-up, Ivanhoe Mines welcomes CITIC as its largest shareholder, BHP and Vale commit to expansions and new mines and INN has a look at other news in the sector.

Copper has been trading slightly down over the week at US$7,195 per tonne after starting out at US$7,222.50 on Monday (June 11).

Don’t let that fool you though — copper is having a ripper of a month. On June 1, the red metal was valued at US$6,813 on the London Metal Exchange, and the heights it climbed to shortly afterwards are not showing signs of letting up.

Meanwhile, zinc is trending down after a bump over the week. As of Friday (June 15) it was trading at US$3,218 per tonne after starting at US$3,217 and reaching a high of US$3,228 during the week.

Nickel, the talk of the month, failed to continue the highs of last week and was trading down on Friday at US$15,240 a tonne.

Base metals top news stories

Our three top base metals news stories last week center on major miners making big moves.

1. New Besties: Ivanhoe Mines, CITIC Ink C$723-million Deal

China’s CITIC (HKEX:0267) became Ivanhoe Mines’ (TSX:IVN) largest shareholder on Monday. Robert Friedland, executive chairman of Ivanhoe, will now share the role with a CITIC-appointed chairman.

Ivanhoe says proceeds from the deal will help advance its three major projects in Southern Africa, which are its Kipushi zinc-copper project in the Democratic Republic of Congo (DRC), the Kamoa-Kakula copper project — also in the DRC — and the Platreef platinum-group metals project in South Africa.

2. Vale Pulls the Trigger on Voisey’s Bay Nickel-Cobalt Expansion

Brazilian miner Vale (NYSE:VALE) decided the nickel price is finally attractive enough to commit C$2 billion to expanding operations at its Voisey’s Bay nickel-cobalt mine in Northern Labrador.

The mine, which has been operating since 2005, will have its life extended by another 15 years with an underground expansion.

The project will be partially financed by C$700 million cobalt streaming deals with Wheaton Precious Metals (TSX:WPM) and Cobalt 27 Capital (TSX:KBLT).

3. BHP Lines Up Iron Ore Replacement Mine

In the land down under, BHP Billiton (ASX:BHP,NYSE:BHP,LSE:BLT) committed to replacing its Yandi iron ore mine in the Pilbara with the South Flank project.

According to the company, the mine is a one-for-one replacement of the 80-million-tonne-per-year Yandi mine, which is reaching the end of its life.

US$2.9 billion will be sunk into South Flank, which will join BHP’s collection of iron mines in the Western Australian mining region. First ore will be by 2021, and the company projects it will have a life of 25 years.

In other base metals news

Miners in the DRC have been demanding concessions of a government that simply doesn’t want to hear it, with Kinshasa signing new mining codes into law that strip operators of insulation against changes to the fiscal regime; they could also see copper slapped with an additional tax of 10 percent. Global operators in the Central African country have previously vowed legal action if the changes become law.

In Chile, BHP’s Escondida mine is witnessing another round of negotiations on wages, with the union representing workers presenting requests to the mining giant. This week the union said it is optimistic, however, telling reporters that because the copper price is so high, demands for higher wages are more likely to be met well. Negotiations will continue for weeks to come.

Rio Tinto (ASX:RIO,NYSE:RIO,LSE:RIO) found itself a new CFO in Maersk’s Jacob Strausholm, who also held the role of CFO at the major shipping company. Rio has been rolling in cash recently, and is widely reported to have a strong balance sheet following a series of sales.

In the Pilbara, Port Hedland saw its iron ore exports to China go up 2.4 percent in May to 37 million tonnes. Port Hedland has been making the news recently in relation to the takeover of Atlas Iron (ASX:AGO) by Mineral Resources (ASX:MIN).

Two of the major companies that use Port Hedland to ship iron ore, Fortescue Metals (ASX:FMG) and Hancock Prospecting, have since stepped in to snap up almost 20 percent of the smaller company each, with access to the port speculated to be the reason why.

Prospective buyers have run into trouble though, with the Western Australian government telling Atlas Iron that it doesn’t have priority rights to a development at the port, possibly making the miner far less attractive to the iron ore giants vying for control.

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.

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