VIDEO - Base Metals Update May 2018

Base Metals Investing

Charlotte and Scott from the INN team talk about what’s been happening around the world in base metals, from nationalization efforts in Mongolia to spurned takeover bids on the Toronto Stock Exchange.

The Investing News Network’s (INN) base metals reporter Scott Tibballs chats with editorial director Charlotte McLeod about the top news in the sector in May 2018.

In copper, miners have been grappling with governments in Mongolia and the Democratic Republic of Congo (DRC) over taxes, while Canadian miners Nevsun Resources (TSX:NSU), Lundin Mining (TSX:LUN) and Euro Sun Mining (TSX:ESM) tango over takeover bids.

Meanwhile, the nickel market has been shifting into gear with the electric vehicle market taking off. Watch the video above, or read the full transcript below.

ST: Copper had a wild ride in May with the great Mongolian experiment on developing economies and how they engage with miners grinding on. Mining giant Rio Tinto (ASX:RIO,NYSE:RIO,LSE:RIO) told the government at a conference in Ulaanbaatar this month that if it wanted big investment from miners, it needed to give them space to work.

Advice the Mongolian Copper Corporation would really like the government to take on, after fending off yet another push for nationalization of the Erdenet mine, which according to government sources produces over half a million tonnes of copper concentrate a year.

Meanwhile, the DRC continues to cause headaches for miners there, stonewalling efforts by companies like Ivanhoe Mines (TSX:IVN), Glencore (LSE:GLEN) and Randgold Resources (LSE:RRS) to water down changes to tax and royalties codes. The changes could also see copper join cobalt in being designated a strategic substance in the DRC economy, attracting a 10-percent tax on the red metal in what is Africa’s largest copper producer.

In North America, Nevsun Resources turned down an unsolicited offer from Lundin Mining and Euro Sun Resources to buy the company and its copper assets, saying the offer undervalued its Timok project in Serbia and jeopardized the future of its producing Bisha mine in Eritrea. An amended offer from Euro Sun did little to entice the Canadian company.

Copper-hungry India had a huge setback in May, with the Sterlite smelter in Thoothukudi being shut down, perhaps permanently, by the state government of Tamil Nadu, after deadly protests over a proposed expansion of the Vedanta (LSE:VED) facility, which is accused of polluting the region and reducing quality of life. The expansion would have seen production doubled to 800,000 tonnes of copper a year, a number that’s now been rounded down to zero.

CM: What did we see in terms of copper prices in May?

ST: In price, copper trended upwards over May with a few peaks and troughs. It started May at US$6,777 a tonne on the London Metal Exchange and finished at US$6,824. June is already off to a good start with the red metal trading above May’s high already.

CM: Let’s shift over to nickel, another base metal.

ST: In nickel, the International Nickel Conference closed out the month in Toronto, with the INN team interviewing experts in the nickel space.

Just for a taste of the coverage, president and CEO of RNC Minerals (TSX:RNX) Mark Selby said that nickel was shaping up to be the best-performing base metal of 2018 — make sure you watch his interview with our reporter Nicole on his insights as to why, though there’s plenty of talk about the electric car market and how it’s playing a role.

CM: How about prices for nickel?

ST: Nickel has seen a shift recently, with demand finally outpacing supply, making the price tick upwards over the month after a decade of the base metal being in surplus. In the middle of the month, inventories of nickel were down 30 percent on early 2016, with consumers drawing down on stockpiles. Nickel is currently trading at US$6.99 a pound — well below the high of US$25 a pound in 2007, but a big improvement on the low of US$3.50 per pound as recently as 2016.

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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