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Copper prices started the week with some upward momentum, supported by supply threats in top producer Chile.
By Leia Michele Toovey- Exclusive to Copper Investing News
Over the weekend, Codelco and unions agreed for staff workers to stay home after contractors threw rocks at buses carrying them to El Teniente, the world’s largest underground mine. According to protest leader Luis Nunez, contractors will block roads to cut any access by emergency crews or dissenting contractors to El Teniente, Codelco’s second largest mine. The protesters want the Chilean government to step in and force contract companies and Codelco to renew stalled wage talks. Contractors are asking for higher wages and benefits closer to their staff colleagues who got $32,000 in bonuses and soft loans this past April.
Copper traders are also keeping their eye on Peru for the potential of further supply threats. Peru’s newly elected president, left-wing nationalist Ollanta Humala, who defeated center-right Congresswoman Keiko Fujimori, will likely push for greater nationalization of resources in the world’s second-largest copper-producing country.
While the supply threats managed to boost copper- the upside was limited, with the undertone of economic uncertainty in China and the US keeping a lid on the gains. Benchmark copper on the London Metal Exchange traded at $9,110 a tonne in official rings, having closed at $9,135 on Monday. The metal hit its highest in a month at $9,278.50 one a week ago, but has failed to gain any momentum, with a slew of weak macroeconomic data out of the United States putting metals, and equities under pressure. Adding to the downside risk is data that suggests that China’s monetary policy is finally taking affect, stoking concerns that the country’s demand for commodities is about to take a dive. Investors will be on the lookout for cues from China’s inflation data due later this week as well as Federal Reserve Chairman Ben Bernanke’s speech.
Demand for the metal will also be affected over the coming months, as the market enters its seasonally quiet period. This year’s demand side of the copper market equation will likely see further downside, as some factory production in Japan remains idled in the wake of the earthquake and nuclear disaster.
Company news
Taseko Mines (TSX:TKO) has submitted a final revised project description for or its Prosperity gold/copper project, and is hoping for federal government approval for the mine. After receiving approval from the British Columbia Government last fall, Canada’s previous Environment Minister Jim Prentice announced in November that the project would not be approved because of environmental concerns about damage to a lake and streams. The government gave Taseko the opportunity to submit a revised plan, which it did in February, but officials requested more information. The new outline for what the company is calling the ‘New Prosperity’ project, aims to tackle the governments and local First Nations’ objections to the original plan, Taseko said. Adjustments to the mine’s plan, including the preservation of a lake, adds $300 million in capital and operating expenses, according to CEO Russell Hallbauer. The Prosperity project hosts reserves of 7.7-million ounces of gold and 3.6-billion pounds of copper.
Two of the world’s largest gold miners- Barrick Gold Corp (NYSE:ABX, TSE:ABX), and Goldcorp Inc. (TSX:G, NYSE:GG) have commenced a courtroom battle for control over the El Morro gold-copper project in northern Chile. Barrick Gold Corp. is fighting Goldcorp Inc. after Goldcorp scooped up a majority stake in the El Morro development, one of the largest known copper and gold deposits in South America. Barrick alleges Goldcorp’s deal to buy Xstrata PLC’s (LON:XTA)70 percent stake in El Morro was done illegally and is suing both parties, along with New Gold Inc. (AMEX:NDG), which has a 30 percent stake in the project. Barrick launched the legal action 17 months ago, and the lengthy trial is set to begin in Ontario Superior Court after months of failed discussions. This first phase of the trial will take place over the next three weeks, where top executives at all four companies are expected to testify. Barrick is seeking, not only regaining the project, but significant financial compensation for what it sees as economic damages from the failure of its agreement. El Morro contains proven and probable reserves of about eight million ounces of gold and six billion pounds of copper.