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Copper is holding steady following the European Financial Stability Facility’s scheduled Greek bailout payment. Nonetheless, political as well as economic uncertainties are prevailing across Europe, and coupled with a decline in copper demand from China, are likely to keep copper from making any significant gains.
By Shihoko Goto — Exclusive to Copper Investing News
Copper prices have inched up slightly following the go ahead for Greece to receive a scheduled bailout payment despite ongoing political instability. However, despite the positive news, prices for the red metal are being kept in check by continued worries about the Eurozone’s overall outlook. Demand has also been sluggish due to a slowdown in China’s appetite for for the red metal.
Amid worries about Europe’s financial future, there was some comfort as the European Financial Stability Facility (EFSF) agreed to make a scheduled payment to Greece from the 700 billion euro bailout fund. An initial 4.2 billion euros will be paid on Thursday and the remaining one billion euros will be paid out at a later date, depending on the Greek government’s financial needs.
Concerns about the global appetite for copper loom as copper imports in China dropped nearly 19 percent in April to 375,259 metric tons, the lowest level in seven months. While growing copper inventories led many analysts to expect the sharp decline in imports, there is growing concern that Chinese demand will remain sluggish in the coming months. Overall, there is wariness about China’s economic outlook given that imports in April rose by only 0.3 percent. Exports increased by just 4.9 percent from the same period a year ago and gained 8.9 percent from the previous month.
Despite the EFSF’s decision to go ahead with supporting Greece as planned, at least for now worries are rising across Europe about the country’s political situation. Greece is still struggling to establish a new government following last weekend’s elections. While voters’ discontent with international bailout efforts was made clear, the challenge now is for Athens to form a coalition government, which none of the major parties appears to want to do. In France, investors worldwide will be closely monitoring how well newly-elected socialist president Francois Hollande will be able to work with Germany’s Angela Merkel, particularly with regard to tackling the Eurozone’s debt crisis.
In the meantime, Spain’s decision to take over banking group Bankia will push investors to watch how the government goes forward with further banking reform in general.
In late afternoon trade Thursday, COMEX copper for July trading is up 0.9 percent at $3.69 a pound.
Company news
Xanadu Mines (ASX:XAM) reached a deal with privately-held Canadian mining group Temujin Mining to acquire its Oyut Ulaan copper and gold project in Mongolia. Xanadu will have an initial 25 percent stake in the project, while the remaining 75 percent interest will be purchased upon shareholder approval. Xanadu stated that it will invest at least five million Australian dollars in the first 30 months after a mining license has been granted.
Turning to Russia, the country’s development bank, Vnesheconombank (VEB), will be lending around $300 million to Baikal Mining over the next three years for the purpose of financing Baikal’s Udokan copper project in Eastern Siberia. Russian President Vladimir Putin is VEB’s chairman, while Baikal Mining is owned by billionaire Alisher Usmanov. The mine holds about 14.4 million metric tons of copper, but a railway link and coal power station will be required to develop the site, according to VEB.
Kazakhstan’s Eurasian National Resources (LSE:ENRC) reported that saleable copper production for the first quarter rose nearly 37 percent from the same period a year ago to 8.988 million metric tons. The surge was largely a result of increased output at its Kabolela South and Kakanda North sites. ENRC’s CEO, Felix Vulis, stated that “we have maintained production at full available capacity across most of our principal commodities, with recoveries in ferroalloys and iron ore production, as well as achieving a notable increase in copper production.”
Junior company news
Redhawk Resources (OTCQX:RHWKF) reported a 175 percent increase in resources at its Copper Creek project in Arizona. The increase amounted to 7.75 billion pounds of copper as well as 150 million pounds of molybdenum.
Alder Resources (TSXV:ALR) reported estimated stockpiles of 108 million pounds of copper at its Rosita site in Northeast Nicaragua. President and CEO Joe Arengi stated, “”[t]hese results represent a milestone achievement for Alder at its Rosita project. This resource is right at surface, and contains a reasonably good grade that adds considerable value to the company for its shareholders, serving as a solid foundation on which to build. Going forward we believe that we can add to this tonnage with an in situ resource in the vicinity of the two open pits. It also appears that there is an excellent chance that Alder can develop a mineral resource in the Rosita tailings, where detailed grid sampling was recently completed.”
Securities Disclosure: I, Shihoko Goto, hold no direct investment interest in any company mentioned in this article.