Base Metals

Copper prices were up on Thursday, with optimism from Chinese and Chilean data giving the red metal an upward push. Operations at Freeport’s Grasberg mine resumed this week.

Copper made some gains on Thursday, recouping some of Wednesday’s losses on three-month contracts. Copper futures reached $3.3155 per pound on the COMEX, a climb of 0.6 percent. Several factors, including the potential for increased imports from China and news from Chile’s state-owned copper producer, Codelco, lent support to the red metal. Keeping copper prices from gaining too much are concerns that the United States will curb its monetary stimulus program.

Some of China’s largest copper smelters have been shutting down due to lack of supply. The reduction in the country’s output has sparked some hope that demand from China is on the rise.

Dan Smith, an analyst at Standard Chartered in London, told Reuters that “[p]eople are underestimating the pace of growth of demand in China.” Smith expects copper demand to hold pretty steady and said “the tightness in the scrap market in China is also quite notable.”

Also impacting copper prices was news from Chile’s largest copper producer, Codelco. Government statistics agency INE said the state-owned firm saw its copper output fall 1.2 percent year-on-year for the month of April, to 441,668 metric tons (MT). The company attributes the reduction in output to a 24-hour labor stoppage at unnamed mines, as well as to problems stemming from production lines and low-grade ores.

On the other side of the globe, consumer confidence in the Eurozone has given the red metal some strength. The Economic Sentiment Indicator rose to 89.4 in May from April’s 88.6, according to The Wall Street Journal. A sustained higher number could imply economic growth for the region.

Company news

For the last several weeks, eyes have been shifting to developments from Indonesia. Freeport-McMoRan Copper & Gold (NYSE:FCX) halted production at its Grasberg mine after a tunnel collapsed, killing 28 workers, two weeks ago. The company resumed operations this week after initial investigations were completed. Grasberg could potentially reach 140,000 MT of production of ore per day within the next three to four days, the company’s president and director, Rozik B. Soetjipto, told reporters on Wednesday.

Concerns over the impact that the stoppage will have on global copper production have been circling news streams. So far, the closure at the second-largest copper mine in the world has had a hand in underpinning the red metal’s price; however, only a long-term shutdown would impact overall supply. Tetsu Emori, chief fund manager at Astmax Asset Management in Tokyo, told Bloomberg that “the impact from the operations halt will not be significant on ore production and shipments” if the company is able to resume the expected production in such a short time frame.

PolyMet Mining (TSX:POM) reported on the progress made on its environmental review and the previously announced rights offering. ERM, an Independent Environmental Impact Statement (EIS) contractor, has completed drafting the NorthMet preliminary supplementary draft for the EIS. From here, the draft will be reviewed by several agencies and is expected to be made public later this summer. The company is confident that the process will produce positive results for the region.

The company will also be mailing its rights certificates to shareholders on June 4. Rights will be listed for trading on the TSX on May 31 under the ticker POM.RT.

Commenting on the announcement was CEO Jon Cherry, who stated, “[c]ompletion of the $60.5 million Rights Offering will mean that PolyMet is well financed to complete the environmental review process, obtain permits needed to build and operate the NorthMet Project, and prepare for rapid construction once we have the permits.”

Columbus Copper (TSXV:CCU) reported drill results from the 2013 diamond drill program at its Karapinar copper-molybdenum project in Turkey. The results include 153.7 meters of 0.48-percent copper and 0.1 grams per MT (g/t) gold from 91.3 meters depth and 49.35 meters of 0.47-percent copper and 0.12 g/t gold from 408 meters depth; both are part of a wider mineralized interval of 426.4 meters from 64 meters grading 0.36-percent copper, 0.08 g/t gold and 0.0101-percent molybdenum in drill hole KDH027.

First Quantum Minerals (TSX:FM) also has an option to earn an initial 51 percent interest in Columbus project and is funding the program.


Securities Disclosure: I, Vivien Diniz, hold no investment interest in any of the companies mentioned. 


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