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Copper rose to a record on Tuesday after a gain in China’s imports of the metal increased the demand outlook, amid supply disruptions in top-producer Chile.
By Leia Michele Toovey-Exclusive to Copper Investing News
Chile’s Collahuasi mine suspended exports Mondays following a weekend ship-loading crane accident that killed three workers. “Collahuasi has declared a force majeure on its contracts of copper concentrate,” said mine spokeswoman Bernardita Fernandez. Collahuasi is the world’s third largest copper mine and produces around three percent of the world’s copper.
In early futures trade on Tuesday, copper for March delivery on the COMEX metals division of the New York Mercantile Exchange rallied 6.85 cents, or 1.6 percent, to a fresh all-time high at $4.2745 per lb, surpassing a prior record at $4.2290, hit on Dec. 14. Over on the LME, Copper rose to a record high at $9,357.75 a tonne. Benchmark copper for three-month delivery on the London Metal Exchange traded at $9,354 a tonne, from $9,201 at the close on Monday.
Also boosting the red metal was an easing greenback. The dollar dipped against a basket of currencies as Moody’s put Portugal on review for a possible downgrade. The Euro was boosted by comments from a Chinese vice premier that China will support the EU’s efforts to calm the global markets in the wake of Europe’s debt crisis. A weak greenback makes dollar dominated commodities, such as copper, more affordable for holders of international currency.
Data released by China on Tuesday showed imports of refined copper rose nearly 37 percent in November from a month ago, the first month in three that the numbers moved in a positive direction. In 2011, the global copper market is expected to benefit from robust consumption in top-consumer China. At the same time, dwindling supply is expected to set the stage for a bull-run.
Copper stockpiles reached a 6-1/2 year high of 555,075 tonnes this past February. Spiking demand had eroded these stockpiles and they are currently sitting around 362,725 tonnes. Falling ore grades, disruptions and project delays, mean that copper supply will, possibly starting this year, fall short of demand estimated at about 19 million tonnes this year.
Worries about supplies in the near term have pushed the metal into a $37.50 a tonne backwardation, premium for cash material over the three-month contract compared with a discount of $20 a tonne in late October. However, this backwardation has eased from $70 on Dec. 13.
Company News
Copper Canyon Resources Ltd. (TSXV: CPY) says a $34.1-million all-stock takeover offer by joint-venture partner NovaGold Resources Inc. (TSXV: NG) is too low and shareholders should hold their ground. NovaGold is offering 0.0425 of a common share for each Copper Canyon common share. Based on Friday’s closing price, that made the offer worth 60 cents per share. Copper Canyon’s principal asset is a 40 percent joint venture interest in the Copper Canyon copper-gold-silver property. NovaGold holds the remaining stake. The property is adjacent to the Galore Creek project, owned equally by NovaGold and Teck Resources Ltd. (TSXV: TCK.B) Galore Creek, was suspended in November 2007 amid spiraling costs.
Duluth Minerals Ltd and partner Antofagasta Plc. plan to buy Franconia Minerals Corp in a deal that values it at about C$77 million ($76.2 million) to expand their deposits in the United States. The main assets of Canadian-listed Franconia are three deposits in northeastern Minnesota containing copper, nickel, and platinum group metals, which are adjacent to the Nokomis deposit being developed by Duluth and Antofagasta. Under the deal, Franconia shareholders will have the option to receive C$0.90 or 0.328 of a Duluth share for each Franconia share.
Holding company Leucadia National Corp announced that it has completed the sale of its 30 percent interest in the Cobre Las Cruces copper mining project to Canada Inmet Mining Corp. Leucadia received US $150 million in cash and 5.4 million shares in Inmet which it valued at about US $330 million when it first announced the deal last month. Leucadia was also released from its guarantee of a US $72 million loan to Las Cruces by an affiliate of Inmet. The transaction resulted in Leucadia’s stake in Inmet rising from 9.1 percent to 17.9 percent.
