Copper Price Rises as Glencore Cuts Copper Production

Copper prices got a much needed boost on Tuesday after Glencore (LSE:GLEN) announced a new debt reduction plan that included cutting approximately 400,000 tonnes of copper cathode out of the market.
Spot copper gained about five percent to finish at $2.43 per pound, according to the Wall Street Journal, marking the biggest one-day percentage gain for the red metal in two and a half years. Meanwhile, the Journal reported that three month copper on the London Metal Exchange was up 4.4 percent to $5,345 per ton.
Production at operations owned by Glencore’s Mopani Copper Mines in Zambia and Katanga Mining in the Democratic Republic of Congo will be suspended for 18 months pending a review of the company’s operations.
“We remain very positive on the long-term outlook for our business and this is reinforced by senior management’s commitment to take up 22 per cent. of the proposed equity issuance,” said Glencore CEO Ivan Glasenberg and CFO Steven Kalmin in a release issued Monday. “Copper and zinc are both supply-challenged and an essential ingredient of future global growth.”

Taking a broader look at the copper space, some analysts certainly had optimistic views on what Glencore’s cuts could mean for prices. “If Glencore delivers on everything they said, we’re in a balanced market situation and you are likely going to see higher prices,” Bart Melek, senior commodities strategist with TD Securities, told the Journal. “The market has been caught off guard by how sensitive supply has become to price.”
Similarly, CNBC noted that Bank of America Merrill Lynch upgraded the stock to neutral following the news. “We think this should tighten the copper market and help put a floor under prices,” said analysts from the bank in a note. “Glencore’s CEO, Ivan Glasenberg, is putting his money where his mouth is, having often chastised fellow CEOs for oversupplying commodity markets.”
However, other analysts were more measured in their reaction to the news. In a separate article from the Wall Street Journal, Stephen Briggs of BNP Paribas stressed that China was still more important to pay attention to. ““I would say in itself [Glencore’s shutdowns] are a mild positive, but I wouldn’t call it a complete game-changer,” he told the publication. According to Reuters, data released from China on Tuesday showed that copper imports were fairly flat in August despite weaker prices.
In any case, Glasenberg’s aims to introduce “supply discipline” will come as a welcome change for resource investors.

Company news

Copper North Mining (TSXV:COL) released results from the first eight drill holes from a 22-hole program at its Carmacks copper-gold project in Canada’s Yukon. Highlights included an estimated true width of 18.32 metres of oxide mineralization grading 0.72 percent total copper, 0.47 percent soluble copper and an estimated true width of 24.01 metres of sulphide mineralization grading 1.01 percent total copper.
Copper Fox Metals (TSXV:CUU) reported that it had found a strong chargeability signature at its Sombrero Butte copper project in Arizona. The signature is at least 600 meters wide and is open to the east and west.
“The results of the IP survey support our interpretation of the presence of a buried porphyry copper system,” said Copper Fox CEO, Elmer Stewart, in Tuesday’s release. “The large chargeability signature exhibits a strong positive correlation with the alteration, mineralization and copper-molybdenite geochemical anomalies outlined in 2013 and with historical drill results.”
Last week, Rambler Metals and Mining (TSXV:RAB) secured an amended and restated purchase agreement with its partner, Transamine Trading, extending its offtake agreement to December 31 2021. Under the terms of the agreement, Transamine will purchase in advance, at Rambler’s option, up to US$5 million of concentrate from the Ming copper-gold mine.
Finally, Mariana Resources (LSE:MARL) recently reported additional high-grade gold-copper intercepts from drilling at its Hot Maden project in Turkey. Highlights included intercepts of 108.2 at 3.08 grams per tonne of gold and 1.3 percent copper and 88.5 meters at 1.8 grams per tonne of gold and 2.3 percent copper.
Additionally, Mariana recently reported that it had terminated its option agreement with Condor Resources (TSXV:CN) for the Soledad project in Chile, stating that deep targets at the project represented “significantly elevated discovery risk and cost.”
 
Securities Disclosure: I, Teresa Matich, hold no direct investment interest in any company mentioned in this article.
Editorial Disclosure: Copper North Mining and Copper Fox Metals are clients of the Investing News Network. This article is not paid for content.