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Despite having recouped some of its losses from the previous session, Dr. Copper appears to be suffering from an ailing economy.
Despite having made back some gains, pessimism in the copper market is lingering and has been knocking at the door for a few weeks now, with some players calling in the bears.
“Dr. Copper is sick,” commodities trader Dennis Gartman told CNBC on Wednesday, adding that other base metals, including zinc, tin and aluminum, are also faring poorly. Base metals, Gartman says, have been under “pressure and are starting to argue for weak economic growth.”
Echoing Gartman’s concern is Marex Specrtron analyst George Adcock who told Businessweek that “Given the questionable demand picture coming from [China], the base purchases tend to provide a good gauge of how order books are looking. The macro environment continues to look unhealthy.”
China’s Purchasing Managers’ Index for April came in at 50.6, slightly lower than the expected 50.7. This number is lower still than March’s 50.9. A reading above 50 signals expansion, while below 50 indicates a contraction; China’s declining PMI is a clear indication of a downward trend.
US jobs numbers for April are expected to be released on Friday.
Company news
Some 1,100 workers at Freeport McMoRan’s (NYSE:FCX) Grasberg mine in Indonesia will be going back to work on Friday. The company experienced a three-day strike with workers demanding better pay. This is not the company’s first time dealing with striking miners. In 2011, a three-month strike over wages resulted in the company agreeing to a huge pay hike.
Freeport was successful in reaching a deal with its workers, however, details of the agreement were not available.
Commodities giant Glencore (LSE:GLEN) stepped up the ranks with the finalization of its takeover of Xstrata. The company — which can now be referred to as a titan — has over 90 commodities within its empire, ranging from barley to vanadium and from copper to zinc. The finalized acquisition has established the world’s fourth biggest mining group.
Junior company news
Making headlines this week in the junior resource space is Colorado Resources (TSXV:CXO), who recently completed its first drill hole on the its North Rok property. The company released the results of the hole, which showed an encouraging high grade return. Colorado Resources announced 0.63 percent copper and 0.85 grams per tonne of gold at 242 meters from its first drill hole on April 25, 2013.
The North Rok property has proven and probable reserves of 301.5 million tonnes grading 0.359 percent copper and 0.274 grams per tonne gold.
Serengeti Resources (TSXV:SIR) acquired through staking a 100 percent interest in a 5,675 hectare property, Red Chris North Property, 10 km north of Colorado Resources’ recent high grade copper-gold discovery in North Rok, British Columbia.
According to the company’s press release, “the highly prospective Stikine Arch hosts a number of world class copper-gold-silver porphyry deposits including Red Chris, Schaft Creek, and NovaGold and Teck Resources’ Galore Creek deposit. Red Chris with proven and probable reserves of 301 mt grading 0.359% Cu, 0.274 g/t Au is currently the site of a $500 million mine development project by Imperial Metals.”
South American Silver Corp (TSX:SAC) has commenced international arbitration proceedings against the Bolivian government. The arbitration is a result of acts of omission of the government including the issuance of Supreme Decree number 1308 on August 1, 2012.
The decree revoked mining concessions covering the Malku Khota, which resulted in the complete expropriation of the project without compensation.
In a statment, CEO and President Phillip Brodie-Hall commented, “It is regrettable that we are forced to resort to international arbitration to resolve this matter. Bolivia chose to expropriate our mining concessions; it must now meet its legal obligations and compensate us for this significant loss. International arbitration gives us the means to pursue our case and we are very confident that it will deliver fair value compensation. We have a first-class team working on the case and, while we are open to dialogue with the Government, we are prepared to go the full distance in arbitration if that’s what it will take to get fair value compensation. Our loyal shareholders deserve nothing less.”
Securities Disclosure: I, Vivien Diniz, hold no investment interest in any of the companies mentioned in this article.