VIDEO - Base Metals Update August 2018

Another month, another round of tariffs and another fresh batch of news from base metals operators around the world.

In the August update, Charlotte and Scott talk about what BHP Billiton (ASX:BHP,LSE:BLT,NYSE:BBL) has been up to in Western Australia chasing the nickel market, and Freeport McMoRan’s (NYSE:FCX) projections for its Grasberg mine in Indonesia over the next few years.

Watch the video above or read the full transcript below.

Charlotte: Now that workers at Escondida have signed a new contract with operator BHP, what’s happening at Grasberg, the world’s second largest copper mine? There was news from owner Freeport McMoRan this month.

Scott: In Freeport’s quarterly report released at the very end of July, the company revealed that copper output from Grasberg would be well down over the next two years as it transitioned from an open pit mine to underground operations.

While the fully ramped-up underground mine could produce even more copper annually than the mine in its current state, it’ll be 2021 before that happens.

Given Grasberg is the second-largest copper mine in the world, it could have an impact on prices.

Charlotte: And demand for the red metal is certainly not going down. Moving away from copper, besides its shiny new contract with workers in Chile, BHP had some interesting news this month, announcing plans to become a major strategic player in the battery metals space.

Scott: That’s right, in Kalgoorlie, BHP’s Nickel West announced plans to build three new nickel mines in Western Australia that will keep the company busy until 2040. The company is building a replacement mine, is increasing capacity at its Mount Keith Concentrator and is exploring new targets to exploit in the area.

Charlotte: What’s behind this?

Scott: Well the company said that by the fourth quarter of 2019, it expects 90 percent of all of its Nickel West sales to come from the battery sector, up from less than 60 percent at the start of this year — so the company sees where its product is going and they are chasing the market.

Charlotte: So how about prices, base metals haven’t fared so well with all the trade war noise, haven’t they?

Scott: It’s a mixed bag really. Nickel has had an interesting journey through August, hitting a low of US$12,980 a tonne in the middle of the month. It’s seen some peaks though, but it’s down.

Copper hit a low not seen since July last year, falling to US$5,842 on the 17th. It’s on its way back up now though, but again, still down. In their consensus commodities forecast for August, analysts at FocusEconomics saw this coming, drawing lines between all the tariffs, slowing growth in China and a currently well-supplied market to predict copper prices would trend lower in the short term. But they predicted prices would rise in the medium- to long-term thanks to solid demand.

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Securities Disclosure: I, Scott Tibballs, hold no direct investment interest in any company mentioned in this article.