VIDEO - Base Metals Update September 2018

Base Metals Investing

This month, Charlotte and Scott talk Zijin’s hijinks in Serbia, how the trade war is hiding a zinc supply crunch and what BHP has been up to with its new South Flank mine.

In September, China’s Zijin Mining (HKEX:2899) made the most noise, crashing the party over who gets to own Nevsun Resources‘ (TSX:NSU) Timok project and making itself comfortable at the previously state-owned RTB Bor copper complex.

In other news, the zinc price being down is hiding a supply crunch, as larger mines that closed in previous years are yet to be replaced, and demand still won’t let up in the face of the trade war.

Charlotte and Scott go over the month of September, covering those topics and a little treat from BHP Billiton (ASX:BHP,LSE:BLT,NYSE:BBL). Watch the whole video above, or scroll down to read the transcript.

Charlotte: Big news broke very early this month didn’t it, with China’s Zijin Mining striking twice in Serbia.

Scott: That’s right, the Chinese company has been very busy — first cab off the rank was the announcement from Belgrade that Zijin was their new partner in the RTB Bor copper complex — a big deal by itself, with that project carrying a US$1.26 billion price tag, but that was overshadowed almost immediately.

Charlotte: The big story was of course Zijin outbidding Lundin Mining (TSX:LUN) for Nevsun Resources.

Scott: Yep. Zijin offered $1.85 billion Canadian dollars for the entire company — pipping Lundin’s July bid by C$450 million.

Nevsun was clearly chuffed by the news, making the effort to point out Zijin’s offer was a friendly takeover compared to Lundin’s hostile bid which it was advising its shareholders to reject.

RTB Bor and Nevsun’s Timok are two copper projects are very close to each other, so Zijin will be in a good position to streamline the projects.

Charlotte: So given Zijin is willing to invest so much, how is the copper price holding up this month?

Scott: Better than last month! Although that may not be saying much. September’s seen copper drag itself up from rock bottom — while it hit yearly lows towards the start of the month, it’s now doing better — as of the end of the month it was back up above US$6,000 a tonne.

Charlotte: And of course the zinc price is proving to be one to watch.

Scott: Yes, this month I interviewed Stefan Ioannou from Cormark Securities who said that while the zinc price is very much depressed — along with all the other base metals because of external factors (read: trade war) the low numbers are hiding falling supply coupled with ongoing demand, hence stockpiles are being drawn down in London and Shanghai, so watch this space — and read the interview for more detail.

Looking at September, prices zinc has not only made up the ground it lost in the first half of the month, but is now above where it started. Pull the graph back out to the whole of 2018, and its still a story that shows the base metal is very much down.

Charlotte: Very interesting reading there from the chat with Stefan this month. Wrapping up, what else is news?

Scott: Well, I have something cool for you courtesy of BHP — the Australian company got cracking on the South Flank iron ore project in Western Australia with a boom. South Flank, shown here with footage of the first blasts on site will produce 80,000 tonnes of iron ore annually at a higher grade of 62 percent. The new mine will directly replace output from the Yandi mine which has reached the end of its operating life. Now that’s some very neat footage from BHP.

Don’t forget to follow us @INN_Resource for real-time updates!

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

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