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By Melissa Pistilli-Exclusive to Resource Investing News Copper Investing News Copper prices rebounded form an 11-week low early this week on strong US manufacturing data and a weak dollar. Barclays Capital reports Chinese copper imports have maxed out after increasing in 2008 on government stimulus spending. Analysts predict 2010 imports will fall by 1 million …
By Melissa Pistilli-Exclusive to Resource Investing News
Copper prices rebounded form an 11-week low early this week on strong US manufacturing data and a weak dollar.
Barclays Capital reports Chinese copper imports have maxed out after increasing in 2008 on government stimulus spending. Analysts predict 2010 imports will fall by 1 million tonnes; however, confidence in the market remains as Barclays analyst Kevin Norrish sees rising demand from other nations countering declining demand from China and predicts the price of copper will rise to $8,500 per tonne by 2012.
Copper miners making news include Anvil Mining who will start production at its Kinsevere mine in the Democratic Republic of Congo in 2011, and Equinox Minerals who has just secured up to US$ 580 million in funding to pay off debts and ramp up production at its Lumwana mine in Zambia.
Leading up to Valentine’s Day, those in the diamond sector are hopeful sales will increase in February and beyond, despite no noticeable increase in demand yet this year.
Prices have managed to climb about 15 per cent from this same period last year, but prices are still around 20 per cent below their August 2008 peak. Although there are notable increases in demand from Asia, industry analysts are looking toward the American and European markets for signs of improvement.
The rough diamond market has already shown strong improvement, because diamond traders foresee increased demand for polished diamonds as the economy recovers.
In India, the Gemological Institute of America and the Surat Diamond Association have signed an agreement to promote gemological education in Surat, the world’s biggest diamond cutting and polishing center.
Diamond companies making headlines include Firestone Diamonds, mining giant Rio Tinto, and Gem Diamonds. Firestone’s diamond mine in Botswana is expected to come online near the end of this year. Rio Tinto may start work again on its Argyle diamond mine in Australia. Gem Diamonds has reported strong rough diamond prices from its Leteng Mine for the fourth quarter.
While gold struggles to hold on to the $1,100 an ounce level earlier in the week, bearish analysts were watching the $1,075 support level. Although bargain-hunters are expected to prop up prices, some are saying investor demand is cooling and point to dropping ETF holdings for the month of January as proof.
Early in the week, gold benefited from positive economic news out of the US, China and Europe as well as a pressured dollar. Investors are advised to follow the money, as in keep an eye on movements in currencies, which is really having an impact on gold trends as the markets ponder possible inflation.
Thursday, a crashing Euro sent the dollar soaring and ripped gold prices down past the $1,075 support level to close at $1,064 an ounce.
China’s monetary polices are also affecting both precious and base metals markets.
The supply side of the fundamentals equation looks good for bulls. Global gold mine production is expected to decline further over the next five years.
Starting this month, the London Metal Exchange (LME) is offering futures trading in molybdenum. There are some concerns that the listing moly as an exchange traded commodity on the LME will make prices more volatile, while others look forward to a “massive comeback” after a 5-year price low as well as more market transparency and market participation.
Prices predictions put the metal at US$ 17 per pound for 2010 and see moly rising to $20 per pound next year on strong demand. Some are forecasting a supply deficit in 2014 that could take prices as high as $40 per pound.
Companies making news include Moly Mines Ltd and Thor Mining. China’s state-owned Hanlong Mining Investment Pty Ltd has bought US$ 140 million in shares from Moly Mines and loaned the Australian-based miner $60 million. Thor Mining has announced it plans to raise A$ 250,000 through a share placement and will use the funds to evaluate new projects as it puts its Molyhil project on hold.
Equities and Economics Report’s Victor Gonçalves predicts rare earth elements will be a “huge phenomenon” rivaling the uranium boom witnessed in 2007 because there is simply not enough supply to meet growing demand, especially with China hoarding its vast reserves.
Already there are reports that many western nations are facing the risk of supply shortfalls of REEs necessary for various green technology applications.
China has cut its export of REEs by 40 per cent over the last seven years and there are reports that it may stop exporting at least two metals as early as next year. Despite these reports, it would seem many western nations have yet to act.
However, a handful of companies have begun operations in Canada, South Africa and Greenland. REE companies making news include Greenland Minerals and Energy, Globex Mining Enterprises Inc., and Northern Uranium.
Uranium demand from utilities is expected to quadruple by 2011, with China and India leading the way. These energy-hungry nations are already seeking to secure uranium supply lines and analysts predict international mergers and acquisitions in the uranium mining sector will increase.
China has been aggressively scooping up resource deposits around the world and uranium is no exception. The Chinese government is already ramping up development of its nuclear program by constructing 20 new nuclear power plants as part of its effort to make non-fossil energy 15 per cent of its total energy consumption by 2020, which some analysts say will require a minimum of 70 million kilowatts of nuclear power capacity.
To meet its nuclear fuel needs, China’s state-owned nuclear giant China National Nuclear Corp (CNNC) been making many acquisitions recently including the Azelik uranium mine in Niger and Canadian-miner Western Prospector Group.
China’s latest bid is for Khan Resources, which has part ownership of the Dornod deposit in Mongolia and was recently the target of a hostile takeover bid by Russia’s ARMZ. CNNC’s white knight 96 cents a share bid is more palatable to Khan’s management than the 65 cents a share ARMZ bid.