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Major manganese mining companies are on the offensive, securing new operations in an attempt to capitalize on growing demand for steel. Analysis from leading iron ore companies anticipate the global demand for steel growing, due largely to emerging economies, for at least a decade.
By Dave Brown-Exclusive to Resource Investing News
Copper prices hit a 19-month peak as increased risk appetite drove investors to the red metal. So far this year, the metal has climbed 5.6 percent and is on track for a fifth straight quarterly gain. Prices are being driven by increasing demand and a reduction in inventories as overall the global economic outlook trots down the path to recovery. Extra impetus for copper came by way of a weak greenback, and collapsing inventories. Stockpiles of copper in warehouses monitored by the London Metal Exchange fell for a 19th straight time, the longest slump since July. A falling dollar makes commodities priced in the currency cheaper for overseas buyers.
The biggest fear permeating the market in recent weeks has been the potential for fall-out from an economic collapse in Greece. These fears were pacified this week; on Tuesday, Greece followed up Monday’s seven-year syndicated bond deal with an announcement that it will re-open the 5.9 percent October 2022 government bond at an auction, to raise up to US$1.35 billion.
Freeport-McMoRan Copper & Gold Inc. will pay dividends to holders of both common and preferred stock. The company said Thursday it would pay a dividend of 15 cents per share for common stock, and $1.6875 per share for 6 percent mandatory convertible preferred stock.
Vancouver based Catalyst Copper Corp. is undertaking a non-brokered private placement of up to 20,000,000 units at a price of $0.15 per unit for gross proceeds of C$3,000,000. The Company will use the proceeds of the offering to pay the remaining US$2 million of bridge financing to Endeavor Financial International Limited, as well as for the purpose of funding their 2010 exploration plans.
Jiangxi Copper Co., China’s biggest producer of the metal, said profit rose 2.81 percent last year. Net income rose to US $344 million and sales revenue for last year exceeded US $732 million.
After days of losing ground and trading sideways, the price of gold got a shot in the arm Wednesday morning as the dollar slipped on the euro and disappointing private sector job numbers. Many analysts were speculating Tuesday that the dollar would rebound next week after Friday’s report, curbing gold demand and furthering its rangebound predicament.
Despite achieving its sixth straight quarter of gains, the precious metal remains more than $100 below its $1,226 an ounce record high hit back in early December 2009. Gold has been rangebound for several weeks now between $1060 and $1120 an ounce, and some analysts are predicting that will be gold’s story for the rest of the year.
Gold has received a lot of support from safe-haven buying tied to debt troubles in the euro zone; however, the dollar is also benefiting from a depressed euro, forcing gold to lose anything it gains. Other concerns weighing on gold include rising real interest rates, according to analysts with an eye on Treasury Inflation-Protected Securities (TIPS). For now, the market is still looking toward Friday’s US employment report; however, we’ll probably have to wait until next week after the Easter holiday to see what impact it will have on the dollar and ultimately gold.
Major manganese mining companies are on the offensive, securing new operations in an attempt to capitalize on growing demand for steel. Analysis from leading iron ore companies anticipate the global demand for steel growing, due largely to emerging economies, for at least a decade.
China is the world’s leading steel producer and major producer of manganese. However, Chinese manganese is of low quality, and changes by the Chinese government regarding environmental and safety concerns of domestic operations are driving China’s appetite for imported manganese.
Australian mining company OM holdings Limited (ASX:OMH) is seeking to triple its manganese output by 2012. This increase in output is anticipated to supply 10 to 15 per cent of the world’s manganese and will challenge the power of mining giants like BHP Billiton. Currently the company sells almost 100 per cent of its products in Asia, and will be keen on rising Chinese steel demand for the sale of their increased production.
American Manganese Inc. (TSX-V:AMY) is conducting further drilling on the first manganese operation in the U.S. since 1970. This development is significant for American steel manufacturers that have been at a competitive disadvantage for forty years because of the tariffs placed on foreign manganese. The reverse circulation drill program is underway in Mohave County, Arizona. If the mine proves to be a success, domestic steel producers will have a reliable source of economical manganese.
Over the past two weeks, lawmakers in Washington have debated resurrecting a domestic supply-chain for rare earths and creating a national stockpile of the elements in response to China’s growing monopoly over the minerals. US domestic production slid dramatically through the early part of the 21st century due to low prices, which some experts attribute to Chinese state-owned production, home-grown environmental concerns and less government support. The US now relies almost entirely on China to supply rare earths despite holding approximately 15 percent of the world’s reserves.
Dudley Kingsnorth, of the Industrial Minerals Co. of Australia, estimated that by 2015 the world demand for rare earths will total approximately 210,000 tonnes. He expects China will produce around 170,000 tonnes, leaving it up to the rest of the world to supply the remainder. It is estimated that opening just one mine and building a new separation plant might cost anywhere from $500 million to $1 billion and would require a minimum of eight years.
Molycorp Minerals is a US-based companies looking to re-establish production of rare earth elements at their San Bernardino County mine and has already begun processing “light” rare earths, such as lanthanum and neodymium, from a stockpile at its mine in Mountain Pass, California. But it still has to ship its rare earths to China for final processing, because only China has the equipment to do the job.
The worldwide push for the electronics industry to take a more active role in ensuring a conflict mineral-free raw materials supply chain has encouraged the International Tin Research Industry (ITRI) to develop an initiative to combat the problem. The Tantalum-Niobium International Study Center made a financial contribution in exchange for the inclusion of columbo-tantalite in the project.
Last week, ITRI announced that it was moving forward to Phase II of its Tin Supply Chain Initiative (iTSCi), which the organization first announced last year with many big names in the electronics industry signed on as financial contributors including Apple, Dell, IBM, Intel, Microsoft and Sony.
The six-month iTSCi pilot project involves a due diligence study that will assess the viability of a tracking system by selecting a number of cassiterite and columbo-tantalite mines sites in North and South Kivu, the provinces most affected by the violence in the Congo. The goal is to trace the origin of minerals and to ensure that those entering the supply chain are not sourced from militia-controlled mines.
Critics point to major weaknesses of the initiative: 1) that it involves those with unclean hands; 2) no third-party audits are in place to monitor the process and verify claims; 3) it does not address extortion and illegal taxation problems; 4) it pushes key responsibilities back onto the Congolese state institutions; and most importantly, 5) it does nothing to address the huge problem of national army units controlling a large part of the mineral trade.
The iTSCi, despite its faults, is a step in the right direction; however, it doesn’t even begin to address all the issues. The most important goal is create peace and stability in the region for the citizens of the DR Congo, who deserve to work in safe, humane conditions and to live without the fear of physical intimidation, rape and murder.