Which way? Metals

Discussion in 'Commodity Futures' started by themickey, Dec 10, 2020.

  1. themickey


    I believe highly likely we have a copper breakout today.
    Iron ore as well, have a suspicion this may have bottomed.
    #181     Nov 11, 2021
  2. themickey


    US adds nickel, zinc to critical minerals list
    Reuters | November 15, 2021 | Battery Metals Intelligence USA Nickel Zinc
    Nickel smelter in Sorowako, Indonesia. (Image by Marcelo Coelho, courtesy of Vale).

    Nickel and zinc are now deemed critical minerals by the United States.

    The US Geological Survey (USGS) is proposing both metals be included in the redrafted critical minerals list. The list has grown from 35 to 50 since the last iteration in 2018, but that largely reflects the splitting out of rare earth elements and precious group metals into separate entities.

    Four minerals – helium, potash, rhenium, and strontium – have been dropped. The United States is the world’s leading producer and net exporter of helium, while import dependency for the other three is mitigated by “low disruption potential”. Uranium was also dropped after being reclassified as a “mineral fuel”.

    Nickel and zinc are the only two new additions, and each reflects an evolution of the methodology used to determine whether a mineral is critical to the well-being of the US economy.

    Single point of failure
    According to the USGS, the United States relies on refined nickel imports for around half of its annual consumption.

    The top three suppliers last year were Canada (42%), Norway (10%) and Finland (9%) – all deemed “friendly” countries.

    This relatively benign supply profile kept nickel off the critical minerals list in the past.

    But it’s now included for two reasons.

    Firstly, the USGS has expanded its criticality criteria to look beyond trade dependency to domestic supply, particularly what it calls “single points of failure”.

    There is currently only one domestic operating nickel mine in the United States – the Eagle mine in Michigan – which exports concentrates for overseas refining.

    There is a single producer of nickel sulphate, but only as a by-product of precious group metals production.

    This limited domestic nickel production base was also highlighted in the Biden Administration’s 100-day review of critical supply chains, which recommended the government should invest as a priority in a new nickel refinery.

    The second reason is nickel’s changing usage profile from alloy in stainless steel production to chemical component in electric vehicle batteries.

    The combination of limited, single-point-of-failure domestic supply and the expected demand growth from battery manufacturers makes “a compelling case for inclusion” of nickel in the critical minerals list, the USGS noted.

    Or, as the supply-chain review put it, not having enough battery-grade nickel “poses a supply chain risk for battery manufacturing globally, not just in the United States”.

    Zinc concentration
    The United States’ domestic supply chain of zinc is less fragile.

    The country has 14 operating mines and three smelter facilities, one primary and two secondary, one of which resumed operations in 2020 after several years of inactivity.

    However, the country’s refined zinc import dependency is relatively high. Imports of 710,000 tonnes last year represented 83% of domestic consumption, according to the USGS.

    Global supply trends make this problematic.

    “For zinc, global mine and smelter production concentration has increased notably during the past few decades,” the USGS said, adding that “this change has been driven mainly by increased production in China”.

    Part of the thinking behind the latest critical minerals list is moving the analysis beyond simple import dependency to encompass broader global supply trends.

    The more supply is concentrated in one country, the higher the potential risk factor, particularly if that country is designated a mineral competitor, as is the case with China.

    Zinc’s supply risk is now above the 0.40 threshold used by the USGS to help determine criticality at 0.48.

    Top of the supply-risk table are gallium, niobium and cobalt, followed by several rare earth elements.

    Aluminum lies in eighth place with a score of 0.60, thanks to the concentration of smelting in China, and tin is also on the supply risk spectrum with a score of 0.50.

    A continuum of supply risk
    The USGS stresses that falling below the 0.40 cut-off point doesn’t mean there is no supply risk.

    “The metrics developed with (the new) methodology are best viewed as a continuum of supply risk”, and one which is continuously moving as global supply chains for each commodity evolve, it said.

    Out of the major industrial metals traded on the London Metal Exchange, only two are now not deemed critical minerals by the United States.

    Copper has a low supply-risk profile due to a large domestic mining, smelting and recycling industry.

    Lead is more interestingly poised on the USGS supply-risk table with a score of 0.39, just below the cut-off point, again due to a growing concentration of global mining and smelting capacity in China.

    None of these industrial metals feature on the European Union’s critical minerals list.

    In part that’s a reflection of Europe’s domestic production base both at the mining and smelting level.

    But in part it may be because the USGS is ahead of its European peers in analysing global supply patterns and the resulting potential threats to critical minerals availability.

    Nickel and zinc may not spring to mind when most people think of critical minerals, but as far as the United States is concerned, they both are.
    #182     Nov 15, 2021
  3. themickey


    I'm not going to post the whole article here, just bits and pieces, follow the link if you wish to read all of it...

    China’s ‘unhappy’ magnetite marriage to Clive Palmer to face ultimate test

    One of the most poisonous commercial relationships in Australian history will soon go on trial, as China’s CITIC and Clive Palmer’s Mineralogy clash over the ‘for better or worse’ elements of their contractual marriage.

    By Aja Styles November 22, 2021
    Clive Palmer’s Mineralogy will clash over CITIC’s $18 billion Sino Iron project in WA’s Pilbara, with CITIC Pacific ceo Chen Zeng. credit AFR.com

    As one historic billion-dollar iron ore feud in Western Australia stands aside, another looks set to get under way.

    Mineralogy mining magnate Clive Palmer has worn thin the patience of the WA Supreme Court in his clash with Chinese behemoth CITIC Group.

    Mr Palmer’s spurious claims and attempted delays over a trial into contracts at the $18 billion Sino Iron project at Cape Preston in the Pilbara have been recently labelled an “abuse of process” by the Supreme Court.

    The case judge went as far as awarding special costs against the Queensland billionaire to mark the court’s disapproval over his unreasonable actions.

    In stark contrast, Hancock Prospecting magnate Gina Rinehart has largely succeeded in her multifaceted actions across various courts in whittling down and delaying the decades-long case over her lucrative Hope Downs ore mining tenement in the Pilbara. That trial, initially set for April, has now been vacated and pushed back to 2023.

    Sino Iron’s magnetite iron ore processing plant in Cape Preston in the Pilbara, WA, is run by CITIC Pacific Mining under disputed lease agreements with Mineralogy billionaire Clive Palmer. Credit:CITIC

    Sino Iron, 100 kilometres south-west of Karratha, is the biggest magnetite ore mining and processing operation in Australia. It operates on mining rights and site lease agreements for 2 billion tonnes of raw ore extraction, exercised rights to a further 1 billion tonnes and a current annual extraction limit of 27.6 million tonnes of magnetite powder for export.

    He described it as “litigious warfare on a grand scale with many fronts”, where the pair had been tied “for better or worse” into an “‘unhappy’ contractual marriage, which has led to the unfolding of an unfortunate landscape of the litigation”.

    In February 2020, ASIC brought two criminal charges under the Corporations Act against Mr Palmer and his Mineralogy directorship over “dishonestly gaining a benefit or advantage” over the payments, which carries up to five years in jail. Court proceedings are still under way after delays due to actions brought by Mr Palmer.

    Palmer United Party in 2013 with elected representatives Dio Wang (WA), Jacqui Lambie (TAS), Clive Palmer, Ricky Muir (VIC) and Glenn Lazarus (QLD).Credit:Rob Homer/AFR

    Mr Palmer refunded the money in 2014, via his now-defunct company Queensland Nickel, and the then-civil matter brought before the Supreme Court of Queensland ultimately ruled there hadn’t been a breach of the port management account since the money wasn’t held in trust.
    “It is no wonder that delving into litigation between these parties sometimes has all the seeming of walking into a room or mirrors.”

    Now a “gargantuan discovery exercise” of pouring over more than 85,000 documents awaits the parties ahead of January’s trial, where Mr Palmer’s Mineralogy will try to assume the role of David in challenging “a complex overseas-based corporate Goliath of the Hong Kong stock exchange”.
    #183     Nov 21, 2021
  4. themickey


    CHARTS: Mining’s fattest margins

    Gold mining companies are best positioned as gold continues to trade around the $1,800 an ounce level. Indeed, the sector is set to enjoy its fattest margins on record in 2022 expanding from an expected 72% this year to 86%.

    Some of the better profitability and lower all-in sustaining costs for gold diggers will stem from richer head grades which S&P GMI sees increasing slightly from 1.4g/t in 2021 to 1.42g/t in 2022.

    Copper margins are expected to shrink as the price falls back to around $4/lbs or $8,820/t next year and mine site costs (Holden highlights rising labour costs as a factor) increase but should remain above 100% for a second year in a row – this first time that’s happened in over a decade.

    The margins of zInc miners are set to shrink in 2022, but remain robust compared to 2019 and 2020 when the sector was losing money while nickel’s 2022 will be much like this year.

    Lithium miners’ all-in costs are set to remain stable next year, but S&P GMI does not believe prices for the battery raw material will hold onto record highs in 2022.

    #184     Nov 23, 2021
    xandman likes this.
  5. themickey


    The slump in the best indicator of China’s commodity trade is all about iron ore
    MINING.COM Staff Writer | November 26, 2021 Intelligence Markets News China Iron Ore
    Stock Image


    The Dalian iron ore benchmark contract marked its first weekly gain since early October on Friday, after a five-session rally driven by China’s moves to ease a liquidity crunch to help its debt-laden property developers.

    However, the best indicator of China’s commodity trade suggests that the metal price will consistently trend downwards in the coming months.

    The Baltic Dry Index (BDI) is a composite measure of the cost of shipping dry bulk commodities, such as coal, iron ore and grains, by sea, and is considered a bellwether for global economic activity.

    After tripling since the start of the year, the BDI has now fallen by just over 50% since its early-October peak.

    According to a new report by Capital Economics, the drop in the BDI is related to the recent plunge in the price of iron ore.

    “Some commentators have pointed to the slump in the Baltic Dry Index as a sign that shipping bottlenecks are easing. But we think it is more a symptom of lower Chinese steel output and plunging iron ore prices,” said Capital Economics Chief Commodities Economist Caroline Bain.

    “The decline in the BDI has not been mirrored in other shipping cost indices. Container shipping costs have dipped recently, but they remain historically very high.”

    Iron ore typically accounts for around 20-30% of the dry bulk trade and China consumes around two thirds of the world’s seaborne iron ore.

    China’s monthly steel production has been falling since July after seeing double-digit growth in the first half of the year, as strict output controls and curbs on power usage dented both supply and demand.

    In a recent report, Fitch Solutions said the iron ore rally is over and revised down its price forecast from $170/tonne in 2021 and $130/tonne in 2022 to $155/tonne and $110/tonne, respectively.

    “For now, China’s iron ore imports have held up relatively well given the downturn in steel production, but stocks at ports are rising and we think it is just a matter of time before imports plunge,” said Bain.
    #185     Nov 26, 2021
  6. themickey


    I'm bullish iron ore and loading up slowly on pullbacks.
    #186     Nov 26, 2021
  7. themickey


    Fortescue tests new iron ore price discovery frontier
    Peter Ker Resources reporter Nov 29, 2021

    Fortescue Metals will test a new frontier of iron ore price discovery with plans to run auctions on the same digital system that stunned lithium markets this year by enabling Pilbara Minerals to sell its product at more than double the industry benchmark price.

    Fortescue has struck a preliminary deal with disruptive commodity trading platform provider GLX Digital to sell iron ore on the “GLX Connect” platform, and Fortescue will become a small shareholder in the star-studded technology company if the deal is formalised.
    Fortescue has confirmed the deal but says it will put small volumes of iron ore through the platform initially.

    The issue of shares to Fortescue would see the iron ore miner join the private companies of Fortescue chairman Andrew Forrest on the register of GLX Digital, alongside oil and gas giants Woodside and Shell and Alex Waislitz’s Thorney Investment Group.

    GLX Connect empowers the seller by allowing it to design and manage its own auction terms on a digital platform and retain the market information obtained in the bidding process.

    Originally created for the trading of liquefied natural gas (LNG) and oil, the platform removes the traditional intermediary between the buyer and seller and enables the seller to manage counter-party risk by choosing who is invited to participate in auctions.

    The advantage handed to sellers using GLX Connect was demonstrated by Pilbara Minerals’ second auction on the platform in September, when a single, small batch of lower grade lithium-rich spodumene concentrate sold at the extremely high price of $US2240 per tonne.

    Price reporting agencies had put the spodumene concentrate price around $US900 per tonne at the time, and the bumper price achieved by Pilbara demonstrated the power of being able to set the precise terms – including volume and delivery schedules – of an auction.

    Access to GLX Connect will cost Fortescue $US100,000 a year under the terms of the three-year deal, which has not yet been finalised.

    Fortescue will be issued a small shareholding – less than 1 per cent – in GLX upon formalisation of the deal and will earn further shares as it conducts auctions on the platform.

    Fortescue confirmed the deal but said it would put small volumes through the platform initially.

    “Fortescue is exploring the potential to trial new platforms to complement our existing sales and marketing channels. The majority of Fortescue’s products will continue to be sold via existing contractual seaborne arrangements, as well as our portside sales entity FMG Trading Shanghai,” said a spokesman for the iron ore miner.

    The GLX Digital deal comes as the marketing side of Fortescue’s business becomes more complex; the company now sells at least six iron products including a higher grade product designed to mitigate the impact of price penalties on the company’s lower grade products.

    The company may introduce another new product within 13 months when its troubled Iron Bridge project is expected to start selling a magnetite concentrate with iron grades above 67 per cent.
    Fortescue has also established a beachhead at Chinese ports, enabling it to sell much smaller volumes of iron ore to a new range of customers that do not want to buy iron ore in the large volumes sought by major steel mills.

    Some of the trades executed by Fortescue’s portside trading beachhead in China are executed in renminbi rather than the standard currency for the iron ore industry, US dollars.

    The big Australian miners sell iron ore on a mix of daily market and longer-term contract prices, with some trades including shipping costs while others do not include the cost of shipping to the customer.

    S&P Global Platts surveys iron ore market participants to determine the industry “benchmark” price for ore with 62 per cent iron – including shipping costs – and the benchmark price was $US96.65 per tonne on November 26.

    To boost uptake in the LNG industry, GLX reduced governance requirements on its “GLX Connect” platform this year, including by making trades non-binding and therefore subject to a secondary confirmation between the seller and buyer.

    GLX Digital was founded by former Shell lawyer Damien Criddle, who remains the biggest shareholder with close to 25 per cent.

    The board of the privately held GLX Digital is chaired by Reserve Bank director and Fortescue deputy chairman Mark Barnaba and included Woodside chief executive Meg O’Neill until she resigned this month.
    #187     Nov 28, 2021
  8. themickey


    MMG to shut down operations at Las Bambas copper mine by mid-December
    Cecilia Jamasmie | December 3, 2021 https://www.mining.com/mmg-to-shut-down-las-bambas-copper-mine-by-mid-december/
    Las Bambas is one of Peru’s largest copper producers, accounting for around 2% of global supply. (Image courtesy of MMG Instagram.)

    Chinese miner MMG (HKG: 1208) will end copper production from its Las Bambas mine in Peru by mid-December following months-long road blockades that have prevented essential supplies from reaching the operation.

    The company, a unit of state-owned China Minmetals, said that despite holding meetings with residents of the Chumbivilcas community, it was unable to reach an agreement with them due to what it qualified as “excessive commercial demands”.

    At issue is a dirt road that Las Bambas uses to transport the copper from its mine to a sea port. Communities along the road asked for more logistics transport contracts, financial compensation for the land used to build the mining road and actions to reduce alleged damage to their crops caused by the large number of trucks using the road every day.

    They also wanted to set a fund with 8% of the mine’s annual profits to finance productive and social development projects, while the company offered financing individual social projects.

    MMG believes it’s the government’s responsibility to pave the route, but a long-term solution would be building a separate freight train link. Construction of the railway would take more than five years and cost $9.2 billion, according to Peru’s transport and communications ministry.

    400 days lost
    Las Bambas, Peru’s fourth-largest copper mine and the world’s ninth, has grappled with on-and-off protests and road blockades since the operation’s 2015-16 ramp-up.

    Operations at the mine were disrupted for more than 100 days in 2019, with 70 communities along the 450 km. (280 mile) road to the Port of Matarani demanding action from MMG and the national government over emissions from trucks and reduction of their farmlands.

    A three-week-long roadblock protest staged at the end of 2020 prevented MMG from exporting 189,000 tonnes of copper concentrate worth $530 million from the mine.

    More interruptions in September this year forced the company to halt operations for a few days. The company agreed in early October to integrate the communities into its value chain, even though they are not within the asset’s area of influence.

    Overall, operations at Las Bambas have been disrupted for close to 400 days since 2016, according to company estimates.

    With production capacity of 400,000 tonnes of copper a year (and significant quantities of gold and silver) or some 2% of the total global primary output, the mine brought in about 69% of MMG’s revenue in 2020.

    In July, Las Bambas flagged that production in 2021 was expected in the low end of its 310,00-330,000 tonnes forecast.

    Muted market response
    With a rosy demand outlook amid the transition to green energy, attention on copper markets has shifted to the supply picture where yawning gaps have opened up. Former Glencore (LON: GLEN) CEO Ivan Glasenberg said in June copper supplies needed to increase by one million tonnes a year until 2050 to meet expected demand.

    The Swiss commodities trader and world number four miner was strong-armed into selling Las Bambas to a Chinese consortium in 2014 after Beijing made the disposal conditional to its approval of the Glencore-Xstrata merger. In hindsight the $6.2 billion cash deal now seems like an excellent outcome for Glencore, which used the proceeds to shrink its considerable debt pile at the time.

    On Friday prices did not react to the news with futures trading in New York down on the day. March delivery contracts were exchanging hands for $4.28 a pound ($9,435 a tonne) by midday, a decline of 5% compared to last Friday. Copper prices hit all-time highs of more than $10,000 a tonne in May this year.
    #188     Dec 4, 2021
  9. themickey


    Nickel imo has been a little bit of a metals laggard, that may be about to change.
    Currently lots of interest shown by large mining companies in mergers and aquisitions, BHP, FMG, Noront, IGO, WSA.
    Nickel cash.
    #189     Dec 9, 2021
  10. themickey


    Nickel on cusp of breakout.

    #190     Jan 3, 2022