Base Metals Weekly Round-Up: US-China Trade Deal “Miles and Miles” Away

It’s been another interesting week for base metals, which started the year on an uptrend. Miners continued to release quarterly reports with mixed results but maintained an overall long-term bullish outlook in particular for copper.

As for base metals price performance this week, a weaker US dollar helped push prices up on Friday (January 25) but all eyes are still on the US-China trade talks.  

Commerce Secretary Wilbur Ross said on Thursday (January 24) that the US is still “miles and miles away” from a trade deal with China, but there’s a fair chance the two countries will get to a resolution.

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Copper edged higher on Friday, gaining back some of the losses from previous days but was on track for a weekly decline. Prices were supported by Freeport-McMoRan’s (NYSE:FCX) lower output forecast for 2019. The company operates the second-largest copper mine in the world, Grasberg in Indonesia.

The red metal started the week at US$ 5,951 per tonne, but was trading 1.12 percent down by Thursday at US$ 5,884 per tonne.

Looking over to nickel, prices started the week at US$ 11,655 per tonne and were also under pressure during the five-day trading period, closing down 1.02 percent by Thursday at US$ 11,535.

Meanwhile, zinc inched up this week, with prices starting at U$ 2,568 per tonne on Monday and closing up 1.40 percent by Thursday at US$ 2,605.5.

Scroll down for the top stories this week.

Base metals top news stories:

1. Barrick Weighs Options for Copper Mine as Zambia Tax Hikes Loom

Barrick Gold (TSX:ABX,NYSE:GOLD) has begun considering various options for its Lumwana copper mine, which includes selling the asset, the company announced on Monday (January 21).

The miner began fleshing out arrangements for the mine when concerns surrounding potential tax hikes in Zambia grew.

“The proposed changes to taxes and royalties would imperil the mine’s ability to sustain returns to all stakeholders, such as the significant contribution of more than US$ 3.3 billion it has already made to the Zambian economy over the past 10 years,” said Willem Jacobs, CEO at Barrick in Africa and the Middle East.

2. Codelco Headed for Possible Strike at Gabriela Mistral

Union leaders at Chilean state-miner Codelco’s Gabriela Mistral mine have voted against a new labor agreement at the company’s sixth-largest mine, with strike action looming.

As reported by Reuters on Tuesday (January 22), an offer made during negotiations over bonuses has been voted down.

“We have rejected their proposal and have voted to strike,” said Ana Catalan, union president.

Gabriela Mistral, located in Sierra Gorda has been operational since 2008, and in 2017 produced 122,737 tonnes of copper — well behind Codelco’s largest mine, El Teniente, which produced 464,328 tonnes in the same year.

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3. MinRes Furthers Joint Venture Option with Brockman for Marillana

Mineral Resources (ASX:MIN) is progressing on a farm-in and joint venture deal with Brockman Mining (ASX:BCK) over the Marillana iron ore project in Western Australia’s Pilbara region.

The latest development came on Monday (January 21), when the two companies executed a mine-to-ship logistics agreement for the transport of iron ore from Marillana to Port Hedland by a light-rail system.

The agreement is still subject to conditions such as: MinRes entering a state agreement with the Western Australian government; gaining project finances to fund the project infrastructure; gathering all necessary leases and licenses for the rail system and port infrastructure; and the company’s board making a final investment decision.

Scroll down for even more stories in base metals.

In other base metals news

Other base metals news this week included quarterly results from companies across the space.

Major miner Freeport McMoRan reported a fall in fourth quarter revenue and net income, but overall yearly results were stronger than in 2017.

The company said it expects sales volumes of about 3.3 billion pounds of copper in 2019 along with 94 million pounds of molybdenum and 0.8 million ounces of gold.

Meanwhile, Chilean copper miner Antofagasta (LSE:ANTO) achieved higher production results for the final quarter, setting a new record for the full year due to higher output at its Los Pelambres and Centinela mines.

Looking over to the zinc space, diversified miner Vedanta Resources said it is committed to invest US$ 1.2 billion into South Africa, where it operates the Gamsberg mine.

The asset, in which the company has already invested US$ 400 million, produced its first finished zinc concentrate in 2018. Vedanta is now working on a feasibility study into building a greenfield smelter and refinery at the mine, which will require another US$ 800 million.

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

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