The Northern Miner, first published in 1915, during the Cobalt Silver Rush, is considered Canada’s leading authority on the mining industry.
Patricia Mohr, vice-president of economics and commodity market specialist at Scotiabank in Toronto, will release her metal price forecasts for 2015 in her annual year-end report at the end of December. But she agreed to share some of her thoughts on base metals, gold and uranium a little beforehand with The Northern Miner.
The Northern Miner: Some people seem to think 2015 will be a writeoff for mining and metals and don’t expect a recovery until mid-2016 or even 2017. What are your views?
Patricia Mohr: I’m a little bit more optimistic for the base metals. In fact, I think when you look at the average prices this year you’ll discover that prices late this year are actually higher for most of the base metals than they were late last year. The one exception to that is copper, which is a little lower than it was in late 2013.
If you look at zinc, it was trading at US$1 per lb. on Dec. 1, and the London Metal Exchange (LME) official cash settlement price at the end of 2013 was US89.03¢ per lb. Aluminum is averaging US95¢ per lb. this year, and in December 2013 it averaged US78.8¢. Nickel is averaging US$7.30 per lb. and was US$6.30 per lb. in December 2013.
Many of the base metals, with the exception of copper, have actually edged up this year — and it’s on fundamentals, and despite lacklustre global economic conditions.
I expect zinc will move higher next year, and nickel also. Aluminum will probably move higher as well, the only one that will drift lower, but not too much lower, is copper.
So I’m not that negative. I think the equity valuations now are oversold — very much oversold as a matter of fact — on fundamentals.
In the case of nickel and zinc, recovery has more to do with supply developments than it has with demand.
Century, which is the world’s third-largest zinc mine, is going to be closed in the third quarter of 2015 because of mine depletion, and in 2016 Lisheen will close, and this comes after closures of the Brunswick and Perseverance mines, and a number of other smaller mines in Canada, so I think zinc supply is going to be quite tight next year.
It might be a bit ambitious, but I’ve been forecasting US$1.25 per lb. for zinc next year. Maybe it won’t get that high, but this year the price is going to average US98¢ per lb. — so almost US$1 per lb.
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