Vein hope: Even miners are pooh-poohing the post-election metals rally (The Economist – Novemer 19, 2016)

DONALD TRUMP’S grandfather, Fred, got his start in the hotel industry at the turn of the 20th century supplying rooms, food, booze and female company to prospectors flocking to north-western Canada in the so-called Klondike gold rush.

It may be part of this legacy that gave America’s president-elect his taste for golden fixtures and fittings. But it may also make miners a bit wary of Mr Trump. After all, their pockets have been “mined” by a Trump once before.

So the world’s biggest mining companies are downbeat about the rally in commodities prices that accompanied Mr Trump’s election victory, which briefly pushed up prices of copper at their fastest rate in five years and sent iron-ore prices to two-year highs close to $80 a tonne. On November 15th Rio Tinto, one of the world’s biggest mining companies, told 440 workers at an iron-ore mine in Western Australia to take two weeks off at Christmas, not as a celebration, but as a precautionary measure to reduce supply.

It expects conditions to get much tougher in 2017. Its main rival, BHP Billiton, is also nonplussed. It predicts economic uncertainty, political instability and a continuation of oversupplied markets next year.

Rio has internal reasons to be cautious. Last week, in the latest twist in a long-running saga, it fired Alan Davies, its head of energy and minerals, after alerting authorities to e-mails that disclosed a payment to an external consultant working on Rio’s operations at the Simandou iron-ore mine in Guinea.

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