Trade war jitters have halted the commodity rally and could disrupt miners’ plans for big projects – by Gabriel Friedman (Financial Post – July 14, 2018)

Speaking at a conference in early June, Vancouver-based Teck Resources Ltd.’s chief executive Don Lindsay raved that his company invested “in the right commodities at the right time,” with a nod to one of its biggest bets — copper.

Lindsay predicted copper soon would hit US$3.50 per pound, at which point his company’s long-planned Quebrada Blanca 2 project — a 300,000-ton per year copper mine to be constructed in northern Chile’s high desert — would add $1 billion dollars per year in cash flow.

“That price is not far off,” he said at the June conference in Chicago, organized by Deutsche Bank, at a time when copper had experienced nearly a year of gains.

But instead of increasing, at the end of June, copper prices started a free fall, dropping 15.7 per cent from US$3.29 per pound to a new one-year low of US$2.77. Benchmark copper fell 1 per cent to US$6,174 per tonne, hovering near one-year lows. Prices are down about 14 per cent in 2018.

Now CIBC Capital Market analysts have pinned Quebrada Blanca 2 — which Teck had suggested could begin construction this year, depending on permitting and other factors — as a likely casualty if a trade war erupts between U.S. and China. It represents one of the ways in which growing fears of a trade war are already hitting the mining sector.

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