Miners navigate uncertainty of currency crises, trade war – by Gabriel Friedman (Financial Post – August 21, 2018)


The U.S. dollar surge is only part of the problem

Vancouver-based First Quantum Minerals Ltd. entered the summer with copper prices on the rise, and investors enthusiastic about its stock.

But the summer has not been kind to Canadian miners, and the company is now contending with plummeting copper prices — which have fallen 19 per cent since June to about US$5,820 per metric ton.

As the U.S. dollar rises in value, and fears of a U.S.-China trade war take root, many Canadian mining executives are seeing ripple effects, as the commodities they produce, from copper to gold, and currencies in some of the markets where they operate, get pummelled. It’s all creating a difficult environment for mining companies.

“I don’t remember times anything like this,” said Clive Newhall, president of First Quantum for more than two decades. “These are one-offs.” “Our view of the future copper price is still a very positive one,” he added, “but in the short term, there’s obviously a lot of noise.”

The company’s stock is down nearly 25 per cent since early June to $17.24. His company is not alone in predicting a positive copper outlook. In February, Goldman Sachs analysts had predicted copper prices could exceed US$8,000 per ton within 12 months.

For the rest of this article: https://business.financialpost.com/commodities/i-dont-remember-times-like-this-miners-navigate-uncertainty-of-currency-crises-trade-war

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