Archive | Commodity Super-Cycle and Decline

From using drones to stockpiling cyanide, miners keep digging amid pandemic – by Anastasia Lyrchikova, Clara Denina and Melanie Burton (Reuters U.S. – March 18, 2020)

https://www.reuters.com/

MOSCOW/LONDON/MELBOURNE (Reuters) – From using drones for field inspections to stockpiling cyanide, miners are scrambling to maintain output amid the coronavirus pandemic, a task made trickier in underground mines where social distancing is nearly impossible.

The virus has claimed 8,700 lives and infected over 200,000 globally. While miners have faced some outages, due to government shutdowns in places like Peru and Mongolia, most production continues.

In a defensive step, miners have begun stockpiling fuel, hydrofluoric acid, lime and other industry staples, including cyanide, which is used to extract gold from rock. Continue Reading →

For the Beaten-Down Miners, It’s All About Timing: Taking Stock – by Michael Msika (Bloomberg News – February 4, 2020)

https://finance.yahoo.com/

(Bloomberg) — When do you catch a falling knife? That’s what investors in resource-related stocks must wonder after the Stoxx basic resources sub-sector tumbled nearly 10% since the coronavirus crisis escalated in mid-January, and as commodity prices are rebounding today.

Metals and miners have been feeling the heat, as uncertainty mount over the impact on Chinese economic growth and demand for commodities. But as in every sell-off, pockets of opportunity may be emerging.

First, there’s the context: China now accounts for over half of global demand for industrial metals, compared to 20-25% in 2003 when the SARS virus broke out, says Hans Guennewigk, a portfolio manager at Consortia Asset Management. But: there’s also what the country might do to limit the economic damage. Continue Reading →

NEWS RELEASE: Deloitte Global mining report explores key trends in 2020

• As the industry balances growth strategies with preparation for a possible economic downturn, companies are revisiting talent and diversity, strengthening community relationships, and seeking new ways to create value.

• Navigating this complex landscape will require strong leadership, with mining executives expected to have broader skill sets as well as be fluent in everything from technology to environmental impacts.

Full Report: https://bit.ly/2OiTuED

Toronto, February 3rd, 2020 — Released today, the 12th annual edition of Deloitte Global’s mining report, Tracking the Trends, explores key trends facing mining companies in their ongoing pursuit of productivity, financial discipline, operational excellence, and sustainable growth. Continue Reading →

Private Equity Abandons Mining as Deal Opportunities Dry Up – by Thomas Biesheuvel (Bloomberg News – February 3, 2020)

https://www.bloomberg.com/

Private equity firms lost interest in the mining world last year, pumping 75% less money into the sector as they focused more on funding existing investments.

Investments dropped to $500 million from $2 billion a year earlier, according to a report by law firm Bryan Cave Leighton Paisner. That was the lowest amount since the company started tracking the space in 2013.

Private equity poured money into the mining sector several years ago when big producers were forced to shed assets amid a collapse in commodity prices. Continue Reading →

The Coronavirus Won’t Wreck the Commodities Market – by David Flicking (Bloomberg News – January 28, 2020)

https://www.bloomberg.com/

Don’t underestimate how much industrial stimulus Beijing will inject in the economy to keep growth on-target.

A rampaging epidemic in the country that consumes about half of the world’s metals has to be bad news for mining stocks, right? Investors are certainly making that bet.

The week started with the Bloomberg World Mining Index falling the most in nearly six months, and a six-day losing streak continued Tuesday on expectations that a slowdown in economic activity will cut China’s voracious appetite for commodities.

Australian shares of Rio Tinto Group fell as much as 5.9% when trading resumed after a public holiday Monday, on track for their biggest slide in three-and-a-half years. Those of iron-ore producer Fortescue Metals Group Ltd. slumped as much as 8.7% in early trading. Continue Reading →

Next decade set to be a serious transition period for mining – report – by Simone Liedike (MiningWeekly.com – January 21, 2020)

https://www.miningweekly.com/

The global mining and metals sector is facing one of its most challenging transitions yet as the industry is considering how it can best position itself to regain and maintain stakeholder confidence on environmental, social and governance (ESG) matters, global law firm White & Case states in its ‘Mining and Metals 2020’ survey report.

According to the report, miners spent 2019 navigating a raft of challenges, with omnipresent concerns about a global slowdown offsetting strong fundamentals.

However, in the law firm’s fourth yearly survey, it asked mining and metals industry participants to share their views for the year ahead. Partners Rebecca Campbell, John Tivey and Oliver Wright co-authored and discussed some of the key findings from the survey report. Continue Reading →

World risks ‘disaster’ as reuse of natural resources declines – by Michael Taylor (Reuters U.S. – January 20, 2020)

https://www.reuters.com/

KUALA LUMPUR (Thomson Reuters Foundation) – The proportion of raw materials the world is reusing has fallen, researchers said on Tuesday, warning of a “global disaster” as annual consumption of natural resources rose to 100 billion tonnes for the first time.

Just 8.6% of the 100 billion tonnes of materials – including minerals, metals, fossil fuels and biomass – was put back into service in 2017, said a report by Amsterdam-based social enterprise Circle Economy, using the latest available data.

That compares with 9.1% of materials that were used again two years earlier, when annual consumption was 93 billion tonnes, CEO Harald Friedl told the Thomson Reuters Foundation. Continue Reading →

RPT-COLUMN-China’s commodity appetite robust in 2019, undimmed by trade dispute – by Clyde Russell (Reuters U.K. – Janaury 14, 2020)

https://uk.reuters.com/

LAUNCESTON, Australia, Jan 14 (Reuters) – China’s imports of major commodities ended last year with a bang, with strong gains showing the appetite of the world’s largest importer of natural resources remains robust despite the trade dispute with the United States.

The exception was coal, but December’s paltry imports of the polluting fuel were the result of cargoes not being cleared by customs in response to Beijing’s wishes to put a cap on purchases from overseas.

Once again the standout was crude oil, with December imports coming in at 10.78 million barrels per day (bpd), down slightly from November’s record 11.13 million bpd. The total for the year was 10.2 million bpd, up 9.5% from 2018 and the 17th straight year that annual imports have set a record high. Continue Reading →

COLUMN-Base metals hope for manufacturing recovery in 2020 – by Andy Home (Reuters U.K. – January 7, 2019)

https://uk.reuters.com/

LONDON, Jan 7 (Reuters) – Well, at least there was nickel. Looking back on 2019 it was nickel that provided most of the thrills and a fair share of the spills in the base metals complex.

The rest of the London Metal Exchange pack was largely moribund. Full-year performances ranged from up 5% (copper) to down 15% (tin) with aluminium, zinc and lead closing December barely changed from the start of January.

The obvious culprit for such a subdued performance was President Trump, given the pervasive uncertainty generated by the United States’ trade stand-off with China. Continue Reading →

RPT-COLUMN-Commodities 2020? Trump, China bring deja vu, all over again – by Clyde Russell (Reuters U.S. – December 17, 2019)

https://www.reuters.com/

LAUNCESTON, Australia, Dec 17 (Reuters) – As 2020 approaches, the year ends with the tantalising prospect of a trade deal between the United States and China. Again.

Initial agreement to de-escalate the tariff war between the world’s two biggest economies has been interpreted as a positive for the global economic outlook. But it’s worth remembering that 2018 ended on a similar note – leaving the commodities outlook once again hostage to the whims of Donald Trump and Xi Jinping.

In November last year, the U.S. President and his Chinese counterpart also reached a trade agreement of sorts at the G20 summit in Argentina. That was also touted at the time as major progress to ending the tariff war that started in the middle of 2018. Continue Reading →

COLUMN-China’s imports of major commodities show accelerating trend – by Clyde Russell (Reuters U.S. – December 9, 2019)

https://www.reuters.com/

LAUNCESTON, Australia, Dec 10 (Reuters) – The growth rate of China’s imports of major commodities has accelerated in recent months, indicating Beijing’s stimulus efforts may be bearing fruit and that the impact of its trade dispute with the United States may not be as bad as feared.

On the surface, China’s imports of major commodities in November presented a mixed picture, with month-on-month gains in crude oil and copper, and declines in iron ore and coal.

But it’s probably more useful to look at the prevailing trends in the year-on-year and year-to-date movements, and here a clearer pattern emerges. Chinese crude oil imports reached a record 11.13 million barrels per day in November and are up 10.5% for the first 11 months of the year compared to the same period last year, customs data showed on Monday. Continue Reading →

COLUMN-U.S.-China trade pendulum swings toward Beijing; commodities key – by Clyde Russell (Reuters U.S. – December 3, 2019)

https://www.reuters.com/

LAUNCESTON, Australia, Dec 3 (Reuters) – Since U.S. President Donald Trump launched his trade dispute with China one of the best questions to ask in order to assess the current state of the process is who, right now, is more desperate to do a deal.

For most of 18 months or so since the tit-for-tat tariffs began the conventional thinking has been Beijing is more keen to finalise an agreement, given the obvious slowing of growth in the world’s second-biggest economy.

However, the abrupt swing in the Purchasing Managers’ Indexes for both China and the United States, coupled with mounting domestic political pressure on Trump as he heads into his re-election campaign, may have altered the dynamic. Continue Reading →

Changing of the guard as mining’s mini-boom loses steam – by Peter Ker (Australian Financial Review – August 30, 2019)

https://www.afr.com/

A three-year boom in prices for some of Australia’s most important commodities is fast losing steam, tempting investors to change horses mid-race.

Saul Eslake was tempting fate. As the keynote speaker for a sparsely attended mining conference during the deathly bottoms of the commodity cycle, the prominent economist’s message did not lift the mood.

”It could well be, in my view, that the commodities boom Australia has just experienced in the last 12 or so years is the last of its kind in human history unless unforeseen technological developments ordain otherwise,” he told Melbourne’s IMARC conference on November 10, 2015. Continue Reading →

Column: Why London Metal Exchange warehouses thrive in the shadows – by Andy Home (Reuters U.K. – July 26, 2019)

https://uk.reuters.com/

LONDON (Reuters) – Investment fund Cobalt 27 boasts on its website that it holds 2,904.7 tonnes of physical cobalt “fully insured and stored in LME-certified warehouses in Europe and the U.S.” Which is curious because the London Metal Exchange (LME) reports only 840 tonnes of cobalt sitting in its entire global warehouse network.

That, however, is metal that has been placed on warrant with the exchange. What Cobalt 27 owns is not on warrant. It could be warranted overnight. It is, after all, already sitting in one of the LME’s 559 registered warehouses.

But because it hasn’t been warranted, it doesn’t get counted as part of the LME’s daily inventory reports. And because it hasn’t been warranted, it’s also subject to a much lower storage charge. Which is, of course, one of the main reasons it hasn’t been warranted. Continue Reading →

OPINION: Mining industry needs investment or metal shortages are inevitable – by Julian Kettle (Woood Mackenzie – July 3, 2019)

https://www.woodmac.com/

Julian Kettle is Vice Chairman, Metals & Mining at Wood Mackenzie.

The time is right for the mining industry to invest in new projects. The fundamentals are clear: we forecast supply gaps across a number of key commodities by 2028.

Investors are understandably concerned that the mining industry will repeat the sins of the past. Meanwhile, macro-economic uncertainty is putting the brakes on project development, and the industry must contend with a widening range of above-ground risks.

But our view is that strong fundamentals mean that investors willing to step up will be rewarded.

Where are the most critical supply gaps? Continue Reading →