Copper – Page 96 – Republic of Mining

UPDATE 1-Glencore’s Zambian unit plans to cut more than 3,800 jobs – govt sources – by Chris Mfula (Reuters U.K. – September 23, 2015)

September 24, 2015

http://uk.reuters.com/

(Reuters) – Glencore’s Zambian unit Mopani Copper Mines (MCM) has notified the government that it plans to lay off more than 3,800 workers due to lower metal prices and high production costs, government sources said.

An electricity shortage in the southern African nation and weaker copper prices have put pressure on its mining industry, threatening output, jobs and economic growth in Africa’s second-biggest producer of the metal.

Mopani had initially said it planned to cut 4,300 citing lower metal prices and high production costs.

“Mopani has served the labour commissioner with a notice stating that they plan to declare 3,817 workers redundant,” a source at the labour ministry told Reuters late on Tuesday.

“They now have to wait for the labour commissioner’s opinion. The labour commissioner has to consent before they can implement the plan,” the source said.

Dr. Copper Has Bad News for Mining Stocks – by Isabella Zhong (Barron’s – September 24, 2015)

September 23, 2015

http://www.barrons.com/

The red metal is down 50% from its peak, but miners may suffer as weak demand weighs on copper prices.

Dr. Copper may need a hospital given the kicking being meted out to the red metal. The widely used base metal suffered another body blow on Wednesday after a gauge of China’s manufacturing activity fell to its lowest point in more than six years, heightening concerns about demand for copper in the world’s biggest consumer of the commodity.

The metal has earned the sobriquet Dr. Copper given its ability to predict the direction of global growth because its use tracks industrial activity. Unfortunately, there is only one conclusion to draw from the good doctor’s charts: prognosis, negative. A near 4% slide in the copper price on Tuesday steered the metal to a 50% decline from its February 2011 high of around $4.60 a pound, and analysts expect more pain to come as waning demand collides with too much supply.

Nomura’s Patrick Jones expects copper prices to fall another 8% from current levels in the next two years, and that casts a pall over major producers like BHP Billiton ( BHP.AU ) ( BLT ) and Rio Tinto ( RIO.AU ) ( RIO ), which are already laboring under near decade low iron ore prices.

Analysis – Copper market may get a 2003-style supply shock from Glencore closures – by Josephine Mason (Reuters U.K. – September 22, 2015)

September 22, 2015

http://uk.reuters.com/

NEW YORK – As copper miners start to slash spending and shutter mines because of the plunge in the price of the metal, experts who analyse the market in the base metal are suddenly getting a little more cheery.

They are seeing the potential for a re-run of 2003 when Chile’s Codelco [COBRE.UL], the world’s top copper producer stockpiled 200,000 tonnes of the metal that is used in everything from pipes to autos, providing the market with a supply shock that soon drove copper prices back up.

This time around hopes are pinned on the announcement earlier this month from Glencore (GLEN.L) of a sweeping strategy to shore up cash and cut spending, including plans to shutter two major, high-cost copper mines in Zambia and the Democratic Republic of Congo over the next 18 months. That will cut company output by 400,000 tonnes and remove some 2 percent of global supply from the market.

For Glencore CEO Ivan Glasenberg, the plan helped placate shareholders worried about $30 billion (£19 billion) of debt as prices of its main products from copper to coal sank to six-year lows amid worries about China’s waning appetite for such commodities.

Chile Begins Relief Efforts After Powerful Quake Kills Eight – by Javiera Quiroga and Eduardo Thomson (Bloomberg News – September 17, 2015)

September 17, 2015

http://www.bloomberg.com/

Chile began dispatching emergency crews and assessing damage left by the biggest earthquake in the world this year that claimed 10 lives and forced more than a million people to evacuate coastal areas.

After a tsunami alert was lifted early Thursday, residents of towns in the region of Coquimbo began returning to their homes, many of which had crumbled in the 8.3-magnitude earthquake. Tsunamis caused severe damage to the region’s main port, Interior Minister Jorge Burgos said.

The disaster brought back memories of an even-stronger 2010 quake that trigged a tsunami that killed hundreds. Copper prices, which had jumped after the quake hit at 7:54 p.m. local time Wednesday, retreated after producers said their mines escaped damage. Chile is the biggest producer of the metal.

“Once again we’ve been forced to face a tough blow from nature,” President Michelle Bachelet said in televised remarks. “Today our main focus is on supporting and helping people.”

On Thursday, Bachelet embarked on a tour of the hardest hit areas near the cities of Illapel and Coquimbo.

Glencore stock dives again on rating outlook, Zambia – by Chris Mfula (Reuters U.S. – September 10, 2015)

September 14, 2015

http://www.reuters.com/

LUSAKA/LONDON (Reuters) – Shares Glencore fell almost eight percent on Thursday after Zambia said it wanted to save jobs at mines the commodities giant plans to suspend and ratings agency Moody’s changed its outlook on the company to negative.

Glencore acknowledged on Monday the severity of the commodity market slump as it suspended dividends and said it would sell assets and new shares to cut debt by a third to around $20 billion – built up through years of rapid expansion – to protect its rating.

The strategy, which also includes plans to shut down some copper mines to support flagging prices, had triggered a rally in Glencore’s stock and propelled copper – hit by worries over the Chinese economy – to a seven-week high.

But on Thursday the stock – which this month fell to the lowest level since being floated in 2011 – resumed its fall after Zambia said it would hold talks with Mopani Copper Mines (MCM) over parent Glencore’s plan to suspend operations after a drop in the metal’s price.

“We are about to start discussions with Mopani.

Editorial: Signs of life in copper market – by John Cumming (Northern Miner – September 9, 2015)

September 10, 2015

The Northern Miner, first published in 1915, during the Cobalt Silver Rush, is considered Canada’s leading authority on the mining industry.

Glencore’s surprise decision to cut back its copper production coupled with stronger-than-expected Chinese copper import data have had a salutary effect on copper prices, which jumped 5% on Sept. 8 to record their biggest one-day percentage gain in two and a half years to US$2.43 per lb. at press time.

That’s a 9.5% rise from the near seven-year low of US$2.22 per lb. seen a little over two weeks earlier on Aug. 24, 2015. For context, that’s still well above the recessionary low of just US$1.26 per lb. on Dec. 24, 2008, but nowhere near the sweet, sweet record-high price of US$4.60 per lb. on Feb. 14, 2011. In some ways, copper’s price gyrations have mirrored that of crude oil, which saw sudden price gains of 27% over three days in late August on lower U.S. production estimates, and expectations of supply cuts from other producing countries.

In light of what it calls the “challenging environment for commodities,” Glencore has had its subsidiaries Katanga Mining in the Democratic Republic of the Congo and Mopani Copper Mines in Zambia launch a major review of their copper-mining businesses, and suspend production at both Katanga and Mopani operations for 18 months until finishing expansion and upgrade projects that will continue to get funding, including the whole-ore leach at Katanga and the new shafts and concentrator at Mopani.

Want off China’s market roller coaster? Look to the U.S. – by Joe Chidley (National Post – September 10, 2015)

September 10, 2015

The National Post is Canada’s second largest national paper.

Stock market lingoists will tell you that the 29th element on the periodic table is dubbed “Dr. Copper.” That’s not because the malleable metal is good for your health, but because its predictive capabilities are allegedly so strong that it should hold a PhD in economics.

As goes the global economy, so goes the price of copper, which is used in just about every manufactured good that human beings make these days. As a result, you might think this week’s rally in copper is a sign that the global economy has at last turned a corner.

You might be wrong.

Until the recent rally, the good doctor had spent the summer looking more like a patient on life support than a healer. Copper futures on the Comex in New York had been hit hard over continuing concerns about the slowing economy in China, which consumes about 40 per cent of global supply, and eventually reached US$2.25 a pound on August 26, the lowest level this decade.

Since then, however, copper has staged a remarkable rebound. The most dramatic signs of life came early this week. On Tuesday, futures rose more than five per cent, the biggest one-day gain in years.

UPDATE 2-Zambia to address jobs threat at Glencore’s Mopani Copper – by Chris Mfula (Reuters U.K. – September 10, 2015)

September 10, 2015

http://uk.reuters.com/

LUSAKA, Sept 10 (Reuters) – Zambia is to hold talks with Mopani Copper Mines (MCM) over parent company Glencore’s plan to suspend operations after a drop in the metal’s price, the mining minister said on Thursday.

An electricity shortage and weaker copper prices have put pressure on Zambia’s mining industry, threatening output, jobs and economic growth in Africa’s second-biggest producer of the metal.

The power problems and slide in copper prices have driven the kwacha currency to record lows amid a sell-off in commodity-linked currencies as key consumer China’s economy has slowed, renewing pressure on Zambia to diversify its economy.

Glencore, Vedanta Resources and China’s NFC Africa and CNMC Luanshya Copper Mine have all said they will shut down some operations because of the harsh business environment.

Zambia minining minister Christopher Yaluma said that the government would not respond to Glencore directly but would instead negotiate with Mopani because it is more familiar with the local economy.

First Steel, Now Copper: Rio Stays Optimistic on Chinese Growth – by Jasmine Ng (Bloomberg News – September 7, 2015)

September 9, 2015

http://www.bloomberg.com/

Rio Tinto Group isn’t just bullish about China’s steel demand, it’s also upbeat about copper use in the world’s biggest consumer.

Signs of improvement in China’s property market are boosting prospects for the metal, Jean-Sebastien Jacques, head of Rio’s copper and coal operations, said in an interview in Singapore. The government will also implement more stimulus measures if the world’s second-largest economy slows too much, he said.

Rio’s optimism stands out amid views from Glencore Plc that mining companies were wrong-footed on a slowdown in China, with demand getting tough to call. The country’s grappling with overcapacity, a downturn in property investment and a volatile stock market that threaten Premier Li Keqiang’s growth target of about 7 percent for this year.

Rio has a direct insight into the Chinese market through its Oyu Tolgoi operations in Mongolia, located north of the Chinese border, Jacques said.

Copper advances as Glencore plans mine shutdowns (Sydney Morning Herald – September 8, 2015)

September 8, 2015

http://www.smh.com.au/

Copper gained after commodities group Glencore announced plans to shut down loss-making mines to help to reduce a glut of supply that has weighed on prices.

Bearish investors scrambled to close out positions by buying futures, but analysts said it was uncertain whether Glencore’s move to close some African copper operations for 18 months would create a trend.

“It’s probably not enough to see prices go up (substantially), but it certainly supports the market,” said Grant Sporre, head of metals research at Deutsche Bank in London. “It also ensures that copper is probably not going to fall in the same way that iron ore and met (metallurgical) coal have done.”

Sporre had forecast a global copper supply/demand surplus of 350,000 tonnes for next year and said that Glencore’s move would bring the market close to balance, given that it is expected to remove 300,000 tonnes in 2016.

Zambia’s Copper Mining Boom Is Under Pressure – by Nicholas Bariyo (Wall Street Journal – September 4, 2015)

September 4, 2015

http://www.wsj.com/

Weaker Chinese demand and power supply problems darken the outlook

For much of the past decade, Zambia’s vast copper mines have posted bumper profits, spurred by a steady electricity supply and surging Chinese demand. Now both those growth engines are sputtering, plunging Zambia’s once-golden copper sector into its most challenging business environment for a decade.

“Most operations are in distress” Jackson Sikamo, a board member of Zambia Chamber of Mines, said on Thursday. “Low prices are putting more pressure on the already stretched margins.”

A steady climb in copper prices since the mid-2000s and until recently one of Africa’s most reliable electricity supplies helped power the dramatic expansion of Zambia’s mining sector from 7% of gross domestic product in 2008 to 12% in 2015, according to the finance ministry.

But this year, a toxic combination of factors conspired to reverse the outlook: Severe drought lowered water levels at the main hydro power plants this year, cutting electricity output in half. The freak weather impact was aggravated by tumbling prices; an increasingly stifling fiscal environment has put additional pressure on balance sheets.

UPDATE 1-Union mulling action on job cuts at Freeport Chile copper mine (Reuters U.S. – August 31, 2015)

August 31, 2015

http://www.reuters.com/

Aug 31 (Reuters) – A Chilean union that represents copper mine workers rejected a move by Freeport-McMoRan Inc to drastically cut staff at its El Abra mine and said on Monday it was considering action.

Last week, Arizona-based Freeport, which owns a 51 percent stake in the mine in northern Chile, became one of the first big global miners to announce it was slashing production because of slumping copper prices.

That would include reducing mining rates at El Abra by about 50 percent to cut and defer costs, and extend the mine’s life, the company said.

Over the weekend Freeport began to send out letters announcing the dismissals and refusing to negotiate, said Juana Mejias, who heads the mine’s local union, adding that around 700 workers were being fired.

“The situation is complex and a true massacre that they have carried out by dismissing 50 percent of the workforce,” she said in a statement on Monday.

Copper slump continues amid waning Chinese demand – by Rachelle Younglai (Globe and Mail – August 31, 2015)

August 31, 2015

The Globe and Mail is Canada’s national newspaper with the second largest broadsheet circulation in the country. It has enormous influence on Canada’s political and business elite.

Copper used to be considered one of the relatively bright spots in the recent downturn of commodity prices. But now it is becoming yet another victim of China’s slowing economy, and the future looks bleak.

“There was always this belief that the deceleration in the Chinese manufacturing sector was going to not just stabilize, but there was this hope that we would see a modest reacceleration,” said John Mothersole, a research director with consultancy IHS, who specializes in metal price analysis and forecasting. “Markets are coming to realize that those expectations were falsely held,” he said.

Copper, like other commodities, has been on a decline since 2011. This year, the red metal is down 20 per cent.

The metal, used in power generation, cars and construction, has dropped as low as $2.20 (U.S.) a pound – the break-even price for some producers.

The main problem is the surplus of copper in the market along with excess capacity in the Chinese copper industry.

What does Carl Icahn want with Freeport-McMoran? – by Kip Keen (Mineweb.com – August 28, 2015)

August 28, 2015

http://www.mineweb.com/

The activist investor has taken a big slug of the company’s shares.

HALIFAX – It must have been an interesting exercise for a billionaire that has made a name as an activist shareholder to tackle the mining industry now. To make a list of mining targets in a decimated market with resources meaningful enough to raise the spectre of a serious shake-up at one of the world’s largest mining companies.

It’s fair to simply step back and chuckle for a moment. For a whole lot of miners are so creamed, so loss-making for so many, that an activist raider surveying the field of options must be like the bear that stumbles into a honey factory after a hurricane.

Where to start? Who can I lean on? Which shareholders will treat me sweetest? Would Barrick have been on that list? Teck? Anglo American?

Yee Gads. You wonder if some mining heads might have muttered under their breath Thursday afternoon, Thanks be to Freeport. Icahn leaves us alone.

Goldcorp, Teck Combine El Morro and Relincho Projects in Chile – by Carolyn King (Wall Street Journal – August 27, 2015)

August 27, 2015

http://www.wsj.com/

Goldcorp will acquire New Gold’s 30% interest in the El Morro copper-gold project in Chile

Goldcorp Inc. on Thursday said it would acquire New Gold Inc.’s 30% interest in the El Morro copper-gold project in Chile and then combine El Morro with Teck Resources Ltd.’s nearby Relincho asset into a single $3.5 billion project.

Goldcorp and Teck, both Canada-based mining companies, said the combination would reduce the project’s development costs and its environmental footprint and thereby improve returns for shareholders. The $3.5 billion estimated cost of bringing the project into production would be less than half the cost of developing the projects separately, they said.

The move comes as mining companies around the world cope with tumbling metal prices and fears of a slowdown in China, the world’s biggest consumer of commodities. The commodity-price swoon has put pressure on many to slash costs and focus on the most promising projects.