LME aluminium teeters near 3-mth low as China smelters ramp up

Date Mar 15 2018 14:10:50 Source:Reuters

MELBOURNE, March 15 (Reuters) - London aluminium hovered near its lowest since late December on Thursday on expectations of rising supply as China's winter pollution controls expire.



    *ALUMINIUM: London Metal Exchange aluminium  CMAL3  crept up 0.2 percent to $2,094 a tonne, having slipped to the weakest since Dec. 19 at $2,087 on Wednesday. Support is seen at the 200 moving day average at $2,083, a break of which could trigger a steeper correction, as it would send a sell signal to momentum following funds.

    *SHFE: Shanghai aluminium  SAFcv1  hit its lowest in 14 months at 13,820 yuan ($2,191) on Tuesday and last traded at 13,950 yuan.

    * SMOG: The winter heating season ended on Thursday. Aluminium smelters in 28 northern Chinese cities had been told to reduce output by at least 30 percent from Nov. 15 to March 15, although the actual volume cut was below expectations, putting pressure on prices. 

    *OUTPUT: China's aluminium production fell 1.8 percent in January-February from a year earlier, data showed on Wednesday, as the country's pollution crackdown and supply-side reform kicked in. An estimated 4.4 million tonnes of new capacity are expected to be completed this year.

    *STOCKS: Shfe aluminium  AL-STX-SGH  stockpiles held at exchange warehouses are within a whisker of record highs near 850,000 tonnes, reflecting a surplus of domestic material.

    *DISCOUNT: The discount between cash Shfe and physical prices  AL-A00-CCNMM  has narrowed to 35 yuan from 385 three weeks ago, reflecting a tightening market and an expected pick-up in nearby demand.

    * COPPER: LME copper traded up 0.3 percent at $7,006 a tonne by 0157 GMT, adding to 0.6 percent gains from the previous session. Prices are expected to rise over the coming month as industrial production in the seasonally strongest second quarter ramps up.

    *TRADE: The Trump administration is pressing China to cut its trade surplus with the United States by $100 billion, a White House spokeswoman said on Wednesday.

    *COBALT: Glencore, the world's biggest producer of cobalt, has agreed to sell around a third of its cobalt production over the next three years to Chinese battery recycler GEM.

    *SMOG: Eastern China's Jiangsu province will step up its war on pollution and focus on "high-quality development" following a spike in smog early this year. 

    *DOLLAR: Supporting metals, the dollar fell against the yen on Thursday as lingering worries about global trade tensions weighed on investors' risk appetite.

Edited by SHMET

Chile's Escondida invites union to early labor talks

Date Mar 15 2018 14:03:26 Source:Reuters

   LIMA, March 14 (Reuters) - BHP's  BHP.AX  Escondida copper mine in Chile, the world's largest, said on Wednesday that it has invited its powerful workers' union to start early talks on a new collective labor contract.

    Last year, a more than month-long strike at Escondida ended with workers opting to extend their previous contract through July 31 of this year instead of replacing it.

    New negotiations are scheduled for June, but BHP said it hoped to begin earlier.

    "This invitation seeks to open a space of dialogue and respect in which the current challenges of the company and the legitimate interest of its workers can be address together," the company said in a statement without proposing a date.

    The union summoned its members to an assembly to decide whether to accept the invitation, according the union's website.

    In February, the union ruled out early talks amid a dispute with the company over the formation of a competing union at the mine.

    Last year's strike jolted the global copper market and cost BHB an estimated $1 billion. 

Edited by SHMET

Gold prices rise on trade war fears, Britain-Russia tensions

Date Mar 15 2018 14:00:28 Source:Reuters

  March 15 (Reuters) - Gold prices edged up on Thursday, lingering near one-week highs hit in the previous session on political tensions between Britain and Russia and as worries over a potential trade war dragged on stocks and the dollar.

    Spot gold rose 0.2 percent to $1,326.83 per ounce at 0431 GMT.   

    U.S. gold futures  GCcv1  for April delivery rose 0.1 percent to $1,327.00 per ounce.

    "Gold has been supported by geopolitical factors as well as dollar weakness ... Stock markets were down overnight, we've got a bit of risk-aversion coming back in," said a Hong Kong based trader. He declined to be identified as he was not authorised to speak with media.

    The U.S. dollar fell against the yen and pulled further away from a recent two-week high, while stock markets slipped broadly as lingering worries about global trade tensions weighed on investors appetite for risk. 

    The Trump administration is pressing China to cut its trade surplus with the United States by $100 billion, a White House spokeswoman said on Wednesday, clarifying a tweet last week from President Donald Trump.

    On Wednesday, geopolitical tensions rose after the Russian Foreign Ministry said it would retaliate after 23 of its diplomats were expelled by British Prime Minister Theresa May over a chemical attack on a former Russian double agent in England that May blamed on Moscow.      

    U.S. television commentator and conservative economic analyst Larry Kudlow will replace Gary Cohn as President Donald Trump's top economic adviser, adding another loyalist to Trump's inner circle. 

    "I think Kudlow's comments will probably support more of a trade war rhetoric than a stronger dollar," the trader said, adding "gold needs to close above the $1,330 level to start getting some traction".

   Trump also spooked investors on Tuesday by firing Secretary of State Rex Tillerson, who was viewed as a supporter of free trade.        

    "The market continues to trade the range with Asian buyers stepping in under $1,320 and speculator profit-taking and producer selling capping the topside around $1,330-$1,335," said MKS PAMP Group trader Alex Thorndike.

    "Gold will likely remain range-bound into next week's U.S. Federal Reserve meeting, with the market eagerly anticipating a first rate rise for the year, given the economy's improved data."

   Spot gold is biased to retrace towards support at $1,317 per ounce, as it seems to have finished a bounce triggered by this level, according to Reuters technical analyst, Wang Tao.

    Meanwhile, silver  XAG=  rose 0.3 percent to $16.54 per ounce and platinum gained 0.5 percent to $963.20 per ounce.

    Palladium  edged 0.6 percent higher to $993.00 per ounce after hitting $1,006.30 an ounce in the last session, its highest since March 1.

Edited by SHMET

China's lithium trouble in Chile hints at more

Date Mar 15 2018 13:51:12 Source:Reuters

    SINGAPORE, March 15 (Reuters Breakingviews) - China is hitting a resource obstacle. A Chilean government agency wants to block Tianqi Lithium's bid for a stake in $13 billion rival. China seldom gets pushback in mining deals, but can expect more as it seeks to tighten its grip on ingredients for electric-vehicle batteries.

    Tianqi Lithium is one of the world's top suppliers of the super-light metal. Buying 32 percent of SQM would provide exposure to Chile's brine pools, cheaper to mine than its own hard-rock deposits in Australia. Together, SQM and Tianqi would have controlled 70 percent of the market, argues Corfo, the agency.

    The $11 billion company was prepared to pay up. Corfo says Tianqi offered 20 percent more than the market value late last year, when SQM was trading around a frothy 35 times forward earnings.

    An outright block of the deal may be excessive, even for a country counting on the metal: more lithium will become available from various sources worldwide, though the supply chain is stressed as it adapts to growing demand. It is also only a minority shareholding.

    That matters less than the complaint. As China invests in battery ingredients, its industrial policy is resulting in concentration, and that means friction. Memories of the rare earth debacle of 2011 are also fresh: China is the largest producer of many of those elements and its export restrictions sent prices soaring.

    Until now, Chinese companies have met limited opposition in their overseas mineral acquisitions, compared to, say, technology. Australia rejected a bid for copper miner OZ Minerals in 2009, but that was because of proximity to a weapons-testing facility.

    Battery ingredients are a more likely battleground, especially as automakers and others join the race to secure supply of raw materials, alongside miners. Tesla has held talks with SQM. And Chinese battery recycler GEM just agreed to buy a big slug of Glencore's  cobalt production.

    China may refocus its lithium ambitions on Australia. SQM, for its part, may see renewed interest from earlier suitors, such as Rio Tinto. In the long run, Chinese bidders would be wise to prepare for more holes in the road.



    - Chile’s development agency, Corfo, has asked antitrust regulators to block the sale of a stake in lithium company SQM to a Chinese rival, Reuters reported on March 9.

    - Corfo oversees SQM’s lithium leases in the Salar de Atacama. SQM is one of the world’s largest producers of the key battery ingredient, and the largest in Chile.

    - Late last year Tianqi Lithium presented a non-binding offer for a 32 percent of SQM that was put up for sale by Nutrien, formerly Potash Corp, Eduardo Bitran, head of Corfo said in an interview. He added the offer was 20 percent above the market value at the time.

    - Corfo argues in the complaint filed on March 9 that a sale to Tianqi “or any entity related to it” would “gravely distort market competition”. It says Tianqi and SQM together control 70 percent of the global lithium market.

Edited by SHMET

Cobalt to be declared a strategic mineral in Congo

Date Mar 15 2018 13:46:07 Source:Reuters

   LONDON, March 14 (Reuters) - Democratic Republic of Congo will declare cobalt and coltan, used in electric vehicle and renewable energy technology, as "strategic" minerals which will earn the country higher royalties, an advisor to the prime minister said on Wednesday.

    A new mining code was signed into law on Friday by President Joseph Kabila despite vigorous opposition by global mining companies with operations in Congo such as Glencore, Randgold and China Molybdenum.

    Royalties paid to the government from cobalt and coltan mining will jump to 10 percent from 2 percent previously. Miners of the two metals used in batteries, would have paid a royalty of 3.5 percent under the new code if they had not been designated as strategic.

    The government considers minerals with the "strategic" designation important for the economic, social and industrial future of the country.

    "We need to make enough money before we run out of these minerals so that is why they are strategic to the country," said Jean Nkunza.

    "We have to make sure for the next 20 years we make money from these minerals because demand is going to be so high. It's going to continue to grow and we are not going to stop raising the royalties on these minerals."

    Other "strategic" minerals on the list include lithium and germanium, Nkunza said.   

    Congo is the world's biggest source of cobalt, the price of which more than doubled last year. The central African country is also Africa's top copper producer.

    International mining companies have said the new mining code will deter foreign investment but have agreed to start negotiations with the government over measures to implement the code.

    The announcement by the prime minister's office, however, appears to pre-empt those negotiations, which were due to determine, among other things, how metals would be classified.

    The code also removes a clause that protected miners from changes to the fiscal and customs regime for 10 years and raises royalties and taxes across the board.

    Low commodity prices in recent years hit Congo's resource-dependent economy hard, causing inflation to swell to nearly 50 percent in 2017, and the government is desperate to increase its revenues.

Edited by SHMET