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

Glencore signs massive cobalt sale deal with China's GEM

Date Mar 15 2018 13:42:44 Source:Reuters

   March 14 (Reuters) - Glencore Plc  GLEN.L , 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 Co Ltd  002340.SZ , according to a filing by GEM on Wednesday.

    Glencore will sell 52,800 tonnes of cobalt hydroxide to GEM between 2018 and 2020 as demand for cobalt, a critical metal in lithium-ion batteries, soars on a forecasted boom in electric vehicle sales.

    Reuters reported last week that Glencore was in talks to sell around a quarter of its cobalt output in a one-year deal to GEM, according to sources. Price was a sticking point as the Swiss-based global miner and other major producers are now able to exert more influence in negotiations. 

    Expectations of supply shortages have fueled a cobalt rally that has taken prices to around $39 a pound, from near $10 a pound in January 2016 and to their highest level since July 2008, before the financial crisis started.

    According to the filing, GEM and its subsidiaries will purchase 13,800 tonnes of cobalt hydroxide from Glencore in 2018. They will buy 18,000 tonnes in 2019 and 21,000 tonnes in 2020.

    Glencore, whose cobalt is mined as a byproduct from its copper and nickel mines in the Democratic Republic of Congo, Canada and Australia, expects to produce around 39,000 tonnes of cobalt in 2018 - equal to about 35 percent of estimated global production.

    Glencore expects its cobalt production to rise to 65,000 tonnes in 2019 and dip to 63,000 tonnes in 2020.   



Edited by SHMET

Anglo American launches new sustainability goals

Date Mar 14 2018 15:20:55 Source:SHMET

LONDON, March 13 (Reuters) - Anglo American  AAL.L  on Tuesday announced new goals to cut greenhouse gas emissions by 30 percent, improve energy efficiency by 30 percent and cut freshwater withdrawal by 50 percent in arid regions, all by 2030.

    Previous 2020 goals included an energy savings target of 8 percent and a goal to reduce greenhouse gas emissions by 21 percent, while cutting freshwater withdrawal by 20 percent.

    The way the targets are calculated also changes as the previous energy and greenhouse gas goals were calculated versus business as usual, while the 2030 goals seek an improvement in energy efficiency per tonne of copper equivalent mined and an absolute cut in greenhouse gas emissions.

    Anglo refers to the new targets as "stretch goals" because of the challenge of meeting them and says they should give it a strategic advantage by cutting costs and making it easier to secure operating licences as environmental concerns mount.

    "The financial benefits to our business by 2030 are expected to be significant, including from substantially reduced energy and water costs," CEO Mark Cutifani said as he announced the goals to investors in London.

    "If you don't have the trust over all our communities, you just won't get the access to the ground," he added.

    All the major miners have released a series of sustainability reports and goals, but the industry is still associated with consumption of coal, the most polluting fossil fuel, and environmental damage.

    Anglo on Monday had to halt iron ore production in Brazil because of a leak and Cutifani said the cause was being investigated.  

    Cutifani said the miner had reduced its thermal coal business by more than 50 percent over five years, but added governments and communities still depended on the fuel.

    "How we transition has to be done in a responsible way," he said.         



Edited by SHMET