A view shows a makeshift dwelling near an area where hundreds of artisan miners have found a rich seam of copper, in the hills of Tapairihua in Peru’s Andes, October 18, 2022. REUTERS/Marco Aquino/file photo Acquire Licensing Rights
LIMA, Aug 31 (Reuters) – Peruvian miner Minsur (MINSURI1.LM) has announced an investment of at least $2 billion in five years as it expands its copper and tin operations, an executive told Reuters on Thursday.
Minsur is set to invest around $543 million in an underground project in Justa mine, which is owned by the firm and Chilean mining company Copec (COPEC.SN), Minsur corporate affairs executive Gonzalo Quijandria said in a phone interview with Reuters.
Another $381 million will be invested to expand the processing plant and to improve the Justa mine camp, which began operations in 2021, Quijandria said.
The mine produced 126,036 fine metric tons of copper last year and was the world’s seventh most productive copper mine, according to official data.
Peru is the world’s No. 2 copper producer.
Minsur also operates the only mine in Peru for tin, a relatively rare element, and produces about 9% of this metal globally, according to the company.
Regarding such a production, Quijandria said Minsur plans to invest $462 million in its tin production line and another $100 million in tin exploration projects in the country.
“They are sustaining investments that include new tailings dams in the San Rafael mine and improvements in the Pisco smelter,” he said.
Minsur also plans to invest some $342 million in the modernization of its polymetallic producer Minera Raura.
Earlier on Thursday, Peru’s ministry provided a different breakdown of figures from the company, and Reuters did not receive an immediate response to a query about the discrepancy.
The announcement followed a meeting between Minsur CEO Juan Luis Kruger and Peru’s energy and mines minister, Oscar Vera.
The Mina Justa Subterranea project will be the second largest and most modern underground mine in Peru,” the ministry said in a statement, adding that Minsur expects to present the first permits for the project in the first months of next year, with production expected to start in 2027.
Reporting by Marco Aquino; Editing by Brendan O’Boyle, Paul Simao and Leslie Adler
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A look at the day ahead in U.S. and global markets from Mike Dolan
World markets stayed remarkably buoyant even as the chances of one more U.S. interest rate hike have moved firmly onto the radar, with China’s bourses extending Monday’s rally and the state of U.S. employment now top of mind.
For the first time since before the regional banking crisis in March, U.S. futures now see more than a 50% chance of yet another Federal Reserve rate rise to 5.5-5.75% – where the median of Fed policymaker forecasts from their June meeting still lies. Early Tuesday, futures priced almost a two-thirds chance of that additional quarter-point move in November.
After almost two months of stability in assuming peak rates would be where they are now, the chances of another tightening have been creeping higher again over the past 10 days and appear to be cementing following Fed Chair Jerome Powell’s relatively hawkish speech at Jackson Hole on Friday.
And yet – perhaps with the uncertainty dissipating, the economy still robust and bond markets better priced – world markets appear to be taking the tighter odds in their stride.
Wall St’s S&P500 (.SPX) clocked only its second-consecutive gain of the month so far on Monday, while MSCI’s all-country index (.MIWD00000PUS) is on course for its sixth gain in seven trading days.
More impressively in the circumstances, restive bond markets calmed down and bond yields continued to dial back from their highest in over a decade last week. Two-year Treasury yields fell back below 5%, with 10-year yields eyeing their lowest in almost two weeks at 4.17% and equity risk gauges such as the VIX (.VIX) of implied volatility touching two-week lows too.
The dollar (.DXY) was firm, but stayed off last week’s near three-month high.
With the Atlanta Fed’s real-time estimate of quarterly real GDP growth running as high as 5.9% – about 9% in nominal terms – the Fed will likely need to see some considerable softening of incoming economic data to prevent it moving again.
This week the onus falls largely on the labor markets, with the national payrolls report due Friday but with July readings on job openings due later on Tuesday – alongside August consumer confidence numbers and June house price data.
Friday’s August payrolls report is expected to show a slowdown in monthly hiring to about 150,000 but an unchanged unemployment rate of just 3.5%.
Overseas, China’s embattled stock markets managed to advance for a second day – lifted by a series of support measures and hopes of some detente in the economic and financial standoff between Washington and Beijing amid a three-day visit to China by U.S. Commerce Secretary Gina Raimondo.
Although it gave back the bulk of Monday’s 5% early surge by the close of business, China’s CSI300 (.CSI300) push 1% higher again on Tuesday after weekend measures to slash stamp duty on stock purchases and limit new stock listings. With tech and healthcare sectors leading the way, foreigners were net buyers again on Tuesday.
Just how cash-strapped embattled Country Garden Holdings (2007.HK) is will be the focus when China’s largest private property developer is due to report its first-half results on Wednesday.
Asia bourses more widely and European indices were higher, while Wall St futures were flat ahead of the open.
Tropical Storm Idalia closed in on Florida’s Gulf Coast on Tuesday after skirting past Cuba, headed for a U.S. landfall as a powerful Category 3 storm, prompting authorities to order evacuations of vulnerable shoreline areas.
Events to watch for on Tuesday:
* U.S. August consumer confidence, July JOLTS job openings data, June house prices, Dallas Fed Aug service sector survey
* Federal Reserve Vice Chair for Supervision Michael Barr speaks
* U.S. Treasury auctions 7-year notes
* U.S. corporate earnings: Best Buy, HP, JM Smucker, Catalent, Pinduoduo
By Mike Dolan, editing by Susan Fenton <a href=”mailto:mike.dolan@thomsonreuters.com” target=”_blank”>mike.dolan@thomsonreuters.com</a>. Twitter: @reutersMikeD
Our Standards: The Thomson Reuters Trust Principles.
Opinions expressed are those of the author. They do not reflect the views of Reuters News, which, under the Trust Principles, is committed to integrity, independence, and freedom from bias.
DAKAR, July 20 (Reuters) – Kenya’s shilling, Nigeria’s naira and Zambia’s kwacha are expected to weaken further in the week to next Thursday, while Ghana’s cedi and Uganda’s shilling could strengthen, traders said.
KENYA
Kenya’s shilling is expected to weaken further in the coming week, driven by demand for dollars from the manufacturing and energy sectors.
Commercial banks quoted the shilling at 141.70/90 per dollar, a record low, according to Refinitiv data, and compared with last Thursday’s closing rate of 141.30/50.
“It just continues to weaken. We have (demand) from oil (retailing companies) and manufacturing,” a trader at one commercial bank said.
NIGERIA
Nigeria’s naira will likely weaken slightly in the coming week as liquidity shortage in the official window persists even after the central bank removed restrictions on the exchange rate market, traders said.
The naira hit a low of 831 against the dollar on the official market on Tuesday, edging closer to the 840 reported by the FMDQ Exchange late last month. It is currently weaker on the black market at 860 naira.
“A lot of participants in the official window have not been able to fill their orders, and are turning to the black market,” one trader said.
ZAMBIA
Zambia’s kwacha is likely to continue trading weaker against the dollar next week as hard currency remains scarce amidst high demand from energy sector importers.
On Thursday, commercial banks quoted the currency of Africa’s second-largest copper producer at 19.4600 per dollar, down from 18.7000 a week ago.
“The local currency is expected to decline in value in the short run,” Access Bank (ACCESS.GH) said in a note.
GHANA
Ghana’s cedi is expected to strengthen against the dollar next week due to muted corporate demand for forex and remittance inflows, traders said.
Refinitiv Eikon data showed the cedi trading at 11.5000 to the dollar on Thursday, compared to 11.0000 at last Thursday’s close.
“The cedi has been on the front foot in recent sessions, mainly on the back of improved remittance flows on the market,” said Sedem Dornoo, a senior trader at Absa Bank Ghana.
“We expect the local unit to continue to strengthen in the coming sessions, especially given current lacklustre FX demand,” he added.
Other traders also said low demand for dollars would likely keep the currency steady or boost it over the coming week.
UGANDA
Uganda’s shilling is expected to post gains on the back of inflows from non-governmental organisations converting their dollar holdings to meet month-end obligations.
Commercial banks quoted the shilling at 3,640/3,650, compared with last Thursday’s closing rate of 3,665/3,675.
“Some (dollar) inflows from charities are expected as we head into the last week of the month,” said one independent foreign exchange trader in the capital Kampala.
NGOs that receive donations in hard currency convert some of it to pay salaries and other operational expenses at the end of each month.
Reporting by Christian Akorlie, Chris Mfula, George Obulutsa, Elisha Bala-Gbogbo, Elias Biryabarema
Compiled by Sofia Christensen; editing by John Stonestreet
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June 12 (Reuters) – Rio Tinto (RIO.AX), (RIO.L) will invest $1.1 billion to expand its “low-carbon” aluminum smelter at Complexe Jonquière in Quebec, Canada, the Anglo-Australian mining giant said on Monday.
The investment will boost annual capacity by about 160,000 metric tonnes of primary aluminum, the global miner said, adding it was sufficient to power 400,000 electric cars.
Pressure to cut greenhouse gas emissions has prompted Rio, Alcoa Corp (AA.N), and other aluminum manufacturers to launch a raft of products with lower carbon emissions.
The Canadian government has been involved in such efforts. It has invested in the ELYSIS technology pioneered by Alcoa and Rio Tinto that eliminates all CO2 emissions and replaces them with oxygen.
“This announcement brings us one step closer to the deployment of the first ELYSIS pots, which will make Quebec the leader in greenhouse gas-free aluminum production,” said Pierre Fitzgibbon, Quebec’s minister of economy, innovation and energy.
The Quebec government will provide up to $113 million in support for the latest smelter expansion.
“This is the most significant investment in our aluminum business for more than a decade…,” Rio Tinto CEO Jakob Stausholm said.
Construction will run over two-and-a-half years, with commissioning of the new pots expected to start in the first half of 2026 and the smelter fully ramped up by the end of 2026.
The project will create up to 1,000 jobs during peak construction, with about 100 permanent jobs.
The investment has been factored into the capital expenditure for 2023 to 2025, Rio Tinto said, retaining the capex guidance of $9 billion to $10 billion for 2024 and 2025.
The expansion will coincide with the gradual closure of potrooms at the Arvida smelter on the same site, Rio said.
Rio and the Canadian government also signed a memorandum of understanding (MoU) to strengthen supply chains for low-carbon primary metals, critical minerals and other value-added products, the miner said.
Reporting by Harish Sridharan in Bengaluru; Editing by Sriraj Kalluvila
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LAUNCESTON, Australia, June 1 (Reuters) – A run of weak economic data in China is likely to show up in softer imports of key commodities, albeit with a lag given the time taken to physically ship resources from around the globe.
The manufacturing indicator, the official Purchasing Managers’ Index (PMI), dropped to a five-month low of 48.8 points in May, the National Bureau of Statistics (NBS) said on Wednesday.
This was the second month the measure was below the 50-level that separates expansion from contraction, and it was also weaker than the median forecast for a rise in May to 49.4 from April’s 49.2.
Weakness in China’s manufacturing sector has been matched by soft outcomes in other important parts of the world’s second-biggest economy.
Property investment fell 16.2% year-on-year in April, the fastest since November 2022, according to Reuters calculations based on official data.
Property sales measured by floor area slumped 11.8% on year in April, the most this year, versus a 3.5% fall in March.
Industrial profits fell 20.6% in the first four months of the year from the same period in 2022, according to NBS data.
The major bright spot for the Chinese economy is retail sales, which jumped 18.4% in April from the same month a year earlier, but even this performance was short of market expectations for a 21% leap.
But retail spending isn’t the top driver of demand for commodities, although it does act to boost demand for refined fuels such as gasoline and jet kerosene as people increase travel.
Rather it is construction and manufacturing that propel commodity demand, especially for steel raw material iron ore and for copper.
Construction and infrastructure account for about 55% of China’s steel consumption, with manufacturing, including vehicles and machinery, taking about 30%.
The softness in those sectors is likely to show up in commodity imports in coming months, but not yet.
IMPORT STRENGTH TO FADE?
In fact, imports of major commodities in May are likely to be robust, but it is worth remembering that these are lagging indicators.
Seaborne iron ore imports are expected at about 93.29 million tonnes, according to Refinitiv data, which would be stronger than the 90.44 million tonnes recorded by customs in April.
Crude oil imports are expected by Refinitiv Oil Research to come in at 11.22 million barrels per day (bpd), which would be up from the 10.36 million bpd in April and down from the 34-month high of 12.37 million bpd in March.
Imports of all grades of seaborne coal are forecast by commodity analysts Kpler to be 34.33 million tonnes in May, up from 33.61 million in April, but down from March’s 34.42 million.
However, it is worth noting that coal imports in the March to May period are the highest in Kpler records going back to January 2017.
The May import performance is likely a reflection of expectations by Chinese refiners and steel mills that the economic rebound would be stronger than it has actually been.
If this is the case, it’s likely that they may consider trimming imports in coming months, especially if the run of soft economic data continues.
It can take several months between the arranging of a crude oil cargo and its delivery and processing in a Chinese refinery, and iron ore cargoes also tend to be secured several weeks ahead of shipment and delivery.
The X-factor is price. If crude oil, iron ore, coal and copper prices all continue to drop, it’s possible that Chinese buyers will import more than they need, choosing to build inventories for when prices start rising again.
Global benchmark Brent crude futures ended at $72.66 a barrel on Wednesday, the lowest close in four weeks.
Iron ore futures traded in Singapore finished at $105.07 a tonne, down 10 cents from the previous close and some 20% below the peak this year of $131.19 from March 15.
London copper futures ended at $8,089 a tonne on Wednesday, down 0.4% from the prior close and 13.5% below the closing peak this year of $9,356 on Jan. 23.
While lower prices may encourage some Chinese buying, it’s also likely that importers may wait for further price falls, especially if the economic performance continues to sputter.
The opinions expressed here are those of the author, a columnist for Reuters.
Editing by Robert Birsel
Our Standards: The Thomson Reuters Trust Principles.
Opinions expressed are those of the author. They do not reflect the views of Reuters News, which, under the Trust Principles, is committed to integrity, independence, and freedom from bias.
Feb 21 (Reuters) – Global miner BHP Group (BHP.AX) reported a steeper-than-expected 32% fall in first-half profit owing to a drop in iron ore prices, sending its shares down, although it flagged a brightening outlook in China, its biggest customer.
China’s strict zero-COVID-19 policy curtailed economic activity and dented demand over the past year, driving iron ore prices down from lofty levels, while miners wrestled with surging costs and a tight labour market in Australia.
As a result, the world’s largest listed miner reported underlying profit attributable from continuing operations of $6.6 billion, down from $9.72 billion a year earlier.
That missed a Vuma Financial estimate of $6.82 billion, as earnings from copper and coal came in lower than analysts had expected. BHP’s giant Escondida copper mine was hit by road blockades in Chile that disrupted mining supply deliveries.
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However, its interim dividend of 90 cents per share, while down 40%, beat Vuma Financial’s estimate of 88 cents.
Shares of the global miner fell as much as 2.8% to A$47.11, their lowest since Jan. 6 but recovered to finish down 0.3%, slightly weaker than the broader market (.AXJO).
“We have got BHP as a ‘hold’ primarily because their share price is sitting up at record highs and they are going to have to do pretty well to justify those levels,” said analyst David Lennox of wealth manager Fat Prophets in Sydney.
The miner said it sees “markedly higher” price floors for some commodities than prior to the COVID-19 pandemic given the rising marginal cost of production.
“The lag effect of inflation and continued labour market tightness are expected to impact our cost base into the 2024 financial year,” BHP said, as it logged a $1 billion inflation hit, primarily from diesel costs, for the half.
Analysts at RBC Capital Markets said BHP’s first half was “surprisingly poor, but is a strong indicator of what is a still challenging inflationary environment for the miners”.
BHP also said it expected aggressive global interest rate hikes from last year to slow growth sharply across the developed world.
CHINA GREEN SHOOTS
However, after a difficult first-half, the miner said China appears to be a “source of stability” for commodity demand, as the world’s second-largest economy and top metals consumer reopens and looks to revive its debt-laden property sector.
The company’s comments sparked a rally in iron ore futures, with prices on the Dalian Commodity Exchange jumping more than 3% to their highest since July 2021.
BHP’s confidence in China’s economy was buoyed by green shoots it had seen since the start of the calendar year, including new loans, house prices and business sentiment surveys, Chief Executive Officer Mike Henry said.
“There’s a lot there that is giving us confidence that we will see an acceleration in the Chinese domestic economy,” he told reporters on a conference call.
BHP brought forward first production at its huge Jansen potash project in Canada to late 2026 from 2027.
It also said that it, along with joint venture partner Mitsubishi Development, had decided to put up for sale their Daunia and Blackwater coal mines, two of their seven metallurgical coal mines in Queensland’s Bowen Basin.
BHP has threatened not to invest in Queensland after the state hiked its coal royalties to the highest rate in the world.
Reporting by Sameer Manekar and Himanshi Akhand in Bengaluru, and Melanie Burton in Melbourne; Editing by Jonathan Oatis, Josie Kao and Sonali Paul
Our Standards: The Thomson Reuters Trust Principles.
LONDON, Dec 22 (Reuters) – China’s imports of primary aluminium jumped to a one-year high of 110,700 tonnes in November in a significant reversal of the recent trend.
The country flipped to net exporter in the first half of 2022, with primary metal shipped as far as Europe and the United States to capitalise on sky-high physical premiums.
The premiums are now much reduced. That for duty-unpaid in Europe collapsed from over $600 per tonne in May to a current $250 over the London Metal Exchange (LME) cash price.
While European smelter output declines under the weight of high energy prices, the region is also bracing for a recessionary hit to demand.
China appears to be taking up some of the slack as its own production momentum stalls just as the country tries to open up from quarantine and lockdown.
TRADE FLOWS FLIP AGAIN
China’s primary aluminium export surge has passed. Outbound shipments totalled 190,000 tonnes in the first eight months of the year, the highest volume of exports since 2010.
Exports have since shrunk to 5,000 tonnes over the September-November period with high-volume shipments to Europe and the United States replaced by a trickle of material to African destinations.
Until last month, imports had been subdued relative to the previous couple of years and largely comprised Russian metal shunned by Western buyers after Russia’s “special military operation” in Ukraine began in February.
Russian imports hit a fresh 2022 high of 56,000 tonnes in November but its share of imports dropped to 51% from 85% in June. The balance was sourced from a range of countries, suggesting more Chinese pull than Russian push.
It’s worth noting that China’s imports of unwrought aluminium alloy have remained consistently strong at around 100,000 tonnes per month since a structural shift higher in 2019.
The step change coincided with a slump in imports of aluminium scrap ahead of a planned ban in 2020. The ban was pulled at the last moment and replaced with tighter purity thresholds.
Scrap imports have since rebounded, up 60% so far this year, but without any impact on alloy flows.
SLOWING MOMENTUM
China’s renewed import appetite for primary aluminium looks at odds with the combination of lockdown-weakened demand and strong domestic production growth.
Headline national output was up by 7.2% year-on-year in November with cumulative production up 3.1% in the first 11 months of 2022, the latest estimates by the International Aluminium Institute (IAI) showed.
However, the year-on-year comparison is accentuated by a low base in the closing months of 2021, when multiple producers were forced to reduce run-rates during a rolling energy crunch.
Expressed in terms of annualised production, China’s collective run-rate has dropped by almost 1.2 million tonnes since August. That’s not as much as the 2.0-million tonne decline in late 2021 but still a significant dissipation of the early-year production surge.
Energy is again the culprit.
Although there are no national blanket power restrictions over the winter heating season this year, provinces have delegated powers to manage their local power balances and the smelter hits have been mounting up.
Sichuan briefly rationed power to industrial users, including aluminium smelters, in August because of a protracted drought in the hydro-rich province.
The following month Yunnan ordered its smelters to reduce operating rates by 10% for the same reason, lifting the mandate to 20% in October.
Last month saw several smelters in Henan province reduce output by 10% on a combination of weak market conditions and pressure from local winter heating restrictions, according to consultancy AZ Global.
The seasonal power pressures have spread to the province of Guizhou this month with local smelters taking cuts of up to 31% of capacity, AZ Global reports.
Guizhou is a relatively small aluminium province with annual production of around one million tonnes but Yunnan is a growing hub of production on the basis of its green energy credentials.
Hongqiao, China’s largest private operator, is undeterred by this year’s power constraints and is moving more of its capacity there.
However, the concentration of smelters in Yunnan and Sichuan leaves China’s domestic supply chain facing a new source of instability in the form of seasonal rainfall levels.
SHIFT TO SURPLUS
The scale of the cumulative production hit in China has been masked by impact of rolling lockdowns and a foundering property sector on domestic demand.
The partial lifting of COVID-19 restrictions, although fraught with the danger of a wave of Omicron infections, is expected to revitalise Chinese growth over 2023.
Any recovery impetus will require an aluminium restock. Visible inventory on the Shanghai Futures Exchange has slumped by 71% since the start of January and at a current 92,373 tonnes is around the lowest levels since 2016.
It is too early to say if last month’s jump in imports is an early sign of domestic recovery in the aluminium sector but it signals a shift in market flows.
The Western deficits earlier this year attracted significant volumes of metal from Asia, including China. The supply-chain tension has accordingly eased and the market focus has shifted to weakening demand and the potential for large amounts of aluminium to head to LME warehouses.
The east-west pendulum is swinging back again and it’s China that looks de-stocked and in need of some top-up metal from the spot market.
How much will depend on how China’s many provincial authorities balance their power systems over the next few winter months.
The opinions expressed here are those of the author, a columnist for Reuters.
Editing by Barbara Lewis
Our Standards: The Thomson Reuters Trust Principles.
Opinions expressed are those of the author. They do not reflect the views of Reuters News, which, under the Trust Principles, is committed to integrity, independence, and freedom from bias.