Recent Business News Round Up: CNBC
Press Releases
January 09: Exclusive: Copper output at Chile's Codelco rose to 1.328 mln tons in 2024, document shows
SANTIAGO, Jan 8 (Reuters) - Copper production from Chile's Codelco, the world's largest producer of the red metal, reached 1.328 million metric tons last year, according to an internal document seen by Reuters on Wednesday.
The closely watched final number had not previously been reported but Chairman Maximo Pacheco said earlier this week that 2024 output was "slightly higher" than the 1.325 million tons produced in 2023.
Faced with declining ore grades, accidents and mistakes at major construction projects, Codelco has been struggling to boost production from 25-year lows and revved up production at the end of the year to hit its 2024 target.
Source: reuters.com
August 16 2024: BHP strike in Chile enters third day, buoying global copper price
SANTIAGO, Aug 15 (Reuters) - A strike at mining giant BHP's (BHP.AX), opens new tab huge Escondida mine in Chile entered its third day on Thursday, bolstering global copper prices as an ongoing standoff between the company and workers starts to spread worries about supply of the red metal.
BHP and the worker union held an initial meeting on Wednesday in a bid to defuse the strike but failed to make a breakthrough that would allow the restart of formal talks, with miners digging in as they seek a larger share of profits.
Benchmark three-month copper on the London Metal Exchange was up over 2.2% to $9,169 per metric ton on Thursday, and various mining shares like Rio Tinto (RIO.AX), opens new tab, Southern Copper (SCCO.N), opens new tab and Freeport-McMoRan (FCX.N), opens new tab rose as well.
Escondida is the world's largest copper mine, accounting for nearly 5% of global supply in 2023, and the union on strike has in past years forced the firm to halt operations and declare force majeure, meaning it can't fulfill its contracts.
On Wednesday, BHP said operations were continuing under a contingency plan while the union said the strike was keeping the Los Colorados concentration and electrowinning plants offline.
The two sides have both signaled a willingness to returning to formal talks but remain at loggerheads over the conditions. BHP had asked the union to pause its strike to resume negotiations, a demand the union refused.
Source: reuters.com
July 25 2024: Net-Zero Targets Could Double Yearly Copper Demand By 2035
BY TYLER DURDEN
THURSDAY, JUL 25, 2024 - 06:30 AM
Authored by Sohrab Darabshaw via Metal Miner,
The global demand for copper is projected to increase by 40% by 2040, driven by the adoption of green technologies.
Vedanta Resources has regained control of the Konkola Copper Mines, a major high-grade copper deposit in Zambia.
The Cobre Panama mine closure and reduced output from Chinese smelters have contributed to concerns about a potential copper shortage.
By now, the world knows that although the current global copper reserves are sufficient to meet demand, extraction continues to lag behind consumption.
As a result, many inside and outside the copper market fear there will be a shortage in the coming years.
Predictions say that the annual global demand for copper will increase by about 40% by 2040.
There are multiple factors fueling this expected growth, including the global move toward renewable energy and sustainable transportation.
Given this current environment, any developments around copper and its mining remain guaranteed to hit the headlines.
Reclaiming an Essential Asset in the Copper Market
Analysts watched from the sidelines for months as the Anil Agarwal-led Vedanta Resources Holdings Limited tried to regain control of the Konkola Copper Mines (KCM) in Zambia, Africa. That was before news arrived earlier this week that the global conglomerate had fulfilled its commitment under the "KCM scheme" of arrangement through a payment of U.S. $245.75 million.
With this move, the copper market could see the immediate reinstatement of KCM's Board of Directors and the restoration of full management control to Vedanta. This critical step is necessary for Vedanta to boost production and fully unlock KCM's potential.
KCM boasts copper grades over 2.4%, placing it among the world's largest high-grade copper deposits. Moreover, the mine also has about 400 kt of contained cobalt reserves and resources, meaning KCM can become a top cobalt producer. As per media reports, Vedanta hopes to push copper production at KCM to 300 ktpa and hike cobalt production from 1 ktpa to 6 ktpa through enhanced production capabilities.
Global Copper Supply Remains in Doubt
Vedanta spent the past five years actively pushing to take full management control of the KCM mine. However, the Zambian Government forced the copper mine into liquidation in 2019 after President Edgar Lungu accused it of failing to increase copper production.
Commenting on the development to LiveMint, Chairman of Vedanta Group Anil Aggarwal said copper was the metal of the future. According to him, the Government of India wanted to secure a copper supply line for its own internal consumption. Incidentally, India has significantly limited domestic production, making it dependent on imports. According to a report by India's Commerce Ministry, India imported copper plus copper articles worth $12 million in FY23 alone.
One significant event that impacted copper market dynamics was the closure of the Cobre Panama mine, a major global copper source. This closure altered market expectations from a surplus to a deficit, thus driving copper prices higher.
Green Tech Continues to Fuel Copper Demand Predictions
Moreover, Chinese smelters decided to reduce output back in March due to a concentrate shortage, further increasing prices. Because of the feared upcoming shortage, copper miners globally foresee closer collaboration with end users, ranging from carmakers to utilities, which could help transform a previously fragmented supply chain.
According to this report, the change mainly revolves around copper's importance in green technologies, which will likely only increase in the coming years. In fact, there's an emerging trend involving some mining companies trying to sign direct deals with cable manufacturers, automotive companies, etc. in order to secure a steady supply of copper at an affordable price.
It may eventually come down to a situation in which anyone using copper for any purpose, be it vehicles, green energy, or charging stations, will have to understand and plan how to lay their hands on the amount of copper they require every year.
Analysts believe that to get anywhere near net-zero targets by 2035, yearly copper demand may double to 50 MMT.
July 21 2024: Copper miners predict industry overhaul as end users rush to secure supply
Executives see increasing signs of a shift to direct deals with cable manufacturers, car companies and other big buyers
The world's largest copper miners predict closer collaboration with end users from carmakers to utilities, upending a hitherto fragmented supply chain as shortages of the metal crucial to green technologies are set to flare up in the years ahead.
Executives at leading mining groups see increasing signs of a shift to direct deals with cable manufacturers and other big buyers to secure supply of the "metal of electrification" at an affordable price.
"Ultimately those that will be utilising the copper - whether that is for charging stations, grid buildout or vehicles - will start to get more interested in how they access this copper," said Jonathan Price, chief executive of Teck Resources, a Canadian copper and zinc producer.
"We will start to see more interest in direct linkages between the miners and those ultimate end users - we are starting to see and hear more of that."
BHP's foiled Pound39bn takeover bid for Anglo American as well as copper spiking to an all-time high above $11,000 per tonne earlier this year shone a spotlight on the predicted shortages of copper later this decade. Although demand for renewables, grid upgrades and electric cars continue to rise, new mines are becoming ever harder to build.
The Bank of America predicts copper supply to be about 5mn tonnes, or 15 per cent lower than demand, by 2030. The bank forecasts the rollout of renewables, grid infrastructure spending and electric cars globally to double annual copper demand growth to 4 per cent per year, from its historical average of 2 per cent.
Executives point to a cocktail of factors blocking construction of large projects, including deteriorating geology, lengthening permitting times, and surging costs as a result of inflation and sustainability considerations. Investors' demand for dividends over growth and copper prices that are too low are also causing miners problems.
"It's just getting harder and harder," said Tristan Pascall, chief executive of First Quantum, which had its vast mine in Panama shut down by the government after protests. "There's no easy jurisdiction now. You can say you shouldn't go into Argentina or into the Democratic Republic of Congo but where is easy to go now?"
The debate raging within the industry is whether miners need to consolidate into "supermajors" or become more open to partnering to build complex multibillion-dollar projects - both moves that have precedent in the oil industry.
Increasing supply chain integration would be another option in addressing the concerns of end consumers, concerned about higher prices resulting from consolidation, and middling miners, vulnerable to takeovers by BHP, Glencore, Freeport-McMoRan and Rio Tinto.
To date, the only major financing deal for copper by a car company with a miner - between which smelters and several layers of manufacturers and suppliers sit - has been Stellantis, owner of the Jeep, Fiat and Peugeot brands, with McEwen Copper, which faces a unique foreign currency issue in Argentina, where its project is.
Executives say copper could follow lithium, nickel and cobalt in having carmakers finance mines in return for supply or could look to how utilities have signed long-term deals with miners to fast-track new uranium supply.
Paul Gait, group head of strategy at Anglo American, said that more customer involvement - as seen with the battery metals - was "the direction of travel that copper is likely to go".
For renewable energy project developers and EV makers, volatile commodity prices can mean the difference between success and catastrophe.
Michael Widmer, commodities strategist at the Bank of America, says that the rule of thumb is a 10 per cent increase in commodity prices lowers the internal rate of return of renewable projects for investors by 1 per cent - which are typically only single-digit to begin with.
Nexans, the world's second-largest cable manufacturer, is an early mover in supply chain integration.
January 06: Several commodities face headwinds in 2025 - but this metal's record rally is set to continue
Key Points
Global commodity prices are largely expected to fall in 2025, but certain items such as gold and gas are likely to see higher prices, according to industry experts.
Market participants will also be keeping an eye on further China stimulus in hopes that it may fuel a recovery in commodities demand in the world's second-largest economy.
Commodity prices are largely expected to fall in 2025 due to a sluggish global economic outlook and a resurgent dollar, but gold and gas prices are poised to rally this year, according to industry experts.
Commodities had a mixed 2024: While investors flocked to gold to hedge against inflation, commodities such as iron ore fell as the world's largest consumer of metals, China, struggled with tepid growth. The story this year is likely to be the same.
"Commodities in general will be under pressure across the board in 2025," said research firm BMI's head of commodities analysis Sabrin Chowdhury, adding that the strength of the U.S. dollar will cap demand for commodities priced in the greenback.
Market participants will be keeping an eye on further China stimulus in hopes that it may fuel a recovery in commodities demand in the world's second-largest economy.
Oil prices to slip
Crude oil prices last year were dragged down by weak Chinese demand and a supply glut, and market watchers expect prices to remain pressured in 2025.
The International Energy Agency in November painted a bearish oil market picture for 2025, forecasting global oil demand to grow under a million barrels per day. This compares to a two million barrel per day increase in 2023.
Commonwealth Bank of Australia sees Brent oil prices falling to $70 per barrel this year on expectations increased oil supply from non‑ OPEC+ countries that'll eclipse the rise in global oil consumption.
BMI said in its December note that the first half of 2025 was likely to see a supply glut as substantial new production from U.S., Canada, Guyana and Brazil comes online. Also, if OPEC+ plans to roll back voluntary cuts materialize, the oversupply will further pressure prices.
BMI noted that the demand picture in 2025 was not clear yet. "Global oil and gas demand remains uncertain, with stable economic growth and rising fuel demand offset by trade war impacts, inflation and contracting demand in developed markets."
Global crude benchmark Brent was last trading at $76.34 per barrel, around the same levels as it was a year ago in early January.
Gas set to rise
Global natural gas prices have rallied since mid-December 2024, driven by cold weather and geopolitics, Citi analysts said.
Ukraine's recent halt of Russian gas flow to several European nations on New Year's Day has introduced greater uncertainty to the global gas markets. As long as the cutoff remains in place, gas prices are likely to remain elevated.
Colder weather for the rest of winter in the U.S. and Asia could also keep prices elevated, said Citi.
BMI forecasts gas prices to rise by about 40% in 2025 to $3.4 per million British thermal units (MMbtu) compared to an average of $2.4 per MMbtu in 2024, driven by growing demand from the LNG sector and higher net pipeline exports.
U.S. Henry Hub natural gas prices, which was the gauge that BMI referred to, are currently trading at $2.95 per MMbtu.
"LNG will continue to drive new consumption, supported by rising export capacity and strong demand in Europe and Asia," BMI analysts wrote.
Gold may add sheen
Gold prices notched a slew of all-time highs last year, and the run of fresh records could extend in 2025.
"Investors are optimistic about gold and silver for 2025 because they are so pessimistic on geopolitics and government debt," said Adrian Ash, director of research at BullionVault, a gold investment services firm, emphasizing on the yellow metal's role as a hedge against risk.
JPMorgan analysts also expect gold prices to rise, especially if U.S. policies become "more disruptive" in the form of increased tariffs, elevated trade tensions and higher risks to economic growth.
Gold notched its best annual performance in over a decade last year.
August 27 2024: Copper prices near six-week high as one strategist says the 'worst of the correction is over'
Key Points
Prices of the red metal have been climbing steadily in recent weeks, paring losses after falling to a four-month low in early August.
Saxo Bank's Ole Hansen said copper's recent rally had been bolstered by renewed demand from hedge funds which had previously cut their exposure "during the recent and deep 24% correction."
"We believe the worst of the correction is over," Hansen said.
Copper prices on Tuesday rose to an almost six-week high, supported by fresh investor demand and market optimism over the potential for imminent U.S. interest rate cuts.
Copper for September delivery briefly touched $4.3065 per pound in New York on Tuesday, notching its highest level since July 18, when copper traded as high as $4.4280. The contract was last seen trading 0.4% higher at $4.2365.
Three-month copper on the London Metal Exchange, meanwhile, traded 1.3% higher at around $9,406 per metric ton.
Prices of the red metal have been climbing steadily in recent weeks, paring losses after falling to a four-month low in early August.
Ole Hansen, head of commodity strategy at Saxo Bank, said copper's recent rally had been bolstered in part by renewed demand from hedge funds which had previously cut their exposure to the base metal "during the recent and deep 24% correction."
"We believe the worst of the correction is over, but before copper can mount a stronger recovery, demand fundamentals need to improve, potentially supported by restocking through lower funding costs once the [Federal Open Market Committee] starts its long-awaited rate-cutting cycle," Hansen said in a research note published Friday.
"Until then, traders will continue to look out for signs of improvement, not least through the reduction of elevated stock levels at warehouses monitored by the three major futures exchanges," he added.
Rate cut optimism
Late last week, Federal Reserve Chairman Jerome Powell boosted already high expectations for a U.S. interest rate cut at the central bank's Sept. 18 meeting.
Powell on Friday said that "the time has come for policy to adjust," although declined to provide exact indications on the timing or extent of the cut.
Copper prices are seen as likely to benefit from U.S. interest rate cuts, with looser monetary policy expected to alleviate the financial strain on manufacturers and construction firms.
Demand for copper is widely considered a proxy for economic health. The red metal is critically important to various sectors including the energy transition ecosystem, and is integral to manufacturing electric vehicles, power grids and wind turbines.
Wall Street banks have been bullish on the outlook for copper prices this year, citing supply risks and improving demand for energy transition metals.
Indeed, analysts at Citi said in early April that the second secular bull market of copper this century was now underway - roughly 20 years after the first such cycle.
"From a technical standpoint, the rally has paused after meeting resistance at the early August highs at USD 4.22 per pound in New York and USD 9,320 per ton in London. A break would open up for an extension to USD 4.31 and USD 9,500, respectively," Saxo Bank's Hansen said.
Source: CNBC
