Archive | Commodity Super-Cycle and Decline

China plans to build new city nearly three times the size of New York – by Tom Phillips (The Guardian – April 4, 2017)

Announcement of the Xiongan New Area leads to a frenzy of property speculation with investors clogging roads to get to site

Beijing – A hitherto anonymous region near China’s smog-choked capital has been overrun by house buyers after Beijing unveiled “historic” plans to build a new city there in a bid to slash pollution and congestion.

Plans for the Xiongan New Area, a special economic zone that authorities say will eventually cover an area nearly three times that of New York, were announced by the Communist party’s top leaders on Saturday with a flurry of government propaganda.

In a joint statement two of China’s most powerful political bodies, the central committee and state council, described the new city, which will straddle three counties about 100km southwest of Beijing, as “a strategy crucial for a millennium to come”. Continue Reading →

Is it just the London Metal Exchange that’s short of tin? – by Andy Home (Reuters U.S. – May 12, 2017)

LONDON – The London Metal Exchange (LME) is running short of tin. Headline stocks of the soldering metal in the LME’s warehouse system fell to 2,290 tonnes this week.

It’s the lowest level in at least 20 years but in truth any historical comparison is lost in the mists of time because the world of metals trading and the LME’s place in that world were so different back then. Unsurprisingly, low inventory is once again generating tightness across short-dated time-spreads, extending a pattern that has been running for a couple of years now.

But the outright price is underperforming. Tin, currently trading just shy of $20,000 per tonne, is down more than 5 percent on the start of the year and vying with nickel for worst performer among the major LME metals. Which begs the question of whether the LME is reflecting the wider state of the market or its own dwindling liquidity. Continue Reading →

The Daily Prophet: If You’re Long Commodities, Our Condolences – by Robert Burgess (Bloomberg News – May 4, 2017)

Connecting the dots in global markets.

It would be an understatement to say it was an ugly day for anything related to commodities. The Bloomberg Commodities Index tumbled 1.82 percent, its biggest drop since November. Energy markets, agriculture-related raw goods such as wheat and cattle, and metals such as copper, nickel and the iron ore used to make steel were all hit hard.

Even gold dived. Economists like to say commodities are not the referendum on the global economy they once were, but it’s hard not to notice how closely the recent weakness tracks the drop in the Citi Economic Surprise Index, which measures the data that exceed forecasts relative to those that miss, to its lowest level since the start of the year.

The oil rally following OPEC’s deal to curb supply has disappeared. Futures on both sides of the Atlantic dropped to their lowest since late November on growing signs that the group’s production cuts are failing to clear a surplus of crude, according to Bloomberg News’ Mark Shenk. Oil stocks felt the pinch, with the S&P Oil & Gas Exploration and Production Index slumping as much as 4.9 percent Thursday to the lowest since August. Continue Reading →

Despite slower growth, China still key market for miners and Africa – by Keith Campbell ( – April 21, 2017)

JOHANNESBURG ( – There can be no doubt that, for the past two decades-and-a-half or so, the biggest single influence on the global mining industry has been China. Between 2002 and 2012, that country experienced an annual average real gross domestic product (GDP) growth rate of 10.4%, compared with India’s 7.6%, the UK’s 1.3%, Germany’s 1.2%, France’s 1.0% and Japan’s 0.8%.

During the period 1992 to 2002, China’s average annual real GDP growth rate had been 9.8% (India’s had been 5.8%). (These figures are from The Economist: Pocket World in Figures 2015.)

The result was the “commodity supercycle” and a global mining boom. But Chinese economic growth has, of course, decelerated significantly since 2012. In 2015, it grew at 6.9% and last year at 6.7%, according to official data released in Beijing. (The International Monetary Fund, or IMF, has estimated India’s 2016 growth rate at 6.6%, which makes China again the world’s fastest- growing economy. Continue Reading →

Billionaire Facebook Backer Buying Commodities That Made Him – by Yuliya Fedorinova (Bloomberg News – April 10, 2017)

The Russian tycoon who made $1.4 billion with an early bet on Facebook Inc. and still owns a stake in Uber Technologies Inc. is returning to the sooty old commodities industry that first made his fortune.

Alisher Usmanov, 63, said he’s been investing in natural-resource producers as they rallied last year following three years of declining prices. The Bloomberg World Mining Index of shares jumped 38 percent in 2016 as concerns eased over China’s economy and prices for metals rose, with companies such as Fortescue Metals Group Ltd., BHP Billiton Ltd. and Anglo American Plc surging.

“Last year showed that commodities companies such as BHP Billiton, Fortescue and traditional companies of the oil and gas sector are also able to offer high returns on investment,” Usmanov said in an interview in his Moscow office, without disclosing which companies he’s bought stakes in. Continue Reading →

Top 50 biggest mining companies – by Frik Els ( – April 3, 2017) and sister company IntelligenceMine’s ranking of the world’s 50 largest mining companies based on market value continues to show an industry in recovery.

At the end of the first quarter this year the top 50 companies had a combined worth of $842 billion. In total these companies’ added $258 billion in market capitalization over the past 12 months and a good fifth of those gains occurred in 2017.

As with any ranking, criteria for inclusion is a contentious issue. We decided to exclude unlisted and state-owned enterprises at the outset due to a lack of information. That of course excludes giants like Chile’s Codelco, Uzbekistan’s Navoi Mining which owns the world’s largest gold mine, Eurochem, a major potash firm, trader Trafigura, top uranium producer Kazatomprom and numerous entities in China and developing countries around the world. Continue Reading →

Miners are spending again, but only to stand still – by Clyde Russell (Reuters U.S. – March 31, 2017)

SINGAPORE – The rally in commodity prices last year is starting to filter through to higher spending by miners, but the nature of how they are loosening the purse strings betrays the view that companies are still cautious about the outlook.

Mining service providers are generally one of the first groups to suffer cutbacks when prices turn down, but equally they are among the first beneficiaries when things turn around.

In the five years of declining prices from 2011 to 2015, mining companies universally tried to survive by stripping costs out of their operations, with many eventually even cutting sustaining capital. It’s this spending that is coming back into the market, according to several participants at this week’s Mining Investment Asia conference in Singapore. Continue Reading →

Miners to spend $21 billion on exploration by 2025 – by Cecilia Jamasmie ( – March 29, 2017)

An undeniable and ongoing rebound in commodity prices could take global mining spending in exploration up to as much as $21 billion by 2025, a level of funding last seen in 2012 according to S&P Global Market Intelligence, but which is necessary to sustain the industry’s growth.

While prognosticating that far into the future can inevitably lead to inaccuracies, Stan Wholley, President for the Americas at CSA Global — the world’s second-largest mining sector consultancy — said that such a hefty investment is essential.

“As deposits get harder and more expensive to find and after such an extended period of inactivity in the exploration space, I believe we need to be back at the levels seen in 2012 to replace resources and reserves required to sustain growth,” he told Continue Reading →

Swedish Miner Says Donald Trump Doesn’t Hold Key to Metal Prices – by Hanna Hoikkala and Niklas Magnusson (Bloomberg News – March 28, 2017)

The operator of some of Europe’s largest copper and zinc mines expects President Donald Trump’s plans to spend on U.S. infrastructure to have much less impact on base-metal prices than the needs of burgeoning middle-class populations in emerging markets.

That’s because projects in the U.S. and other developed countries simply won’t use enough zinc or copper to have any significant impact on prices, Lennart Evrell, chief executive officer of Sweden’s Boliden AB, said in a March 22 interview. When poorer and less-developed countries decide to build transport and power networks they consume far more of these materials, he said.

“The U.S. is not big enough when it comes to commodities,” Evrell said. “It may be a very big economy, but when it comes to need for base metals, it’s more about the earlier stages of a country’s development, and the U.S. is not in that phase. We believe the driver behind the recent metals price increases is the rest of the world, and not Trump, as prices fell roughly as much after his election as they had gained in conjunction with his election.”’ Continue Reading →

Miners Regain Mojo to Spark $18 Billion in Exploration Hunt – by David Stringer (Bloomberg News – March 24, 2017)

A rebound in exploration by global miners could see spending hit $18 billion by 2025 with China the front runner in the search for a new generation of giant discoveries.

Exploration budgets are rising after they plunged to an 11-year low of about $10 billion last year as mining companies slashed costs in the wake of a collapse in prices, according to Richard Schodde, managing director of Melbourne-based MinEx Consulting Pty, an industry adviser.

“We are coming out of the bottom of the cycle. I actually see the opportunity for the exploration sector to regain its mojo and quickly deliver a pipeline of good discoveries,” Schodde said in an e-mailed response to questions. “It’s catch-up time for the industry.” Continue Reading →

$5.5 billion private capital ready to invest in mining – by Frik Els ( – March 20, 2017)

According to a new report by private capital tracker Preqin, overall fundraising for natural resources investment actually declined declined by a fifth in 2016 to the lowest since 2012.

Coming off a record 2015, 74 funds raised a total of $60bn in 2016 for investment in natural resources, which includes metals and mining, water, timberland and energy. Private providers of capital include pension funds, sovereign wealth funds, endowments, family offices and others.

In 2015 mining and metals made up a paltry portion of funds raised with three funds closing on $1.1 billion in 2015. Last year five funds managed to raise $2.1 billion. 2012 was the peak year for mining fundraising with $4.6 billion of capital commitments from investors. Continue Reading →

PDAC Take-Away. Optimism for gold and mining in general – by Lawrence Williams (Sharps – March 20, 2017)

The annual Prospectors and Developers Association of Canada (PDAC) Convention is truly something special. Although unable to attend this year I have been watching reports on the event with considerable interest as it is very much a bellwether of the mineral exploration sector – and that is itself a great indicator of the strength, or otherwise, of the global mining industry and where it is headed. This year’s PDAC took place from March 5th-8th inclusive.

I had been attending the PDAC since 1977 and it has always been one of the industry’s highlights. Back then the whole event took place in the Royal York Hotel and attendance rose to around 7-8,000 at its peak before it transferred to the nearby Toronto Convention Centre, since when it has grown enormously to become what is probably the world’s biggest annual mining event.

Numbers of attendees peaked four years back at around 32,000 when the industry – and gold mining in particular – had been riding high, although had been beginning to turn down. Gold exploration and mining has always been the principal driver of PDAC sentiment – and attendance. Continue Reading →

Anglo’s Billionaire Investor Puts Mining on Cusp of M&A Era – by Jesse Riseborough, Dinesh Nair and Thomas Biesheuvel (Bloomberg News – March 17, 2017)

Anil Agarwal’s surprise move into Anglo American Plc suggests the mining industry may be on the cusp of a new wave of deals.

For years, Anglo has been the subject of takeover speculation and during the worst of the commodities crisis it seemed on the verge of a breakup. It spent last year getting back on firmer footing, but the 2 billion pound ($2.4 billion) investment by one-time Anglo suitor Agarwal has sparked the return of speculation about the company’s future.

“I’m pretty sure every investment banker in London is running around, dusting off old pitch books and going to every major in town,” Paul Gait, an analyst at Sanford C. Bernstein Ltd. in London, said by phone. “This feels to me a little like the last cycle, when the first mover precipitated a round of consolidation.” Continue Reading →

‘This time isn’t different’: Miners must learn lessons of the last boom-bust cycle – by Sunny Freeman (Financial Post – March 7, 2017)

As the mining industry gingerly approaches what could be the start of a new, improved commodity cycle, analysts at the 85th Prospectors and Developers Association of Canada convention in Toronto warned companies to heed lessons from the last crash, lest they repeat their boom-cycle follies.

“This time isn’t different,” warned Mark Fellows, director at U.K.-based Skarn Associates, noting that the impact of the cyclical nature of the industry isn’t going away and miners are an industry of price-takers, having little direct influence over the value of the commodities they produce.

That’s why, he said, those preparing for a price upswing must be more prudent than before as global economic uncertainty persists, especially given that the last boom-bust cycle was particularly extreme. Continue Reading →

PREVIEW-With money in their pockets, prospects improve for small miners – by Susan Taylor and Rod Nickel (Daily Mail/Reuters – March 6, 2017)

TORONTO, March 3 (Reuters) – As mineral and metal prices have rebounded from a slump, so have the fortunes of small miners, and some industry experts are predicting even better times, ahead of the industry’s biggest conference for explorers and developers.

Brighter prospects will be in focus at the Prospectors and Developers Association of Canada’s conference in Toronto, Sunday through Wednesday. The world’s top miners are increasingly investing in exploration companies early on, taking “toehold” minority stakes to boost their odds of success.

“Majors have gutted their own exploration departments,” said Theophile Yameogo, mining and metals advisory leader at consultant EY Canada. “They don’t want to do leap-of-faith drilling.” Continue Reading →