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Zinc, Lead and Tin

Teck Resources profit slumps as prices drop, costs climb – by Susan Taylor (Reuters U.K. – October 25, 2018)

https://uk.reuters.com/

TORONTO (Reuters) – Diversified miner Teck Resources Ltd, the world’s second-biggest exporter of steel-making coal, reported lower-than-expected third-quarter earnings on Thursday, hit by declining commodity prices and higher costs.

A number of one-time events also weighed on the quarter, including delayed zinc sales and higher costs at the Trail smelter due to forest fire smoke, adding up to C$58 million ($44.39 million), TD Securities analyst Greg Barnes said in a note.

Strong steel-making coal sales in the quarter would have “significantly” exceeded Teck’s forecast of 6.8 million tonnes, the company said, but logistics issues at Westshore Terminals delayed delivery of approximately 250,000 tonnes of the material, worth some C$55 million in revenue.

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LMEWEEK-Macro disquiet drowns out signs of base metals shortages – by Eric Onstad (Reuters U.K. – October 4, 2018)

https://uk.reuters.com/

LONDON, Oct 4 (Reuters) – Uncertainty about how metals demand will be hit by trade wars, rising U.S. interest rates and a slowdown in China is weighing on industrial metals prices, submerging signals pointing to potential shortages.

The index of copper and five other top industrial metals traded on the London Metal Exchange has shed 11 percent this year while prices for the worst-performing metals, zinc and lead, have tumbled by about a fifth.

But as speculators pile on bearish positions and investors flee from the metals market during tit-for-tat trade volleys, signs of metals shortfalls are building.

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How Zinc Batteries Could Change Energy Storage – by Ivan Penn (New York Times – September 26, 2018)

https://www.nytimes.com/

Making the batteries rechargeable and lowering their cost are seen as important advances in enabling the electric grid to depend on power from renewable sources.

Over the past six years, 110 villages in Africa and Asia received their power from solar panels and batteries that use zinc and oxygen. The batteries are the basis of an innovative energy storage system created by NantEnergy, a company owned by Patrick Soon-Shiong, a biotech entrepreneur and surgeon originally from South Africa.

Thomas Edison tried to develop batteries made with zinc 100 years ago. But he did not figure out how to make them technologically viable. NantEnergy says its zinc air batteries are the first to become commercially available.

Scientists at NantEnergy said they had achieved two key goals: to make the batteries rechargeable, and to lower their cost for energy storage to $100 per kilowatt-hour. That is a figure that some people in the industry have said is essential to creating a carbon-free electric grid that operates even when the sun is down and the wind abates.

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Appeals court sides with Colville Tribe against Canadian mining company for polluting Upper Columbia River – by Agueda Pacheco-Flores (Seattle Times – September 25, 2018)

https://www.seattletimes.com/

A three-judge panel of the 9th U.S. Circuit Court of Appeals has upheld a lower court decision finding a Canadian company is liable for polluting the Upper Columbia River in a hard-fought lawsuit between the Confederated Tribes of the Colville Reservation and the largest lead and zinc mining company in the world.

In a 55-page opinion issued Sep. 14, federal appellate court judges Ronald M. Gould, Richard A. Paez, and Michael J. McShane upheld a district-court decision that U.S. federal courts do have jurisdiction to find Teck Resources Ltd. (formerly Teck Cominco Metals) liable for polluting the river for close to a century.

The ruling upheld a lower court order for the company to reimburse the Colville tribe $8.25 million — $3.39 million the tribe paid to investigate the river’s pollution, plus $4.86 million in attorney fees and costs. The company must also pay $344,300 in prejudgment interest, bringing the total to nearly $8.6 million.

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Nyrstar profit warning highlights zinc’s disconnects – by Andy Home (Reuters U.S. – September 24, 2018)

https://www.reuters.com/

LONDON (Reuters) – Belgian zinc producer Nyrstar issued a profits warning last week, citing “adverse market conditions”. The company, which last year produced over a million tonnes of refined zinc, is feeling the pain from the dramatic price collapse of the last six months.

London Metal Exchange (LME) zinc hit an 11-year high of $3,595.50 per ton in February. It is currently trading at $2,525 after touching a two-year low of $2,283 in August.

Retreat turned into rout as zinc got caught up in the broader LME sell-off, speculative players using the base metals complex to vent their trade war angst. The resulting price implosion has opened up a disconnect with zinc’s internal supply-demand dynamics.

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Commentary: Trade wars will weigh on already struggling tin – by Andy Home (Reuters U.K. – September 20, 2018)

https://uk.reuters.com/

LONDON (Reuters) – Tin has been spared the volatility afflicting the rest of the industrial metals over the past month. The London contract is too illiquid to attract the attention of many of the speculative players who have been hammering the likes of copper as a proxy for their negative view on global manufacturing growth.

But tin hasn’t been spared completely. The London Metal Exchange (LME) three-month price sank to a two-year low of $18,300 a tonne in August and is still hovering close to that level at $18,900.

Tin has been the weakest performer in the LME base metals pack for some time. It is down more than 10 percent since the start of 2017. Copper, by contrast, is still up 10 percent despite all the recent fund selling.

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Remnant strategy could extend 777 lifespan: Hudbay – by Eric Westhaver (Flin Flon Reminder – August 29, 2018)

https://www.thereminder.ca/

Hudbay is proposing a new strategy that could extend the life of Flin Flon’s main mine. The strategy includes pursuing reserves with remnants, or small pockets of ore found underground.

“They are spread out, smaller in size and more expensive to extract than the ore that is being mined right now,” said Scott Brubacher, Hudbay director of corporate communications.

The 777 Mine is currently slated to end production in 2021, but the remnants strategy has become one of the company’s main hopes for extending the mine past 2021.

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Commentary: Is the metals rout signal or noise? The zinc perspective – by Andy Home (Reuters U.K. – August 16, 2018)

https://uk.reuters.com/

LONDON (Reuters) – The London Metal Exchange (LME) base metals markets were a scene of carnage on Wednesday. The LME Index (.LMEX), a basket of the exchange’s six core contracts, slumped by almost four percent in a single day.

The bloodbath is part and parcel of the turmoil playing out across the financial market spectrum. But industrial metals find themselves at the epicenter of investors’ fears about global, particularly Chinese, growth and escalating trade tensions. A rising dollar and a falling yuan simply reinforce the macro negativity.

If Doctor Copper and his metallic friends are to be believed, global manufacturing is heading for a cliff-edge. But should we believe them? Those analysts that track the complex are not convinced.

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Commentary: Zinc bears get taught another lesson in timing – by Andy Home (Reuters U.K. – July 27, 2018)

https://uk.reuters.com/

LONDON (Reuters) – Zinc has fared worst in the industrial metals rout. From a 10-year high of $3,484.50 per tonne in February, the price of London Metal Exchange (LME) zinc slumped 30 percent to a mid-July low of $2,474. It is currently treading water around $2,570.

Zinc has been hit by the same global growth jitters as the other LME-traded base metals. The metal, in the form of galvanised steel, is heavily dependent on demand from the automotive and construction sectors, leaving it exposed to both U.S. tariffs and Chinese economic slowdown.

But speculators turned on zinc earlier than any of the other metals and they’ve pushed it harder. Down by 23 percent on the start of the year, it is the laggard in an under-performing LME pack.

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Smelting constraints make zinc’s price plunge look overdone – by Pratima Desai (Reuters U.S. – July 17, 2018)

https://www.reuters.com/

LONDON (Reuters) – Expectations for a rise in zinc concentrate supplies in coming years have driven down the metal price to one-year lows, but smelting capacity constraints suggest the sell-off is premature.

Benchmark zinc on the London Metal Exchange (LME) hit $2,473.85 a tonne on Monday, its lowest since mid-June 2017 and 31 percent below February’s 11-year high of $3,595.50. Prices of the metal, which is used to galvanise steel, have underperformed other LME metals this year.

Projects that will deliver more zinc concentrate to market include Vedanta’s Gamsberg mine in South Africa and three Australian projects, namely Dugald River owned by MMG, another mine run by New Century Resources and Glencore’s Lady Loretta mine.

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Trade war jitters have halted the commodity rally and could disrupt miners’ plans for big projects – by Gabriel Friedman (Financial Post – July 14, 2018)

https://business.financialpost.com/

Speaking at a conference in early June, Vancouver-based Teck Resources Ltd.’s chief executive Don Lindsay raved that his company invested “in the right commodities at the right time,” with a nod to one of its biggest bets — copper.

Lindsay predicted copper soon would hit US$3.50 per pound, at which point his company’s long-planned Quebrada Blanca 2 project — a 300,000-ton per year copper mine to be constructed in northern Chile’s high desert — would add $1 billion dollars per year in cash flow.

“That price is not far off,” he said at the June conference in Chicago, organized by Deutsche Bank, at a time when copper had experienced nearly a year of gains.

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Canadian startups focus efforts on zinc, instead of lithium-ion, for future batteries – by Tyler Hamilton (Globe and Mail – July 11, 2018)

https://www.theglobeandmail.com/

The energy storage market is a battlefield, littered with the corpses of failed newcomers that underestimated how deeply entrenched lithium-ion technology would become.

We’re talking 95 per cent entrenched, a market position growing stronger as demand for electric vehicles, wireless devices and cordless tools rise. Costs continue to plunge, with “gigafactories” and “Chinafication” driving the same economies of scale that turned solar photovoltaic panels into a commodity.

This has researchers at the Massachusetts Institute of Technology worried about “technology lock-in.” Their fear, outlined in a recent white paper, is that lithium-ion has become so dominant that it is preventing newer, better battery chemistries from getting funded, gaining market traction and achieving the scale needed to survive, let alone compete on cost.

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COLUMN-China zinc output cuts; hazy details but the pain is real – by Andy Home (Reuters U.K. – June 29, 2018)

https://uk.reuters.com/

LONDON, June 29 (Reuters) – Will China’s zinc smelters cut production?If they make good on a proposal to take a collective 10 percent hit, it would remove at least 400,000 tonnes of metal from the market on an annualised basis.

The news has halted the slide in zinc prices, both in London and Shanghai, though it may have been little more than narrative wrapping for an overdue correction.

The London Metal Exchange (LME) three-month zinc price is this morning trading at $2,875 a tonne, still close to Tuesday’s 10-month low of $2,815 and a long way from February’s peak of $3,595.50. That tells you the market isn’t that impressed either.

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Commentary: Zinc rally over? Bears think so but spreads bite back – by Andy Home (Reuters U.K. – June 21, 2018)

https://uk.reuters.com/

LONDON (Reuters) – Is that it for the zinc rally? After hitting a 10-year high of $3,595.50 per tonne in February, the London Metal Exchange (LME) price has been sliding ever since. The retreat has extended to $2,946.50 so far on Thursday morning, the lowest level since August last year.

Expectations for one last bull hurrah have faded as exchange stocks have rebuilt, apparently calling time on the supply chain tightness that underpinned zinc’s two-year charge from the January 2016 low of $1,444.50 per tonne.

As ever with this particular metal, though, appearances can be deceptive, as shorts have just found out to their cost. Time-spreads across the front part of the LME zinc curve have tightened sharply over the last couple of weeks, a seemingly anomalous outcome given rising inventory.

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Miners’ big spend shows commodities optimism – by Robert Guy (Australian Financial Review – June 18, 2018)

https://www.afr.com/

A $2 billion acquisition spree by South32 and Gina Rinehart’s Hancock Prospecting has underscored the more upbeat outlook on commodity prices among industry heavyweights, with the scramble to buy or develop world class assets and infrastructure heating up as the world’s largest miners emerge from years of austerity.

Australia’s largest miners have moved aggressively to stamp their dominance in key commodity markets amid expectations of strong Asian economic growth over the next decade, with South32’s $1.7 billion bid for Arizona Mining heralding its intent to be a bigger player in base metals, while Hancock Prospecting’s bold $390 million bid for Atlas Iron could position Australia’s wealthiest woman as a bigger player in iron ore shipments from Port Hedland.

The big miners are slowly opening their wallets after many years of cost cutting and a focus on improving shareholder returns, as management teams look to replace aging mines, maintain production and lay the foundation for future earnings growth.

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