On Wednesday, copper futures for three-month delivery gained 1 percent, to $7,352.50, in London as investors fed off speculation that improved global markets would increase demand. Phil Streible, a senior commodity broker at R.J. O’Brien & Associates in Chicago, told Bloomberg in an interview that “[s]igns of increasing global growth could lend some underlying support for copper.”
However, while further support for the red metal was found midweek in declining copper inventories, with London Metal Exchange inventories down to a one-year low, gains were short-lived as investors’ expectations that copper supplies would increase later in the year took precedence on Thursday.
“What we have in the two years ahead is substantial additional amounts of new mine supply coming on stream,” Nic Brown, head of commodities research at Natixis, told Reuters. He added that 2013 saw a great deal of smelter outages; however, this year the market should expect to see an “increase in smelting capacities due to higher treatment and refining charges that will help to incentives smelters to increase capacity.”
Beyond inventories, copper slipped as investors braced themselves for next week’s economic data out of China. Traders are waiting “to see if we’re going to see growth out of China begin to slow,” said Ralph Preston, a market strategist with brokerage Heritage West Financial, to The Wall Street Journal.
The end of the Pebble Mine?
The Environmental Protection Agency (EPA) released a report indicating that the environmental impact of the large-scale gold-copper Pebble mine in Alaska’s Bristol Bay “poses too many risks to salmon and other tribal communities that have depended on them for thousands of years.”
EPA regional administrator Dennis McLerran said in a statement that ”[t]he assessment is a technical resource for governments, tribes and the public as we consider how to address the challenges of large-scale mining and ecological protection in the Bristol Bay watershed.”
The Pebble project is a globally significant copper, gold and molybdenum deposit, but opposition to the mine has been long standing and widespread; it even resulted in Rio Tinto (ASX:RIO,LSE:RIO,NYSE:RIO) — a former major shareholder of Northern Dynasty Minerals (TSX:NDM) — to back out. The Guardian reported that both opponents and supporters of the Pebble Bay mine believe the EPA’s report will very likely damn the project, despite the EPA’s comments that action will not immediately be taken.
In response to the report from the government agency, Northern Dynasty’s president and CEO stated that ”[p]ublication of the final watershed assessment is really the final chapter in a very sad story,” adding that the company believes the “EPA set out to do a flawed analysis of the Pebble Project, and they certainly succeeded with both their first and second drafts of the BBWA. We have every expectation that the final report released today is more of the same.”
Serengeti Resources (TSXV:SIR) announced the discovery of outcropping mineralization grading 0.59-percent copper and 1.59 g/t gold on the RCN property, located in the Red Chris district of Northwestern British Columbia.
President and CEO David Moore is happy with the company’s discovery, and said that the company’s “success in identifying, acquiring and advancing high quality exploration targets such as RCN demonstrates the merits of our brownfield exploration approach.” Serengeti now has “a strategic land position in four BC copper-gold districts, and look forward to testing some of our best targets in 2014,” he added.
It was a good week for Pacific Booker Minerals, (TSXV:BKM,NYSEMKT:PBM), which saw the 30-day period for the British Columbian government to challenge the Supreme Court’s ruling on its Morrison project come to an end without incident. The company had challenged the government’s October 1, 2012 decision when an Environmental Assessment Certificate was refused. The Supreme Court overruled the decision on December 9, 2013.
Kaizen Discovery (TSXV:KZD) completed its initial earn-in expenditures and now owns a 49-percent interest in the Fairholme copper-gold porphyry exploration project in New South Wales, Australia. The project is being explored by Kaizen under an earn-in agreement with Clancy Exploration, which owns the remaining 51 percent.
Through the agreement, Kaizen has the right to increase its interest in Fairholme to 65 percent through additional funding of AU$4 million in exploration over the next two years. Furthermore, if Kaizen funds a prefeasibility study it can increase its share of Fairholme to 80 or 85 percent, depending on the cost of the study.
Securities Disclosure: I, Vivien Diniz, hold no investment interest in any of the companies mentioned.