May 17, 2020

Mongolian Government 'Made Mistakes' in Delaying Rio Tinto Copper Exploration

Oyu Tolgoi copper mine
Rio Tinto
Chuluunbat Ochirbat
Oyu
Admin
2 min
Workers on site at the Oyu Tolgoi copper mine
Good news for Rio Tinto – its stalemate with the Mongolian government over its Oyu Tolgoi copper mine site appears to be coming to an end. The Mon...

Good news for Rio Tinto – its stalemate with the Mongolian government over its Oyu Tolgoi copper mine site appears to be coming to an end. The Mongolian government has admitted that it made some mistakes in putting the Rio Tinto project on hold and, with that, all complications should be fully resolved by September.

According to Reuters, Mongolian vice minister for economic development Chuluunbat Ochirbat discussed the issue this week and noted that the Mongolian government realizes that it made mistakes in delaying Rio Tinto’s copper exploration at Oyu Tolgoi and is working on moving past this issue:

"We are under arrangements and negotiations with Rio Tinto now to complete the process by September this year," he said on the sidelines of a conference in London. "Underground mining will be put into operation in a year and a half or two years time," he added.

Mongolia’s decision to delay underground mining work may have hurt Rio Tinto’s production timetable, but one thing that officials have ruefully noted is that the delay has likely hurt Mongolia more – Reuters notes that the Oyu Tolgoi mine holds the potential to contribute 20-30 percent of Mongolia’s economy and, what’s more, the government’s delays may have hurt Mongolia’s potential to attract business in the future:

"The ongoing negotiation process with Rio Tinto has really hurt the reputation of Mongolia as a reliable partner for businesses and investors," [Ochirbat] said.

[…] "We have made the conclusion that we have made some mistakes in the legislation, we tightened regulations in the mining industry too much and that was the reason why we showed weaker performances (last year)," Ochirbat said, referring to a slowdown in GDP growth for the country in 2013.

According to Ochirbat, Mongolia is taking full responsibility for the standoff and hoping that the issues it caused can be reversed. If Rio Tinto is able to get its underground mining operation constructed and running within the projected two years with beneficial results, then that may well be the case.

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May 6, 2021

Copper, iron ore surge as Chinese investors unleash demand

Copper
Iron ore
Renewables
EVs
3 min
Iron ore broke $200 a tonne for the first time, while copper approached a record high as Chinese investors unleashed fresh demand following May holiday

The reopening of major industrial economies is sparking a surge across commodities markets from corn to lumber, with tin climbing above $30,000 a tonne for the first time since 2011 on Thursday.

In the wake of mounting evidence of inflation fuelled by higher raw materials prices, investors are also increasingly focused on when the U.S. Federal Reserve might start throttling back its emergency support.

Copper

Many banks say the rally has further to run, particularly for copper, which will benefit from rising investment in new energy sectors. Copper is at the highest in a decade, fueling bets it will rally further to take out the record set in February 2011. Steel demand is surging as economies chart a path back to growth just as the world’s biggest miners have been hampered by operational issues, tightening ore supply.

“The long-term prospects for metals prices are ‘too good’ and point to higher prices in the next few years,” said Commerzbank AG analyst Daniel Briesemann. “The decarbonization trends in many countries, which include switching to electric vehicles and expanding wind and solar power, are likely to generate additional demand for metals.”

Trading house Trafigura Group and several major Wall Street banks including Goldman Sachs Group Inc. and Bank of America Corp. expect copper to extend gains.

Copper rose as much as 1.6% to $10,108.50 a ton on the London Metal Exchange before trading at $10,080 as of 4:07 p.m. in London.

Bloomberg

Iron Ore

Benchmark spot iron ore prices rose to a record, while futures in Singapore and China climbed.

The boom comes as China’s steelmakers keep output rates above 1 billion tons a year, despite a swath of production curbs aimed at reducing carbon emissions and reining in supply. Instead, those measures have boosted steel prices and profitability at mills, allowing them to better accommodate higher iron ore costs.

Spot iron ore with 62% content hit $201.15 a ton on Thursday, according to Mysteel. Futures in Singapore jumped as much as 5.1% to $196.40 a ton, the highest since contracts were launched in 2013. In Dalian, prices closed 8.8% higher.

Erik Hedborg, Principal Analyst, Steel at CRU Group commented: “Recent production cuts in Tangshan have boosted demand for higher-quality ore and prompted mills to build iron ore inventories as their margins are on the rise. Iron ore producers are enjoying exceptionally high margins as well, around two thirds of seaborne supply only require prices of $50 /dmt to break even.”

China

Still, some analysts including Commerzbank’s Briesemann expect a short-term correction as metals become detached from fundamentals. There’s also a risk that China could engage in policies that may cool demand for iron ore and copper.

The metals rally has boosted concerns about short-term Chinese demand. Some manufacturers and end-users have been slowing production or pushing back delivery times after costs surged, while weaker-than-expected domestic consumption has opened the arbitrage window for exports.

Tin climbed as much as 2% to $30,280 a ton on the LME, boosted by rising orders for the soldering metal. Tin is at the highest since May 2011, with a 48% gain this year making it the best performing metal on the LME.

 


 

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