Base Resources (LON:BSE) – A$89m raised in the institutional placement
Kibo Mining (LON:KIBO) – Mbeya Coal to Power Project update
Premier African Minerals (LON:PREM) – Operations update
Chile and Argentina to lead lithium output growth after 2018
- New report by BMI Research states that based on project pipelines, Chile and Argentina will lead lithium production in coming years, with the bulk of new capacity coming in 2019.
- Predicted that will be slow moving project pipeline in 2018, due to regulatory hurdles in Chile and growing exploration projects, which will eventually boost long term output in Argentina.
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Economics
Global – World manufacturing activity climbed to a near seven-year high in December driving commodity prices higher.
- The Bloomberg Commodity Spot Index following 22 raw materials climbed to the highest level since 2014 yesterday.
- Stronger production was recorded in both the manufacturing and service sectors with economic activity being broad based across the six sectors covered by the sector in the JPM/Markit survey (consumer, intermediate and investment goods and business, consumer and financial services).
- “Forward-looking indicators such as new orders and backlogs of work also point to the current solid upturn being extended into the start of 2018,” JPM/Markit said.
US – Employment numbers are due later this afternoon with preliminary ADP data pointing to a strong increase in jobs in December exceeding all market estimates.
- ADP payroll numbers climbed 250k, the most in nine months, compared to 190k forecast.
- Nonfarm Payrolls: 190k forecast v 228k in November.
- Unemployment Rate: 4.1% forecast v 4.1% in November.
- Av Hourly Earnings (%mom/yoy): 0.3/2.5 forecast v 0.2/2.5 in November.
Germany – Consumers increased spending in November reflecting the start of the sales season as well as extra day of shopping compared to the previous year.
- Retail Sales (%mom/yoy): 2.3/4.4 v -1.0/-0.9 in October and 1.0/2.3 forecast.
France – Higher consumer inflation numbers came in December amid other reports showing consumer confidence strengthened during the period running above its long term average.
- The consumer sentiment index increased to 105 last month, up 2 points on November numbers.
- CPI (EU Harmonised %mom/yoy): 0.4/1.3 v 0.1/1.2 in November and 0.4/1.3 forecast.
North/South Korea – Two states are due to hold high-level talks later next week regarding a potential participation of North Korea in the Winter Olympics which is expected to contribute to peace talks over escalated tensions in the region lately.
Argentina – The government is looking to raise $9bn offering three bond tranches including 5y yielding 4.625% ($1.75bn), 10y at 6.0% ($4.36bn) and 30y at 6.95% ($3bn).
Moody’s and S&P are expected to rate bonds B2 and B+, four and three notches below the investment grade level, respectively.
Currencies
US$1.2052/eur vs 1.2028/eur yesterday Yen 113.18/$ vs 112.65/$ SAr 12.353/$ vs 12.275/$ $1.355/gbp vs $1.353/gbp 0.784/aud vs 0.785/aud CNY 6.485/$ vs 6.498/$
Commodity News
Precious metals:
Gold US$1,317/oz vs US$1,311/oz yesterday
- Bloomberg’s weekly poll of trader and analysts move from bullish sentiment over the previous three weeks to neutral (Bullish:4, Bearish: 4, Neutral: 5) despite the precious metal rising 1.3% this week to head for a 4th consecutive weekly gain. Spot gold’s 14-day relative strength index recorded 72.59, indicating technical analysis toward the commodity being overbought and suggesting a price correction.
- Spot gold was boosted by early weakness in the dollar against the euro. Despite positive late-2017 US employment data with private employees adding better-than-expected 250,000 jobs in December, the index against a basket of six major currencies is poised for a 0.3% loss to a three-month low of 91.751. Investors will now be focused on today’s US non-farm payrolls report, which is expected to show job gains of 190,000 for December.
Gold ETFs 71.6moz vs US$71.6moz yesterday
Platinum US$961/oz vs US$950/oz yesterday
Palladium US$1,096/oz vs US$1,095/oz yesterday
- Palladium’s price surged 56% over 2017 as supply shortage concerns were fueled by Chinese car sales growth, tightening emissions controls and a move away from diesel cars across Europe.
Silver US$17.16/oz vs US$17.09/oz yesterday
Base metals:
Copper US$ 7,169/t vs US$7,222/t yesterday
- Bloomberg’s weekly poll of traders and analysts see copper prices rising (Bullish: 7, Bearish: 4, Neutral: 5), with bulls expecting a tighter market as China ramps up its curbs on scrap imports and ongoing wage negotiations a major mines have the potential for supply disruption.
- China’s second batch of 2018 scrap copper sees a massive 73% reduction in tonnage as the Ministry of Environmental Protection’s Solid Waste and Chemical Management Division sets quotas amid a major clampdown on the country’s imports of waste. In addition to paper, plastics and other metals, the reduction in tonnage from the first batch at 110,770 tonnes to the second at 29,715 tonnes moves to improve the nations polluted environment. The move by Beijing to cut its quotas for the first batches into 2018 shows a 94.3% cut compared to 2017 levels, with data showing there were far fewer refineries applying for licenses.
- Beijing has also moved to exclude traders from participating in the scrap copper business, with a recent move to issue new rules on firms allowed to handle imports. Meanwhile, demand from China for refined copper has risen 10% from the previous year, fueling the rising prices.
Aluminium US$ 2,237/t vs US$2,229/t yesterday
Nickel US$ 12,525/t vs US$12,585/t yesterday
Zinc US$ 3,355/t vs US$3,347/t yesterday
- Rising concerns over market deficit is driving zinc to 10-year highs, as stocks held in London Metal Exchange warehouses fell 250 tonnes to their lowest levels since 2008. The three-month zinc on the LME rose 0.8% to its highest since August 2007 at $3,359/t. The dramatic fall in stocks, contracting by a third from its October peak, resulted from mine supply falling off in the preceding year.
- Although mine supply was showing signs of picking up, Goldman Sachs still forecast the price to keep rising over the next six to nine months, based on continued refined stocks drawing down and Chinese zinc mine supply being unlikely to respond to higher prices.
Lead US$ 2,579/t vs US$2,574/t yesterday
Tin US$ 19,880/t vs US$19,905/t yesterday
Energy:
Oil US$67.9/bbl vs US$68.1/bbl yesterday
Natural Gas US$2.809/mmbtu vs US$3.035/mmbtu yesterday
Uranium US$24.00/lb vs US$23.90/lb yesterday
Bulk:
Iron ore 62% Fe spot (cfr Tianjin) US$73.8/t vs US$72.6/t
Chinese steel rebar 25mm US$673.8/t vs US$685.0/t
Thermal coal (1st year forward cif ARA) US$85.6/t vs US$89.5/t
Premium hard coking coal Aus fob US$261.9/t vs US$261.9/t
Other:
Tungsten APT European US$294-301/mtu vs US$293-300/mtu last week
Cobalt LME 3m US$75,250.0/t vs US$75,250.0/t
- Last year cobalt prices recorded $75,500/t, with the 129% annual surge sparked by supply fears and expected demand from battery markets, leading battery makers to work hard to find substitute for the metal.
- Christopher Wolverton at Northwestern University, has developed lithium battery which replaces cobalt with iron, which is not only significantly cheaper but can also cycle more lithium ions.
- The battery remains under lab development with typical timelines to commercialisation around 5-10 years, but with fears over supply chain of cobalt it is expected that EV makers will favour new battery compositions.
Vanadium Pentoxide 98%, fob China US$11.6-12.0/lb
- Chinese vanadium market is expected to swing into deficit this year as revisions for standards for the tensile strength of rebar products combined with a ban on vanadium slag imports put pressure on supply. A newly proposed standard looks to eliminate 335MPa-tensile strength rebar and replacing it with minimum 600MPa-tensile strength rebar in an effort to provide greater earthquake resistance. The move looks to enhance the overall consumption of vanadium in crude steel, which sits at an average 37g/kt in China, compared to 73g/kt and 93g/kt in Europe and North America respectively.
- Despite the delay to the revision, due December, the updated standard is receiving internal and external pressure to refocus production toward higher quality steel with a market source noting that “relevant authorities have been told to properly enforce the regulations on steel product standards since the massive damage caused by a series of earthquakes”.
- With the ban on vanadium slag imports, the squeeze on vanadium pentoxide supply is becoming more apparent. The extremely tight flake supply is under pressure from strong procurement demand, with 20-30% Chinese production supplied to Pangang and few materials available for other buyers. Tranvic and Jianlong are supplying material only for regular customers, with some purchasers failing to secure supply even at 160,000 rmb/t purchasing prices. Further, Hongjing is seeing small output and makes no delivery, while in northern area Jinzhou Guangda and Jinxin have suspended production.
Company News
Base Resources (LON:BSE) 16.3p, Mkt Cap £171.9m – A$89m raised in the institutional placement
- The Company raised A$89.3m in gross proceeds from the issue of 350m new shares at A$0.255 to institutional investors.
- This brings total number of share in issue to 1,097m.
- The retail component of the 1 for 3 rights issue involving 42m new shares is currently in progress and is scheduled to close on the 17th of January.
- Proceeds will be used in a $75m acquisition of a 85% initial interest in the Toliara Sands Project in Madagascar from World Titane holdings.
- The project hosts 857mt at 6.2% heavy mineral in mineral resources with 612mt included in the Measured and Indicated categories at 6.7% heavy mineral.
Kibo Mining (LON:KIBO) 6.0p, £24m – Mbeya Coal to Power Project update
- The Company is set to meet with the Ministry of Energy and the Tanzania Electric Supply Company (Tanesco) to discuss the Mbeya Coal to Power Project (MCPP) MOU.
- The update follows the previously announced plan to secure the MOU with the Ministry in December that would outline the framework for the Power Purchase Agreement (PPA).
- A final PPA is expected to be completed during Q1/18.
Premier African Minerals (LON:PREM) 0.22p, Mkt Cap £14.5m – Operations update
- The RHA tungsten mine will be put on care and maintenance on the back of lower than estimated processed grades.
- Plant has lately been processing development ores with diluted grades “insufficient to achieve planned profitable production”.
- The team highlighted that “mining of undiluted ore from stopes will now only be possible from the latter part of Q1 and accordingly, RHA requires additional financial support until this time”.
- Additional funds would allow to carry a short-hole drilling programme to better delineate the orebody and plan waste stripping work, accordingly.
- Additionally, the Company announced that it is considering a separate listing of its Zulu hard rock lithium project (Zimbabwe) in London.
- “The listing is intended to take place as soon as possible, subject to regulatory and other approvals… Premier intends, subject to appropriate legal and taxation advice, to distribute (at nil cost) to Premier shareholders at the time of listing a substantial proportion of Premier’s retained interest in Zulu Newco,” the Company said.