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Posts Tagged ‘Bolivia’

Mining week 26/’12: Resource nationalism & slowdown worries

June 24, 2012 Comments off

Top Stories of the Week:

  • Glencore mine in Bolivia nationalized
    • Bolivia nationalizes the Colquiri zinc and tin mine, one of 5 of Glencore’s assets in the country. The government promises to give a ‘fair compensation for equipment.
    • The nationalization comes after several weeks of labor conflicts between Colquiri’s workers and Glencore’s local subsidiary
    • Sources: Wall Street Journal; Glencore press release; La Prensa Bolivia
  • Rio Tinto invests $4bln more in Pilbara region
    • Rio Tinto has decided to spend an additional $3.7bln in the Pilbara region as part of its long-term investment plan.
    • $2.0bln of the funds will be used for infrastructure enhancements to allow the company to meet its output targets. The other $1.7bln will be used to extend the life of one of the largest mines in the area.
    • Sources: Rio Tinto press release; Financial Times; Fox Business
  • Media stress commodity price uncertainty

    • The disparity between performance of global mining stocks and metal prices is triggering debate in banking world and media about the potential impact of a further slowdown of the global economy.
    • Sources: Mining Weekly; Financial Times

    Trends & Implications:

    • The uncertainty about short-term economic developments in both OECD countries and developing economies, most notably China, is causing share prices across the mining industry to lag the current performance of both metal prices. The uncertainty for short-term prospects apparently also affects the long-term outlook for the industry, making investors believe price and profit levels can’t be sustained. As a result, Price/Earnings (PE) ratios are dropping, causing market capitalization to go down despite good company performance.

    ©2012 | Wilfred Visser | thebusinessofmining.com

Price of tin hits highest level in two years

July 27, 2010 Comments off

“Falling supplies and rising demand from manufacturers in Europe and Asia are pushing tin prices to their highest levels in two years.

The price of the metal, a raw material in soldering and food packaging, has doubled since early 2009 and analysts believe it will soon rise above a key $20,000 a tonne barrier because of falling production in Indonesia, the world’s largest supplier, and strong demand from the manufacturing industry in Japan, South Korea and Europe.

The Sucden brokerage says: ‘It is hard to escape the conclusion that the tin market is tightening quite considerably and may continue to do so in 2011.’ The cost of tin rose nearly 9 per cent last week and on Tuesday it gained 2.5 per cent to $19,670 a tonne at the London Metal Exchange, the highest price in two years.”

Source: Financial Times, July 26, 2010

Observations:

  • Shortage of tin is expected as demand is increasing and no major new production is scheduled to start in the next year.
  • Over two-thirds of both production and demand of tin are in China and Indonesia. However, as national production in China does not keep up with demand, international trade is picking up.
  • The leading tin producing companies are Yannan Tin (China), PT Timah (Indonesia), Malaysian Smelting Corp. and MinSur (Peru)

Implications:

  • None of the diversified international mining houses is active in tin production (as core product). Diversification into this space is unlikely, as tin mining methods are very specific. As efficiency gains could be achieved versus the incumbents, junior niche players are likely to enter the base metal market.
  • Peru, Brazil and Bolivia have significant tin reserves, providing a potential for a surge of the tin market in Latin America. Solder, packaging and chemical applications would be the most likely demand source for the market.

©2010 | Wilfred Visser | thebusinessofmining.com