BHP enforces to dredge new nickel mines in Western Australia

Today’s Morning trade Global

Base metals prices on the SHFE were mainly lower today. The copper prices were oscillating between slight gains and losses. As consolidation set in following the rally seen since May 19.

The most-traded July copper contract on the SHFE was unchanged at 45,770 yuan ($6,644) per tonne. As of 05:00 BST. Around 163,000 lots of the contract have changed hands so far.

In the meantime, three-month copper contract on the London Metal Exchange fell $45 to $5,669 per tonne.

The existing rally in copper prices since late last week is mostly driven by macroeconomic factors. For example a weaker dollar, stronger crude oil prices, etc… 

“So far this year, SHFE copper prices have tended to move lower after rebounding for a short while. We think fluctuations will continue for copper prices as it seeks its low for this year.” (Beijing analyst said)

“There has been some supply disruptions. But it was not enough to cause prices to surge. Which means the problem could be with demand.”

China’s rating

On Wednesday, Moody’s downgraded China’s rating to A1 from Aa3. Happened on expectations that China’s financial strength will erode somewhat over the coming years. With economy-wide debt continuing to rise as potential growth slows.

“While ongoing progress on reforms is likely to transform the economy and financial system over time, it is not likely to prevent a further material rise in economy-wide debt. Also the consequent increase in contingent liabilities for the government.” (Reuters reporting on China’s subject)
After falling to as low as 96.79 on Monday a rebound in the dollar index on Tuesday also checked investors’ appetite for commodities.

Crude oil prices were supported by expectations that members of the OPEC will agree to extend their supply cut into next year during their meeting in Austria on Thursday May 25.

BHP – New Nickel Mines

BHP Billiton is looking for environmental and ecological approval. In order to dig two new mines to extend the life of its Nickel West unit. The planned mines are located in the state of Western Australia.

One of the world’s top nickel producers – Nickel West, applied for EPA of Western Australia. It is the Environmental Protection Authority. According to info found on their official site, the company asked to clear 842 hectares (2,080 acres) for two open pit mines.

BHP has earmarked about $2 million per month during 2016 and 2017 for making improvements at Nickel West. (Reuters)

Nickel West gets lots of the concentrated ore it uses, to feed its 100,000 tonnes-per-year Kalgoorlie nickel smelter, from its neighbor Mount Keith mines. It also has deals with other miners operating nearby for additional feed.

“At the current rate of production, the resource supporting Mount Keith will need to be sustained from other ore sources at some stage over the next five years.”

“Securing environmental approval for the proposed Mount Keith Satellite Project will help to ensure Nickel West has a strong future and will continue to make a significant economic contribution.” (BHP)

Nickel prices

Observing the period of past 6 years, the Nickel prices have fallen nearly 70 percent, due to a global supply glut. The 70% is serious number, and it affected the market firmly.

”BHP booked a $1.25 billion after-tax impairment on Nickel West in 2013. A year later, following an unsuccessful sales process, BHP took Nickel West off the auction block.” (Reuters)