LME Metals, Nickel, Aluminum, zinc, Tin, Copper

April Copper imports in China: Fall of 41% due to tighter financial regulation

May 23rd; Main events in financial market:

  • Sterling slips after deadly Manchester terror attack
  • Global stocks mixed in cautions trade
  • Oil price oscillates as OPEC meeting draws closer
  • Euro zone business activity rises at fastest pace since 2011
  • Bitcoin keeps growing; tops $2,200

For further info on these subjects, visit: www.investing.com

 

The monthly analysis

Firstly, if compared to a period of year ago, China’s refined copper imports fell by 41%. This shows that traders buying power was affected by strained access to credit.

The China’s imports of refined copper fell down to 202,645 tonnes previous month. It is the lowest level seen since February. And compared to March levels, it sees the 18 % down.

Observing the January – April period, China’s refined copper imports have slumped. Coming to the lower levels of 31 percent compared to the last year. Those were impacted partly byChina’s credits & because short-term interest rates and banks became more reluctant to lend.

“In general, metals traders have been suffering from rising financing costs, fierce competition and a slowing economy.” Said JP Morgan in a report.

 

Chinese banks & credits

“While Chinese banks have anecdotally been maintaining existing credit lines for metals-based companies, it has become increasingly hard to get approval for new lines of credit.” (Reuters)

China’s top leadership and their officials have set list of priorities in country’s economy, aimed for this year. The main priority is indentifying the containment of financial risks and asset bubbles. Due to this, China has elevated the short-term interest rates.

It continued with imports of more copper scrap. Those imports were up in the first four months of the year, for 18 percent. That happened after the surge in prices of late last year encouraged and gave a support to a flood of scrap metal back into the market.

 

Concentrate imports

Observing the copper concentrate imports: They continued to grow, even in April. When compared to a period of year ago, they were up 7.7 percent. And they are in line with the year’s trend.

The slight decline in production happened in Chile, caused by a strike earlier this year. But this was more than offset by almost 60 percent jump in imports from Peru. Which than compensated the amounts, and brought a certain balance to the market. However, China’s imports went way lower.

China’s exports of refined copper fell in April from the same month year earlier. But on the other side, they are now at nearly 125,000 tonnes . Which is up 65 percent if observed year to date.

Copper is one of the most ”popular” amid base metals and their trade. China has definitely set a list of priorities in order to stabilize the market. And precisely wants to see if the parts of financial regulation are doing fine with the market aims. What is the key which will connect all the market participants, and bring the balance to country’s imports, exports, trades, production, and all the accompanying businesses, the time will soon show.

 

 

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One-fifth of Mongolia to be opened for digging

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Mining industry executives expect new mining boom in Mongolia. It is going to start very soon. It will open about 21% of country’s territory. Which is more than one-fifth, in order to explore its mining potential.

Mongolia goes through financial IMF-led bailout. And it currently removed the main obstacle of $5.5 million which was affecting its economy. It was a Mongolian banking law, that had required big companies to refer their sales revenues from foreign investments through Mongolian banks. Later it made a proposal to explore wider area of Mongolian territory.

 

Reforms

 

Reform, followed by further steps, all in order to open the mining sector, would definitely see the industry & investment grow.

“It is an important thing for Mongolia as a whole. I think the reaction and the commitment you are seeing from the Mongolian government over the last two weeks to repeal this tax, it shows its firm commitment to really get the foreign investments going and particularly that is very much settled on the mineral exploration and the mining industry in Mongolia.” Andrew Stewart, CEO of Xanadu Mines said.

By some CNBC reports, Stewart also spoke about Xanadu’s flagship Kharmagtai project. Its location is 120km south of Oyu Tolgoi. And it demonstrates that Mongolia offers increasingly favorable odds for discovering significant copper and gold deposits. When compared to mature mining jurisdictions, for example Canada & Australia.

IMF data shows that the economy only grew 1 percent in 2016 from 2.4 percent in 2015.

 

Numbers

By exploration, and Mongolian government efforts given in the mining potential, the country can meliorate its economy. Rise its GDP and of course the economic security which follows. Dashdorj was said to have remarked that the landlocked country bordering China and Russia and among the top 20 countries by landmass needs to take the step to resolve economic woes that go back several years.

Encouraging exploration is crucial for the healthy mining industry. When government gives the effort in structural changes in the industry there exists a great platform on which country can establish its capacities.

 

Mongolia’s growth in 2H17 and 2018

Mongolia’s growth will definitely accelerate this year. Supported by these huge mining investments. Info are coming from Asian Development Bank and its 2017 Outlook report. The forecast says growth will accelerate 2.5% this year, but will be around 2% in 2018. Followed by the base effect of upsurge in coal production in 2017.

This is based on the assumption that investment in the second phase of Oyu Tolgoi mine will rise from $200 million last year to $1 billion in 2017 and $1.2 billion in 2018.

While Oyu Tolgoi is Mongolia’s highest profile mining operation, the country plays host to a number of the copper, gold and coal mines.

Mongolia is a country richly provided with mineral resources.  The Erdenet Copper Mine has been operating for several decades and the indications are that there is still a number of decades of mine life to come.

 

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Base Metals & New electric vehicles

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Further production of Electric vehicles will rise demand for base metals

Electric vehicle market will to boost for 13.7% of global car sales in 2025. This means that copper, aluminium and nickel could highly benefit on these movements.

If we estimate a situation in which 100% of the world’s vehicles were electric, this would impact a copper demand growth of 21%. (Compared to a current growth). Later, the aluminium demand would rise by 13%. While Nickel would see incredible boost of demand for INCREDIBLE 118 % ! Rare metals, such as , lithium, cobalt and graphite would also face a rising demand.

”These figures were based on findings by analysts who physically took apart an entry-level Chevrolet Bolt to see what it contained. ” (Metal Bulletin)

There were comments on how aluminium demand would also rise.

Due to the electrical infrastructure required to fuel the vehicles. These facts were not explained to the fullest.
In 100% electric vehicles scenario, platinum group metals were forecast to see a 53% drop in demand. Steel would see a marginal decline in demand in the context of the global steel market.

“We are more convinced than ever that electric cars will reach the tipping point in the penetration curve in the next few years.”

“This new generation of electric cars has far-reaching implications. For not only the global auto industry but also for many other sectors, such as capital goods, chemicals, mining, technology and energy.” (UBS Research)

The new models of electric cars are going to enter the market soon. For example, the Tesla Model 3 is going to hit the market in upcoming years. UBS Research expects that 14.2 million electric vehicles will be sold in 2025.

 

 

Second successive month of strikes in Grasberg copper mine

Numbers of workers at Grasberg mine, from the workers union decided to go on a second-month strikes. It is the 2nd consecutive month. Because the strikes started in May, and it was expected that they would be one-month long.

“Yes, the strike will go on for a second month.” union representative Tri Pusputal said on Monday May 22.
Freeport is frequently operating under a temporary export permit. To ship copper concentrates out of Grasberg. It is in the Indonesian territory of West Papua, after the government lifted an export ban in April.

The Freeport has been able to ship material to key customers in Japan, South Korea, India and China. But despite that, production at the mine has been affected over the past month by the May strike.

There is another obstacle in Freeport’s production in Indonesia. The company delayed 86,000 tonnes of contained copper.

And also reported that red metal sales coming straight from the mine were down. In percentage, for almost 28% in the first quarter of 2017. Due to this ban.

Grasberg is the world’s second largest copper mine by production. Mining 680,000 tonnes of copper in concentrate during the course of 2016. It is also the second largest for gold – producing 42.3 tonnes in 2015.

The extension of Grasberg mine strike could affect further production and further gains in copper concentrate TC/RCs.

Which confirmed to a three-month high of $80.5 per tonne/8.05 cents per pound. (According to the Metal Bulletin reports)

When asked to comment, the Freeport was not available.

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SHFE & Market today (May 22nd)

As a weaker dollar pushed investor appetite for commodities,  base metals prices on the SHFE went up during Asia morning trading today.


Firstly, the most-traded July copper contract on the Shanghai Futures Exchange rose 580 yuan ($84.30) or 1.3% to 45,880 yuan per tonne as of 03:30 BST. Secondly, over 250,000 lots of the contract have changed hands so far.

In the meantime, the three-month copper contract on the LME rose $29 to $5,676.50 per tonne.

“Commodity markets rallied across the board as the political turmoil in the USA reignited, sparking a weaker US dollar, which helped increase investor appetite in commodities.” (ANZ Research)

The dollar index fell as low as 97.08 last Friday. Which makes it the lowest since November 2016. The political uncertainties in the USA are questioning the US president Donald Trump’s planned infrastructure spending and tax cut plans.

Crude oil prices are also rising supported by the news that members of the Organisation of the Petroleum Exporting Countries will extend their supply cut into next year while also deepening the cuts.

 

Copper stocks in SHFE 

Observing the  deliverable copper stocks at Shanghai Futures Exchange: Approved warehouses rose 1,365 tonnes or 0.7% over last week to 196,358 tonnes as of Friday May 19. Meanwhile the SHFE-LME copper arbitrage remains at a loss – it was at close to $90 per tonne on Friday. Later, on Friday, total copper stocks at LME warehouses fell 3,700 tonnes, to 336,650 tonnes.

Other base metals higher 

When speaking about the SHFE contract, July aluminium contract rose 45 yuan or 0.3% to 14,075 yuan per tonne. Following, the SHFE July zinc price went up 905 yuan or 4.2% to 22,335 yuan per tonne.  Also, the SHFE June lead price climbed 400 yuan or 2.6% to 15,785 yuan per tonne. 

Paying attention to nickel prices, the SHFE September nickel contract gained 2,290 yuan to 78,310 yuan per tonne. Finishing with  the SHFE September tin price which moved up 3,140 yuan. In percentage that is 4.1%, to 147,190 yuan per tonne.

Currencies & data

The Brent crude oil spot price rose 0.6% to $54.11 per barrel as of 03:21 BST on Monday.
Currently, the dollar index rose 0.2% to 97.31 as of 03:20 BST. Observing the Shanghai Composite index, it stood at 3,100.59 recently. Which makes it about 0.32% up.

As of today’s data, those are mainly the European events in slight focus. First of all Europe’s Buba monthly report and then China’s CB leading index due later today. The Euro group meeting will also take place in Brussels later today.
The UK prime minister Theresa May is speaking.

The beginning of the weekly trading seems to have picked up a positive expectations and the upward trends. As for the base metals, for Oil also. Speaking about Important Economic Events today, it is pretty calm day. Nothing bombastic is not currently happening. Later during the day FOMC Members are speaking. Also the RBA Assist Gov Debelle speaks. Some data about RUB Retail Sales are already out. It reached the actual level of -0.4%, while the expected was -1.2%.

Japan Trade Balance fell to actual 482B, while the forecast was 521B.

 

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The deficit of zinc concentrate affecting China’s industry; it will increase refined zinc imports

Refined zinc imports

Starting with this month, China has the plans to increase refined zinc imports. As vanishing global supplies have a big impact on the local zinc outputs; they aim to cover the deficit by boosting the refined zinc imports.

Observing the China’s refined zinc production, in April it came to the lowest levels in more than 2 years. It happened due to the end up of some major mines in Australia. As well as in Ireland; This closure of important mines suffocated the China’s concentrate supplies. Which were of huge value for China’s industry.

 

Mining and heavy industry

Most noteworthy, the China’s ‘war on pollution’ also impacted the outputs in a way it restrained them firmly. Beijing is giving a huge efforts in mining and heavy industry; aiming to clear its environment, and pay attention to the ecological aspect of its production.

This will inspire customers for refined zinc to search their supplies overseas. It will likely lead to Boosting international prices, which this week leveled the lowest points since November.

“It is starting to bite.”

“The tightness is pretty much upon us.” said an analyst from ANZ Research.

“We are looking for zinc to push back to $2,800 in the second half … The zinc market is set to stay tight over the short to medium term. This certainly should provide a bit of a reality check for the bears.”

According to market data, and some analysts opinions, the zinc market price is to go up in forthcoming period (short to medium term), providing some kind of a reality check in markets.

Imports of refined zinc, from China’s guaranteed zones, could afterwards be resold on the local market for a profit. This week’s price leveled to $45; near the strongest since January 2016. In January 2016 the country shipped in around 60,000 tonnes of refined metal.

– China brought in just 25,600 tonnes in March and total imports are down by two thirds this year. (Reuters)

Most market participants have yet been turning to local exchange stocks. SHFE zinc stock fell for 50% since February. To the amount about 100,00 tonnes; which makes them the lowest since February 2015.

 

‘War’ on pollution

In the meantime, ‘war on pollution’ is slowly driving into its fourth year. The idea of the concept is to attenuate the environmental damage caused by periods of glowing & fast economic growth in China. Which will likely affect the production of base metals.

– “The Chinese government is going to put a lot of pressure (on metals producers) to reform from an environmental perspective,” said the head of metals at a China commodity trade house. (Reuters)

“Definitely we are going to see companies with limited domestic availability of concentrate. We should see some opportunities for imports of refined metal,” he said, declining to be identified as he was not authorized to speak with media.

In conclusion, it is important for Beijing to focus on its ”environmental health” and the clear blue skies, but these concepts are firmly going to impact the base metals production. And as well, the base metal prices, and global supply. The forthcoming period, short to medium term will definitely bring the higher global prices for zinc, as China also plans to boost the refined zinc imports.

The long term results will come themselves, it is the time who will show.

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SHFE Friday’s morning trade: Copper prices

Economic Events:

  • Canada Core Consumer Price Index (CPI) MoM at actual 0.3%
  • Canada Core Retail Sales MoM came to actual -0.1% while forecast was -0.3%

 

SHFE Today

Observing the copper prices this morning, they were pretty stronger on SHFE. Asia morning trading on Friday May 19 was following positive Chinese economic data and a bounce in crude oil prices.

In the meantime, the three-month copper contract on the LME reached levels of $5 higher to $5,588 per tonne.

It is the strong sales data from China’s air conditioning sector, who has supported red metal prices this morning.

The bounce in crude oil prices has also raised sense across the commodities market, as OPEC members continued to re-affirm their commitment to a rollover in their production cut agreement.

But looking the copper price in forthcoming future; the Slowdown in Chinese housing market and political shakes in USA will definitely rise the curb in prices.

USA political crisis & China home prices

Threats from political crisis in the USA are real. It is probably going to delay US president DonaldTrump’s proposed infrastructure spending and tax cut plans. Which affects the base metals markets.

China’s growth of home prices cooled again in April. Followed by a brief up rise in March, as tougher market restrictions introduced by local governments took effect.

According to data released by China’s National Bureau of Statistics, prices climbed in 58 of the 70 mainland cities tracked by the bureau, down from 62 in March. (Metal Bulletin)

“The net long position of non-commercial traders on both the LME and Comex have been falling over the past few weeks and are now at levels last seen before the Trump trade rally started.” (ANZ Research)

 

 

Copper output in China: April data

Firstly, latest NBS data shows that China produced 724,000 tonnes of refined copper in April, which makes it up 5.5% year-on-year. Year-to-April production rose 7% year-on-year to 2.86 million tonnes.


Secondly, losses in the SHFE-LME copper arbitrage remained at over $100 per tonne on Thursday. Thirdly, copper stocks at LME warehouses rose 750 tonnes to 340,350 tonnes on Thursday. While deliverable copper stocks at SHFE warehouses slipped 874 tonnes to 71,420 tonnes.

 

Other Base Metals

Observing the SHFE July aluminium contract, it climbed 0.79% or 110 yuan to 14,040 yuan per tonne. While the July zinc price rose 0.35% or 75 yuan per tonne to 21,405 yuan per tonne. Continuing with june lead price which dipped 0.51% or 80 yuan per tonne to 15,455 yuan per tonne. Later, the SHFE September nickel contract was 530 yuan or 0.7% higher at 76,040 yuan per tonne.
September tin price moved up 590 yuan or 0.41% to 144,550 yuan per tonne.


Currencies & data  

The Brent crude oil spot price rose $0.38 to $52.90 per barrel. The Texas light sweet crude oil spot price gained $0.39 to $49.77 per barrel.
Shanghai Composite index stood at 3,090.59 recently, up 0.01. The dollar index edged 0.04% lower to 97.81 as of 04:53 BST on Friday.

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Industrial Metals in China

Industrial metals complex

There is so much difference in individual metals. Observing the supply data, it is actually the demand side of the fundamental ledger that has dulled the metals’ shine.

The most interesting part is that China is impacting the whole market with its ”metal operations.”

As the last year metals were caught out by the firm policy of stimulus last year, they were having a nice back up. Now, industrial metals are reacting really negative to Beijing’s shift to policy constriction.

Watching the market analysts and their comments, it appears that China came from metallic buy to metallic sell.

 

The real question is, are they wrong?

 

China’s Selling

Firstly, at the beginning of process, The first commodity which sent signals about the change of stance in China’s policies was definitely Iron Ore.

Same time last year, the Dalian contract heralded a new stimulus: infrastructure and property grows and nice trends in recovery of these. Now, the current slide in its growth has indicated that the Chinese policy cycle maybe started again.

”It’s noticeable that volumes and open interest have picked up as Dalian iron ore has fallen, suggesting it is being used to express a negative view on China’s immediate growth prospects.”

”Speculative money has been steadily leaving the market over the recent weeks with money manager net length sliding pretty much across the board since late February.” (Andy Home)

Surely, nickel had the worst hit. Aluminum was the least affected, reflecting the former’s overwhelmingly negative and the latter’s more positive supply picture.

LME broker Marex Spectron’s alternative explanation is that money men are net short on zinc, nickel and tin. They are neutral on lead, and marginally long on copper.

Aluminum is the only one showing a sizeable net long. And even that is much reduced relative to earlier this year.

 

A change of the cycle

Secondly, seems like the metal markets are actually ”dancing on” a pre-written script.

Observing  the London LME Week last October: Back then, everyone was short-term bullish but medium-term wary on China.

That time, there existed a thought and agreement amid consensus, that the Beijing stimulus package will impact the second quarter of 2017. Causing a slowdown in most important metals, who are main important parts of the Chinese economy.

The fears of past now seem to have a very good sense.

Beijing aims to force banks to clean their data, and adjust their balance-sheets. This stimulus given by a government was meant to inspire the events of calculating the good position of  Beijing’s financial institutions and banking system.

But as a result, industrial production and fixed asset investment growth happen to have slowed down meaningfully.

Both official and unofficial purchasing managers indices are falling down, suggesting that manufacturing activity has recently topped out.

And China’s metallic imports are oscillating at subdued levels. Observing the copper imports, they fell down by almost 28 percent y-o-y in the first quarter.

People were expecting all of this actually,

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Copper Price Peaks Higher in SHFE

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Economic Calendar Today:

  • United Kingdom Average Earnings Index + Bonus rose to actual 2.3%, while forecast was 2.2%
  • UK Claimant Count Change. It came to 25.5K while the expected was -3.0K
  • European Consumer Price Index (CPI) y-o-y rose to actual 1.9% while the expected was 1.8%
  • United States Crude Oil inventories at -0.930M, while the forecast was -2.333M

Inspired by www.investing.com

 

Morning Trade on SHFE

Amid expectations of increased Chinese demand and a weaker dollar, copper prices on the SHFE grew higher during Asian morning trade on May 17.

The most-traded July copper contract on the SHFE rose 210 yuan ($30.48) to 45,380 yuan per tonne as of 03:33 BST. Open interest of the contract was at around 216,944 positions on Wednesday morning. (Metal Bulletin)

Stronger demand has seen copper prices well backed-up this morning.

Shanghai copper premiums went up this week, because of a rise in buying interest from traders. As well as limited availability for authority and nearby bills of landing.

In addition, major Chinese copper producer Jiangxi Copper said on Tuesday that the country’s copper demand rose 22% month-on-month in March to 822,500 tonnes. Mainly driven by the property market and air conditioner sector.

 

Economic data

US April industrial production rose 1.0% month-on-month – the strongest monthly gain in three years.

“The data pulse overnight was robust, but market moves were more cautious, with US interest rate expectations trimmed and the dollar remaining under pressure,” (ANZ Research)

The dollar index was 0.13% weaker at 97.97 as of 04:00 BST on Wednesday morning.
Market is keeping eye on China’s One Belt One Road (OBOR) policy, though funding restrictions remain a key concern.

“Due to funding constraints, we do not expect OBOR opportunities to become meaningful over the next few years for China. Other than perhaps in very few selected sectors like railway equipment. We believe that, for investment demand, investors should focus on domestic stimulus policy which is far more influential on sectors including resources, materials, machinery and contractors.”  (M.Lynch. Research)

LME stocks

Beginning with LME copper stocks, they fell in today’s trade  by 2,650 tonnes to 322,500 tonnes. FIrstly, deliverable copper stocks at SHFE warehouses rose 799 tonnes to 72,742 tonnes yesterday.
Secondly,  losses in the SHFE-LME arbitrage held at around $90 per tonne. But some buying interest remains. Traders are more active in buying in order to deliver long-term tonnages.

Other base metal contracts

Observing the The SHFE July aluminium contract, it rose 0.36% or 50 yuan per tonne this morning to 14,015 yuan per tonne. Later, the SHFE July zinc contract gained 0.92% or 195 yuan per tonne to 21,505 yuan per tonne.

When considering the SHFE June lead contract, it slipped 0.13% or 20 yuan per tonne to 15,780 yuan per tonne. The September nickel contract rose 60 yuan or 0.08% to 76,660 yuan per tonne. Finishing with Tin, it’s contract was 1,050 yuan or 0.74% higher at 142,050 yuan per tonne.

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Metals trade today: LME & International Economic Events

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LME Today:

Metals prices on the LME slightly declined during morning trade today. Prices were down for an average of 0.6%.

Recollecting the positive Monday, that had closing prices up for about 0.3%. Nickel had a fall of 1.7%, but the average gain would have been 0.6% led by a 1.2% rise in aluminium price.

Firstly, spot precious metals were up for about 0.4% this morning. Gold prices are up 0.2% at $1,233.50 per oz, the rest are all up 0.5%. This comes after a mixed day’s performance on Monday when palladium prices dropped 1.1%, silver and platinum prices were up around 1.1%, and gold prices were up just 0.2%.

Secondly, observing morning trade in SHFE, copper and aluminium prices were a bit up, with copper prices at 45,220 yuan ($6,555) per tonne.  Other base metals complex are down an average of 0.8%. Spot copper prices in Changjiang are up 0.1% at 45,120-45320 yuan per tonne, while the LME/Shanghai copper arb ratio is weaker again at 8.10.

International Markets & Main Economic Events

Thirdly, Brent crude oil prices are up 0.3% at $51.92 per barrel. The market oscillates on a likely OPEC deal extension. The yield on the US ten-year treasuries is little changed at around 2.33%.

Equities on Monday were firmer, the Euro Stoxx 50 closed up 0.1% and the Dow closed up 0.4% at 20,982. Asia has generally seen follow through buying interest this morning with the Nikkei and ASX 200 up 0.2%, the CSI 300 is up 0.1%, the Kospi is up marginally, while the Hang Seng is bucking the trend with a 0.3% decline.

If we have a closer look, the dollar index is showing weakness again.  It is now leveled at 98.75, having seen a recent high of 99.89. For now the 2017 trend is to the downside, with recent lows at 98.54.

Following, the euro is now stronger at 1.0994, it looks well placed to push higher. Also the Australian dollar at 0.7425, seems to push higher. While the sterling and the yen are flat. Sterling at 1.2912 and yen at 113.49.

Economic data

Japan’s tertiary industry activity slipped 0.2% after a 0.2% climb previously.

later there is data on French and UK CPI and a host of other UK price data and leading indicators, Italian and EU GDP, German and EU ZEW economic sentiment and data on the EU trade balance. US data includes: building permits, housing starts, industrial production, capacity utilization rate and mortgage delinquencies – see table below for more details.

Chinese infrastructure projects

President Xi Jinping’s oath of $78 billion worth of financing for infrastructure projects, indicates the One Belt One Road plan is continuing.  It should be long-term backup for metals’ demand. This affected positively almost all the metals on Monday. But if that will be further trend, we will see soon.

 

Other Base Metals

Nickel started to fall yesterday, while copper and aluminium were showing some weakness this morning. Zinc and lead prices are looking more fragile. Today’s lead prices setting a fresh low at $2,092 per tonne. Unless buying emerges soon, the path of least resistance looks set to remain to the downside.

 

Precious Metals

Most of the precious metals are more solid, their recent price weakness appears to have induced agreement hunting.

Except palladium, where resistance above $820 per oz. It seems to be acting as a cap and lack of upside progress is encouraging profit-taking.  Seems like silver and platinum have currently looked oversold.

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ArcelorMittal or IIG? Bosnian iron ore mine for sale

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Bosnian Iron ore mine for sale

The largest steel producer in the world, ArcelorMittal has said to Bosnia’s officials it will take legal action, to protect its ownership rights. If they decide to sell government-owned stake in the Ljubija iron ore to the opposite buyer.

ArcelorMittal owns a steel plant in Zenica. Which is located in central Bosnia. There it processes iron ore from the mines it owns in Prijedor in the north of the country.

Then, it also owns 35.1 percent in the Ljubija iron ore mine. Government of Bosnia’s autonomous Serb Republic has a 64.9 percent stake in this mine. And it is put up for sale.

The ArcelorMittal has offered to buy out the government’s stake in the Ljubija mine. Meanwhile the government already decided to sell it to rival customer. Israeli Investment Group (IIG). Explaining that the IGG proposed higher price and  also promised bigger investment.

 

 

The decision

Parliament will bring final decision about the sale on Tuesday. Still it is not comprehensive if they will have the major backup.

Lakshmi Mittal, ArcelorMittal CEO has consigned a letter to the Serb Republic government. There he “emphasized the very serious negative impacts for jobs and the economies of both Prijedor and Zenica.” Which will happen if they confirm the offered sale of the Ljubija mine stake to IIG.

“The letter also gave notice of our intention to protect our contractual rights by all means possible, if necessary through legal action in the appropriate international courts.” (Reuters)

When asked about this, Milorad Dodik said that he hadn’t yet received the letter and refused to comment. IIG also, wasn’t available for comments on this matter.

Dodik is The President of Serb Republic in Bosnia who supports the sale to the Israeli group.

 

Arcelor Mittal workers

 

AM Prijedor employs 850 workers. It has invested 117 million Bosnian marka ($65 million) in the mines over the past 12 years. Its steel plant Zenica employs about 2,400 workers.

Biju Nair, ArcelorMittal Zenica’s CEO stated that if they sell Ljubija mine to a rival bidder,  Zenica plant would switch to a different production system. And that wouldn’t be convenient for the iron ore from Ljubija. It could also lead to job losses at both Prijedor and Zenica.

“A new owner could threaten the supply of iron ore from Prijedor at commercially acceptable prices. If so, we can change to production without iron ore, using the Electric Arc Furnace.” (Reuters)

Opposition parties in Bosnia, as well as ArcelorMittal Prijedor trade unions, are against the sale to the IIG.

Protests in Prijedor & the budget deficit

Today, police in Prijedor interdicted AM workers protests against the sale to the IIG. They already protested last week in Banja Luka.  When the parliament was discussing the decision on the sale.

The regional government wants to go ahead with sale, cause it has a huge budget deficit. And the IMF stopped its cash payouts to Bosnia. Because of the reform delays.

“Israeli-Russian-Kazak-African investment group” offered 92 million Bosnian marka for the mine, and promised a 65 million marka investment over the next couple years.

ArcelorMittal has offered 63.6 million marka and investment of 63 million marka over the next 10 years.

 

 

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