Chile’s top court puts Dominga mining project decision on Boric admin

SANTIAGO (Reuters) – Chile’s top court on Wednesday turned down appeals filed by communities and environmentalists against the controversial Dominga mining project, saying a final decision needs input from President Gabriel Boric’s administration.

Last year, environmentalists and surrounding communities appealed a ruling from a lower court that tossed out a decision by a regulator that denied the company permits.

In its ruling, the Third Chamber of the Supreme Court said that it was turning down the appeals because it “determined that there is no final judgment that can be reviewed by this court,” adding that the final decision on the environmental evaluation is “pending a resolution from the administrative authority.”

That authority is the committee of ministers, made up of the mining, agriculture, energy, economy, health ministers and is chaired environment minister.

In his first speech as president-elect in December, Boric voiced opposition to projects that “destroy” the country, such as Dominga, which seeks to annually produce 12 million tonnes of iron concentrate and 150,000 tonnes of copper concentrate.

An environmental evaluation commission endorsed the $2.5 billion project last year, but it has been delayed for years amid strong opposition from environmental and social groups that say it would cause serious environmental damage to the region.

OceanaChile, an environmental group dedicated to protecting the ocean, has said the project could hurt the Humboldt archipelago off Chile’s coast, endangering its species and biodiversity.

“Our trust is in that the Committee of Ministers will consider all the scientific information that backs why Dominga is unviable and the Humboldt archipelago must be protected permanently,” it said in a tweet responding to the decision.

Andes Iron, the company in charge of the Dominga project, issued a statement saying it welcomed the court’s decision and added that “every time the Dominga project has undergone technical evaluations we have received favorable pronouncements.”

The project has spanned multiple administrations and sparked controversies for former presidents Michelle Bachelet and Sebastian Pinera. Pinera faced and survived an impeachment vote after details of possible irregularities linked to the Dominga project were revealed in the Pandora Papers leak.

(Report by Natalia Ramos; Additional reporting by Fabian Cambero and Alexander Villegas; Editing by Aurora Ellis)

European shares deepen fall on inflation worries

By Susan Mathew

(Reuters) -European shares slipped on Wednesday led by technology stocks as worries about inflation and monetary policy tightening dampened optimism around China’s economic recovery, while shares of UniCredit and Commerzbank rose.

The pan-European STOXX 600 index fell 1.1% after rising a little more than 3% since Friday.

Technology shares slipped 2.7%, while a fall in copper prices weighed on basic material stocks. [MET/L][.L]

Data on Wednesday showed British consumer price inflation hit 9% in April, its highest level on record, inching closer to the Bank of England’s prediction of above 10% later this year.

“Worries about recession reared up again after UK inflation jumped to the highest level in 40 years,” said Susannah Streeter, senior investment and markets analyst at Hargreaves Landsdown.

Euro zone inflation held steady at a record high 7.4% in April, driven by soaring fuel and food costs, the EU’s statistics agency said, lowering its estimate from a preliminary 7.5%.

The European Central Bank is set to hike rates shortly after ending its bond-buying programme early in the third quarter, with the potential for further hikes in coming quarters, echoing a strategy similar to the U.S. Federal Reserve.

“For the first time overnight index swaps were pricing in that the ECB would hike by more than 100bps by their December meeting,” said Deutsche Bank strategist Jim Reid.

A rise in optimism on Tuesday, after falling COVID-19 cases in China drove hopes of more economic activity, proved short-lived.

The STOXX 600 is in on course to end lower in May, having marked gains only in March this year. But with a 11% decline year-to-date, the index has still fared better than the S&P 500 and MSCI’s All Country index, which are down more than 14% over the same period.

In earnings, Euronext rose 3.9% on record quarterly revenue. Dutch bank ABN Amro topped profit estimates but shares fell 11.9% as it warned about the impact of the war in Ukraine.

Siemens Gamesa jumped 12.6%, after sources said Siemens Energy is preparing to buy the remaining stake in the wind turbine maker. The stake is worth 3.14 billion euros ($3.31 billion).

Germany’s Commerzbank AG rose 3.1%, while Italy’s UniCredit SpA gained 2% after a report spoke of scheduled merger talks before the potential deal was abandoned because of the Ukraine war.

Holiday group TUI tumbled 12.6% after it announced a share sale to repay elements of a German state bailout it received during the pandemic.

(Reporting by Susan Mathew and Shreyashi Sanyal in Bengaluru; Editing by Rashmi Aich and Barbara Lewis)

Want To Know Where Gold Prices Are Heading Next? Then Keep An Eye On Oil

Gold, Oil and Inflation

If you want to know where Gold prices are heading next, then just take a look at the bullish trend in Oil prices.

Oil prices started the week on a tear, surging to their highest level since March – in anticipation of higher demand as China – the world’s largest importer of crude began easing coronavirus-related restrictions.

Shanghai, China’s largest city with 26 million people, which has been under lockdown for more than six weeks – announced plans to start reopening on Monday and gradually return to more normal life from June 1.

Expectations are now running high, that the Oil market may see an identical V-shape recovery in demand as seen in 2020 when China ended lockdown. That event triggered an historic bull run taking Oil prices from sub $40 a barrel in April 2020 to a decade high of almost $140 a barrel in April 2022. That’s a whopping gain of more than 450%, in the last two years.

The timing of Shanghai’s reopening comes at a pivotal moment when global Oil inventories are at the lowest since 1987, OPEC+ and U.S shale producers continue to restrain output increases due to rising drilling costs and sanctions threaten to disrupt Russia’s Oil production and exports.

Historically, surging Oil prices usually feed into inflation expectations and boost demand for assets with inflation-hedging capabilities, such as the Precious Metals.

According to a long list of leading Wall Street banks – Oil prices could very easily be trading back above $130 a barrel by summer and then surge towards $150. Once that happens, Gold prices won’t be too far behind.

Gold Price Forecast Video for 18.05.22

Where are prices heading next? Watch The Commodity Report now, for my latest price forecasts and predictions:

For a look at all of today’s economic events, check out our economic calendar.

Peru mining protests risk clogging $53 billion investment pipeline, industry warns

By Marco Aquino

LIMA (Reuters) – Peru, the world’s second-largest copper producer, risks losing out on billions of dollars of mining investment if the government fails to defuse protests that are hitting the industry and denting production, analysts and executives said.

Social conflicts have risen in the Andean nation over the past year since socialist President Pedro Castillo came into office, with a spate of protests against mines, including one that has halted production at the huge Las Bambas copper deposit.

With global prices soaring on high demand, that now threatens a mining investment pipeline of some $53 billion and could stall future projects expected by investment bank RBC to make up 12% of the world’s copper supply in years to come.

“Without any world-class projects on the horizon, the prospects for sustaining production are not good,” said Gonzalo Tamayo, analyst at Macroconsult and a former Peruvian mines and energy minister.

Mining executives and analyst met last week in Peru’s capital Lima, where the main concern was falling investment tied to rising social protests. A central bank report shows investment dipping some 1% this year and 15% in 2023.

The conflicts, mainly in poor Andean areas where communities feel bypassed by the huge mineral wealth beneath their soils, have started to bite, with protesters emboldened under Castillo who won election pledging to redistribute mining wealth.

Southern Copper’s Cuajone mine was paralyzed for almost two months earlier this year.

Las Bambas, owned by China’s MMG Ltd, suspended operations in April after an invasion of the mine by communities demanding what they called ancestral lands. The mine, which produces 2% of the world’s copper output, remains offline.

Las Bambas had received government approval in March to expand the mine, a plan which is now under threat.

Álvaro Ossio, vice president of commercial and finance for ​​Las Bambas, said in a presentation at the Lima event, that the country faces a big task to benefit from high global prices.

“The great challenge that remains for all Peruvians is to take advantage of this great opportunity in these future trends,” he said.

Peru’s last big mining investments were in Anglo American’s Quellaveco and Minsur’s Mina Justa of a combined $6.6 billion. Their operations starting this year will help Peru hit annual output of 3 million tonnes of copper by 2025, experts say.

However, other major projects like Southern Copper’s Tia María, Michiquillay and Los Chancas worth some $6.7 billion, Buenaventura’s near billion dollar Trapiche and Rio Tinto’s $5 billion La Granja remain up in the air.

Not all was downbeat, however.

The world’s largest gold miner, Newmont Mining, said at the event that it was considering expanding into copper production in Peru, with a potential future return to the canceled Conga project.

Analyst Tamayo, though, stressed recent protests against mining had become harder to resolve.

“Now there are protests that stop mines in full operation,” he said. “The mining firms feel that the State does not support them and that the State has ceased to be the arbiter in conflicts.”

(Reporting by Marco Aquino; Editing by Adam Jourdan and Richard Pullin)

Indonesia posts largest ever trade surplus thanks to export boom

By Gayatri Suroyo and Stefanno Sulaiman

JAKARTA (Reuters) – Indonesia’s trade surplus jumped to its largest ever at $7.56 billion in April, as exports rose to a record high while imports grew slower than expected, data from the statistics bureau showed on Tuesday.

Indonesia, a major exporter of many commodities such as thermal coal, palm oil and nickel, has reported a trade surplus every month in the past two years, enjoying an export boom and rising prices of commodities.

A Reuters poll had expected a trade surplus of $3.25 billion for April, following a $4.53 billion surplus the previous month.

April exports were worth $27.32 billion, up 47.76% on a yearly basis, outdoing the poll’s prediction of a 35.97% increase, with shipments of mining and oil and gas products driving growth.

Imports were up 21.97% on an annual basis to $19.76 billion, below the 34.97% rise expected in the poll.

Indonesia’s government stopped exports of crude palm oil and some derivative products on April 28 to try to tame soaring domestic cooking oil prices.

Statistics bureau chief Margo Yuwono said palm oil shipments were down 2.6% on a monthly basis in April to $2.99 billion, and 10.49% by volume to 1.93 million.

Margo could not confirm if the drop was related to the ban, but said, “of course … if it’s not lifted, the ban will affect our trade balance.”

The rupiah, which had weakened about 0.3% ahead of the data, remained unchanged despite the surprisingly large surplus.

The currency has been under pressure in the past week as inflation rose to its highest level since 2017 and as investors expect further U.S. monetary tightening.

Wisnu Wardana, Bank Danamon’s economist, said the sizeable surplus should help cushion the rupiah from the impact of the Fed’s moves and provide room for Indonesia’s central bank to keep interest rates unchanged in the upcoming policy meeting next week.

Josua Pardede, an economist with Bank Permata, said the surplus is expected to shrink in May due to the palm oil export ban, while noting that the country’s trade performance will continue to be affected by the lockdown in China and ongoing geopolitical tensions in Europe.

(Reporting by Gayatri Suroyo, Fransiska Nangoy, Stefanno Sulaiman; Editing by Kanupriya Kapoor)

A Big Bounce Back In Commodity Prices Is Coming – Are You Ready?

Commodity Markets Fundamental Analysis

Earlier this month, the Federal Reserve wrapped up its highly anticipated May meeting with a 50-basis point increase – the biggest and most aggressive interest rate hike in 22 years in what can only be described as a “belated response” to the fastest rise in inflation seen in over 41-years.

There’s no denying it, that the Fed is caught in a box of its own making because it didn’t move quickly enough on raising rates last year. Now it has to be seen to move aggressively, which ultimately means, Stagflation is now a major risk to the economy, or worst still a recession.

Historically, the Federal Reserve has never been right on monetary policy and has a proven track record of setting the economy up for an even bigger crisis.

Only time will tell if the Fed is right, or on the verge of yet another a major policy error.

However, one thing we do know for certain is that global equity markets tend to get crushed once the Fed begins raising rates. This inversely presents huge bullish tailwinds for the entire commodities sector ranging from the metals, energies to soft commodities – as they are viewed as one of the most reliable hedges against economic risk, inflation and recession.

Looking ahead, more big moves could be on the horizon amid heighten concerns that the Fed won’t be able to deliver a soft economic landing. Fed Chair Jerome Powell will speak on Tuesday and is expected to confirm that the Fed will stick with a half-point interest rate hike in June, July and possibly September.

Elsewhere, Shanghai, which has been under lockdown for more than six weeks will start to reopen on Monday and gradually return to more normal life from June 1.

Expectations running high, that the Oil market may see an identical V-shape recovery in demand as seen in 2020 when China ended lockdown. That event triggered an historic bull run taking Oil prices from sub $40 a barrel in April 2020 to a decade high of $130 a barrel in April 2022 – racking up a phenomenal gain of more than 425%.

Whichever way you look at it, the case for commodities in a well-diversified portfolio has never been more obvious than it is right now!

Week Ahead: Commodity Report Video for 16 – 20 May 2022

Where are prices heading next? Watch The Commodity Report now, for my latest price forecasts and predictions:

For a look at all of today’s economic events, check out our economic calendar.

How the new Latin America left is seeking a greener future

By David Alire Garcia

MEXICO CITY (Reuters) – Colombia’s presidential front-runner Gustavo Petro wants, if he wins later this month, to stop all new oil exploration and move his country to a greener future.

That lines him up with Chile’s recently-elected President Gabriel Boric, a Millennial who has also pledged to take a firm stance on tackling climate change.

As Latin America sees a resurgent ‘pink tide’ – with most of the region set to be headed by leftists by the end of the year – the greener hue of these newer leaders contrasts with the old guard “resource nationalists,” who have typically seen tight state control of energy and metals as the best path to economic progress and self-determination.

The wild card? Brazil’s Luiz Inacio Lula da Silva. The former president and front-runner in his country’s October election has long been identified with support of oil development – but he is also eager to contrast himself with far-right incumbent and climate skeptic President Jair Bolsonaro.

Colombian voters will vote on May 29 in a first-round presidential election where Petro, 62, aims to catapult the left to its first victory in decades. The ex-guerrilla turned politician has tapped environmental activist and rising progressive star Francia Marquez to be his running mate.

Marquez, who would be Colombia’s first Afro-Colombian vice president, stressed in an interview that she and Petro would break not only with the country’s conservatives, who have long embraced oil and coal, but also with fellow regional leftists like Mexican President Andres Manuel Lopez Obrador, an unapologetic backer of fossil fuels.

“The point is that both the left and the right are fomenting a policy of extractivism when humanity faces the challenge today of transitioning from this extractivist economy to a sustainable economy,” Marquez, 40, told Reuters. “Life isn’t possible without our planet.”

Petro has vowed to freeze new oil and gas exploration, protect water resources, and provide more security for environmental defenders in Colombia, the world’s most dangerous country for such activists.

In Chile, meanwhile, a new law is set to bind the country to achieving carbon neutrality by 2050. Companies will have to adapt to new “borders” put in place to limit emissions and pollution, Boric’s environment minister told Reuters on Friday.

LULA 2.0

In Brazil, the region’s largest economy, Lula often hearkens back to the prosperity that defined his previous 2003-2011 stint in power. Back then, a commodities super-cycle fueled by surging Chinese demand for steel, soybeans and other goods filled government coffers.

Lula also presided over state-run Petrobras’ discovery of some 50 billion barrels of crude in offshore deposits, a tantalizing find that was seen as a potential gamechanger for alleviating poverty.

In recent interviews, the 76-year-old has brushed off suggestions he follow Petro’s lead and shun potentially lucrative oil projects.

Even so, Senator Humberto Costa, a close Lula ally, sees a faster green energy transition in Brazil if the left regains power, including more solar, wind and biomass generation.

“I think the newest thing would be environmental and energy concerns,” he told Reuters, dubbing them “more urgent” than during Lula’s earlier government.

The lawmaker also said Lula would permit only “self-sustaining development” in the Amazon rainforest, unlike Bolsonaro.

For traditional Latin American leftist leaders, control and use of resources is bound up with a legacy of exploitation dating back to colonial times – and their policies center on keeping profit-maximizing foreign and private hands away from their natural riches.

Lopez Obrador last month won congressional support to nationalize the exploitation of lithium, a crucial battery metal that Mexico does not yet produce. The Mexican leader has since said he wants to join Chile, Argentina and Bolivia to advance likeminded development.

He has also sought to strengthen state oil firm Pemex and national electricity company CFE’s dominance in their respective sectors, canceling competitive oil and renewable power auctions, and prioritizing the dispatch of power from CFE plants, even though they overwhelmingly burn fossil fuels.

In Bolivia, one of the region’s poorest countries, the need to spur development by exploiting gas fields has long clashed with environmental concerns. Current socialist President Luis Arce is also keen to make the most of his country’s natural resources – including gas and lithium – but in a break from the resource nationalists he has indicated he is open to bringing in outside help.

In the campaign homestretch in Colombia, Marquez is keen to avoid unrealistic expectations for Petro’s green agenda.

“Will this change happen overnight? No, it won’t happen in four years,” she said. “But we need the political will to say, ‘Yes, we must begin the transition.”

(Reporting by David Alire Garcia in Mexico City; Additional reporting by Gabriel Araujo in Sao Paulo; Editing by Christian Plumb and Rosalba O’Brien)

Peru economy grows 3.79% in March, weighed down by mining protests

LIMA (Reuters) – Peru’s economy grew 3.79% in March compared with a year earlier, the country’s statistics agency said on Sunday, with most sectors of the economy showing improvement, while the key mining industry shrank due to social conflicts hitting production.

Peru is the world’s No. 2 copper producer, but protests from indigenous communities in the Andes demanding higher benefits from the mining industry have affected production.

In March, Southern Copper Corp’s Cuajone copper mine was halted throughout the month.

The economic growth is lower than the 4% the central bank had forecast in a press conference on Friday.

Peru’s finance ministry expects the economy to grow 3.6% in 2022.

(Reporting by Marco Aquino and Marcelo Rochabrun in Lima; Editing by Matthew Lewis)

Chile’s constitutional assembly rejects major mining overhaul

SANTIAGO (Reuters) – A constitutional assembly in the world’s top-copper producing nation on Saturday rejected a major overhaul to mining rights, including expanding Chilean state ownership.

Controversial Article 27, which would have given the state exclusive mining rights over lithium, rare metals and hydrocarbons and a majority stake in copper mines, faced fierce opposition from the mining sector and was voted down last week.

The environmental commission submitted multiple variations of the article to a vote on Saturday, but they all failed to achieve the 103-vote supermajority needed to pass into the draft constitution.

Article 25, which states that miners must set aside “resources to repair damage” to the environment and harmful effects where mining takes place, did get a supermajority and will be in the draft constitution.

The assembly also approved banning mining in glaciers, protected areas and those essential to protecting the water system. Articles guaranteeing farmers and indigenous people the right to traditional seeds, the right to safe and accessible energy and protection of oceans and the atmosphere were also approved.

Voting to approve articles concludes after Saturday’s votes, and new commissions in charge of fine-tuning the text take over on Monday. The final draft is due in early July and citizens will vote to approve or reject it on Sept. 4.

The environmental commission, dominated by self-proclaimed eco-constituents, saw just one of 40 of its proposals approved during their first votes in the general assembly.

The commission has since moderated its proposals but its articles including expansion of protected lands, restricting private water rights and making combating climate change a state obligation were included in the new draft text.

(Reporting by Alexander Villegas and Natalia Ramos; Editing by Cynthia Osterman)

Will A Fed Policy Mistake Lead To Higher Commodity Prices In 2022?

Federal Reserve Rate Hike and Recession

This month, the Federal Reserve wrapped up its highly anticipated May meeting with a 50-basis point increase – the biggest and most aggressive interest rate hike in 22 years in what can only be described as a “belated response” to the fastest rise in inflation seen in over 41-years.

The Federal Reserve, which finds itself caught between a rock and a hard place, got even more bad news on Wednesday: Inflation is still rapidly accelerating in many places with April’s CPI data showing the biggest core increase since 1982.

11 of the last 14 Fed tightening cycles since World War II have been followed by a recession within the next 12 months.

Will the Fed Get it Right This Time?

Only time will tell, however one thing we do know for certain is that Equity markets tend to get crushed once the Fed begins raising rates.

The S&P 500 is now down nearly 22% year to date, and the Nasdaq is faring even worse, plummeting over 29% this year. This inversely presents huge bullish tailwinds for the entire commodities sector ranging from the metals, energies to soft commodities – as they are viewed as one of the most reliable hedges against economic risk, inflation and recession.

Commodity Prices Forecast

After tallying up astronomical double to triple digit gains within the first quarter of 2022 – commodity prices are likely to undergo a much-needed and healthy correction in the short-term as trader’s book profits. Overall, it goes without saying that the fundamental backdrop for entire Commodities sector remains extremely bullish in the long-term.

Commodity Report Video for May 13, 2022

Where are prices heading next? Watch The Commodity Report now, for my latest price forecasts and predictions:

For a look at all of today’s economic events, check out our economic calendar.

World shares sink as inflation, economic fears persist

By Elizabeth Dilts Marshall

NEW YORK (Reuters) – World equities fell on Thursday to an 18-month-low, with markets dogged by fears high inflation would persist and force central banks to keep tightening monetary policy.

In the United States, stocks ended a whipsaw session slightly lower, as investors juggled fears of nagging inflation with signs it could be peaking. The S&P 500 came within striking distance of confirming a bear market since swooning from its all-time high reached in January.

In Europe, economic worries were exacerbated by a German warning that Russia was now using energy supplies as a “weapon.”

Europe’s continent-wide STOXX 600 index was down 0.75%. MSCI’s gauge of stocks across the globe was down 0.69%, as of 5:09 p.m. ET (2109 GMT).

That flagship global index is nearly 20% lower for the year.

The Dow Jones Industrial Average fell 103.81 points, or 0.33%, to 31,730.3, the S&P 500 lost 5.1 points, or 0.13%, to 3,930.08 and the Nasdaq Composite added 6.73 points, or 0.06%, to 11,370.96. [.N]

The dollar climbed to a 20-year high, as global economic fears boosted its safe-haven appeal.

The dollar index rose 0.711% after touching 104.92, its highest since Dec. 12, 2002. The euro was down 0.02% to $1.0377 after falling to 1.0352, its lowest since Jan. 3, 2017.

Oil prices settled mixed on supply fears due to the pending European Union ban on Russian oil. Brent crude fell 6 cents to settle at $107.45 a barrel. WTI crude rose 42 cents, or 0.4%, to settle at $106.13.

The U.S. Labor Department said the producer price index for final demand rose 0.5% in April, slower than the 1.6% surge in March, as rising costs of energy products moderated.

Consumer price gains slowed to an 8.3% rise in April year-on-year from the 8.5% pace of March, but exceeded the 8.1% economists had forecasts.

“It has been a punishing time for financial assets since the Fed raised rates … and the subsequent strong US jobs market, and CPI data have reinforced concerns over the extent of the task facing the Fed,” analysts at ANZ bank wrote.

Graphic – World stocks suffer worst start to a year in recent record : https://fingfx.thomsonreuters.com/gfx/mkt/lgvdwgdgopo/Pasted%20image%201652345427073.png

SELL IN MAY

The main pan-Asia Pacific indexes closed down 2.5% at a 22-month low overnight. Japan’s Nikkei fell 1.8. Emerging market stocks lost 2.28%.

U.S. Treasury yields slid. The yield on 10-year Treasury notes US10YT=RR was down 7.1 basis points to 2.843% after the benchmark U.S. government bond fell to a morning low of 2.816%.

Germany’s 10-year yield, the benchmark for Europe, fell as much as 15 bps to 0.85%, its lowest in nearly two weeks.

The rout continued in cryptocurrency markets, with the collapse of the so-called stablecoin TerraUSD; selling in bitcoin and a 15% slump in the next-biggest-crypto, ether.nL3N2X337U]

Tether, currently the world’s largest stablecoin by market cap with a value directly tied to the dollar, broke below its so-called U.S. dollar “peg.” The global sell-off has now wiped more than $1 trillion off crypto markets. Around 35% of that loss has come this week.

“The collapse of the peg in TerraUSD has had some nasty and predictable spillovers. We have seen broad liquidation in BTC, ETH and most ALT coins,” said Richard Usher, head of OTC trading at BCB Group, referring to other cryptocurrencies.

Precious metals also dropped. Spot gold fell 1.7% to $1,821.52 an ounce. U.S. gold futures fell 1.64% to $1,823.80 an ounce. [MET/L]

Benchmark copper on the London Metal Exchange (LME) was down 3.6% at $9,000 a ton in official trading after falling as low as $8,938. Prices are down 17% from a record high of $10,845 reached in March.

(Reporting by Elizabeth Dilts Marshall; additional reporting by Marc Jones in London and Tom Westbrook in Singapore; Editing by Chizu Nomiyama, Will Dunham, Kirsten Donovan, Alison Williams and David Gregorio)

Anglo American to return to Zambia with Arc Minerals copper deal

By Helen Reid

CAPE TOWN (Reuters) -Arc Minerals shares jumped 6.7% on Thursday after it announced an agreement under which Anglo American would take majority control of the junior exploration firm’s Zambia copper-cobalt licences.

Under the deal, which was first reported by Reuters, Anglo will take 70% of a joint venture with Arc that will own licenses to explore Zambia’s copper-rich North-Western province, an area Anglo previously explored in the late 1990s. It would mark the first new investment by Anglo in Zambia in 20 years.

Major mining firms are searching for new sources of the battery metals copper and cobalt, especially following the war in Ukraine and sanctions on Russia which have sent metal prices soaring.

Anglo American will pay $3.5 million into Arc upon signing. It will be able to retain its stake by spending $74 million on exploration within seven years of signing and making cash payments of $11 million to Arc, according to terms of the deal.

Arc Minerals previously had an exclusivity agreement with Anglo from July 2020 to July 2021, and when that lapsed Arc Minerals said it would start talks with other major miners which had approached it.

Zambia, Africa’s second-largest copper producer, has become a more attractive investment proposition for mining companies since the election last August of business-friendly President Hakainde Hichilema and a subsequent mining tax reform.

The country aims to more than triple its annual copper output within the next decade to 3 million tonnes a year.

First Quantum Minerals last Sunday said its board had approved plans for a $1.25 billion expansion of its Kansanshi mine in Zambia, a decision it said was prompted by renewed confidence in Zambia’s investment climate.

(Reporting by Helen Reid; Additional reporting by Clara Denina; Editing by Christian Schmollinger, Edwina Gibbs and Ed Osmond)

Peru community wants its land back, threatening Chinese copper mine

By Marcelo Rochabrun

LAS BAMBAS, Peru (Reuters) – The community of Fuerabamba in the Andean region of Peru was resettled eight years ago to make way for a giant Chinese-owned copper mine, in a $1.2 billion scheme billed as a model solution to protests dogging the South American nation’s mining sector.

Now the community wants the land back.

In mid-April, more than a hundred Fuerabamba community members stormed the Las Bambas mine and pitched tents near the open pit, forcing a halt in production at a site that provides 2% of global copper supplies. They were joined by the nearby Huancuire community, which was protesting a planned expansion of the mine on their former land.

An attempt in late April by the mine’s Chinese owner MMG Ltd to remove the camp led to clashes in which dozens of people were injured and failed to end the protest. Copper production – worth $3 billion a year – remains suspended, with no restart in sight.

The Fuerabamba members were evicted but the Huancuire community remained in place – and the two groups have formed an alliance to bargain with the government and the mine.

Las Bamas acknowledges that 20% of its obligations under the resettlement agreement are outstanding, including the purchase of new lands for the community.

While Fuerabamba’s leaders had initially called just for Las Bambas just to fulfill its commitments, tensions have flared since the failed eviction.

“We’re going to keep fighting until Las Bambas shuts down and gets out of here for good,” Edison Vargas, the president of the Fuerabamba community, told Reuters. “It’s war.” The protest is the most severe crisis Las Bambas has faced since opening in 2016, calling into question the future of one of the largest investments ever made in Peru, the world’s No. 2 copper producer, industry experts say. The mine, which still has over a decade of planned production remaining, has faced road blockades in recent years by communities further away that have hit its production. But the invasion marks a major escalation as well as the potential unraveling of Peru’s most expensive community resettlement scheme, amid a resurgence in South America of protests against mining projects.

Some 1,600 members of the Fuerabamba community were relocated by Las Bambas in 2014 to a purpose-built village with tidy rows of three-floor homes near the mine. The community approved the move, which came with $300 million in cash payouts, according to the company.

A Reuters reporter who visited Las Bambas in late April saw community members, including women and children, rebuilding adobe houses there and grazing cattle against the mine’s open pit backdrop. Residents of Fuerabamba and Huancuire said they would not abandon demands for the return of what they called their ancestral lands.

They face long odds, according to former government officials and advisors. Both communities received substantial payments from Las Bambas in exchange for the land they now want back.

Executives at Las Bambas – which is 62.5%-owned by MMG, the Melbourne-based unit of state-owned China Minmetals Corp – say the protests are illegal and have called on authorities to enforce the rule of law. The company declined requests for comment for this story.

On Tuesday, as the stoppage entered a third week, Peru’s government failed to broker a deal in talks at Las Bambas with the communities, as the two sides traded accusations of violence.

Edgardo Orderique, chief executive for operations at Las Bambas, said Fuerabamba and Huancuire members had destroyed tens of millions of dollars of equipment and injured 27 security personnel during the clashes late last month. Vargas said a Fuerabamba member had lost an eye in the violence.

The protest underscores the depth of the challenge facing Las Bambas as it proceeds with plans to increase annual copper output from 300,000 to 400,000 tonnes amid a spike in global copper prices.

“This protest is the most serious that Las Bambas has faced since it began operating in Peru,” said Ivan Merino, a former mining minister under Peru’s embattled President Pedro Castillo, whose government has been torn between its pledge to uphold the rights of rural communities – the bedrock of its support – and the need to revive the economy.

“The State does not have the control to resolve the conflict,” said Merino.

Peru’s mining ministry did not respond to multiple requests for comment.

THE FACE OF PROGRESS

In the main square of New Fuerabamba, the town that Las Bambas built, a plaque says the settlement is the durable “face of progress and hope”.

Close to a dozen residents, however, said the abrupt transition from rural living to town life had caused trauma and mental health issues. Reuters was not independently able to confirm this.

The residents cited simple problems like the new brick houses – which have electricity and indoor plumbing – do not keep out the cold of the chill Andean nights as well as their former adobe homes.

Residents have also complained that basics like water, food and fuel – which the rural community was previously able to glean from the land – must now be paid for. Many of them no longer plant crops or tend livestock because the replacement plots provided by Las Bambas are too far away.

“The problem is that sustainable development has not been achieved,” said Paola Bustamante, a director at Videnza, a consultancy, who previously served as Peru’s top official in charge of social conflicts at Las Bambas.

“What has been done is they were given some money and that’s it.”

As part of the resettlement agreement, Las Bambas gave one job per family at the company for the life of the mine. The company also said in a 2021 presentation that health and education levels have also sharply improved, particularly in young children.

Three residents told Reuters that some members of the community had already spent their payouts. The resettlement plan, which MMG inherited when it bought the mine from Glencore Plc in 2014, gave Fuerabamba’s people cash settlements the mine says averaged $500,000 per family.

Residents say the payout was closer to $100,000.

Either way that’s a huge sum in a country where the legal annual minimum wage is $3,300.

“For us, it seemed like a lot of money, endless money,” Dominga Vargas, a lifelong resident of Fuerabamba, told Reuters from the tent camp at Las Bambas before the eviction. “But now it has all run out and we don’t have anything left.”

“How could we not regret selling,” she added.

GOVERNMENT IGNORED ‘CRITICAL SITUATION’

The government gave MMG permission to expand the mine in March. Fuerabamba chief Vargas said Castillo’s administration turned a deaf ear to his warnings of a brewing crisis and a request for mediation before the occupation took place.

In a March 28 letter seen by Reuters, Vargas warned the mining ministry of a “critical situation” at Las Bambas. He told Tuesday’s meeting that he also went to the capital Lima to ask the government to intervene in the dispute, without success.

On the day of the attempted eviction, April 27, the government declared a state of emergency in the area, suspending the civil rights to assembly and protest.

The government said in a statement following the eviction attempt that it had supported dialogue between the parties from the beginning.

Under Peruvian civil law, property owners can attempt to evict trespassers by force during the first 15 days after they have settled in the property. If that time period lapses, then they need to go through a lengthier legal process.

In the wake of the clashes, Vargas wrote to Las Bambas management saying that further attempts to restart mining operations would be considered a “provocation” by his community and could trigger more violence, according to a separate April 29 letter seen by Reuters.

“Las Bambas won’t restart, not a single gram of copper will leave from here,” he told the meeting on Tuesday.

The Huancuire community, which also sold land to Las Bambas a decade ago for $33 million that is now key to the expansion project, is demanding more benefits from the minerals under the ground.

Pablo O’Brien, a former adviser to several Peruvian governments including Castillo’s, said the communities were pushing their luck making new demands given the large previous payouts.

“This situation is really just open extortion,” he said. “They cannot complain that they have not benefited financially.”

Community leaders denied the protests were a shakedown.

“As an indigenous community, we need to make ourselves heard because the government has issued this permit without consulting us,” said Romualdo Ochoa, the President of Huancuire.

Under Peruvian law, citizens don’t own mineral wealth underground and the land was already formally sold, Ochoa acknowledged. But he said indigenous communities have special rights because of their long ancestry in the territory: “What’s under our soil still belongs to us.”

(Reporting by Marcelo Rochabrun; Additional reporting by Marco Aquino; Editing by Adam Jourdan and Daniel Flynn)

Copper gains as China COVID cases ease, demand still at risk

By Zandi Shabalala

LONDON (Reuters) – Copper prices gained on Wednesday as slowing COVID-19 infections in top metals consumer China eased near-term demand concerns, even as enduring pandemic-related lockdowns weighed on sentiment.

Shanghai said half the city had achieved “zero-COVID” status, but uncompromising restrictions had to remain in place under a national policy.

Lockdowns in China and worries over aggressive U.S. interest rate hikes this year have weighed on base metals, with copper hitting its lowest in nearly five months this week.

Beijing’s reluctance to inject economic stimulus to bolster demand would continue to weigh on metals, said Caroline Bain, senior commodities economist at Capital Economics.

“The lockdowns in China have been the final nail in the coffin for demand. It has exposed how subdued demand has been,” Bain said.

Benchmark copper on the London Metal Exchange (LME) was up 1.2% to $9,337 per tonne by 1610 GMT.

LOGISTICS: China’s COVID-19 outbreak is suppressing the country’s use of cobalt, nickel and lithium by disrupting transportation and cutting battery manufacturing, state-backed research house Antaike said.

DEMAND: China’s overall vehicle sales for April plunged almost 48% from a year earlier as pandemic-related lockdowns hit factories and showrooms, but sales of electric vehicles surged and Chinese brands took share from global rivals.

COPPER: China’s April copper cathode output fell on both a monthly and annual basis, Antaike said on Tuesday, as maintenance and the COVID-19 outbreak curbed smelters from producing more metal.

INFLATION: China’s factory-gate inflation eased to a one-year low in April, giving policymakers headroom for more stimulus to shore up a flagging economy.

DOLLAR: At a near two-decade high, the dollar makes metals and other assets it is priced in more expensive for buyers holding other currencies. [FRX/]

COLUMN: Bear funds flex muscles on copper as macro outlook darkens: Andy Home.

PRICES: LME aluminium gained 1.2% to $2,786 a tonne, zinc rose 2.2% to $3,676, lead was up 0.8% to $2,130, tin climbed 1.2% to $35,955, while nickel fell 2% to $27,855.

(Reporting by Zandi Shabalala; Editing by Mark Potter, Shounak Dasgupta and Lisa Shumaker)

Miners turn to bacteria and other new ways to leach copper from waste rock

By Ernest Scheyder

(Reuters) – Rio Tinto Ltd, Freeport-McMoRan Inc and other global miners, spurred by rising prices and demand, are deploying a raft of new leaching technologies that can extract low concentrations of copper from waste rock and help avoid lengthy mine permitting delays.

Copper prices have nearly doubled in the past two years largely due to the electric vehicle industry’s growth, with the demand prompting miners to find faster ways to produce the metal.

That has led the industry to reconsider piles of waste rock stored at their mine sites across the globe, with Rio and other companies estimating these piles could contain as much as 100 million tonnes of copper.

In conventional mining, leaching involves applying acid to piles of rock in order to extract copper, gold or other metals. The remaining rock is stored on site in waste piles.

Now, miners aim to use bacteria or other newly developed chemicals to extract even more copper from that waste rock in a secondary leaching process. That could enable them to produce copper at concentrations of 0.5% or lower – compared with typical grades in mines of 0.6% to 1% or beyond – in an economic way, the companies said.

“It’s the equivalent of bringing on a new mine without having all the capital costs,” said Freeport President Kathleen Quirk.

These new processes also do not require fresh regulatory approval, helping to avoid fights with conservationists and others. In Arizona, for instance, Rio faces strong resistance to its proposed Resolution Copper mine.

GREENER AND CHEAPER

While leaching is typically done on lined pits, environmentalists have long worried acids and other materials can find their way into drinking water supplies. The mining industry has said it believes leaching is safe.

Freeport is using several new leaching technologies it developed internally and with partners at its Morenci mine in Arizona – North America’s largest copper mine – where it estimates 19 billion pounds of copper are unrecoverable by traditional leaching methods.

The miner estimates that new leaching technologies could boosts its annual copper production by at least 100 million pounds within a few years, equivalent to roughly 2.6% of its output last year.

Freeport and BHP Group Ltd invested last year in Jetti Resources LLC, a privately-held leaching firm that also counts BlackRock Inc as an investor.

Jetti’s technology helped Capstone Mining Corp double its copper production at an Arizona mine last year, the companies said.

Jetti said it is working on a leach project with another miner it declined to identify that it says will open next year with 50,000 tonnes of annual production. The company charges its customers a per-pound royalty that is linked to the copper price.

“The mining industry is used to high capital budget projects that are hard to permit and have environmental drawbacks,” said Jetti founder and Chief Executive Mike Outwin. “Our proposition to the industry is cheaper.”

‘QUITE SUBSTANTIAL’

Rio Tinto, which says it has been studying leaching technologies for 30 years, says it has developed a bacteria that naturally produces heat when applied to certain types of rock, helping to pull out the copper.

The company has inked deals with Lion Copper and Gold Corp and Arizona Sonoran Copper Co to test out the technology, which it has labeled “Nuton” in a play on the name of the 17th-Century British scientist who first developed the theory of gravity.

“Our ambitions here are quite substantial,” said Rio’s Adam Burley, who runs the Nuton program. “In order to capture the full size of the prize, both financially and socially, we need to deploy within and beyond Rio’s portfolio.”

Beyond copper, technology firms are looking to boost the use of leaching for other minerals, including rare earths, a grouping of 17 metals found in a range of electronics.

Massachusetts-based startup Phoenix Tailings Inc says it has developed technology to leach several types of rare earth metals, including neodymium used in magnets, from waste rock without using harsh chemicals. Its process is still in lab testing, but it hopes to begin commercial operations by mid-decade.

(Reporting by Ernest Scheyder; Editing by Marguerita Choy)

The dollar problem: emerging markets count the costs

By Karin Strohecker and Sujata Rao

LONDON (Reuters) – Barely recovered from a two-year bout of COVID, emerging markets now face capital flight, inflation, and even debt defaults as the dollar’s run to two-decade highs tightens the screws.

Almost all past emerging market crises were linked to dollar strength. As the dollar rises, developing countries must tighten monetary policy to head off falls in their own currencies. Not doing so would exacerbate inflation and raise the cost of servicing dollar-denominated debt.

For all the improvements of recent decades, those equations still broadly hold and the recent dollar rally is leaving a trail of destruction in its wake.

Soaring commodity prices are another complication, alongside the tumble in China’s yuan – an anchor for Asian and commodity currencies.

“The cracks are widening. When a strong dollar intersects with high commodity prices, it’s not strange that we get problems in emerging markets,” said Manik Narain, head of emerging markets strategy at UBS.

“And when the yuan weakens there are no winners in EM.”

CURRENCY CONUNDRUM

Dollar appreciation has pushed an emerging currency index down 3.5% this year to an 18-month trough, though that masks bigger 9%-15% losses on currencies such as Poland’s zloty and Turkey’s lira. Losses also picked up in April, coinciding with the yuan downturn.

Flexible exchange rates do shield developing economies against a repeat of crises of the 1990s.

Back then, a surge in the U.S. currency and Treasury yields first sparked Mexico’s ‘Tequila’ crisis in 1994, subsequently sending shockwaves across Asia, Russia and Brazil as dollar pegs collapsed one-by-one.

But a stronger dollar still means higher imported inflation, especially given 30%-40% increases in food and oil prices. Currency declines also probably helped precipitate the recent heavy investment outflows from emerging markets.

As recession worries spread around world markets, the shine is coming off this year’s bright spot – commodity-exporting Latin America. The copper-reliant Chile’s peso gained 8% in the first quarter, only to fall 10% since then.

GROWING PAINS

Central banks across the developing world have jacked up interest rates by hundreds of basis points cumulatively to tame inflation and ensure a sufficient inflation-adjusted bond premium to rising U.S. yields.

As a result, emerging economies may expand just 4.6% this year, the World Bank forecasts, compared with an earlier 6.3% prediction.

Dollar strength can also dampen growth as it tightens financial conditions — a gauge of how easy it is to obtain credit. An emerging markets financial conditions index from Goldman Sachs is near the tightest since 2008, up some 300 bps this year.

DEBT DEMISE

Rising Treasury yields spell higher cost of capital globally, but are especially painful for countries which gorged on dollar borrowing.

On JPMorgan’s emerging sovereign dollar bond index EMBIGD yields have risen above 7%.

Higher debt costs, alongside economic mismanagement and political unrest, have combined to propel Sri Lanka into full-blown crisis, and the same scenario could be repeated elsewhere, investors fear.

Higher borrowing rates are also discouraging many emerging markets governments and companies from tapping international bond markets. April, usually a busy month for new bond issuance, this year saw its issuance since 2015, with sales of just $6.9 billion.

Trang Nguyen, emerging markets strategist at JPMorgan predicted bond sales to pick up, though, “even if this has to come at a higher cost, as countries will eventually need to plug their financing gaps”.

INFLATION STATIONS

Dollar strength and domestic currency weakness translates into higher import bills, and therefore accelerating inflation.

While emerging markets started their tightening cycles well before developed peers, inflation has consistently exceeded expectations.

Rates are eye-watering: annual inflation in Argentina runs above 50%, in Turkey at 70%. Even wealthier emerging economies such as Hungary are seeing double-digit inflation.

The International Monetary Fund expects inflation to average 8.7% in emerging markets this year – some 2.8 percentage points higher than projected in January.

Turkey, Tunisia, Egypt, Ghana and Kenya are among countries seen at risk, due to their hard-currency debt burdens, current account deficits and heavy reliance on food and energy imports.

“Commodity prices are a key axis of vulnerability and if we see renewed upside to oil and food, we may see a growing list (of casualties),” said UBS’ Narain.

(Reporting by Sujata Rao and Karin Strohecker; Editing by Tomasz Janowski)

Elon Musk says Tesla open to buying a mining company

By Ernest Scheyder

(Reuters) – Tesla Inc is open to buying a mining company if producing its own supply of electric vehicle (EV) metals would speed up worldwide adoption of clean energy technologies, Chief Executive Officer Elon Musk said on Tuesday.

Concern is mounting across the EV industry that there may not be enough supply of lithium, nickel, copper and other metals to match demand later this decade, fueling questions about whether Tesla would consider jumping into the mining sector.

“It’s not out of the question,” Musk told the FT Future of the Car 2022 conference. “We will address whatever limitations are on accelerating the world’s transition to sustainable energy. It’s not that we wish to buy mining companies, but if that’s the only way to accelerate the transition, then we will do that.”

While the auto giant has EV metals contracts with suppliers across the globe, its goal to produce 20 million vehicles annually by 2030 – what Musk called an “aspiration, not a promise” – will require vastly more supplies of metals. Tesla produced just under 1 million EVs last year.

Other automakers and executives including Carlos Tavares, the CEO of Tesla rival Stellantis NV, have warned the auto industry faces a metals supply shortage.

Tesla has no experience with the time-intensive and laborious task of building and operating a mine, so industry analysts have advised the automaker to focus on buying an existing operator.

Many in the mining industry have noted that buying an existing metals producer would cost far less than the $43 billion Musk offered to personally buy social media network Twitter Inc earlier this year.

Tesla has lithium supply deals with Ganfeng Lithium Co , Livent Corp and Albemarle Corp, among others. The company’s lithium supply deal with Piedmont Lithium Inc was put on hold last year.

Tesla has nickel supply deals with Vale SA and Talon Metals Corp.

(Reporting by Ernest Scheyder; additional reporting by Eva Matthews, Bernard Orr)

Elon Musk says Tesla open to buying a mining company

By Ernest Scheyder

(Reuters) -Tesla Inc is open to buying a mining company if producing its own supply of electric vehicle (EV) metals would speed up worldwide adoption of clean energy technologies, Chief Executive Officer Elon Musk said on Tuesday.

Concern is mounting across the EV industry that there may not be enough supply of lithium, nickel, copper and other metals to match demand later this decade, fueling questions about whether Tesla would consider jumping into the mining sector.

“It’s not out of the question,” Musk told the FT Future of the Car 2022 conference. “We will address whatever limitations are on accelerating the world’s transition to sustainable energy. It’s not that we wish to buy mining companies, but if that’s the only way to accelerate the transition, then we will do that.”

While the auto giant has EV metals contracts with suppliers across the globe, its goal to produce 20 million vehicles annually by 2030 – what Musk called an “aspiration, not a promise” – will require vastly more supplies of metals. Tesla produced just under 1 million EVs last year.

Other automakers and executives including Carlos Tavares, the CEO of Tesla rival Stellantis NV, have warned the auto industry faces a metals supply shortage.

Tesla has no experience with the time-intensive and laborious task of building and operating a mine, so industry analysts have advised the automaker to focus on buying an existing operator.

Many in the mining industry have noted that buying an existing metals producer would cost far less than the $43 billion Musk offered to personally buy social media network Twitter Inc earlier this year.

Tesla has lithium supply deals with Ganfeng Lithium Co , Livent Corp and Albemarle Corp, among others. The company’s lithium supply deal with Piedmont Lithium Inc was put on hold last year.

Tesla has nickel supply deals with Vale SA and Talon Metals Corp.

(Reporting by Ernest Scheyder; additional reporting by Eva Matthews, Bernard Orr)

Elon Musk says Tesla open to buying a mining company

(Reuters) – Tesla Inc is open to buying a mining company if producing its own supply of electric vehicle metals would speed up worldwide adoption of clean energy technologies, Chief Executive Elon Musk said on Tuesday.

“It’s not out of the question,” Musk told the FT Future of the Car 2022 conference. “We will address whatever limitations are on accelerating the world’s transition to sustainable energy. It’s not that we wish to buy mining companies, but if that’s the only way to accelerate the transition, then we will do that.”

(Reporting by Ernest Scheyder)

Peru to increase public spending in mining regions to curb social conflicts

LIMA (Reuters) – Peru will increase public spending in mining regions in a bid to de-escalate social conflicts that have impacted mining output, Finance Minister Oscar Graham said on Tuesday.

Peru is the world’s No. 2 copper producer and mining is a key source of tax revenue.

But recent disputes between miners and local communities have forced two key copper mines to temporarily halt operations this year, accounting for a combined 1.5% of the country’s gross domestic product.

“Considering the issue of social conflicts we are going to pass a decentralized investment package in mining zones,” Graham said at the opening of a conference organized by Peruvian mining chamber SNMPE. He did not give a figure for the proposed public spending.

Mining in Peru is concentrated in the historically impoverished Andean region. Local communities there, many of them indigenous, have long complained they have failed to benefit from the mineral riches.

Leftist President Pedro Castillo was elected last year with massive support in mining regions.

MMG Ltd’s Las Bambas copper mine suspended operations on April 20 after two local communities entered company property. Operations remain suspended.

Southern Copper Corp’s Cuajone mine resumed operations this month after a 50-day halt.

(Reporting by Marcelo Rochabrun; Editing by Alistair Bell)