Metals & Mining Monitor | General Decline in Metal Prices; BHP Reports Record Iron Ore Production for FY24, Copper Production Rises by 9%

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Metals & Mining Monitor | General Decline in Metal Prices; BHP Reports Record Iron Ore Production for FY24, Copper Production Rises by 9%

Hello mooers! Check out the latest market dynamics of the metals and mining industry over the past week.
•Base metals: Copper prices fall by 4.7% in a week
•Energy metals: Lithium carbonate prices drop by 3.7%
•Precious metals: Gold prices hits record highs before a swift reversal

Spot Price Snapshot

Key Price Moves

Over the past week, the metals market experienced a widespread decline, driven by persisting concerns regarding industrial demand in China, the leading consumer. Notably, the price of spot copper fell by 4.7% to $9,214 per tonne, spot aluminum decreased by 4.5% to $2,312 per tonne, and spot zinc dropped 5.3% to $2,717 per tonne. Lithium carbonate saw a decrease to $12,112 per tonne, while spot nickel prices reduced by 2.1% to $16,105 per tonne.

China's economy expanded by 4.7% in the second quarter year-over-year, marking the slowest growth rate in the past five quarters and falling below the median forecast of 5.1% as per a Bloomberg survey of economists. President Xi's comments after the CCP’s Third Plenum did not indicate imminent stimulus measures aimed at enhancing domestic consumption, heightening concerns over weak factory demand in the world's premier manufacturing and copper-consuming nation. These developments came on the heels of disconcerting factory activity data; the NBS manufacturing PMI indicated contraction for the second consecutive month in June, compelling smelters and other factories to depend on foreign demand to sustain growth.

The spot price of iron ore experienced a 3.4% decline over the past week, settling at $104.4 per tonne. This downward trend was influenced by the absence of significant policy changes following China's Third Plenum—a key meeting of the country's leaders. Despite indicating a focus on enhancing domestic technology capabilities, Chinese officials did not present definitive policy measures to tackle the nation's economic hurdles.

The sentiment was further dampened by a seasonal slump in steel demand and a climb in Chinese iron ore stockpiles, exerting additional pressure on prices. Recent figures revealed that iron ore reserves at Chinese ports have reached close to 150 million tons, suggesting a surplus in supply. Additionally, BHP Group announced a record production year for the second consecutive fiscal period. This achievement was attributed to favorable weather conditions and increased output from the South Flank project in Western Australia.

Spot gold prices soared to a historic peak of $2480/oz last week, marking a significant milestone. However, the precious metal soon encountered headwinds as the greenback strengthened due to stronger-than-expected manufacturing growth in the US Mid-Atlantic region for July, alongside other economic indicators.

Investor focus is shifting towards upcoming US economic reports, which are anticipated to influence expectations for interest rate adjustments. Key reports to watch include the second quarter's advance estimate for GDP growth, consumer spending and income data, and the June PCE price index.

The political landscape is also under scrutiny, with investors assessing the repercussions of President Joe Biden's decision to conclude his reelection bid and endorse Vice President Kamala Harris.

Top Company News

BHP Achieves Record Iron Ore Output in FY24; Copper Production Climbs 9%

$BHP Group Ltd(BHP.US)$ has reported a milestone in its iron ore production, achieving a record output for the fiscal year 2024, while also experiencing a significant increase in copper production. The company attributes these successes to strategic expansions and acquisitions, particularly in Australia, despite facing operational challenges due to adverse weather conditions.

Over the past twelve months, culminating in June, BHP produced 259.7 million metric tons of iron ore, a 1% increase from the previous year, and expects to sustain this growth trajectory in the coming year. Copper production rose by 9% compared to the preceding year, largely due to the strategic acquisition of Oz Minerals for $6 billion.

VALE's Iron Ore Production Rises by 2% in Q2; Copper and Nickel Production Fall Short

$Vale SA(VALE.US)$ has announced that its iron ore production for the second quarter of 2024 reached 80.6 million tons (Mt), marking a 2% increase when compared with the same period from the previous year. This growth is primarily due to enhanced operational efficiency at the S11D and Vargem Grande complexes. In contrast, VALE's copper output experienced a slight decline of 0.3%, totaling 78.6 kilotons (kt), in comparison to the second quarter of 2023. Despite increased productivity at the Salobo’s 1 & 2 plants and the Sossego facility, this downturn was influenced by the scheduled bi-annual maintenance activities at the Sudbury operations. Additionally, nickel production witnessed a significant drop, decreasing by 24% to 27.9 kt during the April-June 2024 period. The decrease is attributable to the deliberate maintenance schemes executed at the nickel processing plants.

BHP to Cease Operations of Australian Nickel Division Amid Market Surplus

$BHP Group Ltd(BHP.US)$ has announced the cessation of its unprofitable Australian nickel operations until at least the beginning of 2027, in response to a worldwide excess of nickel that has disrupted the market. From October, the mining giant will place its Nickel West division into a state of "care and maintenance" due to the depressed prices of nickel, which is a critical component in electric-vehicle batteries. Concurrently, BHP will suspend progress on its West Musgrave nickel project. The company is allocating A$450 million ($304 million) annually to maintain the infrastructure and assets, facilitating a potential resumption of operations should the nickel market and prospects show signs of improvement.

Agnico Eagle Enhances Position in First Nordic Metals with Strategic Share Acquisition

$Agnico Eagle(AEM.US)$ recently announced its strategic move to expand its shareholding in First Nordic Metals Corp. ("FNM") through a significant stake acquisition. Under the terms of the agreement, AEM will obtain 27,954,872 common shares in FNM. This initiative stems from Agnico Eagle's decision to exchange outstanding amounts as per the asset purchase agreement, initially dated March 19, 2021, and subsequently amended on May 1, 2023. The agreement involves select subsidiaries of both Agnico Eagle and FNM, in conjunction with EMX Royalty Corporation.

Fortescue Announces Workforce Reduction of 700, Appoints Apple Paget as Group CFO

$Fortescue Ltd(FMG.AU)$ has disclosed plans to reduce its workforce by approximately 700 positions. This move is part of a strategic restructuring designed to streamline operations across its mining and energy divisions, with a focus on eliminating redundant roles. In conjunction with the restructuring announcement, Fortescue confirmed the appointment of Apple Paget to the permanent role of Group Chief Financial Officer, following an 11-month tenure as Acting Group CFO. Furthermore, Shelley Robertson, previously serving as Chief Corporate Officer, has been promoted to the position of Chief Operating Officer.

South32 Announces $818 Million Impairments Amid Alumina and Nickel Market Challenges

$South32 Ltd(S32.AU)$ has announced it will recognize impairments totaling US$818 million in its fiscal year 2024 financial results. This decision has emerged in response to the difficulties encountered by its predominantly owned Worsley Alumina operation and the ongoing pressures within the global nickel market.

According to the latest figures, South32 produced approximately 1.14 million tons of aluminum during the year ending in June, mirroring the production levels of the preceding 12 months. In contrast, the company's copper production experienced a 14% reduction, amounting to 60,800 tons, as increased plant processing failed to compensate for the lower-than-expected copper grades and molybdenum recovery rates. Meanwhile, nickel production maintained its previous year's level at 40,600 tons.

Evolution Mining Reports Increased Gold Production for FY 2024, Falls Short of Forecast

$Evolution Mining Ltd(EVN.AU)$ has reported a surge in its annual gold production, reaching 716,700 troy ounces in the fiscal year ending June, an increase from the previous year's 651,155 ounces. Additionally, the firm's copper production experienced a significant boost, escalating by 43% to total 67,862 metric tons. Despite these gains, Evolution Mining's actual gold production did not meet its projected target of approximately 749,000 ounces, although it surpassed the anticipated copper output of around 65,000 tons.

Whitehaven Coal's Production Surges Post Strategic Mine Acquisitions

$Whitehaven Coal Ltd(WHC.AU)$ has reported a significant increase of 32% in its annual coal production, a surge attributed to the strategic acquisition of two mines located in Eastern Australia. On Friday, the mining company announced that its saleable coal production reached 20.7 million metric tons for the fiscal year concluding on June 30. This marked a substantial rise from the 15.7 million metric tons produced in the preceding year. Additionally, the fourth-quarter figures showed a remarkable growth, with output more than doubling from the previous quarter to reach 8.3 million tons.