Metals & Mining Monitor | Gold Prices Soar to New Heights; BHP and Workers' Deal Puts End to Escondida Strike

Moomoo News AU wrote a column · Aug 19 16:28

Metals & Mining Monitor | Gold Prices Soar to New Heights; BHP and Workers' Deal Puts End to Escondida Strike

Hello mooers! Check out the latest market dynamics of the metals and mining industry over the past week.
•Base metals: Spot copper prices briefly rose above $9000 per tonne
•Energy metals: Li carbonate prices prices continue to slide
•Precious metals: Gold prices soar to new heights
•Bulk commodities: Thermal coal prices soar to above $150 per tonne

Spot Price Snapshot

Key Price Moves

Last Friday, the spot gold price momentarily soared above $2,500 per ounce, setting a new historical high. Reports have surfaced that US Secretary of State Antony Blinken is currently in the Middle East, engaging in efforts to mediate ceasefire talks with Gaza. Despite these diplomatic endeavors, the likelihood of an immediate resolution seems slim due to persistent Israeli military actions and discordant pronouncements from both Hamas and Israel.

Additionally, the geopolitical landscape has been further complicated by the recent movements of Ukrainian forces into Russian-claimed territories, raising alarms about a potential escalation of hostilities between Ukraine and Russia.

In the United States, last week's encouraging economic indicators swayed market sentiment toward anticipating a modest Federal Reserve interest rate reduction of 25 basis points (bps) in September, as opposed to the more significant 50 bps cut previously considered. Nonetheless, with inflation edging closer to the Fed's target range, the consensus in financial markets is still geared towards an aggregate of 100 bps in rate reductions across the Fed's three remaining sessions this year.

Investors are now poised for Federal Reserve Chairman Jerome Powell's forthcoming address, along with the release of the latest Federal Open Market Committee (FOMC) minutes. $Gold Futures(FEB5) (GCmain.US)$

Copper prices experienced an increase last week, momentarily exceeding $9,000 per tonne, marking a two-week pinnacle. This uptick was largely attributed to the looming threat of a supply disruption following a strike at BHP’s Escondida copper mine in Chile, which posed a potential impact on over 5% of the global copper supply. The situation was compounded by ongoing wage negotiations at other Chilean copper mines, contributing to a heightened risk of a supply deficit that has kept the market on tenterhooks.

Concurrently, optimistic economic indicators from the United States provided a buffer against fears of a looming recession in the world's preeminent economy. Expectations that the Federal Reserve might commence a reduction in interest rates come September—fueled by signs of diminishing inflation—also remained unshaken.

In a pivotal turn of events, however, the union at BHP's Escondida site reached an agreement, effectively averting the risk of a prolonged strike as of Sunday. The subsequent impact on copper prices necessitates further observation. $Copper Futures(MAR5) (HGmain.US)$

Newcastle coal prices have surged, crossing the $150 per tonne threshold and achieving new heights unseen in the past three months. This notable increase has been propelled by indications of unexpectedly strong demand in the forthcoming period. Despite the swift expansion of renewable energy resources, projections from the International Energy Agency indicate that coal consumption worldwide is anticipated to maintain a stable presence in the energy mix for both this year and the next, as significant economies experience a surge in electricity demand.

Top Company News

Escondida Copper Mine's Union and BHP Finalize Agreement, Averting Strike Threat

The union representing workers at the Escondida mine in Chile, recognized as the largest copper mine globally, reached an agreement with $BHP Group Ltd (BHP.AU)$ on Sunday, effectively averting a strike that posed a potential disruption to worldwide copper supplies. The newly ratified three-year contract features key amendments to working conditions, including "initiatives to optimize shift changes, increase equipment utilization and compliance with the 40-hour law," as outlined in BHP's official statement on the accord.

Rio Tinto Collaborates with Queensland Government to Bolster Aluminium Smelting with Renewable Energy Initiatives

On Wednesday, the Queensland Government disclosed its collaboration with the mining behemoth $Rio Tinto Ltd (RIO.AU)$, aimed at ensuring the sustainability of Australia's second-largest aluminium smelter, BSL. This strategic partnership underscores a commitment to fostering renewable energy investments that will underpin the facility's longevity.

Barrick Gold Announces Increased Q2 Adjusted Net Earnings and Confirms Upcoming Dividend

Shares of $Barrick Gold (GOLD.US)$, experienced a significant rise, closing 4.9% higher in last Monday's New York trading session. This uptick followed the dual-listed (Toronto and New York) mining giant's disclosure of elevated adjusted net earnings for the second quarter, which surpassed analysts' expectations despite a downturn in gold and copper outputs.

For the quarter, Barrick Gold reported adjusted net earnings of US$557 million, translating to US$0.32 per share. This marks a notable increase from the previous year's US$336 million, or US$0.19 per share. These figures exceeded the anticipated S&P Capital IQ consensus normalized EPS estimate of US$0.27 for the quarter. Furthermore, the company's attributable EBITDA witnessed growth, climbing to US$1.29 million from the preceding US$988 million.

Pilbara Minerals to Acquire Latin Resources in Strategic Lithium Deal

$Pilbara Minerals Ltd (PLS.AU)$ has announced its agreement to acquire Latin Resources, an Australian lithium exploration firm, in a transaction valuing the company at approximately 560 million Australian dollars (US$369 million). The directors of Latin Resources have unilaterally endorsed the arrangement, through which shareholders will obtain 0.07 shares of Pilbara Minerals for every share owned in Latin Resources. At the heart of the deal is Latin Resources' Salinas lithium project in Brazil, which both entities assert could emerge as a major player in the global hard-rock lithium market.

Evolution Mining's Annual Earnings Soar to Unprecedented Peak

$Evolution Mining Ltd (EVN.AU)$, a prominent Australian gold producer, has announced a record-breaking increase in its annual profit, coupled with a substantial hike in its final dividend payout. This financial upswing is attributed to enhanced production volumes and favorable metal prices. For the fiscal year ending June 30, the company achieved a net profit of 422.3 million Australian dollars (US$280 million), a significant leap from the A$163.5 million recorded during the comparable period the previous year.

The board of directors has approved a final dividend of 5 Australian cents per share, which marks a considerable increase from the 2 cents per share distributed a year prior. Evolution Mining's output of gold and copper saw an uptick, aided in no small part by the strategic acquisition of a controlling interest in a notable Australian mine. This move effectively counterbalanced the operational disruptions caused by inclement weather conditions at several of the company's sites.

Moreover, the firm benefited from an increase in the market prices for its key commodities, including gold, copper, and silver, thereby contributing to its robust financial performance.