TURNING TIDE: Money flows into gold ETFs first time in 6 weeks |
- TURNING TIDE: Money flows into gold ETFs first time in 6 weeks
- Gold price bounces back above $1,200
- Peru’s $1bn Tia Maria copper mine gets social license, to restart mining soon
- Mining starts at world's second biggest uranium mine
- Aussie billionaire Clive Palmer’s massive coal mine approved
- Colombia calls a truce in freshly declared war on coal
| TURNING TIDE: Money flows into gold ETFs first time in 6 weeks Posted: 20 Dec 2013 03:40 PM PST The gold price regained the psychologically important $1,200 an ounce level on Friday, recovering from a more than 3-year low hit yesterday following a decision by the US Federal Reserve to make cuts to its economic stimulus program. The Fed's decision to slow down its money-printing engine boosted the dollar and sparked a frenzy for US stocks that hit new all-time highs again today. All the money flowing into bonds and equities and yield-producing assets have led to record-breaking withdrawals from commodities this year, particularly precious metals assets, but today there was a flicker of a turnaround, or at least a bottom, in the market. Holdings of SPDR Gold Shares (NYSEARCA: GLD) – the world's largest gold ETF by a wide margin – on Friday increased for the first time in more than six weeks. In a classic case of bargain hunting, investors bought a net 5.4 tonnes of gold on Friday, the first increase in tonnage held in trust by GLD since the 2.1 tonnes inflow recorded on November 5, the only day that month that buyers topped sellers. Liquidation of gold-backed ETFs have been cited as a major factor in the fall of the gold price this year and most analysts expected outflows to continue into 2014 and drive the price down further, marking Friday's positive as something of a surprise. December's net redemptions still tally almost 30 tonnes and year-to-date outflows are more than 530 tonnes. Holdings in GLD on Friday climbed to 814.1 tonnes or 26.1 million ounces, still down almost 40% from the start of the year. There has been an almost non-stop exit since gold ETF holdings peaked a year ago, but April's $200 drop in the price over two trading sessions shocked investors and turned a steady stream into a flood. The world's physical gold trusts have experienced net redemptions of more than 800 tonnes collectively and a close to $80 billion depreciation in 2013. The price of gold is down some 28% in 2013 and is set to break its 12-year bull run that took it from around $270 an ounce at the end of 2000 to a record high above $1,900 in September 2011. Gold's $480 an ounce fall in 2013 is the worst performance since 1980, when the yellow metal hit $850 an ounce in January only to lose $200 in a matter of days. At $2,400 an ounce in inflation adjusted terms 1980's gold price still hold the all-time record. In that year the US inflation rate peaked at just under 15%, versus near record lows of 1.2% today.  |
| Gold price bounces back above $1,200 Posted: 20 Dec 2013 11:18 AM PST The gold price regained the psychologically important $1,200 an ounce level on Friday, recovering from a more than 3-year low hit yesterday following a decision by the US Federal Reserve to make cuts to its economic stimulus program. In early afternoon trade on the Comex division of the New York Mercantile Exchange, the most actively traded contract for gold delivered in February gained $9.20 an ounce to $1,202.80, from highs near $1,207 set earlier in the day. On Thursday the gold price dropped 3.5% or more than $40 an ounce to a more than 3-year low and the weakest closing level for the metal since August 2010. The Fed surprised the market on Wednesday with the announcement of a scaling back of its $85 billion a month purchases under its quantitative easing program that has pumped $4 trillion of easy money into the US economy. The central bank's move boosted the US dollar and hurt gold which usually moves in the opposite direction to the greenback. Scotia Mocatta in a research note warns of further downside pressure on the gold price from a technical perspective with "current price action very weak" and being "driven by year end cycle pressures". The investment brokers see the risk of fresh lows before the end of the year "with next support seen at $1,155." MarketWatch quotes Naeem Aslam, chief market analyst at AvaTrade as saying gold falling below $1,200 yesterday did "not ring too many alarm bells" and that the support that formed in June when gold touched $1,181 intra-day "could be a buy opportunity." Should gold fall through this level, however "certainly call all bets off." |
| Peru’s $1bn Tia Maria copper mine gets social license, to restart mining soon Posted: 20 Dec 2013 10:13 AM PST  Images like this one could soon be a thing of the past. US miner Southern Copper (NYSE: SCCO) is likely to restart work at its controversial $1 billion Tía María copper project near Arequipa, Peru, within the next 90 days, a top government official said following a public meeting with local residents Friday. Peru's Mines and Energy Minister, Jorge Merino, told Andina News agency (in Spanish) receiving support from the local community is "a big step forward," adding it shows that "dialogue and coordinated efforts from national, regional and local authorities can make megaprojects happen." The proposed mine has faced ongoing opposition from anti-mining groups, but SCCO worked on reaching a compromise with locals, a key factor to obtain a social license to operate. If the successful talks are followed by Tia Maria's resuming operations as expected, Peru's government expects investors to come back. "It will show we have made inroads to resolve conflicts that have delayed several mining projects in Peru over concerns by communities about their environmental impact," he was quoted as saying.
The Phoenix-based mining company has the highest copper reserves of any publicity traded mining company worldwide and one of the best cash cost in the industry. Established in 1952 and listed on the New York and Lima Stock Exchange's since 1996, SCCO is the largest single entity of Grupo Mexico, Mexico's No. 1 mining corporation and the sixth largest worldwide, accounting for 67% of the group's total sales. Tía María is expected to generate 120,000 tons of copper a year. |
| Mining starts at world's second biggest uranium mine Posted: 20 Dec 2013 09:43 AM PST On December 16, 2013, Canadian Cameco Corporation (TSX:CCO) (NYSE:CCJ), – one of the world's largest uranium producers, announced that jet boring in ore is underway at the Cigar Lake uranium project in northern Saskatchewan. Commissioning in ore for the underground mining and process equipment continues. Cameco is on track to begin ore production at Cigar Lake during the first quarter of 2014, as previously announced. During production, ore from the Cigar Lake mine will be transported 70 kilometres by truck to the McClean Lake mill for processing to uranium concentrate. The McClean Lake mill is majority owned and operated by AREVA. AREVA has reported that work on required mill modifications is proceeding on schedule for completion by the end of the second quarter of 2014 when milling of Cigar Lake ore is expected to begin. With grades 100 times the world average, Cigar Lake is one of the highest-grade uranium deposits in the world. With the announced capacity of 18 million pounds U308 per year, Cigar Lake will only marginally lag behind the world's biggest uranium mine, the McArthur River in Saskatchewan, Canada, which, in turn, has licensed capacity of 18.7 million pounds U308. Both mines are located in the Athabasca uranium province and operated by Cameco. In recent years this region has attracted the attention of many exploration and mining companies, with plenty of highly prospective discoveries, including the Phoenix deposit/Wheeler River Project (average grade ~ 15% U308), Roughrider deposit (grades up to 17% U308), Millennium, Midwest, and others. After achieving full capacity at Cigar Lake in a couple of years, Saskatchewan will contribute to about 25% of global uranium production. |
| Aussie billionaire Clive Palmer’s massive coal mine approved Posted: 20 Dec 2013 08:51 AM PST Australia's Environment Minister Greg Hunt has given billionaire Clive Palmer an early Christmas gift by approving his China First coal mine, located in Queensland's Galilee Basin. Palmer's Waratah Coal company can now proceed with the mine, subject to 49 conditions, as posted in the ministry's website. These restrictions include setting limits on the total area of the Brigalow ecological community that can be disturbed and securing at least 10,000 hectares of protected land as an offset. The company will also have to pay $100,000 a year for 10 years for a "strategic fund" for threatened species, according to the government 's statement. However, a study by Oxford University released this week has cast fresh doubts on viability of the mine, given the current low coal prices. The mammoth project still needs The Great Barrier Reef Marine Park Authority approval, which has given itself until Christmas Eve to approve a related port expansion or seek an extension. Environmentalists argue that the approval implies that 3 million tonnes of dredge spoil will be dumped in the Great Barrier Reef. For that reason, they claim authorities should have at least wait until the mine secures final financing. It is estimated that Waratah coal will generate 3,500 jobs during construction and over 2,300 permanent positions, but based on the State Government's assessment of the mine, Queensland's manufacturing sector could lose up to $1.2 billion, as workers and investment redirect interest from other sectors into mining. The approval covers the development of new open cut and underground mines, associated infrastructure near Alpha, and a 470-km rail linking the mine and Abbot Point port. Palmer made his fortune, officially pegged at a little less than a billion dollars, from mining rights to the iron ore fields of Western Australia's Pilbara region. Brisbane-based Waratah Coal, a wholly-owned subsidiary of Palmer's Mineralogy Pty Ltd, holds nearly 17,000 sq. km of tenements in the prolific Galilee basin with four large coal mining projects. In 2009, the company signed a deal with China's Metallurgical Group Corp (MCC) for project funding. |
| Colombia calls a truce in freshly declared war on coal Posted: 20 Dec 2013 06:20 AM PST  Drummond initially tried to cover up the massive coal dump, but was photographed by a local environmental activist and journalist. (Special thanks to Radio Caracol for providing this photo). Drummond Co., Colombia's No.2 coal producer, will be able to continue exporting the mineral even as it's set to miss a Jan 1 deadline to convert its current export terminals to direct loading operations, and so avoid spills. The country's environmental authority fined the US coal giant for $3.5 million yesterday for having dumped more than 2,000 tons of coal in the Caribbean Sea near the city of Santa Marta. But it also decided to give Drummond an extension, while charging daily fines, Environment Minister Luz Sarmiento said in a statement (in Spanish). Sarmiento warned the extension will be short, but did not disclose when the Alabama-based company will have to comply before its exports are halted. The extension "can't be a very extensive period," Sarmiento said in audio comments published on the ministry's website (Spanish language). "We will not allow companies to skip regulation and what has been ordered." Drummond initially tried to cover up the massive coal dump, but was photographed by a local environmental activist and journalist. According to the company, it was "forced" to dump the coal as the ship carrying the load was sinking. Industry to authorities: "Take it easy" Industry experts are saying Colombia, the world's fourth largest coal exporter, needs to avoid more troubles to the shipments of its key commodity. This considering that the sector's production is now expected reach only about 85 million metric tons, quite less than the government's most recent production target of 94 million tons for the year. Coal shipments account for 12% of the Colombia's total exports, placing them second to oil, which makes up 40% of all exports. Exports of the commodity now outpace the South American country's better-known products, such as coffee and bananas. Some of the world's top mining companies have operations in Colombia, including Anglo American (LON: AAL) and BHP Billiton (ASX: BHP), which jointly own Cerrejón, the country's largest coal producer. With almost 90 million tonnes of coal generated in 2012, Colombia is South America's No. 1 coal producer, according to data from the World Coal Association. The country's estimated reserves are predicted to last for at least another century. However, the sector faces major uncertainties that have left millions in losses and affected negatively the forecasted output for the year. |
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