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A Calm Week for Copper – Is There Such a Thing?

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A Calm Week for Copper – Is There Such a Thing?

You know it is a calm week for copper when the biggest headlines to start the week are about mine activity and another metal replacing copper in vehicles.

You read that correctly. No buzz about China’s economy or the ongoing trade war. Just news of mining problems in Zambia and Peru and conflicting stories on copper in vehicles – one says electric cars will push demand for the red metal higher; while another one says aluminum could actually replace copper in cars in the not-so-distant future.

The calm started last Wednesday after President Donald Trump tried to dismiss fears of the trade war with China still lingering. President Trump said his tough stance on China’s behavior in global markets would ultimately benefit the American economy.

The stance may have calmed fears, but it also calmed copper. The red metal is almost exactly where it was last week. Hovering around $2.55 a pound and sitting at prices near their lowest since 2017. Click on the chart below for the most current copper price.

“There has been nothing concrete and nothing has markedly changed (in the trade war),” Natixis analyst Bernard Dahdah told Reuters. “I would say the propensity of prices is to be lower until the end of this year. I don’t think there is going to be a solution any time soon,” Dahdah added.

As of right now, U.S.-China trade talks are still planned in Washington in September. The White House has said the latest tariffs could still be changed if talks go well.

Copper Mining on U.S. Soil

All kidding aside about mining news, there was actually some major news released last week about a mining operation right here on U.S. soil. The Resolution Copper project in Arizona received permitting from the U.S. Forest Service.

The company in charge of the mine, Rio Tinto, calls this project one of the most significant undeveloped copper deposits in the world. Rio Tinto says the proposed underground mine is expected to become the largest copper mine in North America – saying the mine could supply up to 25% of the United States’ copper demand.

“Achieving this significant milestone in the rigorous U.S. permitting process allows us to continue progressing one of the world’s most significant untapped copper deposits towards development,” said Rio Tinto chief executive Copper & Diamonds Arnaud Soirat.

“This is a highly complex and challenging mining activity due to space restriction, potential excessive groundwater, and poor ventilation,” said Rio Tinto on its website.

Resolution will be the deepest block cave at over a mile deep. It will also be one of the hottest with temperatures ranging between 168° to 181°.

Resolution Copper Mining is 55% owned by Rio Tinto and 45% by BHP Billiton.

Depending on what side of copper you root for, copper supply could be in for a boost when this mine starts producing, or we could continue the calm until next month’s scheduled trade talks. Either way, this could be the calm before the storm. We will keep an eye on it and let you know.

Further Reading

Copper under pressure, has potential to fall further

 

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Jim Williams

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