A US House committee voted to include the language in a broader budget reconciliation package that would prevent Rio Tinto Ltd from building its Resolution copper mine in Arizona. Elected officials in nearby Superior, Arizona, have said the mine is crucial to the region’s economy. The tribe of San Carlos Apaches and other Indians say the mine would destroy the sacred land where they hold religious ceremonies. Conflict has stalled a decision until now, but the committee’s vote finalizes the language that will determine the future of the mine.
The House Natural Resources Committee on Thursday passed the Save Oak Flat Act, a $3.5 trillion compensation measure. Should the House reverse the move, the measure faces an uncertain fate in the US Senate. Approval of the measure would reverse a 2014 decision by former President Barack Obama that Congress began a complex process to hand over more than 40 billion pounds of copper owned by Rio Tinto in exchange for acreage Rio owns nearby. Former President Donald Trump gave final approval to the process before leaving office in January, but his successor Joe Biden could reverse it and leave the project in limbo.
A final reconciliation budget should also include funds for solar, wind, and other renewable energy projects that require tremendous amounts of copper. Electric vehicles consume much of the metal, as do internal combustion engines. The Resolution mine would cover about 25% of the demand for U.S. copper.
Mayor Mila Besich, a Democrat, said the project appeared stuck in “bureaucratic purgatory”. She hopes the House will not allow the language to remain in the final bill. The move “seems contradictory to what the Biden administration is trying to do to address climate change”, Besich said.
Rio said it would continue consultations with local communities and tribes. Rio Tinto chief executive Jakob Stausholm plans to visit Arizona later this year.
The above references an opinion and is for information purposes only. It is not intended to be investment advice. Seek a licensed professional for investment advice. The author is not an insider or shareholder of any of the companies mentioned above.
The post US House Committee Finalizes Vote to Block Rio Tinto’s (NYSE:RIO) Resolution Mine appeared first on MiningFeeds.nyse copper
Miramar’s Randalls gold project ripe for discovery
Special Report: Allan Kelly-led explorer Miramar Resources has been granted ground containing the ‘Randalls’ project, adjacent to Silver Lake Resources’…
Allan Kelly-led explorer Miramar Resources has been granted ground containing the ‘Randalls’ project, adjacent to Silver Lake Resources’ 1.5Moz Mt Belches gold operations in the Eastern Goldfields of WA.
Purchased as part of the Miramar (ASX:M2R) IPO in October 2020, Randalls covers extensions to the mineral-rich Banded Iron Formation (BIF) that hosts the high-grade Maxwell’s, Cockeyed Bob, Rumbles and Santa gold deposits operated by Silver Lake Resources.
Several high-grade results have also been returned from rock chip sampling of BIF at the Pryde and Logan prospects along strike, which were recently acquired by Horizon Minerals.
Despite the proximity to these deposits, the BIF has been relatively poorly explored within Miramar’s tenement, especially the fold hinges which are generally considered prime targets for BIF-hosted gold mineralisation.
Historical exploration comprised a limited series of shallow drill holes which did not test the obvious fold hinge positions — generally considered prime targets for BIF-hosted gold mineralisation — within the northern half of the tenement.
Gold assays are not reported in open file reports for a number of these holes.
Furthermore, surface sampling is likely to have been ineffective across a significant portion of the tenement “due to the presence of a north-south trending drainage system and associated sheetwash material”.
Proposed exploration at Randalls
Miramar has kicked off planning for initial work at Randalls, which will include compilation of all relevant historic drilling and geochemical data followed by aircore and/or RC drill testing of key targets.
Miramar’s initial focus will be on drill testing the obvious fold-hinge targets with aircore and/or RC drilling.
Miramar exec chairman Allan Kelly says the company was excited to be able to commence exploration on the third of its highly prospective Eastern Goldfields projects.
“Our strategy in the Eastern Goldfields was to acquire under-explored gold projects within close proximity to existing mining and/or processing facilities,” Kelly says.
“Randalls definitely fits the bill, with a lack of any systematic exploration of a mineralised BIF along strike from multiple existing high-grade gold operations and with a haul road crossing the project.”
This article was developed in collaboration with Miramar Resources, a Stockhead advertiser at the time of publishing.
This article does not constitute financial product advice. You should consider obtaining independent advice before making any financial decisions.
The post Miramar’s Randalls gold project ripe for discovery appeared first on Stockhead.asx gold silver iron
Power Supply Shock Looms: “Global Markets Will Feel The Pinch Very Soon” Of China’s Next Crisis
Power Supply Shock Looms: "Global Markets Will Feel The Pinch Very Soon" Of China’s Next Crisis
Distracted by the ‘grandness’ of the collapse…
Distracted by the 'grandness' of the collapse of China's property development market, many have missed the fact that China faces a crisis that could directly hit Asia's economy just as hard as a financial collapse - a nationwide power supply shock.
After ramping up its coal-based power production earlier in the year, it appears Beijing has suddenly grown a conscience over its emissions and the 'average joe' could be about to feel the pain of that decision.
Climate change facts: Chinese CO2 emissions are more than double those of the US, and greater than US and EU combined. pic.twitter.com/ZpJCoPaUjB— zerohedge (@zerohedge) October 6, 2020
As Bloomberg reports, the crackdown on power consumption is being driven by rising demand for electricity and surging coal and gas prices as well as strict targets from Beijing to cut emissions.
It’s coming first to the country’s mammoth manufacturing industries: from aluminum smelters to textiles producers and soybean processing plants, factories are being ordered to curb activity or - in some instances - shut altogether.
"With market attention now laser-focused on Evergrande and Beijing’s unprecedented curbs on the property sector, another major supply-side shock may have been underestimated or even missed,” Nomura Holding Inc. analysts including Ting Lu warned in a note, predicting China’s economy will shrink this quarter.
As a reminder, China pollutes more than the US and all developed countries combined...
More problematic for Greta and her pals, between the years 2000 and 2020, the amount of electricity generated by burning coal increased more than four-fold in China, hitting around 4,600 terrawatt hours in the past year.
You will find more infographics at Statista
As the scene below suggests, this is not the first time China has faced winter power demand surges (which prompted many to turn to diesel generators to plug the shortages of power from the electricity grid).
However, this year is different.
The danger is that, as Zeng Hao, chief expert at consultancy Shanxi Jinzheng Energy, warns: government policies will significantly limit the energy industry’s potential to increase production to meet the demand increase.
2021's worsening power crunch in China reflects three specific factors:
1) Extremely tight energy supply globally (that's already seen chaos engulf markets in Europe);
2) The economic rebound from COVID lockdowns that has boosted demand from households and businesses (as lower investment by miners and drillers constrains production); and
3) President Xi Jinping tries to ensure blue skies at the Winter Olympics in Beijing next February (showing the international community for the first time that he's serious about de-carbonizing the economy).
Simply put, it is the third factor - which is all of its own making - that has raised the risk of a severe shortage of coal and gas - used to heat homes and power factories - this winter; and more ominously, expectations of the need to ration power to those deemed worthy.
“The power curbs will ripple through and impact global markets,” Nomura’s Ting said.
“Very soon the global markets will feel the pinch of a shortage of supply from textiles, toys to machine parts.”
As we noted earlier in the year, China needs to shutter 600 coal plants to meet its emissions goals of net zero greenhouse emissions by 2060.
If Xi's recent actions in the interests of "common prosperity" are really about forestalling social unrest, we suspect his commitment to meeting self-imposed carbon emissions targets may quickly evaporate as the Chinese people are unlikely to stand sustained black-outs for long without upheaval.
Weekly Market Pulse: Not So Evergrande
US stocks sold off last Monday due to fears over the potential – likely – failure of China Evergrande, a real estate developer that has suddenly discovered…
US stocks sold off last Monday due to fears over the potential – likely – failure of China Evergrande, a real estate developer that has suddenly discovered the perils of leverage. Well that and the perils of being in an industry not currently favored by Xi Jinping. He has declared that houses are for living in not speculating on and ordered the state controlled banks to lend accordingly. Evergrande is known as a real estate developer and it certainly is but it is also a sprawling company with investments in multiple industries including, of course, an electric car company. Cutting off its financing isn’t just going to affect the Chinese real estate market. And real estate accounts for roughly 70% of household net worth in China so everyone in the country is going to take a hit. But is there a connection to the US or other developed country stock markets?
Real estate represents anywhere from 15 to 25% of the Chinese economy depending on what source you want to believe. The exact number isn’t really important, just suffice it to say that construction is a very large part of China’s economy and speculating on real estate is a national pastime. But the impact of it goes well beyond China. It is well known – according to the news reports I read – that China’s share of global commodity consumption is large and a large part of that goes to the construction industry. I read some research last week that claimed China’s property sector accounted for 20% of global steel and copper output. That sure sounds big and scary – as I’m sure the authors intended – but I would just point out that copper prices are near their all time highs and actually finished higher last week. The general commodity indexes were higher too. If Evergrande’s demise is going to materially impact commodity demand you wouldn’t know it from last week’s action. Maybe China’s commodity consumption isn’t “well known” in the commodity pits.
The doom and gloom crowd spent all of last week trying to convince investors – or themselves – that Evergrande is China’s “Lehman moment”, based on nothing more than the fact that Evergrande and Lehman both involved real estate. And in the case of Lehman that connection was incidental but superficially I guess the comparison made sense. There are certainly banks with exposure to Evergrande but the vast majority of them are Chinese. HSBC has been mentioned as having exposure but they stopped lending on Evergrande properties a few months ago. UBS was said to have exposure but the CEO said last week it was immaterial. Credit Suisse, which seems to be the new Citibank, involved in just about everything that has blown up the last few years, was so happy they avoided this one they almost broke an arm patting themselves on the back. US banks, as best I can tell, have no exposure. There are some junk bond funds with exposure but for the ones I looked at, it was a rounding error. There just doesn’t seem to be much interconnection with the rest of the global financial system and that was reflected in credit default swaps and credit spreads which barely moved on the week.
Evergrande appears to be mostly a domestic China concern, at least for now. The impact will be seen in Chinese growth figures which were already on the decline. What does that mean for the rest of the world? I don’t know yet but I am old enough to remember the last time the world’s second largest economy popped a real estate bubble. That was Japan in the early 90s and their economy certainly suffered over the next decade but you’d be hard pressed to find a big blowback on the rest of the global economy. Maybe China will be different but I can easily make a case that a Chinese economic slowdown would be beneficial to the rest of the world. Suppose those estimates of commodity consumption are correct and copper and steel prices take a tumble. That probably wouldn’t be pleasant for Chile and Brazil (iron ore) but I’d guess that the rest of the world would welcome cheaper steel and copper. There are plenty of things to worry about right here in the US with political wrangling over the debt ceiling, a possible government shutdown (which I generally take as a positive) and potential tax and spending hikes. I see no need – yet – to start worrying about Xi Jinping’s re-Maoing of the Chinese economy.
For stock investors I think the more important event last week was the rapid rise of the 10 year Treasury yield from Wednesday to Friday. I don’t mean to imply that higher rates mean stocks are going to fall because history says that isn’t the likely outcome. Rising rates are generally associated with rising growth expectations which doesn’t exactly strike fear into stock investor’s hearts. And that is what we saw last week as inflation expectations were unchanged as real rate rose exactly the same as nominal rates. Higher rates will affect which stocks perform well though and we started to see that last week. Higher rates and a steeper yield curve were positive for financials. Energy stocks also had a very good week. In general, I’d expect value stocks to perform better if rates keep rising while growth stocks take a breather.
The move in rates last week came with seemingly no trigger. There was no economic data or other event that should have changed growth expectations. Of course, there really wasn’t any spur for the bond rally of the last 6 months either. But eventually the data caught up with the market and it probably will again. I say probably because markets are not always right, just most of the time. What I think we’re going to see over the next few weeks is the market anticipating the end of the Delta surge and the resumption of the economic re-opening both here and in Europe. Whether it does or not or how long it might last or how far it might go I don’t know. But that investors will try to front run the virus isn’t exactly news. Of course people will try to get ahead of events.
During the course of an economic cycle, growth will ebb and flow. We’ve just come through a growth rate slowdown and bond yields now seem to be anticipating a growth rate upturn. I’m not convinced yet and there’s a lot of potential potholes ahead – mostly political – so I’ll continue to classify the environment as slowing growth/strong dollar but that may not last long. One thing I still don’t see is any change in the dollar trend. It is a short term uptrend and I’ve acknowledge that but the long term trend is no trend at all. The dollar index is in the bottom half of the range it’s been in for over 6 years and I don’t know what would change that. The lack of a dollar trend makes our job a bit more difficult and shorter term but we play the hand we’re dealt.
The economic data last week was a little better and better than expected but not significantly so. Housing starts improved as have sales over the last quarter but still well below last year’s peak. Existing home sales are still softening and we’re starting to see some price cuts which is the only thing that is going to have a big impact on sales.
The monthly reading of the CFNAI fell back a bit but the 3 month average moved higher to 0.43, a reading that indicates the economy continues to grow above trend. We had a slowdown but it didn’t amount to much.
This week’s data includes durable goods, personal income and consumption, the Chicago PMI and the ISM manufacturing index. I think the two to keep an eye on are income and consumption. It will be interesting to see if either was impacted by the impending end of extended unemployment benefits.
Commodities had a good week which seems curious considering the potential growth impact of Evergrande. But as the title says, maybe it isn’t so Grande. Maybe it is just pequeno.
US and European stocks were up last week while the rest of the world was down. Is that because a China slowdown is good for the US and Europe and bad for Asia and Emerging markets more generally? Maybe but I think I’ll wait for more evidence on that front before making any big pronouncements.
Value outperformed last week across all market caps.
As I said above financials and energy led last week. Of equal importance I think is that real estate and utilities – both rate sensitive – lagged the field. If rates keep rising, that seems likely to continue as well.
The 10 year Treasury yield bottomed in March 2020 around 40 basis points. It rose and then fell back to about 50 basis points in August of last year. It rose too far, too fast (1.75%) and the last six months has been nothing but a correction of that trend. Now, it appears rates are resuming their rise. How far will they go? Assuming the Delta end/re-re-opening narrative takes hold and there are no surprises along the way – some very large assumptions – my inner trader says about 1.85% as a first target. But that’s just an extrapolation so I wouldn’t place any big bets on it. What most investors should know is that rates are in an uptrend because the economy continues to recover from COVID. We had a growth rate slowdown and so far that’s all it was. And the market says it is ending. I’ll take that over all the breathless Evergrande articles any day.
Joe Calhoundollar inflation commodities commodity markets bubble commodity demand ax copper iron steel
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