London-based Markham echoed the theme of the May 15 edition of Prospector’s Diary, which was headed “Shortages, outages and stockpiling laying the foundations for a commodities super cycle”.

A difference with Markham’s view is her linkage of demand for metals with the rush to expand artificial intelligence (AI) data centres, and the need for accelerated merger and acquisition (M&A) activity to boost the appeal of mining companies to global investors.

“The AI story is as much a power and metal story as it is a technology story,” she said, before adding that miners barely account for 2% of the Morgan Stanley all countries world index (MSCI ACWI).

“Commodity demand is simply accelerating, and the commodity intensity of gross domestic product (GDP) growth continues to go up,” Markham said.

It’s a convincing argument which is rooted in 15 years of resource sector underinvestment caused by technology consuming the lion’s share of investment capital and the anti-mining policies of governments around the world which have bogged down the approvals process.

Time’s up, is the message from Markham, as countries discover how exposed their economies have become to shortages of most metals, and the blackmail policies of rivals such as in the way China has weaponised rare earths and how Iran is crippling the flow of oil.

Her comments appear to have had an effect on the big miners but only a small trickledown effect so far on the rest of the Australian mining and energy sectors.

BHP, which is reported to be preparing a fresh bid for Anglo American as its finalises a merger with Canada’s Teck Resources, added 71c to trade at $61.28, down slightly on its all-time high of $62.72 reached earlier this month.

Rio Tinto eased back by 38c this week to $183.55 but is up $11.38 over the past month and only a few dollars short of its all-time high reached two weeks ago of $192.68.

Overall a number of issues weighing on investor sentiment, including:

  • The war in Iran, which appears to have reached a stalemate though there are hints of a deal which is why the oil price has eased only to a still be at a punishing US$96 a barrel. Four oil or gas tankers crossed the blockaded Strait of Hormuz yesterday, up one on Wednesday. Modest ship movement but in the right direction.
  • Capital gains tax changes proposed by the Australian Government which threaten the investment appeal of some industries, including small miners, and
  • Continued concern that the policies of U.S. President Donald Trump could trigger a global recession with bond investors on high alert as the “risk premium” from holding bonds over stocks has almost disappeared. The European Central Bank is the latest organisation to say it has doubts about the sustainability of high government debt levels. 

The tax issue is becoming a problem for the Labor-run Australian Government which committed the cardinal sin of springing a tax surprise rather than being open and revealing its plans early.

The net result is growing opposition, even from the Premiers of Labor-run States with WA’s Roger Cook warning that proposed new capital gains tax rules threaten the mineral exploration industry.

A hint of what’s happening can be found in the small number of successful capital raisings by miners this week, bringing to an abrupt end a boom period of new share issues.

Orion Minerals raised $15.4 million to advance its South African copper projects. Lodestar raised $4.4 million for work on its copper projects in Chile and Accelerate raised $2 million for work on its gold and Manganese projects. 

Most share price moves were modest this week with a handful of outperformers that included two of mining’s great characters, Nathan Tinkler and Chris Ellison.

Tinkler, who made headlines 15 years ago with a failed attempt to acquired Whitehaven Coal, made headlines this week through his control of White Energy which has acquired a coal asset in the U.S., a move which delivered an 11c (190%) price rise to 16c for White.

The rest of the coal sector, which is slowly regaining investor interest, got a boost from a mine accident in China which has crimped production. Whitehaven added 65c to $8.85 and New Hope was up 40c to $5.82.

Ellison was in the news as investors reacted positively to his plans for Mineral Resources to increase lithium production by reopening the mothballed Mt Marion mine in WA. MinRes added $48c to $70.28, taking its rise since the start of the year to $18.83 (27%).

Most other lithium stocks edged higher including Vulcan which rose by 22c to $3.71 after announcing that it had finalised a funding package for its German project.

Galan rose by 2c to 46c after reporting first processed lithium rich brine at its project in Argentina, Develop rose by 32c to $5.92 said recent drilling paved the way for direct shipping from at its Pioneer Dome lithium project, and sector leader PLS added 11c to $6.39.

Lithium is enjoying a strong revival but there are hints of history repeating as production restarts and new mines rush to capture market share.

Ellison’s move with Mt Marion follows an earlier restart of the Bald Hill mine and reports of new developments in Africa and South American, including a US$3 billion plan by Codelco and SQM to develop a big direct lithium extraction (DLE) project in Chile.

Gold, which normally gets first mention in this column, struggled again this week as investors weighed the risk premium of holding non-interest paying gold v dividend paying equities – the same question confronting bond investors.

The gold price slipped 3% lower over the week to US$4372 an ounce. Silver was hit harder, down 4.3% to US$72/oz.

Gold and silver moves this week, up and down, included:

  • Tasman Resources, up 1.6c (37%) to 4.9c after announcing a successful capital rising to pay for drilling at its Parkinson Dam project in South Australia.
  • Northern Star resumed its fall, shedding 89c to $18.26 as investors wait for news of a new chief executive and completion of work at its problem-prone Fimiston upgrade at Kalgoorlie in WA.
  • Genesis added 6c to $5.85 but retained a buy tip from Macquarie which has a price target on the stock of $9.
  • Brightstar said it had made a positive investment decision for its Goldfields project in WA, but lost 3c to 34c, and
  • Boab Metals slipped 1c to 41c despite growing interest in its Sorby Hills silver and lead project in WA. Shaw and Partners sees Boab rising to $1.70.

Uranium stocks performed well as the high oil price adds to the case for nuclear power with locally listed but Canadian focused NexGen rising by 61c to $15.51 perhaps on its way to the $21 midweek price target of UBS.

Other u-moves included:

  • Paladin, up 64c to $11.42. Macquarie, in a sector wide review of uranium stocks, has a buy tip on Paladin and target of $13.25.
  • Bannerman, up 18c to $3.66. Macquarie’s target is $5.55.
  • Deep Yellow, up 6c to $1.65. Macquarie’s target is $2.25.
  • Boss added 5.5c to $1.29, just short of Macquarie’s target of $1.30.

Nickel-exposed stocks, the handful left after three tough years, were mixed. Nickel Industries added 1.7c to $1.04 while Ardea slipped 1c lower to 59c.

Morgan Stanley expects the nickel market to tighten this year as Indonesia enforces production cuts. “We see nickel trading in a higher range from here, with potential for (price) spikes if more production is lost,” the bank said.

Other news and market moves in a tense week included:

  • Sovereign Metals rose by 2.5c to 65c after reporting that monazite in pits at its Kasiya project in Malawi had tested positive for a suite of rare earths.
  • Arafura Rare Earths slipped 1.3c lower to 27c after announcing completion of $350 million capital raising, and
  • PhosCo rose by 1.7c to 17c after announcing the development of simple, single-stage process to produce higher quality phosphate at its Gasaat project in Tunisia.