Copper, the bellwether metal, best told the story of global financial markets, edging up 4% this week to take its one-month gain to 14% (and its 12-month rise to 27%).
Iron ore, which led the way on the Australian market last week with a rise to US$109 a tonne, largely held its ground this week which helped Fortescue shares stay above $20 and Mineral Resources stay above $50.
Gaining a clear view of 2025 is not being made easy for investors, as political clouds blow across markets from the U.S. to Australia with the major test being the U.S. presidential election in four weeks and the Queensland election in three.
The U.S. event is obviously the more important, but the threat of Labor losing government in Queensland could set the tone for next year’s Australian federal election.
Gold, easily the star metal (and commodity) of the past 12-months, had a flat week – opening and closing around US$2660 an ounce – but it is up 6.7% in a month and 48% over the past 12 months.
Silver also had a flat week, sticking to a price of US$31.80/oz, but with hints of something better to come if comments from Citi, an investment bank, are correct.
“The case for silver is as strong as it has been for decades,” Citi said, pointing to the potential for the “poor man’s gold” to hit US$45/oz by this time next year – though the bank’s base case is for a price US$38/oz.
Massive deficits of supply and rising demand are the keys to the possible silver boom, driven by investor demand and growing industrial consumption in solar and electric vehicle (EV) demand.
Holding silver down, for now, are large stockpiles of metal accumulated before demand took off with sales out of those sideline stocks explaining why an annual deficit of supply estimated to be more than 200 million ounces a year has not yet had a major impact on the silver price.
“Silver has been running deficits for the past five years, which is ultimately driving turnover in bullion stockpiles,” Citi said, a process which can’t last forever.
Sun Silver, one of the best ASX exposures to the metal, is reflecting the improved outlook with a share price rise this month of 18c (29%) to 81c, taking the gain since its ASX debut in May to 38c (88%).
Overall, the background noise of U.S. politics and Middle East war kept most investors on the sidelines this week, which is why the all-ordinaries index opened and closed around the same level with a mid-week rise that was quickly flattened.
The metals index, which incorporates mining leaders riding the China-driven iron ore recovery, posted a 5% gain, taking its one-month rise to 12%.
The gold index slipped backwards over the week thanks to a minor sell-off in sector leaders such as Northern Star and Evolution Mining, which shed 2% and 3% respectively.
Gold equities continued to trail the gold price with limited movement even on the release of promising news, with one significant exception.
Lunnon Metals, best known as a nickel explorer, reported the discovery of a third high-grade gold zone at its Lady Herial project near Kambalda in WA with a best hit of 6m at 62.5g/t from a depth of just 17m – a result which saw Lunnon jump by 14c (87%) to 30c. Shaw and Partners reckon the stock is heading up to 60c.
Most other gold moves were modest either way. Horizon Minerals announced the mining of first ore at its Boorara project in WA but only got a boost of 0.5c to 4.9c, and while local favorites De Grey and Bellevue rose by 1.5c and 3c respectively.
Copper, as mentioned earlier, was the top newsmaker of the week thanks to the annual commodities gabfest which is London Metals Week, with two of the world’s top copper producers warning of future price volatility and the need for greater government encouragement for new mines to be developed.
Ivan Arriagada, chief executive of Chile-focused Antofagasta, said that while copper is essential for energy transition there is a disconnection between government policies and demand for the metal.
Over the next decade, Arriagada said the world would need to add the equivalent of Chile’s annual copper out or risk the energy transition being delayed.
Rio Tinto boss Jakob Stausholm took up the same theme with the added suggestion that western governments needed to “learn from China” if they want to speed up energy transition.
Stausholm added that the U.S. Inflation Reduction Act (IRA) designed to boost the supply of raw materials and encourage more manufacturing in the western world was yet to have an effect.
Locally, investors with a taste for copper were hard to please with Firefly Metals a good example, slipping 2c lower to $1.03 despite reporting more high-grade assays from drilling at its Green Bay project in Canada, including a best hit of 17.8m at 4.2% copper equivalent.
As with the gold sector, most copper moves were modest either way as investors clung to the sidelines.
Cyprium added 1c to 13c after reporting the closure of a funding deal covering the Nifty copper mine in WA with global trading giant Glencore, while Talisman slipped 1c lower to 24c after announcing the start of drilling at its promising Yarindury project in NSW.
American West reported more high-grade copper at its Storm project in Canada, but its shares were suspended as the company undertakes a capital raising.
Iron ore, the biggest winner so far from China’s stimulus spending, continued to trade at an elevated US$109/t in Singapore, helping local miners of the material keep most of last week’s sharp share price rises.
Fortescue rose by a minuscule 20c this week to $20.20, taking its rise over the past four weeks to $2.47. BHP added $1.01 to $45.35 while Rio Tinto was steady at $126.
Mineral Resources, which had been in the news for the wrong reasons as short sellers targeted the stock, continued its rebound with a rise of $5.57 to $51.62, piling pressure on the shorters who have sold 13.5% of the stock in the belief that it will fall rather than rise.
Lithium stocks remained under pressure despite signs of an improvement which has come too late for some staff at new miner Liontown, which shipped its first cargo and reportedly laid off head office workers at the same time in a re-run of what happened at the Wodgina mine in the lithium price downturn of 2019.
On the market, Liontown rose by 2c over the week to 77c while Pilbara Minerals gained 5c to $3.12.
Arcadium, which has been working hard to attract support through site visits for bankers and an investor day, got little reward, slipping 6c lower to $4.01 despite Goldman Sachs seeing a future price of $5.35 and Morgans tipping $5.40.
Other news and market moves of interest included:
- Australian Rare Earths jumping 10c (133%) higher to 18c after reporting a significant expansion at its Koppamurra project on the South Australian border with Victoria.
- Develop Global adding 9c to $2.32 as interest grows in the redevelopment of the Woodlawn zinc and copper mine near Canberra.
- Reward Minerals rising by 2.2c (53%) to 6.3c after announcing the acquisition of the Beyondie potash project for $2.13 million, a fraction of its replacement cost.
- Cobalt Blue gaining 1c to 8.7c after reporting that is making progress with plans to build a cobalt refinery at Kwinana in WA.
- Warriedar rising 0.2c to 5.9c after reporting further high-grade antimony mineralisation at its Ricciardo project in WA, and
- EQ Resources adding 1c to 5.7c after reporting record monthly tungsten production at its Mt Carbine mine in Queensland.
