Project Vault, a U.S. Government plan to spend US$10 billion buying and storing metals which are being withheld from the market by China, started a run which lifted the share prices of companies expected to benefit.

Almonty, the leading locally listed company exposed to steel-hardening tungsten, was the biggest winner with a rise of $1.65 to $19.98, taking its increase over the past month to $6.74 (up 50%).

Traditionally seen as the ultimate “war metal” because of its use in the high strength steel used to make tanks and artillery, tungsten supply is dominated by China which started restricting exports last year.

Over the past 12-months as the tungsten shortage has worsened the price has rocketed up from around US$400 per metric tonne unit to more than US$1600/t.

As well as Almonty, local tungsten winners include EQ Resources, up 8.5c (47%) this week to 27c, and Tungsten Mining, up 2c to 27c after a $53 million placement. Boutique broker MST Access is tipping a future share price of 69c.

The significance of Project Vault, which will remove metal from the market, is that other countries are likely to follow the U.S, setting the scene for a price explosion in strategic metals as a supply squeeze worsens.

Cutbacks, the other new factor in the mining market, included a decision by U.S.-based Albemarle to mothball its Kemerton lithium refinery in WA, followed by the Indonesian Government forcing its nickel producers to reduce output to help improve the price of the metal.

Albemarle’s move followed a hefty fourth quarter loss of US$455 million but more importantly signalled how uncompetitive Australia has become in mineral processing thanks to its high energy costs.

Losing supply from Kemerton will extend a lithium price recovery which started in the middle of last year and while the price is 80% higher than 12 months ago, it is still down 50% on the price of two years ago which puts the latest increase into perspective.

Lithium miners, which simply export upgraded ore (spodumene), are benefiting from the revival with PLS Group adding 24c this week to $4.36, wiping out most of last month’s sell-off caused by traders taking profits after a strong recovery from the June low of $1.14.

Other lithium stocks reacted positively to the Albemarle news with moves that included Liontown rising by 13c to $1.74, Independence adding 40c to $8.68 and Wildcat Resources rising by 4c to 40c. CG Capital Markets is tipping a future Wildcat price of 75c.

The nickel price edged higher to around US$18,100 a tonne but with few local miners of the metal left to benefit. Ardea rose by 2c to 77c. Nickel Industries added 14c to $1.01.

The depressing nickel situation could change markedly if Indonesia sees through on its proposal to force production cuts that include a severe reduction in the supply of ore to the big Weda Bay processing centre from 42 million tonnes last year to just 12Mt this year.

Promising as that sounds, the companies which own Weda Bay, including China’s Tsingshan Holdings, are planning to step up ore imports from the Philippines.

Among gold stocks, Northern Star rose by $2.99 to $29.88 despite a relatively poor financial performance caused by operational problems which restricted its net profit for the December half year to $759.8 million, up 49%. Shareholders will receive a 25c per share dividend.

Arch-rival Evolution Mining reported a 104% net profit increase to $785 million which led to a share price rise this week of $15.92, up $1.66. A dividend of 20c a share compares with 7c payout from first half earnings last year.

Cash flow and dividends are becoming the key gold sector price drivers with the metal looking stretched at US$5059 an ounce though some analysts such as David Wilson from the French bank BNP Paribas see a price of US$6000/oz by the end of the year.

Other gold and silver news, and price moves included:

  • Genesis, up 61c to $7.21 after a glowing report from Citi which sees the stock rising to $10.20.
  • Boab Metals, up 19c to 68c thanks to growing interest in the silver content of its Sorby Hills project in WA. Shaw and Partners has a price target of $1.70 on the stock.
  • Andean Silver, down 2c to $1.98 despite reporting ongoing exploration success at its Cerro Bayo project in Chile. The stock is up 91c (85%) over the last 12-months, and
  • Dateline Resources, up 3c to 31 after reporting a wide gold intersection (149.65 metres at 1.39 grams of gold a tonne from the surface) at its Colosseum project in California.

Uranium stocks staged a useful comeback during the week as the price of the nuclear fuel continued to strengthen and Canadian fund manager Sprott continued buying for its stockpile in the belief that a demand surge is on the way.

Investment bank UBS upgraded its uranium coverage and long-term price forecast for the fuel from US$77 a pound to US$100/lb as supply struggles to keep up with demand.

Boss Energy clawed back a little of its lost ground with a 20c rise to $1.71. Paladin added 68c to $12.64 after reporting an encouraging half year financial result, and Lotus rose by 2c to $2.09. buoyed by a bullish report from Bell Potter which sees the stock rising to $3.70.

Rare earth stocks rose with the improving local sentiment towards strategic metals. Lynas led the way with an increase of $1.72 to $16.15. Brazilian Rare Earths added 46c to $4.23, and Meteoric put on 2c to 20c.

Copper stocks firmed with the price of the metal which rose above US$6/lb during the week before settling at around US$5.97 with two corporate deals attracting most attention.

A proposed takeover of Peel Mining by Aeris saw the bidder slip 1c lower to 52c and Peel rise by 3.5c to 19c.

The other copper event was an update of the strategic alliance between Sandfire and Havilah Resources with Sandfire adding $1.56 to $19.78 and Havilah slipping 1c lower to 65c.

Other news and market moves of interest included:

  •  Fortescue added 54c to $22.06 ahead of next week’s profit and dividend announcement which is expected to reflect the higher than forecast iron ore price. Champion Iron rose by 29c to $5.66.
  • ANZ Bank and Morgan Stanley forecast continued strength in the iron ore market despite declining Chinese steel production. Both banks see the price sticking around US$100/t for the rest of the year.
  • Victory Metals rose by 11c to $1.25 after reporting high grades of hafnium in material at its North Stanmore project in WA. Hafnium commands a price of US$11,000 per kilogram but has a limited demand, mainly from the nuclear power industry where it is used in reactor control rods.
  • Alpha HPA slipped 6c lower to 68c after completing a major capital raising and despite an upbeat report from Bell Potter which sees the stock rising to $1.50.
  • Sky Metals rose by 3.8c to 19c thanks to the high tin price and a Morgans buy tip with 32c price target, and
  • Element 25 and Trek Metals rose on the back of demand for manganese. Element 25, which is expanding its Butcherbird project in WA, added 4c to 36c. Trek, which is exploring near Christmas Creek, also in WA, rose by 3c to 17c.