Gold price set for biggest weekly jump in 13 months on haven demand
The precious metal has surged around 30% so far this year, supported by healthy central bank buying.
Shares in Freeport McMoRan Inc (NYSE:FCX), the world’s largest listed copper miner, were down 1% in pre-market trading Tuesday on the company’s decision to halt operations at its Grasberg mine in Indonesia.
The firm’s local unit, which has not been able to ship copper from the mine in over a month due to a ban on concentrate exports that kicked in on January 12, also said Tuesday it has begun sending workers home, Reuters reports.
The shutdown, which effectively happened Friday, comes after PT Freeport Indonesia ran out of space to store copper that has been backing up at the site. It also coincides with an ongoing strike at BHP Billiton’s Escondida copper mine in Chile, the world’s biggest.
Copper has rallied lately as a result of the stoppages at both Grasberg and Escondida and it’s having the best start to a year since 2012.
Copper has rallied lately as a result, hitting its highest levels since May 2015 overnight. However it was down 1.2% on the London Metal Exchange Tuesday to $6,030 a tonne around in mid-afternoon trading and it was also trading lower in New York, to $2.76 a pound this morning.
The red metal has climbed about 11% since Jan.1, the best start to a year since 2012 for the commodity, which has been named by analysts as the one they expect to perform the best in 2017.
Freeport’s Grasberg mining complex is responsible for more than a quarter of the Phoenix, Arizona-based company’s total output. The miner has been trying to reach a deal with the government of Indonesia to resume exports and previously said that each month of delay in obtaining such approval meant production would be reduced by 70 million pounds of copper and 70,000 ounces of gold.
And while it continues to hold talks with local authorities on the matter, Freeport told Reuters that no deal had been reached on the terms that were “necessary and critical” for its long-term investment plans. As a result, the firm said the export ban remained in place.
Before the current troubles, Grasberg was set contribute an even greater proportion this year as copper grades improve and gold production is boosted. In 2016, the iconic mine produced more than 500,000 tonnes of copper and over 1 million ounces of gold.
The miner’s overall consolidated sales for 2017 are expected to be around 4.1 billion pounds of copper, 2.2 million ounces of gold and 92 million pounds of molybdenum, including 1.0 billion pounds of copper, 460,000 ounces of gold and 23 million pounds of molybdenum for first-quarter 2017.
6 Comments
Thomas Henricksen
Good time to be looking for copper!
Randy
US companies are handicapped doing business in Indonesia because they can’t pay bribes.
ygnitzi
If you are going to steal a mine , wait until after it is built ……
ThaOracle
What if I were to tell you …… that maybe the “radical democratic subversives” from the US might be able to smooth things over
Candy Erica
Freeport in Papua. Papua is actually an independent state. they called the Melanesian tribes of West Papua. so that now many people of Papua are in disconnect the employment relationship, it happened because the Indonesian government wants to master the freeport, they want to take stock. whereas the employee payroll tax freeport all very small after the deduction of tax paid to Indonesia. the fact that Papua was built because there freeport.
joji gulapetis
Freeport Indonesia started producing copper (with associated gold) in late 1972. At the time it did not report the gold as a significant byproduct. They were forced to report that gold was a significant (a VERY significant) “by”-product about 20 years later. They made an enormous amount of money from the undisclosed gold production, for which they paid no royalty or taxes to the Indonesian government. In legal or any terms you wish to use, how can this action be described? Can it be called an “accident”? An unfortunate loss of memory? Outright theft? Anyway, the problem will soon be solved, as their COW was only for 30 years, and will expire in 2021. Their next contract may not be as one sided as their previous contracts. May they reap what they sowed.