Year’s best major metal gains steam as supply eclipses trade woe

Subsitution is driving rare earth demand down, according to analyst Dudley Kingsnorth speaking at an industry conference in China. Kingsnorth is executive director of Industrial Minerals Company of Australia. Dudley told the Metal-Pages(TM) Minor Metals and Rare Earth Conference in Beijing last September that he is dropping projected demand of rare earth oxide per annum to 170,000 tonnes from a previous forecast of 195,000. For example manufacturers of rechargeable batteries may start using lithium ion materials instead of a nickel-metal hydrid, which uses the light rare earth lanthanum.

Shareholders who held onto their Silvercorp Metals stock during the rollercoaster ride that started on September 2 when the company had to disclose fraud allegations and a massive short position in its stock, had something to show for their loyalty on Friday. Silvercorp, China's biggest silver miner, is now worth more than it was before the scam was exposed. You had to have nerves of steel though – volumes sky-rocketed, intra-day swings reached 22% and at one point shell-shocked owners were down a net 30%. And what is most remarkable: Silvercorp's gains are into the teeth of a silver price that has dropped 27% and a sector slaughtered along with it.

Minmetal Resources bought Anvil Mining for $1.3 billion, representing a 30% premium over Anvil Mining's average share price. The Anvil Board has unanimously approved the offer. Anvil's key asset is the Kinsevere mine, located in the Democratic Republic of Congo. Minmetal says its annual copper output will grow by 60,000 tonnes per year, an increase of 60%. The mine is expected to have about a 14 year life.

North Atlantic Potash Inc., the Canadian subsidiary of JSC Acron, today completed the sale of eight of its potash permitted areas to the Yancoal Canada Resources Co. Ltd. of China for $110 million. The sale allows North Atlantic Potash to focus its activity on key areas of interest within its remaining potash permits in Saskatchewan. The infusion of cash means the prioritization of advanced exploration and drilling required to delineate resources can now proceed through a systematic and strategic capital expenditure program. This sale relates to North Atlantic Potash's potash permit holdings located north of Regina (see map on website: permits KP 374, 377, 392, 406, 506, 399, 378, and 507).

In yet another buying spree, China is going after another African copper producing firm to acquire its abundant copper production. Minmetals Resources Ltd. of China is poised to buy Anvil Mining of Congo for $1.31 billion to secure copper mine production output in Africa amid the recent fall of the commodity's prices in the world market.

The price of the most abundant rare-earths are set to extend their decline from records this year as Japanese manufacturers, including Toyota the world’s top REE consumer, switch to recycled materials or eliminate the need for REEs altogether. Prices of certain elements such as cerium used to polish TV screens and lenses are already down 40% after months of break-neck price hikes while lanthanum which finds its way into nickel-metal hydride batteries has shown similar declines. However, the price of some REEs such as samarium used in jet fighter electrical systems are showing no signs of decline despite increasing 25-fold in just three years.

Speaking to reporters at an industry conference in Qingdao China, the world's largest iron ore miners said on Wednesday they have seen no weakness in demand from China. Forecasts for China's imports by 2015 now top 1 billion tonnes – up more than 60% from 2010 – due to the relatively high cost and the low quality of its domestic supplies. Firm demand from China's construction sector and a drop off in India's exports have been behind the strength in spot iron ore prices which, at above $170 a tonne, have trebled from late 2008. The big three – BHP, Vale and Rio Tinto – control nearly 70% of the annual iron ore seaborne trade and dominate price talks.

Rio Tinto announced on Tuesday that it paid Can$73 million for 49% of Ivanhoe Mines. Rio Tinto acquired an additional 3,700,000 common shares in Ivanhoe Mines Ltd. through a wholly-owned subsidiary, Rio Tinto International Holdings Limited, increasing Rio Tinto's ownership in Ivanhoe Mines by 0.5 per cent to a total of 361,858,442 common shares or 49 per cent through a privately negotiated share purchase agreement.

Chinese companies and investors are stepping up their purchases of industrial commodities such as copper, in a show of confidence in the global economy that stands in contrast to the turmoil in western markets. The wave of buying is providing support for metals and minerals prices after commodities prices fell this month at worries about a double-dip. Senior executives at trading houses, mining companies and banks said Chinese consumers had used the recent drop in prices to rebuild stocks.