Moreover, director of Brics Securities, Ram Pitre suggested a buy on crude between Rs 3,960-3,970 per barrel with a stop loss of Rs 3,940 per barrel and a target price of Rs 4,010-4,040 per barrel.

However, from the precious metal space, Ashish Shah of Sushil Global Commodities expects gold prices to correct to USD 1,630 per ounce. According to him, the most important level for gold would be USD 1,575-1,560 per ounce. He advised to look at the prices correcting to Rs 25,800 per kilogram, which would be a target strategy for going short and looking at that region to go long.

Fears of a double dip recession in the US and negative Chinese manufacturing data last week will weigh on the copper prices in the short-term, said Admisi Commodities’s head of commodities Suresh Nair. “The LME prices would test 7,000 levels on the downside on the local markets,” he pointed out. He recommended selling on rallies the November copper above Rs 370 per kilogram with a stop loss at Rs 375 per kilogram and a profit at Rs 360 per kilogram.

Well, the global economy is clearly in the midst of a slowdown, and we may be far from a recovery. So, what are the telltale signs of a slowdown? You can tell when water is boiling by seeing bubbles forming on its surface. In a similar way, when copper prices fall sharply it should set off warning bells in your mind. This commodity is often called Dr Copper for its ability to give a diagnosis on economic health. Copper has a variety of industrial uses and demand for the metal helps determine levels of economic activity. Copper wires go into various appliances, vehicles, construction of buildings etc. That is why, the 22% drop in copper prices this month is signaling a severe drop in manufacturing activity across the globe. And since China is the world’s biggest consumer of this red metal, the dragon nation may very well be running out of steam. Growth is definitely on a downward trajectory in the country. Its property market is in the dumps and exports have also slowed.

Other signs are also showing that the brakes have been pressed on the global growth engine. Shares of steel, coal, mining, auto companies etc have been seeing selling pressure across the globe. Junk bonds have also been under the scanner, spelling trouble for companies saddled with debt. All these are troubling signs.

Emerging markets were earlier seen as global growth engines. They were supposed to be the cogs in the worldwide growth machine that would never tire or stop moving. But, these countries are not immune anymore. The sovereign debt crisis in Europe and America’s stagnation has contaminated the entire world. “The world is now in a synchronised slowdown,” says Mr El-Erian, the head of Pacific Investment Management, the world’s biggest bondholder. Ominous though his words are, we have no choice but to believe them. But, while negative news is bad for the economy in the short term, it may be excellent for the long term prospects of your portfolio.

As regards global markets, Asian indices closed weak today while European indices have opened on a positive note. The rupee was trading at Rs 49.66 to the dollar at the time of writing.

Food stocks closed in the red today and the key losers here were Britannia, GSK Consumer and ITC. As per a leading business daily, ITC’s Personal Care Products Division is looking to foray into the domestic deodorant market. The deos market is valued at about Rs 9 bn and the company wants to capitalise on the fact that this market is growing at a strong rate. That said, this space is already crowded with around 60 players present. It must be noted that ITC is already present in the fragrances market through its Essenza range of fragrances which fall in the premium category. The company has no presence, however, in the deo range priced between Rs 100 and Rs 150, a segment that is quite popular in the country. Whether this business turns out to be profitable for the company remains to be seen given that there is fierce competition in this space. Especially since players such as Wipro, Hindustan Unilever and sports brands such as Reebok and Nike already corner a significant chunk of this market.

As per a leading business daily, Hindalco Industries has outlined an investment of Rs 100 bn in FY12 in its ongoing projects Mahan Aluminium in Madhya Pradesh, Aditya Alumina and Aluminium and Utkal Alumina in Orissa. The company will also invest Rs 7 bn this fiscal to enhance capacity at the Dahej unit of its subsidiary Birla Copper. The latter produces cathodes, continuous cast copper rods and precious metals. The funding for this capex is expected to be through internal accruals given that the company has cash reserves to the tune of Rs 295 bn. That said, there had been a delay in the commissioning of both the Mahan Aluminium and Aditya Alumina projects due to delay in obtaining environment clearances and procuring land. Availability of skilled and semi-skilled labour was also an issue.

On an overall basis, the sovereign debt crisis in Europe and downgrade of USA may lead to more risk aversion in the financial markets and can have adverse impact on investment flows in commodities sector. This could lead to lower aluminium and copper prices on the London Metal Exchange (LME). High input costs and an uncertain regulatory environment as well as subdued profitability of the copper business are likely to keep margins under pressure. The stock closed lower today.

Concerns about the global economic slowdown have not gone away, with gold tumbling and copper suffering its biggest one-day drop since the 2008 financial crisis.

ECB Governing Council member Ewald Nowotny was quoted as saying that the possibility of interest rate cuts should not be ruled out.

Germany’s Ifo economist Klaus Abberger also said he expected the ECB to cut interest rates towards 1 percent, although it was not clear what the time frame would be for such a move.

Speculation over euro zone easing countered investor concerns about how effective Europe’s latest steps to stop fallout from any Greek default, including finding ways to beef up their existing 440 billion euro rescue fund.

“Until policymakers come up with a long-term solution to address the debt crisis, the short-term prospects for copper and equities will remain bearish,” said Phillip Futures analyst Ong Yiling.

The MSCI world equity index halved its losses to be down 0.5 percent on the day, having hit its lowest since July 2010 on Friday. The index has fallen more than 23 percent since hitting a three-year high in May and is also down 17 percent since January.

European stocks reversed losses to rise 0.8 percent. Emerging stocks were down 1.5 percent after hitting their weakest since September 2009.

US crude oil dropped 1.5 percent to $78.68 barrel. Gold dropped more than 5 percent in Asian trading , while copper fell as much as 6.1 percent to $6,914 a tonne, its sharpest fall since October 2008.

Concerns over the potential impact of a Greek default, especially on the banking sector, and worries over a U.S. economic slowdown had been weighing on world stocks, fanning safety-seeking flows into top-rated government bonds.

Deep differences remain over whether the ECB should commit more of its massive resources to shoring up Europe’s banks and help struggling euro zone member countries.

Bund futures fell 48 ticks on the day. The dollar was steady against a basket of major currencies.

The euro fell as low as 101.90 yen and hit an eight-month low of $1.3361 , before trimming losses.

A smaller-than-expected decline in the Ifo index, which gauges German business morale, also helped sentiment a little.

“(A modest decline in) the Ifo index should dampen the current recession fears for the time being but sends at the same time a clear warning to German policymakers that the solid growth should not be taken for granted. Discussions on possible stimulus packages could be revived in a couple of months,” said Carsten Brzeski, an economist at ING.

David Lennox, analyst at Fat Prophets, in an interview to CNBC-TV18, gave his view on how precious metals will perform going forward and what strategy should investors follow.

“When the market decides that the US yields will no longer support the current levels and start to rise, the one should be buying gold on dips because that’s where the speculative money will return to,” added Lennox.

Below is the edited transcript of the interview. Also watch the accompanying video.

Q: Was there a bubble in gold prices? How are you looking at that entire unwinding?

A: We have seen a significant amount of speculative funds coming out of the gold market. The news, which has been impacting the price of gold, has been stalled, and hence, the market moved out of gold went to US treasuries.

So, the market is deciding which way to move in terms of precious metals. The treasury yields that we seen in the US will not be able to maintain and we will see yield stack to arise over the short to medium-term. With that, the market will move back towards gold as a safe heaven investment.

Q: So it’s a buy on dips kind of strategy that you are advising?

A: Certainly, we would advise to buy on the dips. We do believe that all the elements that have pushed gold up to that 1,900 level or its peak are still in play. They have not gone away; they have not diminished to any great extent. In fact, in some circumstances, they have actually become more uncertain.

When the market decides that the US yields will no longer support the current levels and start to rise, then you should be buying gold on dips because that’s where the speculative money will return to.

Q: The other big slip-off came in crude. The data on crude has not been that weak but we have seen a big sell-off over there. Do you think the trend will continue to be bearish?

A: The USD 80 per barrel level for West Texas Intermediate (WTI) is probably a level, where the fall-off should diminish. We do think that Saudi Arabia will step in if it sees the oil price going any lower than that and will start shutting production.

The US markets have been exceedingly weak for a number of years and that weakness has been replaced by growth in the Asian region. With economic growth now being put in the suspicious basket in terms of growth, we have seen the speculative end of the market very quickly coming out of the oil price, and hence, the prices have been pushed very low.

Q: How much lower does it get at all for both crude and gold?

A: Both commodities are around at their basic levels at this particular point. We cannot see them wanting to fall significantly lower unless there is a real move on the speculative end for the second time. All the factors surrounding the global economies are very much in play.

Q: Is this rise of the dollar index to 78 a transient phenomenon, will it head back to 73 when things improve in Europe?

A: Yes, because the factors that have pushed that particular index up have probably been the speculative factors as investors have moved through into US treasuries.

We can’t see staying in that particular investment class for any significant period of time because to unwind these bonds in due course, they will probably start to suffer capital losses. They will start to move back towards gold and oil. At this point in time, nobody really wants to be in risk assets, and hence, we have seen significant changes in prices.

Q: Base metals have also dipped, copper is down 10%. Which is the base metal that would worry you the most now?

A: We are a bit bemused by the fall that we have seen in the copper price. It is a matter of investors moving out of the speculative end of the copper market.

Copper will face supply constraints going forward; it’s a matter of how much that supply constraint is. Copper prices are getting impacted due to concerns on global economic growth. But that’s a very short-term view and investors should be looking a bit longer at what could happen in the supplies for copper.

With declining base metal prices on the London Metal Exchange (LME), the stock of Sterlite Industries has lagged the broader market since end-July. It has lost almost 32 per cent in the past two months, including 4.5 per cent on Monday, the day it touched a 52-week low of Rs 115.05 before closing at Rs 117.30.

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The non-ferrous metal major has interests in aluminium, copper, zinc and lead, as well as silver. With fears of a slowing in global growth, prices of most of these metals have fallen, especially in September. Copper is down almost 15 per cent, zinc by 14 per cent and aluminium by 10 per cent and are trading at their 2011 lows (see chart). However, given that zinc and lead (along with silver) account for a large portion of the company’s profits, and their production is seen rising, analysts say the same will help partly offset the pressure on profits, due to weak metal prices. They say, while the volatility in metal prices may keep the stock under pressure, most concerns seem factored in at current levels.

“Copper extended losses as fears of a Greek default stirred worries of a global recession, which could slow industrial use, a scenario underlined by copper’s sharpest weekly fall in nearly three years last week,” according to a report.

Shares of Sterlite Industries touched their 52-week low of Rs 117.10 on the NSE and a high of Rs 122.15. At 10:55 a.m., Sterlite Industries Ltd was trading 4.4% lower at Rs 117.25.

Shares of Hindalco Industries Ltd touched their 52-week low of Rs 128.15 on the NSE and a high of Rs 133. At 10:56 a.m., Hindalco Industries Ltd was trading 4.03% lower at Rs 128.50.

Depreciating rupee also has a deep impact on copper prices as it helps in determining the landed cost of the red metal, which is quoted in dollars.

The partially convertible rupee was at 49.57/58 per dollar, after dropping to 49.69 in early deals and 0.3 percent weaker than its close of 49.42/43 on Friday.

Brokerage Call:

Morgan Stanley in a recent report on metals earlier this month downgraded Hindalco to ‘SELL’ from ‘Overweight’ with a price target of Rs126 and Sterlite Industries Ltd to ‘Equal weight’ or ‘Hold’ call from ‘Overweight’ with a price target of Rs 147.

“Heightened fears of a recession in developed markets and slower growth in emerging markets have given persistent high inflation. We reduce our forecast on aluminum, zinc, and copper for F2012-14 by 5-15%,” said the report.

The brokerage also trims F2012-14 earnings forecasts for Sterlite and Hindalco by 15-33%.

Further, Hindalco Industries and Sterlite’s competitive edge is being blunted due to increased cost and issues over the availability of coal and bauxite resulting from the policy impasse.

Higher downside risk to aluminum prices, likely project delays and rising coal crunch also imply Hindalco may have further downside.

As bad news continues to pile up, Hindustan Copper chairman Shakeel Ahmed says prices of copper, which finds applications from wiring and plumbing to automobiles and consumer electronics, will remain uninspiring and range- bound in the short term. The International Monetary Fund lowering its global growth forecast to four per cent for this year and 2012 from the earlier 4.3 per cent and 4.5 per cent, respectively, could only lead operators to lighten their long positions in copper. Expect the market to take note of the IMF warning that the US and European Union could lapse into a recession and a decade of growth lost, unless governments of developed and emerging countries take some decisive actions.

Italian prime minister Silvio Berlusconi is dismissive of Standard & Poor’s downgrading of his country’s credit rating. But, to bankers, Italy’s credit rating lowering adds to the contagion risk generated earlier by Greek debts. The rising bond rates of many euro zone countries are a statement of the area’s deep economic malaise. As if all this was not enough bad news for commodities in general and copper in particular, the US new house construction data for August ,showing a fall of five per cent on July, are the worst in a three-month period. In developed economies in particular, copper finds extensive application in plumbing and electrical wiring. Ahmed says there is growing awareness in the developed world that use of door knob, and handle, made of copper are infection-preventive, particularly in hospitals. But only in better times, will this awareness will result in incremental demand. Now, however, the disappointing house start news from the US must have removed some support from copper.

No doubt, prices would have sought still lower levels had not Chinese August import of the metal gone up 11 per cent to 340,398 tonnes on July when imports rose 9.5 per cent on the month before to 306,626 tonnes. But the contracts for the imports that matured in August were made mostly during May to June. According to Aurubis, one of the world’s leading integrated copper producers, Chinese imports in the remaining months of this year will stay high, as copper stocks in warehouses are used up. Whatever commodity China is a regular importer, it will buy and build a comfortable inventory when prices are low. There will also be occasions when China will indulge in cross- trading by way of selling commodities in the world market when prices rule high.

The point remains had China not been pursuing a tight monetary regime, leading to more modest growth compared to what came to be the routine till the other year, the world perhaps would have seen bigger volumes of copper buying by a country accounting for as much as 38 per cent of world consumption. In the first seven months of 2011, Chinese copper imports were down 22 per cent year on year, a sure indication that the tight monetary policy has slowed demand. But China apart, when the US, the world’s second-largest user of the red metal and western European countries, which together use more copper than the US, are reporting disappointing industrial production, prices are more likely to take a knock. That’s what happened.

We have seen that whenever a big mine in Chile, Peru or in Indonesia is hit by a strike, copper prices move north. So, trust when reports surface that labour disputes at the world’s third largest copper mine in Indonesia owned by Freeport McMoran Copper & Gold, and at Peru’s Cerr Verde mine accounting for two per cent of the world copper output are getting resolved, the market will lose some steam. Copper prices here get set by trade rates at the London Metal Exchange. So far, as Ahmed explains, appreciation in the dollar value vis-a-vis our currency has offset the impact of price falls in copper.

Ahmed, who is leading his company to build copper ore mining capacity of 12.41 million tonnes by 2017 fiscal end from 3.6 million tonnes now is, however, “bullish about the commodity in the intermediate to long term”. While taking this stand, Ahmed must have put his bet on supply-side constraints. Mine owners in developed copper areas are contending with falling grades of ore that finally translate into higher production cost. Dollar appreciation will lead to higher new mines opening cost. Not many will dare to take a copper price view two to three years hence; such are the complexities of the present financial crisis. No one knows for sure how this is going to pan out.

“Globally, price of copper is expected to remain high in the next 3-4 years. The present scenario is highly favourable for copper mining industry and provides an opportunity to expand mines and develop new mines,” Shakeel Ahmed, chairman and managing director of Hindustan Copper told the company’s shareholders.

The recent turmoil being played out in the euro zone has taken a toll on copper prices — it has been extending losses on the London Metal Exchange (LME) over the past few days as worries about stalled economic growth in the West overshadowed robust growth in China’s copper imports.

However, long-term outlook remains bullish supported by some local factors as well, he said.

“Growing environment consciousness and an emphasis on using more energy-efficient appliances would also help to protect demand for copper in India. There is a ready market for copper concentrate in India due to huge deficit in mining as well as refining capacity. There has been insignificant investment in greenfield exploration of copper while preliminary exploratory studies have indicated that there is further scope of increasing reserves of the country,” he said.

After touching the $10,000-tonne mark at the LME in early February, copper prices have stabilised in the range of $8,700-9,200, Ahmed said.

High copper prices augur well for Hindustan Copper and not so much for other domestic companies, all of which are processors importing copper concentrate to feed smelters, he said.

“Profit margins of customer smelters such as Birla Copper (Hindalco Industries) and Sterlite would come under pressure due to high cost of copper concentrate and low TC/RC charges,” Ahmed said. TC/RC, or treatment charges (TC) and refining charges (RC), are indicators for copper price as the charges correlate with the percentage utilisation rate for global smelter capacity as rising charges indicate a surplus in the refined market, a position usually preceding a fall in copper prices.

On the status of Hindustan Copper’s greenfield ventures, Ahmed said that of the 20 mining permits applied, the reconnaissance permit at Balaghat is in the process of being finalised by Madhya Pradesh government while mining lease application has been submitted for Dhobani-Pathargora block in Jharkhand, which is being scrutinised at the district level.

The Kendadih, Jharkhand, mine lease is at the final stage of approval while execution of lease deed for Rakha mine is also set to be cleared, he said.

* Returning workers are contractors, union says

* Workers say any output cannot be shipped due to strike

* Copper prices at lowest this year (Adds company memo, port comment)

By Rieka Rahadiana

JAKARTA, Sept 19 (Reuters) – More than a thousand workers have returned to Freeport McMoRan Copper & Gold’s strike-hit Indonesia mine, the company said on Monday, leading the union to say some production has restarted at the world’s third-biggest copper mine.

The union, which declared a month-long strike for 8,000 mine workers from Sept. 15, said the returning workers were contractors who were operating machinery and doing maintenance, but this did not mean the strike was over.

The union said it had not reached an agreement and remained on strike, adding that the returning workers were contractors.

Freeport spokesman Ramdani Sirait declined to comment on the impact on production from workers returning to the remote Grasberg mine, which also has the world’s largest gold reserves.

“This morning, some hundreds went to the highlands,” said Sirait, adding that this came after 1,500 workers went to the firm’s Papua operations at the weekend, from various departments.

The possibility of some supply being restarted at Grasberg added to bearish sentiment on the copper market, where prices slid 3.3 percent on Monday to their lowest this year as traders worried about a global demand slowdown. Prices were at $8,415 a tonne, down 3.2 percent, by 1101 GMT.

The workers have yet to agree a pay deal with the company, union official Virgo Solossa said. Workers have demanded a pay rise to between $17.5 and $43 per hour, from a current $1.5 to $3 an hour rate.

“We haven’t reached any agreement. We are still on strike,” said Solossa.

“Workers, the company, and police agreed that employees, in this case contractors or whatever they are, can maintain the machinery. But in reality, the workers are running production machinery. This is what we see,” he told Reuters.

THREAT OF SACKING

An internal company memo seen by Reuters said workers were required to return, and if they remained absent for five working days without a written statement or legitimate evidence, they could be sacked. Monday is the fifth day of the strike.

It was not clear how many workers that were on strike had decided to return to the actual mine or to what extent production had restarted, with Solossa only saying output was not at its maximum level.

“Production at the mill operation is paralysed, at Grasberg as well. There are workers underground, working as drillers, but output cannot be carried out by conveyor to the mill as the machines are not running,” said one Freeport Indonesia worker.

Based on the mine’s daily output target, the strike potentially cut output of 230,000 tonnes of ore per day, said energy ministry official Thamrin Sihite on Friday, after a meeting with Freeport Indonesia’s management.

A shipping worker from Freeport’s Papua port said there were no ships that could load or be unloaded because the port workers were still on strike.

Last week, industry officials told Reuters the strike at Freeport’s port in Papua province had delayed around 133,000 tonnes of copper ore concentrate shipments. (Additional reporting by Samuel Wanda in Timika; Writing by Neil Chatterjee; Editing by Helen Massy-Beresford)

Industrial users of metals and energy and companies that use agriculture commodities to make food may slow purchases, waiting on a solution to the euro crisis. Greece needs to prove to its partners it’s doing enough to receive more aid.

“People are waiting on the sidelines to see if prices get cheaper,” said Gary Mead, an analyst at VM Group in London. “Industrial and end-users and consumers in the wholesale sense are in a wait-and-see mode. It’s clearly the fact that there’s no decision on the table for the end of the euro crisis. There’s a tremendous amount of fear out there.”

The Standard & Poor’s GSCI Spot Index dropped 2.4 percent by 3:23 p.m. London time, the biggest drop on a closing basis since Aug. 18. Copper for three-month delivery declined 4.1 percent to $8,336 a metric ton on the London Metal Exchange, the lowest price since Nov. 30. Crude oil for November delivery declined 3.4 percent to $84.99 a barrel in New York.
Mine Strikes

Copper had been supported by strikes at Freeport-McMoRan Copper & Gold Inc. (FCX)’s mines in Indonesia and Peru. Freeport resumed mining at its Grasberg mine over the weekend as 1,500 workers returned to the site in Indonesia’s Papua province. Miners in Peru may strike again on Sept. 27, a union official said, after they returned to their jobs this weekend ending a four-day work stoppage.

The S&P GSCI Spot Index has tumbled 5.4 percent this month, extending the 1.7 percent loss in August. Concerns that there may be an economic slowdown in the euro zone and the U.S. have outweighed the effects of constrained supplies of crude and copper. A report this week may show U.S. home construction dropped to a three-month low.

Finance chiefs from the euro region said last week the 18- month debt crisis leaves no room for tax cuts or extra spending to spur an economy on the brink of stagnation. Reports this week are forecast to show a decline in German investor confidence and a slowdown in manufacturing in Europe’s largest economy.
Global Traction

Money managers cut their net-long positions in 18 commodities by 5.2 percent to 1.21 million futures and options contracts in the week ended Sept. 13, government data compiled by Bloomberg show. That was the first drop since early August.

“People are becoming more concerned about demand prospects, especially with a weakening economic point of view,” said Michael Banks, a researcher at London-based Hermes Commodities, which manages $1.9 billion in assets. “This economic weakening is pervasive across all markets.”

Crude oil for November fell $2.75, or 3.1 percent, to $85.21 a barrel on the New York Mercantile Exchange.

Gold for immediate delivery dropped 1.3 percent to $1,788.35 an ounce.

December-delivery corn fell 0.9 percent to $6.8575 a bushel on the Chicago Board of Trade. Wheat for December delivery slipped 7.5 cents, or 1.1 percent, to $6.8075 a bushel and soybeans for November delivery fell 8 cents, or 0.6 percent, to $13.475 a bushel.

To contact the reporters on this story: Tony C. Dreibus in London at tdreibus@bloomberg.net; Chanyaporn Chanjaroen in Singapore at cchanjaroen@bloomberg.net

To contact the editor responsible for this story: Claudia Carpenter at ccarpenter2@bloomberg.net

Prices for the industrial metal had held firm in recent weeks despite fears that Europe’s banks may be sliding toward a credit crunch. But market participants were disappointed with the result of the weekend’s meeting of European finance ministers, and investors Monday cashed out of perceived risky assets on the view that debt-laden Greece was in danger of violating the terms of its bailout agreement.

The contract for September delivery was down 15.3 cents, or 3.9%, at $3.7670 a pound in midday trade on the Comex division of the New York Mercantile Exchange. Futures at one point touched $3.7595 a pound, the lowest intraday price since Nov. 30.

Copper’s “heavy selling pressure” came on concerns about the inconclusive European summit over the weekend and amid sharply lower equities markets, said Leon Westgate, an analyst with Standard Bank.

The metal is sensitive to the economic outlook because of its widespread uses in construction and manufacturing, and can track equities as a proxy for growth expectations. Major European equities indexes were sharply lower Monday, and U.S. markets also opened with losses.

Copper was also pressured as investors turned to the dollar as a refuge. A rising dollar can hit dollar-denominated copper by making the futures more expensive for buyers using other currencies.

A likely increase in global copper supply also weighed on sentiment in the copper market, as a labor strike at a large Peruvian miner came to an end.

Unionized workers at Peruvian copper miner Sociedad Minera Cerro Verde ended their strike over the weekend, a union official said. The company is controlled by U.S. mining giant Freeport-McMoRan Copper & Gold Inc..

The news was a signal that “one of the key pillars supporting copper prices recently has also been eroded,” Mr. Westgate said.

Commodities markets were hit by European economic growth worries on Monday amid the eurozone’s debt crisis coupled with fresh concern about monetary conditions in China.

Copper fell to its lowest level for the year, while crude oil prices were also hit.

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The red metal for three month delivery on the London Metal Exchange was down 3.62 per cent to $8735 a tonne. Demand for the red metal is closely correlated to global economic growth as well as liquidity levels in China, which represents 40 per cent of total copper demand.

Many analysts and investors were hoping that China, which has been keeping a close eye on inflation, was close to the end of its cycle of tightening monetary just before the summer. However, a statement last week from Wen Jiabao, China’s premier, reiterating that the government would take measures to control inflation, seemed to indicate that the government is still maintaining its tight stance on interest rates. The latest data on Chinese property prices, which showed overall increases for August, also raised the level of nervousness about Beijing’s attitudes to monetary tightening.

Shares in banks, property groups fell in Shanghai, while resource group CNOOC and PetroChina also declined.

The dollar’s strength – amid pessimism about the lack of progress in Europe over the resolution of the debt problems – was another reason to take profits in commodities. The US currency rose over 1 per cent against the euro.

Crude oil prices dropped with the November ICE Brent down $2.80 to $108.42 while the Nymex lost $2.68 to $85.28.

“The market is see-sawing massively between macro events and supply and demand fundamentals,” said Amrita Sen, oil analyst at Barclays Capital. Price volatility has increased as the focus has been split on economic growth worries as well as expectation of more supply into the market.

While the market, especially the Brent contract has been supported by tight physical supply over the past few weeks, with more oil expected to come on to the market from producers including Angola increasing output. On the demand side, the fall in refining margins is likely to mean a fall in demand from refining companies.

Gold eased after gaining ground, in earlier trading. Bullion seems to have lost its lustre as a haven asset amid the dollar’s appreciation, falling 1.44 per cent to $1,784.60 a troy ounce. With annual conferences of two leading gold industry gatherings this week, the yellow metal could find support in positive news flow. The London Bullion Market Association’s annual conference in Montreal starts today, while the Denver Gold Forum also gathers this week.

Edel Tully, precious metals strategist at UBS, said “the lack of market participants at their desks today and tomorrow may add to liquidity constraints and exaggerate price action”.

Crude Oil:
Weekly Price Performance: Nymex Crude Oil gained almost 1% w-o-w and on the MCX prices rose 2.2%.

US Energy Department Inventory: Last week witnessed a sharp decline in inventory levels by 6.7 million barrels to reach 346.4 million barrels for the week ending 9th September. Gasoline stocks increased 1.9 million barrels to 210.8 million barrels, whereas distillates rose by 1.7 million barrels to reach 158.5 million barrels in the same week.

Fundamentals affecting oil prices: The International Energy Agency (IEA) has cut its estimate for global oil demand this year by 1,60,000 barrels per day to 1.04 million barrels. Demand growth for 2012 is estimated to decline by 1,90,000 bpd to 1.42 million bpd. The OPEC and the US department of energy both have also cut their forecasts for global oil demand growth thismonth. Sharp fall in US crude oil inventories.

Outlook: Crude oil prices are expected to trade with a negative bias this week on expectations of slowdown in oil demand amid the globa economic worries will add pressure on prices.

Weekly Strategy: MCX October Crude Oil: Support 4037/3890 Resistance 4320/4450(CMP: 4137). Nymex Crude Oil: Support 86.30/82.50 Resistance 90.50/93.50 (CMP: 86.67)

Copper:
Weekly Price Performance: LME copper declined 1.6% w-o-w and MCX copper November contract slipped around 0.5%.

Inventories: On a weekly basis, copper LME inventories rose around 0.2% to 466,025 tonnes. Shanghai weekly copper stocks dropped by 1.1 percent to 112,061 tonnes last week. Prices took cues from: Rise in inventories on the LME warehouse. Strike in Indonesia and Peru cushioned further losses.

Demand Supply scenario: Strike involving thousands of workers at Freeport McMoRan’s Indonesian copper mine and port has delayed around 133,000 tonnes of copper ore concentrate shipments. This strike has created the
supply concerns which would be supportive for copper prices.

Outlook: Copper is expected to come under pressure this week on account of economic concerns and a stronger dollar. However, supply concerns will cushion sharp downside in prices.

Weekly Strategy: MCX Copper: Support 408/402 Resistance 420/427 (CMP: 409.15). LME Copper: Support 8560/8430 Resistance 8850/9000 (CMP: 8517)

Silver:
Weekly Price Performance: Spot silver dropped sharply by more than 2% w-o-w and prices on theMCX slipped by 1%

Factors that led downside: Fall in gold prices. Positive sentiments in globalmarkets affected demand for silver. Silver being an industrial metal also took cues from base metals complex.

ETF performance: Holdings in the iShares Silver Trust, the world’s largest silverbacked exchange-traded fund, rose 1.1 percent to 9,956.32 tonnes by 16th September from the previous 9847.82 tonnes on 9th September 2011.

Outlook: Silver is expected to rise during the week as economic concerns continue and will boost demand for precious metals. Sharp upside however could be capped if economic worries heighten.

Weekly Strategy: Buy MCX Silver December in the range of 64100-64000 with strict stop-loss below 62800 Targeting initially 66800 and then 67400.(CMP: 64965). Spot Silver Support 39.50 / 38.20 Resistance 41.50 / 42.60 (CMP:
40.54).

Disclaimer: The views and investment tips expressed by investment experts/broking houses/rating agencies on moneycontrol.com are their own, and not that of the website or its management. Moneycontrol.com advises users to check with certified experts before taking any investment decisions.

Ferguson said this represented over 700 containers and a value of hundreds of thousands of dollars in business on which the 60 registered TTSIDA members are missing out. And that’s not counting the containers leaving from Point Lisas, for which Ferguson had no official figures and for which he could not offer an estimate.

Ferguson added that an estimated 25 scrap iron yards fall outside their association although he could not indicate how many of those were operating illegally.

Following on the well-documented raids on industry officials like Ferguson, the business has ground to a halt.

Since Monday, no new container has gone to the port with scrap iron.

“A lot of people are without work this week, the next week and we don’t know when business will regularise again with this State of Emergency. So a lot of people who came from the construction industry, which is on a lull, came to find work here are now out of work again,” he said.

Ferguson said the scrap iron, which includes metals like steel, iron, brass, aluminum, and the most profitable of all, copper, are destined for countries in the Far East like India, China, South Korea, Indonesia and Vietnam.

And why do these countries want the scrap iron?

“We don’t really ask them but I understand that it is used in steel and iron mills and to make a lot of fittings for construction and to make pipes,” Ferguson said, adding that all his scrap iron business is destined for that external market.

Ferguson said scrap iron is sold at TT$1,900-2,000 per tonne.

Asked how scrap iron yards determine if a scrap iron vendor is a legitimate owner of the iron he is selling, Ferguson said for his business, they are required to show documentationand are made to sign a statement of liability in case the transaction and documents prove not to be above board.

He said some companies like Petrotrin also put out bids for scrap iron.

Ferguson said unscrupulous and corrupt scrap iron dealers exist but that they were a minority.

“We recognise and we understand that just like how people go about saying police is corrupt does not mean that all police are corrupt. It is the same with the scrap iron business,” he said.

He added that dealers are also staying away from buying copper cables because of the well-documented arrests in those cases.

“If you check some of the yards, nobody is taking the risk of buying that (copper cables) because the police have shown they are serious and people have been arrested, so it just not worth it,” he said.

Ferguson said people interested in getting into the scrap iron business just needed to apply to the courts (the licence costs $200) demonstrating that they have a piece of land that is barred all the way around.

He said the lease district sends out police officers to inspect the area, who then issue a report to the court for the licence hearing.

As for Attorney General Anand Ramlogan’s statement that the scrap iron industry needed to be regularised, Ferguson said he welcomed the idea.

“We have no problems in sitting down and making some of the rules in line with what the AG is saying. That will make it easy for our industry,” he said, “So as soon as possible we will make sure we have the correct plans to make sure things start back up quickly.”

That incident was just the latest in a category of crimes increasingly coming to the attention of law enforcement: Central Florida thieves are taking advantage of the market in precious metals by stealing whatever they can, regardless of the dangers to themselves or the public.

Thieves risk injury or death when they steal wire from power poles, electric-company substations and underground lines that power overhead lights on Florida’s highways.
Brazen crooks are also putting the public at risk and are annoying property owners as they grab just about anything shiny that comes into view.

Street signs vanish

In July, metal bandits in a DeLand neighborhood stole a manhole cover — worth $500 — and at least 16 street signs. The signs were worth about $4,800. In some parts of the country, thieves are also stealing copper from tornado-warning sirens.

Spools of wire lifted

Just three weeks ago, thieves were caught on surveillance cameras as they walked into an Ace Hardware Store on Edgewater Drive in Orlando and stuffed $474 worth of spools of copper wire down their pants before walking out of the building.

Catalytic converters missing

In May, someone stole catalytic converters, used to reduce air-polluting emissions, from 55 vehicles on a Kia sales lot in DeLand one night while the dealership was closed. Catalytic converters, which can be expensive to replace, typically contain such valuable rare metals as platinum, palladium or rhodium.

Spouts vanish from school

In July, thieves stole 10 outdoor copper waterspouts from Orlando’s Kaley Elementary School. The cost to replace the spouts was an estimated $4,000.

AC units often targeted

Air conditioners are, by far, the most common target of copper thieves, said Brandon Haught, a spokesman for the Volusia County Sheriff’s Office. Similar crimes are routinely reported elsewhere in Metro Orlando.

The scrap-materials industry is concerned enough that it put together a website to track thefts of scrap metals, ScrapTheftAlert.com.

“This is obviously a real problem, and it’s something our industry takes very seriously,” said Melissa Merz, a spokeswoman for the Institute of Scrap Recycling Industries.

Fearing that toxic wastes from the mine could hurt the wild salmon population in her home state, Washington state Democratic Sen. Maria Cantwell intends to enter the fray Monday. She plans to ask the head of the Environmental Protection Agency to consider using the Clean Water Act — if necessary — to stop the proposed Pebble Mine project on Bristol Bay.

Cantwell, a second-term senator and a member of the Senate Energy and Natural Resources Committee, will become the first senator to issue such a call. She’ll face opposition from Alaska Republican Rep. Don Young, who already has introduced a bill that would strip the EPA of its authority to halt the project.

While supporters are excited about the mine’s potential to create thousands of jobs, environmental groups and other critics worry that the project would have a devastating impact on wildlife, including seals, caribou, moose, grizzly bears and migratory birds. The bay supplies nearly half of the world’s annual sockeye salmon harvest.

Opponents of the mine say it could dump up to 10 billion tons of toxic waste in the heart of the Bristol Bay watershed. And they say the sheer scope of the project — up to 2 miles wide and 1,700 feet deep — would be certain to hurt animals that depend on the habitat.

Cantwell is making her request as the EPA conducts a scientific analysis of the proposed mine that’s expected to be released this fall.

If she’s successful, she’ll help thwart a project that could result in the extraction of more than 107 million ounces of gold and 80 billion pounds of copper from a 150-square-mile site, an area as large as the city of Chattanooga, Tenn.

In a draft of a letter that she plans to send to EPA Administrator Lisa Jackson, Cantwell says she’s been contacted by thousands of Washington state residents who have expressed concern about “the potentially catastrophic and widespread long-term impacts” of the mine, which she described as “the world’s largest man-made excavation.”

The mine would capitalize on one of the world’s largest concentrations of gold, copper, silver and molybdenum, a mineral that’s mixed with steel to provide resistance to heat, among other things. The project is proposed by The Pebble Partnership, which includes Northern Dynasty Minerals and mining giant Anglo American.

With the mine requiring permits from at least 67 state and federal agencies, officials with the partnership say it would be environmentally responsible and thoroughly reviewed before any metals are extracted. According to its website, the partnership would make sure “that all of the areas disturbed by exploration are returned to their full capability and usefulness.”

The mine has sparked a fierce advertising campaign in Alaska as local residents gear up for a vote related to the project in October. Last month, the Alaska Supreme Court approved a ballot initiative that would restrict permitting of any large project that could harm salmon runs.

In her letter, Cantwell says that wild salmon populations around the globe already are “disappearing at an alarming rate” and that Bristol Bay is one of the only remaining undeveloped salmon habitats.

And she says the issue is particularly crucial to Washington state’s economy, with Bristol Bay providing $113 million a year for its commercial fisheries.

“Nearly a thousand Washingtonians hold commercial fishing permits in Bristol Bay, supporting thousands more fishery jobs in my state,” Cantwell says in the letter.

Opponents of Cantwell’s plan want to make sure that the EPA doesn’t try to use the Clean Water Act to stop the mine.

“Projects in Alaska and across the country have been shut down or delayed time and time again by the EPA, which serves only as an extension of the administration’s anti-resource development stance,” Young, a member of the House Natural Resources Committee, said when he introduced his legislation in January.

Cantwell is welcoming the EPA’s scrutiny, saying it will be crucial “to have a science-driven independent process evaluating the potential risks” of the mine.

“Should scientists determine that pollution from a large-scale development in the Bristol Bay watershed could have unacceptable adverse impacts on water quality and the fish stocks that depend on it, I would support efforts to prohibit or appropriately restrict such activities,” including by using the Clean Water Act, Cantwell wrote in her letter.

Many conservation and environmental groups, including the Sierra Club and Trout Unlimited, oppose the project, as well.

Last week, they got a boost from 17 Seattle restaurants that marked a “Dine for Bristol Bay” campaign, serving Alaskan salmon and contributing a portion of the week’s proceeds toward efforts to stop the mine.

The wave of buying of oil and industrial commodities suggests that Chinese companies remain confident about the domestic economy and that they would likely see any price corrections as a rare restocking opportunity — a move which should offer strong support to commodity prices.

With China’s inflation having pulled back in August from a three-year high, market watchers also expect the central bank to hold off further tightening measures, which could in turn ease the credit crunch and potentially draw producers and traders to import more raw materials.

China imported 21.04 million tonnes of crude oil in August, up 1.8 percent from the 20.66 million in the previous month, according to Reuters calculations using the revised July numbers.

Although implied oil demand in August slipped to the lowest rate this year, plant maintenance and accidents were the main reasons behind the dip and traders generally expect demand to improve from September.

“August-arrival crude cargoes were mostly loaded in June and July, when oil prices fluctuated a lot,” said a crude oil trader.

Data from the General Administration of Customs also showed China’s iron ore imports in August jumped 33 percent from a year ago to a five-month high of 59.09 million tonnes, thanks to the steel sector’s robust production.

However, analysts have cautioned that steel output could decelerate in the coming months amid a seasonal demand slowdown.

Despite slowing export growth due to the economic malaise in the United States and Europe, China’s economy has continued to grow at an enviable clip of over 9 percent, thanks in part to the government’s construction of over 10 million houses as well as feverish investments in the less-developed mid and western provinces.

These two factors have led Chinese mills to churn out near record amount of steel, cement plants to ramp up production and metal smelters to expand capacity — bolstering the country’s voracious appetite for a raft of commodities.

COPPER DEMAND UP FOR 3rd MONTH

Imports of unwrought copper to China, the world’s No. 1 consumer of the metal, posted a third monthly gain of 11.0 percent — the highest since March — to 340,398 tonnes in August, as buyers took advantage of lower prices overseas.

Compared to a year ago, however, copper imports remain down 10.3 percent, with year-to-date shipments down 20.5 percent.

Fu Bin, an analyst at Jinrui Futures, said China had kept on buying spot copper in recent weeks as arbitrage windows continued to surface, a trend which should support import numbers for September and October.

Unwrought aluminium imports posted smaller monthly gains of 0.8 percent, but declined 2.3 percent from year ago.

Soybean was the only laggard of all commodities, falling 15.7 percent from the previous month to 4.5 million tonnes as high prices overseas led crushers to turn to domestic supplies.

Amid the economic doom and gloom in the eurozone and United States, investors have wondered if China, one of the top buyers, would be able to avoid a hard landing.

However, a series of economic data released over the past few months has suggested that domestic demand was holding up relatively well, although overall economic growth has eased.

Statistics released on Friday showed industrial output moderated only slightly to gain 13.5 percent in August from a year earlier, while fixed-asset investment, a primary driver of the country’s economic growth, rose 25.0 percent in the January-August period from a year earlier.

“Strikes are continuing and now we are considering an escalation,” said Stephen Smyth, president of the Construction, Forestry, Mining and Energy Union’s mining and energy division in Queensland, in a phone interview. Strikes that disrupted operations at the three BHP Billiton Mitsubishi Alliance mines yesterday will continue until at least Sept. 13, Smyth said. The action may be extended to BMA’s four other mines, pending a member vote later this week, he said.

About 3,500 coal miners have taken part in rolling work stoppages that began in June, the first in a decade at BHP’s Australian coal mines. The Melbourne-based company said it will allow all workers at the mines to vote on its proposal at a meeting at the end of September.

“We have reached an impasse in negotiations,” after a meeting with unionists yesterday failed to reach an agreement, BHP spokeswoman Samantha Stevens said in an e-mailed statement today. “We are keen for employees to take the time in the coming weeks to review and understand the agreement in detail, before the end-of-September ballot.”

Labor unions globally are stepping up demands for higher wages and improved conditions as surging commodity prices swell profits at mining companies including BHP. About 1,200 workers at Freeport-McMoRan Copper & Gold Inc. (FCX)’s Peruvian copper mine this week began the first of a series of strikes planned over pay increases.
Shipping Coal

BMA is equally owned by BHP and Mitsubishi Development Pty. It directly employs more than 4,800 people, according to its website. Almost all the coal mined at the BMA sites, with annual capacity of 58 million metric tons, is shipped overseas for steel production, it said.

A full-day strike may cut output by 130,000 metric tons a day from the mines, Melinda Moore, an analyst at Credit Suisse Group AG said in a June 27 report. She also said protracted strikes could sustain current price levels.

Steelmaking-coal prices rose 47 percent to a record $330 a metric ton for three-month contracts starting April 1 after heavy rain and flooding in Australia shut mines. In June, Asian steelmakers agreed to pay Anglo American Plc (AAL) $315 a ton for the September quarter, according to UBS AG.

The strikes have had a “modest impact” on production, BHP Chief Executive Officer Marius Kloppers said last month.

“BHP believes it’s negotiated enough and further talks won’t assist,” the CFMEU’s Smyth said today. “Negotiations should be alive and active. BHP is setting itself up to roll out an agreement that it will present to workers that the union doesn’t support in any shape or form.”

BHP closed 0.7 percent lower to A$37.91 in Sydney trading on Sept. 9. The shares have fallen 16 percent this year.

Kansanshi produced about 230,000 tonnes of copper and more than 100,000 ounces of gold in 2010. First Quantum is looking to raise output capacity there from 250,000 tonnes to about 400,000 tonnes per year by the end of 2014. The expansion will be carried out in two parts with the first stage expected to lift production capacity to about 285,000 tonnes a year.

Mr Clive Newall president First Quantum said that the company was planning investments in Zambia of up to USD 2.5 billion over the next 4 years on top of USD 1 billion already invested. The miner swung back to a profit in the Q2 from a year ago loss but came in short of some analysts’ forecasts after a drop in production.

Copper prices have fallen back to around USD 9,100 per tonne after hitting a record USD 10,190 per tonne in February. Still, some analysts say robust Asian demand and a threat to supplies will keep copper price falls relatively modest over the next few months, regardless of the volatility that has whipped global financial markets on rising fears of a recession in Western nations.

Bae Cheol Gyu Agency official said that the Public Procurement Service which stockpiles strategic commodities bought the grade A copper with more than 99.99% of purity from LS Nikko Copper Inc at USD 93 per tonne more than the London Metal Exchange official cash settlement price on a cost insurance and freight basis.

The price compares with the USD 88 per tonne premium over the same benchmark price that the service paid LS Nikko Copper for 2,000 tonnes in a May 20 tender. In today’s tender, the second lowest price offer was made by LG International Corporation at USD 101 per tonne over the benchmark price for worldwide origin.

The wave of buying of oil and industrial commodities suggests that Chinese companies remain confident about the domestic economy and that they would likely see any price corrections as a rare restocking opportunity — a move which should offer strong support to commodity prices.

With China’s inflation having pulled back in August from a three-year high, market watchers also expect the central bank to hold off further tightening measures, which could in turn ease the credit crunch and potentially draw producers and traders to import more raw materials.

China imported 21.04 million tonnes of crude oil in August, up 1.8 percent from the 20.66 million in the previous month, according to Reuters calculations using the revised July numbers.

Although implied oil demand in August slipped to the lowest rate this year, plant maintenance and accidents were the main reasons behind the dip and traders generally expect demand to improve from September.

“August-arrival crude cargoes were mostly loaded in June and July, when oil prices fluctuated a lot,” said a crude oil trader.

Data from the General Administration of Customs also showed China’s iron ore imports in August jumped 33 percent from a year ago to a five-month high of 59.09 million tonnes, thanks to the steel sector’s robust production.

However, analysts have cautioned that steel output could decelerate in the coming months amid a seasonal demand slowdown.

Despite slowing export growth due to the economic malaise in the United States and Europe, China’s economy has continued to grow at an enviable clip of over 9 percent, thanks in part to the government’s construction of over 10 million houses as well as feverish investments in the less-developed mid and western provinces.

These two factors have led Chinese mills to churn out near record amount of steel, cement plants to ramp up production and metal smelters to expand capacity — bolstering the country’s voracious appetite for a raft of commodities.

COPPER DEMAND UP FOR 3rd MONTH

Imports of unwrought copper to China, the world’s No. 1 consumer of the metal, posted a third monthly gain of 11.0 percent — the highest since March — to 340,398 tonnes in August, as buyers took advantage of lower prices overseas.

Compared to a year ago, however, copper imports remain down 10.3 percent, with year-to-date shipments down 20.5 percent.

Fu Bin, an analyst at Jinrui Futures, said China had kept on buying spot copper in recent weeks as arbitrage windows continued to surface, a trend which should support import numbers for September and October.

Unwrought aluminium imports posted smaller monthly gains of 0.8 percent, but declined 2.3 percent from year ago.

Soybean was the only laggard of all commodities, falling 15.7 percent from the previous month to 4.5 million tonnes as high prices overseas led crushers to turn to domestic supplies.

Amid the economic doom and gloom in the eurozone and United States, investors have wondered if China, one of the top buyers, would be able to avoid a hard landing.

However, a series of economic data released over the past few months has suggested that domestic demand was holding up relatively well, although overall economic growth has eased.

Statistics released on Friday showed industrial output moderated only slightly to gain 13.5 percent in August from a year earlier, while fixed-asset investment, a primary driver of the country’s economic growth, rose 25.0 percent in the January-August period from a year earlier.

(Additional reporting by Judy Hua, Polly Yam and Ruby Lian; Editing by Raju Gopalakrishnan)

At the Multi Commodity Exchange, August copper rose by Rs 3.60, or 0.87%, to Rs 418.10 per kg, with a business turnover of 4,953 lots.

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The November contract edged up by Rs 3.10, or 0.74%, to Rs 423 per kg, with an open interest for 2,593 lots.

Market analysts said a firming trend in overseas markets, on optimism that the US economy will recover, influenced metal prices in futures trade here.

In addition, a pick-up in spot market demand also influenced copper futures prices here, they said.

Meanwhile, copper rose by 0.5% to $8,875.50 a tonne on the London Metal Exchange.

The dollar index was strengthening by 0.64% at 74.1 against the basket of 6 major currencies amid hopes on the growth economic recovery within the country.

In the domestic market at MCX, Copper for delivery in August tested a high of Rs. 420.25 per kg and low of Rs. 415 per kg in intraday and is now trading at Rs. 418.3 per kg, up by 0.92% or Rs. 3.8. The open interest dipped sharply by 49.89% to 4161 lots and volume traded as of now stood at 30,243 lots against 56,450 lots traded last day. The contract was trading between 50-day and 100-day EMA and the RSI stood at 58.11

Nickel was weakening by 0.58% or Rs. 5.9 at Rs. 1004.6 per kg. The open interest dipped sharply by 51.34% to 2673 lots and volume traded as of now stood at 14,358 lots against 20,972 lots traded last day.

MCX Aluminium was trading flat at Rs. 108.05 per kg. MCX Zinc was trading flat at Rs. 103.85 per kg and Lead was trading flat at Rs. 115.2 per kg.

Copper futures November contract in Shanghai settled at 68150 yuan per tonne, up 800 yuan or 1.19% higher. Comex Copper futures most active September contract was trading at $4.1225 a pound, up by 0.82% or just 3 cents compared to the previous day that ended at $4.089 a pound.

Aug. 24, 1912

BISBEE – The Copper Queen and Calumet and Arizona Mining companies have granted to men in their employ working underground an increase of 25 cents per day, beginning on Sept. 1.

Following their policy of making the wages of miners commensurate with the price of the metal mined, the Copper Queen Consolidated Mining company will put into effect on Sept. 1 a new wage scale that will bring the pay of the underground men up to the wage of approximately $4 a day.

This report was circulated on the streets yesterday, and it was confirmed on the part of the Copper Queen company by General Sherman, general superintendent of the company.

Men who now receive $3.50 will receive $3.75, and those who are now receiving $3.75 will receive $4 per day.

“It was agreed Tuesday at a conferences held here that the determination of the company to make the increase of 25 cents per day should be announced today,” said Mr. Sherman to a Review representative. “Though no notices have been posted at the mines as there will be no formal notification. While there may be some few exceptions, the advance will affect all underground men generally.”

“Wages of the surface men were increased some time ago, either in money or in a reduction of time.”

The increase moreover is not confined in the Copper Queen Mining company but the Calumet and Arizona will also participate in the plan so that practically all miners in the district will share in the increase.

Arizona Daily Star The Sundt Cos., O’Rielly Chevrolet, Research Corporation for Science Advancement, Sam Levitz Furniture, the University of Arizona, Freeport McMoRan Copper & Gold Inc., Rosemont Copper, Tucson Realty & Trust. Co., Jack Furrier Tire & Auto Care, Walgreens and Carondelet Health Network are sponsors of the Star’s Arizona Centennial project.

* Strike threat looms at Grasberg copper mine

* Coming Up: U.S. consumer confidence 1400 GMT, FOMC minutes 1800

By Susan Thomas

LONDON, Aug 30 (Reuters) – Copper rose on Tuesday, helped by data that
showed U.S. consumers were willing to spend, especially on cars, suggesting
there is some strength in the world’s biggest economy.

A threatened strike over a pay dispute at Freeport-McMoRan Copper & Gold’s
Grasberg mine in Indonesia, the world’s third-biggest copper mine, also
kept copper prices firmly above $9,000 per tonne.

Three-month copper on the London Metal Exchange was $9,136 per tonne
at 1000 GMT, up 0.7 percent from $9,075 at the close on Friday. The exchange was
closed for a public holiday on Monday.

U.S. consumer spending increased 0.8 percent in July on strong demand for
motor vehicles as Japan-related supply restraints faded, a Commerce Department
report showed on Monday. Spending had slipped 0.1 percent in June.

The data was the latest to suggest the economy started the third quarter
with some strength after growth slowed to a near halt in the first half of the
year.

“What we are seeing is some renewed optimism that the world is not entering
another recession,” Christin Tuxen, an analyst at Danske Bank, said, also
pointing to comments by Federal Reserve Chairman Ben Bernanke last Friday.

“The Fed seems quite committed, if not to specific measures, then at least
to new stimuli and that is something that is feeding optimism in the base metals
market.”

Bernanke opted to keep the door open to further monetary measures,
postponing a decision on more stimulus, giving the central bank more time to
assess the state of the U.S. economy.

His move heightened the focus on upcoming economic data this week, including
the closely watched August U.S. employment report due on Friday, as well as U.S.
ISM manufacturing numbers and China purchasing managers’ index for August.

“For sentiment to improve further in the near-term, positive PMI readings
this week from China and the USA will be needed,” Credit Suisse said in a
research note.

China’s official PMI, due on Thursday, is likely to have picked up a touch
in August from a 28-month low in July, signalling some stabilisation in the vast
manufacturing sector helped by solid domestic demand.

“There is a sense that even though the western countries might struggle for
a few years, the commodities intensive economies are likely to see fairly
healthy growth rates. They’ll need both copper and aluminium,” Tuxen said.

China is the world’s largest consumer of copper, which is used in building
construction, wiring and power cables, accounting for around 40 percent of
global demand.

The higher LME copper price shut the arbitrage window late last week,
discouraging imports of the metal into China. The arbitrage, a lower three-month
LME copper price than the most active Shanghai copper contract price
SCFcv1, opened earlier in August.

Japan’s refined copper exports fell 26 percent in July from a year earlier to
33,254 tonnes, down for a tenth straight month, but the pace slowed from June’s
drop of 39 percent, Ministry of Finance data showed on Tuesday.

Headline inventories of the metal in LME-monitored warehouses fell by 550
tonnes to 464,375 tonnes as nearly 2,000 tonnes into Rotterdam were more than
offset by outflows primarily from South Korean ports, latest data showed.

Aluminium stocks fell by 6,275 tonnes to 4,642,725 tonnes, mostly out of U.S.
locations.

Three-month aluminium was up 0.9 percent at $2,399.50 per tonne from
$2,378 at the close on Friday.

Tin was at $24,100 from $23,805 , zinc
was $2,279 from $2,246, and lead $2,497 from
$2,485. Nickel was $21,891 from $21,450.

Metal Prices at 1000 GMT
Comex copper in cents/lb, LME prices in $/T and SHFE prices in yuan/T
Metal Last Change Pct Move End 2010 Ytd Pct

move
COMEX Cu 415.00 5.20 +1.27 444.70 -6.68
LME Alum 2375.00 -3.00 -0.13 2470.00 -3.85
LME Cu 8800.00 -275.00 -3.03 9600.00 -8.33
LME Lead 2722.00 237.00 +9.54 2550.00 6.75
LME Nickel 24100.00 2650.00 +12.35 24750.00 -2.63
LME Tin 23805.00 0.00 +0.00 26900.00 -11.51
LME Zinc 2517.00 271.00 +12.07 2454.00 2.57
SHFE Alu 17445.00 75.00 +0.43 16840.00 3.59
SHFE Cu* 68250.00 640.00 +0.95 71850.00 -5.01
SHFE Zin 17315.00 190.00 +1.11 19475.00 -11.09
** Benchmark month for COMEX copper
* 3rd contract month for SHFE AL, CU and ZN
SHFE ZN began trading on 26/3/07

(Reporting by Susan Thomas; Editing by Alison Birrane)

Further, precious metals will contribute an average of 44% to the mine’s revenue for the first five years if current prices hold.

Gold surged to new record highs, approaching $1 900/oz on Monday, while silver climbed to $43.58/oz.

“Revenues from gold and silver will have a significant positive effect on lowering the average cash cost to produce a pound of copper during the first five years of mining at Oyu Tolgoi,” Ivanhoe CEO Robert Friedland said in a release.

The company plugged a $1,850/oz gold price, $42/oz for silver and US$4.00/lb copper price into its May 2010 integrated development plan to determine negative total cash costs of $0.07 to produce a pound of payable copper in the first five years of production.

Ivanhoe announced earlier this month that it had started pre-stripping at Oyu Tolgoi’s phase-one open pit.

The mine is expected to produce 650 000 oz of gold, three-million ounces of silver and 1.2-billion pounds of copper yearly in its first ten years of commercial operation, with initial output in late 2012.

Ashok Mittal, CEO of Emkay Commodities said that copper should have a good support at Rs 399 per kg levels because that level has not broken yet. He thinks that buying copper near Rs 399-400 per kg should be a good idea with stop loss below Rs 396 per kg. “On the higher side, we can expect target between Rs 410-412 per kg levels,” recommended Mittal.

Rajini Panicker, head of commodities research at MF Global Commodities India advises to go short the MCX August copper contract at levels of Rs 408-409 per kg, placing a stop for the trade at Rs 412 per kg, targeting levels of Rs 398-397 per kg.

Kunal Shah, research analyst – commodities at Nirmal Bang Commodities said, “In the non-ferrous complex, copper looks very bearish to me. I look to sell copper between Rs 401-Rs 402 per kg with a stop loss of Rs 406 per kg and expect prices to drift lower and test levels of Rs 390- Rs 388 per kg in a day or two.”

He also remains bearish on Lead. He plans to sell lead at Rs 106 per kg with a stop loss at Rs 108 per kg. “Expect prices to drift lower and test Rs 103-Rs 103.50 per kg.” he warned.

Kishore Narne, vice president at Anand Rathi Commodities said, “One can look to buy nickel at Rs 960-Rs 970 per kg with stop loss around Rs 945 per kg and look for targets close to Rs 1008- 1010 per kg levels.

Initial delays in the shipment of the rig meant that the program commenced several months later than expected. The second rig, supplied by the current operator PT Indo Asia Resources, is expected to be assembled on site.

The company is targeting gold mineralisation at Obi, which is of the epithermal style with notable zinc, lead and copper credits.

Drilling progress has been steady so far with six holes completed for a total of about 1,433 metres and the first batch of 502 samples has been dispatched from Obi to Jakarta, where they will then be airfreighted to ALS laboratories in Perth.

The batch includes 94 surface geochemical samples (stream sediments, rock chips and magnetic lag samples) collected from the southern extensions of the artisanal gold workings at Obi.

The company anticipates that assay results from the laboratory will be available in late September.

The project encompasses a large artisanal goldfield and surrounding ground covered by a 70 square kilometres exploration licence on the island of Obi, in the province of South Halmahera in eastern Indonesia.

In December Ashburton placed 75 million shares at $0.02 to raise A$1.5 million to fund the drilling at the Obi.

Macquarie Bank (ASX: MBL) was the largest participant, taking up 25 million shares, with other participants including Munich based Schroeder Equities GmbH and institutional and private clients of Foster Stockbroking and BGF Equities.

The Asian markets are trading in the green except for Indonesia (3822.82) which is trading lower by 0.43%. Nikkei (8636.78) is up 0.10% and the Shanghai (2529.16) is up 0.53%. The Sensex (16341.70, up 200.03 points) and Nifty (4898.80, up 53.15 points) had closed higher yesterday and it will have to be seen whether they can hold on to their gains today.

COMMODITIES
Nymex Crude (84.85) has risen well from yesterday’s low of 81.18. Technically the Support in 80-79 region is holding well and is keeping up the chances of revisiting 90 on the upside.

Gold (1898.90) is retaining its strength and saw a rise past 1900 as expected. It has come off from its high of 1915. The broader outlook remains bullish. BUt however, there could be chances of a sharp pull back as the commodity has risen very high in short span of time. Need to be cautious.

Silver (43.48) tested 44, but has come off from its high of 44.27. As mentioned yesterday, a strong break/close above 44 will be very bullish and it would open doors for revisiting the previous high of 49.80.

Copper (3.97) is trading flat and lower below 4.00 over the last couple of days. The outlook remains mixed. Important Support is seen at 3.90 which needs to be watched.

CURRENCIES
Currencies are relatively quiet. The Euro (1.4385) has come off from yesterday’s high near 1.4432, but remains ranged between 1.4300-4450. The Aussie (1.0423) and Pound (1.6481) have been stable through yesterday, after having fallen sharply over Thursday-Friday. The Aussie appears a little weaker than the Pound, even though it has an important Support at 1.0325, the 200-day MA. The Pound itself may find Resistance at 1.6550.

Dollar-Yen (76.77) and Dollar-Swiss (0.7872) are stable, the market being wary of selling them on account of intervention fears. Possibly, the Swiss Franc could be weaker than the Yen and the immediately strong Resistance at 0.7942 will have to be watched as to whether it can break or not. Dips towards 0.7835 could get bought.

The overall price action suggests there is reluctance to buy any currency, whether the Euro, Pound, Aussie or Dollar. There might be some appetite to buy the Yen and the Franc, but the authorities are working to dampen that appetite. That said, the Yen could be a candidate for further strength, given that the US Bond/ JGB yield differential and the German Bunf/ JGB yield differential have declined dramatically over the last several months and could fall further. This is unless the BOJ comes in buys JGBs heavily. Take a look at
http://www.kshitij.com/graphgallery/usdjpydiff.shtml#usdjpy and

http://www.kshitij.com/graphgallery/eurjpydiff.shtml#eurjpy

In Asia, the USD-SGD is trading a little lower, near 1.2067, and could dip further towardsd 1.2000. That, and the fact that all the A-Pac equity indices are trading in the green, can cause Dollar-Rupee (45.6750) to dip towards 45.50.

INTEREST RATES
The market’s expectation of further monetary easing by US Fed is reflected on 2Y overnight- index swap rate slipping to December 2001 region of 0.07%. The US bonds yields increased marginally between 2bps (2Y at 0.20%) and 5bps (30Y at 3.44%) after a series of fall. Moreover the increase is not significant enough to indicate a trend reversal. Unlike the US, German bunds yields came off further across all tenors, 2Y closed at 0.63%(-2bps) ant 30Y at 2.93%(-1bps).

In India, 10Y AAA rated bond yields came of to 9.38% (-1bps), 9.4% may act as a significant resistance. 10Y GOI yields remained stable at 8.26%.

DATA TODAY
14:00 GMT July US New Home Sales
…Expected 316K …Previous 312K

DATA YESTERDAY
No major data release yesterday

That’s what happened lately with precious-metals mutual funds. These investments hold mining-company stocks and thus are supposed to deliver diversification benefits and participate in gold-price rallies.

But in recent weeks, as gold was going through the roof, most of the funds were getting clobbered.

“It’s been one of the big disconnects we’ve seen lately,” said Janet Yang, a fund analyst focusing on precious metals for researcher Morningstar Inc.

“Although gold-bullion prices have been going up, the mining companies (held by the funds) have gone in the opposite direction.”

The metal itself has been on a tear amid worries about the economy, deficits, political squabbles and more. Gold was up roughly 25 percent for the year through Thursday.

Yet stocks that make up the FTSE Gold Mines Index are showing a negative total return of nearly 3 percent over the same span, and the 22 precious-metals funds tracked by Morningstar have stumbled nearly 5 percent on average.

It’s almost enough to convince someone to give up asset allocation in favor of alchemy.

There are a few exceptions, one being SPDR Gold, an exchange-traded fund that holds only metal, not mining stocks. Its performance very closely mirrors price gains for bullion itself, less fund expenses.

Several factors explain why physical gold fares differently from mining stocks and metals funds.

The most obvious one is that stocks and funds – even those rooted in the mining industry – are still financial assets. As such, they’re susceptible to getting blown around by the treacherous and fickle winds of the stock market, at least over the short term.

And there are other explanations, such as these:

- Hedging policies.

Believe it or not, mining companies don’t want to deal with all the gyrations of the gold market or those for other commodities they produce, such as silver or copper. As such, they will lock in hedging strategies, typically using futures contracts, to ensure fairly stable prices for their output.

This forces them to relinquish some profits when gold is rallying, but it ensures a price floor when the metal is retreating.

“It’s like airlines that want to hedge exposure to higher oil prices,” said Christopher Philips, a senior analyst at the Vanguard Group. “The mining companies want more certainty regarding their sales and revenues.”

- Currency factors.

One thing many Americans might not realize is that most of the major gold-producing mines either are based in foreign nations or have offshore mining operations. That means currency fluctuations can influence profit results, for better or worse.

For example, in the Vanguard Precious Metals and Mining Fund, which owns gold producers along with various other types of mining companies, non-U.S. corporations make up 87 percent of the portfolio, Philips said.

- Other expenses.

Even when higher gold prices are padding the revenue of mining companies, other factors might be offsetting some of these gains. For example, mining firms have faced rising costs for labor, energy and other expenses lately. Production costs for the industry climbed 14 percent in the first quarter, Yang said, although she notes that recent oil-price declines could provide a tailwind for the rest of the year.

For these and other reasons, the performance of gold prices doesn’t always closely mirror that of mining stocks or funds.

Since January 2000, the stocks have increased a brisk 378 percent on average, Philips said. But gold has fared even better, surging 458 percent.

Here’s another way to look at it: The monthly correlation of movement between the stocks and gold itself is a low 0.34, Philips said, where 1.0 equals perfectly synchronized movement and 0.0 indicates unrelated movement.

On an annual basis, the correlation increases to 0.55, he said, which shows the two move a bit closer together over time.

It’s worth noting that these relationships cut both ways. Gold has been rising relentlessly over the past decade, leaving mining stocks and funds trailing behind. But if gold prices reverse course, the financial investments probably wouldn’t fall as much.

The correlation-lag effect also raises an intriguing possibility that buying a fund or mining stock, at current prices, might be a relatively inexpensive way to go for the gold.

“Some of the fund managers we talk to see great opportunities in terms of relative values,” Yang said. “They feel you can get gold exposure cheaper by purchasing mining stocks rather than physical gold.”

Add it all together, and you quickly realize that mining stocks and precious-metals funds aren’t perfect substitutes for holding bars and coins – and you really notice the differences at times when you want them to act the same.

Monday is the deadline to register comments about the air quality permit application for the new SDI La Farga stationary copper rod production plant in New Haven. The Indiana Department of Environmental Management will review all submissions relevant to the application before deciding on whether to grant the air quality permit.

The location of the new plant is under fire by some because neighbors have been complaining for years about the emissions from an adjacent plant, OmniSource Superior Aluminum, which is owned by the same company – Steel Dynamics Inc.

“We’ve been battling the effects of poor air quality for years with Superior Aluminum,” said Don Markley, who lives on Harper Road, just more than a mile from the site. “And no one really wants to hear what we have to say.”

The new company at 1640 S. Ryan Road is a joint venture between Steel Dynamics and La Farga Group, a company from Barcelona, Spain. Steel Dynamics holds a 55 percent share of the partnership.

The proposed 85,000-square-foot factory will use recycled copper to manufacture wire rods, and company officials have said the $39 million investment will create 35 jobs.

Allen County Council members approved tax breaks on both equipment and real estate in April, and SDI officials hosted the first of two public meetings for nearby residents the following week.

According to Markley and two other neighbors, Renee and Sam Spieth, more than 200 people showed up.

Some brought photos of their homes and outbuildings – showing pitted indentations and deterioration – that they said were caused by the emissions released by Superior Aluminum over the years.

“That’s why we are so upset,” Renee Spieth said. “The meetings were slick presentations for politicians. We don’t care that there’s going to be a pond and landscaping and only one smokestack.

“We just want to know what’s coming out of that smokestack.”

Based on the equipment capacity and other factors, the Indiana Department of Environmental Management is proposing a permit for the plant that will allow it to release 71,703 tons a year of greenhouse gasses, 88 tons of particulate matter (commonly known as soot), 68 tons of volatile organic chemicals that cause ground-level ozone and smog, 66 tons of nitric oxides, 23 tons of sulfur oxides, 9 tons of hydrochloric acid, nearly four tons of formaldehyde and 1.2 tons of hexane.

Nitric oxides and sulfur oxides can cause or worsen respiratory disease, such as emphysema and bronchitis, and can aggravate existing heart disease, according to the U.S. Environmental Protection Agency. Hydrochloric acid is irritating and corrosive, while formaldehyde can cause nasal and eye irritation, neurological effects, and it has been linked to cancer and gastrointestinal ulcers, as well as liver and kidney damage in animals. Hexane has been linked to numbness and paralysis of the arms and legs and reproductive problems in animals.

Rob Elstro, an IDEM spokesman, said a summary of the comments will be included in a document attached to the air permit.

Whether IDEM will have a public meeting depends on the type and volume of comments received, Elstro said.

“If we just have a few comments, we will usually respond to each with a phone call,” he said.

Sometimes the public’s response will generate changes in the permit, Estra said. If someone wishes to object to IDEM’s decision, they can appeal to the Office of Environmental Adjudication, which is a mediator between the private sector and IDEM, Elstro said.

After the permit is issued, those interested in filing an appeal have 18 days to do so, Elstro said.

SDI La Farga officials had originally considered four sites, including New Haven, for the new company.

SDI official Rick Poinsatte said the company would revisit the other potential sites only if there are problems obtaining the air permit, adding that he doesn’t foresee any problems in the permit process.

Larry Zehr, who lives within a mile of the site on Dawkins Road with his two daughters, said all he wants is someone to be honest and forthcoming with factual information.

Two of Zehr’s neighbors have died of cancer within the last year and another was recently diagnosed.

“I want them to tell me that it’s going to be clean and not stink,” Zehr said. “I want them to assure me that my daughters will not get sick.”

vsade@jg.net

Again.

You’ve probably at least caught glimpses or heard a fragment or two, but you may be puzzled over what it’s all about.

Why are mine backers highlighting long-closed mines near the Copper River, hundreds of miles from the proposed Pebble mine in Southwest Alaska?

Sometimes it’s personal. Why are mine foes all riled up over someone they call “Pebble Lady?”

And why are both sides so intent on winning our hearts and minds?

Pebble’s buried treasure is immense, an estimated 80 billion pounds of copper and more than 100 million ounces of gold, though the developers stress no decisions have been made on how much — if any — to extract. The claim area spans 150 square miles. Pebble could become North America’s largest open pit mine.

Some welcome the project as a source of sorely needed jobs in the cash-poor Bristol Bay region. But the deposit also straddles the headwaters of streams that feed rich runs of red salmon, king salmon and rainbow trout.

So where supporters see the promise of jobs, revitalized communities and glittering gold, opponents see a risk of destroyed habitat and the ruin of commercial and sport fisheries pursued by Alaskans for generations.

ADVERTISEMENT
Now the two sides find themselves locked in an arms-race-style media war that, five years in, shows no sign of letting up.

BIG SPENDING

Generals in this war of words say they must grapple for public support — or lose ground to the other side.

“Since the opposition is spending a fair amount of money we have to spend a lot — a fair amount of money. It’s not particularly productive,” said Shively, chief executive officer of The Pebble Partnership. The partners are Northern Dynasty Minerals and mining giant Anglo American. Northern Dynasty, considered a junior mining company, is trying to sell its interest.

Pebble is just defending itself against “strong, negative and misleading ads that are thrown out there against this project,” spokesman Mike Heatwole said.

Project opponents say the same thing — they are only responding to Pebble’s claims.

Art Hackney, a media consultant who is credited with leading the charge for the Pebble foes, said the Pebble backers are dominating TV time, with maybe five ads to every one that his side can afford.

“When you being massively outspent, sometimes you have to be reactive in a guerilla-like way,” said Hackney, who has run media campaigns for U.S. Don Young and other prominent politicians.

Shively, a former state Department of Natural Resources commissioner, served 17 years with NANA Regional Corp. and helped the Native corporation negotiate the terms under which Red Dog mine was permitted.

He disputed Hackney’s assessment on spending: “It’s exactly the other way around.” Last year, the opposition spent far more than Pebble on ads, he insisted. This year, the spending has evened out, Shively said.

Verifying who is spending how much is impossible. Neither side will reveal its advertising budget, and at this point they don’t have to. Shively would say only that Pebble is not spending millions this year on ads.

The opposition ads are being sponsored by either Alaska Wild Salmon Protection Inc. — Hackney is president — or a separate group, Alaskans for Bristol Bay, that includes some of the same players, including former state Sen. George Jacko of Pedro Bay.

Eventually some information should be disclosed through campaigns related to proposed ballot measures. A fight is being waged now over the “Save Our Salmon” ballot initiative in the Lake and Peninsula Borough. The initiative, which would bar permits from being granted for big mines that would have a “significant adverse impact” on salmon streams, is being challenged by Pebble in court.

Both sides are trying to win over and hold onto public opinion for wherever the battle is fought: the ballot booth, the Legislature, even with regulators who will decide the dozens of major permits Pebble will need.

BACK AND FORTH

Pebble opponents have been trying since 2006 to convince Alaskans that the big mine is the wrong project for a salmon-rich area. Recently, they’ve been pointing to a poll that found most Alaska voters believe you can be both pro-development and anti-Pebble.

Pebble backers say salmon and mining can co-exist and urge people not to make up their minds until the project issues detailed development plan and applies for permits.

Each side accuses the other of deceiving the public.

“In terms of the ads themselves, our concern is how often they lie,” Shively said in a telephone interview.

One example, he said, is an ad that contended Alaska had no mining standards and that Pebble could rip up 50 miles of salmon streams.

“That just couldn’t be done!” Shively said. Regulators, he said, would never allow it.

The opposition isn’t backing off. State law doesn’t limit how many miles of salmon stream can be wiped out, Hackney said.

On the flip side, the opposition insists that Pebble keeps making claims about how it won’t harm the land or water, only to be proven wrong. They point to one Pebble ad that contended exploration work was being done with nary a trace. Everything man-made was hauled away by helicopter and exploration holes were filled in, Shively told viewers in the ad.

“We went and documented some horrendous gunk and garbage and holes left with things left in them,” Hackney said.

Pebble says the opposition misread state inspection reports. “Anyone who has seen our work comments on the efforts we are taking on reclamation,” Heatwole said.

Hogwash, says the opposition. And on it goes.

At the start of the opposition campaign in 2006, the Pebble opposition targeted local residents resigned to the project, trying to convince them that the mine could be stopped, and the anti-Pebble groups would stand with them, Hackney said.

In 2008, the public relations fight heated up. A ballot measure sought to tighten water pollution discharge rules for large mines. The mining industry fought it hard. The campaign over the measure ranks as the most expensive political ad war in state history. Hackney puts the total at $20 million and says $17 million of that came from mining interests’ successful effort to defeat the measure in the August 2008 primary. Heatwole says that figure is too high.

Things calmed down for a while after that.

The Pebble Partnership began running low-key TV ads that fall featuring Shively, who spoke in a friendly tone and stressed that a final decision about mining there was years away.

“Visit our website and learn the facts today,” Shively urged.

By 2010, Pebble was focusing on economics with a series of ads featuring unnamed people talking about the loss of jobs in the region, the high cost of living, the young people moving away. Pebble was bringing jobs, and opportunity, they said.

The people were all locals, and none were paid, Heatwole said.

‘OFFENSIVE TO SALMON’

Starting earlier this year, Pebble has been telling its story largely through a series of seven television ads featuring a young woman.

The Pebble Lady, say opponents.

Her name is Martina Arce, though that never is said in the ads. She’s paid to be featured in the ads and says she has an open mind on Pebble — the same thing some prominent officials in the region say.

In the first, she tells viewers she is going to hike from her hometown of Iliamna “at the heart of the Pebble deposit” to Bristol Bay to show just how far it is. The ad, in two parts, shows an outdoorsy-looking Arce, camping, looking through binoculars, moving from spot to spot. She says the journey spanned 120 miles and took a week.

“It kind of puts things into perspective, doesn’t it?” she says in the second part.

She didn’t really make the hike — the ads were just to illustrate a point, Heatwole said. Arce said even though she didn’t actually hike or camp, she doesn’t think the ads were dishonest. They showed the big picture.

“It got everyone’s attention,” she said.

Within days, Pebble opponents shot back with an ad of their own.

“Hello!?” the announcer exclaims. The salmon spawn in the waters she is walking across, not in the bay itself, and many salmon streams would be dug up, the ad said.

“These ads are offensive to Alaskans, and to salmon,” the announcer says. “Too many empty words. Too much risk.”

‘THIS GIRL’

The ads featuring Arce shifted to economic themes. In one, she begins by saying how important fishing is to the region, but she notes that the season just lasts a few weeks and says many of the drift fishery permits now are owned by non-Alaskans.

The anti-Pebble group pounced.

“Bristol Bay doesn’t believe the Pebble Lady,” the announcer says in ads that recently began to air. “Do you?”

Residents from the Bristol Bay region appear in the ads challenging the young woman and expressing their worries for salmon. As they speak, their names and villages flash across the screen. None were paid, Hackney said.

“This Pebble spokeswoman does not really know what fishing is about,” says Tisha Lind of Port Heiden.

“This girl,” said Shanda Jones of Chignik Lagoon , holding up Arce’s picture, “does not speak for us.”

In another ad, John Jones, also of Chignik Lagoon said “I think she gets paid well for her words, whoever’s putting them in her mouth.”

The most dramatic comment didn’t mention the Pebble Lady.

“If this mine goes through, we die,” said Natalie Lind of Chignik Lake.

Heatwole said Pebble’s ads are rooted in science and facts.

“One thing that’s common in a lot of the messaging back and forth is the other side is trying to convey a very fearful, emotive message that if Pebble goes, everything out in Bristol Bay is going to go away,” he said.

ON THE RADIO

Another heated exchange has emerged recently in radio ads regarding the old Kennecott mines near the Copper River. The Copper supports a healthy run of red salmon highly prized by Northwest restaurants and fish markets.

Heatwole said Pebble heard from people suggesting they bring up Kennecott and thought it was a good idea.

But the opposition says Kennecott is nothing like what’s proposed for Pebble. The Kennecott deposit had a high concentration of copper, with little waste. Water for processing was taken for a stream that didn’t support salmon.

“The Pebble Mine would be built directly on top of salmon streams. It is less than one-half of 1 percent copper and would generate over 10 billion tons of acid-producing waste,” the rebuttal ad claims.

ROMANCE OF MINING

For all the effort and money, the deluge of ads may not have much effect, say media experts.

“I don’t seem them as game-changers,” said Jean Craciun, chief executive officer of Craciun Research Group. Her agency, which does polling and leads focus groups, is examining how Alaskans feel about mining for industry giant Rio Tinto, which has a minority interest in the Pebble project. She wouldn’t say whether she’s polling on Pebble.

Some of the ad messages may assure those already firmly on one side or the other that they made the right choice, but aren’t likely to move the vast middle, she said.

“The decidedly undecideds are sitting there scratching their heads, ‘what are you people talking about?’ ” she said.

As for mining generally, Alaskans support it and see it as part of the future, Craciun said.

Mining still carries the allure of the frontier, of individuals who get rich their own way and are beholden to no one, said UAA history professor Steve Haycox, who has written extensively about Alaska’s history and economy.

“Gold production peaked in Alaska in 1906, for heaven’s sake,” Haycox said. “But there’s a romance about mining.”

The idea that an individual can hit it big prospecting “happens not to be very true,” he said.

“But nonetheless, there is a deep, deep Western romance, an individualist romance. And it plays very, very well in Alaska.”

At the least, the ads have made people aware there’s a big issue involving Bristol Bay mining and salmon, said Rick Nerland, chairman of Nerland Agency, which isn’t involved in the Pebble ad wars.

And the ads featuring the young woman would have more credibility if she were named and if they included her story, Nerland said. He didn’t even realize she was from the region.

“I don’t think anyone believes 100 percent of either side,” he said.

According to mine experts, most underground mining projects might be forced to scale down their power consumption to cost save lay off some labour while others might be affected in production because of the new cost of electricity, endorsed by the Energy Regulation Board.

There was no immediate comment from Copperbelt Energy Corporation, the service provider to the mines on the Copper rich region of the country as its spokesperson and Copperbelt CEO Mr Neil Croucher’s phone went unanswered when contacted on August 12 for a comment. However, players in the mining and copper sector in Zambia raised eyebrows over the revised power costs endorsement by the energy regulator, expressing fears that it might affect the projected copper output especially underground mining that consumes more than surface operators.

On August 10 the Energy Regulation Board gave thumbs up over the 30% planned revision of electricity supplied to the mines in Zambia under the Bulk Power Supply Agreement undertaken between the state power utility and service provider, Copperbelt Energy Corporation, effective January 1st 2011. The players added that the endorsement of the electricity upping may lead to drastic copper output projections for the country, Expected to rise to more than 900,000 tonnes per annum effective this year and rise beyond 5 million in 2015 because of the adverse costs of energy.

According to players in the industry, most affected will be among others Konkola Copper Mines, China’s non Ferrous Metals Africa, Mopani Copper Mines that run underground operations in the country and require large volumes of water to dewater the working places where copper and other metals are extracted.

The key mining companies face a risk of either shutting down most operations to increase copper output as the cost of electricity will be now be prohibitive while others might lay off workers to remain afloat. The Chamber of mines, a formation of foreign mining companies operating in Zambia is concerned that the development might have higher reparations on Zambia’s anticipated copper output this year and beyond.

A source associated with underground mining said that the mines are still in their recovery stage for the investment they ploughed into the mines and have to pay back the loans from their financiers and the turn of events now means more operational costs.

Mr Frederick Bantubonse GM of Chamber of mines said his voice to the concerned players in the industry arguing that underground mines are likely to be adversely affected because they required more electricity to dewater pits and haul ores up to ground level. The decision will now be a cost on the mines especially those dealing with underground mining. One wonders what the criteria is with the increase. The decision by the regulator might affect future investments in the mining sector because the owners will fail to secure real returns from their investments.

The chamber wondered what would happen when the price of copper on the international market falls yet the tariffs for electricity remained higher. Zambia’s mining companies consume an average 50% of the electricity generated in Zambia, estimated at 1,400 MW per day which rises to 1,800 MW at peak periods.

The mines, through the service provider, Copperbelt Energy Corporation are in most cases prompted to turn to DR Congo for additional average of 140 MW of power to sustain mine operations when the state utility has problems including rationing and power generating machinery maintenance. Copper mines consume about 50 percent of Zambia’s generated power. In 2008, during the financial crisis and copper prices slumped, most mines either closed while others scaled down their labour to remain afloat.

According to the regulator the approval of the proposed 30 percent increase in tariffs is cost reflective measures to enable the state utility undertake rehabilitations to its ageing equipment which needs to meet demand from mines, domestic and industrial users.

According to data, Zesco and CEC, the key providers are likely to resume negotiations for further power hikes for 2012 to 2015 period a decision which prompted most industry players to seek an exemption of mines from such increases to boost Zambia’s metal production record. Zambia envisions its power generation capacity to rise to over 3,000 MW by 2016 to enable it export the surplus electricity to its neighbors. The country’s 1,400 MW to 1,800 MW consumed might rise sharply over the coming years unless countervailing initiatives are done.

The coming of new mining projects including First Quantum Minerals’ Trident mine and the Konkola deep come on stream, Zambia will need to raise its generation capacity to meet local and export demand. Zambia has embarked on various efforts to rise power generation including building USS 2 billion-750 MW plant at Kafue Gorge Lower by 2017 in addition to Kariba power station whose output is expected to be upgraded to 720 MW, from the current 540 MW.

Zambia’s largest distributor of power to the mines, Copperbelt Energy Corporation was also building power stations in some parts of the country to cushion the rising demand. Key consumers, Konkola Copper Mines a unit of London listed Vedanta Resources that plans to invest $1 billion in the next 3 to 4 years to become a major global copper producer. China’s non ferrous metals, operating Luanshya and Chambishi mines, need more power to meet operations at the Luanshya mine where a USD 400 million open cast mine is on stream in addition to the smelter at Chambishi with an investment of USD 250 million.

Mr Fan Wei deputy CEO of Chambishi Copper said that the company may plough in about USD 250 million into the smelter at Chambishi mine in Zambia to increase output to 250,000 per tonne. The expansion program is intended to be completed by next year to increase capacity from 150,000 tonnes to between 250,000 tonnes and 300,000 tonnes of blister copper using an ISA technology from Australia.

Chambishi Copper Smelter customers include among others, Lumwana Copper Mines, China Luanshya Mines, NFCA and Chibuluma mine. The company’s biggest challenge is the lack of a mine of its own in that 96% income is expended into mining companies with the remaining four percent is used for investment, salaries and other overheads.

According to the company’s assement, the USD 300 million state of the art Chinese operated smelter had intentions of increasing production of blister copper to 250,000 tonnes per annum from 150,000 tonnes currently produced.

(Filed by Mr Kapembwa Sinkamba SteelGuru Correspondent Zambia)

However, overnight the metals have stabilised. They initially continue to fall and at their lows were down an average of 3.1 percent overnight, but are opening up in Europe with average gains of 1 percent, with lead and zinc up 2.2 percent and 2.7 percent respectively, while copper is unchanged at $8,775. Volumes have been very high with 22,084 lots traded, of which 10,589 have been copper, see table on right for more details.

Equities were clobbered yesterday with the Dow down 5.6 percent and Asia initially followed through with the Nikkei down 4.8 percent at its lows, it has since rebounded to down 1.7 percent. The Hang Seng dropped 7.9 percent at one stage, but is last down 3.1 percent, the MSCI Asia Apex is last down 2.6 percent and China CSI was down 3.4 percent, but was last up 3.4 percent – so some buying/bargain hunting has appeared – key will be whether it attracts follow through buying.

In Shanghai the October metals have been mixed, with average losses of 1.6 percent. Copper has led the decline with a 3.5 percent fall to Rmb 65,280, zinc was down 2 percent at Rmb 17,050, lead is down 0.6 percent at Rmb 16,000 and aluminium is down 0.4 percent at Rmb 17,050.

Spot copper in Changjiang dropped 4.7 percent to Rmb 64,400-65,200 which puts the market back in a contango which suggests the weakness is not just driven by spec long liquidation. The LME/Shanghai arb window has closed again with the arb at minus $125/tonne.

On the economic front Japanese house hold confidence climbed to 37 from 35.3, Chinese CPI climbed to 6.5 percent and PPI climbed 7.5 percent – so no let up in inflation in China and later we get manufacturing and industrial production in the UK and in the US non farm productivity, unit labor costs and later the FOMC statement and rate announcement. Chinese retail sales, industrial production and fixed asset investment data have been delayed, but is expected at around 08:30 BST, see table for more details.

Metals are beginning to look oversold in the short term so some rebounds for oversold reasons seem likely. However, whether this is just a correction or a continuation of a bear market remains to be seen. We have viewed the metals as being in down trends in recent months, we now need to see whether a down trend turns into a bear market. Since the highs, variously seen between February and May, zinc, lead, nickel and tin have all retreated more that 20 percent – on average they have dropped 26.8 percent, which suggests they are in bear markets. Copper and aluminium have both dropped around 14.5%.

As we start European trade it looks like a bounce is getting underway we would not be surprised to see that run further, especially if equities rebound too. However, we would find it hard to get too comfortable with any rebound as the economic backdrop remains fairly dire still, as such we would not be surprised for more selling to emerge later in the week.

The dollar index dipped slightly by 0.09% at 74.77 against the basket of 6 major currencies on swelling global economic worries.

In domestic market at MCX, Copper for delivery in August trading flat at Rs. 395.85 per kg with its high at Rs. 397.15 per kg. The open interest surged by 2.3% to 17,072 lots and as of now volume traded dipped to 32,120 lots from 150,617 lots.

Aluminium was also trading flat at Rs. 108.15 per kg and Lead surged by 2.28% or Rs. 2.3 at Rs. 103.3 per kg. MCX Zinc was seen trading higher by 2.51% or Rs. 2.35 at Rs. 96.15 per kg and Nickel strengthened by 0.47% or Rs. 4.6 at Rs. 978.5 per kg.

At the SHFE, Copper futures for most active October contract was trading at 65430 yuan per tonne, down 2190 yuan. Comex Copper futures for most active September contract was trading at $3.9555 a pound, down by just 1 cent from $ 3.9615 during the previous day.

In coming sessions, traders will have sharp eye on US Retail Sales (going to released as on 12th Aug’ 11, 6:00PM IST) and US Employment Change (going to released as on 11th Aug’ 11, 7:00PM IST). Most of the US economical data are looking positive for the base metals, which are going to get released within this week.

Technically, Copper has formed a good support near Rs.399; we can expect Copper to touch Rs.412-Rs.415 in coming sessions. Although, the overall economical spectrum is not looking so much positive for the base metals, the up move in metals is the result of oversold zone in which each and metal is travelling at present, says Hardik Jani, technical analyst with Commodity Online.

Zinc and crude oil paced declines as the S&P GSCI Spot Index of raw materials retreated for an eighth day in nine.

The MSCI World Index of shares dropped for an eighth straight session, and futures indicated that US benchmarks will fall when trading starts in New York. Group of Seven and Group of 20 leaders said they are ready to stabilise financial markets.

Markets adjusting

“The markets are adjusting to the deteriorating economic backdrop that threatens the demand side of the fundamentals for the metals,” William Adams, an analyst at Basemetals.com in London, said in a report yesterday.

Copper for three-month delivery fell $80 (Dh293), or 0.9 per cent, to $8,961 (Dh32,913) a metric tonne by 10.30am yesterday on the London Metal Exchange (LME). Prices reached $8,950 (Dh32,872) the lowest level since June 27, and are down 8.8 per cent in August.

LME prices dropped below $9,000 (Dh33,056) a ton for the first time since June 28. Still, they’re unlikely to fall “much below $8,500 [Dh31,220],” said David Thurtell, Singapore-based head of metals research at Citigroup. “The S&P credit-rating downgrade of the US won’t have lasting implications for commodity markets,” he said.

But demand is only part of the equation for the metal widely used in manufacturing and construction. Macquarie Research says current copper supply shortages are a main reason we could see higher copper prices in the near future.

Like gold, oil and other commodities, copper mine supply growth has made little headway recently. Since 2004, only around 1.45 million tons of new supply have been brought online.

This is the same old story for copper production. In 2001, the top 50 probable copper mine projects totaled more than 7 million tons of new production. By 2007, only 1.3 million tons—less than 20 percent—were either operational or under construction, data from Merrill Lynch and Xstrata shows.

With weather delays, poor deposit grades, worker strikes and mill problems, Macquarie forecasted at the start of 2011 that roughly 700,000 tons of copper mine production could be lost to disruptions. Only halfway through 2011, more than 75 percent of that allotment is already accounted for. Much of the supply disruption has come from Chile, the world’s largest copper producer.

Weather reports out of South America indicate that Chile is experiencing the “wettest winter in decades for Chile’s arid northern desert.” In July, a single stretch of storms dropped four year’s worth of rain on the historically dry Antofagasta region, according to the Associated Press. This especially harsh winter has forced more than 12 copper mines to slow or halt operations.

Furthermore, a prolonged strike at Chile’s Escondido mine continues to affect copper supply. Workers at the mine have been striking for nearly two weeks, seeking higher wages and an $11,000 annual bonus. The mine accounts for 7 percent of the world’s annual copper output. It’s estimated the closure has eliminated nearly 36,000 tons of copper from the global marketplace, says the Dow Jones Newswires. Reuters reported progress has been made in labor discussions, raising expectations that workers will soon head back to work.

Macquarie says 2 percent year-over-year supply growth in 2011 is “optimistic.” We believe delays and disappointments for copper production increases will continue to constrain supply. This could keep copper prices at relatively high levels despite a weaker-than-expected global economy.

All opinions expressed and data provided are subject to change without notice. Some of these opinions may not be appropriate to every investor. None of U.S. Global Investors Funds held any of the securities mentioned in this article as of 06/30/11.

Copper fell below $US4 early in the session, as equities and other commodities faced losses following Friday’s after-hours announcement by Standard & Poor’s.

The most actively traded contract, for September delivery, settled down US15.55 cents, or 3.8 per cent, at $US3.9615 a pound on the Comex division of the New York Mercantile Exchange.

S&P’s downgrade of the US’s credit rating to double-A-plus is expected to raise the cost of borrowing for the US Treasury and have wide effects throughout the economy.

As market participants see losses from the downgrade, many investors are dropping risky assets for perceived safe havens, like gold.

The benchmark copper contract hasn’t fallen below $US4 since May 23, when it reached a low of $US3.9535 a pound.

The declines are likely to make copper more attractive to Chinese buyers in the coming months, said Robin Bhar, an analyst with Calyon.

China is the world’s largest consumer of copper, as the country’s booming construction and manufacturing sectors use the raw material for everything from electrical wiring in cell phones to copper plumbing in apartment buildings.

As the price of copper outside of China falls in comparison to domestic prices, the so-called “arbitrage window” has reopened, “and we may see more interest from mainland China,” he said.

Lower prices may not help the bottom lines for copper-mining companies, however. Mr Bhar noted that in second-quarter earnings reports mining companies mentioned higher import costs and inflation.

Still, companies like BHP Billiton, Freeport-McMoRan and Anglo American have assets with fairly low production costs, Mr Bhar said, “so they can still earn pretty good margins.”

Moreover, while copper prices are considered a bellwether of economic growth, the move below $US4 isn’t necessarily a sign that the US economy is heading for a recession.

“I don’t think copper is a leading indicator (of recession),” said Michael Widmer, an analyst with Bank of America Merrill Lynch.

Concerns about the downgrade, along with a lack of fundamental support for copper, have led to lower prices, Mr Widmer said.

Copper is used to make goods from cars to laptops, and demand for those goods tends to decrease as the economy slows.

Bullion for immediate delivery gained as much as 1 percent to $1,663.65 an ounce, and traded at $1,656.38 at 2:58 p.m. in Singapore. Gold, which touched a record $1,681.72 yesterday, is up 1.8 percent this week, set for the longest run of weekly advances since the five weeks to March 4.

“Gold is supported on many fronts and we remain bullish,” said Yang Shandan, a trader at Cinda Futures Co. “There’s fear spreading across all markets,” said Yang, ranked second in a Futures Daily and Securities Times poll of China gold analysts.

Asian stocks extended a global slump before a report today that economists project will show U.S. employers added 85,000 workers in July, failing to reduce a jobless rate that’s holding above 9 percent. The Standard & Poor’s 500 Index had its biggest fall since February 2009 yesterday after reports this week that showed growth slowed in manufacturing and service industries.

Oil headed for the biggest weekly drop in three months and copper slid on concern that demand for raw materials may slow. The U.S. is the world’s largest energy user and the second- biggest copper consumer. Both copper and crude have dropped this year, while gold has rallied 16 percent.

December-delivery gold in New York gained as much as 0.5 percent to $1,666.60 an ounce, after touching an all-time high of $1,684.90 yesterday. Holdings in exchange-traded products climbed for a ninth day yesterday, gaining 4.1 metric tons to a record 2,182.572 tons, data compiled by Bloomberg show.

European Debt

“What’s really troubling investors is that given the fiscal austerity in Europe and the U.S. and the fact that interest rates are already at zero, it’s not clear what steps governments can do to get us out of this,” Russ Koesterich, San Francisco-based global chief investment strategist at the iShares unit of BlackRock Inc., said told Bloomberg Television.

The European Central Bank yesterday failed to halt a rout in Italy and Spain as bond yields in both countries soared, even as the ECB resumed bond purchases. A report today may show German industrial output came close to stalling in June.

“Investors who are looking to China to offset weakness in the rest of the world will have to re-think their options as inflation remains elevated, and this can only mean higher gold prices,” Yang said from Zhejiang.

China Inflation

Consumer prices in China, which led the rebound from the global recession in 2009, rose 6.4 percent in July from a year earlier, according to the median forecast in a Bloomberg News survey of 25 economists. That would match June’s increase, the biggest since 2008, and prevent policy makers from loosening monetary policy to spur growth. The number is due on Aug. 9.

In a separate Bloomberg News survey, 13 of 25 traders, investors and analysts, or 52 percent, said that gold will rise next week. Eight predicted lower prices and four were neutral.

Cash silver, which touched a three-month high of $42.23 an ounce yesterday, climbed as much as 1.4 percent to $39.46. Spot platinum extended its biggest decline in nine months, dropping 2 percent to $1,688 an ounce. Palladium shed 2 percent to $732.75 an ounce after falling the most since March yesterday.

–Editors: Ovais Subhani, Jake Lloyd-Smith

ECONOMIC EVENTS, AGRICULTURE REPORTS:
Forecast Prior Time
(N.Y.)
U.S. Change in Nonfarm Payrolls JUL 85K 18K 8:30
U.S. Change in Private Payrolls JUL 113K 57K 8:30
U.S. Change in Manu. Payrolls JUL 10K 6K 8:30
U.S. Unemployment Rate JUL 9.2% 9.2% 8:30
Avg Hourly Earning MOM JUL 0.2% 0.0% 8:30
Avg Hourly Earning YOY JUL 1.9% 1.9% 8:30
Chg in Household Survey Emply JUL -445 8:30
U.S. Consumer Credit JUN $5.000B $5.077B 10:00
USDA Cattle Slaughter AUG 5 127000 14:00
USDA Hog Slaughter AUG 5 403000 14:00

METAL PRICES: ($/ton)
Last % Chg RSI
Copper 9,200 -1.7 35
Aluminum 2,473 -0.1 37
Zinc 2,274 -2.4 36
Lead 2,434 -2.2 29
Nickel 23,118 -2.2 41
Tin 24,650 -3.4 28

OTHER MARKETS:
Last % Chg % YTD
U.S. Dollar Index 74.977 -0.4 -5.1
Crude Oil $86.16 -0.5 -5.7
Gold $1,666.3 +1.2 +17
MSCI World Index 1,196.80 -1.0 -6.5

TOP STORY:

Commodities Post Worst Run Since 2008, Erasing Gains for Year

Commodities declined for an eighth day, the longest losing streak since December 2008, and erased their gains for the year as concern deepened that the global economic slowdown would reduce demand for raw materials.

COMMODITY EXCLUSIVES:

India Top Court Allows NMDC to Produce From Its Bellary Mines

India’s Supreme Court allowed NMDC Ltd. to produce 1 million metric tons of iron ore a month from its mine in Bellary.

GMR Infrastructure Seeking ADB Backing to Attract Bond Investors

GMR Infrastructure Ltd., an Indian builder of roads, airports and power plants, is in talks to get partial guarantee from the Asian Development Bank to make its planned $268 million bond sale attractive to foreign investors.

China Elbows Into German Soccer as Solar Rivalry Hits Field (1)

Chinese solar companies are reaching into the homes of German soccer fans for the first time, ramping up advertising to oust local suppliers from Europe’s biggest power market.

Indonesia May Surpass Japan as Biggest Wheat Buyer in Asia (2)

Indonesia, the world’s fourth-most populous nation, may boost wheat and flour imports 10 percent this year as surging sales of instant noodles and cookies stoke demand, according to an industry group.

Clean Power Stocks Close to Bottom as Vestas Falls, Impax Says

Clean energy stocks are approaching a floor after European austerity measures and cheap U.S. natural-gas pushed wind and solar companies lower, Impax Asset Management Ltd. said.

Japan Promotes Shipyard Mergers on Chinese, Korean Competition

Japan, dethroned as the world’s biggest shipbuilding nation over the past decade, is promoting mergers among local shipyards to help compete with China and South Korea.

Hoarding Gold Beats Charts Over 25 Years: Technical Analysis

A buy-and-hold strategy for gold made investors more money during the past quarter century than any technical analysis tool.

Art Treasure Faces Meltdown on Records for Gold, Silver Futures

Experts are watching thousands of valuable heirlooms be melted down as financial-market turmoil boosts investors’ demand for precious metals.

INDUSTRIAL METALS:

Escondida Workers Vote to End Strike, Sign Deal With BHP (1)

Workers at BHP Billiton Ltd.’s Escondida unit in Chile voted for a package of benefits to end a strike at the world’s biggest copper mine as soon as today.

Copper Slumps to Five-Week Low on Concern Growth Will Falter

Copper fell to a five-week low in London, on course for the biggest weekly drop since March, as commodities and equities plunged on concern a faltering global economy will curb demand.

Shanghai Copper Inventories Rise Fourth Week; Aluminum Drops (1)

Copper stockpiles monitored by the Shanghai Futures Exchange increased for a fourth week, while aluminum inventories declined to a 26-month low.

MINING:

Glencore May ‘Prove Mettle’ in Commodities Rout, Liberum Says

Glencore International Plc, the listed raw materials trader that’s slumped 18 percent in London trading this week, may “prove its mettle” in the current rout in commodities prices, said Liberum Capital Ltd.

Zimbabwe Diamond Production Surges After Marange Sales Allowed

Zimbabwe became the world’s seventh- biggest diamond producer by value in 2010, up from 13th the previous year, statistics released by the Kimberley Process and New York-based Rapaport show.

Richards Bay Coal Terminal Shipments Fell 27% From Year Ago

Richards Bay Coal Terminal, on South Africa’s east coast, shipped 4.36 million metric tons of the fuel in July, 27 percent less than a year earlier.

PRECIOUS METALS:

Gold Gains in London as Financial Turmoil Boosts Investor Demand

Gold climbed in London as turmoil in financial markets boosted demand for the metal as a protection of wealth. Platinum and palladium fell.

AngloGold Plans Trial to Tap $118 Billion of 3-Mile Deep Ore (1)

AngloGold Ashanti Ltd., which owns the world’s deepest mine, will within two years trial new mining methods in South Africa to access almost $118 billion worth of gold lying more than three miles underground as it expects gold prices to keep rising from this year’s record.

Gold May Gain on Currency Alternative, Debt Woes, Survey Shows

Gold may extend gains from a record as investors seek a protection of wealth and an alternative to currencies, a survey found.

AGRICULTURE:

Uganda Waives Tax on Sugar Imports for Six Months, Minister Says

Uganda will waive all taxes on sugar imports for the next six months to allow the country to import 40,000 metric tons of the sweetener, said Fred Omach, the minister of state for finance.

Palm Oil Inventory in Malaysia Advances to 19-Month High (1)

Palm oil stockpiles in Malaysia, the second-largest grower, probably climbed to the highest level in 19 months in July as production peaked on favorable weather, according to a Bloomberg News survey.

Palm Oil Drops as Commodities Plunge on U.S. Recovery Concern

Palm oil dropped the most in more than five weeks as commodity and equity markets slumped on concern that the U.S. economic recovery may stall.

Wheat Falls a Third Day as Commodities Drop on Slowdown Concern

Wheat fell for a third day in Chicago, extending the biggest drop in five weeks, as commodities and equities plunged on concern a faltering global economy will curb demand. Corn and soybeans slid.

China Said to Be Planning Soy Sale to Rotate State Inventory (1)

China, the biggest soybean consumer, plans to sell 4 million metric tons of the oilseed from government warehouses to make room for this year’s harvest, four trading executives familiar with the matter said.

Japan to Spend $1.1 Billion to Contain Tainted Beef Crisis (1)

Japan will spend 85.7 billion yen ($1.1 billion) to buy back beef and cattle tainted by radiation in an attempt to curb losses among producers and ease food safety fears.

Cocoa May Drop in London on Ivory Coast Output; Coffee Advances

Cocoa may decline in London on speculation of plentiful supplies from the Ivory Coast, the world’s largest producer. Coffee rose.

SHIPPING:

Vitro, Marc Dreier, A&P, Borders, Spiegel: Bankruptcy

Ten subsidiaries of Vitro SAB, the Mexican glassmaker, filed papers asking the bankruptcy judge in Dallas to assess $6.2 million in damages against bondholders who filed unsuccessful involuntary Chapter 11 petitions. The dispute goes to the bankruptcy judge for decision on Aug. 23.

ECONOMIES:

China 6% Inflation Limits Loosening as Stock Rout Hits Asia (1)

China, which led the rebound from the global recession in 2009, may have limited room to counter weakening growth in the U.S. and Europe as inflation restrains policy makers from loosening monetary policy.

Yuan Debt Worst in BRICs as PBOC Battles Inflation: China Credit

Yuan-denominated bonds are the only local-currency debt among the biggest emerging nations delivering a loss as investors bet quickening inflation will force China to keep raising interest rates.

HSBC, BEA Chiefs Say Currency Basket Can Replace Hong Kong Peg

Hong Kong should consider replacing the local dollar’s 28- year peg to the greenback in favor of an exchange rate managed against a basket of currencies, the chief executives of HSBC Holdings Plc and Bank of East Asia Ltd. said.

Trichet’s Firepower Faces Test as Rout Withstands ECB Buying (2)

European Central Bank President Jean-Claude Trichet may be forced to step up his fight against the sovereign debt crisis after a resumption of bond purchases yesterday failed to halt a rout in Italy and Spain.

U.S. Payroll Gain Was Likely Too Small to Cut Unemployment (1)

American employers probably failed to create enough jobs in July to reduce the jobless rate, showing anxiety over government debt deliberations and a slowdown in consumer spending have shaken confidence, economists said before a report today.

OTHER MARKETS:

Stocks Tumble for Eighth Day as Commodities Drop; Franc Weakens

Stocks dropped for an eighth day, the longest losing streak since January 2010, and commodities declined on concern the U.S. recovery is faltering. The Swiss franc weakened and the yen strengthened.

Franc Falls as Hildebrand Calls Strength ‘Absurd;’ Yen Rebounds

Switzerland’s franc weakened, falling from a record against the euro, after Swiss National Bank President Philipp Hildebrand said the central bank won’t exclude any measures to curb the currency’s advance.

Yen Intervention Only ‘Buys Time’ as U.S. Slows: Japan Credit

Japan’s third intervention in a year may fail to halt the yen’s appreciation as the slowing U.S. economy reduces the appeal of dollar-denominated assets.

European Stocks Retreat as RBS, Allianz, Dexia Shares Decrease

European stocks and U.S. futures retreated, with the benchmark Stoxx Europe 600 Index heading for its biggest weekly loss since November 2008, as concern escalated the economic recovery is stalling. Asian shares sank.

Worldwide Equity Rout Erases Year’s Gains in Developed Markets

A global rout in equities sparked by concern economic recoveries in the U.S. and Europe may stall wiped out gains this year for major benchmark indexes in the world’s developed markets.

Oil Drops to Lowest in Eight Months Amid Global Rout on Economy

Oil fell to the lowest in eight months in New York, set for the biggest weekly decline since May, on speculation fuel demand will falter as U.S. economic growth falters and Europe’s debt crisis worsens.

Europe’s Leaders Race to Tackle Crisis as Spanish Bonds Gain

European leaders returned to the hunt for solutions to the debt crisis, helping Italy and Spain gain a a respite from the market turbulence after the resumption of the European Central Bank’s bond-buying program.

Syria’s Assault on Hama Unhindered by Criticism of Assad (2)

Syrian tank crews and snipers pressed on with their assault on Hama, site of a 1982 massacre, as U.S. Secretary of State Hillary Clinton said that President Bashar al-Assad has “lost his legitimacy to govern.”

Emerging Stocks Tumble, Currencies Fall on Global Recession Risk

Emerging-market stocks slumped for a fourth day, sending the benchmark index to its largest weekly rout in 15 months, as Europe’s debt crisis and weaker U.S. economic data heightened the risk of a global recession.

SPORTS:

Arsenal to Play Udinese in Champions League Soccer Playoff Round

The following are the matchups for the playoff round of European soccer’s Champions League. The winners of the two-match series, which will be played Aug. 16-17 and Aug. 23-24, advance to the group stage. The first team listed plays the opening match at home.

Arsenal Rejects Third Barcelona Bid for Fabregas, Sky Reports

Arsenal has rejected a third bid from Barcelona for midfielder Cesc Fabregas, Sky Sports reported on its website.

Kroenke Backs Arsenal’s $65 Million Fabregas Valuation: Roundup

The following is a roundup of soccer stories from U.K. newspapers, with clickable links to the Web.

To contact the editor responsible for this story: Stuart Wallace in London

The industrial metals tumbled at the LME on US economic recovery fears triggering a massive sell-off in commodities and equities.

Tin and nickel both plummeted by Rs 35 and Rs 20 per kg to Rs 1,410 and Rs 1,210 respectively from overnight closing level of Rs 1,445 and Rs 1,230 previously.

Copper cable scrap and copper wire bar dropped by Rs 9 per kg each to Rs 464 and Rs 492 as against Rs 473 and Rs 501 previously.

Copper scrap heavy dipped by Rs 8 per kg to Rs 456 from Rs 464 and copper utensils scrap slid by Rs 6 per kg to Rs 419 as compared to Rs 425 yesterday.

Copper armiture and brass utensils scrap both slipped by Rs 5 per kg to each to Rs 446 and Rs 300 respectively. Brass sheet cutting fell by Rs 4 per kg to Rs 315 and copper sheet cutting by Rs 3 per kg to Rs 442.

Zinc and lead also moved down by Rs 2 per kg each to Rs 125 and Rs 118.

At MCX Copper August contract is currently trading at Rs.413.50 per Kg, lower by 1.38 against the previous close.

In the earlier session the contract traded at a low of Rs.410.75 per Kg and a high of Rs.418.20 per quintal. Open interest of the contract is 20164 lots and volume traded is 58310 Kg as of now.

Market analysts said weak trend at the London Metal Exchange (LME) as concern that the US economic recovery may be faltering spurred a global sell-off in commodities, led to the fall in Copper futures prices.

* BHP Billiton refused to raise bonus, aims to set example

* Strike could herald new era of labour turbulence in Chile

(Adds copper prices)

By Moises Avila

ANTOFAGASTA, Chile, Aug 5 (Reuters) – Workers at Chile’s giant Escondida mine on Friday accepted a company offer to end a two-week strike that shut down the world’s top copper deposit and stoked fears of a global supply shortage.

Union leader Marcelo Tapia told Reuters workers could return to the job as soon as Friday evening to lift a stoppage that is believed to have cost owner BHP Billiton more than 40,000 tonnes of copper production.

An end to the strike could ease supply fears and add to a sharp fall in copper prices as a gloomy global economic outlook sparks a flight to save-haven assets.

Copper rose to near 4-month highs earlier this week, thanks in part to the stoppage, but has shed more than $500 in value as investors fret over a sluggish global economy.

“This (the end to the strike) might remove some of that (price) support, but I think what’s going to be far more influential to prices is what happens on the macro front over the next view days,” said Gayle Berry, an analyst with Barclays Capital in London.

Copper in London was trading at $9,190 a tonne at 1037 GMT from Thursday’s close of $9,355, a slide of 6.5 percent on the week, which would be its biggest weekly fall since March.

The world’s top miner had defied strikers, resubmitting a lower bonus offer that they snubbed last week but that aimed to set an example to workers at other mines mulling similar pressure tactics to demand more from the copper-price bonanza.

A BHP official was not immediately available to comment.

Union officials said the proposed bonus worth $5,760 fell short of workers’ expectations but acknowledged strikers were tired after two weeks on the picket lines without pay.

The stoppage lasted longer than expected and forced the mine to declare force majeure — a contract clause that frees it of liability on delivery delays — on copper concentrate sales.

It also became a headache for unpopular President Sebastian Pinera, who is struggling with massive student demonstrations that turned violent on Thursday after clashes with police in the capital Santiago.

MORE TURBULENCE AHEAD

Soaring commodity prices have moved workers from Zambia to South Africa and Australia to demand a bigger share of the near-record profits of mining giants such as Anglo American and Freeport McMoran .

Unions at Escondida tapped into the growing discontent against Pinera, which may force him to ease on the strict fiscal discipline that has made Chile the region’s most stable economy.

The strike came only days after workers at state copper giant Codelco downed tools for 24 hours to protest against massive layoff plans as part of a restructuring of the world’s top copper producer.

The Escondida strike caught Chile off guard, coming outside the collective bargaining process. It has raised the possibility of increasingly unpredictable and volatile labour action in Chile, the world’s top copper producer.

The world’s No. 3 copper mine, Collahuasi, went through a 24-hour partial strike over the weekend. Some workers Collahuasi, which accounts for 3.3 percent of global mined copper, downed tools on Saturday over labor demands of their own but ended their protest on Sunday.

Diego Hernandez, CEO of state copper giant Codelco , the world’s biggest copper producer, told Reuters in Australia on Thursday he saw some risk that unrest at Escondida could spread to other mines in Chile, but said companies would be able to manage.

“There is a risk to more industrial actions but not a big one,” Hernandez said in an interview after a presentation to the Melbourne Mining Club.

The last time Escondida workers downed tools in 2006 — for 25 days — they had similar demands for higher bonuses linked to lofty profits. Copper prices then rallied on the stoppage.

Labour unrest and severe weather disruptions have buffeted the mining industry in Chile this year, which may cut its annual output target and deepen a global supply deficit.

Codelco’s Hernandez said a string of strikes, bad weather and delayed start ups would probably drag down Chile’s estimated annual output by 5 percent or up to 500,000 tonnes in 2011.

(Reporting by Santiago newsroom; writing by Alonso Soto; editing by Michael Urquhart and Keiron Henderson)

–Price gap between Comex copper and high-grade scrap copper shrank to 31 cents a pound from 49 cents a pound at the start of 2011

–Asian demand strains U.S. scrap supply

By Tatyana Shumsky and Matt Day
Of DOW JONES NEWSWIRES

NEW YORK (Dow Jones)–Metal manufacturers are raiding the scrap heap to save money, pushing up demand–and prices–for recycled metal.

Scrap prices are rising faster than prices for new metal in important markets like copper, aluminum and steel, as demand grows from U.S. manufacturers looking to save on energy costs, and from Asian buyers that need raw materials of all kinds.

Copper and brass mills are forgoing their usual summer slowdown to snap up supply from Louis Padnos Iron & Metal Co.’s 18 scrap yards across Michigan, says Matthew Heitmeier, a marketing director at the company.

And this spring, Novelis, an aluminum supplier to companies like Coca-Cola Co. (KO) and Ford Motor Co. (F), said it plans to increase the share of scrap in its supply to 80% at the end of the decade, from about 34% today. The Atlanta company is one of the world’s largest producers of aluminum sheets used to make everything from chocolate wrappers to car doors, buying about three million tons of the metal a year.

“To get to the growth goals we have, we have to use recycled content,” Novelis Chief Executive Phil Martens said in an interview.

Melting down old brass door handles, aluminum beer cans and shredded steel car frames always has appealed to companies like Novelis that are looking to avoid hefty power and fuel costs to refine new metal. Others, including Louis Padnos’s copper buyers, have turned to scrap when miners failed to meet demand, causing prices to rise for new, or “virgin,” metal.

Still, scrap sellers and metal industry analysts say the competition for supply has grown increasingly fierce this year, and the window for cost savings is closing. U.S. metal manufacturers are turning to recycled material as fuel costs skyrocket and China’s booming economy sucks in more virgin metal. But buyers in China and other emerging markets are also buying more scrap, while generating relatively little recycled metal of their own.

“There’s a battle for this resource going on right now,” said Eric Glover, an analyst with Canaccord Genuity.

The price gap between scrap and virgin metal is narrowing. Shredded steel scrap costs $450 a ton in the U.S., up 33% from a year ago. Finished hot-rolled steel coil climbed 25%, to about $730 a ton. Scrap user Steel Dynamics Inc. (STLD), which normally posts better profits than competitors that make steel out of iron ore, last month said second-quarter earnings would disappoint due to rising scrap prices.

The gap between Comex copper prices and high-grade copper scrap has narrowed to 31 cents a pound recently from 49 cents at the start of the year, according to Platts. July copper futures settled 0.5% lower at $4.3720 a pound on the Comex division of the New York Mercantile Exchange Thursday.

Novelis is likely to run up against China and other Asian buyers as it relies more heavily on scrap. Consumers in developing countries only recently have become wealthy enough to buy cars and appliances, and aren’t ready to send them to the scrap heap just yet. Almost 90% of the $12.5 billion in U.S. exports of scrap iron and steel, copper and aluminum went to Asia.

Martens, the Novelis CEO, said the company will turn its auto-industry customers into scrap suppliers.

With demand for both old and new metal surging, price relief is only likely to come to the scrap market later in the decade, when the first wave of Chinese consumers starts replacing older goods.

“The urban mine is the future of the copper industry,” said Michael Jansen, head of metals research at J.P. Morgan Chase & Co. The same could be said for aluminum, steel and other in-demand metals, he added.

-By Tatyana Shumsky and Matt Day, Dow Jones Newswires; 212-416-3095; tatyana.shumsky@dowjones.com

Stillwater, which offered to buy Peregrine Metals Ltd. (PGM) for $487 million in cash and stock this week, projects it will cost as much as $2.5 billion to develop the Altar project in western Argentina over the next seven years, Chief Executive Officer Francis McAllister said on a conference call. The combined cost is about a billion dollars more than the Billings, Montana-based company’s market value, according to data compiled by Bloomberg.

The takeover will hand shareholders of Vancouver-based Peregrine a more than threefold gain after extracting from Stillwater the second-largest premium for any mining acquisition in the world, data compiled by Bloomberg show. While Stillwater is betting that it can profit from diversifying away from palladium as copper approached a record and gold climbed to an all-time high this week, the company’s shares slumped 23 percent since the deal was announced through yesterday.

“This foray into another continent to buy a different kind of metal that is far from developed and pay a high price — it raises a lot of question marks,” said Jim Grefenstette, a Pittsburgh-based fund manager at Federated Investors Inc., which oversees $354.9 billion, including Stillwater shares. “It’s a disappointment.”

John Beaudry, a spokesman at Stillwater, and Peregrine’s Brooke Clements, didn’t return telephone calls seeking comment.
Acquisition Details

Stillwater — once a unit of OAO GMK Norilsk Nickel, Russia’s biggest mining company — gets more than half its revenue from palladium and platinum. Those precious metals are used in catalytic converters to make exhaust fumes less toxic.

The company agreed to pay $1.35 a share and 0.08136 of its own stock for each share held by holders of Peregrine, according to a statement on July 11.

Based on Stillwater’s closing price of $23.72 on July 8, the deal valued Peregrine Metals at $3.28 a share, the statement said. That’s 279 percent higher than the target’s price in the 20 trading days before the deal was announced, according to data compiled by Bloomberg. The premium is the second-highest for any announced deal over $100 million in the mining industry.

Peregrine shareholders have seen the value of their holdings increase 216 percent since the deal was announced through yesterday, boosting the company’s market capitalization by about C$207 million ($216 million) to C$302 million.
Pricing Power

Stillwater’s market value has decreased by about $570 million to less than $1.9 billion over the same period.

Shares of Stillwater slipped 4 percent to $17.46 at 10:22 a.m. in New York today, while Peregrine fell 1.2 percent to C$2.53 in Toronto.

“I’d like to give them the benefit of the doubt that they did their due diligence and they know something that the rest of us don’t,” said Rick de los Reyes, a manager at T. Rowe Price Group Inc. in Baltimore, which oversees about $510 billion including Stillwater shares. “But it’s hard to believe the market is so inefficient that it’s pricing Peregrine at a huge discount.”

Stillwater’s bid for Peregrine came after copper and gold outperformed palladium this year. Palladium, which climbed more than fourfold from the end of 2008 through 2010, has slipped 2.4 percent this year through yesterday.

Copper for delivery in three months on the London Metal Exchange has more than tripled since the end of 2008 to $9,650 a ton, leaving it within 5.6 percent of a record of $10,190.
Metal Prices

While prices of copper and gold may peak in 2011, analysts estimate lower average prices in the next two years.

Copper, used in electric wire, roofing and plumbing, will average $10,000 next year before dropping to $8,542 in 2013, the median of analysts’ estimates compiled by Bloomberg showed.

Gold futures rose to a record $1,588.90 an ounce on the Comex in New York yesterday as a slump in the dollar and Europe’s debt crisis spurred demand for precious metals. The average price of gold will slide to $1,413 next year and $1,231 in 2013, analysts’ estimates show.

Peregrine’s Altar mine has the potential to produce an annual average of 280 million pounds (127 million kilograms) of copper and 24,000 troy ounces of gold with a 36-year mine life, according to Stillwater’s July 11 presentation.

At that level, the project would boost Stillwater’s annual copper production almost ninefold from the 37 million pounds its mine in Marathon, Ontario, is projected to extract each year, according to the company’s presentation and data compiled by Bloomberg. Stillwater got less than 5 percent of its sales from copper, gold, silver and nickel last year.
Head Scratcher

The acquisition also means Stillwater may lose investors who owned the company because they wanted to bet exclusively on palladium, said Keith Moore, an event-driven strategist at MKM Partners LP in Stamford, Connecticut.

“To get into a different field from what they know, it’s got me scratching my head,” said Peter Sorrentino, a senior portfolio manager at Huntington Asset Advisors in Cincinnati, which manages $14.8 billion. “The easy money in a lot of the metals has already been made.”

Stillwater’s shareholders will have to wait at least six years before the Altar mine produces any copper, according to Leon Esterhuizen, an analyst at RBC Capital Markets in London. Stillwater still needs to conduct more exploration, design the mine and raise more money to pay for the project, he said.
‘Nice Little Pocket’

Stillwater began mining palladium in 1986 and controls the “only significant source of platinum group metals in the United States,” according to its website. Buying an undeveloped mine in Argentina for copper and gold may be not be worth the risk, Federated’s Grefenstette said.

“This is a challenge, because they’ve gone into a geography they’ve never gone into before,” he said. “You have this nice little pocket in Montana, and that’s cool, because you can isolate your opportunities, you can isolate your risks.”

To contact the reporter on this story: Danielle Kucera in New York at dkucera6@bloomberg.net.

To contact the editors responsible for this story: Daniel Hauck at dhauck1@bloomberg.net; Katherine Snyder at ksnyder@bloomberg.net.

Trading sentiment turned better after demand for copper in China, the world’s biggest user, rose by 8% this year, depleting global supplies and boosting prices.

At the Multi Commodity Exchange, copper for delivery in August rose by INR 1.25 or 0.29% to INR 434.25 per kilogram with a business turnover of 11,052 lots. Similarly, the metal for delivery in November edged up INR 1.10 or 0.25% to INR 440.05 per kilogram with an open interest of 937 lots.

Market analysts said that besides a firming trend overseas increased demand in the spot market mainly led to the rise in copper prices at futures trade. Meanwhile, copper for 3 month delivery gained 0.2% to USD 9,672 per tonne on the London Metal Exchange.

(Sourced from Economic Times)

The new project, Llahuin comprises a group of Mining Licences located near the city of Ilapel, 250 kilometers north of Santiago. The Llahuin Project comprises two elements: the Amapola Group of Exploitation Licences and the Llanos Group of Exploitation Licenses.

Southern Hemisphere has signed an Option to purchase the Amapola Group. The terms of this agreement will result in one of the Company’s 100% owned Chilean subsidiaries becoming the 100% owner of the licenses without any encumbrances.

Under the terms of the option agreement, the Company will acquire the licenses by making staged cash payments of USD 615,000 over the course of 12 months from the date of the agreement and issue shares to the value of USD 1.2 million, 18 months from the date of the agreement for total consideration of USD 1.875 million.

The Company will also enter into a separate option agreement to purchase the Llanos Group once due diligence on the licence areas is completed. The Company has completed due diligence on the Amapola Group and commenced an initial Reverse Circulation drilling program on June 1st 2011.

Upper Copper Zone at Strawberry East:
1. Drill hole SC11-049 intersected 7.19 meters grading 2.22% copper, 0.08% cobalt and 12.1 gram per tonne silver.

2. Highlights from Upper Copper Zone in fill drill program at Strawberry Butte:
(I). Drill hole SC11-045 intersected 3.10 meters grading 2.13% Cu, 0.03% Co and 9.2 gram per tonne Ag

(II). Drill hole SC11-046 intersected 24.39 m grading 2.20% Cu, 0.14% Co and 14.2 gram per tonne Ag

(III). Drill-hole SC11-047 intersected 11.20 meters grading 1.52% Cu, 0.11% Co and 11.6 gram per tonne Ag.

The Company has also begun drilling with two drill rigs in the Strawberry East target area a full two miles east of the Strawberry Butte mineralization. The purpose of this drilling is to gain enough additional data to calculate inferred resource estimates for the Lower and Middle Copper Zones and to further investigate the UCZ as well as explore other potential zones. The first hole of the 2011 drill campaign in the Strawberry East area encountered significant copper mineralization in the UCZ, the first time this particular zone has produced ore grades and thicknesses of copper mineralization. In addition, hole SC11-049 encountered a thin zone of high grade copper mineralization in the Lower Copper Zone as well.

The Company has also completed in fill and expansion drilling of the Upper Copper Zone massive sulfide on the Strawberry Butte target area where it has assays pending for 26 holes. The results of this drill campaign will be used to expand and upgrade the UCZ resource to Measured and Indicated status.

The UCZ at the Strawberry Butte target area currently has an Inferred Resource containing 7 MMT grading 2.4% Cu, 0.12% Co and 12.3 gram per tonne Ag using a 1.5% Cu cut off grade. The Company has initiated a Preliminary Economic Assessment on the UCZ to determine project economics and has started collecting environmental baseline information in preparation for an environmental assessment report and project permitting.

The Company is also preparing an initial Inferred Resource estimate for the Lower Copper Zone massive sulfide at Strawberry Butte and has initiated resource definition drilling on both the Lower Copper Zone and Middle Copper Zone massive sulfides on the Strawberry East target area where copper mineralization is associated with multiple mineralized horizons. The new Upper Copper Zone mineralization on the Strawberry East target area will be followed up with subsequent drilling.

Sandstorm Metals & Energy has:
1. Entered into a copper purchase agreement with Donner Metals Limited to acquire an amount of copper equal to 17.5% of the copper produced at the Bracemac McLeod development property located in Matagami, Quebec and operated by Xstrata Canada Corporation. Donner is the owner of 35% JV interest in the Bracemac McLeod Property.

2. Entered into a natural gas purchase agreement with Thunderbird Energy Corporation to acquire 35% of all natural gas produced from Thunderbird’s Gordon Creek project located in Utah of USA.

3. Engaged Cormark Securities Inc as co lead underwriter with National Bank Financial and a syndicate including BMO Capital Markets, Canaccord Genuity Corporation Paradigm Capital Inc and Casimir Capital Limited to raise gross proceeds of approximately CAD 25 million.

Sandstorm Metals & Energy has entered into a copper purchase agreement with Donner pursuant to which the Corporation has agreed to purchase an amount of copper equal to 17.5% of the copper produced from the Xstrata operated Bracemac McLeod Property. Sandstorm Metals & Energy will make an upfront cash payment to Donner of USD 20 million upon the completion of certain funding conditions by Donner which are expected to be completed in the near future. In addition, Sandstorm Metals & Energy will receive 6,428,571 common shares of Donner. Donner has also agreed to issue USD 1.4 million worth of common shares to the Corporation on June 30th 2012.

Sandstorm Metals & Energy will make ongoing per pound payments equal to the lesser of USD 0.80 per pound of copper and the then prevailing market price of copper. If the spot price of copper falls below USD 2.75 per pound the Per Pound Payments will decrease and be equal to the lesser of USD 0.55 per pound of copper and the then prevailing market price of copper. Once Sandstorm Metals & Energy has purchased 14.8 million pounds of copper under the agreement, the Per Pound Payments will be increased by USD 0.25 per pound to USD 1.05 per pound. Donner will have the option, for a period of 24 months, to repurchase up to 50% of the Agreement by making USD 14 million payments to Sandstorm Metals & Energy upon receipt of which the percentage of copper that Sandstorm Metals & Energy is entitled to purchase will be decreased from 17.5% to 8.75%.

Aside from the Upfront Deposit and Per Pound Payments, the Corporation is not required to contribute to any capital, exploration or operating expenditures in respect to the Bracemac McLeod Property. Donner has provided Sandstorm Metals & Energy with a guarantee that the Corporation will receive minimum before tax cash flows of (i) USD 5.7 million in 2013, (ii) USD 5.1 million in 2014, (iii) USD 5.6 million in 2015 and (iv) USD 3.6 million in 2016 thus providing 100% return of capital within approximately 5 years.

As part of this transaction, Sandstorm Gold Limited has agreed to purchase 17.5% of the gold and gold equivalent from the Bracemac McLeod Property in exchange for making a payment to Donner of USD 5 million on June 30th 2012.

Mr Nolan Watson president & CEO of Sandstorm Metals & Energy said that “We are pleased to have acquired a copper stream on a strong mine, operated by one of the world’s largest mining companies. With the acquisition of 5 commodity streams in the past 7 months the vision of Sandstorm Metals & Energy as a multi-resource streaming company has come to fruition and we are excited to continue developing the business.”

FUNDAMENTALS
* Three-month copper on the London Metal Exchange
edged up 0.2 percent to $9,644 a tonne by 0124 GMT, after losing
0.2 percent in the last session.
* The most-active September copper contract on the Shanghai
Futures Exchange fell 0.4 percent to 71,810 yuan per
tonne.
* Ratings agency Standard & Poor’s has warned there is a
one-in-two chance it could cut the United States’ prized
triple-A rating if a deal on raising the government’s debt
ceiling is not agreed soon.
* Mid-week comments by Federal Reserve Chairman Ben Bernanke
raised hopes that the U.S. central bank would embark on a third
round of economic stimulus, but in testimony to the senate on
Thursday he said the Fed was not yet ready to take action.

* President Barack Obama concluded a round of U.S. debt
talks on Thursday by sending lawmakers back to Congress to gauge
support for a deal, saying a package to cut the deficit by $2
trillion was within reach.
* The U.S. Treasury has warned that it will run out of money
to pay the country’s bills after Aug. 2 if the $14.3 trillion
borrowing limit is not raised. Failure to seal a deal by then
could cause turmoil in global financial markets and plunge the
U.S. into another recession.
* Bernanke warned that overzealous cuts to government
spending in the short term could derail a shaky recovery and
said a U.S. debt default could wreak financial havoc.

* Alarmed by a worsening of the euro zone debt crisis,
policymakers and bankers are examining radical proposals to
rescue Greece that include a sharp cut in its debt burden, ways
to prop up banks and a new emphasis on boosting Greek growth,
official and banking sources say.
* Italy’s austerity budget passed its first parliamentary
hurdle on Thursday but the opposition says Prime Minister Silvio
Berlusconi’s government is in a shambles and should resign after
it is finally approved.
* The world economy should expand steadily this year and
next thanks mainly to prospering emerging powers, a Reuters poll
showed, but fiscal troubles lurking in Europe and potentially
the United States risk blowing this view apart.

MARKET NEWS
* U.S. stocks fell on Thursday as Bernanke backed off hints
additional near-term stimulus could be on the way, removing a
possible catalyst from a market already facing plenty of
obstacles.
* The U.S. dollar fell in early Asian trade on Friday after
ratings agency Standard & Poor’s warning on the United States
credit rating, while Asian stocks are expected to start on a
weaker note following a lower close on Wall
Street.

DATA/EVENTS
0900 EZ Eurostat trade nsa, EUR May
1130 India M3 Money Supply
1200 U.S. Citigroup earnings Q2
1230 U.S. Consumer Price Index Jun
1230 U.S. Real earnings Jun
1315 U.S. Industrial prod/Capacity use Jun
1355 U.S. Reuters/UMich sentiment Jul-P
1930 U.S. CFTC trader commitments-futures Weekly <0#1CFTC00>
1930 U.S. CFTC trader commitments-fut&opnsWeekly <0#3CFTC00>

Base metals prices at 0124 GMT
Metal Last Change Pct Move YTD pct chg
LME Cu 9644.00 14.00 +0.15 0.46
SHFE CU FUT SEP1 71810 -310 -0.43 -0.06
LME Alum 2508.75 1.75 +0.07 1.57
SHFE AL FUT SEP1 17375 -15 -0.09 3.18
HG COPPER SEP1 438.50 -1.90 +0.11 -1.23
LME Zinc 2370.00 20.00 +0.85 -3.42
SHFE ZN FUT SEP1 18200 -105 -0.57 -6.55
LME Nickel 24050.00 -160.00 -0.66 -2.83
LME Lead 2681.25 16.25 +0.61 5.15
SHFE PB FUT 17460 -95 -0.54 -4.85
LME Tin 27425.00 0.00 +0.00 1.95
LME/Shanghai arb 1053

Shanghai and COMEX contracts show most active months
^ LME 3-m copper in yuan, including 17 pct VAT, minus SHFE
third month
Shanghai lead launched on March 24

(Reporting by Carrie Ho; Editing by Himani Sarkar)

Copper

Suresh Nair of Admisi Commodities expects copper prices on the LME to test USD 10,000 plus. In the domestic market, he recommends buying on dips in the MCX August copper in the range of Rs 430-434 with a target of Rs 441 with a stop loss at Rs 428.

Gold

Gold futures jumped to their all time high in yesterday trading session. Tarang Bhanushali, AVP (Research) of India Infoline advises buying at 22900 on the MCX, keeping a target of Rs 23050 and stop loss of Rs 22870.

Meanwhile, Ram Pitre of ITI advices buying gold between Rs 22700 and Rs 22725 with a stop loss of Rs 22630 for a target price of Rs Rs 22925 and Rs 22970.

Three-month copper on the London Metal Exchange
edged up 0.3 percent to $9,675 a tonne by 0334 GMT after ending
almost flat previously.

The most-active September copper contract on the Shanghai
Futures Exchange fell 0.9 percent to 71,790 yuan per
tonne, after surging to a three-month high in the previous
session.

“Shanghai copper is going through a technical correction
after a big rise yesterday compared to London. This overrides
the positive influence of the dollar’s weakness today,” Great
Wall Futures analyst Li Rong.

“London copper, on the other hand, closed flat and is
therefore free to be directed by the weakening dollar. And
having crossed the high 70,000 yuan mark, Shanghai copper is a
bit lacking in upward momentum,” he added.

The U.S. dollar was on the run in Asia after the ratings
warning from Moody’s and a hint of further policy easing from
the Federal Reserve unleashed a wave of panic selling, much to
the relief of the hard-pressed euro.

Moody’s Investors Service jolted White House debt talks on
Wednesday with a warning that the United States may lose its top
credit rating in the coming weeks, piling pressure on Washington
to lift its debt ceiling.

The U.S. Federal Reserve is ready to ease monetary policy
further if economic growth and inflation slow much more,
chairman Ben Bernanke said on Wednesday.

The IMF joined Germany on Wednesday in pushing for private
sector investors to help cut Greece’s debt mountain as the euro
zone sought to break an impasse on how and when to grant the
country urgent aid.

With Germany hanging back, euro zone officials struggled
even to set a date for leaders to meet to agree a way forward,
raising fears financial markets might exploit a policy vacuum
with a new onslaught on the bloc’s high debtors.

Confidence at Japanese companies turned positive in July for
the first time since the March 11 earthquake devastated the
country’s northeast coast, a Reuters poll showed, pointing to a
return to moderate economic growth later in the year.

In industry news, Brazilian miner Vale
will stick to its target of producing 1 million tonnes of copper
a year by 2015 after pulling out of a bid for South Africa’s
Metorex and may pursue other buyouts, a source close to Vale
said on Wednesday.

Base metals prices at 0334 GMT
Metal Last Change Pct Move YTD pct chg
LME Cu 9675.00 25.00 +0.26 0.78
SHFE CU FUT SEP1 71790 -670 -0.92 -0.08
LME Alum 2515.75 2.75 +0.11 1.85
SHFE AL FUT SEP1 17370 -30 -0.17 3.15
HG COPPER SEP1 440.10 0.00 -0.06 -0.87
LME Zinc 2385.00 24.00 +1.02 -2.81
SHFE ZN FUT SEP1 18250 -75 -0.41 -6.29
LME Nickel 23950.00 -25.00 -0.10 -3.23
LME Lead 2719.00 18.00 +0.67 6.63
SHFE PB FUT 17510 -185 -1.05 -4.58
LME Tin 27001.00 -399.00 -1.46 0.38
LME/Shanghai arb 1321

Shanghai and COMEX contracts show most active months
^ LME 3-m copper in yuan, including 17 pct VAT, minus SHFE
third month
Shanghai lead launched on March 24

(Editing by Himani Sarkar)

The Metal Purchase Agreement provides for the sale of metal by Donner to Sandstorm equal to 17.5% of the copper and precious metals (gold and silver) from the Bracemac-McLeod mine. Donner will receive US$0.80 per pound of delivered copper if the spot price of copper per pound as quoted on the London Metal Exchange is above US$2.75 per pound, otherwise, the lesser of US$0.55 and the prevailing spot price of copper per pound. Once Sandstorm has purchased 14.8 million pounds of copper, Donner will receive US$1.05 per pound of delivered copper, if the spot price of copper per pound is above US$2.75 per pound, otherwise, the lesser of US$0.80 and the prevailing spot price of copper per pound. Donner will receive for gold or gold equivalent ounces the lesser of US$350 per ounce and the prevailing spot price for gold per ounce as quoted by the London Bullion Market Association.

Donner has the option for 24 months to purchase back from Sandstorm half of the metal to be sold to Sandstorm for US$17.5 million. Pursuant to the Metal Purchase Agreement, Donner has also agreed to issue to Sandstorm US $1.4 million worth of common shares on the date of the second purchase deposit.

The US$25 million received from Sandstorm will be used for the development of the Bracemac-McLeod mine (Donner Metals Ltd. 35% / Xstrata Canada Corporation 65%) in Matagami, Quebec. Development of the mine began in April 2010 and production into the nearby wholly-owned Xstrata mill is expected to begin in early 2013. The mine is expected to produce an average of 2,500 tonnes per day for four years on the basis of proven and probable mining reserves of 3.7 million tonnes grading 9.6% zinc, 1.3% copper, 28.3 g/t silver and 0.4 g/t gold. Potential to expand the mine life is possible on the basis of inferred mineral resources of 2.63 million tonnes at 8.8% zinc, 1.3% copper, 38.8 g/t silver, 1.1 g/t gold and excellent exploration potential immediately surrounding both mining reserves and mineral resources.

Mr. David Patterson, Chairman of Donner Metals, said, “The metal purchase agreement presents Donner with a unique opportunity to finance the development of the Bracemac-McLeod mine in a way that is least dilutive to shareholders. Detailed comparisons of financing options consistently ranked the metal purchase agreement as the best available option.” Patterson also spoke about the ongoing development of the Bracemac-McLeod mine, saying, “Rapid development continues and the underground ramp has now reached over 1,400 metres of lateral development; this rate of progress is a tribute to Xstrata’s experienced development team.”

Mr. Nolan Watson, President & CEO of Sandstorm Metals & Energy, said, “We see great potential in the Bracemac-McLeod mine and are excited that initial production is near-term.”

Euroscandic International Group (“Euroscandic”) acted as Donner’s advisor for the financing of the Bracemac-McLeod mine, and the decision to pursue the metal purchase agreement with Sandstorm. Euroscandic is an independent company specialized in the natural resources and raw materials sectors, offering investment banking and corporate advisory services.

The Metals Purchase Agreement and share issuances to Sandstorm are subject to the approval of the TSXV.

Additional information is available at www.donnermetals.com .

ON BEHALF OF THE BOARD OF DONNER METALS LTD.

David Patterson, Chairman

Cautionary Statement:

Certain phrases in this news release are “forward-looking statements”. Forward-looking statements are identified by wording such as “will” and “is expected”. Such statements are applicable specifically to the possible future commencement of, and timing of commencement of, production from the Bracemac-McLeod Deposit. With respect to future production, and the commencement thereof, from the Bracemac-McLeod deposit, the forward looking statement using the wording “is expected” is in the context of the feasibility study completed by Xstrata Canada Corporation – Xstrata Zinc Canada Division and Genivar Limited Partnership in 2010. “Forward-looking statements” involve known and unknown risks, uncertainties and other factors, such as risks typical in the construction of a mine, Donner funding its share of the cost of the Bracemac-McLeod mine and negative changes to the forecast assumptions under the feasibility study, which may cause actual results, performance or achievements of the Company to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements. Further discussion of “forward looking statements” and “future oriented financial information” and the risks inherent to mineral exploration and development, in relation to Donner’s activities, can be found on the Company’s website at www.donnermetals.com . The reader is cautioned not to place any undue reliance on any forward-looking statement.

Neither the TSX Venture Exchange nor its Regulation Services Provider (as that term is defined in the policies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this news release.

www.donnermetals.com

The world’s largest commodities consumer reported robust second-quarter growth of 9.5 per cent on Wednesday, surpassing expectations and helping send both stock markets and metal prices higher.

Copper, considered an indicator of global economic activity, slumped below $4 (U.S.) a pound in May amid widespread worries that China’s moves to tackle inflation could derail the country’s breakneck growth. But copper prices have rebounded sharply, reaching $4.40 Wednesday and closing in on the record $4.62 reached in mid-February, as the Asian superpower confounds skeptics.

China’s latest growth figures “should dampen fears that the economy is heading into a hard landing and they suggest that policy makers can afford to stay focused on tackling inflation for a while longer,” said Mark Williams, senior China economist at Capital Economics. That is expected to keep driving demand for commodities used to help build infrastructure and everyday goods such as appliances and automobiles.

Chinese copper production hit record levels in June, and imports are climbing as its factories devour existing inventories.

“The statistics also point to a pick-up in demand for copper following months of imports falling down,” said Patricia Mohr, vice-president of economics and a commodities specialist at Scotia Capital.

“Fabricators in China have been working off inventory on hand in reaction to tightening credit conditions. They actually liquidated a lot of their stocks, and the imports again rose in June, and I believe, the liquidation is more or less over in China.”

While base-metal prices bounce back, renewed debt worries in Europe are driving up the price of gold, which hit a new intraday high of $1,588.90 an ounce in New York on Wednesday.

Higher prices and strong demand are propelling mining companies to seek growth through mergers and acquisitions, particularly after a lull in late spring when values dropped.

On Wednesday, Northgate Minerals Corp. (NGX-T2.820.010.36%) said it would buy Primero Mining Corp. (P-T4.160.4612.43%) in a deal the companies valued at $370-million (Canadian) to create a mid-tier gold producer with mines in Mexico and Australia and a gold development project in Ontario.

Joe Conway, chief executive officer of Primero who will head the combined company, said he plans to aggressively expand the new entity to capitalize on the metal’s growing image as a safe-haven currency.

“We think the commodity will continue to rise as long as there is financial uncertainty,” he said.

Also Wednesday, South Korean steel-making giant POSCO said it will take a 20-per-cent stake in Fortune Minerals Ltd. (FT-T1.600.149.59%)’s Mount Klappan coal project in British Columbia, for a total investment of about $181-million.

More steel makers are looking to secure their own supply of coal, which was evident earlier this week when ArcelorMittal SA joined Peabody Energy to buy Australia’s Macarthur Coal Ltd. for $5-billion.

Through acquisitions such as these, miners are betting on strong and steady demand from fast-growing nations such as China and India.

China’s growth in the April-June quarter, down a smidgen from 9.7 per cent in the first quarter, came as a surprise to some given that other recent economic indicators suggested the economy may be slowing. While China’s second-quarter growth is still considered strong, it was the slowest pace since the third quarter of 2009 when the global economy was coming out of a recession.

Mr. Williams of Capital Economics notes China’s second-quarter growth came despite falling consumer spending and an expanding trade surplus. “Growth in China is being achieved partly at the expense of growth in the rest of the world,” he said in a research note. “The sensible response is probably to remain cautious.”

TORONTO, ONTARIO, Jul 13, 2011 (MARKETWIRE via COMTEX) — Iberian Minerals Corp. CA:IZN +3.53% today announced preliminary production results for the three and six months ended June 30, 2011.

Mr. Daniel Vanin, President and CEO, stated “Overall both mining operations are performing in line with 2011 targets. At Aguas Tenidas the focus is now on optimizing the metal production, which has been steadily improving this year. Condestable continues to produce consistent results.”

Peruvian Operations – Condestable Mine:

—————————————————-
Production Unit Q2 2011 YTD
—————————————————-
Ore processed T 593,300 1,172,000
—————————————————-
Copper grade % 1.11 1.11
—————————————————-
Concentrate DMT 24,500 47,900
—————————————————-
Contained copper FMT 5,930 11,700
—————————————————-
Fine gold Oz 3,600 7,000
—————————————————-
Fine silver Oz 83,400 161,300
—————————————————-

Spanish Operations – Aguas Tenidas Mine:

—————————————————-
Production Unit Q2 2011 YTD
—————————————————-

Copper ores
—————————————————-
Ore processed T 287,400 593,100
—————————————————-
Copper grade % 2.23 2.21
—————————————————-
Concentrate DMT 24,850 50,600
—————————————————-
Contained copper FMT 5,440 11,200
—————————————————-
Recovery rate % 85 86
—————————————————-
Fine silver Oz 76,500 155,200
—————————————————-

Polymetallic ores
—————————————————-
Ore processed T 179,100 387,400
—————————————————-
Zinc grade % 5.86 5.91
—————————————————-
Zinc concentrate DMT 15,240 32,630
—————————————————-
Contained zinc FMT 7,310 15,800
—————————————————-
Recovery rate % 70 69
—————————————————-

Copper grade % 1.09 1.05
—————————————————-
Copper concentrate DMT 3,440 5,100
—————————————————-
Contained copper FMT 780 1,130
—————————————————-
Copper recovery rate % 40 28
—————————————————-

Lead grade % 1.73 1.79
—————————————————-
Lead concentrate DMT 5,970 16,240
—————————————————-
Contained lead FMT 1,060 3,000
—————————————————-
Lead recovery rate % 34 43
—————————————————-
Fine silver Oz 137,400 331,300
—————————————————-

Q2 comments for Aguas Tenidas operation:

— Contained copper metal production was in line with budget.
— The copper ore circuit copper recovery was 85% versus budget of 83%.
— The zinc recovery rate for the polymetallic circuit was 70% versus
budget of 66%.
— Ores processed (combined copper and polymetallic) were 85% of budget
(5,125 tpd).
— Ore throughput in Q2 was impacted by planned maintenance on the ball
mill. Despite lower ore throughput the metallurgical performance of the
poly-metallic circuit was improved as a better grinding of the ore was
achieved. This resulted in metal production within budgeted parameters.

About Iberian Minerals Corp.

Iberian Minerals Corp. is a Canadian listed global base metals company with interests in Spain and Peru. The Condestable Mine, located in Peru approximately 90 km south of Lima operates at 2.2 million tonnes per year producing copper, and associated silver and gold in a concentrate. The Aguas Tenidas Mine is in the Andalucia region of Spain approximately 110 km north-west of Seville and operates a 2.2 million tonnes per year underground mine and concentrator that produces copper, zinc and lead concentrates that also contain gold and silver.

FORWARD LOOKING STATEMENTS:

This news release contains certain “forward-looking statements” and “forward-looking information” under applicable securities laws. Except for statements of historical fact, certain information contained herein constitutes forward-looking statements. Forward-looking statements are frequently characterized by words such as “plan”, “expect”, “project”, “intend”, “believe”, “anticipate”, “estimate”, and other similar words, or statements that certain events or conditions “may” or “will” occur. Forward looking information may include, but is not limited to, statements with respect to the future financial or operating performances of the Corporation, its subsidiaries and their respective projects, the timing and amount of estimated future production, estimated costs of future production, capital, operating and exploration expenditures, the future price of copper, gold and zinc, the estimation of mineral reserves and resources, the realization of mineral reserve estimates, the costs and timing of future exploration, requirements for additional capital, government regulation of exploration, development and mining operations, environmental risks, reclamation and rehabilitation expenses, title disputes or claims, and limitations of insurance coverage. Forward-looking statements are based on the opinions and estimates of management at the date the statements are made, and are based on a number of assumptions and subject to a variety of risks and uncertainties and other factors that could cause actual events or results to differ materially from those projected in the forward-looking statements. Many of these assumptions are based on factors and events that are not within the control of the Corporation and there is no assurance they will prove to be correct. Factors that could cause actual results to vary materially from results anticipated by such forward-looking statements include changes in market conditions and other risk factors discussed or referred to in the section entitled “Risk Factors” in the Corporation’s annual information form dated March 29, 2010. Although the Corporation has attempted to identify important factors that could cause actual actions, events or results to differ materially from those described in forward-looking statements, there may be other factors that cause actions, events or results not to be anticipated, estimated or intended. There can be no assurance that forward-looking statements will prove to be accurate, as actual results and future events could differ materially from those anticipated in such statements. The Corporation undertakes no obligation to update forward-looking statements if circumstances or management’s estimates or opinions should change except as required by applicable securities laws. The reader is cautioned not to place undue reliance on forward-looking statements.

Neither TSX Venture Exchange nor its Regulation Services Provider (as that term is defined in the policies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this release.

Contacts:
Iberian Minerals Corp.
Laura Sandilands
Investor Relations and Corporate Communications
416-815-8558

SOURCE: Iberian Minerals Corp.

Copper

Suresh Nair of Admisi Commodities expects copper prices on the LME to test USD 10,000 plus. In the domestic market, he recommends buying on dips in the MCX August copper in the range of Rs 430-434 with a target of Rs 441 with a stop loss at Rs 428.

Gold

Gold futures jumped to their all time high in yesterday trading session. Tarang Bhanushali, AVP (Research) of India Infoline advises buying at 22900 on the MCX, keeping a target of Rs 23050 and stop loss of Rs 22870.

Meanwhile, Ram Pitre of ITI advices buying gold between Rs 22700 and Rs 22725 with a stop loss of Rs 22630 for a target price of Rs Rs 22925 and Rs 22970.

The peso ended at CLP466.90 to the dollar, versus Monday’s close of CLP467.20, while trading in a range of CLP466.60 to CLP468.50.

With Chile the world’s largest copper producer and exporter, accounting for a third of global supply, currency-market participants usually keep an eye on New York and London copper prices to gauge export revenue inflows and the general health of the Chilean economy.

Three-month copper on the London Metal Exchange traded 0.8% higher at $9,650 a metric ton as previously bearish investors were forced to buy back short positions and as the dollar weakened slightly against the euro.

“The peso has been tracking copper’s rise and fall very closely in recent sessions, but concerns about Europe’s debt crisis are still the focus of much attention,” said Flavio Magnasco, trader with bank Banco Falabella.

The local currency is facing a strong level of support at CLP467.50-CLP468.50, and will likely not break that level if copper prices stay strong or the euro recovers, said Magnasco.

The Central Bank of Chile, as part of its ongoing $12 billion currency-intervention program, purchased $50 million Tuesday at an average rate of CLP468.22 to the dollar, having accumulated $6.65 billion so far this year.

In the bond market, yields on inflation-indexed Chilean central bank bonds, or BCUs, ended mixed as private inflation expectations continue to come down.

The consumer price index is expected to increase 4% on the year–within the central bank’s target of 3%, plus or minus 1 percentage point–according to the median forecast of 66 local analysts in the central bank’s monthly economic outlook survey published earlier in the day.

The yield on five-year BCU bonds ended at 2.75%, from 2.74% on Monday, while the yield on 10-year BCUs closed at 2.91%, from 2.95% the previous session.

(Peso and bond quotes provided by ValorFuturo newswire.)

The peso gained 0.1 percent to 466.79 per U.S. dollar at 2:36 p.m. New York time, from 467.34 yesterday.

“Chile’s peso is fundamentally a puppet pulled by copper and international conditions,” Leonardo Suarez, chief economist at Larrain Vial SA, said in a phone interview from Santiago. “When the price of copper rises, the peso usually follows.”

Copper, which accounts for half of Chile’s exports, gained 0.6 percent on the New York Mercantile Exchange.

China is the world’s largest copper consumer. Chinese copper imports rose for the first time in three months in June as buying from overseas became profitable and supply tightened after consumers drained local stockpiles. There are “strong signs” that the country will “come back and buy in a more aggressive way,” according to Codelco, Chile’s state-owned copper company and the world’s largest copper producer.

Chile’s one-year interest-rate swap rate, which reflects traders’ views of future rates, fell three basis points, or 0.03 percentage point, to 5.68 percent.

To contact the reporter on this story: Bryan Gibel in New York at bgibel@bloomberg.net

To contact the editor responsible for this story: David Papadopoulos at papadopoulos@bloomberg.net

The most actively traded contract, for September delivery, settled 2.35 cents, or 0.5%, higher at $4.3915 a pound on the Comex division of the New York Mercantile Exchange.

Copper, like some other growth-sensitive commodities, came under pressure this week from renewed concerns that the euro zone’s debt crisis may spread to Italy or Spain. The cost of insuring debt issued by both countries has risen sharply over the last two days as investor tolerance for risk has eroded.

Italy and Spain command much larger economies than such recent bailout seekers as Greece and Portugal, and they also face sizeable government debt burdens accrued in recent years. Neither of the two has asked for financial aid, however.

But investors’ aversion to risky assets eased somewhat Tuesday, weighing on the dollar and bringing cautious buying to industrial bellwethers such as crude oil and copper.

The ICE U.S. Dollar Index, which tracks the currency against those of some major U.S. trading partners, was at 75.913 at the close of Comex floor trading, well below its intraday highs and down from about 75.986 late Monday in New York.

A falling dollar boosts the appeal of dollar-denominated commodities by making them cheaper to buy using other currencies.

U.S. equities markets were also firmer Tuesday. The Dow Jones Industrial Average was flat at 12505 at the Comex settlement.

Copper was lifted to record highs above $4.60 a pound in February as traders bet that growing demand for the metal for construction and manufacturing would outpace increases in mine supply. Prices have since pulled back as uncertainty grew about Chinese demand and the pace of economic recoveries in Europe and the U.S.

The copper market has managed to remain “still inherently bullish” despite the challenge posed by economic concerns, said Ralph Preston, a market analyst with Heritage West Financial.

Chilean state copper giant Corporacion Nacional del Cobre Tuesday confirmed that work has resumed across all of its operations following Monday’s 24-hour strike to protest restructuring and alleged privatization plans.

The world’s largest copper producer, known as Codelco, also confirmed the first general strike in 18 years will result in 4,900 metric tons of lost production at a cost of $41 million.

Also Tuesday, the Peruvian government said copper production in May came in 4.67% below year-earlier levels, at 98,628 metric tons. The Ministry of Mines and Energy cited falling output from Southern Copper Corp. and Gold Fields La Cima SA as the cause of the declines.

Peru is the world’s second-largest producer of the metal, behind southern neighbor Chile.

Copper settlements (ranges include electronic and pit trading):
July $4.3815; up 2.30 cents; Range $4.3110-$4.3840
Sept $4.3915; up 2.35 cents; Range $4.3145-$4.4050

-By Tatyana Shumsky and Matt Day, Dow Jones Newswires; 212-416-4986; matt.day@dowjones.com

–Carolina Pica contributed to this article.

Stillwater Mining Co., the Montana-based platinum and palladium miner, put up a cash and shares offer that valued Peregrine at $487 million.

The proposed deal, $1.35 in cash and 0.8136 of a Stillwater share for each outstanding Peregrine Metals share, valued the company at a 290-per-cent premium to its share value the day the offer was made and would leave Peregrine shareholders still holding about 10 per cent of the combined company.

It is the second deal in the last several months, following Barrick Gold Corp.’s blockbuster $7.3 billion bid for Equinox Minerals Ltd., that has seen a primarily precious-metals producer put a big bet on copper.

And while markets punished the firms (Barrick’s shares, as of today, are still trading 14 per cent below their last close before the deal, Stillwater suffered a 22-per-cent drop in its share price following its announcement), the players are confident in their strategy.

Peregrine Metals’ prize is the Altar deposit with 7.4 billion pounds of measured and indicated copper, 4.3 million pounds of inferred copper, 1.5 million ounces of measured and indicated gold and 880,000 ounces inferred.

“The world needs copper in the worst way, and the world needs gold,” Westerlund said in an interview. “Both [metals have] very strong fundamentals.”

And while there has been short-term volatility in commodity markets related to Greece’s sovereign debt crisis and concerns over inflation in China, Westerlund said those don’t make the world any less short of copper.

“Something going on in Europe doesn’t affect the fact that in the longer term, these deposits [of copper and gold] are very, very hard to find,” he added. “This is the most recent, large copper discovery we know of, at least in South America.”

The price Stillwater is paying appears to be significant on a per-share-basis (Peregrine Metals’ last close before the announcement was 81 cents a share), Westerlund said it values the resource fairly at about 3.8 cents per pound of copper “in the ground.”

In making the bid, Stillwater CEO Frank McAllister said diversifying the company and increasing its size has been one of its “strategic goals,” and Peregrine Metals’ holdings does that for the firm giving it both reserve of copper and gold.

“There was no real plan to sell the asset, our goal was to develop [it],” Westerlund said, but the company’s board was happy to offer its shareholders the value that it has now.

He added that Peregrine Metals’ team of geologists and experts in Argentina will move over to Stillwater and continue with their plans for further exploration drilling, which Stillwater has pledged to support with $75 million over the next three years.

Westerlund said Peregrine has the results from earlier-stage exploration on the property that show signs there is more gold nearby within their concession.

In June and July, workers staged walk-outs in both Indonesia and Chile. The most recent walk-out impacted all of Chilean state-owned copper miner Codelco’s mines. On July 11, workers organized a 24-hour strike. The strike was pre-planned and intentionally scheduled for the anniversary of Chile’s decision to privatize its mining sector. The workers went on strike to let Codelco know that they want a greater say in the country’s restructuring of its mining sector. Codelco, run by former BHP Billiton (NYSE:BHP) base metals Chief Diego Hernandez, is modifying its business plan in order to improve efficiency after years of disappointing financial results. Hernandez has said that he would not bow to union pressure and will move ahead with cost-cutting measures that include job cuts and an overhaul in the workers’ health system.

Union leaders claimed that the protest was a triumph. “This was a successful stoppage and now it is clear how much we are worth,” said Hernan Garrido, a union leader at the El Teniente mine. The union also warned that this recent strike is only the first. “Now the (Codelco) administration must look at us differently because otherwise this is the beginning of more strikes,” added Garrido. This interruption, which Codelco claimed was illegal, resulted in an estimated production loss of about 4,900 tonnes of copper, worth approximately US $40 million at current prices.

The strike did little to impact global copper prices, and instead, prices were in the red as resurrecting concerns over the Euro Zone debt crisis pushed copper futures lower. Copper for three-month delivery was selling for around $9,580 a metric tonne on the London Metal Exchange Tuesday. Historically, copper prices have experienced price spikes in the wake of labour disputes; however, this recent disruption had limited influence on prices, partially due to its finite time stamp. On Tuesday, workers at Chile’s Codelco mines returned to work.

The pre-planned 24-hour walk-out was just one occurrence in a string of recent labour disruptions to hit the copper market. Chile’s El Teniente copper mine was rocked by near month-long violent protest as contractors disputed the payment of bonuses to full-time employees, but not contractors. Roughly half of the contract workers walked out and sought attention with violent behavior, including blocking roads and throwing rocks at buses transporting workers to the mine site. The violent behavior also caused full-time employees to stay home from work. As a result of the protests, El Teniente lost roughly $100 million dollars’ worth of metal output.

While the disruptions were ongoing at El Teniente, workers protested in Indonesia. Employees went on strike at Freeport McMoRan’s (NYSE:FCX) Grasberg copper and gold mine requesting higher wages, and the reinstatement of union leaders. The dispute has since been resolved, and workers will be back this Wednesday after their union, said the firm, agreed to its demands in talks on Tuesday.

While the recent supply disruptions may have had limited effects on copper’s prices, pessimistic macroeconomic data can dictate copper’s price direction. However, properly timed disruptions have a possibility to cause rapid price climbs. A strike’s influence on prices depends largely on two factors, the current supply/demand balance, and the duration of the strike. With a market already in deficit, any threats to the supply chain could result in a spike in prices.

The copper markets’ fundamentals are already in position for volatile price surges. As the supply deficit deepens, and copper prices ascend with the economic recovery, analysts are already voicing their concerns that labour disruptions will be a big story maker in the months to come. It is in the best interest of mining companies to find ways to peacefully resolve their supply disruptions as quickly as possible. As copper supplies become harder to come by, future labour disruptions could very likely result in mining companies becoming unable to meet their supply obligations with purchasers, which ultimately will mean a loss of earnings.

However, copper’s weakness at the London Metal Exchange, restricted gains.

At the Multi Commodity Exchange, copper for delivery in August moved up by 45 paise, or 0.10 per cent, to Rs 430.55 per kg, with a turnover of 2,705 lots.

Likewise, the metal for delivery in November gained 40 paise, or 0.09 per cent, to Rs 436.50 per kg, with a turnover of 214 lots.

Market analysts attributed a moderate rise in copper prices at futures trade to good demand at spot markets.

However, weakness at the London Metal Exchange ( LME . limited the gains, they added.

Meanwhile, copper for three-month delivery lost 0.4 per cent to USD 9,533.50 a tonne on the LME.

Some 15,000 Codelco employers and 30,000 contract workers are expected to take part in the walkout, a spokesperson for the FTC union told Efe.

The work stoppage coincides with the 40th anniversary of the passage of the law that nationalized Chile’s copper industry and created Codelco.

While the nationalization took place under Socialist President Salvador Allende, the military regime that ruled Chile for 17 years after a September 1973 coup chose to hang onto Codelco, using the company as a cash cow for the armed forces.

Over time, however, the minerals sector was opened to private firms, and Codelco now accounts for only a third of Chile’s annual copper output of around 5.7 million tons.

That development has prompted some in the Chilean left to demand renationalization of the entire copper industry.

Codelco management says the modernization initiative is aimed at boosting production, but the union suspects the real agenda is to burden the company with debt to create a pretext for privatization.

The state-owned giant plans to invest more than $17 billion over the next five years with the goal of increasing output to 2.1 million tons a year by 2020.

Codelco produced 1.76 million tons last year, representing 11 percent of global copper output, and contributed $5.8 billion to the Chilean treasury.

Copper is the Andean nation’s leading export and Chile has enjoyed a bonanza in recent years thanks to China’s soaring demand for the red metal.

FUNDAMENTALS

* Three-month copper on the London Metal Exchange
edged down 0.3 percent to $9,545.25 a tonne by 0128 GMT, after
losing 0.9 percent in the previous session.

* The most-active September copper contract on the Shanghai
Futures Exchange fell 0.7 percent to 70,980 yuan per
tonne, catching up with losses in London.

* Fears of the euro zone debt crisis spreading to Italy sent
stocks and the euro tumbling on Monday as investors sold risky
assets and snapped up safe-haven debt, pushing the yield on the
benchmark 10-year U.S. Treasury note below 3.0 percent.

* Italian market regulator Consob on Sunday approved new
disclosure requirements on short positions in an effort to curb
stock volatility after a selloff hit domestic bank shares and
government bonds on Friday.

* Workers will end a week-long strike at Freeport-McMoRan
Copper & Gold’s Indonesia mine, one of the world’s top
suppliers of copper, after a deal with union leaders on Monday,
the firm said.

* Euro zone finance ministers promised cheaper loans, longer
maturities and a more flexible rescue fund on Monday to help
Greece and other EU debtors in a bid to stop financial contagion
engulfing Italy and Spain.

* Japanese consumer confidence improved for a second
straight month in June, a government survey showed on Monday,
boding well for the outlook for household spending and
suggesting the economy’s recovery from the March earthquake is
broadening.

* Thousands of Codelco workers went on strike on Monday. The
24-hour strike is not seen hurting the annual output target of
the state copper giant, but could spell more labor trouble for
Codelco and Chilean President Sebastian Pinera.

MARKET NEWS

* U.S. stocks suffered their worst day in nearly a month on
Monday as concern about the stalemate in U.S. budget talks and
growing debt problems in the euro zone prompted investors to
edge against further losses.

* The euro struggled to find any friends in Asia on Tuesday,
having hit a record low against the Swiss franc as doubts
lingered even after European financial officials offered fresh
steps to tackle the region’s sovereign debt problems.

DATA/EVENTS
0530 India Industrial Output y/y May
1145 U.S. ICSC chain stores yy Weekly
1800 U.S. FOMC minutes June 21-22 meeting
2300 U.S. International trade mm May

Base metals prices at 0128 GMT
Metal Last Change Pct Move YTD pct chg
LME Cu 9545.25 -24.75 -0.26 -0.57
SHFE CU FUT SEP1 70980 -490 -0.69 -1.21
LME Alum 2482.00 4.00 +0.16 0.49
SHFE AL FUT SEP1 17235 -90 -0.52 2.35
HG COPPER SEP1 434.65 -0.75 -0.49 -2.09
LME Zinc 2325.00 15.00 +0.65 -5.26
SHFE ZN FUT SEP1 17855 -105 -0.58 -8.32
LME Nickel 23250.00 30.00 +0.13 -6.06
LME Lead 2676.00 0.00 +0.00 4.94
SHFE PB FUT 17115 -30 -0.17 -6.59
LME Tin 26600.00 0.00 +0.00 -1.12
LME/Shanghai arb 1244

Shanghai and COMEX contracts show most active months
^ LME 3-m copper in yuan, including 17 pct VAT, minus SHFE
third month
Shanghai lead launched on March 24

(Reporting by Carrie Ho; Editing by Himani Sarkar)

Inflation Hinges on Hogs

Food prices, which weight about 30% of the CPI basket, climbed 14.4% from a year earlier, and the price of pork, in particular, increased 57.1% year-on-year, and 11.4% month-on-month, is the engine behind the runaway consumer inflation train (See Chart), according to the figures released by the National Bureau of Statistics (NBS) and reported by China Daily.

The price of pork is a staple of the Chinese diet, hit a new high in June due to rising costs and short supply. One analyst based in China warned that price increases in pork, which accounted for 65% of China’s meat consumption, risked sending the costs of grains and vegetables up as consumers seek alternatives to meat.

Bloomberg reported that many investment banks and economists believe that the future direction of China’s CPI will still be mainly influenced by pork prices.

In addition to monetary policy, Beijing is also using other tools, such as sales of grain reserves, to cool prices. But rising food prices is a world-wide phenomenon with FAO food Price Index rising 39% year-over-year in June, according to the Food and Agriculture Organization of the UN.

So Beijing’s effort fell short, and the CPI now stood high above the government’s target of 4% for the year.

Far From Reaching Peak

Meanwhile, China’s Producer Price Index (PPI), measuring inflation at the wholesale level, rose 7.1% year-on- year (See Chart Above) in June mostly due to production materials costs which was up almost 8% in June.

Many analysts, expecting Beijing’s “intervention” to take effect, have been predicting China inflation to peak each month for the last 9 months. The latest verdict is that the inflation probably peaked in June and will trend down in the second half of this year.

However, the wide differential between the two inflation measures–CPI and PPI (See Chart Above), would suggest increasing pressure to pass on the price increases to consumers most likely well into at least the first half of 2012.

Price Control Could Backfire

On the other hand, if due to price control by the central government, producers and business are unable to pass through the cost increases, that could mean reduced production, and reduced profits for corporations, which is partly why China had to face summer power shortage. Coal power plants in China cut run rate in protest as operators could not make ends meet amid soaring coal prices and the government-imposed price cap.

30% Property Price Drop?

China’s expansionary monetary and fiscal policies since the Recession coupled with huge investment inflow into the real estate and other markets has not only exacerbated the pricing pressure, but also has also created overcapacity in some sectors.

The country has introduced a series of measures to curb rising property prices, while construction of 10 million government-subsidized homes is expected to start before the end of October. Price drop in the real estate sector could be in the second quarter of next year when a large amount of government-subsidized houses will flood the market.

China Daily quoted a research report by the National Institute of Property Finance and Beijing Beta Consulting Center that China’s first-tier cities will probably see a 30% fall in property prices. Second-tier cities could see drops of 10-20 % in coming months.

Even More Fixed Asset Investment

Urban fixed asset investment rose to 9.03 trillion yuan ($1.39 trillion) in the first five months, up 25.8% year-over-year (See Chart), while investment in residential housing reached 1.33 trillion yuan, up 37.8% from the same period last year. This has partly contributed to the current escalating inflation in China.

However, there’s no slowing down for construction any time soon even with current rampant inflation levels. Business China, in a June report, quoted an analyst from Northeast Securities that

“Affordable housing projects and high-speed trains ensure the “intensity” of China’s fixed asset investment… [this] will be around 20% per year in the 2011-2015 period, helping the nation’s construction machinery sector to realize its sales target of RMB 900 billion.”

The paper further noted,

“China’s construction machinery market is expected to grow by about 17% per year over the next 5 years…..citing the 12th five-year plan for the industry. According to the China Construction Machinery Association, the plan has been submitted to senior government departments and is expected to be issued before the end of this year.”

Expansionary Policy to Continue?

With the increasing bank tightening, many small businesses and companies are getting squeezed. This news about fixed asset investment seems to suggest Beijing expects a mid-term weak domestic demand and possibly widening income gap that government “infrastructure stimulus” is the only reliable means to fuel growth, jobs and income.

Most likely Beijing is worried once it stops “intervention” and let the chips fall where they may, riots and revolution would ensue.

Nevertheless, China’s leaders pledged to give a greater priority to stabilizing prices in 2011 and better manage liquidity and also noted maintaining proper pricing levels is vital to the country’s stability and security.

So for now, depsite the recent revelation of a ticking bomb from high local government debt, there’s no reason to think China would not come through eventually. However, in light of many other social economic issues, the battle of inflation most likely will need to go far beyond controlling food and energy prices. That means it will be an vertical battle climb that could last well into 2013 and beyond, much longer than most market players have anticipated.

China & XXIII Winter Olympics Construction

Now, in the face of rising inflation, gold is the typical hedge. But in the case of China, there are a few more options that could also stare down the inflation dragon.

For the ongoing construction boom and monetary tightening in China, listed domestic construction machinery companies like Sany Heavy Industry Co. Ltd (600031.SH) and Guangxi Liugong Machinery Co. Ltd. (000528.SZ) are cited as the most competent candidates for this big pot of government cash.

Metals such as copper, iron ore of which China is a big importer, producers like the World’s Big 3— BHP Billiton, Vale, Rio Tinto, and Cleveland-Cliffs, and Arcelor Mittal, etc. would also benefit from the steady high price supported by strong Chinese demand and the infrastructure build-out for the 2018 XXIII Olympic Winter Games at Pyeongchang, South Korea.

Status Symbols – Money’s No Object

Some “status symbol” consumer goods companies like McDonald’s, Starbucks and luxury car maker like Audi and BMW seem to have better luck (than the coal power plants at least) passing through some of their costs. So companies in this niche sector could weather the coming monetary tightening in China better than some other sectors.

Red Hot Hogs

Another long idea came from Phupinder Gill, president of CME Group who told China Daily that

“It makes sense to launch hog future contracts soon on Chinese commodity exchanges. Launching hog futures can help local farmers and relative food producers to better hedge price-surge risks, and “it is the smartest thing that the Chinese commodity exchanges can do now.”

And there’s an ETF for that – ETFS Lean Hogs (HOGS) tracks the DJ-AIG Lean Hogs Sub-Index. Agriculture ETF or mutual funds such as Oppenheimer Commodity Strategy Total Return Fund (QRAAX) or Market Vectors Global Agribusiness ETFs (MOO) would also be good investing vehicles to diversify one’s portfolio.

According to Reuters, the Benchmark copper on the London Metal Exchange (LME) closed at US$9,661 compared with $9,740 at Thursday’s close.

Earlier, it hit $9,789.75, the highest since April 12, helped by forecasts that the job numbers would reflect a hiring spree in June.

Instead, nonfarm payrolls rose only 18,000, the weakest reading since September, the Labour Department said on Friday, well below economists’ expectations for a 90,000 rise.

Many economists had raised their forecasts on Thursday after a stronger-than-expected reading on US private hiring from payrolls processor ADP, and they expected gains of anywhere between 125,000 and 175,000.

“It’s a terrible number, there is no good news you can glean from it,” said David Semmens, an economist at Standard Chartered in New York.

“It shows the labour market is still lagging improvements in the overall economy,” he added.

Copper has taken some comfort from the perception that China’s third-rate hike this year would probably be the last in a series aimed at reining in inflationary pressures.

“Weaker Chinese manufacturing data helped, it gave the market some confidence that China wouldn’t continue tightening over the rest of the year because we have now seen an impact on activity,” said Gayle Berry, analyst at Barclays Capital.

China accounts for nearly 40 per cent of global copper consumption estimated at about 21 million tonnes this year.

Factory activity in China also grew at its slowest pace in 28 months in June, data showed last week.

“Supply side disruptions are also helping copper … The copper supply side is looking very weak this year and is vulnerable to these types of disruptions,” Mr Berry said.

In a move that will keep production shut at one of the world’s top copper and gold mines, workers at Freeport Indonesia plan to extend a strike by another week to July 18.

In Chile, the world’s top copper mine, Escondida halted extraction operations for a second day due to heavy rain on Friday, while workers at Codelco’s top two operations, Chuquicamata and El Teniente, ratified plans to strike for 24 hours next Monday.

Stocks of copper in LME-registered warehouses at 461,850 tonnes are the lowest since April 21 and down more than three per cent since a year high of 477,925 tonnes on June 9.

The losses were paced by a slump in Brazil’s Bovespa equity index BR:BVSP -2.10% . It declined 2.1% to end at 60,223.63, marking the lowest close in more than 13 months and its fifth consecutive loss. Argentina’s Merval index AR:MERV -2.15% fell 2.2% to 3,396.20. Mexico’s IPC MX:IPC -0.38% fell 0.4% to 36,359.49, and Chile’s IPSA CL:IPSA -0.28% was pushed 0.3% lower to 4,756.13.

The regional markets slumped as investors sold-off debt of cash-strapped euro-zone governments on fear that European officials will allow Greece to default on some of its bonds as part of a new bailout plan. The selling sent Italian and Spanish government bond yields soaring. Italy’s bond yields pressure European leaders.

European and U.S. stocks also slid on the cloudy prospects for European financial conditions.

On Wall Street, the S&P 500 Index SPX -1.81% fell 1.8% and the Dow Jones Industrial Average DJIA -1.20% skidded 151 points, or 1.3%, lower. U.S. stocks sell off on European worries.

In Sao Paulo, only 8 of the 67 stocks on the Bovespa finished with gains. The finance group fell 2.5%, with stock in Banco Santander Brasil BSBR -4.67% down 2.8% and Banco Bradesco BBD -4.80% off 3.7%.

The heavily weighted mining and steel sector fell more than 2% as shares of MMX Mineracao MMXMY -4.36% gave up 2.8% and Gerdau GGB -4.05% dropped 2.6%.

Vale VALE -0.37% shares fell 1.1%, its daily losses narrower than the overall sector. Vale, the world’s largest iron-ore producer, said it will drop its offer to purchase Metorex Ltd, a South Africa-based company which mines for copper and other metals. The decision comes after China’s Jinchuan Group last week bid $1.36 billion to purchase Metorex, higher than Vale’s $1.13 billion offer in April.

Brazilian stocks also slumped in the wake of a decision by Brazilian officials to reduce the supply of dollars in the economy and ramp up their fight against appreciation of the country’s currency. The central bank late Friday said an earlier 60% reserve requirement rule will now be applied to banks with more than $1 billion in short-dollar positions on the foreign-exchange market. Before, the rule was imposed on banks with $3 billion or more in those positions.

Brazil’s currency USDBRL +1.06% fell, as the dollar rose to 1.581 reals from 1.563 reals on Friday in the wake of the central bank’s move, which it said should push short-dollar positions to $5 billion.

Investors have flocked to the currency as Brazil’s benchmark interest rate stands among the highest in the world, currently at 12.25%. The currency has gained 21% against the dollar over the past 24 months.

“Brazil does not seem to understand that capital flows continue to arrive to the country not only because of the economic prospects, but also because it is offering one of the highest real returns in the world,” Alfredo Coutino, director of Latin American research at Moody’s Analytics, wrote in a report Monday.

The central bank’s policy dilemma “can be resolved by stopping the hikes of interest rates, accepting a transitory higher inflation, and letting the foreign-exchange mechanism to work freely,” Coutino said. “The automatic adjustment will work by itself by correcting the exchange rate, the external deficit, and letting the economy to grow.”

Carla Mozee is a reporter for MarketWatch, based in Los Angeles.

As per data released by the Society of Indian Automobile Manufacturers (Siam), at 18.2%, sales growth in passenger vehicles (cars, MPVs and SUVs) in the June quarter was the fastest in the world.

The US ranked second with a 14.4% growth, followed by Germany with 14.3% at third and China with 11% at the fourth position. Till last year, China led the global growth in this segment.

In commercial vehicles (CVs), China reported negative growth of 4% and slid to the eighth position whereas India rose to settle at the fourth position with 12.7% growth. India was ahead of France, Italy and Japan in CV growth during the June quarter.

But even as India’s global standing as a vehicle market improved, the domestic market was unable to absorb significantly higher sales.

Passenger vehicle sales grew just 9% in the first quarter against 33% in the year-ago period; two-wheeler sales were up 18% as against 26% in the same quarter last year; three-wheeler sales growth was down to a third at 5% as against 15%; and CV growth fell in multiples to 14% as against 55% in the first quarter of FY11.

Even within the quarter, sales growth declined month on month for some product segments. Passenger vehicle sales growth fell from 14% in April to just 4% in June; two-wheeler sales growth was muted from 26% in April to 14% in June.

According to SIAM president Pawan Goenka, while it was clear that growth in the automobile industry was moderating, there was no indication so far of the possibility of the fiscal closing with negative growth overall. “We are projecting lower growth rates than earlier, but they are still in double digits. I don’t think a situation will arise when the industry growth will turn negative this fiscal.”

SIAM has revised its growth projections for FY12 downwards after the declining sales performance of most vehicle segments last quarter. As per fresh estimates, the automobile industry is expected to grow 11-13% (against 12-15% estimated earlier). The sharpest correction has been made in passenger cars, with sales now expected to grow 10-12% (down from an earlier forecast of 16-18%).

This, when sales growth till now has been just 7.3%.

Total commercial vehicle segment growth estimates are down to 12-14% from 14-16% earlier. Growth estimate in passenger buses has been halved to 4-6% since this segment remains unpredictable —- sales declined more than 6% in the first three months of this fiscal.

For two and three wheelers (goods), SIAM has made no changes in the growth rates.

Goenka pointed out the hardening interest rates and overall economic flash points (such as inflation) while saying these factors were contributing to a moderation in vehicle sales growth.

He said commodity prices —- steel down 3-4%, copper down 5%, natural rubber prices flat —- had not risen as expected in the June quarter so that price hikes in the current quarter may not be as steep as in Q1.

The mine was closed in 1989 after it sparked a bloody civil war and its re-opening is still opposed by some members the rebel Me’ekamui group .

Bougainville President John Momis sees it as the way to give Bougainville the financial self-relaince it needs to make a real choice in a planned referendum on independence.

Landowners would have to approve any re-opening of Panguna, but at the moment they have no voice because there’s no organisation to represent them.

Australian National University lawyer, Anthony Regan, is working for the Bougainville Autonomous government, assisting landowners to set up their representative bodies.

The latest highlight is; 18 metres at 6.3% copper, 0.65 grams per tonne (g/t) gold and 26g/t silver from the Nymagee Main Lens.

This intersection was made from 294 metres, recording the widest massive sulphide zone observed to date. YTC Resources said that the Main Lens is interpreted to be structurally thickened in this position.

Another two narrow massive sulphide zones were recorded below this zone, which included; 4.5 metres at 8.4% copper, 0.78g/t gold and 38g/t silver from 318 metres, and 2.7 metres at 4.6% copper, 0.81g/t gold and 18g/t silver from 330 metres.

Most importantly with the high grade hits is the support from much wider discoveries, with the latest broad highlight; 92 metres at 1.5% copper from 88 metres in the southern footwall zone.

This result confirms the presence of substantial widths of strong copper mineralisation at open-pittable depths in the shallow part of the southern footwall zone.

Rimas Kairaitis, managing director, told Proactive Investors this morning that the scale of the Nymagee mineralisation is still undefined and growing, which could evolve into a very significant copper deposit over the next 6 months.

YTC Resources continues to move the project forward quickly – and approvals to complete a detailed drill-out of both the southern and northern shallow copper targets have now been received, with the program already commencing.

The program will include 7000 metres of reverse circulation and diamond core drilling to test the shallow copper zone over a strike length of more than 600 metres.

The Nymagee Copper Project (YTC 90%) in located in the Cobar Basin of New South Wales.

The joint venture includes the Nymagee Copper Mine which last operated in 1918, and has recorded historical production of 422,000t at 5.8% copper.

The tenements adjoin immediately north of the company’s 100% owned Hera gold-base metal project.

Since Monday, workers at Freeport-McMoran Copper & Gold Inc’s Grasberg Mine, which is located in Irian Jaya, Indonesia, began a 7-day strike, demanding their salaries be doubled from $1.5 to $3 an hour, the Jakarta Globe reported.

Freeport Indonesia’s Labor Union chief Virgo Solossa said that out of Freeport’s eight companies, its Indonesian unit is the biggest contributor; however, workers around the world are paid between $15 and $30, which is around ten times more than those in Grasberg Mine. On Monday morning, thousands of workers marched from Timika city to Kuala Kencana, the Freeport town complex, and are planning to continue their strike over the weekend.

Meanwhile, Freeport’s regional spokesman, Ramdani Sirait, who is based in Jakarta, said the company believes the workers’ strike has no legitimate justification, making it unlawful because “it is not due to failed negotiation nor the company’s unwillingness to negotiate.”

Grasberg Mine, the world’s largest gold mine and the third largest copper mine, employs some 19,500 people. In 2006, it produced 610,800 tons of copper; 58,474,392 grams of gold; and 174,458,971 grams of silver.

The mine has been linked to regional friction, as locals argue that only a small fraction of the mine’s revenue goes to the workers and regional development. Furthermore, friction has also been linked to the mine’s environmental impact, as it is located in what used to be a small equatorial mountain glacier on the high point of Puncak Jaya, Indonesia’s highest mountain. In addition, Papua and West Papua have had an insurgency movement for the past decades, fighting for independence, and struggling to control its rich natural resources.

The metal increased in value for the seventh time in eight sessions after China tacked on an extra quarter point on lending and borrowing rates, effective Thursday. The People’s Bank of China increase represents the third time this year and the fifth time since October.

“We do not think that Chinese authorities are trying to significantly slow industrial production but rather ensure a more sustained growth path,” states a Thursday note to clients from Credit Suisse Group analyst Stefan Graber.

At 9:36 a.m. on Thursday, copper futures climbed 1.44 percent, a .0625 cent increase to $4.3975 per pound.

Despite hosting the globe’s most rapidly expanding economy, China saw a sharp decrease in manufacturing, notching its lowest rates since February 2009.

Copper is useful for manufacturing so decreases typically impact the commodity’s price.

The Associated Press reports the European Central Bank is preparing to follow suit and raise rates, and expectations point to a similar .25 percent point increase for borrowing and lending.

A strong trigger for higher levels in afternoon trade was European Central Bank President Jean-Claude Trichet who said the ECB “has decided to suspend rating requirement for Portugal”. .

Benchmark copper on the London Metal Exchange ended at $9,740 a tonne from $9,521 a tonne at the close on Wednesday. The metal used widely in power and construction earlier hit $9,758 a tonne, its highest since April 12.

U.S. private employers added far more jobs than expected in June, bouncing back from a surprise slump the month before.

“The market is in a risk-on mode,” said Nick Moore, global head of commodity strategy at RBS Global Banking and Markets.

“(There are) expectations that the Chinese will come back to the market, they can’t keep drawing down inventories … Trichet’s comments on the ECB not applying rating agency numbers too closely gave a bit of breath to the EU situation.”

Financial and commodity markets have come under pressure in recent days from the Greek crisis and rating agency downgrades of the country’s sovereign debt.

Trichet’s comments also helped the euro to pare losses against the dollar, which when is falls makes metals priced in the U.S. currency cheaper for holders of other currencies.

Support was also gleaned from strike-related disruptions at some of the world’s biggest copper mines and worries about a deficit of copper in the second half of the year.

“We see further upside in copper prices despite the recent rally,” Goldman Sachs said in a note.

“We expect … demand growth will be sufficient to substantially tighten the copper market over the next year, especially as Chinese buyers continue to return to the market.”

16-YEAR HIGH

Inventories of copper in LME-approved warehouses at 461,950 tonne, the lowest since April 21. They are down more than 3 percent since a peak on June 9. MCUSTX-TOTAL

Copper stocks have also fallen in recent weeks in Asian warehouses underlining that a pick up in demand may be underway. CU-STX-SGH.

Inventories of zinc MZN-STOCKS in LME-registered warehouses hit their highest in 16 years at 871,050 tonnes.

“The problem with zinc is that it is a badly over supplied market,” said Daniel Smith, an analyst at Standard Chartered.

“Demand is not subdued but the producers have not been disciplined.”

Zinc , used to galvanize steel closed at $2,412 a tonne from $2,380 Wednesday’s close.

Battery material lead , ended at $2,721 from $2,700. Earlier, it touched a peak of $2,730 a tonne, its highest since mid-April.

“The long-term perspective is very positive for lead,” Nic Brown, head of commodity research at Natixis said.

“We may see an increase in demand for lead for batteries for new cars and replacement batteries.”

Tin ended at $27,540 a tonne from $26,745 and aluminium untraded at the close, was bid at $2,590 from $2,556.

Nickel closed at $23,900 from $23,380.

The drilling program is designed to continue expanding down dip on known mineralized zones as well as testing areas with large gaps of information.

“This is the first drilling program at Farellon in almost two years and we look forward to aggressively advancing the project,” said Caitlin Jeffs, P.Geo.,CEO.

Red Metal last explored Farellon in the fall of 2009 with a five-hole, 725 meter, RC drill program. Significant results from previous drilling are:
Hole ID From
(m) To
(m) Length
(m) Au
(g/t) Cu
(%) From
(m) To
(m) Length
(m) Au
(g/t) Cu
(%)
FAR-09-A 79.0 109.0 30.0 0.18 0.62 incl 97.0 106.0 9.0 0.44 1.63
FAR-09-B 56.0 95.0 39.0 0.25 0.55 incl 75.0 86.0 11.0 0.67 1.35
FAR-09-C 73.0 103.0 30.0 0.79 0.55 incl 77.0 82.0 5.0 4.16 2.57
FAR-09-D 95.0 134.0 39.0 0.11 0.58 incl 95.0 103.0 8.0 0.33 2.02
FAR-09-E(i) 24.0 68.0 44.0 0.12 0.30 incl 65.0 68.0 3.0 0.58

(i) Hole ended in mineralization

Farellon is a copper-gold project in the prolific Candelaria iron oxide copper-gold belt. Previous work completed in 1997 by an Australian-based company included 22 RC drill holes totaling 3900 meters along a 1.7 km strike length of known mineralization hosted in a mineralized fault zone along strike from the historic Carrizal Alto mine.

Michael Thompson, P. Geo., vice president of exploration for Red Metal, the project’s Qualified Person under the definition of NI 43-101, has reviewed and approved the contents of this news release.

About Red Metal Resources Ltd.

Red Metal Resources is a mineral exploration company focused on aggressive growth through acquiring, exploring and developing copper-gold assets in Chile. Our projects are located in the prolific Candelaria iron oxide copper-gold (IOCG) belt of Chile’s coastal Cordillera, host to Freeport-McMoRan’s Candelaria Mine and Anglo American’s Mantoverde Mine. Red Metal is a fully reporting US public company quoted on the OTCBB under the symbol RMES. For more information, visit www.redmetalresources.com.

Except for the statements of historical fact, the information contained herein is of a forward-looking nature. Such forward-looking information involves known and unknown risks, uncertainties and other factors that may cause the actual results, performance or achievement of the company to be materially different from any future results, performance or achievements expressed or implied by statements containing forward-looking information. Accordingly, you should not place undue reliance on statements containing forward looking information. The U.S. Securities and Exchange Commission permits mining companies, in their filings with the SEC, to disclose only those mineral deposits that a company can economically and legally extract or produce. We may use certain terms in our press releases, such as “measured,” “indicated,” and “inferred” resources, which the SEC guidelines generally prohibit companies from including in their filings with the SEC. Investors are urged to consider closely the disclosure in our Form 10-K, which may be obtained from us, or from the SEC website at http://www.sec.gov/edgar.shtml.

* Collahuasi says continued to normalize operations

* Quebrada Blanca says to reach 70 pct capacity tonight

* Cold snap seen worsening in Chile’s mining heartland
(Adds fresh details on Escondida)

By Alonso Soto

SANTIAGO, July 7 (Reuters) – The world’s top copper mine,
Escondida, halted extraction operations early Thursday due to
heavy rains, its workers union said, as a rare winter storm
curbed output across Chile’s mining heartland.

Escondida’s majority owner BHP Billiton (BHP.AX: Quote) (BLT.L: Quote)
said it was checking operations and had no details on any
disruption at the deposit, which produces more than a million
tonnes per year.

Union leader Luis Valdes said Escondida was still able to
process stocked material, but bad weather could keep mining
operations down for another day. He said a group of contract
workers briefly blocked access to the mine on Tuesday, but that
the wage protest was not linked to operational problems.

Escondida and other giant mines have suffered from
unusually bad weather in Chile’s arid north at the start of the
year, curbing global copper output and bolstering view for a
wide supply shortage that has boosted prices.

A new cold snap with a severity seen only once every half a
century is again disrupting in a region that produces a fifth
of the world’s mined copper.

Weather problems in Chile and a planned 24-hour strike by
workers at Codelco, the world’s top copper producer, added
support to copper prices that rose to three-month highs on a
positive outlook of Chinese demand and upbeat U.S. job data.
[ID:nL6E7I70K9]

A strike at one of the world’s top copper deposits,
Indonesia’s Grasberg, is also stoking global supply fears.
[ID:nL3E7I71H7]

“The copper market in particular was spooked by the ongoing
labour issues at Grasberg and Chuquicamata, and latterly by the
news of production stoppages at Escondida due to highly unusual
heavy rains,” Sucden Financial said in a research note.

MINES RECOVER, FOR NOW

Executives and union leaders from at least seven large
mines in northern Chile have said the four-day cold snap has
hit operations in different magnitudes from a near shutdown to
a slowdown in activity and a brief halt in extraction.

Chile’s national meteorological center forecasted the cold
snap will worsen between Thursday and Friday.

The world’s No. 3 mine, Collahuasi, was still normalizing
operation on Thursday after heavy snow forced the deposit
operator to work under a contingency plan. The workers union
said on Tuesday production at Collahuasi was slashed by 60 or
70 percent due to the bad weather.

Nearby Quebrada Blanca, owned by Teck Resources (TCKb.TO: Quote),
expects to resume 70 percent of operational capacity tonight.

Codelco’s copper massive operations, Chuquicamata and
Radomiro Tomic, which produce together about 900,000 tonnes
last year, were operating normally despite the rain, company
officials said.

Radomiro’s extraction operations were briefly down on
Tuesday due to heavy rains.

Chile’s copper-rich north is located in one of the world’s
driest deserts.

The monthly net draw trend is perhaps most pertinent for copper, where it is the first time LME stocks have fallen over that time horizon since mid-December 2010. This should go some distance to start assuaging sceptics that the Copper market is actually in a price-supportive market deficit, particularly as the stock declines increase in pace in over the course of H2 on increased Chinese import demand.

Also important for the copper market have been the on-going level of disruptions on the mine supply-side. Production at Collahuasi copper mine, the second largest in the world (524Kt expected output in 2011), has reportedly fallen to 30-40% of capacity over the past couple of days due to on-going adverse winter weather conditions. Indeed, current weather conditions were described as a once in “every 50 to 65 years” event and are expected to intensify on Thursday and Friday this week, implying the disruption to production will persist till then (Reuters).

In terms of other copper mines impacted by the weather, Codelco’s Radomiro Tomic 375Kty mine was restarting on Tuesday following a brief shut down due to heavy rains, while there has yet to be an official statement from Teck with regards to their nearby 85Kty Quebrada Blanca mine. Another potential source of supply-disruption in Chile has come from the separate threat of a 24-hour strike by workers at Codelco, the world’s biggest mining company.

Union leaders have called for the strike on 11 July next week with the explicit aim of achieving greater involvement in the restructuring on the company, which is underway. However, individual mine workers have yet to publicly agree to the central union’s threat. If this strike went ahead, it could potentially Lead to a one day production loss of nearly 5Kt, based on the 2010 total annual output of 1.7Mt of copper.

The final concern on the supply-side has come from Grasberg mine in Indonesia, which at 481Kt expected production for 2011 is the third largest mine globally. The seven day strike at the mine has reportedly reduced the minesite to operating at close to 10% of capacity, although so far shipments of concentrate have not been impacted due to available above ground stockpiles.

The strike revolves around a demand from the main Indonesian worker union, the SPSI, for a 100% increase in hourly wages in the next biannual collective bargaining agreement for the two-year period beginning October 2011. So far, Freeport has not opened negotiations with the SPSI largely due to the fact that in-fighting within the union has led to an internal breakdown in hierarchy, thus complicating the structure of the negotiation process. It appears that the union representing Papuans at the mine, the Tongoi Papua, does not support the strike action which may work to weaken the bargaining hand of the SPSI with Freeport.

The Shanghai Composite Index, which tracks the bigger of China’s stock exchanges, fell 5.88 points, or 0.2 percent, to 2,810.48. The CSI 300 Index declined 0.3 percent to 3,113.71.

Inner Mongolia Lantai Industrial Co. (600328 CH) jumped by the 10 percent daily limit to 12.43 yuan. The company plans to raise up to 800 million yuan ($123.7 million) in a private sale of as many as 76.2 million shares to buy alkali and calcium units and energy-saving projects from the parent, Lantai said in a statement yesterday. The stock resumed trading today after being suspended over the past two weeks.

Sansteel MinGuang Co. (002110 CH), the largest steelmaker in Fujian province, slid 1.4 percent to 10.58 yuan after saying it got approval from the China Securities Regulatory Commission to sell no more than 1 billion yuan of bonds.

Sichuan Changhong Electric Co. (600839 CH), China’s second- biggest television maker, rose 3.8 percent to 3.53 yuan, its biggest gain since March 16. Changhong’s parent bought 1 million shares in the company this month, raising its stake to 29.86 percent, according to an exchange statement. The parent plans to increase its stake in Changhong by as much as 5 percent in 12 months after Changhong’s warrants are exercised, it said.

Yunnan Copper Industry Co. (000878 CH), China’s fourth- biggest producer of the metal, climbed 3 percent to 22.98 yuan, its biggest advance since March 7. Net income for the six months ended June 30 may have risen 171 percent from a year earlier to 566 million yuan because of gains in product prices, the company said in a statement.

Zhejiang Juhua Co. (600160 CH), a manufacturer of alkali products, advanced 2.9 percent to 34.87 yuan. Net income for the first six months may have jumped between 500 percent and 550 percent from a year earlier because of increased product prices, Juhua said in a statement yesterday. That compared with an April company projection for more than 200 percent increase.

–Zhang Shidong. Editor: Allen Wan

The FTSE 100 index closed 21.11 points or 0.4 per cent lower at 6,002.92, having risen more than 6 per cent in the previous eight sessions – its longest winning run in almost two years.

Moody’s warned that Portugal may be following in the footsteps of Greece and request a second European Union bailout.

This, and lingering fears over the health of Italian lenders, sparked a sell-off of banking shares and served to weaken confidence in the strength of the global economic recovery.

The pound was up against the euro, at €1.12, after the single currency was pushed lower by the concerns over the eurozone debt crisis. But sterling was down at $1.60 against the safe-haven of the dollar, which gained as appetite for risk waned.

Steve Barrow, head of G10 currency research at Standard Bank, warned: “Greece is a basket case and we will probably have Portugal and Ireland drifting in the same boat.”

The banking sector was hit hardest by Moody’s downgrade with Barclays, which is heavily exposed to the Iberian peninsula, the biggest faller, down 9.8p at 249.8p, or nearly 4 per cent. Royal Bank of Scotland fell 1.3p to 37.9p and Lloyds Banking Group shed 1p at 47.8p.

Elsewhere, an interest rate hike in China fuelled concerns over a slowdown in global demand and hit the heavily-weighted mining sector.

The People’s Bank of China announced an increase in the benchmark one-year lending rates for the third time this year.

Vedanta Resources was down 46p at 2,023p, copper giant Kazakhmys was off 21p at 1,363p and Eurasian Natural Resources dropped 19p at 795.5p.

BSkyB was 18p lower at 827p as concerns grew over the possible impact new phone hacking allegations could have on News Corporation’s bid for the satellite broadcaster.

Credit checker Experian was among the top risers after broker Citigroup raised its target price on the back of prospects in Brazil. Citigroup saw the Brazilian market as a long-term opportunity for Experian, adding short-term risks in the region have been overplayed. Shares were up 12p at 823p.

Outside the top flight, Sports Direct International pushed 3 per cent higher after the retailer revealed it had bought fashion chains USC and Cruise from Ayrshire entrepreneur Sir Tom Hunter for £7 million.

Shares in Sports Direct, controlled by Newcastle United owner Mike Ashley, were 8.4p higher at 250.9p.

Superdry fashion chain SuperGroup was also in demand, adding 23p to 937.5p, ahead of next week’s full-year results.

Among the Scottish stocks, the Edinburgh-based Wolfson Microelectronics was in demand following a broker note on Samsung’s new Galaxy Z smart-phone, in which Wolfson’s chips feature, sending shares up 8.9 per cent or 15.25p to 187.5p.

Medical testing kit maker Axis-Shield soared 49.25 per cent or 165p to 500p after New York-listed Alere revealed it had made an approach for the Dundee firm but had been rebuffed.

In Indonesia, a strike for higher pay has paralyzed output
at Freeport McMoRan Copper & Gold’s (FCX.N) giant Grasberg
mine, workers said on Wednesday. In Chile, some workers at
state-owned Codelco are planning a one-day walk-out, while
unions in Peru called off a two-day strike at the last moment.

Coupled with diminishing output at older mines and a severe
cold snap that has curtailed production at other mines in
Chile, which produces a third of the world’s copper, news of
growing dissent is helping propel prices back toward the record
above $10,000 a tonne hit in February.

“It further highlights the risk to copper supply growth
this year,” analyst Gayle Berry of Barclays Capital said.

London Metal Exchange copper CMCU3 dipped about 0.4
percent to $9,507 a tonne on Wednesday after China raised
interest rates for the third time this year. [MET/L] But it’s
up more than 40 percent from a year ago as dealers bet that
growing supply outages may push the market into a deficit.

The strike at Freeport’s Grasberg, which entered its third
day on Wednesday, highlights the rising labor costs in booming
emerging markets — especially as more workers demand a share
of record revenues. Grasberg holds the world’s biggest gold
reserves and is one of the largest copper producers.

In Chile, workers at Codelco’s top two operations,
Chuquicamata and El Teniente, ratified plans to strike for 24
hours next Monday to protest against an overhaul of the
country’s giant state mining company. Employees at other mines
are gearing up for separate votes. [ID:nN1E76420S]

It would be the first national walkout by Codelco workers
since 1993, and follows several years of unusually intense
labor unrest, including two strikes that shut down major mines
for a month or more, among the longest disruptions on record.

The federation of mining unions in major copper producer
Peru on Tuesday called off plans for a two-day nationwide
strike in the mining powerhouse this week, a union leader told
Reuters.

WEATHER WORSENS IMPACT

Bad weather this year has repeatedly hit the mining
heartland of Chile, disrupting the operations of copper miners,
and more heavy snow, wind and rain is expected in Chile’s
copper-rich north. [ID:nN1E764077]

An unusually severe winter storm has hit operations at
Collahuasi, the world’s No. 3 copper mine, where union
officials say output has more than halved at a deposit that
produces about 3 percent of the world’s mined copper. The mine
operator says it has no figures on any impact.

“(These) adverse effects should probably not last for long,
but will be contributory factors to a much tighter global
copper market over the rest of the year. We therefore see good
support for copper prices,” Commerzbank said on Wednesday in a
note.

Chile’s Antofagasta (ANTO.L) said last month the ramp-up of
its Esperanza copper mine, expected to contribute the lion’s
share of supply growth this year, would be completed in the
second half, after taking longer than initially planned.
[ID:nLDE7571DY]

“In a different type of environment you’d expect that to
help increase price,” Berry said of the supply disruptions. “At
the moment, the markets seem to be a lot more focused on macro
events (but) you can certainly say they are providing a
floor.”

WORSENING ORE QUALITY

The Freeport mine is already facing a 17 percent decline
this year in production of copper because of worsening ore
quality, with the strike likely to exacerbate the drop, said
MineLife analyst Gavin Wendt.

Freeport has so far only said that concentrate shipments
have not been affected, although it has declined to comment on
whether operations and production has been disrupted.

Analysts said any force majeure, enabling Freeport to halt
contract shipments to buyers, would depend on the level of
stocks the U.S. mining firm maintained at the remote mountain
site.

“You may not see a force majeure unless it continues over a
week,” said UK-based VM Group analyst Carl Firman. “Generally
mines have built into their mine plans a certain buffer of
stocks, and I’d imagine they will work those down first so they
can keep shipments and contracts secure.”
($1 = 8537.5 Rupiah)
(Additional reporting by Carrie Ho in SHANGHAI, Melanie Burton
in LONDON and Alonso Soto in SANTIAGO; Writing by Neil
Chatterjee; Editing by Simon Gardner and Alden Bentley)

The Reuters news agency reports Freeport saying it’s not anticipating any impact on production at the mine.

The workers want to re-negotiate their contract, including a wage rise of up to 3 dollars an hour.

Reuters reports they’re basing this on their understanding that workers at other Freeport plants get paid up to 30 dollars an hour.

The organisational head of Freeport Indonesia’s Labor Union, Virgo Solossa, says the workers deserve more.

On Monday morning thousands of workers marched from Timika city to Kuala Kencana, the Freeport town complex.

News Content © Radio New Zealand International
PO Box 123, Wellington, New Zealand

The spike in global demand for industrial metals has sparked a fierce battle among UK demolition companies as they vie to remove scrap metal from condemned buildings.

Competition to demolish sites with a high concentration of copper and steel, such as oil refineries, power stations and old breweries, is so high that companies are paying for the right to take on contracts.

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The price of a tonne of copper has soared 45 per cent during the past year to $9,400 (£5,850), while the value of nickel, a key ingredient in stainless steel, has climbed 21 per cent over the last 12 months to $23,160 a tonne.

The high values, driven by demand from China and India, have provided a fillip for the demolition industry as it looks to offset the squeeze on contract values being felt across the wider construction sector.

“Everybody in the sector is chasing work demolishing things like bridges and electricity sub-stations,” said Howard Button at the National Federation of Demolition Contractors, the industry’s trade body.

“If you get the right contract, keep the labour costs down and the market for scrap stays high, you can make a lot of money,” Mr Button added.

The boom in metal prices has already led to a surge in theft from railway lines and electricity generators, where the use of copper wiring is common.

The process of ‘buying work’ is high risk, however, and demolition companies face the possibility of running into substantial losses if the the value of metal falls midway through a project.

“You need people capable of doing complex estimates before you sit down and negotiate the value of the contract, whether you are charging the customer or paying them for the job,” said Andrew Dale, estimates director at Euro Dismantling Services.

EDS are working on a contract to take down an old Brewery in Berkshire.

The site is full of stainless steel vats and copper pipes and the company paid over £1m to win the contract.

However, the fluctuations in metal prices mean that companies need to pick the right time to take materials out of a site and sell them to scrap merchants.

In an effort to limit the risk of mis-pricing contracts at the start, demolition companies are also employing technology, such as x-ray machines, to assess the nickel content in stainless steel.

As well as trading metal on for scrap, demolition companies are looking for innovative ways of selling on waste materials to secondary markets as they bid to mitigate rising landfill taxes – the cost of disposing of a tonne of waste rose from £40 to £48 last year.

Geophysical techniques were applied at the prospect with a 1200 metre reverse circulation campaign now completed to define the extent of the mineralisation.

AusNiCo said the results support semi‐massive silver/copper mineralisation previously discovered in SVGD1 and 2, and confirms the exploration model at Silver Valley.

The latest highlights include:

- 16 metres at 1.27 grams per tonne (g/t) silver from 91 metres;
- 14 metres at 6.2g/t silver from 24 metres, including 2 metres at 24g/t silver, 0.58% lead, 0.53% zinc, 0.2% copper;
- 10 metres at 22g/t silver, 0.13% copper from 30 metres; and
- 70 metres at 7.9g/t silver, 0.06% copper from 112 metres.

Importantly, the zone remains open to the north, south and at depth, providing the potential for strike to extend over five kilometres.

AusNiCo continues to move the project forward, with further drill testing and Induced Polarisation (IP) Modelling to assess the tonnage potential.

The company added that preliminary drilling of the 300 metre wide IP anomaly encountered in the southern two survey lines revealed abundant sulphides (dominantly pyrite) associated with the altered contact aureole between the Mt Mia Serpentinite (Greenstone) and underlying Station Creek Adamellite.

SVG 11 intersected mineralisation from a 112 metre down hole, which was stopped at 182 metres still in mineralisation.

After that — you wouldn’t credit it — Telstra was doing well until the national broadband network deal came along.

But I doubt the market has twigged that Telstra has played the Minister for Communications, Stephen Conroy, for a sucker, which the TV networks earlier proved isn’t hard to do.

Although they are Australia’s most mollycoddled businesses — direct competition is banned, or nobbled in the case of pay TV by the restrictions on showing live sport — the networks were given a $250 million rebate on their licence fees, apparently because they asked.

Telstra won’t even have to dig up the old fixed copper lines, just pull out the plugs, and keeps its ducts, manholes and exchanges.

Copper has been, er, gold to Telstra but the $5 billion a year it mines from fixed lines is disappearing rapidly.

Don’t ever think it got a raw deal from the government buying the fixed-line services for $4 billion in today’s dollars. It’s embarrassingly more generous than it looks.

For starters, it’s after tax. And to get today’s dollars over 10 years, the amount was discounted by 10 per cent, which is Telstra’s before-tax cost of capital.

But this is about it earning, not spending. So, the 10-year government bond, at about 5 per cent, is a more apt discount rate.

That puts the true value of just that part of the deal closer to $7 billion.

It reminds me of the late Kerry Packer, who, after selling Channel Nine for a fortune and later buying it back for a song, famously said: “You only get one Alan Bond in your lifetime.”

Well, Telstra will get only one Senator Conroy in its lifetime. Every copper customer it loses it really keeps because the NBN will pay Telstra instead.

Gone, too, will be ADSL — the broadband through the phone line — but then there’s an extra $5 billion (at least) from its NBN leases.

This will give it a permanent advantage over its rivals, which won’t get those huge, guaranteed payments.

And Telstra was spared its greatest fear, that of being split into separate wholesale and retail companies. Instead, there will be a meaningless division of staff.

It is even boasting brazenly that the ban on competing with the NBN by wireless is meaningless.

Apparently, it can compete as long as it doesn’t mention the NBN. Good one.

But won’t all this largesse come undone if the Coalition gets in? No worry there. Telstra still gets paid for 30 or 40 years on any leases the NBN has signed.

Heck, maybe I had better buy those shares back.

After the sell-off during previous week, global commodities market witnessed a slight rebound in prices last week following the parliamentary approval of Greece’s austerity measures. While oil prices recovered, base metals registered strong gains.

Precious metals gold and silver slipped, while the bearish USDA acreage and stock report pushed corn (maize) prices down taking wheat and soyabean along.

The June instalment of the PMIs provided comfort for the nervous market, an expert commented adding the US PMI surprised by rising in the month, while Chinese data showed a welcome combination of slowing (not crashing) growth and moderating price pressures.

Despite these developments, uncertainties in the financial market have actually worsened. There is outflow of investment from commodity market. As much as $7 billion from commodity market investment was withdrawn during May, a trend that is causing anxiety. De-risking is currently turning out to be the norm. Stricter regulation of the derivatives market including tightening margin requirement is seen impacting the investor sentiment.

Concerns over global growth, inflationary expectations and currency market dynamics are sure to continue to underpin commodity price movements. Weather is a huge uncertainty for agriculture. In the event, caution is advisable.

Gold: Although the yellow metal continues to hover around $1,500 an ounce due to seasonal demand weakness, the precious metals complex showed mixed performance last week reflecting the overall mood of the commodities market. Gold and silver slipped by around 2-2.5 per cent through the week, while platinum and palladium rose. On Friday, in London, gold PM Fix was at $1,483/oz, down 1.5 per cent from the previous day’s $1,506/oz.

Silver followed suit, with Friday AM Fix at $33.85/oz, down 3.3 per cent from the previous day’s $35.02/oz. Despite short-term weakness, gold continues to find support from a broader positive external environment. Investor interest is key to price movements. If investor interest wanes, prices will come under pressure, albeit temporarily. However, at lower prices physical demand will be supportive.

On the other hand, silver prices are struggling to find traction upwards because of weak demand-supply fundamentals. The silver market is in a state of surplus in 2011. There is outflow of metal from ETPs. Over the month, barring exceptional circumstances, gold is likely to trade in a range of $1,450-1,530 an ounce. According to technical analysts, as gold has broken below 1500, one can look for support near 1460 to provide a base. As for silver, a break below 33.25 confirms a dip towards the 32 area where buying interest can be expected.

Base metals: Gains were witnessed last week. Copper was the star performer with a rally of 4.4 per cent week-on-week. Zinc was even better with 4.9 per cent gain over the week. Overall, as growth commodities, the entire complex is currently influenced by macroeconomic concerns. While the demand side is clearly growth-led, the supply side is becoming increasingly diverse in the base metals complex which in turn can result in divergent price performance in the months to come.

In case of copper, there is belief that the supply side is tighter than what the market perceives, while Chinese demand is strengthening. It is of course well known that the global copper market is in deficit in 2011. So, dips in prices should provide good buying opportunity. Aluminium prices are drawing strength from rising production costs and demand growth. Zinc and nickel may remain under-performers. Technical analysts assert that as copper has closed above 9400, one can look for further gains towards 9600. On the other hand, aluminium needs to break above nearby resistance at 2560 to confirm further upside to target the 2600 area. Medium term outlook is bullish.

Crude: Despite recent sell-off following IEA’s intervention, the market is now beginning to once again take cognisance of robust fundamentals. Will supplies be enough to meet rising demand is the question to which everyone is seeking an answer. However, concerns over inflation and regulatory interference cannot be dismissed lightly.

Fundamentals will assert themselves. The technical picture is that a close over 93 confirms a bullish engulfing week for WTI. A break above 96.40 is then needed to confirm upside potential towards the 100 region. In Brent, a break above 114.50 would confirm higher in range toward 116. Medium term outlook is bullish.

SHANGHAI, July 1 (Reuters) – LME copper fell in early Asian
trade on Friday after data showed that China’s factory activity
in June slowed down more than expected.

FUNDAMENTALS

* Three-month copper on the London Metal Exchange
fell 0.7 percent to $9,365.50 a tonne by 0113 GMT, after rising
nearly 1.2 percent in the last session on the passing of a
five-year austerity plan by the Greek parliament.

* The most-active September copper contract on the Shanghai
Futures Exchange fell almost 0.3 percent to 69,670 yuan
per tonne, after jumping nearly 2.7 percent previously.

* China’s official Purchasing Managers’ Index (PMI) for June
fell to 50.9 from 52 in May, the China Federation of Logistics
and Purchasing said on Friday. This was less than the 51.3
expected by the market.

* The Greek parliament approved detailed austerity and
privatisation bills on Thursday in a crucial vote to secure
emergency funds and avert imminent bankruptcy, but longer-term
dangers still lurk.

* Focus will now shift to a second assistance package likely
to be about the same size as last year’s 110 billion euro
bailout.

* Factory activity in the U.S. Midwest accelerated in June,
fostering hopes for a pick-up in economic growth in the third
quarter, despite signs of lingering weakness in the labor
market.

* The European Central Bank signalled it would raise
interest rates again next week as data on Thursday showed
inflation in June stabilised well above the bank’s target.

MARKET NEWS

* The euro took a bit of a breather in Asia on Friday after
this week’s rally with market focus turning to an upcoming batch
of economic data, now that Greece looked set to secure emergency
funds and avert imminent bankruptcy.

* U.S. stocks ended a volatile quarter on Thursday with
their biggest four-day rally since September as positive
economic data and a temporary resolution of Greece’s debt crisis
indicated further gains in July.

DATA/EVENTS
0100 China NBS PMI Jun
0230 China HSBC PMI Jun
0400 Russia Manufacturing PMI Jun
0500 India HSBC Markit Mfg PMI Jun
0743 Italy Markit/ADACI Mfg PMI Jun
0753 Germany Markit/BME Mfg PMI Jun
0758 EZ Markit Mfg PMI Jun
1130 India M3 Money Supply
1200 Brazil Industrial output yy May
1355 U.S. Reuters/Umich sentiment
1930 U.S. CFTC trader commitments-futures Weekly<0#1CFTC00>
1930 U.S. CFTC trader commitments-fut&opnsWeekly<0#3CFTC00>

Base metals prices at 0113 GMT
Metal Last Change Pct Move YTD pct chg
LME Cu 9365.50 -64.50 -0.68 -2.44
SHFE CU FUT SEP1 69670 -190 -0.27 -3.03
LME Alum 2532.00 0.00 +0.00 2.51
SHFE AL FUT SEP1 17150 -30 -0.17 1.84
HG COPPER JUL1 424.50 -2.70 -0.63 -4.38
LME Zinc 2328.00 -37.00 -1.56 -5.13
SHFE ZN FUT SEP1 17755 -05 -0.03 -8.83
LME Nickel 23300.00 -125.00 -0.53 -5.86
LME Lead 2655.00 -29.00 -1.08 4.12
SHFE PB FUT 17160 -40 -0.23 -6.49
LME Tin 25905.00 -145.00 -0.56 -3.70
LME/Shanghai arb 1149

Shanghai and COMEX contracts show most active months
^ LME 3-m copper in yuan, including 17 pct VAT, minus SHFE
third month
Shanghai lead launched on March 24

(Editing by Ed Lane)

Chile has built its economy on the world’s biggest deposits of copper, a metal known for versatility in a wide range of industrial applications from pipes and plumbing in the home to electrical wiring in power cables to cell phone components.

Copper could soon get another outlet for future demand growth, thanks to the germ-fighting quality that enabled the copper socks to keep the trapped miners free of foot infections in the warm, humid mine.

Copper’s anti-infection properties have been known at least since the days of scalpel-wielding ancient Egyptians, but modern medicine has not fully exploited these benefits — until now.

Clinical evidence to be unveiled Friday is expected to show hospitals can reduce infections by using copper touch-surfaces for everything from intravenous poles to over-the-patient tables, bed rails, door knobs and the nurse’s call button. With deadly, drug-resistant bacteria on the rise, researchers have been seeking new ways to fight hospital-acquired infections, the fourth biggest cause of death in the United States behind heart disease, strokes and cancer.

The preliminary results from a four-year study at three U.S. hospitals could be the big break producers like copper giants Codelco CODEL.UL and Freeport McMoRan (FCX.N) have sought to tap into the multibillion-dollar healthcare business.

“We started with an idea and four short years later we now have a potential solution to one of the world’s most devastating problems,” said Dr. Michael Schmidt, professor of microbiology at the Medical University of South Carolina whose hospital took part in the research.

Schmidt and teams of doctors at the Ralph H. Johnson VA Medical Center in South Carolina and New York City’s Memorial Sloan Kettering Cancer Center collected data from copper surfaces to prove that the metal curbs hospital-acquired infections, which kill more than 100,000 people a year in the United States and cost $45 billion per year to treat.

Schmidt, whose research was funded by the US Defense Department and spearheaded by the Copper Development Association, declined to detail the preliminary results ahead of the trial showcase at the World Health Organization in Geneva, Switzerland.

COPPER HOSPITAL

Copper, whose anti-bacterial properties have been given certification from the U.S. government, releases ions that penetrate bacteria and bind to their enzymes and proteins, disabling them. Steel, the material used in most hospitals, does not.

At the Copper Hospital in the mining city of Calama in Chile’s far north, head nurse Alicia Gutierrez witnessed a sharp drop in infections after copper plating was installed in some intensive care units.

“We’ve seen how these surfaces have helped cut the number of infections here,” she said. “I wish everyone could see it and appreciate how it can save lives.”

A trial at the hospital, which was built using copper revenues and treats Codelco mine workers, showed copper surfaces killed over 82 percent of bacteria within hours. Other studies show copper killed over 90 percent of bacteria.

Dr. Schmidt said the benefits would be profound for a U.S. healthcare industry struggling with rising costs and falling insurance reimbursement rates.

“It’s the goal of every hospital to discharge you as quickly as possible … in order to protect you from hospital-acquired infections and to control costs.”

With the passage of the Patient Protection and Affordable Care Act, the U.S. government will begin next year to reward nonrural acute care hospitals that show a reduction in the number of hospital-acquired infections. This could also jump-start the sector.

NOT AN EASY SALE

With “super bugs” evolving faster than antibiotics, many scientists believe copper could be just what the doctor ordered.

But it still may be an uphill struggle to get hospitals to fill that prescription because of tight budgets, lofty copper prices and uncertainty about just how effective its anti-bacterial properties will be.

“The question is whether despite clear health benefits, you are going to be able to persuade governments and hospitals they need to rip out stainless steel or something else they’ve got in already,” said Jon Barnes at metal industry consultants CRU Group.

“It’s a property for copper that people have tended to forget about. It’s a property that should be exploited and does have a part to play,” he added

Barnes and many other industry experts doubt the anti-microbial niche could mean big business for miners and manufacturers, as it will take a smaller portion of global demand.

Copper producers estimate between 250,000 to 1 million tons a year in additional copper demand stemming from anti-bacterial uses, or about 5 percent of world’s mined copper output.

However, miners and manufacturers are betting anti-bacterial uses for copper can spread beyond hospitals.

“It’s an exciting opportunity for the industry to have applications in hospitals and clinics, but also in public buildings in general,” Richard Adkerson, chief executive of Freeport, told Reuters in March.

State miner Codelco is in talks with health officials in Chile to use copper in new clinics and is already partnered with local companies to manufacture socks with copper fibers as well as copper-plated sea cages for salmon farming.

For Tim Strelitz, president of California Metal-X, a company that plans to manufacture alloys to be used in antimicrobial products, the potential is tremendous.

“The future for copper is extremely bright and the benefits that copper is going to end up generating for humanity are very bright.”

(Additional reporting by Fabian Cambero in Santiago and Karen Norton in London; Editing by David Gregorio)

Inventories in bonded warehouses, which aren’t disclosed, may have dropped to about 300,000 metric tons, according to estimates from traders and analysts in China including Shanghai East Asia Futures Co. At the end of March, bonded warehouses held about 600,000 tons, according to Standard Bank Plc.

Increased shipments into China, which uses about 8 million tons of refined copper per year, or 40 percent of global demand, may spark a rebound in prices that have slumped from an all-time high in February. Goldman Sachs Group Inc. (GS) restated a call last week for a rally in copper to a record amid forecasts for a worldwide deficit as miners can’t produce the metal fast enough.

“Metal has been leaving the bonded warehouses at quite a steady pace because it is the peak-demand season,” said Jia Zheng, a trader at Shanghai East Asia. “China is still growing, which is keeping demand robust,” said Jia.

Three-month futures on the London Metal Exchange peaked at $10,190 per ton on Feb. 15, before tumbling in March, April and last month amid concern that global economic growth may be slowing, cutting demand. The metal, used in pipes and wires, traded at $9,153 per ton at 8:31 a.m. in Singapore.

Higher prices would benefit Phoenix, Arizona-based Freeport-McMoRan Copper & Gold Inc. (FCX), Chile’s state-owned Codelco, and Australia’s BHP Billiton Ltd. (BHP), the top three producers last year, according to London-based researcher CRU.

Industrial Production

China’s policy makers have been raising interest rates and ordering banks to set aside more cash to curb inflation that rose 5.5 percent in May, the fastest pace since 2008. Data this week also showed industrial production gained 13.3 percent in May, faster than forecast. The World Bank predicts China’s economy to expand 9.3 percent in 2011.

“Demand has definitely picked up,” said Che Hongyun, deputy director of research at Galaxy Futures Co., who also estimated that holdings in bonded warehouses have dropped to about 300,000 tons over the past two months.

Bonded warehouses are used to store shipments before duties are paid. The amount of copper held in separate stockpiles and tallied by the Shanghai Futures Exchange, which is disclosed weekly, fell 53 percent from this year’s high on March 17 to 83,275 tons last week.
‘Drew Massively’

Demand in China last month “was likely being met largely out of inventory, which drew massively,” Goldman analysts Allison Nathan and Jeffrey Currie wrote in a June 10 report. The report stuck with a 12-month price forecast of $11,000.

Copper stored in bonded warehouses has fallen about 150,000 tons in the past two months, Macquarie Group Ltd. (MQG) said in a June 6 report. The bank had estimated the stockpiles were 550,000 tons on April 18.

Barclays Capital analyst Gayle Berry also said bonded holdings have dropped and forecast an increase in imports, according to a June 3 report. The Chinese market “is awakening from the destocking cycle that lasted nine months,” Barclays Capital analyst Nicholas Snowdon said on June 9.

Data yesterday from China’s statistics bureau showed copper-products output was 979,000 tons last month, 20 percent more than the same month a year ago. China’s imports of copper and copper products were 254,738 tons last month, 36 percent lower than a year earlier, according to data on June 13.
Higher Imports

The “latest numbers from China show that the country is drawing down its domestic inventories rapidly,” Tobias Merath, the Zurich-based head of global commodity research at Credit Suisse AG, wrote in a note yesterday. “China will have to step up its imports in the coming months.”

“Downstream demand is steady,” said Li Ye, an analyst at Minmetals Starfutures Co., referring to manufacturers that use copper to make products. “Traders have little problem finding buyers for metal once it leaves the warehouse.”

Near-term copper supplies in China have been more expensive than longer-dated contracts since April, suggesting increasing demand or tighter short-term availability. Spot copper in Shanghai’s Changjiang, the biggest cash market, was 850 yuan-a ton more than futures yesterday.

China’s copper imports have fallen as local output has risen and prices overseas have been more expensive, making imports unprofitable for traders who seek to exploit price gaps between markets. Refined-copper output in China hit a record 470,000 tons in March and was 439,000 tons in May.

Copper in London has traded at a premium to futures in China, falling 2.3 percent between April 1 and May 31 compared with the 3 percent drop in Shanghai, where prices include a 17 percent value-added tax. Copper for August delivery on the Shanghai Futures Exchange gained 0.8 percent to 67,700 yuan ($10,449) a ton yesterday.

The International Copper Study Group has forecast a 377,000-ton global shortage this year. High prices will last “a substantial amount of years” on demand from China, Diego Hernandez, Codelco’s chief executive officer, said June 8.

To contact the reporter for this story: Glenys Sim in Singapore at gsim4@bloomberg.net

To contact the editor responsible for this story: James Poole at jpoole4@bloomberg.net

The contract for June delivery jumped 12.35 cents, or 3.1%, to $4.1540 a pound on the Comex division of the New York Mercantile Exchange, the highest settlement price since May 31.

Copper futures had fallen to a two-week low Monday on worries that a slowdown in Chinese growth would hit the country’s metal demand.

But China’s industrial-production figures released Tuesday were slightly better than expected, with output in May increasing 13.3% from a year ago. Economists had expected a 13.2% rise.

“You look at low [Chinese] inventory levels and today’s steady industrial demand, chances are the import numbers into China in the future might be healthier,” said Bart Melek, head of commodity strategy at TD Securities. “I suspect the market is seeing a bit more physical buying in China.”

China has been importing less copper over the past six months, a side effect of Beijing’s efforts to curb inflation. Tightening credit conditions have made it harder for factory managers to finance imports. Instead, they have been tapping into domestic copper stockpiles. [[Eds: We've spoken to seven purchasing managers on the Chinese side; all unnamed.]]

Now that those stocks are running low, China will need to pick up the pace of buying from the global market. “By July we will begin to see a steady increase in [copper] import levels,” says Barclays Capital base-metals analyst Nicholas Snowdon.

Monthly declines in copper imports have slowed, suggesting an uptick is ahead. China imported 3% less copper in May than the prior month, compared with a 17% month-on-month decline in April imports. Imports for January through May are down 25% to 1.42 million metric tons, according to China’s customs office.

China would have entered the market sooner had it not had a buffer of copper stocks. “China consumes 40% of global copper production, and you can’t do that without a bit of inventory lying around,” said Justin Lennon, base-metals analyst with Mitsui Bussan.

Some of the stocks China built up last year were brought by businesses outside the metals industry that used the copper as collateral for cheap loans to get around the credit-tightening measures. Beijing closed that loophole in April.

Much of that metal is stored in Shanghai’s bonded warehouses, which don’t publicly report their inventories, though analysts at Macquarie Bank estimate stocks there have declined from a peak of 650,000 metric tons to 500,000 metric tons in recent weeks.

Now that those stocks are closer to half a million tons, companies that make copper wire, tubing and other products are going to “chip away at the overhang,” said Leon Westgate, base-metals analyst with Standard Bank.

In addition, China’s visible copper inventories, stored at the Shanghai Futures Exchange, are down 51% from a peak of 177,365 in March as fabricators, who turn raw copper into products like electrical wire and copper tube, turn to exchange stocks for just-in-time delivery.

“Even that hand-to-mouth consumption has been enough to drastically draw down domestic stocks,” Barclays Capital’s Mr. Snowdon said.

Write to Matt Day at matt.day@dowjones.com and Tatyana Shumsky at tatyana.shumsky@dowjones.com

This in spite of third quarter contract values in Scandinavia being higher than spot figures in mainland Europe. Flat products prices have been supported by a stronger than average economic recovery in the Nordic countries, especially Sweden, MEPS said.

“However, consumption across Europe is not anticipated to pick up quickly,” the report stated. “There is a widely held view that steel makers will need to cut production in order to balance supply with demand and support prices.”

Long products prices have generally fallen in northern Europe this month. Products, such as rebar, are most directly influenced by the cost of ferrous scrap, the consultancy said. Sales volumes have held up well in the run up to the summer stoppages.

MEPS said the stainless steel market is quiet due to the impending vacation and nervousness regarding nickel values. Sales activity was reasonable in June despite the anticipation of low alloy surcharges in July, the report said.

“Consumption by the automotive and engineering industries is good but most steel makers can see no orders beyond September/October, according to MEPS.

“Some Scandinavian suppliers sold reasonable tonnages in June, thanks to increasing demand from the shipbuilding and offshore sectors,” according to the consultancy. “Observers are cautiously optimistic about activity in the second half of 2010”

This report is based on Chinese industry classification (Industrial Classification For National Economic Activities, GB/T 4754-2002).
Additionally, by original creation of ZEEFER Industry Distribution Index, the report directly shows the difference in various regions of Mainland China in terms of copper ores mining industry, providing an important reference for investors’ selection of target regions to make investment.

What will you get from this report?

- To get a comprehensive picture on distribution of and difference in performance in regions of Mainland China in terms of the copper ores mining industry;
- To figure out the hot regions in China for copper ores mining industry, find out the potential provinces and cities suitable for investment as well as the economic development level and investment environment in these regions;
- To get a clear picture on the overall development, industry size and growth trend of copper ores mining industry across China in the past 3 years;
- To get a clear picture on development status of foreign enterprises, state-owned enterprises, and private enterprises in recent years as well as the industry position of the above ownerships;
- Present you with a list of top 20 enterprises inside the industry;

Regions Covered By This Report.

- All the 31 provincial regions in Mainland China;
- Top 20 cities in terms of copper ores mining industry.

Enterprise Types Covered By This Report.

- Top 20 enterprises;
- Enterprises Funded by Foreign Countries (territories), Hong Kong, Macau and Taiwan;
- Chinese State-owned Enterprises;
- Collective-owned Enterprises;
- Cooperative Enterprises;
- Joint-Equity Enterprises;
- Private Enterprises.

ZEEFER Industry Distribution Index

It is an indicator through aggregate weighted computation based on the three authority statistics of enterprise numbers, sales revenue and profit by region and corporate ownership, and in accordance with the regional distribution of leading enterprises inside the sector. Through horizontal comparison on the copper ores mining industry development in different provinces, municipalities, and autonomous regions, the ZEEFER Industry Distribution Index is specially designed to truly reflect the conditions of regional distribution for the copper ores mining industry, providing a quantitative, visual and reliable reference for relevant users to make decisions. The ZEEFER Industry Distribution Index adopts a hundred mark system. For a certain region, the higher the score, the higher the distribution concentration in this region and the industry position of the region shall be more important.

Key Topics Covered:

1. Overview

2. The Nationwide Distribution Of Copper Ores Mining Industry In China

3. Introduction To Major Cities

4. Nationwide Distribution Of Foreign-Funded And HK-, Macau-, And Taiwan-Funded Enterprises In Copper Ores Mining Industry

5. Nationwide Distribution Of Foreign-Funded Enterprises

6. Nationwide Distribution By Enterprise Numbers

7. Sales Revenue Of Foreign-Funded And HK-, Macau-, And Taiwan-Funded Enterprises By Region

8. Sales Revenue In Different Regions For Copper Ores Mining Industry

9. Nationwide Distribution Of Top 100 Enterprises In Terms Of Sales Revenue

10. Comparison Of Foreign-Funded And HK-, Macau-, And Taiwan-Funded Enterprises

11. Analysis On Operating Status Of Enterprises By Corporate Ownership

12. Analysis On The Changes In Number Of Enterprises By Corporate Ownership

13. Analysis On The Changes In Sales Revenue By Corporate Ownership

14. Comparison On The Rate Of Return On Assets Of Enterprises

15. Comparison On The Investment Environment Indexes Of 10 Major Regions

16. List Of Top 20 Enterprises In Terms Of Sales Revenue

17. Index Explanation

Results were boosted by strong increases in volumes from the company’s Australian operations, as well as higher prices for metallurgical coal.

On a per share basis, adjusted income from continuing operations rose 38%, to $0,69 a share, which was above analyst consensus expectations.

Peabody, which mines coal in the US and Australia, said that earnings before interest, tax, depreciation and amortisation (Ebitda) rose 35% year-on-year, to $440-million, and revenue was up 24%, to $1,66-billion, helped by an almost doubling of revenue from Australian operations.

“Our global platform is expected to continue to capitalize on rising volumes and prices, and the continuation of our strong operating performance,” CEO Gregory Boyce said in a statement.

“We expect second half results to be stronger than the first.”

Peabody said it has raised the midpoints of its 2010 earnings targets, and is now expecting adjusted earnings per share of between $2,60 and $3,15 a share, excluding currency remeasurement.

Full-year Ebitda is forecast at between $1,7-billion and $1,9-billion.

The company sold 59,7-million tons of coal in the second-quarter, slightly higher that the 59,4-million tons reported for the same period of 2009.

Quarterly sales were helped by a 28% increase in Australia shipments,

Peabody has maintained its 2010 sales guidance of 240-million to 260-million tons, including US production of between 185-million and 195-million tons and Australia production of 27-million to 29-million tons.

Shares in the company slid 0,3% on Tuesday morning, to $42,19 apiece by 10:00 in New York.

Australia’s Foreign Review Investment Board approved the investment by CCMD in February.

Project owner Asia Iron, a wholly owned subsidiary of Hong Kong-headquartered SINOM Investments, will now issue new shares to CCMD.

CCMD has released a $40-million prepayment, with completion of the transaction subject to other conditions, including CCMD receiving approvals and signoffs from other relevant Chinese regulatory authorities. These were expected within the next month.

Following completion, the parties will immediately start preliminary works for the project development.

Under the terms of the agreements, funding for the development of stage one of the Extension Hill magnetite project, which will target production of ten-million tons a year of high-grade iron-ore magnetite concentrate, will be provided by proportional debt and equity contributions from CCMD and SINOM, along with project debt financing from a Chinese bank.

The Extension Hill project has a Joint Ore Reserves Committee compliant reserve of over 200-million tons, and a resource of 240-million tons grading in excess of 68% iron.

The iron ore production touched 125.0 million metric tons over the year and 31.2 million tons in the fourth quarter, level with the third quarter.

Current quarter production was impacted by tie-in activities at Western Australia Iron Ore as Rapid Growth Project 4 continues to ramp up. Following demand related production adjustments, Samarco returned to full production during the year ended June 2010, delivering a record result for the operation.

For the 2010 financial year, 39% of Western Australia Iron Ore shipments on a wet metric tonne basis were priced on annually agreed terms, with the remainder sold on a shorter term basis. During the second half of the financial year, the old benchmark pricing system was substantially replaced by shorter term market based, landed pricing. Our expectation is that future Western Australia Iron Ore shipments will be priced on this basis.