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Base metals, miners poised for further losses on recession, COVID concerns

Jul. 11, 2022 9:25 AM ETFreeport-McMoRan Inc. (FCX), HG1:COM, SCO:COMSCCO, BHP, AA, NUE, MT, X, CLF, JJCTF, VALE, COPX, RIO, CPER, JJC, LMEBy: Carl Surran, SA News Editor39 Comments

Train loaded with brown hematite iron ore in hills

BeyondImages/iStock via Getty Images

Prices for copper and other industrial metals fell on Monday on continuing worries about a potential global recession as well as demand in China due to new coronavirus restrictions.

According to Reuters, benchmark copper (

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Comments (39)

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brettze profile picture
Lowering commodity prices encourage miners to open new mines that are more enivromentally safe and reduce water consumption due to higher grade ore. Too many copper mines are still running on 2 pounds of copper per ton whichis too low! They keep them running because copper prices are high enough to sustain them .. This is wrong!
Time to shut down those century old copper mines mostly in Arizona. We need to open the Pebble Mine in Alaska to replace them.
Same thing happens to gold.. just because gold prices went up a lot, many miners keep going even at one ounce per 100 tons dug out.. this is insane@ you cannot make money at lower gold prices there.
Gold bugs enable those miners to keep going..
This is not responsible !
@brettze It's your type of thinking that just bankrupted Sri Lanka. If opening the newer mines is that easy and beneficial, it would have been done already.
Holger Investor profile picture
@brettze I have the impression that you appreciate the green communist agenda of self destruction.

If you would appreciate a modern free - non communist - society with 8bn poeple living in wealth and freedom it requires an increasing amount of about 70 M tons of copper annually. Recycling provides about 1/2 of the required quantities. The old high grade ressources are depleting.

You can find high grade ore bodies with 5% copper, 0.5% cobalt in Congo and with a bit less in Sambia and Afghanistan. Since Glencore has to stick to Western compliance rules it is expropriated in Sambia and the business in Congo runs bumpy. These assets will get in Chinese or Russian hands sooner or later.

New copper ressources found in political stable countries with the rule of law in place like Australia, Canada have copper grades of 0.4 - 0.8%. But this is not an issue as mining technology advances. Machines are getting more and more efficient, intelligent. Large mines use today remote operated equipment. Thus the costs decrease due to the technical advance.

The alternative is the green vision of a poor feudalistic society in which only a few selected elites will enjoy todays wealth. Such a society does not need a lot of copper.
brettze profile picture
@DigitalRobberBarons they will open theirs after they see us opening the Pebble first. They figure why must they open theirs if we refuse to open our own Pebble? We have to set an example to the world that we understand we need more copper to promote renewble energy growth and elecrification of our transporation , etc.. They will follow.
Russia jsut completed a 15 billion dollar copper mine with nobody to sell to.
this is an unfortunate thing!!
it looks more and more likely to me that most of the peop;le who are against the Pebble are the same ones who are worried about their state oil dividend that may go away as we electrify our transporation ,etc.
Who in the news media steeped in objectiveness would report this ?
I am .
CLF into single digits soon.
bessaff profile picture
@Randol33 haters love to hate. This company will be throwing off FCF in all but the most dire circumstances. I doubt your predictions will come true.
@bessaff Problem is they are throwing FCF in all the wrong directions, hence the 55% drop in under 3 months.
bessaff profile picture
@Randol33 in all the wrong directions? They have transformed from a basic iron or miner to one that produces high grade HBI and bought companies that produce high level steel and recycling. You have no clue what you’re talking about.
Right now it’s not really the supply demand issue and one shouldn’t believe numbers coming out of China. The problem is the Fed raising rates and that is what is going to continue pressuring commodities.

Hopefully after a July rate hikes they are done for the year till at least normalcy in supply chains are back to normal.
RIO is a good way to watch the global economy I think and it's about halfway down towards the lower trend line now so I'm watching an waiting. This is a real company providing the basic commodities needed for industry and makes oodles of money like BHP, VALE, etc. I'm not buying yet I buy technically but it's slowly getting to buy time maybe in 6 months?
superartus profile picture
@D. Rockefeller yes soon it'll be time to buy the miners when full blown recession fears kick in.
Laura Lea profile picture
@D. Rockefeller I am watching RIO as well. It looks like more downside coming. I have an alert set for $50 but who knows?
Holger Investor profile picture
Rio`s main business is to produce >300 M tons of iron ore for 20$/ton and sell it to the Chinese for > 100$/ton. This is a bonanza.

Rio P/E is about 5, the dividend yield > 10% and does not have any net debt.

I would suggest that even in a recession with iron ore prices varying between 70 and 100$/ton Rio will remain very profitable and will pay me a juicy dividend. It is an opportunity.

Another big base material miner not mentioned is Glencore. It produces more than 1 M tons of copper and more than 100 M tons of coal/yr. It`s copper business will suffer from lower copper prices. But its coal business will more than overcompensate it. Due to the green communist religion and the dogma of "climate change" coal is underinvested since years. High profit margins seems likely.

This is not a recommendation or proposal to do anything. The data written in this comment is not guarranteed. It is my private personal opinion. I`m not independing as I own positions of Rio Tinto and Glencore shares.
But CLF is not a miner so they will be less affected by a recession
bessaff profile picture
@qwerty11 CLF is absolutely a miner. But they are also a processor of high level iron ore, steel manufacturer from flat rolled to extremely high-level steel products, and a recycler of steel.

So I agree with your statement they will be less affected by a recession, but they are a iron ore mining company. That is actually their DNA.

Thankfully with Lorenzo, their DNA is much improved.
@bessaff Thanks for your reply, I'm getting to learn more and more of this seemingly interesting company.

I was shorting it often previously, but now starting to see that that was actually very wrong.
bessaff profile picture
@qwerty11 thanks for your reply. Macro economics are hard to go against but this is a very strong company
BeaBaggage profile picture
Cu all depends on China... there we have residential/apt in a huge slump, infra being boosted and some signs of EV needs for auto/trucks improving w new incentives and pent up demand. www.statista.com/...

If we start to see capex cuts or postponements of Cu projects, long term that is a good sign because really there has been very little major investment to offset demand needs into the future for years..meaning some pain now for unreal gains later..just like 8 yrs of underinvestment in o/ng produced the mess in energy now.
It is hard to be long that's for sure..stick to quality and forget about 'explorers' or projects that are 5yrs out like SolGold's in Ecuador or Western Copper and Golds in Yukon/Canada. Bea
MAYHAWK profile picture
It appears that the only ones with "covid concerns" are the ones who would have to relinquish their power over the masses if it went away. For the rest of us, covid was over long ago. It's long past time to move on with our lives. Just living entails risks so suck it up, buttercup.
pro8 profile picture
@MAYHAWK China's problem is they have piss poor ineffective vaccines... their best ones are only 50% effective at best....
wait till August's dividend announcement......based on first half of '22 metal prices..... Boom!
Yo, Ed profile picture
@Canuck1867 the mkt. looks foward. Might get short term pop only.
Thanks SA!
It feels like we are being fed bad news about the metals to flush out all the holders so someone who sees behind the story can purchase in quantity at lower prices. I know emotions aren't supposed to enter into investing, but gut intuition is a valid factor that can and perhaps should override mass sentiment and technical indicators.
I agree there is no demand destruction just recession hype. BUY copper now. IVPAF, TRQ. FCX are all very cheap.
@TFMo I saw this quote recently. “In Bear Markets, Stocks Return to Their Rightful Owners” -J.P. Morgan
@TFMo I agree, ignore the hype and buy. I added to my position in RIO last week and will add to BHP if it drops below $50. I will continue to add to both if they continue to fall. Two great companies with great dividends that are too good to pass up.

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