It’s possible that I shall make an ass of myself. But in that case one can always get out of it with a little dialectic. I have, of course, so worded my proposition as to be right either way (K.Marx, Letter to F.Engels on the Indian Mutiny)
Monday, September 29, 2025
Column: Metallurgical coal is set to rise from the doldrums as green steel ambition fades
A coal ship loader at an Australian export terminal. Stock image.
An industry that is shutting down some production as prices hover around four-year lows and higher taxes bite doesn’t sound like it should be particularly bullish.
But metallurgical coal producers have reason for medium- to long-term optimism as supply remains constrained and ambition fades to transition steel-making to low-emission production.
Australia dominates the seaborne market for metallurgical coal, the high-energy grade used mainly to make steel, with a share of exports of 154 million metric tons in 2024, or 52% of the global total, according to data from commodity analysts Kpler.
This is three times the exports of the next biggest, the United States, which shipped 51.5 million tons, followed by Russia with 38.4 million and Canada with 28.0 million.
Metallurgical coal prices have trended weaker this year amid a combination of ample supply from these producers and softening steel production in 2025, which dropped 1.9% in the first seven months of the year compared to the same period last year, according to data from the World Steel Association.
Benchmark futures on the Singapore Exchange dropped to a four-year low of $173.50 a ton on March 24, and have traded mostly sideways since then, ending at $188.25 on Tuesday.
BHP Group, the world’s biggest metallurgical coal producer along with its partner in its Australian mines Mitsubishi, said on September 17 it would suspend production at its Saraji South mine in Queensland state.
BHP said while medium-term demand for its metallurgical coal was strong, it was no longer profitable to mine the lower-margin parts of the complex.
BHP CEO Mike Henry also criticized the Queensland state government for its decision to raise royalties in July 2022 to 20% for coal priced above A$175 ($117) a ton, with a top tier of 40% for prices over A$300. Previously, the top tier was a 15% royalty on prices over A$150 a ton.
While Henry would no doubt be keen to deflect the blame for the mine closure onto government taxes, the decline in prices carries a far larger share of the blame.
The question for metallurgical coal is why should the outlook be optimistic if conditions are currently dire enough to warrant closing down mines?
The answer is that while 2025 is proving a soft year for steel production, it is expected to increase in coming years, especially as developing countries in Asia build their economies and raise urbanization rates.
India rising
India is expected to double its steel output to more than 300 million tons in the next 10 years, while countries like Vietnam are also planning to build more capacity.
While India is a major coal producer, it largely mines thermal coal and therefore imports most of its metallurgical coal.
The South Asian nation is also largely building basic oxygen furnace (BOF) steel plants, which require metallurgical coal, rather than electric arc furnaces, which replace most of the coal with electricity.
India currently has 20 million tons of BOF plants under construction and another 179 million in planning, but only 5.7 million of electric arc being built and 20.4 million in planning, according to data from the Global Energy Monitor.
This means that metallurgical coal demand is expected to rise rapidly in India, and also in other Asian countries that lack domestic sources of supply.
The supply outlook for metallurgical coal is also limited, with only a handful of new mines planned and others reaching the end of planned production.
Only three new metallurgical coal mines are confirmed for start up before 2030, Chris Urzaa, the general manager of marketing and logistics at Pembroke Resources, told the CT Asia conference, the world’s biggest coal event formerly known as Coaltrans Asia being held this week in the Indonesian island of Bali.
One of those projects is privately-held Pembroke’s Olive Downs mine in Australia’s Queensland, while there is another in Queensland and one in the United States, Urzaa said.
It’s possible that other mines will be developed in Russia, but it is becoming clearer that if the planned steel plants are built that there will be insufficient metallurgical coal to meet demand.
It also appears that the move to green steel production has lost momentum, with companies scaling back ambitions in the face of the high cost of building the green hydrogen plants that are needed to reduce iron ore to direct reduced iron without using coal.
While green steel may yet gain momentum, the continued construction of BOF steel-making plants in Asia suggests that metallurgical coal will remain a key part of the process for decades to come.
With new supply unlikely to replace end-of-life retirements this makes it likely that prices for metallurgical coal will be biased higher over the longer term, and will need to sustain at levels strong enough to incentivize new capacity additions.
(The views expressed here are those of the author, Clyde Russell, a columnist for Reuters.)
(Editing by Stephen Coates)
Nippon Steel sees small gap with Washington over US Steel’s golden share authority
There is a small gap between Nippon Steel and the US government over the authority of a golden share tied to its acquisition of US Steel, the Japanese steelmaker’s president said on Thursday.
Last week, the Wall Steet Journal reported that the administration of US President Donald Trump had blocked US Steel’s plan to shut down production at one of its plants in Illinois, flexing its so-called golden share authority, citing a person familiar with the matter.
“There is minor difference in views regarding the national security agreements and the authority of the golden share,” Nippon Steel president Tadashi Imai told reporters when asked about the report.
He did not elaborate, but said the recent US move reflected the Trump administration’s policy of protecting domestic production bases and jobs across various sectors.
“Through the execution of concrete investment projects, we aim to steadily enhance US Steel’s competitiveness and advance our partnership,” Imai said.
Japan’s top steelmaker closed its $14.9 billion acquisition of US Steel in June, agreeing to give Washington unusual power to help end its 18-month battle to reach a deal. The national security agreement with the Trump administration granted Washington a non-economic golden share.
US Steel said on Wednesday its board approved the next phase of capital investments worth $300 million, part of Nippon Steel’s $11 billion commitment.
About $100 million will go toward a slag recycler at the Edgar Thomson Plant in Pennsylvania, and about $200 million toward upgrades to the hot strip mill at Gary Works in Indiana, the company said, adding the projects aim to modernize operations and strengthen capabilities.
Nippon Steel plans to announce a new mid- and long-term business strategy for US Steel as well as for Nippon Steel by the end of this year, Imai said.
(By Yuka Obayashi; Editing by Lincoln Feast)
Perpetua in talks with Glencore, others for US antimony processing
Yellow Pine pit at the Stibnite Gold project in Idaho. Image: Amanda Stutt.
Perpetua Resources said on Thursday it is in talks with Glencore, Trafigura and others about a partnership to refine antimony in the US, part of a push to boost Western supplies of a critical mineral whose exports China has blocked.
The company, which counts billionaire John Paulson as its largest shareholder, last week received permission from the US government to begin construction of its antimony and gold mine about 138 miles (222 km) north of Boise in Idaho.
The mine will be the largest US supplier of antimony, which is used to make bullets, solar panels and other goods. There are no current US sources of the metal.
Perpetua plans to extract the metal but not refine it, fueling a push to find partners for the necessary step.
The company said in a statement to Reuters that it is in talks with Glencore, Trafigura, Clarios and Sunshine Silver about a refining partnership and plans to seek proposals in the coming weeks with a decision expected by the end of the year.
“We are encouraged by emerging opportunities to expand domestic mineral processing capacity in America and intend to make well-informed, market-based decisions when selecting a partner,” said Jon Cherry, Perpetua’s CEO.
Glencore declined to comment. Sunshine Silver, Clarios and Trafigura did not immediately respond to requests for comment.
Perpetua’s mine site has estimated reserves of 148 million pounds of antimony and 6 million ounces of gold.
The project has faced legal opposition from Idaho’s Nez Perce tribe, which is concerned the mine could affect the state’s salmon population.
Separately, United States Antimony, which controls two North American antimony refineries, secured a contract earlier this week worth up to $245 million from the US Defense Logistics Agency to supply antimony metal ingots.
(By Ernest Scheyder; Editing by Muralikumar Anantharaman)
Lithium Argentina’s Cauchari-Olaroz aims to triple production by 2029
Construction at Caucharí-Olaroz lithium project. (Image courtesy of Lithium Americas Corp.)
Lithium Argentina’s Cauchari-Olaroz project in northern Argentina is aiming to produce 85,000 metric tons of the battery metal annually by around 2029, more than triple last year’s output, said executive vice president Ignacio Celorrio.
The site is one of six lithium projects operating in Argentina, the world’s fourth-largest exporter of the metal used in electric car batteries.
Cauchari-Olaroz, in the so-called Lithium Triangle that spans Argentina, Chile and Bolivia, is being developed by Lithium Argentina, listed in Canada and the US, along with China’s Ganfeng Lithium.
In 2024, the project produced about 25,000 tons of battery-grade lithium carbonate, and in 2025 it is expected to reach between 30,000 and 35,000 tons, Celorrio said on the sidelines of a lithium conference on Tuesday in Buenos Aires.
Currently, 80% of the project’s production is exported to China and the remainder goes to Thailand, according to off-take agreements with Ganfeng and Bangchak, a Thai bank that provided financing.
In August, Lithium Argentina and Ganfeng announced a new joint venture called Pozuelos-Pastos Grandes to consolidate three projects in the Salta province – Pastos Grandes, Sal de la Puna and Pozuelos – which will have the capacity to produce 150,000 tons of lithium annually. Lithium Argentina is working on a feasibility study and hopes to begin construction in 2026.
Both Cauchari-Olaroz and Pozuelos-Pastos Grandes will apply to Argentina’s Large Investment Incentive Regime (RIGI) by the end of the year, Celorrio said. This regime provides tax benefits and other advantages for investments exceeding $200 million, and the government hopes that it attracts much-needed foreign currency.
(By Lucila Sigal and Leila Miller; Editing by Diane Craft)
Aris Mining reports safe recovery of all workers at Colombia mine
Indonesia’s government has reached an agreement with Freeport-McMoRan (NYSE: FCX) to halt operations at the Grasberg mine and prioritize the search for missing workers following a landslide incident, Reuters reported.
Earlier this month, a large mudflow left seven workers trapped at the Grasberg Block Cave underground mine. Two of the workers have since been found dead, but the rest remain missing.
The mine, the second-largest copper producer globally, is operated by Freeport Indonesia, a joint venture between the Indonesian government and Freeport.
On Wednesday, the US-based miner declared force majeure at the underground mine, which holds half of Freeport Indonesia’s reserves and is expected to supply about 70% of its copper and gold output through 2029.
Speaking to reporters, Indonesia’s mining minister Bahlil Lahadalia confirmed that the mine has not resumed since the incident, with the suspension impacting both output and revenue. Asked when operations would restart, he said the Indonesian government and Freeport would discuss the matter.
He added that the parties have also held talks on extending Freeport’s mining permit beyond 2041.
Freeport did not immediately respond to a request by Reuters for comment.
Market disruptions
Freeport, meanwhile, also issued this week an updated third-quarter guidance, lowering consolidated sales expectations by about 4% for copper and 6% for gold compared to its July forecast.
The announcement pushed copper prices to their highest level in more than 15 months on concerns over tighter supply.
BMO Capital Markets said the announcement was broadly in line with expectations for a weaker second half of 2025 but noted that the preliminary 35% cut to 2026 production guidance is an incremental negative, with Grasberg output not expected to return to pre-incident levels until 2027.
BMO analysts described Freeport’s suspension as a “negative near-term development that will likely put Freeport in the penalty box.”
Adding to the disruption to the copper industry, Hudbay Minerals (TSX: HBM) said late Tuesday it was shutting operations at a mill at its Constancia mine site in Peru due to ongoing political protests.
“The copper market has been, and continues to be, jolted by supply-side issues this year,” said Olga Savina, a commodities analyst at BMI, a Fitch Solutions company. “We expect any prolonged supply setbacks to further strengthen the bullish narrative for copper throughout the remainder of this year and possibly into 2026.”
On Friday morning, three-month copper futures were trading down 0.75% at $10,496 per tonne ($4.7225 per lb.) on the CME.
Northern Dynasty receives $12M royalty payment as government talks continue
The Pebble project (Image courtesy of Northern Dynasty Minerals)
Northern Dynasty Minerals (TSX: NDM) (NYSE-A: NAK) says it has received another $12 million payment from its royalty investor while it continues to have talks with the US government on the approval of the company’s flagship Pebble project in Alaska.
The payment is part of a royalty financing agreement signed with an unnamed investor in July 2022 for Pebble, touted as one of the world’s largest copper-gold-molybdenum resources. However, the proposed mine has faced stern local opposition and undergone a protracted period of review due to its location near the Bristol Bay watershed, where some of the world’s largest sockeye salmon fisheries reside.
Under the royalty agreement, the investor can make five payments to the company totalling $60 million. The latest payment represents the fourth tranche, bringing the total royalty investment to date to $48 million. The maximum payment would give the investor the right to purchase 10% of the payable gold production and 30% of payable silver production from the Pebble project.
“We appreciate the continued support from our royalty investor and are pleased to see the fourth payment of $12 million completed,” said Ron Thiessen, Northern Dynasty’s president and CEO, in a press release.
“This $12 million investment, when combined with the several million dollars of inflow from the exercise of stock options and warrants this summer, and when added to our second quarter closing cash balance of C$25.2 million ($18.5 million), gives us a strong treasury position as we move the project forward.”
Project status
The status of the Pebble project, as it stands, remains uncertain after the US Environmental Protection Agency in 2023 blocked the company’s Alaskan subsidiary from storing mine waste in the area, essentially killing the project.
In a bid to overturn that decision, Northern Dynasty filed actions against the EPA with the federal courts and is currently in talks with the Agency regarding a potential settlement. On the company’s part, it must provide an updated mine proposal to the EPA, but to date, it has yet to make a submission despite encouragement from government officials.
While it is unclear what changes to the project could appease EPA officials, any modification to the handling of mining waste could help address concerns raised since President Donald Trump’s first term in office.
“We continue to have discussions with the government about withdrawing the veto and remain optimistic for a positive outcome,” Thiessen stated in a press release on Friday. “Withdrawal of the illegal veto will be a step towards developing this very large new source of copper and rhenium, as well as significant amounts of gold, molybdenum and silver.”
If built, the Pebble mine would be the largest copper, gold and molybdenum extraction site in North America. A 2023 economic study estimated that it would produce 6.4 billion lb. of copper, 7.4 million oz. of gold and 300 million lb. of molybdenum, plus 37 million oz. of silver and 200,000 kg of rhenium, over 20 years.
Shares of Northern Dynasty closed the Friday session 5.3% higher at C$1.59 apiece, its highest in two months. The stock had plunged in mid-July following reports of insider selling and a potential stalemate with the EPA. The company’s market capitalization currently stands at C$877.3 million ($629 million).
(Article originally published in July/Aug 2025 edition.)
The first six months of the year were a rollercoaster of ups and downs and backs and forths as the markets seesawed between highs and lows. The lows came in mid-April, shortly after April 2 – so-called "Liberation Day" – when Trump unleashed a wave of threatened tariffs on the world. The highs came both before and after Liberation Day but mainly after as all three indices set new records.
It was a nonstop blast, all right. For the record, the Nasdaq and S&P 500 were up over five percent for the six months while the Dow rose nearly four percent. Not earthshaking, but better than the alternative, especially in view of all the doomsday scenarios that rose up in response to a seeming unending series of crises.
"Nothing ever happens" is the new meme on Wall Street.
Despite wars, tariffs, spending bills, inflation, trade deficits, tax cuts – you name it – none of it seems to matter. Consumers and investors alike just shrug it off. The markets keep going up. So sit back and relax. Not to worry. In the end, it's all good.
Here's how Randy Forsyth put it in a recent Barron's piece:
But mainly, the first half gave rise to the investment meme of "Nothing ever happens," insofar as the stock market is concerned. Trade wars and the uncertain impact of tariffs on the economy; fiscal fights over the Big, Beautiful tax bill that resulted in the U.S. losing its last triple-A credit rating; and conflicts in the Middle East, including the U.S. bombing of Iranian nuclear sites on June 22. After all of that, the S&P 500 and the Nasdaq Composite are ending the first half at record highs.
And he's optimistic about the second half of the year:
Forget about the proverbial "wall of worry" that bull markets supposedly ascend. The new belief, "Nothing ever happens," is actually relevant to stocks and helped induce individual investors to buy the steep dip in April and May, putting a lie to all the hand-wringing. By halftime, the mood had swung back to FOMO, or fear of missing out.
CRYPTO & GOLD
The seemingly blasé approach of investors in the equity markets is mirrored by crypto investors, but even more so, as they seem to have a blind faith in the coins' ability to go up. Take Bitcoin, for example. It was up about 15 percent in the first half of the year. Last year it rose a whopping 121 percent! It's currently trading around $120,000.
Why bother with the equity markets when you can make money like that in crypto?
And it will only get better as the Trump Administration legitimizes cryptocurrencies of all kinds and they begin trading on real exchanges. Well, they're already trading on real exchanges and being offered by blue-chip investment houses. You can even buy a Bitcoin ETF and brag to your friends that you're now "into crypto."
Excuse me while I buy some more Coinbase (which, incidentally, is up more than 50 percent this year) and Robinhood (up 160 percent!).
The real winner of the first six months was not stocks or crypto but, amazingly, gold. That stodgiest of investments was up 25 percent – on top of a 29 percent increase in 2024 – and is currently trading at around $3,300 an ounce, an all-time record. Since when do both gold and crypto outpace equities?
Oh, and you can also buy gold as an ETF, and you don't have to tell anybody. Just keep it to yourself (like cash under the mattress, except in this case the cash is getting more valuable).
So there seem to be two different things going on here – an appetite for risk (crypto) and an desire for safety (gold). That's at the extremes, and it's okay to do both, especially since they're outpacing traditional investments. In the middle are all the rest of us, plodding along in stocks and bonds.
But that's where I want to be. I'll take my five percent in the first six months of the year – and another five percent between now and year-end – and live happily ever after.
SHIPPING STOCKS
So let's take a look at the wonderful world of maritime and see how some of these stocks did.
Not so good, actually. And not unlike most of the market, for that matter. It's been a very narrow rally, really, limited largely to Big Tech and AI. The rest of the market, including shipping stocks, has moved in a limited range.
And for good reason. Too much uncertainty, especially surrounding tariffs and trade, which directly affect shipping. If global trading volumes decline, as they will if some of the threatened tariffs go into effect, that will directly impact shipping.
So don't look for any good news regarding the container, tanker, ro-ro and bulker trades. They will likely continue to stagnate. Offshore too, despite the "drill, baby, drill" mantra, as the price of oil remains stuck in the mid-$60s and offshore wind flounders. "Nothing ever happens" has traditional shipping markets on edge – with one exception. Cruising.
Given all the strife in the world today, people are looking for an escape, and cruise lines are the beneficiary. Two in particular – Viking and Royal Caribbean – are big winners. Let's start with Viking (VIK).
The darling of Baby Boomers and the brainchild of Torstein Hagen, Viking's stock is up an impressive 30 percent so far this year and currently trades around $57. It's more than doubled from its IPO price of $24/share back in May 2024 and continues to generate solid earnings from its loyal base of affluent clients.
As you cruisers out there well know, the company pioneered river cruising in Europe, starting more than 25 years ago, and has since expanded into small ship and ocean cruising worldwide. With a fleet of nearly 100 vessels, it's consistently voted #1 in its various categories (river, ocean, expedition) by upscale publications like Travel+Leisure and Condé Nast Traveler and has won numerous awards for excellence.
It's a cruise line "For the Thinking Person" and features "Experiences created for curious travelers." It's famously noted for its TV advertising on programs like "Masterpiece Theatre" and "Downton Abbey" and was one of the first cruise lines of any type to advertise on TV.
Royal Caribbean (RCL), #2 among cruise lines in terms of size, did even better. Its stock is up more than 50 percent this year and has doubled over the last 12 months, currently trading around $315. Can it go any higher? That's the big question.
Many analysts think so and have price targets ranging as high as $400, and there are good reasons to be optimistic. It reported earnings recently and blew past estimates, earning more than $1 billion on revenues of $4.5 billion.
"The strong demand we are seeing across our new ships and land-based destinations reinforces that our strategy is working and resonating with today's traveler," noted Jason Liberty, President & CEO, in the company's earnings release. "As consumer preferences continue to evolve – toward more frequent vacations, closer-in vacation planning, and a greater focus on meaningful, experience-driven travel – our experiences are designed to meet these evolving expectations. These trends, combined with our pipeline of bold, guest-centric initiatives, position us not only to create value for our shareholders, but to continue winning share of the growing $2 trillion global vacation market."
Sounds pretty upbeat to me! RCL even pays a dividend – a small one, I'll admit (75 cents/share) – but it's the only company among the major players to do so, and it's certainly a sign of confidence.
NOTHING EVER HAPPENS
So sit back, relax. Ignore all the ups and downs of tariffs, trade, wars and ceasefires, inflation and jobs reports. The market keeps going up.
Nothing ever happens.
The opinions expressed herein are the author's and not necessarily those of The Maritime Executive.
Vietnam traders say gold reforms to help dong, curb price gap
Golden Bridge on Ba Na Hills, Danang, Vietnam. Stock image.
Vietnam’s plans to loosen the state’s grip and reform the gold market will help reduce currency volatility and narrow an outsized gap between domestic and global prices, according to the nation’s gold association.
“The policy move will better regulate the gold market, limit smuggling and help stabilize the dong,” Huynh Trung Khanh, vice chairman of the Vietnam Gold Traders Association, said in an interview in Ho Chi Minh City.
The government has outlined plans to end its monopoly on imports and exports of raw bullion, let some companies and banks obtain licenses, and allow trading on a state-run exchange. The moves come because prices in Vietnam’s existing gold market have become distorted, with the local premium over offshore prices leading to smuggling and pressure on the dong.
“The Vietnamese government is proceeding with the opening of its market in a careful and controlled manner, given that more than half of the eight approved banks are state-owned,” said Lee Liang Le, a Singapore-based analyst from Kallanish Index Services. “Nonetheless, this is welcome progress for both Vietnam and its regional counterparts, particularly the easing of restrictions on gold imports.”
The changes have been described as representing a “pivotal shift” for Vietnam, and encapsulate the country’s broader move away from state control to private enterprise.
They also come as investor and central bank demand have helped gold become one of the world’s best-performing commodities this year. But Vietnam’s prices have often run ahead of global rates, despite government efforts to reduce the difference.
The price gap surged to as much as 20 million dong ($758) per tael last month before easing to about 14 million dong, or a 10% premium to offshore prices, according to Khanh. The government aims to narrow the spread to just 2–3%, he added.
Still, investors are awaiting detailed guidelines from the central bank. The decree on gold market changes formally takes effect Oct. 10, and the central bank is preparing a circular with details.
“Some dealers see it as a good business opportunity to sell gold to Vietnam, but they are waiting for more details on rules around gold imports,” Kallanish’s Lee said.
Vietnamese authorities have said they plan to impose a personal income tax on gold trading to curb speculation in the metal. They are also weighing a requirement for gold transactions to be conducted via bank transfers, to improve market transparency.
That comes after neighboring Thailand said it’s considering a tax on baht-denominated gold trades, amid concern at the market’s impact on the Thai currency.
Khanh said the reforms could have a broader impact than just the gold market.
“Vietnam has the skills and low labor costs to build a world-class jewelry industry,” Khanh said. “With the right policies, we could export billions of dollars’ worth of jewelry, just like our neighboring countries, and we can import gold from the US to process and re-export to China, helping balance trade with both countries.”
Based on import licenses issued in the past, Vietnamese households could be sitting on at least 500 tons of gold, according to Khanh. With the country having seen multiple conflicts in the past century, many people hoard their gold at home, away from the banking system.
“That’s a huge volume of gold sitting idle,” he said. “Bringing it into circulation would spur business activity, curb hoarding and speculation, and ease pressure on the dong.”
(By Francesca Stevens and Nguyen Dieu Tu Uyen)
Congo seeks to tap more gold with new mines amid soaring prices
Barrick’s Kibali mine, Democratic Republic of Congo. Image from Rangold Resources.
Democratic Republic of Congo says it loses 60 tons of gold a year to smuggling. The new mines minister wants the country to build new sites to recapture that wealth.
Louis Watum, who became minister last month, previously developed Africa’s biggest gold mine at Kibali, now owned by Barrick Mining Corp. He sees more projects like it on the horizon.
“There’s a lot of talks in the pipeline and a few deals might be announced in the near future,” Watum told Bloomberg in an interview in New York Wednesday. “We are talking with not only existing big mining houses like Barrick. We open again space for newcomers as well.”
Despite the success of Kibali, Congo has struggled to develop gold assets in its conflict-ridden east. Traffickers and armed groups dominate the trade, much of which transits through neighboring Uganda and Rwanda to the United Arab Emirates. With the gold price near record highs, 60 tons of gold could be worth more than $7 billion, a transformative revenue source for a poor country.
Watum, who also developed Ivanhoe Mines Ltd.’s copper and zinc projects in Congo, is in talks with the US over a forthcoming minerals, infrastructure and security deal, which he said are “quite advanced.”
“Once we’ve agreed on that framework, it’s going to be a lot more” business-to-business discussions with US companies, he said. “We’re trying to put as much as we can on the table for them.”
He said he is also looking to resolve longstanding disputes with some of the country’s biggest copper and cobalt miners, including Glencore Plc., Eurasian Resources Group and China’s CMOC Group Ltd.
Earlier this month Watum flew to Kazakhstan with Congolese President Felix Tshisekedi and held talks with ERG, which was in danger of losing at least one of its several projects in the country.
“I don’t think expropriating assets from their operators is a right signal to send to the world,” he said. “They also need to discharge on their obligations, and if they don’t, then we’re going to have also again a conversation to see how we take things forward.”
Watum has also talked to Glencore’s management about outstanding payments, he said.
In response to questions, a Glencore spokesperson said, “We continue to engage with the government.”
Cyrille Mutombo, Barrick’s Congo country manager, said in a message Thursday the company “is ready to invest in future growth in both the north eastern DRC and the copper belt.”
ERG did not immediately respond to messages requesting comment.
Watum said he also has started discussions with CMOC — the world’s biggest cobalt producer — over a new cobalt export quota, and is pushing for development of Congo’s lithium assets with other interested miners.
China’s Zijin Mining Group Co., Australia’s AVZ Minerals Ltd. and the US mining explorer KoBold Metals Co. are all hoping to develop projects in the country.
“When you have an economically viable deposit,” Watum said. “it doesn’t matter who’s going to mine it. It’s going to be mined sooner or later.”
(By Michael J. Kavanagh)
Hedge fund Waratah snaps up gold stocks as rally powers ahead
One of Canada’s largest hedge fund managers is piling into gold stocks in anticipation that bullion’s record-setting rally is only just beginning.
Waratah Capital Advisors has invested in mid-size Canadian producers including Equinox Gold Corp. and Centerra Gold Inc. as well as exploration and development companies including Artemis Gold Inc. in its funds, said chief investment officer Brad Dunkley. He and Blair Levinsky founded Toronto-based Waratah in 2010.
“Gold’s been in the bull market with some ramp-ups and then some periods where it gives back — but if you zoom out, gold’s been very strong,” Dunkley said in an interview. “It’s just getting started.”
Bullion prices have almost doubled over the past two years and hit fresh records above $3,790 an ounce this week. Gold has been among this year’s best performing commodities due to a broad confluence of factors including an easing of Federal Reserve policy, central bank buying and lingering geopolitical tensions that fuel investor appetite for the safe-haven asset.
Gold equities are back in vogue after investors shunned the sector for years due to poor returns. Money typically flows in when commodities rally, with higher prices translating into greater revenue for gold producers since it usually brings improved margins and cash flows.
Stocks of gold companies have now become “compelling investments” thanks to the unprecedented bullion rally, said Dunkley, whose firm manages C$3.64 billion ($2.6 billion). He said mining companies now have “astounding” margins and are piling up cash, with cash flows and profit comparable to software companies.
Mid-size mining companies with low-grade ore and higher operating costs are starting to benefit from rising bullion prices, according to Dunkley, who cited Equinox and Centerra as examples. Shares of Vancouver-based Equinox have more than doubled this year, while Toronto-based Centerra has gained about 67%.
Waratah also is investing in firms it sees as potential takeover targets and early-stage exploration companies. The fund manager sees Artemis and Snowline Gold Corp. as companies likely to be acquired by bigger firms amid dealmaking momentum that typically happens during a commodity price rally.
The firm’s Waratah Special Opportunities Fund is the most exposed to gold. Returns for the C$88 million strategy rose almost 29% for the first eight months of this year, according to an investor letter seen by Bloomberg. The fund has produced average annual returns of almost 13% since inception in 2013. Waratah Performance, a C$817 million fund, is the second-most exposed to gold. Returns climbed 12% during the eight-month period.
Home bias
Waratah is also eyeing companies that stand to benefit from what it expects will be a boom in exploration activity for precious metals and critical minerals. It’s pursuing Canadian companies that can build mines within the country, Dunkley said. A new mine with a long reserve life and “very high margins” would be an ideal candidate for investors wanting to deploy money in Canada.
“One of our themes is jurisdiction matters,” he said. “Canada’s a great place to build and operate a mine, and it’s a safe political jurisdiction.”
One company that fits the bill is Goliath Resources Ltd., according to Dunkley. Goliath’s stock has more than tripled since the start of the year. The Toronto-based firm is exploring a large high-grade gold deposit in British Columbia.
Waratah also likes copper and counts Hudbay Minerals Inc. as an industry favorite given its prospects of being able to take advantage of US President Donald Trump’s push to revive America’s copper industry.
“They have this thing called Copper World in Arizona,” Waratah’s investment analyst, Grant McAdam, said in the interview. “The US administration has made it very apparent that they want domestic production and this is one of the ones that’s fully permitted, ready to go.”
Silver has rallied 55% so far this year. Stock image.
Silver prices rose above $45 an ounce for the first time since 2011 on Thursday, bolstered by an increased risk-off sentiment in equity markets amid worries about the trajectory of the US economy.
Spot gold hit an intraday high of $45.07 — its highest in over 14 years — before pulling back to around $44.70 per ounce, for a 1.8% rise.
The move takes silver’s year-to-date gains up to over 55%, surpassing that of its more expensive sister metal gold, which has seen multiple record highs this year. The bullish drivers include a weakening US dollar, relentless central bank buying and rising geopolitical risks.
Surging demand for gold exchange-traded funds this month is also signalling a growing clamor for safe-haven assets. Inflows into global gold ETFs surged to a record $10.5 billion so far in September, with year-to-date inflows exceeding $50 billion, according to Citigroup.
“ETF has outshined all other gold demand sectors this year and is the single most important contributor to the gold price rally in our view,” the bank’s analysts said in an emailed note.
In recent weeks, precious metals have been gaining momentum as markets anticipated the beginning the Federal Reserve’s rate cut cycle. Since its first 25-basis-point cut last week, US stock markets have come under pressure amid stretched asset valuations.
The second-quarter GDP data on Thursday clouded the Federal Reserve’s policy path, as a surprise economic lift may have dampened expectations of further cuts.
Looking ahead, traders will focus on the US personal consumption expenditures price index due Friday. The Fed’s preferred measure of underlying inflation likely grew at a slower pace last month, which would boost the argument for rate cuts.
“Softer inflation could strengthen the case for Fed rate cuts, supporting bullion, with markets pricing two cuts this year,” Kaynat Chainwala, analyst at Kotak Securities, said in a note on Thursday.
