2024-09-29 12:09

World's top copper producer focuses on expanding current assets Leaching copper to cost a third less than hard rock mining Leaching to boost output by 800 million pounds annually as soon as 2027 Expansion projects in U.S., Indonesia, Chile to add over 1 bln pounds annually Freeport's stock up 30% as investors back expansion plans Sept 29 (Reuters) - Freeport-McMoRan(FCX.N) , opens new tab is turbo-charging its copper output across three continents with no plans to join a buyout frenzy sweeping the mining industry, a strategy that analysts say positions the company well to capitalize on the clean energy transition's rising demand for the red metal. Used widely across the global economy, copper is an ideal conductor of electricity and easily malleable, qualities that have made it widely popular for use in wiring, engines, construction equipment, electronics and other devices. Global demand is poised to jump at least 60% by 2050, according to the International Energy Agency. Analysts at Jefferies (JEF.N) , opens new tab expect prices for the red metal to rise more than 40% in the next two years. Yet new copper mines are proving difficult to develop, due in part to opposition from Indigenous groups, conservationists, local communities and others. The difficult backdrop has pushed BHP (BHP.AX) , opens new tab, Rio Tinto (RIO.AX) , opens new tab, Glencore (GLEN.L) , opens new tab and other diversified miners of iron ore, nickel and other critical minerals to hunt for deals to boost their copper output even while balancing shareholders' expectations for payouts. Phoenix-based Freeport has long focused primarily on copper - it produces 9% of global supplies, more than any other company - and now finds itself in the rare position of being able to concentrate on expanding mines it already owns and avoiding the distraction of a buyout. "We're really, really focused on creating value from the assets that we have," Kathleen Quirk, who became Freeport's CEO in June , opens new tab, told Reuters ahead of the LME Week conference in London, one of the world's largest annual gatherings of mining executives. "I don't see Freeport as having to aggressively go out and have to overpay for things." Freeport expects to produce 800 million pounds (362,874 metric tons) of copper annually as soon as 2027 by leaching the metal from piles of old waste rock at its U.S. mines previously thought to be worthless. Drones and helicopters have been installing irrigation lines atop miles-long waste piles that release an acid solution to tease out low concentrations of copper. The leached copper will cost a third less to produce than Freeport's hard rock mines - already some of the cheapest in the industry, according to analysts - and will not require a smelter for processing. Freeport estimates it would need to spend at least $10 billion on a new mine to mimic output from leaching. "It's a huge opportunity for us and one that we're pursuing aggressively," Quirk said. That leaching plan alone would produce nearly half the copper that Anglo American (AAL.L) , opens new tab - which BHP tried unsuccessfully to buy earlier this year - mined across the entire globe in 2023. 'STICK TO THEIR KNITTING' Freeport has four other expansion projects underway that could add more than 1 billion pounds (453,592 metric tons) of copper annually to its production in coming years, including more than 500 million pounds (226,796 metric tons) annually by 2025 in the United States. Another is in Indonesia, where it is expanding Grasberg, the world's second-largest copper mine. Freeport is also hoping to negotiate an extension of its mining rights beyond 2041 with the new Indonesian president, who takes office next month. The company is preparing its application now to extend the license and Chairman Richard Adkerson - who led the last round of negotiations when he was CEO - plans to join the discussions, Quirk said. "Indonesia is part of the fabric of our company as we've been working hard to improve the livelihood of the people, provide benefits to the government, all while providing returns on investments for our shareholders," she said. "I want to continue that positive relationship." In Chile, Quirk said the regulatory climate has improved under President Gabriel Boric after a period of uncertainty fueled by an unsuccessful attempt to change the country's constitution last year. "Chile is a more stable environment for investors now," said Quirk. An application to expand the El Abra mine, which counts state-owned Codelco as a minority partner, should by filed next year, she said. Freeport's stock has risen 30% the past year as investors have warmed to the company's plans to expand existing operations. Seventeen of the 24 analysts that track Freeport's stock recommend buying it and none recommend selling, according to LSEG Workspace. "Freeport is a workhorse in my portfolio," said Derek Bone of the Optica Rare Earths & Critical Materials ETF (CRIT.P) , opens new tab, which holds shares of Freeport. "I want them to stick to their knitting." Quirk, who had been Adkerson's deputy for more than 20 years, is facing a challenge recruiting workers in the United States, where the company has moved as a result to deploy autonomous trucks. "I'm hoping that with everybody focused on our future economy and how it will require more use of metals, we'll get the best and brightest into our industry to help us," said Quirk. That is top of mind for Freeport's customers, who are gobbling up more copper. Nvidia (NVDA.O) , opens new tab, for example, said in March it would use copper cables for AI data centers - rather than fiber optic cables. "That bodes well for copper demand over the longer term," said Steve Schoffstall of the Sprott Energy Transition Materials ETF (SETM.O) , opens new tab, which holds Freeport shares. "Companies like Freeport are in a good spot." Sign up here. https://www.reuters.com/markets/commodities/freeport-cranks-up-copper-output-rivals-scour-deals-grow-2024-09-29/

2024-09-29 10:31

CME Group leads LME in lithium and cobalt trading volumes LME's complex structure hinders growth Lithium hedging expected to triple by 2030, says Benchmark LONDON, Sept 29 (Reuters) - The London Metal Exchange is being left behind in the race to dominate trade in metals used for EV batteries such as lithium and cobalt as other exchanges gain momentum, capitalising on a shift from annual fixed-price contracts to hedging with futures. The LME is the world's oldest and dominant market for industrial metals like copper and aluminium, but its complex futures structure and less aggressive marketing mean its battery metals futures have largely been snubbed. The 147-year-old exchange may miss out on a huge growth area in coming years as miners and EV makers step up hedging unless it can lure traders to its contracts in materials needed for the energy transition. Among Western exchanges, the U.S. CME Group (CME.O) , opens new tab has vaulted ahead of the LME in lithium and cobalt volumes. Volumes in the CME's lithium hydroxide contract have surged by 759% during the first eight months of the year compared to the same period in 2023 while the LME's contract has failed to trade this year. In China, the Guangzhou Futures Exchange has seen strong growth in its lithium carbonate futures since a launch in July 2023, but there are hurdles for foreigners to participate. "The LME is not getting the buy-in from the market that the CME has," said Jack Nathan, head of battery metals at broker Tullett Prebon. "But people are not wedded to one particular contract or exchange. People are just looking for the most accurate hedge and most efficient execution venue." COMPLEX LME Part of the lack of liquidity on the LME may be due to the complexity of the LME set-up, according LME Chief Executive Matthew Chamberlain. The CME and most futures exchanges have a single expiry date for monthly contracts, but on the LME each day can be traded so physical users can tailor their deals to metal deliveries. "We know that the specificity of the LME's market structure can certainly hurt you when you try to build liquidity," Chamberlain told Reuters, when asked about boosting volumes of LME battery metals. "I think that would undoubtedly be aided by a broader set of participants in the market and a more standardised market structure." Earlier this month, the LME unveiled a set of proposed measures to boost electronic trading and liquidity. The higher CME volumes are also due to its more aggressive marketing campaigns to lure brokers and users to its battery products, industry sources said. To help boost activity, in May the LME announced fee waivers for cobalt and lithium. LITHIUM TO TRACK IRON ORE Until a few years ago, most lithium supply was agreed in fixed-price annual contracts, like iron ore decades ago. After major producer BHP (BHP.AX) , opens new tab led a drive in 2010 to disband a 40-year-old system of pricing iron ore once a year, a futures market in the steel ingredient has climbed to massive volumes. Lithium has similar potential - albeit in a smaller market - once volatility calms down and big companies become more comfortable with using futures markets, analysts said. "It's been a tumultuous 36 months," said Daniel Fletcher-Manuel, director of prices and data at Benchmark Mineral Intelligence. Lithium prices soared by 500% in the 12 months to May 2022 as automakers rushed to secure supply amid worries about shortages. But a surge in output from new mines and weaker than expected EV sales created a glut of supply and prices have since crashed, giving up all of their gains. "There's still a lot of anxiety driven by the uncertainty in pricing, which is making the opportunists reluctant to enter this battery metals derivatives space, but that will change," said Fletcher-Manuel. Benchmark expects lithium hedging will more than triple to 1 million metric tons a year by 2030, using conservative assumptions. Hedging is expected to be lacklustre this year and next, with miners and EV makers expected to hedge on average about 10% of global supplies in 2026, increasing to 40% by 2035, Fletcher-Manuel added. COBALT The LME also is behind in cobalt, a smaller market than lithium. The CME has seen 20 times more volume in cobalt metal futures so far this year than the LME. The LME's cobalt volumes while modest, have at least increased this year, which the LME's Chamberlain believes is partly due to the exchange's responsible sourcing guidelines. The LME has also seen some warehouse deliveries based on its physically-based cobalt contract, attracting some of the oversupply in the market. More cobalt brands are expected to apply for listing on the LME, which may help liquidity, an industry source with direct knowledge said. Sign up here. https://www.reuters.com/markets/commodities/lme-lags-rival-exchanges-battery-metals-trading-gains-momentum-2024-09-29/

2024-09-29 04:29

KATHMANDU, Sept 29 (Reuters) - Nepal has shut schools for three days after landslides and floods triggered by two days of heavy rain across the Himalayan nation killed 151 people, with 56 missing, officials said on Sunday. The floods brought traffic and normal activity to a standstill in the Kathmandu valley, where 37 deaths were recorded in a region home to 4 million people and the capital. Authorities said students and their parents faced difficulties as university and school buildings damaged by the rains needed repair. "We have urged the concerned authorities to close schools in the affected areas for three days," Lakshmi Bhattarai, a spokesperson for the education ministry, told Reuters. Some parts of the capital reported rain of up to 322.2 mm (12.7 inches), pushing the level of its main Bagmati river up 2.2 m (7 ft) past the danger mark, experts said. But there were some signs of respite on Sunday morning, with the rains easing in many places, said Govinda Jha, a weather forecaster in the capital. "There may be some isolated showers, but heavy rains are unlikely," he said. Television images showed police rescuers in knee-high rubber boots using picks and shovels to clear away mud and retrieve 16 bodies of passengers from two buses swept away by a massive landslide at a site on the key route into Kathmandu. Weather officials in the capital blamed the rainstorms on a low-pressure system in the Bay of Bengal extending over parts of neighbouring India close to Nepal. Haphazard development amplifies climate change risks in Nepal, say climate scientists at the International Centre for Integrated Mountain Development (ICIMOD). "I’ve never before seen flooding on this scale in Kathmandu," said Arun Bhakta Shrestha, an environmental risk official at the centre. In a statement, it urged the government and city planners to "urgently" step up investment in, and plans for, infrastructure, such as underground stormwater and sewage systems, both of the "grey", or engineered kind, and "green", or nature-based type. The impact of the rains was aggravated by poor drainage due to unplanned settlement and urbanisation efforts, construction on floodplains, lack of areas for water retention, and encroachment on the Bagmati river, it added. The level in the Koshi river in Nepal's southeast has started to fall, however, said Ram Chandra Tiwari, the region's top bureaucrat. The river, which brings deadly floods to India's eastern state of Bihar nearly every year, had been running above the danger mark at a level nearly three times normal, he said. Sign up here. https://www.reuters.com/world/asia-pacific/nepal-closes-schools-after-heavy-rains-kill-100-2024-09-29/

2024-09-29 02:03

Rate decision up to BOJ, working closely with government, says Ishiba Monetary policy must stay loose given current economic situation Vows to compile new spending plan to cushion blow from inflation TOKYO, Sept 29 (Reuters) - Japan's incoming prime minister, Shigeru Ishiba, said on Sunday the country's monetary policy must remain accommodative as a trend, signalling the need to keep borrowing costs low to underpin a fragile economic recovery. It was not immediately clear whether Ishiba, who had been a vocal critic of the Bank of Japan's past aggressive monetary easing, was taking a more dovish line with his remarks. "It's something the Bank of Japan, which is mandated to achieve price stability, will decide while working closely with the government," Ishiba told public broadcaster NHK, when asked about further interest rate increases by the central bank. "From the government's standpoint, monetary policy must remain accommodative as a trend given current economic conditions," he said. On fiscal policy, Ishiba said he will aim to compile a package of measures at an early date to cushion the economic blow from rising living costs, with a focus on helping low-income households. Ishiba, a former defence minister, is set to become prime minister on Tuesday after winning the presidency of the ruling Liberal Democratic Party on Friday. After his victory, Ishiba said monetary policy would broadly remain loose but suggested he would not push back against further increases in still near-zero interest rates. The BOJ ended negative interest rates in March and raised short-term borrowing costs to 0.25% in July in a landmark shift away from a decade-long, radical stimulus programme. BOJ Governor Kazuo Ueda has signalled a readiness to raise rates further if Japan makes progress towards durably achieving the bank's inflation 2% target, as the board projects it will. Ishiba told Reuters in August that the BOJ was on the "right policy track" by ending negative rates and endorsed further normalisation of monetary policy, saying it could boost industrial competitiveness. But in an interview this month, he said Japan must prioritise making a full exit from deflation and warned of weak signs in consumption. The yen, which fell on Friday on news that a dovish rival would join Ishiba in a run-off for the LDP leadership, rebounded on his victory. Sign up here. https://www.reuters.com/world/japan/japans-incoming-pm-ishiba-calls-loose-monetary-policy-2024-09-29/

2024-09-28 18:34

HOUSTON, Sept 28 (Reuters) - Exxon Mobil board director Gregory Goff recently joined a newly formed Elliott Investment Management-backed company seeking to acquire control of Venezuela-owned oil refiner Citgo Petroleum. Citgo and Exxon are rivals in the motor fuels and lubrications business. Exxon is the third-largest U.S. oil refiner by capacity and Citgo is the seventh-largest. Goff, who joined Exxon (XOM.N) , opens new tab in 2021 as part of a dissident slate of directors, was on Friday identified as CEO of Amber Energy, an Elliott affiliate, in a statement heralding its selection as the successful bidder in a U.S. court auction of shares in Citgo (PDVSAC.UL) parent PDV Holding. Exxon had no immediate comment on Goff's status at the company. The company's board of directors webpage lists Goff as chairman of its audit committee and member of its executive and finance committees. A spokesperson for Amber Energy declined to comment. Amber's bid puts an up to $7.28 billion enterprise value on the Houston-based oil refiner. Shares in a Citgo parent whose only asset is the refiner are being auctioned to repay up to $21.3 billion in claims against Venezuela and state oil firm PDVSA for expropriations and debt defaults. Citgo owns refineries in Texas, Louisiana and Illinois, an extensive fuel storage and pipeline network, and 4,200 independent retailers. It had 2023 net profit of $2 billion. Amber's disclosure of the Citgo bid describes Goff as having 40 years of experience in energy and energy-related businesses. It makes no mention his Exxon tenure, but does describe him as the former chairman and CEO of oil refiner Andeavor and CEO of Claire Technologies Inc. He was a vice chairman at Marathon Petroleum until 2019. Elliott made billions of dollars after taking a stake in Marathon and prodding it to improve operations and hive off pieces of its business. Marathon sold its Speedway retail fuel business to 7-Eleven for $21 billion in 2021. Sign up here. https://www.reuters.com/markets/deals/exxon-director-joins-elliott-group-seeking-acquire-citgo-petroleum-2024-09-28/

2024-09-28 17:16

MEXICO CITY, Sept 28 (Reuters) - Residents in south-western Mexico on Saturday evacuated from homes flooded by the remnants of Hurricane John that ravaged the Pacific coastline for a week, bringing deadly floods and landslides that left 22 people reported dead. In Guerrero, the worst-hit state and one of Mexico's poorest, 18 people were killed, according to local media, many due to mudslides that crushed houses. To the south, local media reported three deaths in Oaxaca, and a young boy died in a river to the north in Michoacan state. John rapidly strengthened into a major hurricane on Monday before tearing into Guerrero. It dissipated then reformed offshore and for the rest of the week skimmed the coastline north, bringing torrential rain and floods. John began dissipating on Friday and is no longer considered an active storm. Guerrero state governor Evelyn Salgado shared images on X of emergency responders in the major resort city of Acapulco carrying out rescue operations by boat, jetski and helicopter, and residents wading through roads flooded up to waist-high. Salgado said access to the airport had been reestablished on Saturday morning. Residents with small children who evacuated from flooded neighborhoods on dinghies and surfboards asked authorities for support as the city, still recovering from a devastating 2023 storm, faced a second disaster in less than a year. Last October, Hurricane Otis struck Acapulco as a Category 5 storm that rapidly intensified off the coast, leaving over 50 people dead and billions of dollars in damages. But John's rainfall nearly tripled the rain generated from Otis. "A lot of water has come down," resident Jazmin Barrera told UnoTV. "We haven't seen the sun since Monday. I think this time around has been more devastating." Heavy rainfall and thunderstorms are forecast across Guerrero and parts of Oaxaca later on Saturday, but authorities in Acapulco said the floodwaters were starting to fall back. "Shelters and kitchens have been set up and food supplies are being distributed," President Andres Manuel Lopez Obrador said on X. "Fortunately, the water is now receding and aid to the victims will continue." Meteorologists say warmer ocean temperatures are giving more fuel to hurricanes, allowing them to become stronger faster and leaving coastal communities less time to brace for their blow. Sign up here. https://www.reuters.com/world/americas/least-22-reported-dead-storm-john-dissipates-over-mexico-2024-09-28/