Raw Materials & Natural Resources - The Economy's Primary Sector

Economy & Markets
556

True, but why drill two holes when one is enough – and the infrastructure for one hole is already in place?

An oil company drilling for oil gets (free) natural gas as a byproduct, which is then cheaply steam-reformed into hydrogen. So much gas comes from the world’s oil fields that annual flaring alone would cover Finland’s electricity needs for 15 years (140bcm > 1300 TWh). Someday, even that flaring could be put to use, for example, by converting it to hydrogen via SRM+CCS.

Who would start drilling for hydrogen separately now, when its transportation and storage is a much more painful capital-intensive business than moving natural gas?

6 Likes
557

I trade platinum and palladium, as well as gold and silver of course, on a fairly regular basis using NYMEX futures.

The following video provides an overview of the situation regarding platinum, palladium, rhodium, and other rarer industrial metals, among others. The video features relevant charts on, for instance, the slowdown in platinum demand as electric vehicles take over the market (starting at 05:30).

https://www.youtube.com/watch?v=STXWslwykhg&ab_channel=CPMGroup

No real sanctions have been imposed on Russia regarding platinum, palladium, and rhodium, for example. South Africa is the largest producer of platinum, and the industry has been facing significant issues due to factors like the lagging platinum price and rising costs. Platinum has also started to replace palladium in hybrids, for instance, which still use catalytic converters.

Pl auto

The platinum price has been stuck between approximately $800–$1100 for several years and has offered several short-term long and short trades. After a significant drop over the last five days, platinum has fallen to near the $930–$945 support level.

Platinum supply
Pl suply

Platinum oversupply has plummeted from previous years; although there is still a surplus this year, it is considerably smaller. However, this drop has not yet been reflected in the platinum price, and the gap compared to gold, for instance, remains at a historically high level. Larger players have been particularly cautious with their platinum investments, which has maintained a fairly steady trading range where the price has hardly fallen below $900, and larger upside attempts have been quickly sold off.

Platinum surplus is shrinking, which has not yet been reflected in prices
PL surplus

The Metals Daily website provides good news feeds for most metals:

https://www.metalsdaily.com/news/pgm-news/

12 Likes
558

Good times may be ahead for copper. Bank of America predicts copper supply will be 15% lower than demand by 2030; furthermore, annual copper demand growth could double to 4%, particularly due to renewable energy sources, power grids, and electric vehicles. :slight_smile:

https://x.com/KobeissiLetter/status/1832893881479737409

image

image

15 Likes
Metso - Edelläkävijä kiviainesten käsittelyssä
559

Bloomberg had an interesting article on how hedge funds have turned bearish on the oil price outlook for the first time since 2021:

kuva

At this point, I would also like to briefly revisit @Verneri_Pulkkinen’s oil views from Vartti. For 2025, it is indeed expected that shale oil drilling will accelerate (questionable) and that OPEC will significantly increase its production (also questionable), meaning weak economic growth would not be able to absorb all this oil:

kuva

kuva

The situation is overall quite difficult because major oil-producing countries, such as Russia and the Saudis, would need higher oil prices for their state budgets, but America has somewhat unexpectedly been able to continue developing shale oil technology so that productivity increases year after year even without adding drilling capacity. The number of rigs is actually even on a declining trend. It is unlikely that those predicted production figures will be realized, as OPEC+ and shale drillers must operate according to demand and adjust their activities so that the price doesn’t truly collapse.

The bulls’ hope is likely to see either a macroeconomic recovery or a collapse of the Russian state (and production capacity), both of which would enable a higher oil price. Since these are not in sight, we are seemingly on our way toward the bottom of the oil cycle.

“The cure for high prices is high prices. The cure for low price is low prices.” - the saying holds true once again.

Other fossils aren’t doing any better. Coal prices have collapsed again:

kuva

And natural gas is no longer fetching peak prices either:

kuva

30 Likes
561

CNBC: USA is currently producing 40% more oil compared to Saudi Arabia

6 Likes
562

Brent briefly dipped below $70, but recovered quickly from the trough. Libya’s complicated internal situation, Israel’s strike against Hezbollah, the Fed’s interest rate decision, and the alignment of the stars are reflected in the risen price, but OPEC and the bulls are likely not popping the champagne yet.

China’s demand growth remains modest; U.S. production is still strong, at least for now; additionally, South American production looks set to grow in the near future, especially through offshore projects in Brazil and Guyana, while Venezuela remains a perennial question mark.

It is also interesting to see the strong growth of Argentina’s shale sector. U.S. shale oil production has remained strong, and capabilities as well as cost management have certainly evolved. If Argentina can attract this expertise, shale oil could become an even greater thorn in the side of Riyadh and Moscow.

On the other hand, in a world of growing uncertainty, predicting a price collapse within a <2-year timeframe is a risky bet.

Besides crises, the world’s toughest oil trader and part-time politician Joe Biden is preventing prices from free-falling and maintaining the drilling and investment appetite of shale oil operators.

https://www.economist.com/finance-and-economics/2024/05/16/joe-biden-master-oil-trader?utm_medium=cpc.adword.pd&utm_source=google&ppccampaignID=18151738051&ppcadID=&utm_campaign=a.22brand_pmax&utm_content=conversion.direct-response.anonymous&gad_source=1&gclid=EAIaIQobChMI_9vE7b7RiAMV61CRBR1lNghtEAAYASAAEgJiKPD_BwE&gclsrc=aw.ds

During the energy crisis, the U.S., with the help of its allies, significantly depleted its reserves by selling a large portion of the Strategic Petroleum Reserve (SPR) into the market, which lowered oil prices, and now they want to refill them. There hasn’t been a rush, but refilling has begun at WTI $70 levels. If WTI were to approach $60 levels, it’s likely that purchases would also accelerate.

https://www.reuters.com/markets/commodities/us-seek-6-million-barrels-oil-reserve-amid-low-oil-price-2024-09-17/

Hard to say what Trump would do if he ended up back in the White House, but one can assume Harris would follow in Biden’s footsteps. The transformation of the SPR from a passive stockpile into a counter-cyclical tool could be the most significant change in oil market logic for a while. Especially because where the big players lead, the small ones follow. Although the U.S. has the largest strategic reserves, other Western countries have them too. If strategic reserve levels begin to be used even somewhat coordinately as a counter-cyclical tool in the future, a few swear words might be heard in the administrative districts of OPEC capitals :smile:

20 Likes
563

Here is a piece from Sijoittaja.fi about copper; the article includes a bit of “promotion”. :slight_smile: It only takes a few minutes to read.

With the summer, the economic outlook took a bit of a setback, which also caused the price of copper to fall from its peak. In September, as central banks shifted to an expansionary stance and interest rate trends turned downward, copper futures prices also began to rise.

4 Likes
565

Not sure if this is the right thread; Palladium is finally falling under sanctions from Russia. This has been long awaited, and many have wondered why it didn’t happen sooner.

11 Likes
566

Sibanye Stillwater said it is cutting production at its Stillwater mine by 200,000 oz/year in 2025. Stillwater is located in Montana and produces platinum group metals. Following this announcement came that news about sanctions. It might not be cause and effect, but together these are at least driving up the price of palladium.

9 Likes
568

Lithium demand is down as the electric vehicle buying rush faded. Production has been scaled back in the lithium triangle. And expansions are on hold. Reuters estimated demand growth for 2026.

4 Likes
569

Does anyone have information on where LKAB’s Norra Kärr project is in the permit process? The area has been defined by the EU as Europe’s most important area for rare minerals. But the location is next to Vättern, and the nearest town, Gränna, is on the shore of Vättern. And Jönköping, with about 90,000 inhabitants, is about 15-20km from the mine.

1 Like
570

The project applied for EU strategic project status in the autumn, and the first decisions for this should come in December: https://leadingedgematerials.com/eu-strategic-project-application-submitted-for-norra-karr/

Through that, I understand, one should get at least a clearer / faster path for permit processing (in terms of time), if the project is included in that.

1 Like
571

It will be interesting to see how the project progresses; it seems to be a mining project in Sweden where many parties have interests, and the political pressure from outside is certainly strong. At least in my mind, LKAB is one of the most responsible operators in the mining industry. One could guess that a similar situation will be faced in Finland at some point as well. Talvivaara’s “one-man show” created a big dent in people’s attitudes here.

2 Likes
573

Do you mean some REE (Rare Earth Element) deposit or the mining industry with its processing chains in general?

In Finland, we are very advanced in mining and processing operations concerning minerals for electrification. Finland’s Keliber is the only lithium mine under construction in Europe, and processing operations are also being built on top of it. There are large deposits elsewhere in Europe (Serbia, Portugal, etc.), but there are no permits and investment decisions like with Keliber. Terrafame has battery minerals, and there is cobalt processing in Kokkola. In Germany, there is one AGM lithium refinery (mine in Brazil), and that lists the critical metal upstreams in Europe outside of Finland.

Terrafame just received permits for uranium recovery, the first in Europe. Norra Kärr has only been worked on for 15 years, and the latest PFS (Pre-Feasibility Study) calculation seems to be from 2015 - it will take a while longer.

3 Likes
574

Generally, mining falls into the “not my backyard” category. And Talvivaara’s early days, with its legal proceedings, certainly didn’t improve the public image of mining. Images have spread globally of the environmental catastrophe caused by Chinese mining companies’ lithium mines in Chile. However, few remembered to mention that the main reason for the catastrophe was the leaching method used by the Chinese to extract lithium. The mines in Congo are a story in themselves. At least we’re not fighting wars over mines, as sometimes happens with oil.
Regarding the situation in Serbia, I understood that Rio Tinto is very hopeful about Jadarite. However, no decisions have been made yet.

1 Like
575

This is simplifying things too much. “Mining” lithium from salt lakes (brine) using evaporation ponds is not particularly dangerous for the environment, provided local groundwater conditions are taken into account. There are vast numbers of these brine mines in South America, and it’s not a peculiarity of Tibet. Separating lithium from rock (spodumene) consumes more energy, uses more water, and produces more CO2 emissions – and is thus also more expensive. Hard rock deposits are abundant in Australia and now also in Finland.

Even in Chile, there isn’t much concern about environmental problems – at least when considering the volume of investment.

https://www.reuters.com/markets/commodities/chile-aims-invest-83-bln-mining-through-2033-newspaper-says-2024-12-04/

4 Likes
576

For those interested in Rio Tinto, and indeed, there’s something in it for all Finns. It would be desirable to achieve sensible electricity consumption near wind turbines.

Rio Tinto is seeking growth, and the cyclicality caused by iron ore is slowly diminishing. Rio now has significant additions of copper and lithium. Rio Tinto’s share price follows the price of iron ore or China’s growth ambitions, so a reasonable return has been achieved by trading so far, but the dividends are also good. We can talk about a growth stock whose production looks promising.

One should definitely read about the risks in the mining industry; Rio also pays compensation for environmental damage and how the Mongolian business operates. I would not invest directly in Mongolia, and for Rio, this is now significant. However, I am again among Rio Tinto’s owners via the London Stock Exchange; some would like to dismantle the dual listing. So there are enough variables here, and perhaps a player’s spirit is needed.

3 Likes
577

Has anyone here been following copper’s performance? :slight_smile:

https://x.com/robert_ivanhoe/status/1867979374710136876
image
image

15 Likes
578

The article below tells, among other things, how last year BHP offered to buy Anglo American, but the project was halted. Well…Anglo is now changing its operations, focusing on copper, which would cover 60 percent of its portfolios. BHP is investing in organic growth, such as the Escondida mine.

Then again, a merger of Glencore and Rio Tinto could significantly increase copper production. Glencore owns extensive copper and cobalt resources in Africa and Latin America.

Teck Resources and First Quantum Minerals are also at the center of the copper trade.

So, more about these is told in that article, which should interest those following the “copper world”. :slight_smile: The article can be read in about five minutes, if one understands these matters.

4 Likes
579

Hey there, copper buddies! :cowboy_hat_face:

Otavio thinks it’s copper’s time from now on, based on some poor man’s TA as well.

https://x.com/TaviCosta/status/1888017526090777002
image
image

9 Likes