Monthly Metal Review
- February 2012
- January 2012
- December 2011
- November 2011
- October 2011
- September 2011
- August 2011
- July 2011
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- February 2011
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Overview (January 2012)
In many ways, 2011 ended much like it began, with uncertainty. December 2011 was marked by more global economic uncertainty, with euro zone turmoil, US ma-laise, fear of a Chinese construction bubble and turmoil in producer nations all helping to baffle miners and smel-ters.
Late December, the European Central Bank (ECB) moved some $640 billion into the European banking system in an aggressive, if perhaps delayed, push to re-lieve the continent's economy crushing credit squeeze. The relief came in the form of three-year, 1 percent loans to commercial banks and could indirectly support debtor nations, especially Spain and Italy, assuming banks use some of the funding to buy their shorter-term, higher-yield government bonds. The ECB also loosened collat-eral requirements to help smaller banks. More than 500 applied for almost 490 billion euros in loans.
Economic news from the United States remains mixed, but tinged with hope. The U.S. economy remains anemic with GDP growth expected to be less than 2 percent for all of 2011. A consensus survey of economic forecasts puts U.S. growth at 2.4 percent for 2012, but December marked the fifth consecutive month that the U.S. economy has generated at least 100,000 new jobs, a record not seen since 2006. The United States' demand for primary metals shipments were up 29.8 percent in 2011, with new orders up 26.1 percent. At the same time, metals inventories fell slightly. New orders were up 7.9 percent and year-to-date shipping values grew 6 percent.
China's metals-hungry economy has been mired since July, and some analysts say it may be reaching a tipping point. Nobel Prize winning economist Paul Krugman compared China today to Japan at the end of the 1980s and the United States in 2007. Krugman argues that Chi-na, with relatively weak domestic consumer demand, pinned growth on a real-estate bubble and "a shadowy, unregulated finance system." Property construction was at least 13 percent of GDP last year. Other economists say the bubble is bursting and fear a 25 percent sector price drop, with another 25 percent later. The world's fastest growing major economy the largest importer of iron ore and copper.
Despite a growing economy and high oil prices, inves-tors in Russia face political uncertainty. Buoyed after 4 December parliamentary elections, equities took a beat-ing as protesters decried results that gave Prime Minister Vladimir Putin's ruling United Russia party a small major-ity win. Demonstrations continue though Putin is widely expected to be elected president in March. The Micex dropped 11 percent 12 December, double the decline for other emerging markets. Capital flight is a problem; a Russian government estimate said $70 billion will leave this year, some in loans called in by European banks.
A Peruvian government agreement with local authori-ties to hire international consultants to review environ-mental impacts of the Minas Conga project should restart work in early 2012. A late December deal with Cajamarca region authorities calls for re-examining Conga's $4.8 billion environmental permit, which was granted in 2010. Minera Yanacocha SRL, 51 percent owned by Denver based Newmont Mining Corp, suspended work during November local protests. Newmont's chief SA executive welcomed the deal. Minas Conga has estimated copper and gold reserves of $15 billion, is to open in 2014 and could yield 680,000 oz. yearly.
2012 is set to bring new metals-related tax laws. Ghana will place a 10 percent windfall tax on mining firms. That's in addition to a 10 percent hike in Ghana's corpo-rate rate to 35 percent. Poland is considering a copper tax recalculating monthly based on market price. Most notably, Indonesia plans to introduce 2012 export taxes on base metals as it works for a 2014 total ban on unpro-cessed exports.