Early this month the LME tested its disaster center at Chelmsford, Essex. Things went smoothly despite some teething issues on a quiet day of trading as the US was on its Labor Day holiday. Most felt that the venue was fairly adequate though there were some concerns on whether there were sufficient phone lines and would there be struggles on a busier day. They will probably do a fuller days trade test in the near future but for now as one trader said, “It does exactly what is says on the tin.”
    The same day, September 7th, base metal prices edged higher amid thin volumes as the LME had purposely chosen a day where large trading volumes were not expected to try out its disaster and recovery site. Despite some poor economic indicators the market continues to be rather bullish. Most base metals finding support in fund-driven performance while Lead was finding its strength in the Chinese crack down on lead producers. Authorities having already shut down and estimated lead smelting capacity of 400,000 tpy, following further investigation could potentially rise to 900,000 tpy, loss of smelting capacity.
     Nevertheless China announced it would be giving preferential loans to producers in an attempt to offset the cost of raw material import theses including lead, zinc, and copper concentrates. This is seen as a symbolic statement intended to show support for producers dependant on overseas raw materials. However domestic smelters feel it would have little impact as the interest rates on loans appear as small differences in the face of more important factors as the volatility of prices. China has been engineering a rapid economic recovery to maintain production and employment by freeing up bank lending and offering inexpensive loans to industrial producers.
   Chinas impressive economic boom has not come without its consequences as its “cancer villages” bear witness. Rivers viscous with heavy metal pollution leach through poisoning town wells and crops. An estimated 460,000 people died prematurely of cancer every year according to a 2007 World Bank study, 85 percent of these cases are stomach, liver, kidney, and colon cancer that can stem from heavy metal ingestion. Chinas top environmental officials have now called for a more effective way to tackle the heavy metal poisoning following a series of lead poisoning across the country.
    It may seem futuristic but it could be just around the corner. Mining hydro thermal vents for not only a renewable form of energy but also drinking water and recovering the gold, silver, copper, iron, zinc, cadmium, manganese, and sulfur, as well as halides, sulfates, chromates, molybdates, and tugstates that are all abundant in the high temperature high pressure fluids of the geological ancient vents.
    As the economy looks forward some feel it is still too soon to affirm a sustainable recovery is just around the corner. Viewing only a weak recovery in an environment of limited inflation, in emerging markets both growth and inflation could be stronger. The quest for high yield will dominate but large-scale risk-taking will continue to be limited, seems to be the forecasted them for next year.
  Towards the end of this month industrial metals ended on a lower trend as the dollar rebounded though miners gained an upward momentum as optimism over the global economy helped drive the sector higher.

    In London, the Lead cash settlement price rose by to US$ per tonne while the Zinc cash settlement price rose by to US$ per tonne on September 30, 2009.
    China continues to import zinc concentrate, despite rising stocks high metal prices have maintained a solid demand. Smelters in the west are also revoking cutbacks more quickly than earlier feared. Therefore smelters are competing for a limited supply of concentrate even though these are surpassing metal demand. Hence he markets signals are encouraging further mine supply. The demand for concentrates is unlikely to wane as long as zinc prices remain high.
    Despite the concerns of China’s lead smelters emissions, that has caught the markets attention, spot lead is still in demand. The market for lead concentrate has remained firm as pockets of demand in Europe and elsewhere are being satisfied, offsetting the quieter demand in China.
   Many of China’s lead smelters have been affected by suspensions or curtailed as reports of infants with very high levels of lead in their blood surfaced last month. Chinese official are calling for a better handling of heavy metal pollution.
    Midmonth the price of lead dropped sharply, down to $2,115 per tonne, on profit-taking after a strong rally, where it hit $2,511 per tonne. After a number of smelters in China were forced to close or reduce production following startling reports that hundreds of children has been harshly affected by lead poisoning.
     Peruvian miner Volcan seeks higher zinc and silver output as they plan to boost their output from 690,000 tonnes to 800,000 tonnes over the next three years.
    This month two miners were trapped underground for almost 24 hours at the remote Perilya Ltd mine in Australia. According to a Construction Forestry Mining and Energy Union (CFMEU) spokesperson, a dust storm hit the outback town of Broken Hill cutting the power to the Perilya mine.
    Korea Zinc, the world’s number two zinc refiner, reported a spike in gains amid a jump on the zinc price.
    Sizable Chinese zinc smelters that import considerable amounts of concentrates under yearly contracts are seeking to include a price participation (PP) clause for next year’s shipments with overseas suppliers, however overseas sellers are far from convinced of the merits of this request.

    In London, the Copper settlement price rose by more than to US$ a tonne with a backwardation of US$ on September 3, 2009.
    China is the worlds second largest copper concentrate importer in the world and probably will remain so in the near future considering the new smelting capacity. Tough the copper concentrate market is tight the availability of scrap has managed to ease the pressures. Scrap imports are at fairly high levels and may maintain so perhaps limiting the concentrate purchase until the end of the year.
    However in general the lighter season for copper is coming to a culmination and the demand should be picking up. The demand for copper in the telecommunication and power industries remains fairly stable. While the Chinese automobile sales have been on the rise according to the China Association of Automobile Manufactures and the copper consumption in the industry is expected to follow accordingly. Never the less the copper demand in domestic appliances has been on a slight decline.
    Katanga Mining has moved forward, almost by two years, the ramp-up of its copper and cobalt project in the Katanga province of the Democratic Republic of Congo (DRC). The Kamoto concentrator and Luilu refinery are being refurbished, that will increase their capacity. By the second quarter of 2011 they expect to have a capacity of 150,000 tpy of copper and 8,000 tpy of cobalt.
    African Copper under new owners has restarted mining in Mowana, Botswana, nine months after putting its only commercial mine operations under care and maintenance. The company was rescued from collapse a few months earlier by Bermuda-registered connected to Zambia Copper Investments Ltd (ZCI).
    Chinas Huludao Zinc plans to double its copper smelting capacity by the end of next year. The upgrade project would increase the capacity from 80,000 tonnes a year to 150,000 tonnes a year, which could raise its demand for copper concentrates imports.
    Copper producers caution that premiums on 2010 contracts may fall, arguing that consumers should agree to contracts in order to secure supply. This is in stark contrast with traders who still expect a rise for 2010, as the copper market could be extremely tight in the next year. Market participants attribute the expectation differences between producers and traders to the higher copper prices, as they would be typically aligned in trying for higher premiums.

     In London, the tin settlement price slightly declined to US$ 15,105 per tonne with a backwardation of US$ 505 on September 30, 2009.
     In Indonesia, the worlds second largest tin producer after China, the private tin smelters look like they will be extending their closure until October following the police crack down on illegal mining resulting in a shortage of raw material. Banka Belitung Timah Sejahtera (BBTS), a consortium of seven private smelters, sees no sign of the smelters resuming their operations any time soon. As producers keep a low profile by not producing or purchasing any ore from independent miner. Since the sale of tin in Banka virtually came to a halt hundreds of miners from Java retuned to their hometown to observe fasting and celebrate the Hari Raya holiday. Some smelters are expecting to resume operations when the workers return in October and the situation is a bit calmer. This halt by the private smelters after the police crackdown could result in a drop of almost 50% of Indonesians tin production. However the Kuala Lumpur Tin Market (KTLM) has shown not sign of being affected by the operation cuts in Bangka and Belitung though there are fears that both the price and the supply may be affected if the situation persists.
    PT Timah, Indonesia’s largest tin producer, has said that that in the first half their net profits have fallen 96.1% as they produced more tin for a lower average price. Their net profit was a mere 42.9 billion rupiah ($4.3 million) after a 38% plunge of its average sales price to $12,087 per tonne. Due to thinning resources on the on Bangka and Belitung islands PT Timah plans to double its off shore production to 40% this ear through the purchase of six dredging vessels and intends to have a 50:50 production by 2010. PT Timah is confident it will met its projections for 2009 with prices improving in the second half and catching up on production by reactivating some capacity.
    Bolivia’s state-owned tin mine Empresa Minera Huanuni (EHM) expects to increase its production by 14% in 2009, with an output of 9,000 tonnes compared to 7,875 tonnes the previous year. Nevertheless the company expects to report a 50% fall in profits near $7 million due to low tin prices this year.
    Speculation swirled through the tin market towards the beginning of the month, as a single party held 10,000 to 16,000 tonnes of tin. Not knowing what they planned to do with such a substantial amount traders kept a close eye on the tin.

     In London, the Gold AM fixing was traded at US$ 1001.25 per ounce and spot Silver rose to close at US$ 1,645 per ounce, on September 30, 2009.
  At the beginning of September the end of the holidays brought a flurry of repositioning, as the price of gold bullion rose above $1,000 an ounce, while the dollar fell against leading currencies. By mid month the gold bullion price closed at a record high breaching the $1,020 mark from last March hitting $1,020.50 a troy ounce. However towards the end of the month gold bullion took a tumble in prices falling back below the $1,000 a troy ounce.
     Eritrea’s first goldmine will be ready to yield much needed revenue as production begins next year. The dictatorial ruling regime in urgent need of revenue from mining finally drops its credo of self-reliance by awarding prospecting licenses to eight new foreign companies, eager to explore one of the last frontiers in African mining near the Red Sea.
     Gold and silver mining stocks have gone up as the price of precious metals rallied. According to analysts the flight to seemingly less risky quality buying has been a main supporter of the high gold price. However some silver company shares moved rather high and even surpassed those of the gold companies.
Silver was in the spotlight midmonth as it out performed gold three to one. According to analysts not only were investors purchasing silver seeking a safe haven to weather the recession, but there is a new demand stemming from electronic appliance makers. This is likely to put some strain on the global supply and keep the prices rather high.
     Peruvian precious metals miner Buenaventura trims its 2009 silver outlook as it expects to produce 17.5 million ounces of silver this year, down 2 million ounces from an earlier forecast of 19.5 million ounces. Never the less the company has held its 2009 gold outlook of 1.3 million ounces. They also announced that the company’s La Zanja gold project is expected to start at the end of next year.

    In London, Nickel rose by % to US$ 17,335 per tonne, with a Contango of $ 115, on September 30, 2009. Cobalt min. 99.8% traded at US$ 18 per pound and Cobalt min. 99.3% at US$ 15.62 per pound on September 30, 2009.
    China's cobalt market has been quiet for some time, though some traders believe buyers will return for restocking. The subsidies announcement could provide a reason for prices to move higher but low demand for cobalt end products may also bring pressure. An official from Jinchuan stated that there could be an equivalent to three month consumption in Chinas cobalt inventory. Nevertheless there are reports that some Chinese customers are in the market for long-term supply deals.
    Cobalt prices slump slightly in China, towards the end of the month, with the concentrate price hovering around $12.5 per lb.
    Little business was reported as the price of cobalt remains virtually unchanged for weeks. Partially tempered by the European summer holidays but also by market debate of the influence the Chinese sentiment would have on prices. Though the cobalt metals price appears fairly flat and business remains rather quiet. However despite the bearish forecast some market participants are confident that cobalt can regain momentum.
    BHP Billiton pulls out of the cobalt spot market as the company puts alternative arrangements in place for the sale of its cobalt production, with the aim to achieve better returns in response to changing market conditions.
    Nickel premiums strengthen as strike persists at the Vale Inco Ltd’s Sudbury, Ontario, Canada operations. Vale Inco has declared force majeure on a number of contracts but continues to make some shipments as they plan to restart their Thompson, Manitoba site that was closed for scheduled maintenance. Though the premiums remain in range the trend is towards the upper reaches particularly in the US coupled with a weak dollar has lead to an interesting import/export role reversal in the industry. US mills are selling prime product in Asia and buying scrap from India and China, something that has never happened before. Additionally European producers looking to capitalize on the higher premiums across the Atlantic are directing more material that way.