This month’s big event was the London Metal Exchange week. With an atmosphere of every who’s who in the industry would at least make an appearance that week in London. Indeed the LME did report record braking attendance to all of its functions this year.   
    A survey done by Credit Suisse reveals investors optimistic view of base metals. According to the majority of investors metals have begun what will be a rather strong recovery with a few investors saying it would be explosive. Mitsui Bussan Commodities also forecasts a strong metals performance for 2010 with an increase in metal appetite following restocking. The LME seminar projected that supply constraints will drive lead, zinc, nickel and tin prices for the second half of 2009. Calyon Credit Agricole also sees all base metals are poised to rally in the fourth quarter. According to investment guru Jim Rogers the interest in commodities will soar as supply constraints mount and currencies continue to weaken. All of these opinions contributing to painting a rather bright picture for base metals in the future.
    As commodity prices rise companies reconsider the hazards of doing business in Africa. Many have fallen and several continue to fall victim to the law of the jungle, however some of the best assets lay beneath that inhospitable jungle. As antagonism between the governments of some of Africa’s least developed countries and international mining companies resurges questions of the future of industrial metal supply are being raised. Some of the richest mineral deposits are cloaked behind the most unpredictable governments. There is a sentiment that secrecy in mining contracts fuels the suspicions and distrust on both sides but there are also many other underlining factors. One of the most problematic for many investors is the seemingly capricious and unpredictable application of the law by equally erratic governments. Nevertheless and despite the risks there has been an increase in investment in the frontiers of African mining.
   From the green of the jungle to the green patina of copper roofs large investments are being made. You may have thought that copper roofs were a charming vestige of an era gone by but Dow Chemical Co sees a huge market. As their solar copper shingles that can be integrated even into standard asphalt shingles will be introduced next year. The shingles that convert sunlight into electricity would save consumers large sums on their energy bills and hopefully reduce their carbon footprint. These nifty little copper shingles could generate $5 billion in revenue for the company by 2015.
   The weak dollar that has been boosting commodities has also raised worries not only with in corporate America but more importantly with international opinion. Despite the prevailing decline of the dollar it is down but not out, partially due to the fact that there is no easy substitute. But with much international support and now new economic growth it may be on the rise again. The United States economy grew for the first time in more than a year as the third quarter numbers came in at 3.5 percent growth in the GDP on an annual rate. As the government stimulus package helped lift consumer spending and fueled an unexpectedly strong advance. The US Treasury Secretary warned that even though the return to economic growth showed that some stability had been regained the recovery is still fragile and would need to be nurtured.
 

    In London, the Lead cash settlement price rose to US$ 2,322 per tonne while the Zinc cash settlement price rose to US$ 2,195 per tonne on the 30^th of October, 2009.
    The International Lead and Zinc Study Group (ILZSG) sees the surplus for both metals widening towards the end of the year. The zinc surplus will widen to 380,000 tonnes at the close of 2009 before narrowing to 227,000 tonnes in 2010. The forecast for lead is the surplus will be 80,000 tones end of 2009 and continue widening to 100,000 tones into 2010.
    At the beginning of the month lead premiums held as the market felt that the Chinese supply concerns seemed over done and with hope that the European demand for lead would pick up as usual in the winter. However by mid month lead plunged 7% in the LME with a fresh Chinese crackdown on lead poisoning following the holidays. Top Chinese lead smelters acknowledged at least partial responsibility for lead poisoning after 1,000 children in the smelters vicinity showed excessive levels of lead in their blood. China now plans to relocate 15,000 residents away from the smelters in order to allow them to keep operating, after constrains for nearly two months due to the poisoning issue.
    Xstrata and Anglo were high in the news this month as the original informal merge offer by Xstrata was snubbed by Anglo, followed by UK regulators urging Xstrata to “put up or shut up”. Had the two companies merged they would have created the world’s largest producer of zinc amongst some other commodities. As Xstrata walked away the biggest losers were the banks who would not cash in on their fees in the merger.
    The world’s biggest zinc mine is just about to get bigger as Red Dog mine in North West Alaska gets both federal and state approval for expansion.
    Bulgaria’s OTZK OTZK.BB lead smelter gets green light from environmental ministry for long awaited expansion and upgrades.
    HudBay will invest on a production ramp connecting Lalor and Chisel in a move to increase zinc production.

    In London, the Copper settlement price rose to US$ 6,575 a tonne with a contango of US$ 5.50 on the 30^th of October, 2009.
    The International Copper Study Group (ICSG) recognizes the uncertainties in the market due to the crisis and though a recovery is expected in 2010 the impact on supply and demand is still unclear. However 2011 is forecasted to be more balanced with increased activity leading to stronger markets with moderate growth and production. Nevertheless Chile assumes copper to be around $2.66/lb in 2010 and plans to slash its deficit to 1.1% of GDP in that year. Cochilco the Chilean copper commission sees the copper price at $2.68/lb in 2010 and $2.86/lb in 2011, according to its surveys. 
   While LME Week was this October on a much more optimistic mood than last year, the 2010 TC/RC negotiations have once again come into focus. A statistical deficit in the concentrates market is to the miners’ favor. Smelters will have to prove a large surplus in the refined market and a threat of cutbacks to keep terms near last year’s benchmark.
    Lukewarm strikes brew in South America as workers in the industry and their unions are looking to get their share of the market. In Chile BHP sought government mediation to move closer to an agreement for their Spencer copper mine. In Peru 25,000 workers went on, what was supposed to be a two day, strike as they marched to the Peruvian Congress in Lima demanding better benefits. However the nationwide strike only found limited support and by the second day many employees reported to work with hopes that Congress would vote in their favor. 
    On a positive note many greenfield and brownfield projects are popping up in South America. There are already 48 copper projects involving not only expansions but also new mines. This puts the region at the heist ranking in new copper development in comparison to research in 98 projects worldwide.

    In London, the tin settlement price continued to declined to US$ 14,755 per tonne with a backwardation of US$ 55 on the 30^th of October, 2009. 
   Opening this month tin users grumbled that the market was “disorderly” complaining that the prices were distorted due to one entity controlling most of the stocks and cash contracts. Traders have warned that the prices do not reflect the reality and even going as far as to say that for the moment the market was “complete nonsense”. Many feel that the LME’s lending guidance, which limits dominant positions, should be still stricter. Though it is thought that the original dominant position holder has scaled back others may have quickly picked up the slack. However since nothing actually illegal is going on there is not much that can be done. 
    During the LME week Martin Abbott the chief executive officer rejected the claims that the tin market was being manipulated by a dominant holder or operating in a disorderly fashion. He insisted that the tin price was accurate but acknowledged the past years difficulties due to the economic crisis. 
     Abbott also hinted at the industries robust nature demonstrated by the number and range of guests attending the formal LME dinner.
       Indonesia’s tin troubles continued at the beginning of the month, as thousands of independent miners took to the streets in protest of the recent police enforcement of mining laws. The crackdown had caused widespread confusion as previously the artisan miners had been seemingly able to mine where ever they like, many actually refusing to return to work for fear of arrests and affecting the country’s smelters due to lack of material. Nevertheless by mid month the Indonesian government had made several concessions and assured there would be no further arrests. This allowed some smelters like Bangka Belitung Timah Sejahtera (BBTS) a consortium of seven private smelters to resume operations but with a diminished capacity. However some smelters as PT Timah are now being questioned for purchasing illegally mined tin ore.

    In London, the Gold AM fixing was traded at US$ 1005.75 per ounce and spot Silver rose to close at US$ 1,655 per ounce, on the 30^th of October, 2009.
    Gold still shining high as prices hit new record as Deutsche Bank and JPMorgan forecasts gold at $1,100/oz and silver at $15.80/ oz in early 2010. Precious metals and even base metals in particular copper have been benefitting from the weakend dollar. This is followed by investors turning to the metal and commodity markets looking for a haven in which to weather the storm of the global financial crisis.
  Gold projects getting a green light to move forward. Archipelago Recourses a UK based miner was approved by Indonesia’s North Sulawesi for environmental study regarding their gold project. The provincial government had initially rejected the project over concerns on the impact despite central-governments approval. Euro Goldfields gets the initial nod from Greek government in the development of a project expected to increase gold production fivefold.  
   There were some gold mine setbacks this month. Brisbane miner PanAust expects the gold and copper output of its Phu Kam Cambodia operations to fall 12% for 2009 after several mechanical and other challenges. However the operations have made significant improvements and believe most troubles are behind them. Buenaventura’s operations were hit by the Peruvian two day strike. In Australia BHP was forced to declare force majeure at its Olympic Dam gold, silver, copper, and uranium mining project.
    At the start of the month India’s HDFC Bank known to be a large gold seller has begun to look at offering silver for sale due to investor interest. The option of silver sales in select cities is something the bank is seriously considering.
    Canadian Silver miner Pan American Silver Corp plans to acquire Aquiline Resources Inc in a deal that will more than triple their indicative and measured silver resources.
    The world’s largest silver producer Fresenillo Mexico posted a 9.3 percent rise in its third quarter output.

    In London, Nickel rose to US$ 1,465 per tonne, with a backwardation of $ 10, on the 30^th of October, 2009. On the same day Cobalt min. 99.8% traded at US$ 20.63 per pound and Cobalt min. 99.3% at US$ 19.10 per pound. 
       Vale was the name in the news this month for the good, the bad and the ugly. They kicked off the month resuming their copper production at their Sudbury operation but not their nickel production as strikes linger on. The strike has had a positive effect on nickel premiums as they held firm under the continued supply pressure. The question is whether the demand up-tick is not merely an illusion of the supply disturbance due to the constraints at Sudbury.
    Anglo was happy to paint a brighter picture for demand stating that the market would need 500,000 tpy of new capacity by 2020. Clearly they would be pleased to supply this increase in demand and plan to do so with several projects that are already in the pipeline.
    Indonesia’s PT Aneka Tambang Tbk also forecasts an increase in demand and plans to increase their output by 42 percent for 2010, restarting their third smelter to full operations after months of maintenance.
   Other projects also along the way Gladstone Pacific has signs with MoU for a heap-leach project, Amur is approved by Russia for Maly Krumkon reserves, and not to be forgotten Vale Goro project is nearing completion.
     At the start of the month the LME listed Vale cobalt as its first official cobalt brand to be delivered to the exchange-bonded warehouses. By mid month the brand approval was passed which comes ahead of the molybdenum and cobalt contract launch scheduled for the 22nd of February 2010. Nevertheless there seems to be no rush to hire molybdenum or cobalt traders amid the financial crisis and previous bad experience had dampened the appetite to take on new staff. With divergent opinions on the new product and continued cost cutting, members are deciding which of their existing staff will be appointed the minor metals book.