Base metals moved higher following the Christmas holidays supported by optimism in the equities markets and a better sentiment over all for 2010. As investors seek less volatile markets, commodities rank amongst the best investments alongside those of emerging markets. The two rather closely linked as emerging markets often have a pull on both the supply and demand of commodities. Indeed India’s growth data seem to support raw materials as commodities prices appeared to struggle for direction at the beginning of the month. While the move by the United Arab Emirates bank looked to quell fears over Dubai in establishing emergency liquidity following the shockwaves of Dubai’s substantial debt. 
    Following in the emerging markets and commodities link China is coming under mounting pressure to abandon export restrictions on some strategic non-ferrous metals. The World Trade Organization (WTO) will establish a dispute panel to arbitrate all complaints regarding these rules and restrictions. Since several nations are discontent with China as it is preventing the free sale abroad of a variety of minerals and metals affecting the market by inflating world prices, while lowering material prices within China. The argument being that the various taxes that China imposes on the export of the products in question is not permitted with in China’s WTO accession agreement.
    Nevertheless the investor influx of money that supported base metals through much of 2009 should continue into 2010 and even further according to analysts. There is an expectation that more and more funds will invest in commodities over their more traditional equity or interest-rate linked investments. This is due to the strength shown in commodity asset class through the past few years.
   According to Vaugh Wickins, head of mining and metals in Standard Bank’s project finance team, there are “three canaries”, in reference to the old-fashioned gauge of oxygen in underground mines, which need to keep chirping. Firstly government bond yields, at all-time lows owing to historically low interest rates, which are driving investors in the direction of high-yield commodities investments. Second the strength of the US dollar since commodities are often seen as a hedge against dollar weakness. Last but not least oil price, which in the past has lead other commodity prices, seeing that the moderate price to date suggests that further increases could be expected. Summing up that if oil prices remain firm, with continued dollar weakness, and government bond yields remaining low, then expectations are that investors will carry on pouring in money into metals, mining and commodities in general. However if one of these canaries stops singing a brake for the surface may be advised.
    These views of expected rise in investor inflows in to commodities for 2010 were also echoed by other large institutional investors. Barclay’s survey, at the fifth annual US Commodities Investor Conference, projected the cash flow into commodities to increase to record levels through the New Year. BofA Merrill Lynch Global Research sees metal markets soaring for 2010, despite some queries of oversupply for a few metals.

    In London, the Lead cash settlement price rose to US$ 2,395.00 per tonne while the Zinc cash settlement price rose to US$ 2,570.00 per tonne on the 31th of December, 2009.
    Nyrstar the world’s biggest zinc producer is confident that 2010 will bring higher zinc prices. With a rise in steel demand and the looming threat of mining shortages influencing the expected upward trend. Apparently in that mindset Nyrstar will be ramping up to full production its newly acquired East Tennessee and Gordonsville zinc mines. 
   In contrast Xstrata will be permanently closing its Kidd copper and zinc refinery by May 2010, due to insufficient feed. The remaining mine at Kidd Creek, Ontario will be integrated into the assets of Xstrata’s CCR refinery and Horn smelter in Canada, which are predominantly copper. 
   Exxarro intends to sell its zinc assets after reviewing its commodity portfolio. This comes as no surprise after almost a month ago the company was interested in packing its southern African assets with those of Anglo America that are also up for sale. 
   Production at the Australian Century zinc mine and concentrator was restarted after an 11-week suspension due to a leaky fault in the slurry pipeline. Century the world’s second largest zinc mine operation intends to restart its shipments in the few weeks following the restart. During the time of the pipeline repairs scheduled maintenance and other repairs were completed while mining did continue. 
    Mitsui Mining and Smelting (Kinzoku), Japan’s largest zinc producer, expects is Pallca zinc mine in Peru to return to complete operational capacity for next April, this is in light of the increased optimism of the growing global zinc demand. 
    Also in Peru Antamina, a leading copper and zinc mine, announced that its plans for a $1.2 billion expansion should soon be formally approved. Construction would start in 2010 and be finalized in 2011 and should extend the life of the mine to 2029. According to mining ministry of Peru, Anatmina produced 382,842 tonnes of zinc and 358,179 tonnes of copper in 2008 .

    In London, the Copper settlement price continued to rise to US$ 7,346.00 a tonne with a contango of US$ 31.00 on the 31^th of December, 2009.
    Copper started off the month leading a strong advance by base metals, boosted by investor flows, signs of economic growth in Asia and a weaker US dollar. This was followed by a fall back in the copper price midmonth, under pressure of a stronger dollar, only to rise in a sharp pick up towards the end of the month breaching $7,300 per tonne, on 2010 confidence of global market tightness.
   According to Chile’s copper commission Cochilco, survey of copper experts, the price of copper should average around $3.08 per pound in 2010; also forecasting an increased average price of $3.13 per pound for 2011.
    Also in Chile Codelco workers at the massive Chuquicamata mine commenced a strike halting over time after walking out on wage talks at the beginning of the month, signaling tough negotiations. This escalated to workers blocking access to the mine over the pay dispute and finally returning to work as negotiations resumed. Codelco estimates the loss at the Chuquicamata mine, due to the interruption of production, at around $8 million.
    Continuing in Chile workers at Xstata’s Altonorte copper and molybdenum smelter voted to go on strike following a rejection of wage offers. Xstrata having sought government mediation has not managed to reach a resolution over the wage dispute. A drawn out strike could delay some copper cathode shipments from Chile one of the world’s top producers, however analysts say the market impact would be minimal.
    Ivanhoe plans to undertake a rather aggressive development program at its Oyu Tolgoi project in the Gobi Desert of Mongolia. Arrangements are being made to spend $758 million in 2010 and should have the $3.5 billion portion of the open-pit mine completed in 2012. This slightly more accelerated timetable would have production scheduled for early 2013. The Oyu Tolgoi project is seen as one of the largest untapped copper and gold deposits in the world.

    In London, the tin settlement price rose steadily closing at US$ 16,725 per tonne with a contango of US$ 70.00 on the 31^th of December, 2009. 
    According to the director for mineral and coal production at the energy ministry, Bambang Gatot Ariyono, Indonesia is expected to complete regulations to limit tin production starting in 2010.
    The police in Indonesia have resumed their efforts to end illegal tin mining on the island of Bangka. This recent crackdown has been set by the local police and is of a slighter scale than the August to October campaign. That was headed by the authorities in Jakarta and brought tin production to a near standstill as fears of arrests loomed.
   The local authorities appear to be much more lenient with no arrests so far and only warning shots to discourage would be illegal mining. This is in sharp contrast with the 16 arrests for alleged illegal mining or purchasing illegally mined ore stemming from the Jakarta initiative. The local system understands that local miners subsist on tin mining as their only source of livelihood but still wishes to stop illegal mining.
    However much of the independent mining is at a halt during this time due to the rainy season. Offshore mining is simply too dangerous because of turbulent seas, while onshore mining is nearly impossible since the region tends to flood. However, some miners still head out when ever possible continuing to work in rather damp conditions.
    Bangka Belitung Timah Sejahtera (BBTS), a consortium of seven private smelters capable of producing 2,800-3,500 tonnes, is idle due to the lack of available ore and only expects conditions to improve in May with the return of more favorable weather. PT Timah and Koba Tin, the two largest tin producers, have carried on seemingly unaffected by the rains in part due to superior equipment.
    According to the World Bureau of Metal Statistics, Indonesia is the second largest producer of tin in the world, turning out 84,356 tonnes of tin in 2008.

    In London, the Gold PM fixing was traded at US$ 1176.75 per ounce and while Silver rose to closed at US$ 18.14 per ounce, on the 30^th of November, 2009.
    Gold started the month mostly steady then began to rise again hitting a new record high of over $1,225 an ounce on the 3^rd of December. Then Gold began to fall back for the remainder of the month, however having a slight upward trend at the very end of December. Despite speculations of a bubble, warnings of weak fundamentals, and calls of a downward correction, bullion is still in rather high demand even reaching the retail sector that have added it to their list of products for sale.
    The gold miner Mwana Africa posted a narrow pretax loss this month, though having completed drilling at its Zani-Kodo gold project in the Democratic Republic of Congo, they expect to report updated resources in the New Year.
    This month NunaMinerals renewed its alliance, that dates back to 2007, with global mining giant Rio Tinto for mineral explorations in Greenland. NunaMinerals has been exploring for gold and other precious and base metals with a portfolio of 16 licenses encompassing 40 exploration projects.
    A combination of Guatemalan groups has filed a complaint with the Canadian government, under the guidelines of the Organization of Economic Co-operation and Development, requesting an investigation into Goldcorp’s Marlin mine. The complaint outlines concerns of supposed structural damages to homes near the project caused by blasts and heavy trucks, alleged depletion and contamination of fresh drinking water, and grievances over skin rashes and other ailments of people living close to the mine.
     Minera Penmont, a joint venture between Fresnillo and Newmont Mining, and Goldcorp have been rivaling over bids to acquire Canadian gold and silver producer Canplats Resources. Both companies would be interested in Canplats Represa deposit at the Camino Rojo development in Mexico, that could host 3.44 million ounces of gold and 60.7 million ounces of silver following measured and indicated resource basis.

    In London, Nickel rose to US$ 18,480.00 per tonne, with a contango of $ 75.00, on the 31^th of December, 2009. On the 30 of December Cobalt min. 99.8% traded at US$ 21.00 per pound and Cobalt min. 99.3% at US$ 20.25 per pound.      Nickel seemed to have an exuberant Christmas cheer as it rallied on Thursday the 24^th of December to all-time highs. Rising more than $500 per tonne trading on the LME, with a flurry of business driving the price to heights unseen since October; despite the hefty influx of material into warehouses, increasing 1,836 tonnes to 152,400 tonnes. Traders expected the trend to continue before falling back early in the New Year. 
   Vale was once again rather often in the headlines this month and giving us a little tour of the planet. From the Indonesian and the financing for a new hydroelectric plant; to Canada where they continue to have troubles with the United Steelworkers union; and Finland where the off take agreement with the Harjavalta refinery has come to a close. 
    Norilsk was also mentioned a fair amount in the news this month. As the Harajavalta refinery may struggle to find feed after the expiration of the Vale agreement; to the sale 0.4 percent of Norilsk parent company to two separate off shore companies; and Norilsk projects its domestic revenues at $8 billion for 2010 despite Russia reinstating a 5% nickel export tax.
    Another headline name was BHP, as they seem to be heading for the exit from nickel, with several of its mines still shuttered and the sale of Ravensthorpe to First Quantum.
    Cobalt market grows and pressure builds as sales and purchases go above and below market prices. One trader making a comparison to the San Andreas rift; with not much going on at the surface, but a considerable amount of pressure building below. Yet the prices seem to continue remain firm as the focuses shifts to 2010 contracts. 
    In the Democratic Republic of Congo the strike at the Tenke Furgutume copper and cobalt mine has not hurt production according to Freeport. However government review may have a disruptive affect on the development of the mine.