Monsters of Rock: A game of two halves for big miners ASX

Iron ore stocks plunged into afternoon trading to send what appeared to be a good day for major mining stocks sharply in the red.

Fortescue Metals Group (ASX: FMG) lost 5.34%, erasing gains from the start of the week, with Rio Tinto (ASX: RIO) falling 3.19% and BHP (ASX: BHP) falling 1.03% .

After a week of rebounds, the price of iron ore fell from US $ 135 / t to US $ 129 / t, with the most traded contract in January on the Dalian stock exchange falling 4.8% to 4.30 AEDT.

Attention is once again turning to the debt-ridden Chinese real estate market after Evergrande missed another round of bond payments on Tuesday.

There are differing opinions on whether China will allow its real estate and infrastructure sectors to decline.

Some market watchers, such as Peter Hannah, manager of the Fastmarkets index, and Rob Brierley, boss of Fenix ​​Resources, are skeptical given the continued importance of infrastructure to China’s five-year plan.

Capital Economics senior economist for Japan, Australia and New Zealand Marcel Thieliant, who estimates iron ore prices will drop to US $ 60 / t by the end of 2025, sees the industry China’s infrastructure is heading for a structural slowdown.

“The fact that Japan’s steel demand has fallen by 30% since the early 1990s highlights the stakes,” he said.

“A slowdown in the Chinese real estate sector is the main obstacle, as residential construction accounts for about a third of steel use in China.

“We also believe that investment in infrastructure, which still absorbs 20% of steel, is bound to slow down.

“China accounts for 57% of global steel production and other countries are unlikely to fill the void. In fact, we anticipate a drop in global demand for steel over the next few years. “

Uranium stocks of Mooning Paladin (ASX: PDN) and Energy Resources of Australia (ASX: ERA) were the leading large and mid-cap mining companies after nuclear fuel prices rose $ 3 / lb during the night.

british australian company Adriatic Metals (ASX: ADT) has secured $ 244 million in financing with Orion Resource Partners for its Vares Silver Project in Bosnia and Herzegovina.

It also turned out to be a boon for copper miner Sandfire Resources, which will cash in $ 97 million from the sale of its 34,600,780 CHESS depository interest at $ 2.80 apiece.

The financing will be a practical complement for Sandfire, which last month announced a $ 1.865 billion deal to purchase the 100,000 tpa MATSA copper complex in Spain from Trafigura and Mubadala Investments.

Kalium Lakes announced last week that it had become Australia’s largest producer of potassium sulphate, an important moment for a new Australian industry that has had its fair share of hiccups so far, including Salt Lake Potash (ASX: SO4) is having trouble getting its Lake Way project running.

Today, Kalium Lakes announced that it will restructure its debt and raise $ 50 million in two tranches to increase production at its Beyondie SOP project in WA from an initial 90,000 tpa to 120,000 tpa by the fourth. quarter of 2022, which is expected to cost around $ 45.3 million.

“Today marks another exciting milestone for the Beyondie SOP project after the first SOP production delivered last week. The expansion further strengthens the company on several fronts, including the ability to take advantage of economies of scale, providing more robust working capital, earnings and operating leverage and improving the strength of the company’s balance sheet ” said Rudolph van Niekerk, CEO of Kalium Lakes. .

“The funding will expand Beyondie from 90 ktpa to 120 ktpa, which is well positioned in an environment of rising SOP prices and several potential upside opportunities as the impacts of COVID-19 normalize. With additional production at 120 ktpa, Beyondie remains a long-lasting, low-cost operation with the potential to expand production further. “

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