Engineering & Mining Journal

APR 2018

Engineering and Mining Journal - Whether the market is copper, gold, nickel, iron ore, lead/zinc, PGM, diamonds or other commodities, E&MJ takes the lead in projecting trends, following development and reporting on the most efficient operating pr

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88 E&MJ • APRIL 2018 www.e-mj.com MARKETS With workers from steel and aluminum mills on hand at a signing ceremony in the White House, U.S. President Donald Trump fulfi lled another of his "Ameri- ca First" campaign pledges, promising tariffs on the two metals. Much of the rhetoric surrounding the announcement focused on the 25% steel tariff and the sources of imported steel. He later tem- pered his position. While the 10% tariff could affect the U.S. market for aluminum, the recently announced sanctions against key Russian individuals, such as Oleg Deripaska, CEO, United Co. Rusal, the world's second larg- est aluminum producer, have already had an impact on markets. Rusal's aluminum, alumina and baux- ite production accounted for approxi- mately 7%, 7% and 4% of the global production in 2017, respectively. The company's inability to conduct business will certainly affect the global aluminum supply chain, given the company's posi- tion in the market. As this edition was going to press, the London Metals Exchange (LME) had an- nounced a temporary suspension on trad- ing Rusal metal unless "the metal owner can demonstrate that it will not constitute a breach of the sanctions." This move by the LME caused aluminum futures to surge to $2,229 per metric ton (mt). The prior-closing spot price for aluminum was $1,967/mt. While the LME's stance surprised a number of analysts, long-time E&MJ readers will remember that the ex- change has taken action against Rusal previously and prevailed in court. Western companies are trying to avoid becoming entangled in the sanctions. Glencore CEO Ivan Glasenberg resigned his position as a director of Rusal. Glen- core holds a 9% stake in Rusal, which is valued at about $1 billion. The company said it was committed to complying with the sanctions. It said it was also halting a previously announced exchange of Rusal shares for En+ Group plc. Deripaska is the majority owner in both Rusal and En+. A Rusal spokes- person said Deripaska called the sanc- tions against him baseless, ridiculous and absurd. Sanctions aside, many doubt the tar- iffs will have a positive impact on the U.S. market. Stocks for major U.S. alu- minum companies were mixed. Alcoa saw the value of its stock increase recently while both Century and Kaiser saw stock values drop. Most of that movement was related to prices for alumina, which have increased nearly 10% to $500/mt due to a lower output from Alunorte's alumina refi ning capacity. Located in Brazil, the word's largest alumina refi nery declared force majeure during March after Brazil- ian authorities requested a 50% reduc- tion in production while it recovered from heavy rains, fl oods and concerns of possi- ble water contamination. As it is with most commodities, China remains the wild card. China's fi rst-quarter 2018 total aluminum output was reportedly down 2.5% year-on-year to 8.8 million mt. March output was estimated at 3 million mt, a 2.7% year- on-year decrease. Year-to-date, China has reduced its re- liance on alumina imports by as much as 60%. It could be sustaining itself on in- creased domestic sources and, with these alumina price swings, the market might see China export alumina. Aluminum: Caught Between Tariffs and Sanctions By Steve Fiscor, Editor Gold and silver prices provided by KITCO Bullion dealers (http://www.kitco.com). Platinum group metals prices provided by Johnson Matthey (http://www.platinum.matthey.com). Non-ferrous base and minor metal prices provided by London Metal Exchange (http://www.lme.co.uk). Iron ore prices provided by Platts Iron Ore Index. Currency exchange rates were provided by www.xe.com. (April 6, 2017) Precious Metals ($/oz) Base Metals ($/mt) Minor Metals ($/mt) Exchange Rates (U.S.$ Equivalent) Gold $1,333.40 Aluminum $1,967.00 Molybdenum $26,000 Euro (€) 1.232 Silver $16.36 Copper $6,703.00 Cobalt $91,500 U.K. (£) 1.413 Platinum $918.00 Lead $2,358.50 Canada ($) 0.787 Palladium $909.00 Nickel $12,890.00 Iron Ore ($/dmt) Australia ($) 0.770 Rhodium $2,040.00 Tin $21,050.00 Fe CFR China $63.34 South Africa (Rand) 0.083 Ruthenium $215.00 Zinc $3,222.00 China (¥) 0.159

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