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Commodities Roundup: DRC Rips Up 2002 Mining Charter, Neodymium Market Falling Short of Demand

04/06/2018 By

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For the buyers and category managers out there, especially those deep in the weeds of buying and managing commodities, here’s a quick rundown of news and thoughts from particular commodity markets.

From price movements to policy decisions, our MetalMiner editors scour the landscape for what matters. This week:

DRC Ditches 2002 Mining Charter

MetalMiner’s Stuart Burns this week wrote about the Democratic Republic of Congo’s effort to get more out of its own natural resources by ripping up the 2002 mining charter and adjusting associated royalties and levies.

“Needless to say, mining companies are lobbying hard for a reduction in any additional royalties, arguing for delays to implementation, and special exemptions,” Burns wrote. “The government’s position is that the previous code, now some 15 years old, was created to make the DRC attractive for investors at a time when it was suffering the second Congo War from 1998–2003. The government argues that in the intervening period, the situation has become much more stable and mining companies can operate in a better domestic security environment (and therefore at lower cost and lower risk).”

The DRC boasts the majority of the world’s mined cobalt, which is coveted for its application in electric vehicles and other high-tech products. (In 2017, 64,000 tons of cobalt were mined in the DRC out of a total of 110,000 tons worldwide, according to the U.S. Geological Survey.)

“If the state takes a little more of the pie, it will probably be reflected in prices,” Burns wrote. “But with limited alternatives for products like cobalt, it is unlikely to dent mining companies’ enthusiasm for investing in the DRC.”

The Neodymium Market

As a rare earth metal, neodymium is not a material that’s on the radar for the vast majority of buyers. But it is important for companies like Tesla, which wants the metal for application in magnetic motors.

MetalMiner touched on the issue in its Rare Earth Monthly Metals Index report this week. The neodymium market, however, is already falling short of demand. According to a Reuters report cited in the aforementioned article, neodymium supply fell short of demand in 2017 by 3,300 tons.

Add Tesla’s demand — its recent struggles as a company notwithstanding — and you have a recipe for a rising neodymium price.

Cooper Cools Down

After an upward surge to close 2017, the copper price has come back down through the first quarter of 2018.

After eclipsing the $7,200/mt mark in December, LME copper has dropped back to $6,683/mt as of March 29, a 6.6% retracement.

The situation wasn’t much different for Shanghai Futures Exchange copper, which posted an approximately 4.5% drop from March 1-29.

Steel Plate, Cobalt Are Big Risers

While it was a downward March for copper, other metals soared.

As noted in MetalMiner’s Renewables Monthly Metal Index report, the price of U.S. steel plate closed the month up 13.6% month over month.

Meanwhile, the always mercurial cobalt jumped 10.6% on the month. The actual impact of the DRC’s focus on shaking up the 2002 mining charter remains to be seen, but any move that could potentially slow down production will lead to price support.