Monday, December 28, 2009

Strike at Chile's Altonorte copper smelter

News: Union workers at Chile's Altonorte copper smelter plan to strike and block roads on Monday after scrapping a final wage offer from owner global miner Xstrata.
Company’s profile: Altonorte is a custom copper smelting operation located near the port of Antofagasta in northern Chile. The smelter has the capacity to process 900,000 tonnes of copper concentrate per year, yielding 290,000 tonnes of anode copper and 800,000 tonnes of sulphuric acid annually.
Impact: Impact could be minimal due to ongoing general maintenance of the metallurgical complex, which already lowered its copper anodes output to a minimum. The maintenance, which started last week and is carried out every 2-1/2 years, is expected to end on Jan. 20. A prolonged strike at the metallurgical complex could delay some copper anodes shipments from top producer Chile. Mining companies could also be forced to look for other smelters to process their concentrate, which could increase costs; however, analysts say the impact on the market would be minimal.

05/01/10 - Strike in Chile copper smelter has ended, with union leaders agreeing on a settlement with mangment. According to the deal, Xstrata workers will receive a 2 percent increase in base pay, a bonus of 2.4 million pesos ($4,745), a production bonus of 750,000 pesos a year and a low-interest loan of 2.04 million pesos.

Strike has provided good support to the prices, as price have risen to Rs 347 levels, a rise of Rs 10 after the news came out.

Tuesday, December 22, 2009


Recent fall in Gold seems to have given the chance to investors to buy gold. Fall in prices seems to be a more of correction rather than a genuine fall. Prices in Gold (MCX) have corrected from its high of 18364 on 3/12/09 to current 16650 as on 22/12/09. Correspondingly in COMEX prices have corrected from $1227 to current $1090.8 levels.
There are two reasons which proves gold has not topped out:
1. The gap between yields on US Treasuries and TIPS (Treasury inflation adjusted security) due in 10 years, a measure of the outlook for consumer prices, closed above 2.25 percentage points four days last week, the longest stretch since August 2008. TIPS being an instrument issued by Fed, which protects investors from inflation in a way that principal will increase with the rise in inflation. The yield on TIPS is negative, negative yield in inflation signifies that investors are giving away the yield for the sake of protecting themselves against rise in inflation. Rising difference between treasury and TIPS, seems to be positive for Gold in long term as Gold has been traditionally considered as hedge against inflation.
2. SPDR Gold ETF has risen from 1,116.247 tons on 08/12/09 to current levels of 1,132.708 tons. The current holding is near to its life time high of 1134.03 tones. The rise in holding has coincided with fall in gold price, it just goes on to prove that demand for the metal has not at all detreotiated despite recent sharp fall in prices.

12/01/10 Gold has recovered from the day of the posting of the article, stating that fall in gold has given chance to investors to buy the gold. Price made a high of $1161 in COMEX and 17104 in MCX.