Cory's Insights – Tue 24 Nov, 2015

Copper Miners’ Pain Doesn’t Stop Buildup

This is an interesting article published by The Wall Street Journal focusing on copper production and supply around the world. Even with the economic slowdowns seen in China and essentially every producing nation copper demand is immediately hit. You would think that supply would begin to adjust to reflect the lower demand but the opposite is happening… Read below to understand the disconnect between copper supply and demand how how it is only getting worse.

Click here to visit the original posting page.

Global copper production is on track to hit an all-time high as companies push new projects to completion

Mining companies are digging up record amounts of copper even as prices plumb new lows, a strategy that threatens to deepen a four-year bust.

Global copper production is on track to hit an all-time high of 18.7 million metric tons this year, according to BMO Capital Markets, and many analysts predict it will expand until at least 2019.

The reason: Companies such as Freeport McMoRan Inc., MMG Ltd. and Southern Copper Co. that have sunk billions of dollars into new projects are pushing them to completion in a bet that the larger, lower-cost ventures will help them weather the rout.

Once up and running, the new mines will be profitable even if copper prices drop below $2 a pound, a level last hit in May 2009. The cost of producing a pound of copper at Freeport’s Grasberg mine in Indonesia will drop to 61 cents next year, from an estimated $1.05 in 2015, according to BMO.

On Monday, copper prices hit a 6½-year low, with December futures down 1.7% at $2.0210 a pound in New York. Year to date, copper is off 28%.

The supply growth is another sign the downdraft in commodities could last much longer than many investors expect. It also will likely complicate plans by miners such as Glencore PLC, Freeport and Teck Resources to pay down heavy debt burdens and shore up their financial health.

“It’s a classic prisoner’s dilemma: It makes sense for them as a group to have lower copper production, but individually nobody wants to cut back and give up market share and profits,” said Dane Davis, a metals analyst with Barclays.

The metal is used in products from cellphones to laptops to farm equipment, making its price sensitive to shifts in the global economic outlook.

Copper prices have been declining since 2011, and predictions for an upturn have been proved wrong again and again. In October 2013, Credit Suisse analysts forecast that prices would bottom at $3 a pound sometime in 2014. Now, they predict that prices won’t return to $3 until after 2019.

Next year, four new mines will increase the world’s copper production by 5.1%, says Barclays. These and other projects nearing completion in coming years were approved at the peak of the commodities boom, when analysts were projecting a prolonged copper shortage. It takes from seven to nine years to build a new copper mine.

“If you had to remake that decision today from the beginning, and you haven’t spent any money at all, would you build the mine? The answer in some of these cases is no,” said Rick de los Reyes, who helps manage $1.4 billion at T. Rowe Price. “That’s why commodity down cycles last so long, because you have all these long-dated projects started during the boom times and, by the time that supply comes on, it’s too late.”

Freeport McMoRan, the world’s largest listed copper miner, expects to add 1.1 billion pounds of new copper output to the roughly 46 billion pound global market in 2016. This will chiefly come by expanding two mines: Grasberg and Peru’s Cerro Verde.

At Grasberg, the world’s third-largest open-pit copper mine, Freeport spent $5.5 billion over the past decade to build an extensive tunnel network and add two underground mines, with plans for more. BMO analysts predict the Grasberg expansion will add 847 million pounds of copper to the market next year, raising global supply by 2.1% in 2016.

One of the few new mines starting next year is Las Bambas in Peru. China-backed MMG bought it for $5.85 billion in 2011 and expects to invest a further $1.9 billion to complete the project. Goldman Sachs predicts Las Bambas will increase global copper supply by 1.2% next year.

Mining-company shares have been hurt amid the weak copper prices. Miners have tapped the stock market to raise cash and sold assets to shore up their balance sheets.

“We’re in an environment where the company with the lowest debt wins,” said Clive Burstow, who helps manage $600 million at Barring Asset Management. Mr. Burstow said his fund had been cutting its Glencore stake since start of 2015 on concerns about the company’s debt and sold its position in the third quarter.

Executives are swearing off new investments. In September, Freeport McMoRan Chief Executive Richard Adkerson said the company responded to weak copper prices by cutting spending on new mine projects by 25%. “After we complete these current projects, until the market warrants further investments, we’re not going to be making them,” he said.

It is possible that companies could fail to reach production targets if operations hit a snag, which could buoy prices. Copper mines are vulnerable to supply disruptions. This year, rains, drought, earthquakes and labor strikes cut 9% from planned global mine output, versus typical annual losses of 4% to 5%, said Citigroup analyst David Wilson.


Comments:
  1. On November 24, 2015 at 12:38 pm,
    Excelsior says:

    Yep, Dr. Copper and the Base metals have had a rough time of it the last few years, as the global economy slows. However, as discussed there are pockets of growth all over the planet where they are still going to need copper, iron, nickel, zinc, moly, silver, PGMs, and even strategic metals like Tungsten, Niobium, Rare Earths etc….

    Precious metals Gold/Silver will likely lead the charge up out of the bottom before the base metals, but there are some really interesting values showing up in the commodity conglomerates in this current price weakness.

    Here’s a good watch list for some of the Commodity Conglomerates:

    Company Name Symbol
    AMERICAN CUMO MINING CORP MLYCF
    ANGLO AMERICAN PLC NGLOY
    ANTOFAGASTA HOLDINGS PLC ANFGY
    AVRUPA MINERALS LTD AVPMF
    BHP BILLITON LTD BHP
    BRIXTON METALS BXTMF
    CANADA ZINC METALS CORP CZXMF
    CAPSTONE MINING CORPORATION CSFFF
    COMPANHIA VALE DO RIO DOCE VALE
    COOPER LAKE RESOURCES LTD WTCZF
    COPPER FOX METALS INC CPFXF
    COPPER MTN MNG CORPORATION CPPMF
    EXXARO RESOURCES LTD EXXAY
    FIRST QUANTUM MINERALS LTD FQVLF
    FREEPORT-MCMORAN INC FCX
    GLENCORE XSTRATA PLC (ST HELIER) GLCNF
    HUDBAY MINERALS INC HBM
    IPATH DJ-UBS COPPER SUB TR ETN JJC
    IPATH DJ-UBS NICKEL SUB TOTAL RETURN ETN JJN
    JIANGXI COPPER COMPANY LTD JIXAY
    JSC MMC NORILSK NICKEL NILSY
    KAZ MINERALS PLC KZMYY
    LUNDIN MINING CORORATION LUNMF
    MARKET VECTORS STEEL INDEX FUND SLX
    METALS X LTD MLXEF
    MINERA ALAMOS INC VGMTF
    MITSUI & COMPANY LTD MITSY
    NORTHERN DYNASTY MINERALS LTD NAK
    NOVACOPPER NCQ
    OZ MINERALS LTD OZMLF
    POSCO PKX
    RIO TINTO PLC RIO
    SHERRITT INTERNATIONAL CORPORATION SHERF
    TASEKO MINES LTD TGB
    TECK RESOURCES LTD TCK
    THOMPSON CREEK METALS COMPANY INC TC
    TURQUOISE HILL RESOURCES LTD TRQ
    VEDANTA LTD VEDL
    VVC EXPLORATION CORPORATION VVCVF
    ZAZU METALS CORPORATION ZAZUF

    • On November 24, 2015 at 6:01 pm,
      Excelsior says:

      Hedge funds have never been this bearish on commodities
      Frik Els | November 23, 2015

      “According to the Commodity Futures Trading Commission’s weekly Commitment of Traders data, five weeks of selling has seen 13 of the 24 commodities tracked pushed into net short positions.

      Thos include the major commodities like crude oil, gasoline, gold, copper, soybeans, corn and wheat where speculators are betting that these commodities will be cheaper in future.

      Sentiment on commodity markets have not been this bearish since at least 2006, when the Commodity Futures Trading Commission first began tracking the data.”

      http://www.mining.com/hedge-funds-have-never-been-this-bearish-on-commodities/

      • On November 24, 2015 at 8:45 pm,
        Excelsior says:

        Looking At Copper’s Bear Market
        by Tiho | Nov 23, 2015 | Blog | 3 comments

        Peaking February 2011, Copper prices have been declining for years…..

        https://shortsideoflong.com/2015/11/13323/

  2. On November 24, 2015 at 2:04 pm,
    Bob UK says:

    From tomorrow’s Telegraph:

    ‘Elite funds prepare for reflation and a bloodbath for bonds’

    All the stars are aligned for an end to the deflationary supercycle, yet $6 trillion of bonds trade at yields below zero

    http://www.telegraph.co.uk/finance/economics/12014821/Elite-funds-prepare-for-reflation-and-a-bloodbath-for-bonds.html

  3. On November 24, 2015 at 2:20 pm,
    JIM says:

    EXCELSIOR,

    Thanks for the list. One company you might want to add is NGEX Resources. They are a Lukas Lundin company. They had a lot of gold, silver & copper before and just added more yesterday (http://ngexresources.mwnewsroom.com/Files/cb/cbb06e1a-7a32-4ba7-b5d5-6cf6be0921e6.pdf). They had a BIG spike today on yesterdays news and I plan to be buying NGQ.TO after the bottom is in.

    All The Best,

    JIM

    • On November 24, 2015 at 2:26 pm,
      Excelsior says:

      Fantastic Jim. Thanks, I’ll definitely add it. I realized I didn’t put up Nevsun Resources either and just found a whole other watchlist with many copper gold companies too. Some of Gold/copper or Silver/base metal plays I also have in the Gold and Silver mining watch list. It’s hard to categorize some of these when they are poly-metallic.

      Thanks again for the recommendation. I’ll post an updated list in a few minutes….

      • On November 24, 2015 at 2:57 pm,
        Excelsior says:

        ADITYA BIRLA MINERALS LTD ABWAF
        AMERICAN CUMO MINING CORP MLYCF
        AMERIGO RESRCS LTD ARREF
        ANGLO AMERICAN PLC NGLOY
        ANTOFAGASTA HOLDINGS PLC ANFGY
        AVRUPA MINERALS LTD AVPMF
        BHP BILLITON LTD BHP
        BRIXTON METALS BXTMF
        CALIBRE MINING CORPORATION CXBMF
        CANADA ZINC METALS CORP CZXMF
        CAPSTONE MINING CORPORATION CSFFF
        COMPANHIA VALE DO RIO DOCE VALE
        COOPER LAKE RESOURCES LTD WTCZF
        COPPER FOX METALS INC CPFXF
        COPPER MTN MNG CORPORATION CPPMF
        CUDECO LTD CUDEF
        CURIS RESOURCES LTD PCCRF
        EXXARO RESOURCES LTD EXXAY
        FIRST QUANTUM MINERALS LTD FQVLF
        FIRST QUANTUM MINERALS LTD FQVLF
        FIRST TRUST ISE GLOBAL COPPER INDEX FUND CU
        FREEPORT-MCMORAN INC FCX
        GLENCORE XSTRATA PLC (ST HELIER) GLCNF
        GLOBAL X COPPER MINERS COPX
        GRUPO MEXICO S.A. DE C.V. GMBXF
        HUDBAY MINERALS INC HBM
        IMPERIAL METALS CORP IPMLF
        IPATH DJ-UBS COPPER SUB TR ETN JJC
        IPATH DJ-UBS NICKEL SUB TOTAL RETURN ETN JJN
        JIANGXI COPPER COMPANY LTD JIXAY
        JIANGXI COPPER COMPANY LTD JIAXF
        JSC MMC NORILSK NICKEL NILSY
        KAZ MINERALS PLC KZMYY
        KAZAKHMYS LTD KZMYF
        KGHM POLSKA MIEDZ S.A. KGHPF
        LUNDIN MINING CORORATION LUNMF
        LUNDIN MINING CORPORATION LUNCF
        MARKET VECTORS STEEL INDEX FUND SLX
        MERCATOR MINERALS LTD MLKKF
        METALS X LTD MLXEF
        MILLROCK RES INC MLRKF
        MINERA ALAMOS INC VGMTF
        MITSUI & COMPANY LTD MITSY
        NEVADA COPPER CORPORATION CDA NEVDF
        NORTHERN DYNASTY MINERALS LTD NAK
        NOVACOPPER INC NCQ
        OZ MINERALS LTD OZMLF
        POLYMET MINING CORPORATION PLM
        POSCO PKX
        Quaterra QTRRF
        RIO TINTO PLC RIO
        SHERRITT INTERNATIONAL CORPORATION SHERF
        SOUTHERN COPPER CORPORATION SCCO
        TASEKO MINES LTD TGB
        TECK RESOURCES LTD TCK
        THOMPSON CREEK METALS COMPANY INC TC
        TURQUOISE HILL RESOURCES LTD TRQ
        VEDANTA LTD VEDL
        VEDANTA RESOURCES PLC VDNRF
        VVC EXPLORATION CORPORATION VVCVF
        WESTERN COPPER & GOLD CORPORATION WRN
        ZAZU METALS CORPORATION ZAZUF

        • On November 24, 2015 at 2:59 pm,
          Excelsior says:

          Ha Ha! Darn it! I forgot Nevsun and NGEX Resources, because I had them pulled off to the side. Oh well….. we’ll mention them again here to go with this list above. 🙂

          • On November 24, 2015 at 3:33 pm,
            Excelsior says:

            Here’s a link to some info on Nevsun Resources – They have a great copper resource, but then Zinc, Gold, and Silver. What I like is the project Zinc profile and rising Gold profile a few years down the road:

            http://www.nevsun.com/projects/bisha-main/#production

          • On November 24, 2015 at 4:10 pm,
            Excelsior says:

            Another Copper company that I’d point out as one to watch is Copper Mountain Mining Corp (CUM) on the TSX or (CPPMF) OTC.
            ___________________________________________________________________

            COPPER MOUNTAIN ANNOUNCES POSITIVE Q3 2015 RESULTS
            Vancouver, British Columbia – November 9, 2015 – Copper Mountain Mining Corporation (TSX: CUM) (the “Company” or “Copper Mountain”) announces third quarter revenues of $63.7 million after pricing adjustments and treatment charges from the sale of 21.9 million pounds of copper, 7,800 ounces of gold, and 65,300 ounces of silver. Total cash cost for the quarter ended September 30, 2015 was US$1.72 per pound of copper sold, net of precious metals credits.

             Copper, gold and silver production for the third quarter of 2015 at Copper Mountain Mine was 20.4 million pounds of copper, 6,300 ounces of gold and 64,900 ounces of silver, or 58.2 million pounds of copper, 21,900 ounces of gold and 216,300 ounces of silver for the nine months ended September 30, 2015.
             Revenues for the third quarter of 2015 were $63.7 million from the sale of 21.9 million pounds of copper, 7,800 ounces of gold, and 65,300 ounces of silver, net of pricing adjustments, bringing nine month revenues to $192 million from the sale of 61.8 million pounds of copper, 21,700 ounces of gold, and 224,700 ounces of silver, net of pricing adjustments.
             Adjusted EBITDA was $14.7 million for the quarter; and $48.5 million for the nine months ended September 30, 2015.
             Adjusted earnings were $2.0 million for the quarter; and $9.8 million for the nine months ended September 30, 2015.
             Cash flow from operations was $4.7 million for the quarter; and $18.1 million for the nine months ended September 30, 2015.
             Cash on hand at the end of the quarter was $18.5 million.
             Mine production continued at a mining rate of 160,000 tpd moved during the quarter.
             SAG mill achieved an all-time monthly throughput record of 39,100 tpd during the month of July and averaged 37,400 tpd during the quarter.
             Site cash costs for the quarter were US$1.21 per pound of copper produced net of precious metal credits, a reduction of 11% over Q2 site cash costs.
             Total cash costs for the quarter were in-line with expectations at US$1.72 per pound of copper sold net of precious metal credits and after all off-site charges, a reduction of 5% over Q2 total cash costs.
             Realized prices on metal sales for Q3 2015 were US$2.39 per pound of copper, US$1,118 per ounce of gold and US$14.70 per ounce of silver.

            http://www.cumtn.com/all_news/151109_CMMC_News_Release_Q3-2015_Production_Results_Released_Nov-9-2015.pdf

  4. On November 24, 2015 at 5:47 pm,
    Excelsior says:

    Copper price: Lower for longer
    Frik Els | November 24, 2015

    http://www.mining.com/copper-price-lower-for-longer/

    • On November 24, 2015 at 5:52 pm,
      Excelsior says:

      Here’s the first part of the article posted above because it is a nice summary:
      ____________________________________________________________________________
      Study shows copper price fall matches previous down-cycles going back to 1975, but expect a long painful slog before a sustained recovery

      It’s been a brutal November for copper which despite a nice bump on Tuesday is down more than 10% during the month.

      In New York on Tuesday copper gained 2.5% to $2.06 a pound after coming dangerously close to dropping through $2.00 on Monday, the lowest since March 2009.

      Copper traded below the $2-level for a brief seven months at the height of the global financial crisis. It took just 18 months to climb its way back to a record of nearly $4.50.

      Is today’s big bounce off the psychologically important $2-level (in the absence of any really positive development on commodity markets) the first signs of a bottom in the copper market?

      Barclays recently put out a research report that compared copper and crude oil cycles going back to 1975.

      Compared to previous downturns – the 1980s global economic slump, the late 1990s Asian crisis and the global financial crisis of 2008-2009 – the current bear market in oil and copper is already more severe.

      Relative to their rolling five-year averages, the November average price for copper is down 36% (and at today’s price it’s just over 40%) and more than 50% below for oil. Copper’s decline matches the average maximum decline of 36% during the previous downcycles while oil is clearly overshooting on the downside, according to the study.

      But the depth of this bear market is just one half of the story.

      Comparing the length of time trading at cyclical lows compared to previous periods indicated the copper market may be “bumping along the bottom” for a while still.

      Take China out of the picture and global demand has actually been flat or declining
      Copper has now traded at 20% or more below its prevailing five-year average for 10 months. According to Barclays during previous downturn the red metal spent 15 months in a bear market.

      Put another way – copper (and oil) should be performing much better and not making fresh lows if we were witnessing a sustainable recovery….”

  5. On November 24, 2015 at 5:48 pm,
    Excelsior says:

    Most copper producers in Chile barely breaking even — mining group
    Cecilia Jamasmie | November 24, 2015

    http://www.mining.com/most-copper-producers-in-chile-barely-breaking-even-mining-group/

    • On November 24, 2015 at 5:54 pm,
      Excelsior says:

      Here’s the first part of the article posted above:
      ___________________________________________________________________________

      “More than 18,600 km from Beijing, in copper-rich northern Chile, beleaguered miners are barely coping with the impact of China’s economic slowdown.

      The situation is worse than many think, according to the country’s mining industry group Consejo Regional Minero de Coquimbo (Corminco), which represents some of Chile’s top miners in the copper sector, including Antofagasta (LON:ANTO), Glencore (LON:GLEN) and Teck Resources (TSE:TCK.A, TCK.B) (NYSE:TCK).

      Its president, Juan Carlos Sáez, told El Día newspaper (in Spanish) that a “majority” of the group’s members are already unable to make a profit.

      “We hope this is already the lowest level,” said Sáez referring to current copper prices. “Because it’s below the limit of exploitation for the majority of miners in the country.”

  6. On November 24, 2015 at 6:53 pm,
    JIM says:

    EXCELSIOR,

    If you like zinc companies, David Morgan has written about Trevali Mining Corporation (http://www.trevali.com/s/Home.asp). They’re first operating mine is located in Peru with another going through commissioning in Canada. The stock price obviously has been really beat up this year, but they are moving forward and produce zinc, lead & silver.

    All The Best,

    JIM

    All The Best,

    JIM

    • On November 24, 2015 at 7:24 pm,
      Excelsior says:

      Another great suggestion with Trevali Jim. Yes, I am familiar with their story and have them grouped in with my Silver miners watchlist. You are correct that what is unique about them is their “Zinc focus”, so they may be better suited here the other base metal companies than with Silver companies.

      My thought was that there are number of companies like:
      – Americas Silver corp’s: Nuestra Señora (silver-zinc-copper-lead project)
      – Alexco: Flame & Moth, Bellekeno, and Lucky queen projects that are (silver-gold-lead-zinc)
      – Great Panther Silver: Guanajuato Mine Complex, San Ignacio mine, and Topia Mine, that are (silver-lead-zinc)
      – Fortuna: Caylloma mine, which produces silver, gold, zinc, and lead

      etc….etc….. there are a number of Silver-Gold-Lead-Zinc companies that fall into the “Silver miner” category, and that is why I had Trevali in with that crowd.

      It is definitely and interesting company to keep an eye on Jim, and I appreciate that you brought it up into the mix today. Cheers!
      __________________________________________________________________________

      Trevali reports third quarter 2015 financial results and provides Caribou commissioning update: Q3 EBITDA(1) $3.9 million, Revenues $27 million and Net Loss of $3.4 million
      November 16, 2015

      Q3-2015 Highlights:
      • Santander concentrate sales revenue of $27 million
      • EBITDA(1) of $3.9 million
      • Income from Santander mine operations of $1.5 million
      • Santander Q3 site cash costs(2) of US$0.28 per pound of payable Zinc Equivalent (“ZnEq”)(3) produced or US$38.67/tonne milled, ahead of the Company’s revised year-end guidance of US$46-48 per tonne milled
      • Santander Q3 production of 14.8-million payable pounds of zinc, 7.8-million payable pounds of lead and 285,962 payable ounces of silver
      • Santander Q3 sales of 15.2-million pounds of zinc, 8-million pounds of lead, and 290,228 ounces of silver
      • Realized selling prices for zinc, lead and silver of US$0.78 per pound, US$0.73 per pound and US$14.80 per ounce respectively at Santander
      • Santander mill recoveries remain higher than design at 90% for Zn, 89% for Pb and 77% for Ag
      • Net loss of $3.4 million or ($0.01) per share

      http://www.trevali.com/i/pdf/2015-11-16_NR_TV.pdf

  7. On November 24, 2015 at 7:29 pm,
    Chartster says:

    Excelsior,
    Wow, you are all over it, man. I just bought COPX. But you are much more prepared for ” the move ” than most!
    I always enjoy your input and knowledge.
    BTW: I’m down a bit on SILJ, but hoping that will change tomorrow…
    The truth be told, I’m a bit down on a few companies that I thought would be breakouts and it is a wait and see now. I’m in the ” invest in ETFs and wait for the company move stage “. I can read the move much better than the company, and don’t have the time to DD the companies lately. Your input as always is much appreciated !!

    Two stocks I’m in the red on are IPI and REE. I think IPI is gonna rock! But, I’m still down right now..

    • On November 24, 2015 at 7:45 pm,
      Excelsior says:

      Hey Chartster, glad to get your thoughts, and I’m always glad to share ideas.

      Yes, COPX is a great way to get exposure to the copper miners. I’m not crazy about their weighting inside the ETF, because there are companies with a high weighting that I’d reduce, and some with a small weighting that I’d increase. Overall though, it is an easy way to play the copper and some base metal recovery over a great smattering of companies.

      Here are the Holdings inside of COPX for anyone curious:

      Stock Weight Amount
      Cst Mining Group Ltd 6.536% $1,076,885
      OZ Minerals Ltd 6.268% $1,032,688
      Sandfire Resources NL 5.392% $888,370
      Jiangxi Copper CO Ltd-h 5.329% $878,031
      Grupo Mexico Sab DE Cv-se 5.136% $846,089
      Antofagasta Plc 4.862% $801,060
      Kghm Polska Miedz SA 4.701% $774,575
      Glencore Plc 4.572% $753,230
      Teck Resources Ltd-cls B 4.388% $722,979
      Vedanta Resources Plc 4.165% $686,171
      Kaz Minerals Plc 3.867% $637,115
      Imperial Metals 2.31% $1,160,923
      Cudeco Limited 2.301% $379,105
      Hudbay Minerals 2.18% $1,094,887
      Lundin Mining 2.11% $1,060,963
      Copper Mountain Mining Co. 1.90% $956,992
      Southern Copper 1.81% $910,548
      Turquoise Hill Resources 1.78% $892,424
      Capstone Mining 1.67% $839,111
      First Quantum Minerals LT 1.63% $820,841
      Freeport-mcmoran 1.31% $658,230
      Copper Mountain Mining Co. 0.024% $4,034

    • On November 24, 2015 at 8:02 pm,
      Excelsior says:

      As for SILJ, I almost picked some up today. It has a great allocation of quality Silver Jrs and a great weighting in most of the companies included. Whatever team of analysts is doing the research behind SILJ is doing a great job. The only challenge with it is less liquidity, but I still expect it to outperform both Silver and likely SIL when we have Silver prices above $18-$19 again.

      IPI – Intrepid Potash is a great company, and fertilizers will do fine in the next few years. I really like Mosaic (MOS), (ICL) Israel Chemicals, and (CF) CF Industries for the mid to long-term. Lastly, there is the ETF (SOIL), that is an easy way for investors to get exposure to the Potash and Agricultural space. (MOO) and (JJA) are other good Agricultural-focused ETFs.

      Here’s my Fertilizer & Agricultural Watchlist. If there are any other agricultural companies you recommend, please post them below:
      ______________________________________________________________________
      Fertilizer, Potash, Agricultural
      Company Name Symbol

      AFRICAN POTASH LIMITED APOTF
      Adecoagro S.A. AGRO
      AGRIUM INC AGU
      IPATH PURE BETA COFFEE ETN CAFÉ
      TEUCRIUM SUGAR ETF CANE
      CF INDUSTRIES HOLDINGS INC CF
      COMPASS MINERALS INTERNATIONAL CMP
      FMC CORPORATION FMC
      GLOBAL X FERTILZERS/POTASH SOIL
      INCITEC PIVOT LTD INCZY
      INTREPID POTASH INC IPI
      iPath® Bloomberg Agriculture Subindex JJA
      ISRAEL CHEMICALS LTD ICL
      Market Vectors AGRIBUSINESS ETF MOO
      MOSAIC COMPANY (THE) MOS
      NUFARM LTD NUFMF
      PJSC URALKALI URAYY
      POTASH CORPORATION OF SASKATCHEWAN INC POT
      SYNGENTA AG SYT
      TERRA NITROGEN COMPANY L.P. TNH
      YARA INTERNATIONAL ASA YRAIF

      • On November 24, 2015 at 8:05 pm,
        Excelsior says:

        For those interested in the ETF (SOIL) – Here are the holdings in it. Some good companies to follow…….
        ________________________________________________________________________
        GLOBAL X FERTILZERS/POTASH SOIL

        Stock Weight Amount

        Scotts Miracle-gro Co-cl 6.10% $693,522
        Grupa Azoty SA 5.756% $651,836
        Compass Minerals Internat 5.55% $630,096
        Incitec Pivot Ltd 5.343% $605,040
        Yara International Asa 5.141% $582,156
        Oci NV 5.053% $572,156
        Quimica Y Minera Chil-sp 4.998% $565,905
        Agrium 4.95% $562,213
        Syngenta Ag-reg 4.924% $557,540
        Nufarm Ltd 4.921% $557,288
        Uralkali-spon Gdr 4.676% $529,502
        K+s Ag-reg 4.643% $525,747
        CF Industries Holdings IN 4.30% $488,651
        Israel Chemicals Ltd 4.264% $482,848
        Taiwan Fertilizer CO Ltd 4.232% $479,175
        Tessenderlo Chemie 4.164% $471,468
        Mosaic CO/THE 3.88% $441,340
        Israel Corp LIMITED/THE 3.67% $415,569
        Potash Corp Sask 3.599% $407,494
        China Bluechemical Ltd – 2.365% $267,829
        Terra Nitrogen Company LP 2.30% $260,852
        Sinofert Holdings Ltd 1.394% $157,853
        Gubre Fabrikalari Tas 0.884% $100,070
        Intrepid Potash 0.88% $100,233
        Namhae Chemical 0.82% $92,870
        Bagfas Bandirma Gubre Fab 0.623% $70,496
        Agrium 0.32% $35,983

    • On November 24, 2015 at 8:43 pm,
      Excelsior says:

      OK we covered Copper, Silver, Fertilizers, and you also brought up REE. Let’s talk Rare Earths…….

      Rare Earths were part of a series of pump & dump marketing campaigns, that peaked around the same time that many commodities like gold, silver, & base metals, but go over-hyped like graphite, lithium, niobium, and tungsten. The valuations got way to far into the stratosphere, and the expectations were to grand and predicated on what China would or would not produce, use, or share.

      Now, having said that, like investors do so often…..everyone threw the baby out with the bathwater, and sold down the entire sector to decimated levels.

      It didn’t help fledgling Rare Earths space that 3 first main contenders to the market (Molycorp, Lynas, and Great Western) all cratered and that the price declines hit right at the wrong time in their development cycles. What a mess!!

      #1) Molycorp turned into Molycrap and did one of the most epic nose-dives I’ve ever seen in almost any stock. What a tragedy, and the company they acquired before falling off the cliff (Neo-Materials), was world class and had all kinds of supply contracts into China. I believe it became the Magnetic Materials and Alloys division. Again, they had great assets, infrastructure, and promise, but the management made a series of bad decisions, had bad timing, and the pricing just pulled out the rug from under their feet. Now they are in the final death throws and mired in lawsuits about which kind of Chapter 11 to file.

      2) Lynas – Lynas has great assets, supply contracts and offtake agreements, and things were going great, but they diluted the snot out of investors, and starting slipping compared to Molycorp (and at the time many up an coming Rare Earth projects that were seen as gaining fast). The real back-breaker (besides the price slide) was when they went to build their processing plant in Malaysia and got stuck in years of riots, protests, and political posturing from radical environmental groups. It stalled the project for too long, swallowed up time & money, and resulted in many more expenses to keep the public happy with their environmental security protocols. Also, they had to start with trial production for a long ramp up, due to public outcry. When they finally started producing their first concentrates, the pricing had tanked.

      What I will say about Lynas is that their share price has spiked up lately on the news that Molycorp is even more a of trainwreck than it already was.

      #3) Great Western Minerals – Here was the RC cola to the Coke (Molycorp) and Pepsi (Lynas) in the Rare Earths space. Great Western had a really unique factory in the US and in London with their Less Common Metals division, where they worked with all kinds of specialty metals, made magnets for wind turbines, and produced many variations of rare earth metals for targeted application. In an effort to have an integrated supply chain, they took over a majority ownership of the are Earth Extraction Co and Steenkampskraal Project in S. Africa. Well eventually, when prices came off in REE’s, the market only traded them based on this mine and exploration play, but totally discounted their 2 factories which were making great strides. The debt got out of control as they expanded the factories right before the prices fell off a cliff. Now they are currently selling all the components of the company and breaking it up. Another tragedy, as this company had so much potential, and now it is roadkill.
      __________________________________________________________

      As for the remaining survivors and zombie Rare Earths, I have a big list of over 40 companies, but there are only a handful I feel remotely hopeful for, and the pricing route may last so long that none of them are still in business in a few years, but here are the gems in the rough:

      REE – Rare Earth Element – (I used to like it, but the divergence between rare earths and precious metals seemed like 2 different companies sandwiched together). There are companies I like more.

      My favorites in the new paradigm are:

      Alkane Resources, Arafura Resources, Avalon Rare Metals, Commerce Resources, Frontier Rare Earths, Pele Mountain Resources, IBC Advanced Alloys, Matamec Explorations, Quest Rare Minerals, Tasman Metals, and Ucore Rare Metals.

      Again, the space is just decimated, so I’ve steered clear of it the last 2 years. I still hold trapped and underwater positions in Lynas, IBC Advanced Alloys, Arafura, and Pele Mountain because I rode them down into the ground.

      The most likely companies to make it out alive in a few years are Avalon, Tasman, Ucore, Matamec, Arafura, Pele Mountain, and Frontier Rare Earths.

      I’m keeping the door open for Lynas, as lately, there has been the first glimmer of hope in years, and their production is finally getting close to where they promised it would be 2 years ago. Lynas is hanging on by a thread, but it just may survive, and has a big jump-start on any of the other companies listed.

      Also, the restructured or partially restructured Molycorp may have certain divisions that get spun out to new endeavors, so it will be interesting to watch that play out.

      For now I don’t give rare earths much time, but they will eventually have their time.

      Best of luck to all in their investments.

      • On November 25, 2015 at 6:17 am,
        Frank from moscow CCF says:

        Wasn’t monycorp one of Al’s friends……..

        • On November 25, 2015 at 6:17 am,
          Frank from moscow CCF says:

          I mean molycorp………..

          • On November 25, 2015 at 10:11 am,
            Excelsior says:

            I don’t know. The main CEO that created such a mess (Mark Smith) went over to NioCorp and is at it again. Constantine was the CEO of Neo Materials and did his best to guide a sinking ship through shark-infested waters, but it was a lost cause. The last CEO officially sunk the ship.

            Some of the “conspiracy theorists” have postulated that there was extra incentive to take down Molycorp so that the US government could more easily get at these strategic assests, out of whatever surfaces out of their restructuring or Chapter 11 aftermath. I’m not sure if that is the case, or if it was all just bad management decisions, bad timing, and the unfortunate fallout of a price implosion.

            Regardless, it is tragic how much potential all their assets, products, and supply chains were just completely flushed down the toilet over the last 4 years. I am very curious to see if the banks will own everything and sell it off to private or government entities, or if a new company will come in and try and pick up some of the pieces with a new venture.

            For now though……. some other company will need to carry the torch, and Lynas has a matchstick barely lit, and GreatWestern had their fire stomped out by a debt monster and low prices.

            Will it be Tasman or Avalon or Alkane or Arafura or Ucore or Matamec or Frontier or Rare Element or Pele Mountain or Commerce Resources?? Who knows…..?

          • On November 25, 2015 at 12:19 pm,
            Excelsior says:

            I have to say that Lynas’s matchstick may have just turned into a mini-lighter. The stock was up substantially over the last few days and look at today so far….+26.7%

            Lynas Corporation Limited (LYSCF) -Other OTC
            0.0938 Up 0.0197(26.69%) 2:49PM EST

      • On November 25, 2015 at 11:51 am,
        GH says:

        You’re a scholar and a gentleman.

        Excelsior!!!

        • On November 25, 2015 at 12:25 pm,
          Excelsior says:

          Thanks GH.

          Ever Upward!!