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Today’s Market View – Rio Tinto and W Resources.


SP Angel . Morning View . Wednesday 03 03 21

Base, Industrial and Precious metals prices rise as US Stimulus draws closer


Rio Tinto (LON:RIO) – Chairman steps down over Juukan Gorge destruction

W Resources (LON:WRES) – Completion of plant improvements at La Parilla


India – National Infrastructure Pipeline to lead post-pandemic recovery with US$1.5tn funding

The Indian Government has set out plans for its largest ever public-spending initiative to help the country bounce back from the disastrous economic effects of Covid-19.

The National Infrastructure Pipeline (NIP) aims to provide over US$1.5tn in funding to infrastructure projects by 2025 in an attempt to raise India’s GDP to US$5tn by that year.

The NIP is expected to focus on roads and highways, railways, energy and urban infrastructure, with the transport sector in India expected to grow at a CAGR of 5.9% to 2025.

While India has not committed to ‘hard figures’ in terms of targets for kilometres of rail, road and waterways, the scheme does provide funding allocations to specific sectors:

Roads and Bridges – 4308 opportunities worth $460bn.

Railways – 720 opportunities worth $152bn.

Urban Public Transport – 475 opportunities worth $135bn.

Ports – 170 opportunities worth $19bn.

The total pipeline amounts to 7606 projects with a total project cost of $1,825bn.

A custom gauge of Indian road builders by Bloomberg has gained 27.6% since the budget was presented on the 1st of Feb, reflecting the task ahead for Indian Industrialists.

One of India’s top highway builders, Dilip Buildcon, expects revenue to double in the next 4-5 years, expecting 15-20% growth year-on-year.


Chinese steel futures hit 10-year high on further output curbs due to heavy air pollution

Steel futures in China rose to the highest level since 2011 as Hebei province ordered limits on iron ore processing and the closure of more steel furnaces to counter heavy air pollution.

The curbs are an addition to those already imposed by Tangshan on some steel output last week.

Output curbs are not uncommon at this time of year, with Beijing keen to clamp down on pollution before the biggest annual meeting of the National People’s Congress.

Top officials are rumoured to be formulating a detailed plan to meet the nation’s decarbonization goals- which may further rein in steel supply.

Rebar futures in Shanghai rose as much as 4.1% to 4,924 yuan/t, while hot-rolled coil rose 3.4% (Bloomberg).


Chinese battery manufacturers seen tying up raw material supply

The race to secure suitable raw material supply accelerated today with Tsingshan’s deal with Huayou Cobalt and CNGR for nickel supply

Tesla called for miners to bring suitable nickel supply while VW moved somewhat unsuccessfully to secure cobalt supply in 2017.

VW is now supporting sustainable artisanal cobalt mining in the DRC. Presumably that means no child labour overseen by local warlords.

Huayou Cobalt has a subsidiary in the DRC, Dongfang Mining International, which smelts and sources cobalt ores from artisanal miners in the DRC and has been questioned by Amnesty International for its procurement from artisanal mines where it claims child labour is commonly used with very few safety precautions taken (FastmarketsMB).


Tsingshan signs pacts for 100,000t of nickel matte (concentrate) with Huayou and CNGR for EV battery supply (Reuters)

Tsingshan Holding Group has signed a deal to supply 60,000tpa of nickel matte to Huayou Cobalt and 40,000tpa to CNGR Advanced Material, which supplies battery raw materials to CNGR.

Tsingshan is looking to raise nickel production to 600,000t eq. this year of nickel in matte and nickel in pig iron mainly for stainless steel production in China

The group is targeting production of 850,000t in 2022 and 1.1m in 2023.

Tsingshan has been trialling a >75% nickel matte product for direct processing into nickel suitable for EV batteries on top of its existing battery-grade nickel chemicals production.

The firm also signed a $850m deal with Xuzhou Construction Machinery Group Co Ltd in January to invest in a new energy vehicle project.


Global manufacturing activity rising on low interest rates, government support and stimulus programs

Consumer spending on manufactured goods is rising as consumers are unable to spend on travel, holidays, restaurants and many other services.

The environment created one of the broadest improvements in manufacturing for >30 years in the US in January according to ISM data.

The PMI composite index rose to 60.8 in February reflecting the strong rise in manufacturing activity.

Inventory levels also fell at manufacturers fell to 1.39 in December from a high of 1.70 in April and 1.40 a year earlier (Reuters).

China continues to benefit from the situation though exporters are seeing higher rates for shipping and containers along with logistics delays and challenges.

Anecdotal evidence shows retailers cancelling and delaying orders due to a lack of stock, logistics and COVID-19 working practices slowing output.


US foreign policy may sound different under Joe Biden but key issues with China are likely to remain the same

Microsoft has blamed a Chinese cyber-espionage group for attacks on its mail server software (BBC)

The Microsoft allegations, the 8th in 12 months suggests to us that forcing China to back down on Cybercrime will remain at the top of the US agenda

The US corporation describes Hafnium as a ‘state-sponsored’ hacking group targeting institutions critical to civil society.

Hafnium has been seen by Microsoft as targeting infectious disease researchers, law firms, higher education institutions, defence contractors, policy think tanks and non-governmental groups.


London Stock Exchange – new listing rules propose to allow company founders to maintain control over companies after listing on the LSE (BBC)

The idea is for companies to sell dual-class shares in the premium market of the London Stock Exchange.

The controlling shares would allow founders to maintain deciding votes on mergers, takeovers and other major events.

The new rules also propose reducing the ‘free float’ on publically traded shares to 15% from 25%

The report also recommends the Chancellor should report to Parliament on the state of The City of London every year.

The recommendations are said to be consistent with existing practices in other well regulated financial centres in the US, Asia and Europe.


Recent Interviews:

IGTV:  Are we in a new commodity supercycle, or is one coming?

Is this a new Supercycle for commodities:

Metals expected to continue the last-year gains into 2021

Is 2021 the start of the new COVID-Supercycle or will Lockdowns delay the recovery?


VOX Markets: 24/02/20



121 Conference panel:  Investment Leader’s Discussion: Van Eck, Qora Capital, Nedbank, SP Angel


iiTV:     Mining stock to own 2021:

Mining share tips for 2021 –

*SP Angel almost invariably acts as nomad or broker or nomad and broker to companies mentioned in the above videos and podcasts.

We speak more about these companies as we have a good understanding of their business and can talk with a greater degree of confidence. As ever, however, it should be noted that our views do not take into account the circumstances and needs of any particular investor or investor type. So enjoy the talks, but please do your own research, including other companies not mentioned by us but operating in the same areas, and get professional advice where appropriate.


Metals price forecasting through 2020 – 2020 was probably the most difficult year for forecasting anything

No.1 in Copper:  “The winner of the 2020 Fastmarkets Apex contest for copper was the team at SP Angel comprising John Meyer, Sergey Raevskiy and Simon Beardsmore, with an  accuracy score of 93.8%”

No1. In Gold:  “SP Angel’s trio took the top spot for the gold price prediction throughout the year, with an accuracy score of 97.59%”

The SP Angel team also ranked 1st in Palladium, 3rd in Tin and 5th in Silver in the fourth quarter of 2020


Dow Jones Industrials -0.46% at 31,392

Nikkei 225 +0.51% at 29,559

HK Hang Seng +2.54% at 29,836

Shanghai Composite +1.95% at 3,577



ECB officials are talking down risks of rising bond yields arguing against the expansion of the bond buying programme, Bloomberg writes.

The central bank is reported to have made the least gross asset purchases last week (€16.9bn) over the four weeks.

Eurozone – Final PMI figures reiterated sharp divergence between manufacturing and services sectors with the general business activity remaining in the contractionary territory.

Strong manufacturing growth failed to compensate for a continuing struggle in the services sector.

“A fourth successive monthly drop in business activity puts the eurozone economy on course for a double-dip recession, though an easing in the rate of decline underscores how the latest downturn appears far less severe than the initial hit from the pandemic last year,” Markit commented.

The survey also highlights that slow vaccine roll-out suggest that virus related restrictions will need to be in place for longer which in turn could “extend the drag on the economy from the pandemic into the second half of the year”.

Markit Eurozone Manufacturing PMI: 57.9 v 54.8 and 57.7 est.

Markit Eurozone Services PMI: 45.7 v 45.4 in January and 44.7 est.

Markit Eurozone Composite PMI: 48.8 v 47.8 in January and 48.1 est.

Flash CPI 0.2% in February vs 0.2% in January, yoy 0.9% (0.9%).


US – Senate expected to pass Biden’s ‘Go Big’ $1.9tn stimulus

The new stimulus adds to Trump’s $3bn stimulus passed last year

US 10-year bonds rose to 1.6% as the rout in treasuries fizzled out

US construction spending rose 1.7% in January to a record high of US$1.52tn vs 1.1% in December

US New York ISM index took a hit 35.5 in February vs 51.2 in January


Germany – Retail sales fell -4.5% in January vs -9.1% in December, yoy fell 8.7% in January vs +2.8% in December

Flash Feb unemployment steady at 6%

German exports to the UK fell 30% yoy in January with exporters having rushed to beat the Brexit deadline and importers having stocked up.

Future months will give a better picture of the impact of Brexit.


South Korea – PMI 55.3 in February vs 53.2 in January

Industrial production fell 1.6% in January vs +2.7% in December and 7.5% yoy vs 2.5% yoy in December

Manufacturing output rose 7.4%yoy (3.4% in January,

Retail sales 1.6% in January vs 0.1% in December


Taiwan – PMI 60.4 in February vs 53.2 in January

Singapore – PMI 50.5 in February vs 50.7 in January,


UK – The government is expected to offer £20bn in fiscal support to businesses and workers until targeted easing of restrictions (FT)

The programme includes an extension of the business rates holiday, a £5bn grants scheme for the high street, a change to the furlough scheme that is currently expected to end in April among other measures.

The furlough programme in its current form will be extended until the end of June with employers gradually picking up a bigger share of the wages of laid-off staff with complete withdrawal of the state support planned for the end of September.

Should COVID-19 cases reduce as planned, the cost of the furlough extension is likely to be around £10bn, with a further £5bn for extending the self-employed income support scheme.

UK Nationwide house prices rose 6.9% yoy in February vs 6.4% in January


Australia – Economic growth in the last quarter beat market estimates led strong consumer spending that contributed 2.7pp to the 3.1%qoq headline number.

The economy is reported to have now recovered 85% of the virus related drop.

GDP (%qoq): 3.1 v 3.4 (revised from 3.3) in Q3 and 2.5est.


Brazil – The country recorded the highest number of deaths from COVID-19 in a single day on Tuesday highlighting the pressure the national healthcare system is faced with and slow vaccination programme.

More than 257,000 people have died from virus related causes in Brazil making it the deadliest outbreak in the world after the US.

Earlier reports suggested that many municipalities had to slowdown inoculation programme on the back of supply bottlenecks.

Brazil began vaccination in mid-January with the government targeting of immunising the entire population by the end of the year.

Official data shows that only 3% of the country’s 212m population has been vaccinated so far.


Turkey – Inflation accelerated to 15.6%yoy in February coming in above market estimates and increasing pressure on the centra bank to lift rates.

The central bank expects inflation at 9.4% by the end of the year and increased rates by 675bp since last November, but voted to leave rates unchanged in the two most recent meetings.

CPI (%yoy): 15.6 v 15.0 in January and 15.4 est.


Currencies US$1.2085/eur vs 1.2007eur yesterday.  Yen 106.11/$ vs 106.87/$.  SAr 14.868/$ vs 15.043/$.  $1.398/gbp vs $1.388/gbp.  0.783/aud vs 0.775/aud.  CNY 6.461/$ vs 6.470/$.


Commodity News

Precious metals:  

Gold US$1,729/oz vs US$1,717/oz yesterday

Gold ETFs 103.6moz vs US$103.7moz yesterday

Platinum US$1,208/oz vs US$1,178/oz yesterday

Palladium US$2,365oz vs US$2,354/oz yesterday

Silver US$26.71/oz vs US$25.98/oz yesterday


Base metals:  

Copper US$ 9,223/t vs US$9,031/t yesterday

Aluminium US$ 2,231/t vs US$2,127/t yesterday

Nickel US$ 18,630/t vs US$18,545/t yesterday

Zinc US$ 2,857/t vs US$2,834/t yesterday

Lead US$ 2,060/t vs US$2,080/t yesterday

Tin US$ 24,380/t vs US$23,515/t yesterday



Oil US$62.9/bbl vs US$62.9/bbl yesterday

Natural Gas US$2.867/mmbtu vs US$2.786mmbtu yesterday



Iron ore 62% Fe spot (cfr Tianjin) US$168.6/t vs US$167.2/t

Chinese steel rebar 25mm US$735.9/t vs US$718.4/t – Chile copper production falls 0.7% YoY in January

Chile produced 457.1kt in January, down from 460.1kt in January 2020.

Thermal coal (1st year forward cif ARA) US$70.0/t vs US$69.2/t

Coking coal swap Australia FOB US$140.0/t vs US$147.5/t



Cobalt LME 3m US$52,610/t vs US$52,610/t

NdPr Rare Earth Oxide (China) US$89,776/t vs US$85,778/t

Lithium carbonate 99% (China) US$12,306/t vs US$11,978/t

Spodumene 6% Li2O min, cif (China) US$510/t vs US$455/t

Ferro Vanadium 80% FOB (China) US$34.0/kg vs US$34.0/kg

Ferro-Manganese high carbon 78% Mn US$1,625/t vs US$1,610/t

Tungsten APT European US$260-265/mtu vs US$250-255/mtu

Graphite flake 94% C, -100 mesh, fob China US$560/t vs US$560/t                

Graphite spherical 99.95% C, 15 microns, fob China US$2,625/t vs US$2,625/t



Battery News

India set to offer Tesla production incentives to undercut China

India’s transport minister Nitin Gadkari has laid out plans to offer Tesla incentives that would ensure the EV maker’s cost of production would be less than in China, Reuters reports.

Gadkari commented: “Rather than assembling in India they should make the entire product in the country by hiring local vendors. Then we can give higher concessions,”

Comments from the transport ministry come after Tesla registered a company in India last month in a step towards entering the country.

For EV makers to make serious traction in India, the country needs a comprehensive EV policy like China and vastly improved charging infrastructure.

India’s EV market accounted for just 5,000 out of a total 2.4m cars sold in the country last year, compared to 1.25 NEVs sold in China out of total sales of 20m.


China cuts “carbon intensity” 18.8% in past 5 years. 

China has succeeded in lowering “carbon intensity” by 18% in the five years through 2020, a Ministry of Ecology and Environment report said on Tuesday, showing the country’s reduced reliance on fossil fuels.  

The decline in “carbon intensity” beat the official target for an 18% reduction. During the five-year period, China’s increased to 101.6 trillion yuan, from 68.9 trillion in 2015. 

For 2020 alone, carbon intensity fell 1% from 2019.  

A new carbon intensity target is expected to be contained, along with other climate-related targets such as energy consumption control, in a five-year plan for 2021-2025 that is due to be presented to China’s parliament later this month. 


Company News

Rio Tinto (LON:RIO) – 6,476p, Mkt cap £80.3bn – Chairman steps down over Juukan Gorge destruction

Rio Tinto reports that its Chairman, Simon Thompson, will not be seeking re-election at the 2022 AGM and that a search is underway to identify a successor.

The departure of Mr. Thompson follows the high profile departure of the former CEO, as well as the head of the company’s iron ore operations and others in the aftermath of the destruction of 46,000 years old rock shelters at Juukan Gorge in the company’s Brockman4, Pit 1 operation in the Pilbara.

In submissions to the Australian Parliamentary Inquiry into the incident the company has acknowledged that “The destruction of the Juukan rockshelters should not have occurred”.

The company, under its new CEO, Jakob Stausholm, must hope that the departure of Mr. Thompson following the other departures will finally draw a line under the matter.

Although he was clearly not directly involved in the operational decisions which led to the loss of such a significant historical site, we applaud Mr. Thompson’s integrity in taking responsibility for failures within the corporate chain of command he leads.

It appears to us that, while those at the ‘rockface’ will have fully understood what they were doing, even if they did not fully appreciate its significance, they will be unlikely to have had the authority to question the decision while on the other hand those at the top of the organisation, with that authority, will have been unaware until it was too late.  Somewhere in between a deeply flawed decision was made.

In its submission to the Inquiry (Introduction – Item 13) , Rio Tinto acknowledges that “During 2012 and 2013, Rio Tinto progressed its plans for Brockman 4, Pit 1 in the Juukan Gorge area and four pit options were considered. Three avoided the shelters to varying distances. The fourth option impacted the rockshelters in order to access higher volumes of high-grade ore, and was the option that was chosen by Rio Tinto”. In hindsight, many within Rio Tinto’s chain of command must now question the wisdom of that choice.

The whole Juukan Gorge episode and its fallout highlights the complexity of interconnected issues facing modern large-scale mining activity where the engineering and commercial logic of extracting the maximum volume of high-grade ore from a deposit has to be weighed against competing social, environmental and reputational priorities.  It is certainly not easy and Juukan Gorge has been a wake-up call for the whole industry.


W Resources (LON:WRES) 0.1p, Mkt Cap £7.1m – Completion of plant improvements at La Parilla

W Resources reports that it has now completed its programme of plant improvements at the La Parilla mine in Extremadura in Spain and that it expects Q2 2021 production of tungsten and tin concentrates to exceed that of any previous quarter.

In its Q4 2020 production report, W Resources confirmed that it achieved recovery rates for tungsten of 31% and that tin recoveries had declined from 37% to 26% so today’s news that “Concentrator plant recovery for tungsten during February was greater than 60% – an all-time high” is an early demonstration of the impact of the plant improvement programme.

The company reports that it has shipped two consignments of tungsten concentrates, each of 20t, during the last two months and that a 20t shipment of tin concentrates was shipped on 1st March benefitting from the recent strength in tin prices.

The improvement programme “included a planned closure in late January to enable the final stages of the Programme to be implemented. Whilst this was initially planned as a four-week closure, the team and contractors accelerated the process reducing this period to just two weeks”.

While the operational team’s efforts have speeded completion of the plant improvement programme, the weather has proved challenging and “the Extremadura region of Spain experienced the highest amount of rainfall recorded in the last seven years. This came at a time when the water level of the historic mine pit adjacent to the mine was already unseasonably high and as a result it became unsafe for the team to access the higher-grade ore”.

W Resources says that it is “taking steps to lower the water level and regain access to the higher-grade ore and it is envisioned that these steps will create a permanent solution covering the life of the mine” and that “With a stockpile of mid and lower level grade ore on site, processing will continue and the amount of concentrate expected to be produced in Q1 and Q2 2021 will be ahead of any previously reported quarter”.

There is, however, little indication in the announcement as to the likely timetable for resumption of access to the higher-grade material or any indication as to whether the stockpiles contain adequate material to maintain production until the higher grade ore becomes available again.

Although a near doubling of recovery rates for tungsten as a result of the plant improvements is undoubtedly welcome progress, the inability to access high grade ore, at least in the short term, will inevitably curb Q1 production already held back by the impacts of weather and the plant problems.

The company’s expectation that the rates achieved in the current quarter will be the best so far at La Parilla is relative to a difficult past with recovery rates of only around 30% in the last quarter.  Until the operation achieves ‘steady-state’ operations with access to the full range of ore grade from the mine and the plant settles down to consistent feed rates and grades following resolution of the water issues, it will be difficult to assess the full benefit of the plant improvements.

Conclusion: Plant improvements at La Parilla aimed at improving the recovery rates are now complete. However, adverse weather has disrupted ore supply from the mine and with the newly upgraded plant partially reliant on treating low and medium grade ore from stockpiles, it may be some time before the full impact of the plant modifications is apparent.



John Meyer – [email protected] – 0203 470 0490 / 07943031001

Simon Beardsmore – [email protected] – 0203 470 0484

Sergey Raevskiy –[email protected] – 0203 470 0474

Joe Rowbottom – [email protected] – 0203 470 0486



Richard Parlons –[email protected] – 0203 470 0472

Abigail Wayne – [email protected] – 0203 470 0534

Rob Rees – [email protected] – 0203 470 0535

Grant Barker – [email protected] – 0203 470 0471



SP Angel                                                            

Prince Frederick House

35-39 Maddox Street London



*SP Angel are the No1 integrated nomad and broker by number of mining brokerage clients on AIM according to the AIM Advisers Ranking Guide (joint brokerships excluded)

+SP Angel employees may have previously held, or currently hold, shares in the companies mentioned in this note.


Sources of commodity prices

Gold, Platinum, Palladium, Silver

BGNL (Bloomberg Generic Composite rate, London)

Gold ETFs, Steel


Copper, Aluminium, Nickel, Zinc, Lead, Tin, Cobalt


Oil Brent


Natural Gas, Uranium, Iron Ore


Thermal Coal

Bloomberg OTC Composite

Coking Coal




Lithium Carbonate, Ferro Vanadium, Antimony

Asian Metal


Metal Bulletin


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