Ground Breakers: Evergrande in default, Iluka seeks approvals for WA rare earths refinery
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The world and commodities market will be nervously watching the fallout of the Evergrande situation, as the heavily indebted Chinese property developer was declared in default for the first time on Thursday by Fitch Ratings.
The downgrade of Evergrande to “restricted default” came after the 30-day grace period for unpaid coupons on more than US$1 billion worth of bonds originally due on November 6 wound up without a payment.
“The non-payment is consistent with an ‘RD’ rating, signifying the uncured expiry of any applicable grace period, cure period or default forbearance period following a payment default on a material financial obligation,” Fitch said.
The metals complex was down across the board overnight, although the impact of the Evergrande situation is unclear.
Nickel took a 2% tumble to US$19,976/t after Tsingshan announced it had produced battery grade nickel from low grade ore normally reserved for stainless steel pig iron production.
“The process is expected to be low cost, and could provide much needed high-purity nickel for the expansion of the electric vehicle sector (where nickel intensity is increasing to extend driving ranges),” Commbank analyst Vivek Dhar said.
“However, the process may face challenges in wide-scale adoption because it is expected to be carbon intensive.”
Copper, lead, iron ore, aluminium and precious metals all fell.
But there were few themes across the large and mid cap miners, with many recording gains against falls in underlying commodity prices.
Mineral Sands miner Iluka Resources (ASX:ILU) was a standout with a ~6% gain on no (on market) news.
It did submit a referral to the EPA today for a new rare earth refinery at its Eneabba project in WA.
Located around 300km north of Perth, the company says it will produce about 17,500tpa of rare earths oxides and carbonates.