Monsters of Rock: Poor day for big miners as investors dump iron ore majors
The materials sector, which is dominated by the big resources names, fell 1.39% today as the iron ore majors tanked.
Dalian Iron Ore’s May contract fell more than 2% during the middle of the day before recovering to a 1.1% loss, while Singapore futures were similarly sickly this morning before returning to a near break even US$124.05/t.
Optimism about China’s recovery from Covid-19 and its ability to power a commodities rebound in 2023 has waned in recent days amid weak property data for January.
The All Ords Gold sub-index was similarly dire, dropping 3.85% as the US dollar made a comeback, setting off an almost 2% fall in bullion prices.
Lynas Rare Earths (ASX:LYC), Grange Resources (ASX:GRR), Syrah (ASX:SYR), Sandfire Resources (ASX:SFR) and Regis Resources (ASX:RRL) also struggled along with uranium names Paladin (ASX:PDN) and ERA (ASX:ERA).
Liontown Resources (ASX:LTR) and Sandfire have both had their share of challenges lately, with Liontown realising some of the worst fears of investors with a $350m blowout in costs at its Kathleen Valley lithium mine and SFR raising more cash to derisk its balance sheet as it beds in its MATSA copper complex in Spain.
But both are making progress on new operations, with Liontown commencing open pit mining at Kathleen Valley in WA’s Northern Goldfields today.
It is the first step in developing the underground operation at Kathleen Valley, a first in the hard rock lithium sector, where an expanded Kathleen’s Corner open pit will be mined for direct shipping ore lithium material.
Previously not considered within Liontown’s mine plan, the DSO product comes off the back of strong lithium prices and could enable LTR to generate revenue while it progresses with the construction of the massive onsite concentrator for the 500,000tpa-plus Kathleen Valley.
The mine remains scheduled to open in mid-2024.
“Completion of the first blast and commencement of open pit mining operations at Kathleen Valley is a significant milestone for Liontown, signifying our transition from explorer to mining operator,” LTR MD Tony Ottaviano said.
“Achieving this milestone ahead of schedule is a testament to the hard work and dedication of the Liontown and Iron Mining Contracting teams.
“We are excited to be working with the experienced team at Iron Mine Contracting. We have every confidence in their ability to deliver results and look forward to partnering with them to bring our Kathleen Valley Lithium Project to life.”
Sandfire meanwhile says it is weeks away from wet commissioning at its Motheo copper and silver development in Botswana in southern Africa.
Ramp up is expected to begin from the June quarter, with 1,700 people onsite at the Kalahari Copper Belt mine and the SAG Mill due to be lined this month.
SFR is already looking into an expansion of the mine’s processing plant from its initial nameplate of 3.2Mtpa to 5.2Mtpa.
“With that in mind, the team has already made substantial progress with early works for the 5.2Mtpa expansion, with the Ball Mill already delivered to site and engineering design more than 85 per cent complete. The critical-path timeline for the expansion is approval of the ESIA and grant of the Mining Licence for the A4 Open Pit, with the ESIA now submitted to the Botswana Government,” acting CEO Jason Grace said.
“The successful execution and delivery of the 3.2Mtpa project, followed by the expansion to 5.2Mtpa, will see copper production in Botswana quickly ramp up to a peak of 55ktpa, complementing our operation at MATSA in south-western Spain.
“Motheo is coming into production at an opportune time given the positive outlook for copper as a future-facing metal. New demand for copper is being driven by the strong investment being made globally in the electrification of the global economy and the growth being seen in renewable energy and the EV sector.
“Sandfire’s asset portfolio – comprising high-quality copper producing assets in Tier-1 jurisdictions and growing production profile – means Sandfire is well placed as a key beneficiary of this compelling global thematic.”