Business Reacting Fairly Quickly
Surfing around I notice quite a few mines closing. I wonder how many have been operating in the hole burning through their cash reserves.
Copper $1.82, peaked around $4.40.
Nickel $4.07, peaked around $22. What China was doing in response to high nickel was a different nickel production process that was highly energy dependent. The price has to be around $8 for that process to break even so that process is wiped out along with the energy it was using.
Zinc $0.50, peaked around $2.10.
Lead $0.52, peaked around $1.60 or $1.80.
Uranium $44, peaked over $100.
What is interesting to me was that I thought looking at an open pit mine with metal values under about $50/ton was nuts and I was looking for about $80/ton. Well, it seems that even that level will be a challenge with today's metal prices. I was looking minimum $300/ton for underground mines and that level also appears to have been wiped out. I was extremely vocal that you were nuts even considering a mine with metal values below that. Probably longer term properties that meet the criteria I was thinking will be mined, but it won't happen until prices recover.
This is a post I did over a year ago on Bingham, in Utah, owned by Rio. Their metal values in 2006 were $90/ton. With grades of 0.54% copper, 0.043% molybdenum, 0.32 g/ton gold and 2.59 g/ton silver today's metal values per ton would be about $58, but a huge chunk (more then half) of that is from molybdenum, which tends to only have about 50% recovery and it is nuts to suggest that molybdenum price is going to continue to stand up through this mess.