5 things you need to know before markets open in Australia and around the world.
Do you know what SMONDAY is? It’s the moment Sunday stops feeling like Sunday and anxiety of Monday kicks in. Perhaps some good news will help ease the transition.
1. Everything was going sweetly until Wednesday when the All Ordinaries dropped by 89 points (1.6%) after just a couple of hours of trading. Apart from gold, banks and miners all dropped with Fortescue Metals losing almost 5% being the biggest drop of prominent mining stocks. President Trump seems to be having trouble pushing through his healthcare and tax changes and the ASX reacted accordingly. All trade indexes dropped in sympathy.
2. Electric vehicles and Lithium continue their road trip side by side and the announcement by Talison, the Tianqi and Albermale JV lithium mine in Greenbushes, WA, to double their capacity will no doubt get the government’s okay. Why not? More jobs and more tax dollars. The new Minister for Mines in Western Australia, Peter Tinley (isn’t that great surname for a mining minister?), will also be looking with interest at two new mines owned by Pilbara Minerals and Altura Minerals starting production. Another boom in the West is in the offing it seems. Cobalt, the required partner for Lithium / Cobalt batteries is priced at a level that reflects a mix of investor speculation and its requirement in batteries. Unfortunately, the mining of Cobalt, most of which is in Africa, has come under fire by groups such as Amnesty International for the use of children working in the mines.
3. The mining of coal has its supporters and certainly its opponents based on environmental issues. The Queensland premier, Annastacia Palaszczuk, took herself and 8 mayors on a trip to India. The visit was to get some commitment from Indian mega company, Adani, on the Carmichael Coal mine. The investment amounts to $21 billion and means over 10,000 jobs in Queensland which will certainly slow their unemployment rate. Add to that the opportunities for small businesses who will become part of the supply chain as they build the mine-rail-port project in regional Queensland. It won’t be easy to do in face of the environmental lobby, members of which even turned up in India to protest the premier’s visit and talks. That’s determination!
4. The price of oil is not likely to reach those halcyon days of $100 / barrel with prices currently at more than 50% lower. This is due to a mixture of over supply as the US stockpile is high although supply to Asia is maintaining its medium to high level intake. It’s always been a puzzle to motorists as to why the bowser price didn’t fall by over 50% as well. In direct contrast to oil, Gold has always been the ‘go to’ investment when all around it looked shaky. A good example again is how the markets all fell during the week while Gold found favour with investors in times of even small uncertainty with a small rise.
5. Federal government news seems to have shifted to the opinion that the Prime Minister Malcolm Turnbull is finding his feet after a somewhat mediocre and ineffective start to his leadership for the first few months after the elections. The Childcare Reforms Bill has passed the Senate and once it’s introduced to the public, an estimated one million families will benefit. One can only hope that the trend of looking after our own is set to continue.
This week’s mining trivia. Numbers. Their significance
This is the melting point of Tungsten, second only to Carbon. Compare that to Mercury at -39°C and 327°C for Lead.
This is China’s share of the rare earth element production. In contrast, China has only 37% of the world’s reserves of the 17 Elements.
This is the height of the Bagger 293, the world’s largest mobile mining machine. It’s a bucket wheel excavator that can move 240,000 cubic metres a day and weighs 14,200 tonnes. Big is beautiful in mining!