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Copper producers feel the Trump bump
Copper producers feel the Trump bump
Copper prices, which have been in steady decline since 2011, thanks to China’s slowing economic growth, have been on a tear lately, lifting both the stock prices for B.C. copper mining companies and the hopes of developers with new copper projects in the pipeline.
A 30% increase in copper prices between October 24 and November 28 has been dubbed the “Trump rally” on the assumption the price rise had something to do with U.S. president-elect Donald Trump’s promise to go on an infrastructure spending binge that would boost demand for basic materials and metals.
Companies with operating copper mines, like Teck Resources (TSX:TCK.B) and Imperial Metals (TSX:III), experienced nice bumps in their stock prices.
Even the beleaguered Taseko Mines (TSX:TKO), which has been locked in a vicious battle with First Nations and senior governments over its New Prosperity copper mine, saw its stock rise to $0.92 from $0.56 per share between October 24 and November 28.
Other B.C. companies with new copper projects in development, like Northern Dynasty Minerals (TSX:NDM), which is trying to develop the massive Pebble copper mine in Alaska, also experienced healthy stock bumps. The company’s stock price nearly doubled between November 3 and December 2.
Analysts point out copper prices were on the rise even before Trump was elected, and might simply be riding a temporary wave of enthusiasm that will die down once reality sets in.
“It’s not supply and demand driven,” said Joe Mazumdar, an analyst for Exploration Insights. “It’s more about people thinking that Trump’s potentially going to do a lot of spending on infrastructure.”
An unexpected rally in copper and decline in gold started in late October. Per-pound copper prices jumped to US$2.74 on November 28 from US$2.10 on October 24.
Scotiabank commodities analyst Rory Johnston expects prices will settle back to around US$2.20 per pound once the post-election enthusiasm wears off.
Whether copper’s price rise is artificial or not, companies trying to raise the profile of new copper mine proposals are happy to ride the sudden wave of enthusiasm.
“Certainly Trump being elected helped – it fanned the flames,” said Paul West-Sells, CEO of Vancouver’s Western Copper and Gold (TSX:WRN), which is trying to develop a $2.5 billion copper-gold project just across the B.C. border in the Yukon.
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