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Monday mining massacre as gold, copper, iron ore prices tank

Image of bear skin rugs on sale at Ismaylovo market, Moscow, March 2007 by beggs

The gold price fell to its lowest in nearly two months on Monday as the US dollar strengthened and a drop on global stock markets failed to translate into safe-haven demand for the precious metal.

US gold futures fell by as much as $77.50 an ounce, or 3.9% from Friday’s settlement, hitting a low of $1,885.40 on the Comex market in New York before recovering some of those losses to trade above $1,900 by early afternoon. Trade was heavy with nearly 36m ounces exchanging hands by 2 pm.

Copper prices dropped by more than 3% from fresh 2-year highs reached on Friday but managed to stay above the pivotal $3.00 a pound level.  Copper for delivery in December exchanged hands for $3.0135 per pound ($6,645 a tonne) by early afternoon amid heavy selling with contracts totalling 2.5 billion pounds of copper traded in New York.  

A coalition of gold investors is urging changes at miners as performance “continues to fall short” despite the 24% rally in the gold price this year

The retreat of iron ore prices from six-and-a-half year highs hit last week accelerated on Monday with the price of Fastmarkets MB, benchmark 62% Fe fines imported into Northern China falling 4.1% to $119.82 a tonne on the back of rising port inventories and normalizing of supply from Brazil. 

Big 3 cut down

Anglo-Australian giant Rio Tinto (NYSE:RIO), which had rallied to multi-year highs recently despite losing its top management over governance issues, was the hardest hit among the diversified majors with a loss of 5.2%. Rio is now worth $112 billion in New York. CEO Jean-Sébastien Jacques was ousted and two other senior execs were shown the door as investors revolted over the company’s destruction of ancient Aboriginal rock shelters. 

The world’s no. 1 mining company – BHP Group (NYSE: BHP) – fell by 4.2%, wiping out its gains for 2020 and pushing down its market value to $134 billion. BHP has been caught up in the Juukan Gorge scandal, acknowledging last week it was aware of Australian Aboriginal groups’ worries about the future of dozens of heritage sites before it sought and obtained approval to destroy them.

Vale (NYSE: VALE) shares shed 4.1%, bringing its year-to-date losses to 17.5% as the iron ore giant struggles to bring its operations back up to scale following the dam burst in Brumadinho in January last year. 

Brazilian prosecutors said despite two major deadly mining disasters since 2015, the Rio de Janeiro-based company has not complied with a number of commitments signed with authorities to prevent another disaster.

Shine off gold stocks 

Considering how hard they’ve run in 2020, Monday’s damage among the top gold mining stocks was relatively light. Number one producer Newmont (NYSE: NEM) gave up 2.3% for a market value of $52 billion,  while Barrick’s (NYSE: GOLD) losses were limited to 2.6%, affording the company a $50 billion valuation in New York. 

Further down the field declines were sharper – Agnico Eagle (NYSE: AEM) fell over 3% in afternoon trade, AngloGold Ashanti (NYSE: AU) traded down 4.7%, ADRs of Australia’s Newcrest (OTCMKTS: NCMGY) trading in New York gave up 5.1% and Kinross Gold (NYSE: KGC) declined 8.2%. Platinum and palladium producer Sibanye Stillwater (NYSE: SBSW) dropped 7.9%.

Bloomberg reports a coalition of gold investors is urging changes at miners as performance “continues to fall short” despite the 24% rally in the gold price this year.

In an open letter to the mining industry, prominent gold investors including firms backed by billionaires John Paulson and Naguib Sawiris, and members of the Shareholders’ Gold Council are targeting issues including executive compensation and directors “who don’t have enough skin in the game.”