Weak copper and zinc prices have hurt base-metal miners around the globe, including Hudbay, but could relief be in sight in 2016?
Mary Poulton, director of the University of Arizona’s Lowell Institute for Mineral Resources, told the Arizona Daily Star she is “cautiously optimistic that 2016 and 2017 will be better years for copper.”
Poulton reviewed 115 years of stats and found that copper prices have declined an average of 2.4 consecutive years before rising, the newspaper reported.
But in the same article, John Tilton, a Colorado School of Mines mining economist, said he is pessimistic about copper prices rising in the near future.
As if to further hammer home the mixed messages, the article noted: “The investment banking firms Goldman Sachs and Citigroup recently issued very pessimistic and very optimistic copper price forecasts, respectively.”
As for zinc, Investingnews.com put it this way: “Despite zinc’s struggles in 2015, analysts and other market watchers believe that the metal’s fundamentals remain strong.”
By way of example, Pasinex Resources head Steve Williams told the Investing News Network that he is “very bullish” on zinc and that while the “price must go up,” he did not know “when this will occur except to say that the longer time runs on, the more probable this is to occur.”
Elsewhere, the Metal Miner website urged investors last month to “buy only as needed” when it comes to zinc.
Copper and zinc lost a quarter of their value in 2015, according to the Financial Review website in an article that took the pessimistic path, headlined “Base metals seen extending rout into new year.”
As for Hudbay, its shares have been on a rollercoaster over the past year, rising as high as $12.51 and falling as low as $4.52. The stock closed at $5.45 on Monday.
A December article on the investor website Seeking Alpha summed up Hudbay’s situation with five words: “great assets, too much debt.”
Hudbay’s next major project is the proposed Rosemont copper mine in Arizona, but the low copper price “puts a question mark over the future” of that project, the Daily Star reported.
Hudbay “hopes to start construction this year if it can get its final two federal permits. But it has said it won’t open any new mine – not just Rosemont –
until copper prices return to $3.50 a pound, compared to today’s price of barely $2.”
