Good afternoon
very jittery markets...they feeled a bit tired anyway, and below-expectations manufacturing numbers the other day from the States, and from Germany today induced some heavy profit-taking in European markets today. Also, the Greece-story is coming up again...not helping sentiment! US-Services industries, though, are doing quite well - and the services sector is more important to the GDP than manufacturing. I guess the market is looking at jobs - and as far as I know, they are tending to be in manufacturing.
Yield of the German 10-year is below 0,1% again - first time in a long time, while metals are treating water today - except for gold, which is gaining from all this uncertainty. And even better for our resources sector, the A$ is coming under pressure again - so A$ gold at 1635 A$ is looking a bit sexier.
Macquarie published a detailed outlook for copper - they think the metal is fairly balanced in the moment, and see little upside for now. Large deficits they are expecting for 2020-2021 only - some time away, and I do not think, that copper-stocks in general are something you need to be invested in.
Highfield - I spoke to them today to try to shed a bit more light on the approval process for their potash mine in Spain. The situation is complicated:
The critical approval is the enviromental approval - everything else is a formality. This approval is to come from the central Enviromental Ministry in Madrid, which is a bit in limbo, as Spain effectively does not have a government in the moment! The election result from last December has made things very complicated, and the parliament has not managed to build a government as yet. Chances have increased over the last few days, for the Socialists ( well, that´s what they call themselves ) to form a government with the Liberals, and Podemos. This process would have to be finished by the 2nd of May - if not done by then, Spain needs to hold new elections, which would take place on the 24th of June.
The currently outstanding approval could be signed by the Director General of the Ministry for Enviroment ( who is a political person ) - but he has left 2 weeks ago, and his colleague, who is responsible now, I guess would not want to sign anything and take responsibility . So I am really hoping for a government to be formed soon, even if it´s a left-of-the-middle government - in the end, provincial governments of Navarra as well as Aragon ( the mine would be located in both provinces ) are left wing, and they are very strong supporters of the project. Left wing sounds terrible - but left wing in Spain is not what I would call a traditional left wing.
So I have no doubt at all, that they will get approval - but I am also pretty sure, that it will take at least until June ( in the case of a new government being formed soon ) or even September ( in the case of new elections ), to actually have somebody sign up on it! Bad news, and we have been burnt before - but we are not in Kirgystan, and not in Indonesia as well with this project!!! Whether this project starts producing by the end of 2017, as planned so far, or by the middle of 2018 does not make a significant difference to valuing it! Hence I am still a very strong supporter, and have increased my shareholding in HFR over the last few days! This mine will get started at every, conceivable price for potash - use the opportunity to load up....
Otherwise, very little news today - companies are getting quiet in light of the Quarterly Reporting Season, which starts in about 2 weeks.
have a nice evening,
WS
Wilhelm Schröder
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