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AMSI is a credible tight-kit team run business with a track record of over 25 years in the mining sector.

Commodity News:

Looking at the S&P GSCI serves as a benchmark for investment in the commodity markets and as a measure of commodity performance over time. The index rose by 8.2% in the first month of the new quarter, following a strong 13.5% increase in the first quarter alone. Commodity markets continue to be pulled higher through several conflating factors from recovering economies, War in Ukraine, and supply chain disruptions. Brent crude oil is expected to average $100 per barrel in 2022, a 42 percent rise from 2021 and the highest level since 2013. Non-energy costs are predicted to climb by around 20% in 2022, with the steepest rises in goods where Russia or Ukraine is a major supplier. Wheat prices are expected to rise by more than 40% this year, surpassing an all-time peak in nominal terms. Copper reached its best level in almost a decade in April, as the global economy recovered from the COVID-19 outbreak. Industrial metals have benefited from the world’s leading economies establishing initiatives to recover “greener” from the COVID-19 shock; but, despite the price increase, corporations and investors remain hesitant to boost production. The gains in the Copper prices were paired back slightly towards the end of the month as the impact of increased hawkish policy at the US FED, along with the continued zero-covid policy implemented by China, weighed on economic growth expectations for the rest of the year.

Talking Points:

The World Bank released their Commodity Markets Outlook report towards the end of April, as they analysed the sustained impact that the war in Ukraine is having and will continue to have on global commodity markets. The Ukraine conflict has inflicted a major blow to commodities markets, disrupting global trade, production, and consumption patterns in ways that could keep prices at record levels until the end of 2024. The rise in energy costs over the last two years has been the most significant since the 1973 oil crisis. Food staples, of which Russia and Ukraine are major producers, plus fertilisers, which rely on natural gas as a manufacturing input, have seen the highest price inflation since 2008.

 

The report takes a particular look at previous oil price shocks in comparison to the current situation in which we find ourselves. According to their research, the war’s impact may be more persistent than earlier shocks for at least two reasons. First, because price rises have been broad-based across all fuels, there is less opportunity presently to swap the most impacted energy commodities for other fossil fuels. Second, rising commodity prices are feeding into a growing feedback loop for increasing other knock-on commodity prices —high natural-gas costs have pushed up fertiliser prices, putting upward pressure on agriculture prices.

 

The report proposes that the best way to deal with the impacts of price inflation for policy makers is by focusing on a short-term goal of targeted assistance to disadvantaged households whilst in the longer term, they can drive investment into advances in power generation technologies, facilitate investment in new zero-carbon sources of energy, and promote more efficient food production. We have learned through both the COVID-19 pandemic and now the War in Ukraine that uncertainty and shocks are a part of life. That’s why having and sticking to your core business values is more important now than ever. Dealing with a suddenly changing wind can be overcome by a team who work together to change the direction of the sails.

New In Mining:

 

When we go to the shops each day, we rarely pick up food or goods and think to ourselves “where is this from, or how was it made?”. Although the advent of the words “Free Range” and “Organic” are becoming more popular on labels around the world as we become more conscious of our choices, the decisions we make impact the world around us, even if we don’t see it. Drawing a parallel to the mining world, within the framework of ESG, it is often said that much of the commodities supply chain does not yet have a robust system in place to take into account the ESG characteristics of the commodity being purchased. How can we create transparency into every single step of a products journey? For instance, how can I know that the Cobalt used in my Electrical Vehicle’s battery was sustainably mined and produced? We came across a great research article by Catherine McDonald, a PhD candidate at the University of St. Gallen, where she works at the Institute for Business Ethics (IWE). Her research into the potential for blockchain technologies to revolutionize supply chains in the Cobalt sector are a fascinating read. You can take a more in depth read here: www.nbs.net/articles/how-to-make-mining-more-sustainable