US markets fall, April 27-May 1: Vale, Barrick

The Dow Jones Industrial Average fell 0.22%, or 51.58 points, to 23,723.69, and the S&P 500 dropped 0.21%, or 6.03 points, to finish the trading week at 2,830.71. Spot gold finished US$26.60 per oz. lower at US$1,702.90 per oz., a 1.54% drop.

Vale was the most heavily traded stock of the week, finishing up US31¢ at US$7.98. The company said it will resume dry processing operations at the Timbopeba mine, part of its Mariana complex, in the first week of May. Vale said tests concluded in January certified the “absence of impact on the site’s geological structures,” so it can restart dry processing at a monthly production rate of about 330,000 tons of iron ore fines. Wet processing activities are expected to resume in the fourth quarter of the year, after the construction of a pipeline for tailings disposal at the Timbopeba pit is completed and receives approval. If wet processing activities resume, the operation would achieve its full production capacity of about 1 million tons a month, Vale said. If both dry and wet processing resumes, as planned at Timbopeba, Vale says it can meet its total production guidance of 310-330 million tons iron ore fines this year.

Shares of Barrick Gold were down US17¢ to US$26.93 in the wake of Papua New Guinea’s decision, announced on April 24, not to extend the special mining lease (SML) for the company’s 47.5% owned Porgera mine. China’s Zijin Mining owns the other 47.5% of the mine and Mineral Resources Enga, a landowner group, owns the remaining 5%. The manager of the mine, Barrick Niugini Ltd., applied for a permit extension in June 2017, which would have renewed Barrick’s rights for 20 years. Papua New Guinea Prime Minister James Marape said the lease, which expired in August 2019, would not be renewed on environmental and social grounds.

Barrick said CEO Mark Bristow had met with the prime minister four times to discuss the extension issue, and “neither the Prime Minister nor anyone acting on behalf of the government has ever proposed any alternative terms on which the SML could be extended, or indicated that it would not be extended.” Barrick also said that in 2019 the company had “proposed a benefit-sharing agreement that would deliver more than half the economic benefits to PNG stakeholders including the government for 20 years.” Barrick says it will “pursue all legal avenues to challenge the government’s decision and to recover any damages that BNL may suffer as a result of the government’s decision.” The Porgera open pit and underground mine is situated in Enga province, 600 km northwest of Port Moresby.