President dissolves Renca to attract investment in region thought to contain gold as critics warn of irreversible damage

The Brazilian president Michel Temer has abolished an Amazonian reserve the size of Denmark, prompting concerns of an influx of mineral companies, road-builders and workers into the species-rich forest.

The dissolution of the Renca reserve – which spans 46,000 sq km on the border of the Amapa and Para states – was described by one opposition senator Randolfe Rodrigues of the Sustainability Network party, as the “biggest attack on the Amazon of the last 50 years”.



Conservationists said it will open the door for mining companies to enter Renca – the Portuguese acronym for the National Reserve of Copper and Associates – which was set up in 1984 and encompasses nine protected areas.



Norway issues $1bn threat to Brazil over rising Amazon destruction Read more

More than 20 domestic and multinational firms have expressed an interest in the region which is thought to contain deposits of gold, copper, tantalum, iron ore, nickel and manganese.



The government said the reserve is being abolished to attract foreign investment, improve exports and boost an economy that has been struggling to emerge from its deepest recession in decades.

It claimed the change of status would not affect conservation areas and indigenous territories in the region, but Amazon activists warned commercial exploitation by big companies in the past has been followed by illegal land grabbers, artisanal miners and road builders.

Christian Poirier of Amazon Watch said Temer’s decision had to be seen in the context of wider efforts by his government to erode protected areas, weaken environmental licensing, and diminish indigenous rights in the interests of wealthy supporters in the extractive industries.

“The abolition of Renca will wreak havoc on the forest and indigenous communities in the interests of the small group of economically powerful groups who are keeping Temer in power,” he said. “This is the largest assault so far in a package of threats.”

“A gold rush in the region will create irreversible damage to local cultures,” warned Mauricio Voivodic, executive director of WWF-Brazil. “In addition to demographic exploitation, deforestation, loss of biodiversity and water resources, this could lead to an intensification of land conflicts and threats to indigenous peoples and traditional populations.”

Gisele Bündchen (@giseleofficial) VERGONHA!Estão leiloando nossa Amazônia! Não podemos destruir nossas áreas protegidas em prol de interesses privados https://t.co/WvtHdaKYYX

Since plotting the impeachment of his running mate Dilma Rousseff last year, Temer has moved rapidly to unravel environmental protections to please the powerful agricultural and mining lobbies. The only pause in this policy came earlier this year when Temer vetoed a bill that would have opened up swathes of forest to development. At the time, the president said he was responding to an appeal on Twitter by the supermodel, Gisele Bündchen.

But Temer has since approved several similar measures, including the latest one this week, which prompted an angry response from Bündchen. “SHAME! We are auctioning off our Amazon! We can’t destroy our protected areas for private interests,” she tweeted.</s>For all the talk about slumping commodities prices against the backdrop of a weaker dollar, there is copper. One of the most widely watched commodities is surging this year. After climbing about 2 percent on above-average volume on Thursday, the iPath Bloomberg Copper Subindex Total Return ETN (NYSE: JJC) is up more than 21 percent year to date, good for one of the best performances among commodities exchange-traded products.

With copper and JCC resting at multi-year highs, data points suggest traders are increasingly bullish on the red metal and some copper-related equities.

“Investors are throwing cash into copper ETFs, while aggressively trimming their bearish bets on global copper producers,” said Markit in a note out Thursday. “Copper ETFs are gathering assets at three times the pace of the ETF industry. Average shorting activity in global copper stocks 75% lower than in Q1 2016.”

Copper is one of the most widely watched commodities in the world because it is seen as a harbinger of economic activity. That said, the red metal is not always the most accurate gauge of risk appetite. JJC has slumped over the past three years, badly lagging competing gold ETFs and the S&P 500 during that period. In fact, from 2011 through 2016, JJC outperformed the SPDR Gold Shares (NYSE: GLD), the largest gold ETF, in just two of those years.

With copper looking tempting for the first time in a while, investors are showing plenty of enthusiasm for the industrial metal.

“Investors are eager to grab a piece of this rally – the 33 global copper ETFs amassed more than $100m of inflows since the start of the year,” said Markit. “These inflows put copper ETFs on track to post their best year since copper’s last bull run in 2012.”

Another Way To Play

Equity investors looking to participate in the copper rally via ETFs have some options to consider as well. There is the Global X Copper Miners ETF (NYSE: COPX), which is displaying significant leverage to copper's recent upside. COPX is up more than 6 percent over the past week and nearly 30 percent year to date.

Then there is the iShares MSCI Chile Capped ETF (NYSE: ECH). Although the lone Chile ETF features several sector weights that top materials, Chile is still the largest copper-producing country in the world, explaining in the large part ECH's 27 percent year-to-date gain.

Putting ECH's year-to-date performance into context, the Chile ETF is trouncing its Brazil, Colombia and Peru counterparts.

© 2017 Benzinga.com. Benzinga does not provide investment advice. All rights reserved.</s>Copper (JJC) broke strongly to new 2017 highs in July. The collapse of the Trump trade and reflation themes didn't seem to concern buyers too much.

And this is how price is responding.

So far, so bullish. What could go wrong?

Well actually lots could. As most know, copper is related to growth and inflation, and inflation looks like it has peaked for now, despite the Fed insisting the dip is 'transitory'.

Sure, inflation could turn back up, or copper could just ignore it for a while, but looking back at similar situations suggests otherwise.

Many analyst have compared the current stock market with the 1999-2000 bubble. Eventually they will be right, but one reason many analysts have been wrong and early is because they didn't look across a variety of markets.

Copper bottomed in 1999 after a significant bear market and made a +50% recovery over the next 18 months into the September 2000 top. Equity bears in 2015 and 2016 would have saved themselves a lot of pain if they had waited for copper to do this again. And now it has.

The reversal and pick up in inflation from 2015-2017 is comparable to 1998-2000 after it reversed a two year downtrend. However, as the stock market peaked and crashed from 2000-2002, inflation reversed back down again.

Superimposing the inflation rate on copper during both periods we can see how similar the interactions are in both periods.

Inflation had already peaked in March 2000 and was turning down as copper made its last rally into the September 2000 top. It may be doing the same now.

The Fed raised four times in 2000 and we can say with hindsight they were much too aggressive. With three hikes in the past nine months and plans for balance sheet reduction, could we say the same of today's Fed with foresight?

Other markets seem in a similar position to 2000. The equity comparison is well known, but gold also fits the period; the way it bottomed and rallied in 2015-2016 is comparable to 1999-2000.

Over the medium term I see it heading towards the lows again with copper. Many expect gold to shoot higher if equities fall, but history tells us otherwise.



I use Elliott Wave to identify cycles of buying and selling in different markets. Copper looks to be in wave 5 - the last wave - of the current cycle from the lows.

Wave 5 is associated with momentum divergence (which is evident in the lower pane of the chart), as well as deteriorating fundamentals (i.e. inflation falling). Sentiment is the real driver of price and we know from the very first chart how sentiment must be very frothy as positioning is so extreme on the long side.

Once wave 5 is complete, a 61.8% Fibonacci retrace is normal, but I would target the November 2016 pre-election lows of $2.25 if equities start to fall significantly.

I would expect copper to top out around $3.1, near the top of the channel.

Copper has its own fundamentals based on supply and demand, but it is also a valuable piece in the cross-asset puzzle. How copper, gold, equities and inflation are currently configured is very similar to the market top of 2000. This doesn't bode well for any market.

Concentrating on copper alone, the technicals, sentiment, and positioning, plus the decoupling with inflation, suggest that we should be wary of the seemingly bullish move higher. Regardless of any historical comparisons, copper looks to be heading lower over the medium term.

Disclosure: I/we have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.

I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

Additional disclosure: I am long various stocks, and gold, but only in the short term. Gold is nearly at my $1330 target.</s>Brasilia: The Brazilian government has abolished a vast national reserve in the Amazon rainforest to open up the area to mining despite strong opposition from environmental activists, the media reported on Thursday.

President Michel Temer on Wednesday signed a decree which abolished the protected area known as the National Reserve of Copper and Associates (Renca), reports the BBC.

The area, covering 46,000 sq.km., comprises the northern states of Amapa and Para, and is thought to be rich in gold and other minerals.

The decree said nine conservation and indigenous land areas within it would continue to be legally protected.

"The objective of the measure is to attract new investments, generating wealth for the country and employment and income for society, always based on the precepts of sustainability," the ministry said in a statement.

Its size is larger than Denmark and about 30 per cent of it will be open to mining.

But Maurício Voivodic, head of the World Wildlife Fund (WWF) in Brazil, warned that mining in the area would lead to "demographic explosion, deforestation, the destruction of water resources, the loss of biodiversity and the creation of land conflict", the BBC reported.

According to a WWF report, the main area of interest for copper and gold exploration is in one of the protected areas, the Biological Reserve of Maicuru.

There is also said to be gold in the Para State forest, which lies within the area.

The statement said that there was a potential for conflict too in two indigenous reserves that are home to various ethnic communities living in relative isolation.

WWF`s report said than a "gold rush in the region could create irreversible damage to these cultures".

"If the government insisted on opening up these areas for mining without discussing environmental safeguards it will have to deal with an international outcry."</s>HAMBURG, Nov 17 (Reuters) - Aurubis, Europe's biggest copper smelter, said on Thursday the reported agreement between Jiangxi Copper and Freeport McMoRan for annual copper ore treatment and refining charges for 2017 is "too low".

Diversified miner Freeport-Mcmoran has agreed a 5 percent reduction in charges it will pay China's biggest copper smelter Jiangxi Copper to process its concentrate for 2017, people familiar with the matter said on Thursday, in a deal that will set a benchmark for the copper industry. (Reporting by Michael Hogan; Editing by Alexandra Hudson)</s>The price of copper is breaking out. We wrote recently that investors should wait for the Ultimate Confirmation Of A New Bull Market In Copper, and we identified $3.00 as the ultimate breakout point. As copper is blasting through $3.00 now it seems we are getting that confirmation. Note there is always this possibility of a false breakout. It could well be that copper rises just a little bit more ...</s>Copper prices are considered by many analysts to be a key measure of economic strength. Growing economies require a lot of copper; it is used in construction, electronics, power transmission and many other applications too numerous to mention here. Traders call the red metal “Doctor Copper” because rising and falling demand for copper often precedes similar turns in the global economy - giving it a de-facto “PhD” in Economics.

After five years of a punishing bear market that took prices from $4.50 to $2.00 per pound, copper is back. Price action over the past few months has negated the bear market and appears to be setting the stage for an emerging bull market. What the “good doctor” appears to be telling us now is that the global economy - especially Asia - could be setting up for another growth spurt.

The need to improve their power grids makes China and India key players in the copper market. Asia alone accounts for 63% of copper usage. 75% of newly-mined copper demand is associated with electrical wiring, something that the emerging economies of Asia require a lot of. Nearly half of China’s consumption goes to grid infrastructure. Power deficient India is trying to catch up, potentially increasing demand there as well. The Chinese also have a history of using industrial metals like zinc and copper as stores of value especially during inflationary periods.

The International Copper Study Group (ICSG) expects China to continue to be the biggest factor in global copper demand in 2017 and projects an increase in Chinese demand of 2.5% to 3.5%. At the same time, the ICSG projects a supply deficit of 150,000 metric tons in 2017 and 170,000 metric tons in 2018 due partially to supply disruptions earlier this year.

But what really makes copper interesting right now is how it sets up technically (chart wise). The election of Donald Trump led to expectations of massive infrastructure spending in the US which caused the price of the red metal to jump, effectively ending the bear market that began back in 2011. The market has chopped sideways since then, creating the right “shoulder” of a classic, bullish “Reverse Head and Shoulders” formation. We consider the latest breakout over resistance at the “neckline” of this pattern to be extremely bullish. That copper was able to do this despite fading hopes for a US infrastructure bill is even more impressive.

How to Play It

It appears that we are not the only ones interested in copper right now. A year ago we would have probably skipped the copper market altogether due to almost impossible illiquidity in copper options. And while we certainly wouldn’t call copper options a liquid market, getting a trade done at a reasonable price is no longer impossible.

We suggest trading clients consider buying March 3.30 copper calls while simultaneously selling an equal number of March $3.50 copper calls for $900 or less, looking for March copper futures to hit our $3.50 per ounce target prior to option expiration on February 22, 2018.

If we are wrong and copper does not rally, the most we can lose is the $900 we’ve paid for our $3.30/$3.50 “bull call spreads”, plus transaction costs. Our spreads could be worth as much as $5,000 should copper rally to $3.50 per pound or higher on or prior to option expiration.

Please be advised that you need a futures account to trade the recommendation in this report.

The risk of loss in trading futures and/or options is substantial and each investor and/or trader must consider whether this is a suitable investment. Past performance, whether actual or indicated by simulated historical tests of strategies, is not indicative of future results. Trading advice is based on information taken from trades and statistical services and other sources that R.J. O’Brien believes are reliable. We do not guarantee that such information is accurate or complete and it should not be relied upon as such. Trading advice reflects our good faith judgment at a specific time and is subject to change without notice. There is no guarantee that the advice we give will result in profitable trades.

Disclosure: I/we have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.

I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it. I have no business relationship with any company whose stock is mentioned in this article.</s>Brazil's President Temer says the move will stimulate economic activity and will abide by environment protection laws.

The government of Brazil has abolished a vast national reserve bigger than the size of Denmark to open the area to commercial mineral exploration, drawing sharp criticism from environmentalists and political opponents.

The area, which straddles the northern states of Amapa and Para, is thought to contain rich deposits of gold, iron, manganese and other minerals.

A decree from President Michel Temer published in the official government gazette on Wednesday dissolved the protected area, known as the National Reserve of Copper and Associates (Renca).

Established in 1984 under the then military dictatorship, the protected status of the reserve, which covered roughly 4.6m hectares (17,800 square miles) restricted mining activities to state companies.

Temer has been seeking to stimulate economic activity as Latin America's top economy emerges from the worst economic crisis in more than a century.

Wednesday's decree stressed that it does not override other existing environmental protection laws, such as protections for native vegetation and nature conservation areas.

But campaign groups such as the World Wildlife Fund (WWF) have expressed concern about the environmental threat to the reserve from potential mining projects.

Brazilian newspaper O Globo quoted Michel de Souza, the public policy coordinator of WWF-Brazil, as saying that the decree is a "catastrophe".

"The Amazon Forest is our biggest asset. In this moment of despair and crisis, they are putting at risk the protected areas that are within the reserve," de Souza said.

Last month, the executive director of WWF-Brazil Mauricio Voivodic warned of the damages that mining would bring to the reserve.

"Despite the strong economic appeal, the development of mining activity may bring undesirable impacts to the Renca protected areas, such as deforestation, threats to indigenous people and populations, water resource loss, loss of biodiversity, and aggravation of land conflicts," Voivodic said.

More than two-thirds of the Renca area that lies in Amapa state are subject to conservation controls or protections for indigenous areas that would limit mining, leaving only 31 percent open to research and exploration after the area's abolition, according to a 2010 government report.

In April, a report by the mining ministry said that lifting the protected status could provide "access to minerals potentially existing in the region" by letting private companies operate there.

Yet, some politicians criticised the decree as an act of devastation to the Amazon.

According to O Globo newspaper, opposition Senator Randolfe Rodrigues decried the move as "the biggest attack on the Amazon of the last 50 years".</s>An employee carries copper hoses at the Sociedade Paulista de Tubos Flexiveis (SPTF) metallurgical company which manufactures flexible metal hoses, in Sao Paulo April 20, 2012.

LONDON (Reuters) - It will probably go down in the history books as the Trump Rally.

Copper is on course to record its biggest weekly rally in 35 years. It's a stand-out even amid the turbulence that has rocked the broader financial universe.

The London Metal Exchange (LME) has seen over 205,000 lots trade on its benchmark three-month contract since Monday, already an all-time weekly record and the week isn't over yet.

On the CME copper traded 256,017 contracts on Wednesday, also an all-time daily record.

The entire global copper market, it seems, has been repositioned from bear to bull territory in a matter of days.

And while there is no doubt the election of Donald Trump as U.S. President has acted as an accelerator, there is more to this explosive price action than as yet vaguely-defined promises of infrastructure spending and reflation.

Copper's extraordinary 20 percent (and still counting) price surge has been as much machine-made as man-made.

This rally began last month. On Oct. 25 to be precise.

LME three-month copper opened that day at $4,649 per tonne and closed at $4,735. It has since recorded 14 consecutive days of higher closes.

Two weeks ago only Trump and his supporters really believed he would beat Hillary Clinton in the race to the White House. The markets certainly weren't pricing in a Trump victory.

Rather, the copper market, particularly the speculative part of it, seems to have started reassessing the prevailing copper narrative of chronic over-supply.

There was a noticeable shift in mood during the ensuing LME Week.

Chinese demand, everyone agreed, has been running at a much faster pace than originally expected thanks to the government's early-year stimulus package.

Supply disruption, conspicuous by its absence in the first half of the year, was suddenly back on the agenda as the Q3 reporting season brought a series of production downgrades from major producers.

And with LME inventory falling fast and Shanghai Futures Exchange (ShFE) stocks low as well, there was little tangible sign of that much feared "wall-of-copper".

Fund money started flowing into the copper market in ever increasing quantities.

The LME's Commitment of Traders Report showed that the net money manager long position as of last Friday had already hit its highest level since the exchange started publishing its weekly report in 2014.

The weekly close on Nov. 4 was $4,991, the highest since April.

That close was right at one of those big-number levels, $5,000 per tonne, so beloved of chart technicians.

Another key big-number level was at $5,100 and an even hotter chart point was up at $5,400.

It's noticeable that copper's rally accelerated on each break of these technical levels, a clustering of historical resistance levels, long-term downtrend lines and Fibonacci retracement points.

Without going into the esoteric world of chart analytics, there are two takeaways from such technicals.

Firstly, copper had been defined for almost a year by range-trading with every part of the market, from producers to consumers to speculators, positioned around that range.

Breaches of those trading bands caused a mass repositioning with short positions closed out, long positions put on, new short positions put on only to be closed out again as the price kept motoring upwards.

One very public example was Goldman Sachs issuing a research note on Thursday saying it was closing out its short March 2017 copper vs March 2017 half unit zinc long position after reaching a stop-loss of minus eight percent.

"This was driven by losses on the copper leg that more than offset the gains on the half unit zinc long," the bank said. ("Metal Detector - Reflation Rotation."

Secondly, many Commodity Trading Advisors (CTAs) plug chart technicals into their algorithms, causing a snowball effect as key resistance levels are taken out.

Momentum trading funds then join the feeding frenzy and high-frequency funds amplify the effect as they are programmed to pre-empt other automated trading systems.

Think the copper market equivalent of Skynet, the artificial intelligence network that takes over the world in the Terminator films.

That $5,000 level had added significance for option traders. Options open interest is also often clustered around such big-number levels.

LME market open interest on the December $5,000 call options totals around 90,000 tonnes. Adding in January and February and the figure rises to 200,000 tonnes.

Sellers of those options would have had to buy futures to cover their exposure, the exact "delta" dependent also on computer models.

Indeed, copper's ascent to this morning's high of $6,025.50 per tonne has brought into play around 525,000 tonnes of open call options across the three front months.

Options sellers covering their exposure would have added fuel to an already red-hot market.

The last part of copper's price rally has been driven by Chinese players waking up to what has been happening in the rest of the world.

The Chinese retail crowd have been playing other markets, particularly the Shanghai and Dalian ferrous contracts, in recent weeks.

Copper has been relatively neglected, precisely because it seemed so boringly range-bound.

That's changed this week. Market open interest on the Shanghai copper contract had fallen to a three-year low of 439,784 contracts at the end of September.

It has since risen to 552,572 lots (and counting) with volumes spiking as the price has soared. That's a whole new buying impetus coming in from what LME broker Marex Spectron termed in Friday's morning report the "onshore casino".

It's a catch-up play but one that is now hitting the copper market at precisely the moment many Western players are looking to take some profits.

Chinese investors trade what moves and what is hot with rises in open interest fanning further buying in what is a mass human echo effect of how momentum funds operate in the West.

This week's extraordinary rally will still go down in the history books as the Trump Rally.

But in truth even the influence of the extraordinary Donald Trump has been trumped by the power of the program traders.

This rally started in late October with a human reassessment of copper's underlying dynamics but this week the robots have taken over.

It's a sign of the times. Other markets have learned the robots' power. This is probably the first time the base metal markets have experienced it.

It won't be the last time.</s>SYDNEY (Reuters) - Not many small exploration companies would knock back a multi-million-dollar financing offer by BHP Billiton, the world's biggest mining company, but Nick Mather of Ecuador-focused SolGold Plc said he has better offers. Interest in Solgold's Cascabel copper and gold project has already led to a $33 million deal with investment bank Maxit and Australian gold miner Newcrest.

"BHP certainly wants the asset," SolGold Managing Director Nick Mather told Reuters on Tuesday. "But it's not what we are looking for."

BHP on Saturday offered $30 million, or 22 cents per share, for a 10 percent stake in SolGold, which SolGold rejected.

The offer included an additional $275 million proposal, linked with acquiring a much larger stake in the unit managing the Cascabel project, Exploraciones Novomining (ENSA).

"The deal BHP was offering was very inadequate because we would lose 70 percent of the upside," Mather said.

SolGold holds 85 percent of ENSA, and 11 percent of Cornerstone Capital Resources, which owns the remaining 15 percent of ENSA.

Based on early exploration work, Mather believes SolGold may have made a major new high-grade copper and gold find to rival some of the largest existing mines, such as Grasberg in Indonesia, controlled by Freeport McMoran Inc, and Oyu Tolgoi in Mongolia, controlled by Rio Tinto.

BHP's attempt to take control of SolGold comes just ahead of a Oct. 13 shareholders' vote on whether to approve the Newcrest and Maxit offers.

"Barring the arrival of superior offer, we will be approving the Newcrest and Maxit transactions," Mather said. "Newcrest and Maxit understand what we want."

Major mining companies are spending big to find more copper. Copper is the most sought-after industrial metal, as existing mines age and new ones are found in increasingly difficult locations.

Rio Tinto in the past year has undertaken a $5.3 billion expansion of the Oyu Tolgoi copper mine. Anglo American has designated copper as only one of three commodities where it sees a future for the company.

SolGold marked BHP's first attempt to boost its copper assets via an acquisition since Managing Director Andrew Mackenzie unveiled a corporate shift in growth strategy this year away from iron ore mining, with a focus on copper and oil.
Brazilian President Michel Temer abolishes the 46,000 km2 National Reserve of Copper and Associates (Renca) ecological reserve, which spans the borders of Amapá and Pará states in northern Brazil. More than 20 domestic and multinational firms have expressed an interest in accessing the area's deposits of gold, copper, tantalum, iron ore, nickel and manganese.