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Anglo American chief executive Duncan Wanblad has warned that US President Donald Trump’s wave of new tariffs will push up the cost of mining production for years.
Wanblad’s remarks come as a worldwide trade war threatens to upend the flow of commodities on oil and gas and a range of precious and base metals on which their businesses depend.
Trump’s sabre-rattling sent the stocks of some of the big mining groups lower on Monday with London listed Glencore and Anglo American down more than 2 per cent at the close.
Wanblad warned that Trump’s tariffs on Canada and Mexico and threat to freeze funding to South Africa over a new law that permits expropriation of land in public interest would lead to market volatility and inflation.
“One thing I’m sure of is that under all circumstances, [tariffs] are going to be inflationary. We are going to see the cost of production go up pretty much everywhere as a result of this,” he said.
It remains unclear whether Trump will stick to his plans, however, as Mexico’s President Claudia Sheinbaum said the tariffs would be suspended for one month after a discussion with the US president. Canada’s Prime Minister Justin Trudeau is also locked in talks with Trump.
The Anglo boss said the near-term impact on mining groups was unclear, depending on the region, the level of the tariff and where the product was bought. “I have no idea what to make of the [Trump] statement, other than we could have all done without it.”
Wanblad’s view on tariffs echoes other mining chief executives, who are all assessing the impact of higher tariffs, particularly on resource-rich Canada, which has reserves of oil and gas and metals such as gold and copper.
Speaking to the Financial Times in January before the tariffs were announced, William Oplinger, the chief executive of aluminium producer Alcoa, said a tax on Canadian imports would mean “aluminium prices in the US would be substantially higher”.
“Ultimately it will be in the price of pick-up trucks and beer cans,” he said. “It’s really hard to determine how much demand destruction we’ll see . . . If prices are substantially higher in the US that has to put some downward pressure on aluminium demand.”
Duncan Hobbs, an analyst at trader Concord Resources, said the impact of the tariffs would be reflected in the premiums paid by metal users on top of the benchmark exchange price for physical metals in the US.
Analysts at BMO said higher premiums were likely to endure until “Canadian producers and US consumers alike can reroute supply chains to avoid the new duties”.
Practically, that is likely to mean Canadian metals being diverted to Europe and the US importing more from other regions such as Australia, they said.
Such a change would “create longer supply chains which will result in a sustained increase in US premiums”.
Speaking at the Investing in African Mining Indaba in Cape Town on Monday, South Africa’s mining minister Gwede Mantashe called on African countries to halt mineral exports to the US in retaliation for Trump’s decision to suspend funding aid programmes on the continent.
“They want to withhold funding, but they still want our minerals,” he said. “Let us withhold minerals. Africa must assert itself.”
https://www.ft.com/content/a55fbf80-bfd5-4cf2-bad7-77a568d733a9
