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June 21, 2023

What Really Happened the Night the #Nickel Market Broke

Hundreds of pages of legal filings describe how the LME sleepwalked into a crisis, "that the LME was largely in the dark about Tsingshan's role as the major driver of the price spike until after it had decided to cancel billions of dollars of nickel trades; that the exchange's top decision makers were asleep as the market spiraled out of control; and that Chamberlain made the key decision that the market was disorderly in about 20 minutes after he woke up on March 8 – unaware until much later that the LME's staff had allowed prices to move more rapidly by disabling its own automatic volatility controls."

Jane Street alleges the very fact that the LME's key decision makers were asleep was a breach of the exchange's regulatory duties, since it meant that "no-one had been monitoring transactions in order to assess whether there were disorderly trading conditions." The LME disputes that it was in breach.


What oversight there was came from the exchange's trading operations team. They were in charge of operating the LME's price bands, a form of speed bump designed to limit extreme price moves, such as in the case of "fat finger" trades.

But in the early hours of March 8, the operations team received numerous complaints from market participants that the price bands were preventing them from booking trades. At 4:49 a.m., they suspended them altogether.


Dizzying Ascent

It was soon after this that nickel prices started the most dizzying part of their ascent. By the time Chamberlain woke up, at 5:30 a.m., the price was already $60,000 a ton. In the next 38 minutes, it rose another $40,000.





"The abandonment of price bands caused or at least materially contributed to the speed and scale of the increase in prices," Jane Street said in its court filing. "Without price bands in place, the LME could not control price volatility at all."


Chamberlain wasn't aware that his operations team had suspended the price bands, as he made his pivotal decision to suspend the nickel market. 


The exchange still didn't have a handle on the scale or the importance of Tsingshan's position — the real reason behind the runaway rally.

Brokers on the LME would normally need to pay their first margin call of the day by 9 a.m., based on prices prevailing at around 7 a.m. If that had happened on March 8, the LME would have needed to request $19.75 billion from 28 banks and brokers – an unprecedented sum that was more than 10 times the previous daily record before March 2022.



See the whole article on Bloomberg here:

https://www.bloomberg.com/news/articles/2023-06-21/nickel-market-chaos-how-the-lme-sleepwalked-into-last-year-s-crisis?



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June 12, 2023

Major-Junior #Mining Exploration Investments lukewarm in 2022

The number of major company investments in early-stage exploration through project earn-ins and purchases, and junior company acquisitions and financings fell to a seven-year low in 2022.


Gold favored target despite lackluster investment


Despite the high market price for gold — on par with 2021 — exploration investment for gold fell considerably in 2022, following the overall trend in the majors' early-stage investment. The yellow metal nevertheless remained the favored target, accounting for more than half of the number of transactions and two-thirds of the financings.

Unsurprisingly, the highest-valued financing and acquisition were both for gold.
Major early-stage exploration investment in acquisitions and financings was lackluster in 2022, with the number of transactions halving year over year

June 8, 2023

Top 10 Largest #Gold Mines in South America

Top 10 largest gold mines in South America in 2022 - report | Kitco News
Top 10 largest gold mines in South America in 2022 - report

(Kitco News) - Kitco ranked the top 10 largest gold mines in South America in 2022 by production.

1. Paracatu, Brazil. 577 koz. Kinross' Paracatu gold mine is located in Brazil, north of Paracatu city and nearly 230km from the capital city of Brazil, Brasília. Paracatu is the largest gold mine in South America and one of the largest in the world.

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