Hudbay stock hits one year low as copper prices slump

Toronto-based Hudbay Minerals Inc. stock price is hovering near 52-week lows dragged down by falling copper prices facing downward pressure by the U.S. initiated trade war and signs of a global economic slowdown.

Hudbay, which is seeking permits to construct the proposed $1.9 billion Rosemont open-pit copper mine in the Santa Rita Mountains on the Coronado National Forest southeast of Tucson, has seen its stock price cut in half since January.

Hudbay’s stock traded on the New York Stock Exchange hit a 52-week low on July 11 when it closed at $5.10. It’s drifted sideways since closing July 16 at $5.15.

Copper prices have seesawed since late 2017 when the price hovered near $3.30 a pound before declining to below $3 a pound in early April before rebounding to around $3.30 a pound in early June. But since President Trump launched a trade war with China, Canada, Mexico and European Union countries, the price of copper has dropped to $2.80 a pound as of July 16.

The pace of global growth has peaked and “a deceleration phase now lies ahead,” Nomura economists stated last week, according to Investor’s Business Daily. They forecast global growth of 4.0% in 2018 will slow to 3.7% in 2019, with risks to the downside.

Global trade tensions certainly share the blame, but Nomura cites a range of negative factors, including “a growth slowdown in China,” European political uncertainty, higher oil prices, Fed interest-rate hikes and broader emerging-market fragility, Investor’s Business Daily reported.

Hudbay officials have stated in the past that it had a target price of $3.50 a pound to initiate construction of the Rosemont mine. Many of its economic forecasts for Rosemont are based on $3 per pound copper.

Falling copper prices have already forced the company to delay its Rosemont construction plans. In late 2015, the company announced it was delaying construction plans until copper prices recovered after falling below $2 a pound.

Hudbay cannot begin Rosemont construction until it receives a Clean Water Act permit that is issued by the U.S. Army Corps of Engineers. The corps’ Los Angeles district office recommended denying the permit in July 2016.

Hudbay subsequently amended its mitigation plan in September 2017 to compensate for the destruction of desert aquatic resources . The revised plan was sharply criticized by conservation groups and the U.S. Environmental Protection Agency, which can veto Army Corps permits.

“The mine will irreparably undo decades of public efforts to protect drinking-water supplies, biological resources, and sensitive aquatic ecosystems within the Cienega Creek watershed,” the EPA stated in a Nov. 30, 2017 77-page letter to the Army Corps.

“A crucial factor in our determination that the mine will result in significant degradation of the aquatic ecosystem is the lack of meaningful mitigation being proposed within the Cienega Creek watershed.”