OM in freefall

After dropping from US$40 to US$30 in the previous week, the shares of cobalt refiner OM Group collapsed further during the report period, falling 71% on Oct. 29 to US$8.95 and closing at US$7.49 on the following day.

The previous week’s decline coincided with the United Nations’ pointing an accusing finger at OM in its report on illegal mining activities in the Democratic Republic of Congo — a charge OM denies.

In contrast, OM’s share collapse on Oct. 29 was triggered by the release of third-quarter results that reflected the sharp decline in cobalt prices over the past few months. Owing to a US$94-million writedown on inventories, the company lost US$71.2 million on revenue of US$1.4 billion in the third quarter, compared with a profit of US$20.4 million on revenue of US$833 million a year earlier.

Management commented that cobalt prices are likely to remain weak, the company will require a major restructuring, and the dividend will likely be suspended.

The rest of the base metal miners were mostly down in an uneventful week: Anglo American fell back 46 to US$13.12; BHP Billiton declined 15 to US$10.53; Rio Tinto slipped 99 to US$73; Alcoa dropped 97 to US$22.37; CVRD jumped $2 to US$25.63; Phelps Dodge eased back a dime to US$30.76; and Freeport-McMoRan Copper & Gold shed 27 to reach US$12.45.

Almost all the U.S.-listed gold majors added to the previous week’s gains: AngloGold jumped another 63 to US$25.35; Newmont Mining fell 20 to US$24.80; Gold Fields rose 76 to US$11.46; Harmony Gold rose 64 to US$13.40; and Ashanti Goldfields eased up 8 to US$5.34 on encouraging third-quarter results.