US markets flat over July 11-15 trading week

Over the July 11-15 trading week, the Dow Jones Industrial Average gained 113.23 points, or 0.36%, to 31,451.38, and the S&P 500 fell 8.27 points or 0.21% to 3,891.11.

Shares in coal miner Arch Resources gained US$1.26 during the week to US$140.06. The company has scheduled a highly anticipated second-quarter conference call for July 28. The market is bullish on coal against an apparent pause, or even regression, of anti-fossil fuel sentiment in the wake of the Russian war on Ukraine and the fallout from Western sanctions against the perpetrator. Disruptions to coal supplies exacerbate a tight market, pushing coal prices to astronomical highs. With Russia cutting off gas supplies to industrialized nations such as Germany, coal is once more stepping up as a primary energy source. The Dutch government had also recently scrapped limits on power production from coal-fired plants until 2024. It bodes well for highly efficient, low-cost thermal mines in the Powder River Basin and Colorado in the U.S. which produce cost-competitive thermal coal for sale in the domestic and international power generation markets. Analysts expect second Arch Resources’ quarterly per-share earnings to come in at US$22.67, up from last year’s comparable figure of US$1.66. 

Canada-focused Seabridge Gold was another top-performing stock, adding US93¢ in the week to US$12.44. On July 11, the company announced plans to spend $150 million this year to prepare the KSM gold-copper deposit — said to be the largest undeveloped deposit of its kind globally — for development. Seabridge has spent $480 million to move the KSM project through exploration, engineering and environmental permitting. Earlier this year, Seabridge raised $285 million through Sprott Resource Streaming and Royalty Corp. and the Ontario Teachers’ Pension Plan and signed a power agreement with BC Hydro to supply the new mine with power. Seabridge plans to spend $150 million this year on infrastructure needed to prepare the new mine for development, and as much again next year. That includes building road access, work camps and a new bridge across the Bell Irving River. 

Among the worst performers was Rio Tinto, which announced a cost increase of US$300 million for the ongoing expansion of its massive Oyu Tolgoi copper-gold mine in Mongolia. The world’s second-largest miner said the cost and schedule forecast, completed in June, now pegs the total project cost estimate at nearly US$7.1 billion, almost US$1.8 billion higher than its original estimate in 2015. The company blamed the rise on skilled labour supply constraints caused by Covid-19 and noted the new estimate, under review by Oyu Tolgoi’s board, assumes there are no further disruptions. Rio Tinto currently controls and operates the mine, located 550 kilometres south of Mongolia’s capital Ulaanbaatar, through its 66% stake in Canada’s Turquoise Hill Resources.