Rio Tinto Group Negotiating With Freeport

Rio Tinto Group Negotiating With Freeport

US mining giant Freeport McMoRan has signaled it believes a breakthrough agreement allowing it to continue operating a massive gold and copper mine in Indonesia will win the approval of Rio Tinto.

Indonesian Energy and Minister Resources Minister Ignasius Jonan said on Tuesday that after “tough negotiations” Freeport had agreed to give up its majority stake in the Grasberg mine to Indonesia.

The agreement will require Freeport to cut its ownership of the mine from 90.64 per cent to 49 per cent, provide more state revenue, adopt a special licence and build a second smelter by 2022.

Rio Tinto is entitled to a 40 per cent share of output from Grasberg above specific levels until 2021 and 40 per cent of all production after 2021.

However the company indicated in April it might not take ownership of 40 per cent of copper production after 2021.

“Rio Tinto’s participation beyond 2021 is likely to be affected due to the application of force majeure provisions in the joint venture agreement between Rio Tinto and Freeport McMoRan,” it said at the time.

The preceding month Rio Tinto Group chief Jean-Sebastien Jacques had flagged it was considering the future of its stake in the Grasberg mine.

Technical Analysis

rio tinto

Overall, the bias in prices is: Upwards.

Short term: Prices are moving.

Intermediate term: Prices are trending.

Note: this chart shows extraordinary price action to the upside.

By the way, prices are vulnerable to a correction towards 64.35.

The projected upper bound is: 70.62.

The projected lower bound is: 65.44.

The projected closing price is: 68.03.

Candlesticks

A big white candle occurred. This is generally considered bullish, as prices closed significantly higher than they opened. If the candle appears when prices are “low,” it may be the first sign of a bottom. If it occurs when prices are rebounding off of a support area (e.g., a moving average, trendline, or retracement level), the long white candle adds credibility to the support. Similarly, if the candle appears during a breakout above a resistance area, the long white candle adds credibility to the breakout.
During the past 10 bars, there have been 8 white candles and 2 black candles for a net of 6 white candles. During the past 50 bars, there have been 31 white candles and 18 black candles for a net of 13 white candles.

Three white candles occurred in the last three days. Although these candles were not big enough to create three white soldiers, the steady upward pattern is bullish.

Momentum Indicators

Momentum is a general term used to describe the speed at which prices move over a given time period. Generally, changes in momentum tend to lead to changes in prices. This expert shows the current values of four popular momentum indicators.

Stochastic Oscillator

One method of interpreting the Stochastic Oscillator is looking for overbought areas (above 80) and oversold areas (below 20). The Stochastic Oscillator is 69.5081. This is not an overbought or oversold reading. The last signal was a sell 2 period(s) ago.

Relative Strength Index (RSI)

The RSI shows overbought (above 70) and oversold (below 30) areas. The current value of the RSI is 64.42. This is not a topping or bottoming area. A buy or sell signal is generated when the RSI moves out of an overbought/oversold area. The last signal was a sell 71 period(s) ago.

Commodity Channel Index (CCI)

The CCI shows overbought (above 100) and oversold (below -100) areas. The current value of the CCI is 110.This is an overbought reading. However, a signal isn’t generated until the indicator crosses below 100. The last signal was a sell 3 period(s) ago.

MACD

The Moving Average Convergence/Divergence indicator (MACD) gives signals when it crosses its 9 period signal line. The last signal was a buy 5 period(s) ago.

Rex Takasugi – TD Profile

RIO TINTO FPO closed up 1.140 at 67.840. Volume was 12% above average (neutral) and Bollinger Bands were 4% wider than normal.

Open     High      Low         Close     Volume
66.700  67.985   66.660   67.840   2,505,644

Technical Outlook
Short Term: Overbought
Intermediate Term: Bullish
Long Term: Bullish

Moving Averages:  10-period    50-period    200-period
Close:                        65.90           64.48           62.35
Volatility:                 22                 26                 32
Volume:                   1,841,892    2,060,170   2,354,624

Short-term traders should pay closer attention to buy/sell arrows while intermediate/long-term traders should place greater emphasis on the Bullish or Bearish trend reflected in the lower ribbon.

Summary

RIO TINTO FPO is currently 8.8% above its 200-period moving average and is in an upward trend. Volatility is low as compared to the average volatility over the last 10 periods. Our volume indicators reflect volume flowing into and out of RIO.AX at a relatively equal pace (neutral). Our trend forecasting oscillators are currently bullish on RIO.AX and have had this outlook for the last 3 periods.

 

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Ivy Heffernan

Ivy Heffernan, student of Economics at Buckingham University. Junior Analyst at HeffX and experienced marketing director.

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