The OPEC cartel has cut back oil production by 4.2 million barrels a day. The latest delivery information indicates that the actual number is more around 3 million barrels a day. But that’s still a substantial reduction.
Looking at production cuts in other natural resources, oil production would probably have been cut back anyway – with or without OPEC.
Here are just some of the production delays and suspensions announced so far in February…
Feb 16 - Norilsk Nickel says suspending production at its last two active mines in Australia. Will suspend Black Swan and Lake Johnston nickel mines with immediate effect.
Feb 12 - The Philippines Berong Nickel Corp said it has temporarily stopped nickel production.
Feb 11 - Norsk Hydro has decided to begin the shutdown of its Neuss primary aluminium smelter in Germany. A day earlier, it announced reducing its aluminium production by another 25 percent at its Soeral smelter in Norway.
Feb 10 - Germanys Trimet Aluminium AG said had cut aluminium output by about 30 percent.
Feb 9 - Xstrata Plc said plans to expand production of rhenium at a project in northern Chile have been shelved.
Feb 9 - Plans to boost output at the Madneuli Ore Enrichment Plant in Georgia by another 35-40 percent this year no longer look realistic because investment plans are on hold.
Feb 6 - FNX Mining Co Inc said it plans to cut costs beyond the production cuts and layoffs announced late last year. Company mainly mines nickel and copper in Canada’s Sudbury Basin.
Feb 5 – Russia’s United Company RUSAL said it will cut 11 percent of its annual aluminium output, 30 percent of alumina output and 5 percent of its staff.
Feb 4 - Century Aluminum said it would curtail remaining output at its 170,000 tonnes tpy Ravenswood, West Virginia aluminium smelter by Feb. 20.
There were just as many if not more announcements of productions cutbacks in January.
The focus now is on falling demand. In the not too-distant future, we’re going to wake up and realize that the shortages and tight supply that dominate the commodity sector can’t be reversed overnight.
In such a market environment, any hint of a pickup in demand will ignite prices. And that’s when you’ll wish you were following the tips of my colleague Rusty McDougal. His mining companies and juniors are beat up now, but they’re like ticking time bombs waiting to explode.
Believe me, it’s going to happen – and with metals mining and production shrinking so fast – it’ll happen sooner than you think.