Commodity-Backed Currencies? China Buys Huge Copper Mine; Russia Onshores Largest Gold Miner

Tyler Durden's picture

The last few days have seen Western anti-Russian rhetoric and red lines escalate dramatically as the military and economic issues come to light in any push back against Putin's pressure. From NatGas export fallacies to "boomerang"-ing sanctions, the west seems stuck (for now).. which brings up the question - why is China and Russia making huge investments in commodity-miners? Russia's largest gold miner Polyus Gold is considering a complete onshoring of its activities and China is buying a huge Peruvian copper mine from Glencore. The outcome would appear to enable both firms to do away with USD but not having to buy this resource in the market... just mine it?


Russia is onshoring its commodity miners...

Polyus Gold, Russia's biggest gold miner, is considering state proposals to encourage the rebasing of Russian firms currently owned by offshore entities and intends to explore these issues with the government, the company said on Friday.




Russian President Vladimir Putin has been pushing for the so-called "de-offshorisation" of the Russian economy, whereby companies with offshore entities re-register them in Russia and pay taxes in Russia.




Earlier this week First Deputy Prime Minister Igor Shuvalov urged companies listed on foreign stock exchanges to consider relisting in Moscow to protect themselves from sanctions imposed by the West over Russia's annexation of Crimea.


Polyus's biggest shareholder is Russian tycoon Suleiman Kerimov, who owns 40.22 percent.

and China is buying commodity miners...

A Chinese consortium is buying Glencore Xstrata's copper mine in Peru in a $6bn (£3.6bn) all-cash deal, marking one of China's largest mining acquisitions.


The consortium is led by MMG Limited and includes China's Citic Metal.


The acquisition is subject to regulatory approvals but all parties expect the deal to be done by the end of September.


Analysts expect Glencore to use the proceeds from the sale to reduce its debt.


The mine is expected to produce more than 450,000 tonnes of copper a year in its first five years.


China relies heavily on the metal, which is used in electronics production.

Another peg in the anti-USD hegemony board? Shift each nation's need to use USD to purchase critical resources and instead own them away from control by western states...?

Of course, in the case of China's copper mine acquisition, one can't help but wonder if - on theback of the collapse in commodity-finance deals - whether China simply bought the mine to shut it down and maintain artificially high copper prices and thus keep collateral chains from crumbling in the shadow banking system.

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achmachat's picture

sounds good to me.

last time I checked, you can't print commodities out of thin air.


Oh regional Indian's picture

I guess we are coming in for an era of real-er fake money!

Wealth in the ground.

Countries will count un-mined reserves. More bullshit geology and statistics coming our way.

This is NOT the escape hatch!

astroloungers's picture

Doesn't all wealth come from the ground ?

Oh regional Indian's picture

Yes, but we are used to counting "heavy" metals in hand/vault/mint, not projected mine deposits according to geo-physics. That is what I meant.

India for example has massive in-ground gold reserves and 2, tiny, functioning mines.


GetZeeGold's picture



why is China and Russia making huge investments in commodity-miners?

Eric Snowden informed them there is a bright future in it.  

Arius's picture

a little known fact is that the Governors of the major Central Banks (china of course included) meet every 2-3 months in Switzerland .... you think they need Snowden ... or whoever for that matter ... to tell them anything???

they get it directly from the source ... the rest is kabuki theater ... with all due respect to the stocky irishman who run the World Bank (prins newest book) and made all of those major decisions ...

DoChenRollingBearing's picture

The link in the article re CHINA buying Xstrata's Peruvian copper mine mentioned that China was concerned that an over-concentration of copper producers might adversely affect them.

BS.  The Xstrata mine in Peru is Peru's 4th largest.  Peru is the world's 3rd largest copper producer.  CHINA it self is No. 2.  And Chile is No. 1 by a huge margin.

The Xstrata mine affects China very little.  But, it is a smart hard asset investment.


And Peru would not likely be happy if the Chinese shut in production (as the end of the article suggests), less revenue for Peru.

Ghordius's picture

no, that's just metal. from a financial point of view, real wealth accumulation happens after it's out of the ground. particularly when it's transformed into tools, machines, etc.

though from a human point of view, your real ultimate wealth is... your children

note that the latter point is not a reason not to own some gold, in case you are puzzling

Fix-ItSilly's picture

Govt programs like Social Security minimizes the historical "wealth from children" mantra.  China seems to have exorcised the mantra as well.  Places like Egypt should modernize. 

y3maxx's picture

...Canadians have a big worry that the USSA will soon swallow Canada..."In the name of Security vs Russian and Chinese aggression."

...and exacerbated by California's drought


sleigher's picture

Only if the Crown Corp. or The City of London allows it.

Bindar Dundat's picture

I suggest a merger, a big merger, between Canada and the U.S. ;  Resources, health care  good manners from Canada,  and the miitary and  technology from the U.S.   We could close our borders and tell the rest of the world to go fuck itself.

y3maxx's picture


...America needs Canada to save its own Ass.

This is bad for Canada.

caShOnlY's picture

America needs Canada to save its own Ass

Really? Canada save America?  FUCK ME!!  you have to be Canadian, aren't you?  Without America the 85% of Canadian exports would have NO WHERE TO GO!! 

I once had to oversee QC in a Canadian company, work is the last thing Canadians want to do!!!!  The sick calls and time off blew my mind!!  I have talked with other US businessmen that oversee operations in Canadian factories and I get the same stories!!  Warren Buffett just closed the Heinz plant in Ontario.  John Deere shut down a few years back because of "PRODUCTIVITY".  Canadian and US companies alike have been moving into the US. 

The best kept secret: Canada devaluing it's currency to keep its exports flowing south.  Canada cannot ever use a "same currency" as the US or they would be decimated!!  They need about 10% to 15% to cover the lost productivity.    Based on the totality of all the factors the Canadian dollar SHOULD NOT BE 10% lower that the USD.  It's "steroidal" economy should prove the CAD 15% more!!   Canada purposely hold interest rates too low even while watching a massive bubble get blown.  

There is a reason the guidelines for a Canadian bank bail in was written into the Federal budget of Canada in 2013.    

known unknown's picture

I like Americans but frankly the place is a shithole with a few exceptions. It wasn't always that way but they let it get that way. Sorry the truth hurts. I can see them invading Canada as things get more desperate for them.

caShOnlY's picture

We could close our borders and tell the rest of the world to go fuck itself

too late for that, jimbo!! think the US consumer can support those huge US corps all by themselves?  That ship sailed away back in the early 1990s.  It's all "globalization" now.  Even when the collapse comes to America it will matter little as Ford and GM sell more cars overseas!! 

You really think the oil tar sands of Canada can support the wild thirst of oil of the US daily?  If you believe that shit then you really believe the US will be the number 1 exporter of oil by 2020.  Assholenomics runs wild in the well educated US.  

Here is a finely "Edjumacated American" showing the world why the US immigrates so many educated immigrants

Grab a new GM pickup while you can still borrow for 8 years

Omen IV's picture


the Canadians dont need the warmongers in the USA - anywhere in the world they can get technology for hire including the USA - there are only 26 million people in Canada and millions of sq miles of resources very similiar to Russia in terms of per capita resources - high  vs debt - low

the Scots in Canada will never ever do a 51st state -insane  


Omen IV's picture


the Canadians dont need the warmongers in the USA - anywhere in the world they can get technology for hire including the USA - there are only 26 million people in Canada and millions of sq miles of resources very similiar to Russia in terms of per capita resources - high  vs debt - low

the Scots in Canada will never ever do a 51st state -insane  


CrabNuggetOne's picture

What a great idea! Yanks just disappear up their own collective arse-hole! Maybe then the world would be worth living in, go for it!

Fix-ItSilly's picture

No, from the sun and the human mind.

TheFutureReset's picture

No. Who is John Galt? Wealth is made. The saying, 'to make money' is accurate because people must add something to raw resources to produce wealth. 

LawsofPhysics's picture

Money is not capital.  Real capital requires additional work.  All work requires energy available for consumption.

Hedge accordingly.

quasimodo's picture

Obviously, it seems that trees as well are as good as gold.


LawsofPhysics's picture

"Doesn't all wealth come from the ground ?" -

No, ultimately it comes from the sun (the only functioning fusion reactor that I am aware of).

Latitude25's picture

Real wealth is in the culture of prosperity of a civilization.  Just look at the Japanese in the past.  They had NO wealth in the ground yet were wildly successful.  Also so many countries with incredible wealth in the ground are distinctly uunsuccessful.

jefferson32's picture

Does anyone have an opinion on why neocons now openly talk about a new international "gold-backed" currency, a challenged US dollar, etc.?

From Kristol himself (2011):

Hu goes on to discuss [...] that "the current international currency system is the product of the past." China hawks and American hegemonists (I'm both) will be tempted to jump on this statement as a challenge to the U.S., which in a way it is. But it's worth overcoming for a minute our (justified) distaste for the Chinese regime, and pausing to ask this: Isn't Hu in this one respect right? And does the current international currency system of fiat money, with the U.S. as the reserve currency, serve U.S. or world interests?



tradewithdave's picture

They call me "Vector Gold" Mister Tibbs.... A Glen Corezine production.

Buck Johnson's picture

Whats going to happen is that eventually a new type of currency will be issued for a reserve over the dollar and it will be based on a basket of natural resource (gold, copper, silver etc.).  So that it would be hard for any one country to print this without having it backed by 20 million dollars worth of that basket of resources.

Dr. Engali's picture

Since we can no longer afford copper plumbing we can always back our currency with Pex pipe.



It's all good. I'm sure the garden hose flavor is mostly gone.

yogibear's picture

LOL, Federal Reserve banksters are you feeling the heat yet?

Your fiat burns well.

agent default's picture

They will take us to war before their fiat burns.  This  a fight for survival for the central banks.

TheFutureReset's picture

That is easier said than done. Bunkerville NV is an example of that. This country will tear apart before we start a major war. More likely is a turning inward in the coming decades, losing reserve status with a whimper, and a violent restructuring of the union. 

The USG has spent so much time and effort into creating boogy men to defend us against they have become the boogy man. And the people know it now. 

AdvancingTime's picture

While I don't think any government wants to go to the effort to back their currency with anything I do see how they would like to knock the dollar off its perch. Below is an article about how many people will use anything they can to put in place a new world currency.

The leaders in Russia have been talking about this for years. Remember many people with agendas have a lot to gain when a major shift in the currency markets takes place.


...out of space's picture

Looks to me that SDR (imf money) will be the next reserve money back by basket of commodites and nacional money will be peg on.

TheFutureReset's picture

Wouldn't that still put the US in the driver's seat? I don't think China would buy that solution. They will create a new BRIC SDR before they use the IMF. 

...out of space's picture

depending of how much commody each cuntry got. But in this case people will have cuntry and bankers will have a world. no naciona law for them. and no cuntry will be favourite in the game. so people will have to accepted, a peacefull kumbaya solution.

Quinvarius's picture

No the SDR won't be the next reserve currency and no it won't be backed by a basket of commodities.  The SDR already exists and has existed for decades.  No one uses it.  It is garbage promises to deliver a basket of fiat that the issuer does not own.  At best it is a FOREX futures contract in practical terms.

There is gold and there is fantasy fiat.  There is absolutely nothing different this time.  Same liars.  Same lies.  Same endgame. 

...out of space's picture

SDR existe from 60. and yes, you or me cant uses it but gov. can and they do. 

medium giraffe's picture

Wow, sooperdooper retail figures.  Bullshit relief rally on bullshit figure in 10... 9...

Seasmoke's picture

Good Health, is Wealth. 

Rodders75's picture


All part of a grander plan to repudiate the USD which will lead to the US' economic and geopolitical castration.

So saith Paul Craig Roberts

A_Nejad's picture

Scary thought crossed my: what happens if Vlad gets the nasty thought of nationalizing any privately held industry/corp and cancel the whole current JV shenanigans? He could do that, you know, and by the time it gets to take the case to international courts....Let me assure you that specific thought has crossed "some" European Execs. minds, some industries more than other, of course.

Rodders75's picture

Possible. But he's not stupid. Russia gets not a cent of FDI for many years, just like the Argentines. He will push things just far enough, but no further. 

eddiebe's picture

Seems like a good trade for US bonds and dollars, especially if you are fed up with dancing to the same old tune.

NoWayJose's picture

Not too far in the future you will either be working for a company bought by the Chinese, working for the government, working for Walmart, or will be on the government dole,