Asia Mining – Page 136 – Republic of Mining

Iron and Steel: BHP’s big admission – by Kip Keen (Mineweb.com – August 26, 2015)

August 26, 2015

http://www.mineweb.com/

Steel demand in China is expected to be what BHP once thought.

HALIFAX – Just a couple of weeks ago I argued BHP and Rio should defend – in detail – their bullish steel demand forecasts in China given the growing number of forecasters that say the peak has already past.

Recall that Rio Tinto and BHP have long stuck to forecasts putting peak steel demand in China at, or over, a billion tonnes a decade or so from now. Others see it behind us already.

Well, I haven’t seen that defense, yet. We got a major revision of steel demand announced to the market instead.

In outlining its year-end financials August 25, BHP slashed its forecast of Chinese demand a decade or so from now by some 100 million tonnes steel.

A half year ago BHP argued peak demand would come in the mid-2020s somewhere around 1 billion to 1.1 billion tonnes.

Corruption, Death and Tin Mining – by Yoga Rusmana (Bloomberg News – August 25, 2015)

August 26, 2015

http://www.bloomberg.com/

At the end of a muddy track through plantations of oil-palm and cocoa on the Indonesian island of Bangka, three dozen men on wooden rafts off the beach are dredging black sand from the shallow bay.

The workers, near the village of Sungai Liat, are among hundreds of illegal tin miners on the island, the first link in a chain of trucks, smelters and fishing boats that smuggles the metal out of the country. Backed by a complex web of corruption and international payments, the dark sediment is transformed into the solder that ultimately ends up binding the electronics in everything from smartphones to cars.

The trail begins on two islands off the coast of Sumatra in a sea channel that connects Indonesia’s capital, Jakarta, to Singapore and Malaysia. These islands, called Bangka and Belitung, produce more than 90 percent of the tin in Indonesia, which is the world’s biggest exporter of the metal.

Most of that production comes from mining companies such as PT Timah, the world’s third-largest producer. Pits those operators abandoned and more marginal deposits are worked illegally by men and children using diesel-powered equipment on floating platforms off remote stretches of coast, or with high-pressure hoses on land.

Family of former Centerra Gold CEO fears he will be ‘kidnapped’ to Kyrgyzstan – by Drew Hasselback (National Post – August 26, 2015)

August 26, 2015

The National Post is Canada’s second largest national paper.

The family of former Centerra Gold chief executive Len Homeniuk says he has been re-arrested in Bulgaria and fears he may be spirited away to Kyrgyzstan.

Homeniuk, who last week spoke with the Financial Post, spent 11 days in prison after he was arrested on July 27 in the Bulgarian town of Vidin, near the border of Romania. He was later transferred to house detention in a small apartment in the capital, Sofia.

Family members now say Homeniuk was re-arrested at that apartment at 9:30 local time Monday night, then whisked back to Vidin on Tuesday.

It’s the latest twist in a saga in which the former mining executive, who holds dual U.S.-Canadian citizenship, seems to be a pawn in on-going talks over the fate of a gold mine in Kyrgyzstan, a rugged Central Asian republic located along the Silk Road.

Marina Stephens, Homeniuk’s wife, was with him when the police came Monday night, and was able to visit him at the police station a short while later.

COLUMN-BHP downgrades China steel forecast but keeps iron ore strategy – by Clyde Russell (Reuters U.S. – August 25, 2015)

August 26, 2015

http://www.reuters.com/

LAUNCESTON, Australia, Aug 26 (Reuters) – One of the first steps in recovering from a debilitating condition like alcoholism is admitting you have a problem. It seems BHP Billiton has finally started down this path with iron ore.

In announcing a 52-percent plunge in annual profit on Tuesday, Chief Executive Andrew Mackenzie also lowered BHP’s forecast for the peak in Chinese steel output to between 935 and 985 million tonnes by the mid-2020s.

This was down from the previously long held target of 1 to 1.1 billion tonnes that had underpinned BHP’s massive expansion of its iron ore mines, which has more than doubled output in the past five years to a total of 254 million tonnes in the 2014-15 financial year.

The scaling back of BHP’s China steel forecast leaves Sam Walsh, the chief executive of rival Rio Tinto, as one of the last holdouts for a peak above 1 billion tonnes.

Walsh said after releasing Rio’s results, which saw a 43-percent drop in underlying earnings, that his company was “holding the line” on the 1 billion tonne by 2030 forecast, saying this represented growth of just 1 percent per year over the period.

Can You Read China? Top Mining CEOs Disagree on Biggest Customer – by Thomas Biesheuvel (Bloomberg News – August 25, 2015)

August 25, 2015

http://www.bloomberg.com/

What on earth is going on in China?

Two of the biggest mining companies feeding the country’s appetite for raw materials can’t even agree on whether there’s an answer to the question.

Andrew Mackenzie, head of BHP Billiton Ltd., is bullish on his ability to comprehend a country that consumes more commodities than any other — and whose economic woes have shaken markets around the globe this week.

“We don’t find China impossible to read,” Mackenzie, chief executive officer of the world’s biggest mining company, said Tuesday.“We’ve been at this game for decades.”

His certainty conflicts with billionaire mining rival Ivan Glasenberg’s admission last week that he couldn’t read the world’s second-largest economy right now and neither could anyone else.

Commodity rout unlike 2008 recession, no China to the rescue – by Clyde Russell (Reuters U.S. – August 24, 2015)

August 24, 2015

http://www.reuters.com/

LAUNCESTON, AUSTRALIA – With the prices of many major commodities currently plumbing depths last seen six years ago, what are the chances of a repeat of the China-led boom that lifted resources out of the 2008 recession funk?

To answer the question it’s worth looking at what is the same and what is different about the weakness in commodity prices between 2008-09 and now, and the answer is not much is the same.

The main similarity is simply that prices are weak and have fallen precipitously in a relatively short period of time. Brent crude fell by about 75 percent between the all-time high in July 2008 and the low in December that year.

So far it has dropped about 52 percent from the last year’s peak in June to the close of $45.46 a barrel on Aug. 21.

Benchmark London copper futures dropped about 67 percent between July and December in 2008, and they have slumped 22 percent since July this year to the close of $5,055 a tonne on Aug. 21.

Iran Prepares to Lure Foreign Investors After Nuclear Deal – by Thomas Erdbrink (New York Times – August 21, 2015)

August 21, 2015

http://www.nytimes.com/

Sadjad Ghoroghi, for one, who runs a mining company in Zanjan in northwestern
Iran, says he had long dreamed of finding a foreign investor willing to help
expand his operations. Iran is thought to have rich deposits of zinc, copper
and gold, and experts say that mining has the potential to become a $60 billion
industry, equal in size to the country’s oil industry.(Thomas Erdbrink)

ZARRINABAD, Iran — When Iran’s Revolutionary Guards Corps took over the nation’s telecommunications monopoly in 2009, the move was denounced as another dark step in the hard-line military group’s seizure of the levers of power.

“It’s not just a matter of the Guards dominating the economy, but of controlling the state,” Alireza Nader, an expert on Iran and the co-author of a comprehensive RAND Corporation report on the Revolutionary Guards, said at the time.

Last month, however, the company, the Telecommunication Company of Iran, was put up for sale, as the Revolutionary Guards now seem more interested in cashing in on what Iranian leaders are hoping will be a flood of foreign investment if a nuclear deal with world powers gains final approval and sanctions are lifted.

Surviving the Chinese and euro storms – by John Redwood (Financial Times – August 21, 2015)

August 21, 2015

http://www.ft.com/

I’m staying well away from commodities

We have just seen a perfect storm. Markets gave a strong warning to the bulls and underlined why many people chose balanced or cautious funds to limit sudden swings into loss on their investments. In recent weeks some markets have issued a timely reminder of why investment specialists usually recommend a spread of assets to limit your risks.

This summer has brought big falls in some markets. The Greek stock market closed for a month and then reopened much lower. Greek uncertainties took some of the shine off the better performance from euro area shares. The Brazilian market, the largest exchange and economy in Latin America, is down by more than 40 per cent over the past year.

The authorities there are trapped between recession and inflation, with crisis levels of interest rates. The domestic Chinese share market suddenly fell nearly 30 per cent after a phenomenal upwards run. Commodity markets continued their downwards moves after the oil rally of the spring.

The inability to buy and sell shares in Greece at all made investors realise how important continuous liquidity in markets is, and how much we rely on the ability to get out if we change our minds.

COLUMN-Glencore caution, Rio optimism over China? You decide – by Clyde Russell (Reuters U.S. – August 20, 2015)

August 20, 2015

http://www.reuters.com/

LAUNCESTON, Australia, Aug 20 (Reuters) – Take two top mining executives and ask them about China. One says he cannot fathom what’s happening in the world’s biggest commodity consumer, the other says he remains unashamedly bullish.

This isn’t an exercise to determine which executive is right and which is wrong, rather it underscores just how difficult it has become to make long-term investment decisions at the current stage of the commodity cycle. Ivan Glasenberg, the outspoken chief executive of Glencore , was candid when presenting the London-listed miner’s 29-percent slump in first half earnings on Wednesday.

“(Commodity demand is) difficult to call at the moment with what we see in China,” Glasenberg said. “That’s the one we are all struggling to read, demand in China.”

Battling to understand the dynamics of President Xi Jinping’s “new normal” isn’t confined to Glasenberg, with views on China currently ranging from the doom and gloom of an imminent hard landing to the more benign gradual, if somewhat disorderly, transition toward a more sustainable, consumer-driven economy.

COLUMN-Coal’s pain from yuan devaluation may be less than feared – by Clyde Russell (Reuters U.S. – August 18, 2015)

August 19, 2015

http://www.reuters.com/

LAUNCESTON, Australia, Aug 19 (Reuters) – In theory the devaluation of the Chinese yuan should be negative for the country’s coal imports and Asian prices, but so far it’s not quite panning out that way.

There’s nothing wrong with the logic behind the view that purchases of foreign coal by the world’s largest importer may decline, given the relative advantage domestic coal has just received from the weakening of the yuan.

The Chinese currency fell about 3 percent in domestic trade last week after it was pushed lower by the People’s Bank of China, a move widely interpreted as aiming to boost the competitiveness of the struggling export sector.

It wouldn’t have been a surprise if the price of the international coal that heads to China declined in dollar terms, or that the price of domestic coal rose in yuan to reflect the new currency rates.

But Chinese domestic prices remained largely steady, with no change in the benchmark price of thermal coal at Qinhuangdao SH-QHA-TRMCOAL, which held at 410 yuan ($64) a tonne last week.

Friedland: Mining companies ‘priced for Armageddon’ – by Lesley Stokes (Northern Miner – August 18, 2015)

August 19, 2015

The Northern Miner, first published in 1915, during the Cobalt Silver Rush, is considered Canada’s leading authority on the mining industry.

VANCOUVER — The vanguard executive chairman of Ivanhoe Mines (TSX: IVN; US-OTC: IVPAF), Robert Friedland, took to the stage at the Sprott Natural Resource Symposium in Vancouver in late July, and delivered a relaxed speech discussing why he believes copper is set to rebound in two to three years.

“The further you push the price down, the higher it’ll bounce,” he said, predicting that higher environmental standards in China may strengthen the demand for copper, in tow with other “green” metals such as zinc, platinum and palladium.

He said that China will “try very hard” to double its growth to 6% or 7% through sustainable development, but he’s dubious whether the current world supply will match the metal needed to clean China’s air and fertilize its soils.

He describes many of the great copper mines as “little old ladies, kept on life support and waiting to die,” whereas others are so low grade “they’re practically mining air” and kept alive by favourable currency exchange rates.

Former Centerra CEO ‘shocked’ by lack of Canadian action after controversial arrest in Bulgaria – by Peter Koven (National Post – August 19, 2015)

August 18, 2015

The National Post is Canada’s second largest national paper.

TORONTO — The former chief executive of Centerra Gold Inc. is lashing out at Canadian authorities after his arrest last month in Bulgaria on corruption allegations he says are unfounded and simply an attempt to sway current negotiations around a gold mine.

“My situation here is, in my opinion, pretty dire,” Len Homeniuk said in a phone interview.

Homeniuk, 68, was on a cruise on the Danube River with his family when Bulgarian authorities detained him in late July. He spent 11 days in prison, and was then transferred to house arrest. He is confined to a small apartment in Sofia, and is facing a potential extradition to Kyrgyzstan.

Homeniuk was arrested because the Kyrgyz government put him on Interpol’s wanted persons list due to alleged involvement in corruption. This comes as Centerra and the Kyrgyz government try to negotiate a new ownership agreement over the Kumtor gold mine.

“In my opinion, the only reason for this action is to put pressure on Centerra in the ongoing negotiations,” he said. He appealed the Interpol notice months ago, but the case has not yet been reviewed.

COLUMN-Chinese gold demand limbers up for bull-bear tussle – by Clyde Russell (Reuters U.S. – August 17, 2015)

August 17, 2015

http://www.reuters.com/article

LAUNCESTON, Australia, Aug 17 (Reuters) – Gold investors are trying to work out whether the yuan’s depreciation and the recent turmoil in Chinese equity markets is good, bad or indifferent for demand for the precious metal in the world’s biggest buyer.

It’s possible to construct plausible-sounding arguments why the recent drama in China’s financial markets could be both bullish and bearish for gold.

At the heart of most of the arguments is a view on how Chinese consumers will respond to the recent developments but it seems this is largely guesswork on the part of analysts, as there are few precedents to serve as a guide to future behaviour.

One big question is whether the yuan’s sudden 3 percent decline against the U.S. dollar last week and the swings in equity valuations are likely to be important drivers of Chinese gold demand, or whether other factors with a lower media profile are at work.

Looking at the yuan depreciation first, and the important thing seems to be that the authorities are signalling the drop last week was a one-off move, not part of any sustained weakening.

African trade partners feel the bite of China’s yuan devaluation – by Geoffrey York (Globe and Mail – August 15, 2015)

August 17, 2015

The Globe and Mail is Canada’s national newspaper with the second largest broadsheet circulation in the country. It has enormous influence on Canada’s political and business elite.

JOHANNESBURG — For African countries that have bet heavily on China as their economic saviour, the sudden devaluation of the Chinese currency is a painful reminder of the risks of over-dependence on the Asian giant.

The devaluation of the yuan, coupled with a broader slowdown of the Chinese economy, is likely to weaken demand for the commodities that have spearheaded Africa’s booming trade with Beijing. It could also help Chinese manufacturers to compete even more ruthlessly against African producers as Beijing’s exports become cheaper.

China, hungry for minerals and oil, has rapidly gained dominance in African markets over the past decade. Its trade with Africa last year was more than $220-billion (U.S.), three times greater than U.S. trade with Africa. It’s the biggest trading partner of most African nations. But while this has helped spur African growth, it also leaves the region vulnerable to a slowdown or a devaluation.

RPT-COLUMN-Yuan devaluation more likely to boost than hurt China commodity imports – by Clyde Russell (Reuters U.K. – August 14, 2015)

August 14, 2015

http://uk.reuters.com/

LAUNCESTON, Australia, Aug 13 (Reuters) – The sudden depreciation of the yuan will have flow-on effects in commodity markets, but reducing China’s demand for imports is unlikely to be one of them.

The yuan has lost around 3.5 percent of its value against the U.S. dollar in domestic trade since the People’s Bank of China this week took steps to devalue its currency, in a move widely interpreted as aimed at boosting the competitiveness of the struggling export sector.

The depreciation was more steep in international markets, where the yuan lost about 4.8 percent of its value as investors feared China was starting a sustained depreciation, which may lead to a global currency war.

Commodity prices, and the currencies of major natural resource exports such as Australia, also took a hit along with the yuan on the view that a weaker Chinese currency will dampen demand for imports.

Brent crude lost as much as 3.6 percent on Aug. 11, the day of the Chinese devaluation, although by the close on Wednesday at $49.66 a barrel, the decline had tempered to just 1.5 percent.