Asia Mining – Page 139 – Republic of Mining

Iron ore miners brace for more volatility – by Paul Garvey (The Australian – July 10, 2015)

July 10, 2015

http://www.theaustralian.com.au/business

A head-spinning 24 hours in iron ore may only be the start, with investors warned to expect more volatility in the market for Australia’s biggest export.

An early morning panic in response to an unprecedented plunge in the iron ore price yesterday transformed into a surprise rally for Australian iron ore miners as Chinese markets rebounded.

Yesterday had been shaping up as a bloody day for Australia’s iron ore sector following an 11 per cent plunge in the spot iron ore price to just $US44.10 a tonne. Both the closing price and the scale of the fall were the worst seen since the introduction of spot prices in 2009.

But a rally in Chinese markets and a rise in iron ore futures helped Australia’s miners not only recover early losses but, in many cases, close the day higher.

Fortescue Metals Group, having hit a six-year low earlier this week, was the biggest winner with a 6.6 per cent jump to $1.785.

China’s market crash signals crisis of faith in authoritarian system – by Nathan Vanderklippe (Globe and Mail – July 10, 2015)

July 10, 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.

BEIJING — The Chinese miracle of the past few decades lifted more people out of poverty, and faster, than anywhere else in history. But even the spectacle of poor farmers graduating to Chevrolets could not compare to the thrill ride of China’s stock markets in the past year, which left recent university graduates counting their weekly profits in the number of new Audis they could afford – and pinching themselves at their immense good fortune.

But when it all started to fall apart, China’s fast-swelling new investor class blamed not misfortune or their own poor choices in share-picking. They instead faulted a government that had been the stock market’s cheerleader-in-chief. It was Beijing’s insistence that helped prod retirees and students alike to pour savings into stocks that then nosedived, taking with them lifetimes of accumulated wealth.

For China, then, the market crash has created not just spiralling fortunes but a crisis of trust. And as the rout deepened, people who are denied a democratic voice in their governance instead cast ballots with sell orders – making undeniably clear their dissatisfaction with the way markets, and by extension their country, has been run.

Mining companies sucked into Chinese stock market’s vortex – by James Wilson and Neil Hume (Financial Times – July 9, 2015)

July 9, 2015

http://www.ft.com/intl/companies/mining

London – Just when miners thought there was light at the end of the tunnel.

A month ago commodities were showing signs of stabilisation and investors in mining were cautious that a bottom might have been reached for the sector after four years of negative shareholder returns. Now China’s stock market rout has sucked the industry into its vortex, with mining shareholders taking fright at signs of increasing economic difficulties for its number one customer.

Shares in some of the largest miners have in the past two weeks fallen to levels last seen a decade ago, mirroring a downward lurch in commodity prices. The benchmark price of iron ore, key to steelmaking and one of the most important of traded mined commodities, fell 11 per cent in just one day this week.

The sector’s fall underscores how tightly its fortunes are bound up with events in China, which became by far the largest consumer of mined commodities in the first decade of this century amid rapid industrialisation, and supposedly set in train a natural resources supercycle.

China still absorbs about half of global iron ore, coal, and copper exports, but the country’s slowing economic growth since 2011 unleashed a severe downturn for miners by reducing demand for commodities.

Iron ore tumbles amid China contagion – by Neil Hume (Financial Times – July 8, 2015)

July 9, 2015

http://www.ft.com/intl/markets/commodities

Iron ore, the key ingredient in steelmaking, suffered its biggest one-day fall since records began, dropping by more than 11 per cent to a seven-year low as worries about the Chinese economy continued to mount.

Ore with 62 per cent iron content for immediate delivery to China dropped $5.60 to $44.10 a tonne, according to an assessment from The Steel Index.

That was the biggest one-day percentage drop since TSI begun compiling records for physical iron ore transactions in 2008. Iron is critical to the profitability of several major mining companies such as Anglo American, BHP Billiton, Rio Tinto and Vale.

They have spent billions of dollars expanding their operations to meet expected demand from China but, if the iron ore price were to stay at the current level sustained period of time, it would call into question the ability of miners to fulfil promises of higher return for shareholders.

Over the past year iron ore has dropped almost 55 per cent as a tsunami of new supply has overwhelmed demand.

Fate of global rare earth miners rests on China smuggling crackdown – by David Stanway (Reuters U.S. – July 7, 2015)

July 9, 2015

http://www.reuters.com/

BEIJING – The fate of debt-ridden U.S. rare earth miner Molycorp rests on China’s efforts to crack down on networks that smuggled as much as 40,000 tonnes of the vital technology metals out of the country last year, driving down global prices.

Greenwood, Colorado-based Molycorp is the sole U.S. domestic supplier of rare earths used in everything from smartphones to military jet engines and hybrid vehicles. In 2011, it relaunched its huge Mountain Pass mine in California expecting prices to stay high after China, which dominates world supply, restricted exports. Last month it filed for bankruptcy protection as operating losses mounted.

Customs police in the eastern Chinese port of Qingdao last month arrested five traders following a nine-month investigation into a rare earth and ferromolybdenum smuggling ring worth nearly $18 million.

That was no one-off. Chinese authorities have been struggling since 2010 to smash an illegal supply chain in which rogue miners deliver ores to unauthorized separation facilities, with the finished products then disguised and shipped abroad.

“Traders go through all kinds of channels and make false product declarations at customs – marking it as alumina or even washing powder,” said Chen Zhanheng, vice-secretary general of the Association of China Rare Earth Industry.

Mining’s $143 Billion Stock Rout Signals Escalating China Fears – by Jesse Riseborough (Bloomberg News – July 8, 2015)

July 8, 2015

http://www.bloomberg.com/

Fears of faltering Chinese growth ignited a $143 billion meltdown in global mining stocks as investors confront sputtering demand in the world’s biggest consumer of commodities.

The Bloomberg World Mining Index of 79 producers dropped 17 percent in the past 10 days as prices for industrial metals such as copper, nickel and aluminum sank to six-year lows. The price of iron ore, a key profit driver for top-ranked BHP Billiton Ltd. and Rio Tinto Group, slumped 10 percent Wednesday to its lowest since at least 2009 as new supply floods the market.

China is set to grow at its slowest pace in a quarter of a century, sapping the country’s demand for commodities and crimping mining companies’ profits. Chinese authorities are struggling to contain a $3.5 trillion stock rout with a slew of market-boosting measures, rattling investors.

“It’s pretty bleak at the moment, there’s no getting away from that,” James Sutton, a portfolio manager at JPMorgan Chase & Co.’s $2 billion Natural Resources Fund in London, said in an interview. “Overwhelmingly it’s technical factors that are driving the severity of the move. Amazing moves to happen, just whipsawing around like this.”

INSIGHT-China’s ‘infrastructure for minerals’ deal gets reality-check in Congo – by Aaron Ross (Reuters U.S. – July 8, 2015)

July 8, 2015

http://www.reuters.com/

KOLWEZI, Democratic Republic of Congo, July 8 (Reuters) – W hen it was signed in 2007, China’s $6 billion ‘minerals for infrastructure’ deal in Congo stirred fears among Western countries that Beijing’s hunger for resources would erode their influence and saddle the vast central African country with unmanageable debt.

Eight years on, as Sicomines prepares to produce its first copper after long delays, the main lesson from the giant project is that investing in one of Africa’s most chaotic countries is a messy and frustrating business, no matter who you are.

While most mining projects in Congo go years before paying significant taxes under the mining code, Sicomines was meant to have an immediate economic impact. The government says the deal has already produced at least $800 million in infrastructure investment.

Chinese firms Sinohydro Corp and China Railway Group Limited are building roads and hospitals in exchange for a 68 percent stake in the Sicomines copper and cobalt mine, one of the largest in Africa with about 6.8 million tonnes in proven reserves.

China’s state-run Exim Bank and smaller Chinese banks are stumping up $3 billion for infrastructure plus a further $3 billion to develop Sicomines, with all the loans to be repaid with mining profits.

COLUMN-Miners paint rosy iron ore picture by skirting tough issues – by Clyde Russell (Reuters U.S. – July 8, 2015)

July 8, 2015

http://www.reuters.com/

LAUNCESTON, Australia, July 8 (Reuters) – Australia’s major iron ore miners have had a torrid year so far, battling low prices, engaging in an ugly slanging match with each other and dealing with persistent questions about the wisdom of their expansion strategies.

It was therefore not surprising when the mining industry’s peak body launched a report on Tuesday that puts quite a different spin on the iron ore industry.

The Minerals Council of Australia’s report, entitled “Iron Ore: The Bigger Picture”, points out the enormous benefits the industry has brought Australia and will continue to provide.

The major Australian iron ore miners, Rio Tinto and BHP Billiton, are members of the council and sit on the board of directors, but the country’s third-biggest producer, Fortescue Metals Group, is absent from the list.

The report doesn’t really make an effort to explain how the major miners got their forecasts on Chinese demand so wrong, and it glosses over whether they really expected the price to fall as low as it has.

China panic crushes mining stocks – by Frik Els (Mining.com – July 7, 2015)

July 8, 2015

http://www.mining.com/

Billions wiped from mining sector as gold, silver prices fall and copper, iron ore prices plummet to 2009 levels amid Chinese stock market collapse

The value of base and precious metal miners and the diversified giants all fell on Tuesday as commodity prices dropped to fresh multi-year lows hit by the triple whammy of a stronger dollar and turmoil in the eurozone and China.

In New York trade on Tuesday copper for delivery in September dropped as much as 6% to a low of $2.39 per pound or around $5,260 a tonne, the lowest since July 2009 and down 16% so far this year.

Despite a rebound in late trade, base metals prices ended the day at multi-year lows. Nickel lost as much 9% hitting $10,637 a tonne, tin ended 4.4% lower at $13,700 a tonne while zinc gave up 3.7% to $1,934 a tonne.

Lead prices dropped more than 2% to $1,722 a tonne entering a bear market with a 20% decline since its May high. The same fate befell aluminum which declined 1.7% to $1,666 a tonne, more than 20% below its September highs. Crude oil despite a slight gain late in the day is now back into bear territory.

Only half of nickel smelters to be built in Indonesia this yr-industry (Reuters U.S. – July 8, 2015)

July 8, 2015

http://www.reuters.com/

JAKARTA – Nickel producers in Indonesia may only build half of the 12 new smelters anticipated this year and some may not commence production immediately due to low global prices, a senior industry official said.

Indonesia, which had been China’s top nickel ore supplier, brought in export restrictions last year aimed at forcing mining firms to build smelting and processing facilities so the country could earn more from raw ores and concentrates.

I.D. Susantyo, chairman of the Indonesian Nickel Association, expected only five or six nickel smelters would be completed by the end of the year. That is half the number anticipated by the mining ministry in April.

Susantyo said not all of the smelters built this year would start production as global prices drop to six-year lows of around $10,700 a tonne, nearly half of their peak last year.

“With nickel prices dropping like this, even though they are completed, they may not be able to produce because the market price is lower than the cost of production,” he said.

India overtakes US as 3rd largest steel producer, says Narendra Singh Tomar (Business Today India – July 7, 2015)

July 7, 2015

http://businesstoday.intoday.in/

India has overtaken the US to become the world’s third-largest steel producer and is working towards achieving 300 million tonnes (MT) target in the next 10 years, said Union Steel and Mines Minister Narendra Singh Tomar on Tuesday.

“So far, India was the fourth-largest steel producer in the world only after China, Japan and the US. However, during the first five months of this calendar year, India has achieved the 3rd position in the global steel production,” Tomar said.

Addressing a meeting of the Parliamentary Consultative Committee, attached to his Ministries, in Bengaluru, Karnataka, the Minister said Indian steel industry is growing at a reasonably good pace and last year the growth in crude steel production in India was more than 8 per cent.

“However, per capita steel consumption is quite low, 60 kg as against the world average of 216 kg. The low consumption no doubt indicates huge growth potential for Indian steel industry. India has fixed a target of 300 MT production capacity by 2025 and the steel ministry is working out action plan and strategies to achieve this target,” he said as per an official statement issued in New Delhi.

Selwyn-Chihong Mining eyes upgrade to N.W.T. road to Yukon mine – by Guy Quenneville (CBC News North – July 7, 2015)

July 7, 2015

http://www.cbc.ca/news/canada/north

‘It’s our only viable access route into the mine site,’ says Doug Reeve

A Chinese-owned company that’s developing a Yukon lead-zinc mining project wants to spend between $35 million and $45 million upgrading a crucial N.W.T. access road to the mine.

Selwyn-Chihong Mining, a Canadian subsidiary of Yunnan Chihong Zinc and Germanium Co., is applying to the Mackenzie Valley Land and Water Board for permits that would allow the company to convert a narrow and windy access road cutting through multiple areas of the N.W.T. into a two-lane service road capable of handling regular and heavy truckloads during the mine’s construction and operation.

“It’s our only viable access route into the mine site,” said Doug Reeve, Selwyn-Chihong’s manager of permitting. “If we don’t have that permitted, it will be very difficult, of course, to develop a mine site.”

The 79-kilometre gravel road was originally built in the late 1970s to access mineral deposits but fell into disrepair until Selwyn-Chihong spent around $13.5 million in 2014 to install bridges and convert the road into a single-lane all-season road.

Iron Ore’s Bear Market May Deepen as Clarksons Forecasts $40 – by Jasmine NgDavid Stringer(Bloomberg News – July 7, 2015)

July 7, 2015

http://www.bloomberg.com/

Iron ore will probably extend declines after falling back into a bear market on Monday as low-cost supplies from Australia and Brazil are set to expand further this half while demand stumbles in China.

Prices may drop toward $40 a metric ton, according to Clarksons Platou Securities Inc. A deepening slowdown in China’s steel industry and higher iron ore exports from the largest miners are weighing on prices, said Sanford C. Bernstein & Co.

Iron ore’s return to a bear market highlights that the same factors of surging supply and stalling demand growth, which dragged prices to a decade-low early April, remain at the forefront. Recent losses followed figures showing inventories in China rebounded, while exports in June from Australia’s Port Hedland were at a record. The Minerals Council of Australia on Tuesday defended local miners’ policy of adding output, saying cuts would be a failed strategy that would aid competitors.

“Momentum is clearly negative and that is going to be hard to reverse in the immediate short term,” Paul Gait, an analyst at Bernstein in London, said in an e-mailed response to questions. “The revealed preference of the miners is for volume over value, for tons ahead of price.”

London resource stocks going nowhere fast – by Lawrence Williams (Mineweb.com – July 7, 2015)

July 7, 2015

http://www.mineweb.com/

Investec in London paints a mostly gloomy picture for resource stocks for the next 2 years.

Analysts at the London arm of the international specialist banking and asset management group Investec, continue to paint a gloomy outlook for resource stocks in the short to medium term. However they do suggest that the year-end may provide something of a clearer outlook and the possible indication that the sector may have bottomed out by then.

Even so they don’t see a meaningful recovery in commodity prices until 2017 and while this is not to say that some resource stocks may not outperform the market, the likelihood is that most will remain depressed, and there could well be casualties among the weaker ones.

Investec points to what it describes as tepid signals from China, weaker than expected U.S. growth and the problems surrounding a possible (perhaps probable) Greek exit from the EU as being the major factors accounting for commodity price weakness.

Looking at China in particular, although there is some stimulus being applied to the Chinese economy, a change in focus away from infrastructure building towards consumer driven growth, as the government aims for a self-sustaining economy, has been implemented.

COLUMN-China risk story just getting started, while Greece nearly over – by Clyde Russell (Reuters U.S. – July 6, 2015)

July 6, 2015

http://www.reuters.com/

LAUNCESTON, Australia, July 6 (Reuters) – What’s the bigger risk? Greece leaving the euro zone in a messy debt default or China continuing to pump money into its faltering stockmarket while trying to boost the rest of the economy through cheap debt?

While Greece is probably ahead in the news headline count, especially in the developed world, the main impact from the weekend rejection by Greek voters of the terms of a new bailout is likely to be short-term market volatility.

This can be seen in crude oil, with West Texas Intermediate futures dropping as much as 4.4 percent and Brent futures falling as much as 1.6 percent early on Monday. The euro currency and stocks outside of China also stumbled as the Greek vote against austerity brought the Mediterranean nation closer to a debt default and leaving the single currency.

But the declines were relatively modest and probably reflected the reality that Greece is just 0.25 percent of the global economy, and accounts for a tiny 0.5 percent of the euro zone’s total exports.