Asia Mining – Page 142 – Republic of Mining

Goldman Says Iron Rally on Borrowed Time as China Buys Less -by Jasmine Ng (Bloomberg News – June 7, 2015)

June 8, 2015

http://www.bloomberg.com/

Iron ore imports by China contracted in May from April and the same month a year earlier, highlighting weakening demand in the largest buyer as Goldman Sachs Group Inc. repeated a forecast for a rally in prices to reverse.

Cargoes fell 12 percent from April to 70.87 million metric tons, and were 8.4 percent lower than a year earlier, according to customs data on Monday. That’s the lowest monthly total since February. Adjusted for the number of days in the month, the imports in May were at the slowest pace since November.

While prices posted the biggest monthly advance in almost two years in May as China’s port stockpiles fell by a record, Goldman Sachs is among banks predicting that the rally won’t last as global supplies are set to expand further amid a glut. In many commodity markets, recently installed low-cost supply can now be stretched to meet demand, BHP Billiton Ltd. Chief Executive Officer Andrew Mackenzie said last week.

“This rally is living on borrowed time,” Goldman analysts Christian Lelong and Amber Cai said in a note on Monday, targeting a drop back below $50 a ton. While higher prices may last in the short term, rates need to drop again to force the closure of higher-cost mines to balance the market, they said. Last month, Goldman said iron ore’s jump offered investors an opportunity to bet on renewed declines.

Retaining Posco in India-a challenge for Centre? – by Ashok B Sharma (The Echo of India -June 5, 2015)

June 8, 2015

http://echoofindia.com/

Prime Minister Narendra Modi’s hopes for mobilising foreign direct investments (FDIs) for bolstering growth and job creation may meet with the first casualty if the South Korean steel major POSCO takes a firm stand on withdrawing from its proposed project in Odisha. The main reason for this sorry episode would be not providing mining lease on out-of-turn basis in the spirit of the Bilateral Investment Promotion and Protection Agreement signed between the two countries way in 1996.

South Korean investments in India surged after signing of this agreement and touched $ 3.8 billion by December 2014. South Korean companies forayed into India much before the Make in India programme was officially launched by PM Modi. South Korean companies sources large parts of local contentment, thereby facilitating indigenisation.

From its manufacturing base in Chennai, Hyundai Motor India has exported about 2.2 million cars to 123 countries in five continents. Its success story is that with a total investment of $2.7 billion, its yearly turnover is about $5 billion and it has created about 1,50,000 direct and indirect employment including dealers and vendors.

COLUMN-Indonesia, not Australia, doing heavy lifting on cutting coal output – by Clyde Russell (Reuters U.S. – June 5, 2015)

June 5, 2015

http://www.reuters.com/

LAUNCESTON, Australia, June 5 (Reuters) – Indonesia appears to be doing more of the heavy lifting than Australia when it comes to cutting coal output and exports in the face of persistently weak prices.

Coal production in Indonesia, the world’s largest exporter of the fuel used in power stations, dropped 21 percent year-on-year in the first quarter to 97 million tonnes.

This put the country on track for 2015 output of about 388 million tonnes, which is near the mid-point of the 350-400 million tonnes forecast by Pandu Sjahrir, the chairman of the Indonesian Coal Mining Association.

The low end of Sjahrir’s forecast would mean a decline of 24 percent in coal output in 2015 from 2014, and would also be 75 million tonnes below the 425 million forecast by the government.

In contrast, Australia’s official forecaster expects thermal coal output to be largely steady in the 2014/15 fiscal year.

Odisha’s story about pollution, mining and the environment – by Priya Ranjan Sahu (Hindustan Times – June 5, 2015)

June 5, 2015

http://www.hindustantimes.com/

Bhubaneshwar – Odisha’s resource-rich Sukinda valley acquired infamy as the fourth most polluted place in the world in 2007, ranked by the Blacksmith Institute of the US.

The finding was vigorously contested by the state pollution control board as vastly exaggerated, but it did manage to cause a constructive debate on environmental issues in the region.

The valley in Odisha’s Jajpur district has around 97% of the country’s reserves of chromite ore, a vital component in the production of stainless steel, leather and alloys.

The downside to the heavy tapping of mineral resources from a dozen open cast mines in the area over 70 years has been the utter degradation of Sukinda’s landscape. Water in the region has been severely contaminated, the soil polluted with toxic substances, the forests almost wiped out and farms laid waste.

Locals say half the mines now stand closed but the damage has already been done, thanks largely to the improper disposal of waste in river water by the miners.

UBS suing Western Potash over Chinese investment (Regina Leader-Post – June 3, 2015)

June 5, 2015

http://www.leaderpost.com/index.html

Western Potash Corp. has confirmed that UBS Securities Canada Inc. has filed a lawsuit against the company before the Ontario Superior Court of Justice, the Vancouver-based junior mining company said in a press release Wednesday.

UBS is “claiming fees, disbursements and damages in connection with a strategic investment in the company by China BlueChemical Ltd., and GUOXIN International Investment Corp. Ltd., through a wholly owned subsidiary, CBC (Canada) Holding Corp., which closed in June 2013,” the release said.

The company believes that the “UBS lawsuit is unfounded and entirely without merit, and intends to vigorously defend itself against the lawsuit,’’ said Patricio Varas, president and CEO of Western Potash.

Two years ago, Western Potash Corp. announced the closing of a $32-million investment by China Blue Chemical Ltd., and Benewood Holdings Corp. through a joint venture company, CBC (Canada) Holding Corp. (CBCHC), for a 20 per cent ownership stake in Western, which is traded on the TSX under the symbol WPX.

COLUMN-Big iron ore miners’ plan to displace everybody else losing steam – by Clyde Russell (Reuters U.S. – June 3, 2015)

June 3, 2015

http://www.reuters.com/

LAUNCESTON, Australia, June 3 (Reuters) – How well is the plan by big iron ore miners to displace high-cost iron ore from the seaborne and Chinese domestic markets going? Maybe just OK, certainly not great.

Much has been written about how the big three global iron ore miners will use their low-cost, high-output mines to muscle competitors out of the market, thus restoring the supply-demand balance and ultimately justifying the billions of dollars they spent boosting capacity well in excess of demand.

The problem for Brazil’s Vale and the Anglo-Australian pair of Rio Tinto and BHP Billiton <BHP Billiton> is that the signs are this isn’t working perhaps as well as they may have hoped.

Certainly Chinese trade numbers show that Australia in particular has increased market share in iron ore imports, but the momentum may be stalling.

In the first four months of the year, Chinese imports of the steel-making ingredient from Australia were 195.845 million tonnes, or 63.7 percent of the total 307.282 million tonnes.

Japan’s nuclear plan is bad news for LNG, coal – by Clyde Russell (Reuters U.S. – June 2, 2015)

June 2, 2015

http://www.reuters.com/

LAUNCESTON, Australia, June 2 (Reuters) – The rise of China and India as energy importers has largely consigned Japan to the sidelines, but the world’s third-largest economy still exerts significant influence in some markets.

That’s why Japan’s long-term energy vision is too important to be ignored, given it is the world’s top importer of liquefied natural gas (LNG), number three in coal and four in crude oil.

A consultative committee on Monday endorsed the government’s blueprint for the energy mix it hopes to achieve by 2030, with the proposal now open for public comment for a month ahead of a likely formal approval by the trade ministry mid-July.

While the proposal has attracted controversy over a plan for nuclear energy to generate 20-22 percent of the nation’s electricity, it’s also worth noting how it sees the rest of the generating mix.

Renewables are set at 22-24 percent, LNG at 27 percent and coal at 26 percent. This represents a decline in nuclear’s share of electricity generation from the 30 percent it held before the Fukushima disaster following the March 2011 earthquake and tsunami.

China Inc circling Australian iron ore – by Tess Ingram (Sydney Morning Herald – June 1, 2015)

June 1, 2015

http://www.smh.com.au/

The sustained lull in iron ore prices has put iron ore miners under considerable pressure, with Chinese investors circling distressed Australian companies.

Chinese investors are circling distressed Australian iron ore miners, according to local dealmakers fielding growing interest in the commodity’s struggling mid-tier ranks.

The sustained lull in iron ore prices has put iron ore miners under considerable pressure, causing market values to plummet and a handful of Australian producers to suspend operations.

The price of iron ore has slumped close to 50 per cent in the past 12 months to hover at around $US63 a tonne, after slumping as low as $US47 a tonne in April.

Against this backdrop, an increasing number of Chinese entities had expressed interest in providing debt or equity to iron ore miners, acquiring an asset or attempting a takeover, Minter Ellison West Australian managing partner Adam Handley said.

The iron ore price equation that makes Fortescue attractive for China – – by Anne Hyland (Australian Financial Review – May 29, 2015)

May 29, 2015

http://www.afr.com/

CITIC Group and Baosteel Group, which are said to be interested in Fortescue Metals Group, are two of the most politicised companies in China. Baosteel is China’s leader in the steel industry and CITIC was anointed to make significant investments outside China, such as the $10 billion Sino Iron project, which has been described as the worst mining investment in Australia in the past decade.

What is almost certain is that CITIC and Baosteel, which is developing an iron ore project with Aurizon, won’t bid against each other for Fortescue or other resource companies. It would be politically unpalatable in China and it’s typically not what China Inc does.

While there would be a dozen companies in China capable of taking out Fortescue, only one would get the green light, say veteran China observers.

At the Stockbrokers Association conference on Thursday, Li Xinchuang, president of the China Metallurgical Industry Planning Association, firmed up speculation with comments that Fortescue would benefit from a Chinese investor, while saying he didn’t believe the argument that there was a global oversupply of iron ore.

China Dotes on South American Infrastructure – by Tim Maverick (Wall Street Daily – May 28, 2015)

May 29, 2015

http://www.wallstreetdaily.com/

In April, I told readers about the billions of dollars China was pumping into the New Silk Road, connecting Pakistan to China. But China isn’t stopping there. It seems the economic powerhouse has also set its sights on South America.

Chinese Premier Li Keqiang just completed an extensive nine-day tour of Brazil, Peru, Chile, and Colombia. These four countries account for 57% of China’s quickly increasing trade with South America.

In January, Li promised $250 billion in investment into South America over the next decade. As of the end of 2014, China had already invested nearly $100 billion into its favorite countries.

On his current tour, Li is lavishing billions more on a number of deals, most of which center around infrastructure, such as rail.

You see, China is unflinching in its quest for power and security. Meaning the Chinese want to ensure speedy delivery of the precious commodities produced in South America.

Chinese President’s new Silk Road plan will fail unless ideas are free to travel – by Carl Mortished (Globe and Mail – May 29, 2015)

May 29, 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.

“One Belt, One Road” is China’s slogan for a 21st-century revival of the ancient trading routes that linked Han Dynasty silk merchants with Central Asia and the Mediterranean. President Xi Jinping’s big idea is investment in roads, railways, ports and pipelines that will link China to the world.

However, the ancient Silk Road was more than a caravan of camels loaded with stuff. It was also a convoy of ideas, and this may be where the Chinese Communist Party’s great ambition comes a cropper.

The first question you have to ask is why China needs such a vision of a new Silk Road.

The Chinese President sought to give a romantic gloss to his plan when he first mentioned it in 2013 on a visit to Kazakhstan, noting the thousands of years of trade between the two nations on the Silk Road. Last year, he announced a $40-billion (U.S.) infrastructure fund to build roads, railways, ports and airports across central and south Asia, and this year China reaffirmed its political ties to Pakistan with a promise of $45-billion of infrastructure investment.

Japan push into Africa resources sputters, helps China – by Yuka Obayashi (Reuters U.S. – May 29, 2015)

May 29, 2015

http://www.reuters.com/

TOKYO, May 29 (Reuters) – A Japanese government drive to secure access to resources in Africa has sputtered as some companies shy away from investing due to slumping commodity prices and worries over political stability, helping China as it races to import raw materials from the continent.

Around two years ago, Japan said it would provide about $2 billion mainly to back African commodity projects by its firms as part of a move to secure supplies of materials such as coking coal and copper it needs to churn out steel and electronic components.

But worries over the stability of the investment environment in some African nations, along with falling commodity prices, have sapped momentum from that push, Japanese firms said at a mining conference on Thursday and Friday.

A lack of infrastructure and concerns over resource nationalism were also cited as reasons.

“To invest in mine development, it is necessary to see an improvement in Africa’s investment environment so it is politically, sociologically and economically stable,” Shigeru Oi, president of JX Nippon Mining & Metals Corp, Japan’s top copper refiner, said in a speech.

Barrick investors welcome Chinese tie-up, debt reduction moves – by Nicole Mordant and Euan Rocha (Reuters U.S. – May 26, 2015)

May 28, 2015

http://www.reuters.com/

VANCOUVER/TORONTO – Barrick Gold Corp’s first step to long-promised partnerships with China, as well as progress in reaching an ambitious debt-cutting goal, are turning skeptical investors warmer toward the world’s biggest gold miner.

Barrick said on Tuesday it would sell a stake in its Porgera mine in Papua New Guinea mine to China’s Zijin Mining Group, and form a strategic partnership with Zijin. The moves marked an initial push in Executive Chairman John Thornton’s plan to forge closer ties with China, the world’s biggest producer and consumer of gold.

The former Goldman Sachs executive’s radical overhaul since taking Barrick’s reins a year ago, including eliminating the position of chief executive, had raised eyebrows among investors. Many also complained about his outsized signing bonus, lack of access, and most recently his 36 percent pay rise.

But a clearer strategy unveiled in February to slash Toronto-based Barrick’s mountain of debt, while seeking close links with China, looks to be winning approval.

COLUMN-“Cautious optimism” abounds in Asia commodities – by Clyde Russell (Reuters Africa – May 28, 2015)

May 28, 2015

http://af.reuters.com/

SINGAPORE, May 28 (Reuters) – There appears to be an outbreak of “cautious optimism” in the Asian commodities sector.

It was easy to lose track of the number of times the phrase popped up in presentations and conversations at four major commodities conferences in the region in the past two weeks.

However, defining what people meant by being cautiously optimistic was somewhat more challenging, although the common thread was a view that the worst is over for commodity prices, and the sector is once again worth looking at from an investment perspective.

Of course, it’s easy to dismiss participants at the SGX Iron Ore Forum and the Asia Mining Congress in Singapore, the Asia Oil & Gas Conference in Kuala Lumpur and the LME Week Asia in Hong Kong as talking their books, or at least to their hopes.

But what will be key is how the expectations of better times ahead translates into action. From a pricing perspective, there was widespread acknowledgement that the likelihood of strong rallies was very low, rather what producers, traders, buyers and investors are forecasting is a gradual grind higher as rising demand eats away the supply overhang created by over-investment in mines.

China cash lining up for Fortescue Metals Group – by Matthew Stevens, Amanda Saunders and Julie-anne Sprague (Australian Financial Review – May 25, 2015)

May 26, 2015

http://www.afr.com/

Chinese-linked companies have applied to the Foreign Investment Review Board seeking permission for an investment involving Fortescue Metals Group.

Australia’s third-largest iron ore producer has held discussions with China’s largest steel producer, Baosteel, and China’s largest conglomerate, CITIC, about a recapitalision to shore up its balance sheet.

It is unclear if the applications to FIRB are from CITIC or Baosteel but sources said there is interest in Fortescue from one or more companies which are Chinese or part-Chinese owned.

There are no moves to take over Fortescue. Instead, the companies are interested in buying a stake or increasing an existing stake, sources said. A deal could involve the partial selldown by the company’s founder, chairman and biggest shareholder, Andrew Forrest.

Fortescue and Baosteel already work closely. In June 2012 the two companies merged their magnetite iron ore assets in the Pilbara into a venture called FMG Iron Ore Bridge, which is 88 per cent controlled by the Perth company and 12 per cent owned by the Chinese steel giant.