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Lower coking coal contract price shows downward pressure – by Clyde Russell (Reuters U.S. – April 8, 2015)

http://www.reuters.com/

LAUNCESTON, AUSTRALIA – (Reuters) – – Coking coal prices are yet to show signs of bottoming with bearish signals from both contract talks between Australian producers and Japanese buyers as well as Chinese demand.

Hard coking coal for second quarter delivery was settled at $109.50 a tonne free-on-board between producer BHP Billiton and buyer Nippon Steel, Morgan Stanley said in a research noted on April 6.

This was down 6 percent from the previous quarter’s contract and represented a 7 percent premium to the spot price at the time the deal was concluded. The premium to the spot price is in line with prior settlements, with Japanese buyers willing to pay above spot in order to guarantee supplies.

Coking coal, also known as metallurgical coal, is used in steel-making and is traditionally a higher value product than thermal coal used in power generation because it has a higher energy value and fewer impurities.

However, coking coal prices are now down two-thirds from their peak around $300 a tonne in 2011, while benchmark thermal coal prices at Australia’s Newcastle Port have dropped about 55 percent over the same period.

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As iron ore slides, China buyers inflict more pain on small miners – by Manolo Serapio Jr (Reuters U.S. – April 7, 2015)

http://www.reuters.com/

SINGAPORE, April 7 (Reuters) – Chinese steelmakers are unwittingly helping the world’s biggest iron ore miners tighten their grip on global production by demanding to pay for shipments of the raw material based closely on depressed spot prices.

The three largest and most profitable iron ore producers – Australia’s Rio Tinto and BHP Billiton, along with Brazil’s Vale – have been happy to sell at or near spot despite plunging iron ore prices, while their smaller rivals struggle to make money.

Smaller producers, including some higher cost Australian miners, want to continue with deals based on longer-term averages of prices, looking to hedge against further falls in the market.

But buyers in the world’s largest consumer of iron ore are having none of it, with many Chinese mills demanding cargoes priced as close as possible to their delivery date.

“Pricing moves around with the steel mills. It used to be all based on a monthly average. Now you find the steel mills and traders perhaps trying to anticipate low points and suggesting quotation periods of maybe two weeks,” said Morgan Ball, chief executive of Australian iron ore miner BC Iron Ltd.

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India’s $18 Billion Mistake? – by Dhiraj Nayyar (Bloomberg News – April 1, 2015)

http://www.bloombergview.com/

A decade ago, Korean steelmaker Posco’s proposed $12 billion investment in the eastern Indian state of Odisha (then still known as Orissa) was hailed as the country’s biggest-ever foreign investment commitment, as well as a vote of confidence in India as a potential manufacturing power. Ten years later, Posco’s reported pullout is a PR debacle and a blow to Prime Minister Narendra Modi’s hopes to convince companies to “make in India.”

Worse, it’s the government’s success rather than its policy failures that appear to have driven out the steelmaker. On the heels of a lucrative auction of telecom spectrum, which garnered bids totaling a record $18 billion last week, the government is set to sell off iron ore and the rights to limestone mines by auction as well. Under the old regime, the state would have allocated these kinds of resources to industry at a nominal price. Now that the government is looking to maximize profits by putting them up for bids instead, Posco has apparently decided that the additional costs make the Odisha project unappealing.

The political logic of auctions is obvious. Under the previous Congress-led government, the opaque process of allocating resources to private companies quickly led to accusations of cronyism and corruption. Anger over the 2G spectrum scandal of 2008 and the coal scandal of 2009 played a huge role in Modi’s landslide victory last year.

Unfortunately, criticism has focused on the idea that the government gave away India’s resources too cheaply.

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Vale sets aside $185m to finance expansion – by Tama Salim (Jakarta Post – April 1 2015)

http://www.thejakartapost.com/

Publicly listed nickel mine operator PT Vale Indonesia (INCO) will allocate up to US$185 million in capital expenditures (capex) this year to finance expansion projects, including the construction of new refining facilities. The company’s chief financial officer, Febriany Eddy, said on Tuesday the allocated sum was significantly higher than last year’s capital spending realization of $76.8 million.

She said that Vale would be gearing up for the second phase of its ore processing and refining facility in Sorowako, South Sulawesi, as well as operations in Bahodopi, Central Sulawesi. “Phase 1 is currently being concluded, so we’re starting to plan out the next phase while we await the licenses for expansion,” Febriany told reporters in South Jakarta, on Tuesday.

“If everything goes according to plan, we can realize all our capital spending and put our projects into motion.” Vale’s capital expenditure for 2014 was 51 percent lower than the $163 million target, because of delays in the issuance of required permits and the decision to further assess the rebuilding of an electric furnace.

On the other hand, stakeholder returns in 2014 were high as the firm reached a dividend payout ratio of 58 percent, equal to $50.2 million. Febriany argued that the high payout rate was in line with Vale’s previous actions, citing average dividend payments of more than 50 percent in the last five years.

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Mercury in Mining a Toxic ‘Time Bomb’ for Indonesia – by Harry Pearl (Jakarta Globe – March 31, 2015)

http://thejakartaglobe.beritasatu.com/

Cisitu, Banten. Inside a dusty, cupboard-sized workshop in the remote mountains of western Java, Ateng spells out the toxic mix he uses to produce gold.

“I used 300 grams of mercury, in five ball mills, for two sacks of ore,” the 25-year-old says, flicking a blowtorch alight and taking aim at the amalgam of gold ore and mercury in front of him.

It’s a familiar calculation for Ateng, and one that in some form or another has been utilized for centuries — using mercury, a highly toxic liquid metal, to extract gold from ore. But here in Cisitu, a gold mining village deep in Gunung Halimun National Park, medical experts and environmental campaigners believe it could be the cause of a rash of illnesses among residents.

Rice fields and fishponds have been poisoned, environmental testing has found, and some residents are showing signs of severe mercury intoxication.

What’s more worrying to campaigners like Yuyun Ismawati, a Goldman Prize-winning environmental engineer and senior adviser at BaliFokus, is that a similar situation is being played out at hundreds of mining hot spots across Indonesia.

“You cannot see it now, but the cost of inaction could be huge,” says Ismawati, an Indonesian now based in the United Kingdom.

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India seeks potash bargain after Belarus-China deal – by Rajendra Jadhav (Reuters U.S. – April 1, 2015)

http://www.reuters.com/

MUMBAI- (Reuters) – Belarus’ deal to sell potash to China at a lower-than-expected price has prompted India to seek a similar bargain ahead of the signing of new contracts this month, a move that could hit spot rates already under pressure due to stiff competition.

Belarusian Potash Company (BPC) last month agreed to raise the price of potash exports to China, the biggest consumer and which sets the benchmark, by $10 to $315 per tonne, undercutting Russian and North American rivals who were negotiating for a hike of $25-$30.

India, which imports all its potash needs, bought the crop nutrient at $322 per tonne on a cost and freight basis last year, the lowest level in seven years. It is seeking to keep the price at the same level this year.

India usually pays slightly more than China due to additional freight and as it buys in small consignments.

“The Chinese deal has highlighted the oversupply in the market,” said P.S. Gahlaut, managing director of state-run Indian Potash Ltd, the country’s biggest importer. “As far as India is concerned we cannot afford a price rise.”

Officials from Russia’s Uralkali, the world’s largest producer, are expected in India in the third week of April and any supply agreement around last year’s price will put pressure on spot prices that collapsed after Uralkali broke away from a joint trading venture with BPC in 2013.

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Tax breakthrough at Rio Tinto’s Mongolia copper mine -source – by Terrence Edwards (Reuters U.S. – March 31, 2015)

http://www.reuters.com/

ULAN BATOR – (Reuters) – Rio Tinto and Mongolia have made a breakthrough in a tax dispute that has been among issues stalling development of the $6.5 billion Oyu Tolgoi copper mine, according to an official familiar with the government’s position.

Disputes over costs and taxes have delayed an expansion of the mine that would extend its life beyond an estimated 15 years.

“Misunderstandings and issues surrounding the tax climates have been resolved,” the official told Reuters, without specifying the terms of an agreement or what other issues needed to be resolved for the next underground phase of the project to go ahead.

“The parties are working towards agreeing on the commercial terms of the underground project,” added the official, who asked not to be named because no announcement had been made yet. A Rio Tinto spokesman and a spokesman for Mongolia’s mining ministry declined to comment.

A spokesman for Rio’s Turquoise Hill Resources, which owns 66 percent of the mine, also declined to comment and pointed to a statement last week that said Oyu Tolgoi was appealing a ruling by Mongolia’s Tax Dispute Resolution Council to the country’s Administrative Appellate Court.

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India: At the coalface – by James Crabtree (Financial Times – March 31, 2015)

http://www.ft.com/home/us

Failure to boost energy supplies will hurt Modi’s goal of turning India into a manufacturing force

A large, colourfully painted sign hangs above the entrance to the depths of Jhanjra, the largest underground mine in West Bengal’s Raniganj coal belt. The left side shows Indian mining as it once was, with roughly drawn cartoon figures wielding basic shovels and carrying woven baskets of coal, balanced on their heads. The right paints a more modern scene, featuring large yellow mining machines, operated by skilled technicians.

Take the cage-like lift down hundreds of metres into the darkness below, and walk for nearly an hour through narrow tunnels in stifling heat, and that second image suddenly becomes real as a cutting vehicle with fierce rotating metal teeth, known as a continuous miner and built by US manufacturer Caterpillar, rips tonnes of black rock from the coal face.

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Digging up a culture clash [B.C. Jade Mining] – by Alan Campbell (Richmond News – March 27, 2015)

 

http://www.richmond-news.com/

Richmond man finds himself between a jade rock and a hard place as the bridge between a rough and ready Canadian mining family and billionaire Chinese investors on a new TV show

Nowhere in the Lower Mainland has the coming together of two worlds — East and West — stirred emotions over the last few years than Richmond.

Throw in a hard-bitten, beer-drinking all-Canadian family, jade-mining in harsh conditions, with Chinese billionaire investors breathing over their shoulder, and you have a culture clash ready to ignite at any given second.

The poor guy caught slap, bang in the middle is Richmond family man Alan Qiao, who is one of the stars of a new Discovery Channel show called Jade Fever, which debuts March 31.

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COLUMN-Bauxite and the limits of resource nationalism – by Andy Home (Reuters U.S. – March 27, 2015)

http://www.reuters.com/

(Reuters) – It’s been over a year now since Indonesia imposed its ban on the export of unprocessed minerals. The aim of the January 2014 lock-down is to generate greater value for the country and its citizens by forcing operators to build processing plants and export value-added product not raw materials.

Other resource-rich countries, such as the Democratic Republic of Congo, are travelling the same road but Indonesia is way out in front.

The country’s high-stakes strategy, implemented in the face of considerable opposition from both its own mining sector and overseas buyers, does appear to be largely working.

At a practical level flows of nickel ore and bauxite to Chinese buyers have been halted. Indonesia’s mining ministry says there are now 11 nickel-processing projects under way, many of them backed by Chinese nickel and stainless steel producers.

The country’s two top copper miners, Freeport McMoRan and Newmont Indonesia, have been successfully cajoled into committing to a new copper smelter in return for keeping their mining rights.

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UPDATE 2-Iron ore slump set to shrink China’s mining capacity – by David Stanway (Reuters U.S. – March 27, 2015)

http://www.reuters.com/

SHIJIAZHUANG, China, March 27 (Reuters) – A slide in iron ore prices is turning the screw on China’s fragmented mining sector, paving the way for closures and consolidation with three-quarters of the country’s mining capacity operating at a loss, industry officials said on Friday.

More mine closures in China, the biggest consumer of the steelmaking commodity, would increase its appetite for imported iron ore and help ease a global glut that has slashed prices by more than half in the past 12 months.

“I would like to thank the big four miners for driving prices down because it has given bigger domestic mines an opportunity and forced small miners to cut production,” Gao Yan, deputy general manager at the mining unit of Chinese steelmaker Angang Group, told an industry conference.

Top global producers Vale, Rio Tinto and BHP Billiton have boosted output despite falling prices, prompting No. 4 iron ore miner Fortescue Metals Group to propose limiting production. The commodity fell to $54.20 a tonne .IO62-CNI=SI this week, the lowest since records began in 2008, and Citigroup predicted prices will drop below $50.

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Beijing to Shut All Major Coal Power Plants to Cut Pollution (Bloomberg News – March 23, 2015)

http://www.bloomberg.com/

(Bloomberg) — Beijing, where pollution averaged more than twice China’s national standard last year, will close the last of its four major coal-fired power plants next year.

The capital city will shutter China Huaneng Group Corp.’s 845-megawatt power plant in 2016, after last week closing plants owned by Guohua Electric Power Corp. and Beijing Energy Investment Holding Co., according to a statement Monday on the website of the city’s economic planning agency. A fourth major power plant, owned by China Datang Corp., was shut last year.

The facilities will be replaced by four gas-fired stations with capacity to supply 2.6 times more electricity than the coal plants.

The closures are part of a broader trend in China, which is the world’s biggest carbon emitter. Facing pressure at home and abroad, policy makers are racing to address the environmental damage seen as a byproduct of breakneck economic growth. Beijing plans to cut annual coal consumption by 13 million metric tons by 2017 from the 2012 level in a bid to slash the concentration of pollutants.

Shutting all the major coal power plants in the city, equivalent to reducing annual coal use by 9.2 million metric tons, is estimated to cut carbon emissions of about 30 million tons, said Tian Miao, a Beijing-based analyst at North Square Blue Oak Ltd., a London-based research company with a focus on China.

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THE DEADLY GLOBAL WAR FOR SAND – by Vince Beiser (Wired.com – March 26, 2015)

http://www.wired.com/category/business

THE KILLERS ROLLED slowly down the narrow alley, three men jammed onto a single motorcycle. It was a little after 11 am on July 31, 2013, the sun beating down on the low, modest residential buildings lining a back street in the Indian farming village of Raipur. Faint smells of cooking spices, dust, and sewage seasoned the air. The men stopped the bike in front of the orange door of a two-story brick-and-plaster house. Two of them dismounted, eased open the unlocked door, and slipped into the darkened bedroom on the other side. White kerchiefs covered their lower faces. One of them carried a pistol.

Inside the bedroom Paleram Chauhan, a 52-year-old farmer, was napping after an early lunch. In the next room, his wife and daughter-in-law were cleaning up while Paleram’s son played with his own 3-year-old boy.

Gunshots thundered through the house. Preeti Chauhan, Paleram’s daughter-in-law, rushed into Paleram’s room, her husband, Ravindra, right behind her. Through the open door, they saw the killers jump back on their bike and roar away.

Paleram lay on his bed, blood bubbling out of his stomach, neck, and head. “He was trying to speak, but he couldn’t,” Preeti says, her voice breaking with tears. Ravindra borrowed a neighbor’s car and rushed his father to a hospital, but it was too late. Paleram was dead on arrival.

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What 60 Minutes Got Wrong About Rare Earths And China – by Tim Worstall (Forbes Magazine – March 23, 2015)

 

http://www.forbes.com/

Last night 60 Minutes ran a segment on how American industry, and more importantly, the American defense industry, is prostrate before a Chinese monopoly of rare earths production. This is of course very worrying for all sorts of Very Serious People and something no doubt should be done.

There is a slight problem with the analysis 60 Minutes presented though: that problem being that their analysis was wrong. And I say this as someone who works in that rare earth industry, someone who has, at times, been a near monopoly supplier of one of the rare earths and, even, a supplier to the US defense industry of non-Chinese rare earths.

Here are the most important lines in the 60 Minutes report:

But trouble is once again looming for the U.S. rare earth industry. Since restarting operations two years ago, Molycorp’s mountain pass mine has yet to turn a profit, and so deeply in debt that just last week, its own auditor warned it may not be able to stay in business.

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China, Russia and the Tussle for Influence in Kazakhstan – by Arthur Guschin (The Diplomat – March 23, 2015)

http://thediplomat.com/

The two powers are pursuing competing interests in Central Asia.

Until recently, Central Asia played only a modest role in world politics, a reflection of its economic weakness, domestic problems, and distrust of integration. Russia’s presence in the region as the primary political mediator and economic partner was incontestable. In the last few years, though, China’s growing economic interest in Central Asia has come to be seen in Moscow as a threat to its influence. Russia is watching closely the Silk Road Economic Belt initiative, which would give Beijing the dominant role and could supplant the Eurasian Economic Union. With Kazakhstan the core state in any integration project in the region, it looks set to become the frontlines of the tussle between China and Russia for regional influence.

Russian Interests

Driving Russian policy in Kazakhstan are the activities of four major Russian energy companies: Gazprom, Lukoil, Transneft and Rosneft. These companies allow Moscow to keep Astana within the sphere of Russian interests and help prevent Beijing from dominating Kazakhstan’s economy. Their participation in local energy projects gives Russia access to oil and gas reserves, while binding the two countries in the energy, transport, space and agriculture sectors.

The basis of the partnership rests on agreements covering petroleum contracts and energy supplies transiting through Kazakhstani and Russian territory to European or Chinese markets. Currently, the leading Russian investor in Kazakhstan is Lukoil, which operates seven projects and has a stake in the cross-country pipeline Caspian Pipeline Consortium (CPC). In 2013, 32.7 million tons of oil was pumped through the pipeline, 28.7 million tons of it exported from Kazakhstan.

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