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Asia Mining

Turning point for coal? Japanese trading firms snap up coal assets – by Yuka Obayashi and Sonali Paul (Reuters India – December 22, 2014)

http://in.reuters.com/

TOKYO/MELBOURNE, Dec 22 (Reuters) – Only a few months ago, a potential buyer said Japanese trading house Marubeni Corp was prepared to sell a costly stake in a Canadian coal mine for as little as $1.

But a flurry of acquisitions of high-quality coal assets by Japanese firms in recent weeks signals that some trading houses at least are betting a depressed coal market where prices have halved in three years may be bottoming out.

This vote of confidence comes amid signs that coal demand in Japan and emerging markets such as India is holding up well despite weaker demand in markets such as China, where coal imports in the first 11 months fell nearly a tenth.

Japan is the world’s second-biggest coal importer behind China, importing almost 200 million tonnes a year.

Recent acquisitions include the first coal investment by Mitsui & Co in 10 years. It is purchasing a stake in a Mozambique mine operated by Brazil’s Vale, in which the trading firm has an indirect stake.

“The biggest reason for participating in the Moatize project is to retain excellent quality metallurgical coal that is scarce globally,” Tetsuya Fukuda, general manager of Mitsui’s coal division, said. “With the resource supercycle, we had been not able to buy any assets.”

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Nickel Shortage Propels Philippines Mining Boom: Southeast Asia – by Ian Sayson (Bloomberg News – December 21, 2014)

http://www.businessweek.com/

Michael Defensor is racing to mine and ship nickel from projects across the Philippines to plug the gap in global supplies left by Indonesia’s ore-export curbs.

“Indonesia’s ban affected us positively,” said Defensor, chairman of Pax Libera Mining Inc. and the nation’s environment secretary from 2004 to 2006. He’s preparing four new sites for next year after opening two in the past two years. “We will maximize this window and ship as much as we can.”

The Indonesian curbs, designed to promote local processing, started in January and were upheld in court this month. The ban initially drove prices to a two-year high in May, before larger-than expected Philippine exports and slowing Chinese growth reversed the rally. Citigroup Inc. says it’s still bullish on nickel because the country won’t be able to expand supply much more and a global shortage will emerge.

Futures on the London Metal Exchange, the global benchmark for the metal used to make stainless steel, traded at $15,550 a metric ton on Dec. 19, from this year’s high of $21,625 in May. The price is still 12 percent higher for the year, making nickel the best performing industrial metal on the LME.

“Everyone will try to max out their permit,” said Ramon Adviento, a mining analyst at Maybank ATR Kim Eng Securities in Manila. “The low-hanging fruit has already been harvested even before the ban, so there is probability that the Philippines won’t meet the gap” left by Indonesia, he said.

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Modi Getting His Thatcher Moment Confronting Coal Unions – by Rajesh Kumar Singh and Debjit Chakraborty (Bloomberg News – December 17, 2014)

http://www.bloomberg.com/

Is India’s Prime Minister Narendra Modi reading up on Margaret Thatcher?

The late former prime minister of the U.K. had one of her defining and controversial confrontations in a protracted fight with striking coal miners in the 1980s. Different time, another country, but Modi has angry unions threatening to stop work at the world’s biggest coal miner, Coal India Ltd. (COAL)

Coal-fired power plants generate 60 percent of India’s electricity, except for when shortages lead to repeated blackouts. Outages shaved $68 billion or almost 4 percent off annual gross domestic product in the year ended March 2013, says the Federation of Indian Chambers of Commerce and Industry.

Last week, Modi made a move toward ending shortages, winning partial passage of a bill that will allow him to end a 40-year government coal monopoly. The plan is to bring in more efficient private companies. The coal unions say that will mean job losses, and that they will fight the legislation.

“Let them open up the sector, there will be strikes all across and large-scale violence,” S.Q. Zama, secretary general at the Indian National Mineworkers Federation, a unit of the opposition’s Congress party-backed Indian National Trade Union Congress, said in a Dec. 5 interview.

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The Chinese Century – by Joseph E. Stiglitz (Vanity Fair – January 2015)

http://www.vanityfair.com/

Without fanfare—indeed, with some misgivings about its new status—China has just overtaken the United States as the world’s largest economy. This is, and should be, a wake-up call—but not the kind most Americans might imagine.

When the history of 2014 is written, it will take note of a large fact that has received little attention: 2014 was the last year in which the United States could claim to be the world’s largest economic power. China enters 2015 in the top position, where it will likely remain for a very long time, if not forever. In doing so, it returns to the position it held through most of human history.

Comparing the gross domestic product of different economies is very difficult. Technical committees come up with estimates, based on the best judgments possible, of what are called “purchasing-power parities,” which enable the comparison of incomes in various countries. These shouldn’t be taken as precise numbers, but they do provide a good basis for assessing the relative size of different economies. Early in 2014, the body that conducts these international assessments—the World Bank’s International Comparison Program—came out with new numbers. (The complexity of the task is such that there have been only three reports in 20 years.)

The latest assessment, released last spring, was more contentious and, in some ways, more momentous than those in previous years. It was more contentious precisely because it was more momentous: the new numbers showed that China would become the world’s largest economy far sooner than anyone had expected—it was on track to do so before the end of 2014.

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After conquering iron ore, BHP and Rio move to dominate in copper – by James Regan (Yahoo Finance/Reuters – December 14, 2014)

http://finance.yahoo.com/

SYDNEY, Dec 15 (Reuters) – Rio Tinto and BHP Billiton are amassing vast copper holdings in a push to capture a greater chunk of the $140 billion world market, apparently aiming to squeeze out high-cost producers just as they did in the global iron ore business.

Separately and in joint ventures, Rio and BHP intend to mine millions of additional tonnes of copper, despite seeing an oversupplied market for the next few years.

“For both companies, this is about wielding the greatest influence possible over the global marketplace,” said Gavin Wendt, senior resources analyst for Sydney-based consultants MineLife.

“Having said that, unlike in the highly concentrated iron ore space where the focus is squarely on one market owned in large part by Rio and BHP – China, copper is sold much more widely, leaving room for smaller producers to stay in the game,” Wendt said.

Several smaller producers contacted by Reuters declined to comment, saying it was too early to gauge the impact of the expansions. There have been no suggestions that BHP and Rio are working in concert to seize overriding control of global copper supply.

A worldwide supply surplus of 300,000 tonnes is forecast in 2015 by Australia’s Bureau of Resource and Energy Economics, equivalent to half a year’s output by South Korea.

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Iron ore won’t reach $US100 per tonne again, says BHP Billiton – by Philip Wen (The Age – December 12, 2014)

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

Shanghai: Mining giant BHP Billiton says iron ore prices are unlikely to eclipse $US100 a tonne again, with expectations of steel consumption growth in China slowing further next year.

“I’ve learnt never to say never and there’s always short-term variations, but I think that if you use basic economics … certainly $100 seems high,” BHP’s president of iron ore Jimmy Wilson told reporters in Shanghai on Thursday.

“It’s hard to see that significant bump [in demand] that we’ve seen coming from China happen again.” BHP’s senior management group, including chief executive Andrew Mackenzie, was in Shanghai to celebrate the shipping of its one billionth tonne of iron ore to China.

The first shipment departed from Port Hedland in 1973. “It took nearly 30 years for BHP Billiton to ship 100 million tonnes of iron ore to China and then only 12 more years to reach the one billion tonne milestone,” Mr Mackenzie said.

The milestone was testament to China’s extraordinary rate of development, he said. At current rates the next 1 billion tonnes milestone would take just five years to reach.

But though imports into China have surged, prices have nearly halved, dropping under $US70 a tonne for the first time in five years. The drop comes amid a supply glut brought on by aggressive expansion by major miners Rio Tinto, BHP and Vale – even as Chinese economic growth cools.

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Angkor Gold: A gold standard for CSR – by Joseph Kirschke (Asia Miner – December 1, 2014)

http://www.asiaminer.com/

BANTEAY, Cambodia: Accessing this village eight hours north of Phnom Penh is daunting on the best of days, not least during the rainy season. On the main artery from the capital, buses, cars and tractor-trailers alike can be seen moored in the mud, all resembling helplessly grounded ships. Another 30-minute ride can foil the hardiest off-road vehicle at the gruelling final stretch.

Visitors are greeted by barefoot children supervised by adults and elderly, listless and weathered far beyond their years amid thatched huts and stray, emaciated oxen. But beneath the surface, something remarkable is unfolding nearby a mid-sized copper-gold deposit: Canadian junior Angkor Gold Corp is fulfilling a Corporate Social Responsibility (CSR) mandate – one unprecedented for a miner its size in the region. Stakeholder engagement through Free Prior and Informed Consent (FPIC) blooms here near a rainforest clearing of peppercorn, cassava and cashew patches, and classrooms full of students.

A clean slate

History hasn’t been kind to Cambodia. Over the half decade ending in 1979, the Khmer Rouge purged the intellectual class while bringing the country to ‘zero’ for an agrarian-based communist society after a brutal US bombing campaign. In all, two million lives were lost as the world stood by in silence; memories of forced starvation, mass graves and unspeakable atrocities continue to elicit tears to this day.

But Cambodia has turned the page, with its emerging market economy and small-scale mining industry an open book. Early next year, Angkor and Mesco Gold Cambodia will begin operating one of the country’s newest commercial mines while establishing Phnom Penh’s first continuing royalty revenue stream from mining.

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Investors tapped to fund gold fraud film – by Ben Bland (Financial Times – December 10, 2014)

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

Jakarta – Two of the world’s toughest mining tycoons battle it out with a star geologist, a chancer and a dictator’s children for control of one of the world’s largest gold discoveries in the heart of the Indonesian jungle, until it is exposed as a huge fraud.

The true story of Canadian company Bre-X Minerals, which collapsed in 1997 after attaining a market capitalisation of $6bn, reads like a movie script and the producer of hit film Home Alone is trying to raise $18m from mining investors to put it on the silver screen.

Malcolm Burne, a serial mining entrepreneur and former Financial Times journalist, has given Hollywood producer Scott Rosenfelt $150,000 of seed capital and together they are tapping minerals investors from Canada to Australia to fund a film about a scandal that changed the industry.

“It’s an amazing story with political and financial intrigue and thousands of people’s lives shattered as well as those who are still standing tall like Peter Munk of Barrick Gold,” says Mr Rosenfelt, who has tentatively titled the film Bre X: King for a Day.

Gold-mining companies struggled to raise money for years after the fraud, which prompted stock market regulators in Canada and Australia to bring in rules forcing miners to disclose detailed technical information about new finds.

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Vietnam’s emerging nickel-sulphide district – by Frik Els (Mining.com – December 9, 2014)

http://www.mining.com/

Nickel investors have been on a wild ride in 2014. Indonesia, supplying more than a fifth of global exports, surprised the mining world in January by putting into effect an outright ban on nickel ore exports.

Initially record warehouse inventories, massive stockpiling by Chinese nickel pig iron producers and growing mine supply kept a lid on the price which was languishing at near five-year lows below $14,000 a tonne at the start of the year.

The Asian nation, against expectations, stuck to its guns and the ban, in combination with fears that tensions with Russia could affect supply from top miner Norilsk, eventually sent the price above $20,000 in May.

But as LME stocks continued to rise and the Philippines – the only other source in the region of high-grade laterite ore required by China and responsible for 9% of global mine supply – took up some of Indonesia’s slack, supply worries subsided and the price tanked again, nearly wiping out all 2014’s gains.

Prices are now back above $16,500 on the back of dwindling stockpiles in China and expectations of robust demand from steelmakers in the US, China and the EU.

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Germany hopes to ‘beat China with CETA’ in race for raw materials – by Dario Sarmadi (Euractiv.com – December 10, 2014)

http://www.euractiv.com/

On many issues, the free trade agreement between the EU and Canada is caught in the crossfire. But if the agreement fails, Europe is likely to lose the race for economically essential raw materials, analysts in Germany and Canada predict. EurActiv Germany reports.

Although the final text of the free trade agreement between the EU and Canada has been set for over one month now, critics are not giving up.

Among them is the organisation Campact, campaigning against the controversial arbitration courts and putting pressure on national parliaments to have CETA rejected in its current form. But Europe’s politicians see CETA as the beginning of a new era.

By removing trade barriers, the European Commission is hoping for €12 billion in additional growth. And industry also has high expectations for the measure; Canadian raw materials are particularly important for Germany’s automotive, chemical and high-tech industries.

“Where do the batteries for our electric cars come from? What about the nickel for our airplanes? Demand for critical raw materials is growing and that is why CETA is so essential,” explained Tim Aiken, CEO of the Nickel Institute, at the EurActiv Europe+Canada workshop last week. The Nickel Institute represents the combined interests of Nickel producers worldwide.

At the same time, Aiken warned against China, the sleeping giant seeking to challenge Western dominance in the competition for raw materials, and the fastest-growing economic power in the world.

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TVI affiliate looking to build Philippines’ third nickel plant (Reuters U.S. – December 10, 2014)

http://www.reuters.com/

MANILA – Dec 10 (Reuters) – A Philippine miner partly owned by Canada’s TVI Pacific Inc is looking to build what could be the Southeast Asian country’s third nickel processing plant ahead of a possible ban on exports of unprocessed ore, a Manila-based spokesman said.

TVI Resource Development Phils. Inc. (TVIRD), which in October began shipping ore to China from its newly developed Agata mine in Surigao province in southern Philippines, expects a feasibility study on the plant to be completed this month.

“The company’s direct shipping ore operations will pave the way for the opportunity to list on the Philippine Stock Exchange as well as the establishment of a nickel processing plant over the medium term,” Corporate Communications Director Kaycee Crisostomo told Reuters.

If the plant is proven feasible, TVIRD plans to build and commission it by 2016 at a cost of $150 million to $200 million. It is a looking at a technology cheaper than the most commonly used one called high pressure acid leach, or HPAL.

Nickel Asia Corp, the Philippines’ biggest nickel miner, and main shareholder Sumitomo Metal Mining Co Ltd own and operate the country’s two existing processing plants, including the $1.7 billion Taganito HPAL facility commissioned about a year ago.

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Sandvik to relocate global mining facilities to India, China – by Pratim Ranjan Bose (The Hindu Business Line – December 3, 2014)

http://www.thehindubusinessline.com/

KOLKATA, DECEMBER 2: – In October, Sandvik announced a plan to set up its sixth manufacturing base in India at $ 45 million (approximately 280 crore at current exchange). But that may not be the end of the investment proposals to the country.

According to Kobus Malan, President emerging markets, Sandvik Mining, the company is also relocating number of its global mining equipment facilities from USA and Europe to India and China as part of a two year business reorganisation plan that will be completed in the next fiscal.

“A number of factories in Europe and USA are to be closed down. They were acquired during the 10-year long mining super cycle when chasing orders were a priority,” Kobus Malan, President emerging markets, Sandvik Mining told Business Line on Wednesday.

Malan could not offer details of the factories to be relocated to India and China. He was in the city in connection with International Mining and Machinery Exhibition (IMME).

With commodity prices plummeting Sandvik is focussing on cost efficiencies and shifting its operations to the growth markets of India and China.

“We have formed a focussed group for the emerging markets of India and China,” he said adding that as the business process is on course to be streamlined further India (along with China) may get more investments.

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Constitutional Court in Indonesia Upholds Ore Shipment Ban – by Yoga Rusmana (Bloomberg News – December 3, 2014)

http://www.bloomberg.com/

Indonesia’s Constitutional Court upheld today the country’s ban on exports of raw mineral ores imposed in January, rejecting a challenge from mining companies.

The court ruled the prohibition was acceptable to ensure ore supplies to domestic smelters. The Indonesian Association of Mineral Entrepreneurs and companies with mining business licenses filed a request in January to seek revision of articles in the 2009 law that formed the legal basis of the ban. Chief Justice Hamdan Zoelva said the ruling was final.

The country, the biggest producer of mined nickel and third-largest bauxite miner last year, banned shipments from Jan. 12, seeking to spur investment in domestic processing and transforming the nation into the producer of high-value metal. President Joko Widodo reaffirmed his commitment to the ban last month. Nickel and aluminum prices have climbed in London this year helped by the curbs.

“This will continue to act as a restraint on Indonesia’s export revenues, and therefore continue to adversely affect Indonesia’s balance of trade,” Luke Devine, foreign legal consultant, finance and projects, at Hadiputranto, Hadinoto & Partners, said by e-mail before the decision.

Nickel futures climbed 18 percent this year to $16,370 a metric ton, the biggest gainer among six base metals on the London Metal Exchange, while aluminum added 9 percent to $1,961.50 a ton.

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Mongolia restarts bidding for giant coal project as economy flags (Reuters India – December 3, 2014)

http://in.reuters.com/

Dec 3 (Reuters) – Mongolia has relaunched an international tender to develop its giant Tavan Tolgoi coal project as it tries to boost a flagging economy hit by falling commodity prices and a decline in foreign investment.

The latest attempt has drawn interest from Hong-Kong listed Mongolia Mining Corp (MMC), U.S.-based Peabody Energy Corp and Japan’s Itochu Corp, despite weak global coal prices.

Tavan Tolgoi holds around 7.5 billion tonnes of coking coal, but Mongolia’s cash-strapped government has struggled to finance its development, and little progress has been made since an international bidding process collapsed in 2011.

The Mongolian Mining Corp (MMC) said on Monday that it has formed a consortium with “certain independent parties” to submit a bid for the project, located around 300 kilometres (186 miles) from the Chinese border.

Interested firms had to notify the Mongolian government of their intention to bid for the block before a Dec. 1 deadline, with a shortlist expected to be released by Dec. 15, MMC said.

The firm declined to give further details of its bid, when contacted by Reuters. Erdenes Tavan Tolgoi, the state-owned entity in charge of the project, did not immediately respond to requests for comment.

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Iron ore prices could stay depressed for 10 years – by Scott Murdoch (The Australian – December 1, 2014)

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

A PROMINENT Chinese fund manager has grimly forecast that the global iron ore price could remain under pressure for 10 years as oversupply continues to hit the market and the Chinese residential property market slumps.

Shanghai Jianfeng vice-president Liang Ruian believes prices could slide below $US60 a tonne within the next year and could even fall to as low as $US50 a tonne, with major consequences for miners around the world.

The iron price on the weekend was $US71.32 a tonne, up $US1.34, but the commodity is down more than 50 per cent this year. The price slide has prompted miners to rethink capital expenditure plans and intensifies pressure on companies struggling to bring projects to the production stage.

Mr Liang, a well known fund manager in Shanghai, said the price of iron ore would be heavily affected by the performance of the domestic Chinese real estate ¬market.

About 30 per cent of China’s steel output is used in residential development, which is forecast to remain flat in the next few years after a surge following the global financial crisis. It is estimated China now has a nationwide inventory of housing to last up to three years.

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