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RPT-UPDATE 3-India’s Modi steps up economic reforms, eyes privatisation [coal sector] – by By Manoj Kumar and Krishna N Das (Reuters India – October 21, 2014)

http://in.reuters.com/

NEW DELHI, Oct 20 (Reuters) – India promised on Monday to open up the coal industry to private players and moved closer to selling a stake in a state-run oil company, as Prime Minister Narendra Modi picked up the pace on economic reform days after relaxing fuel price controls.

Using an executive order, the cabinet agreed to allow private Indian companies to mine and sell coal at an unspecified future date, Finance Minister Arun Jaitley said. That sets the stage for the biggest liberalisation of the industry in more than 40 years.

The ruling party’s success in two state elections last week capped several days of action on the economic front and has given Modi more room to cut through a thicket of regulations and state controls he says holds back Asia’s third-largest economy.

“Reform is the art of the possible,” Jaitley earlier told TV network ET Now, hinting that more was to come. “In the first year, when people expect lot of reforms and there is lot of popular support behind the reform process, it is more easily possible.

Modi was elected in May on promises he would create jobs and rejuvenate the Indian economy, but investors and economists were disappointed by his first budget and a lack of early progress on fixing structural economic problems. In the last week, he has gone some way towards quelling those concerns, putting in a reform-minded team at the finance ministry that includes prominent economist Arvind Subramanian to help formulate the budget and policy.

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Is the global commodity supercycle over? – by Niranjan Rajadhyaksha (Live Mint – October 17, 2014)

http://www.livemint.com/

It is too early to say whether the current decline in global commodity prices is temporary or structural

The sharp drop in global oil prices to their lowest level in four years has provided unexpected relief to the Indian economy. A barrel of the benchmark Brent crude cost around $114 in the middle of June.

It has slipped below $90 four months later. The impact is already becoming apparent. Petrol prices paid by motorists were cut in September.

One reason the Indian financial markets have held up better in the ongoing emerging markets sell-off is that India is a commodity importer that gains from a decline in prices. There is also greater confidence that the government will keep its fuel subsidy bill within the budgeted limit since global prices are well below the $110 a barrel that had been assumed in July.

And it is interesting that Indian monetary policy authorities are projecting inflation using a baseline assumption that oil will remain below $100 for the rest of the year.

The impact of lower global commodity prices on the Indian economy has been quantified. For example, economists at Nomura Financial Advisory and Securities (India) have estimated the likely impact of the fall in global crude prices on important macroeconomic numbers.

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Tin’s price slump seen cutting Indonesian shipments by 30% – by Yoga Rusmana and Eko Listiyorini (Chicago Tribune – October 14, 2014)

http://www.chicagotribune.com/

Bloomberg News – JAKARTA, Indonesia — Tin exports from Indonesia, the world’s biggest supplier, will probably plunge this quarter to the lowest in more than a year after prices declined and as the government moves to impose stricter rules on exports.

Overseas sales may drop 30 percent to 16,000 metric tons from 22,825 tons a year earlier, the median of estimates from one analyst and six smelters compiled by Bloomberg showed. That’s the largest decline since the three months to March and the smallest amount since the quarter ended Sept. 30 last year, Trade Ministry data show.

Tin futures have slumped 16 percent from a six-month high in April on concern that slowing economic growth may curb demand in China, the biggest consumer of industrial metals. Prices dropped even as exports from Indonesia declined 16 percent through September from a year earlier. The government tightened rules on trade in August last year to boost exports of higher- value products and smelters have restrained sales in an attempt to counter declining prices.

“Shipments may slow this quarter as prices have dropped to near the cost of production,” said Jabin Sufianto, chairman of the Association of Indonesian Tin Exporters in Jakarta. “Prices of about $21,000 are unattractive to some smelters,” he said in a text message on Oct. 9.

Futures fell 9.8 percent this year to $20,150 a ton on the London Metal Exchange Monday. They reached $23,849 on April 24 after the country required all refined tin to be traded through the Indonesia Commodity and Derivatives Exchange starting August last year, seeking to create a benchmark price and challenge the role of the LME.

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Mongolia as the Key to a Russian-South Korean Strategic Partnership – by Andrew Korybko (Global Research – October 11, 2014)

http://www.globalresearch.ca/

Nestled between Russia and China, Mongolia is a geographically obscure country with the sparsest population density in the world. It isn’t exactly what comes to mind when one thinks of East Asian or Pacific economic opportunities, yet for Russia, Mongolia is the key that it needs to unlock strategic relations with South Korea.

Ulaanbaatar’s unique Third Neighbor Policy has allowed it to cultivate favorable relations with Seoul, and coupled with its valuable coal reserves and rare earth minerals, it has just the type of resources that South Korea needs. By bridging the geographic divide between the two, Russia stands to gain by entering into a strategic and multifaceted partnership with South Korea that proves the seriousness of its Pacific Pivot and could potentially transform Northeast Asian affairs.

Mongolia’s Third Neighbor Policy

Mongolia has historically been in the Russian sphere of influence, but after 1991, the country spearheaded the so-called Third Neighbor Policy to diversify its relations in the post-Cold War world. This saw it reaching out in economic, political, and military (although largely benign) ways to distant partners such as the EU and NATO, as well as closer ones such as Japan and South Korea.

The guiding philosophy behind this policy was that Mongolia did not want to be dominated by either Russia or China, the latter of which it secured its independence from in 1911 after centuries of control.

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Monsoon to curb Philippines nickel mining, hurt China supply – by Erik dela Cruz and Melanie Burton (Reuters India – October 14, 2014)

http://in.reuters.com/

Manila – Oct 14 (Reuters) – Seasonal rains are set to disrupt nickel mining in the Philippines for the next four months or so, crimping exports to top buyer China and stoking a shortfall in the global supply of ore.

Miners in the Philippines say they will be able to fulfil their 2014 contracts as they have factored in the impact of the annual monsoon.

But, with a ban on raw metal shipments by former top exporter Indonesia, the seasonal decline in the Philippines’ output could force China’s vast stainless steel industry to run down its stocks of nickel ore, reigniting a rally in nickel prices.

Most producers in the Philippines’ main nickel mining region of Caraga are expected to close operations as normal from October or November until early next year in anticipation of heavy rains. The Philippines has emerged as the top supplier to China’s producers of nickel pig iron, a key ingredient in stainless steel.

“They (China NPI makers) are definitely going to be caught short,” said Daniel Hynes, analyst at ANZ in Sydney. “Obviously they’ll just have to dig into their inventory to meet demand in the shorter term or look at importing some ferronickel from various sources.”

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Why are iron ore prices falling so quickly? – by Eric Reguly (Globe and Mail – October 14, 2014)

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.

ROME- Iron ore mines are to Australia what the oil sands are to Canada. The Aussie iron ore business is enormous, capital intensive, profitable and has an insatiable customer – China – just as the oil sands can depend on the United States to consume almost all of its output. The Aussie and Canadian industries share another trait: falling prices.

The value of both iron ore and oil is plummeting. But the similarities end there. Oil is falling because of excess supply and waning demand in the Western world, in good part because zombie Europe is on the verge of a new recession. But global demand for iron ore is still climbing, if at a somewhat slower pace than last year. So why are iron ore prices falling, and why are they falling so much faster than oil?

The price for iron ore in China, the world’s biggest consumer of the material used to make steel for everything from office towers to dishwashers, is down about 30 per cent this year (compared to a 20-per-cent drop for oil). The spot price for iron is off about 40 per cent, though it bounced back a few bucks this week to reach $83 (U.S.) a tonne.

Iron ore is falling even though Chinese demand for steel is up about 5 per cent year on year, while demand for imported iron ore is up 15 per cent or so, outpacing import demand in 2013.

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Commodities under pressure as China continues economic realignment – Simon Rees (MiningWeekly.com – October 9, 2014)

http://www.miningweekly.com/page/americas-home

TORONTO (miningweekly.com) – Commodity prices will continue to face near-term challenges that are linked to the dip in Chinese growth. However, support is likely to come from the country’s new economic agenda, Scotiabank VP and commodity market specialist Patricia Mohr told attendees at the recent Global Chinese Financial Forum.

Gold will come under greater pressure as the US recovery gathers pace, while some opportunities are apparent in base metals, particularly with zinc. “In addition, because of the tremendous expansion in US and Canadian oil and gas production, there are some excellent prospects in the pipeline and railways sectors,” Mohr said.

NEW ORDER

China dominates the global base metals market, accounting for 46% of global demand. Given this, the country’s economic fortunes are closely monitored, with any dip in growth potentially representative of a reduced metals uptake. Chinese gross domestic product (GDP) growth for 2014 will be over 7%, which compares with 7.7% in 2013, Mohr said.

In the long term, support for commodities will come from China’s new economic agenda that was born out of a leadership change in 2013. One of the agenda’s central goals is to spur greater urbanisation to underpin growth and boost further infrastructure investment.

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Indian coal import growth outstrips China – by Neil Hume (Financial Times – October 6, 2014)

http://www.ft.com/intl/commodities-note

Domestic supply growth is weak and unlikely to improve soon

Could India soon overtake China as the world’s biggest consumer of seaborne thermal coal? For many miners and traders, the answer to that question, posed at the Financial Times’ inaugural Commodities Retreat in Singapore last week, is yes.

Coal is India’s most important energy source – supplying more than half of all power stations – and the country, alongside Korea, is emerging as one of the few bright spots in the 1bn tonne a year seaborne thermal coal industry.

In the wake of adverse legal rulings – the Supreme Court recently cancelled more than 200 coal licences held by dozens of private sector groups – miners and traders are tipping strong import growth from India. They say domestic supply growth is weak and unlikely to improve in the foreseeable future because of bureaucratic and infrastructure challenges.

Glencore, the world’s largest producer of high quality thermal coal, told analysts on a recent site visit that it expects Indian annual imports to rise from 150m tonnes, to 180m tonnes in 2015 and 300m tonnes by 2020.

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Resources, Empire & Labour: Crisis, Lessons & Alternatives – Edited by David Leadbeater

To order a copy of Resources, Empire & Labour: Crisis, Lessons & Alternatives, click here: http://fernwoodpublishing.ca/book/resources-empire-and-labour

The interconnections of natural resources, empire and labour run through the most central and conflict-ridden crises of our times: war, environmental degradation, impoverishment and plutocracy. Crucial to understand and to change the conditions that give rise to these crises is the critical study of resource development and, more broadly, the resources question, which is the subject of this volume. Intended for researchers, students and activists, the chapters in Resources, Empire and Labour illuminate key aspects of the resources question from a variety of angles through concrete analyses and histories focused on the extractive industries of mining, oil and gas.

Natural Resources in Japanese Imperialism: The Yasuba Critique

To discuss the evidence on the role of natural resources in Japanese imperialism, a useful point of departure, despite many flaws, is Yasukichi Yasuba’s 1996 article “Did Japan Ever Suffer from a Shortage of Natural Resources Before World War II?” Yasuba challenges the resource-shortage explanation of Japanese imperialism.

According to Yasuba, proponents of the resource shortage view emphasize that Japan had a high population density and also suffered from a lack of natural resources. The situation became particularly acute in the 1930s with the rise of protectionism in the high-income countries to which Japan shipped many of its exports.

These features of the situation made it attractive for Japan’s leaders to pursue military expansion. By establishing political control over more territory, it could obtain more resources and it could create a trade bloc and thereby find markets for its exports, markets that would serve as alternatives to the markets of the other imperialist powers and their areas of control. The territories acquired could also provide an outlet for surplus Japanese population.

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Rio $5.4 Billion Copper Project Mired as Deadline Missed – by Simon Casey and David Stringer (Bloomberg News – October 3, 2014)

http://www.bloomberg.com/

Rio Tinto Group (RIO) and the Mongolian government broke another deadline set by lenders for the $5.4 billion expansion of their Oyu Tolgoi project, raising concerns over the earnings outlook for Rio’s copper business and the strength of the Mongolian economy.

Commitments from project finance lenders expired Sept. 30, Rio’s unit in Canada, Turquoise Hill Resources Ltd. (TRQ), said in a statement yesterday. Oyu Tolgoi’s shareholders haven’t asked for those commitments to be extended, although “engagement” with lenders continues, it said.

“With iron ore in decline, the market is looking for Rio’s other businesses to fill the gap,” said David Radclyffe, a Sydney-based analyst at CLSA Asia-Pacific Markets. “The market is concerned from the point of view that Rio needs to do the expansion to give its copper business relevance.”

Underground development at Oyu Tolgoi, the largest foreign investment in Mongolia, has been held up for more than 18 months on disputes between London-based Rio and the government over taxes due and cost overruns, among other issues. Copper accounted for 11 percent of Rio’s revenue in the 2013 fiscal year, behind iron ore and aluminum.

An Oyu Tolgoi board meeting was scheduled yesterday, according to Mongolia’s mining ministry. Three Mongolian members of the board didn’t respond to phone calls after the meeting. A call and e-mail to the government’s cabinet secretary Saikhanbileg Chimed went unanswered.

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Four months on, fallout from Chinese scandal drives up nickel stocks – by Melanie Burton (Reuters U.K. – October 3, 2014)

http://uk.reuters.com/

SYDNEY, Oct 3 (Reuters) – A commodity fraud at China’s Qingdao port has hit bank financing of metal deals, sparking a surprise jump in nickel exports and pushing back expectations of a global supply shortage of the metal used mainly in stainless steel.

The Chinese exports have helped global stockpiles hit record highs, confounding expectations of a deficit as soon as next year that drove a spike in nickel prices after Indonesia enforced a ban on ore exports in January.

That was part of Indonesia’s ambition to retain more of its mineral wealth by building a processing industry. Investors bet that Chinese stainless steel mills would run out of feed before Indonesia’s industry reached full swing, putting a rocket under prices.

“The market got quite bullish. The reason they got bullish is still there. But now they are looking at all this metal coming out of financing deals,” said analyst Lachlan Shaw of Commonwealth Bank of Australia in Melbourne.

“It doesn’t change the reasons for the deficit next year -essentially the ferronickel sector in China not being able to access the ore because of Indonesia’s export ban,” he said. China is the world’s biggest consumer of nickel.

Its stainless steel mills relied on Indonesian ore to make nickel pig iron (NPI), a cheaper substitute for refined nickel, and the result of the export ban was a 50 percent jump in nickel prices by May.

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Supply a critical issue for suitors of Nickel West – by Tess Ingram (sydney Morning Herald – October 3, 2014)

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

Possible buyers for BHP Billiton’s Nickel West business are scrutinising the sector’s junior miners as they weigh up the potential for long-term supply for one of its key assets, the Kalgoorlie smelter.

The sale of the Nickel West business has been under way for some months and industry sources suggest interested buyers have been narrowed down to resources giants Glencore and Jinchuan Group.

Any buyer of the West Australian assets would have to work with local nickel producers to secure supply for the smelter, which has run about 10 per cent under capacity and at a high cost for BHP, with industry suggesting that either a secure offtake agreement or an acquisition of a local player is highly likely.

Fingers appear to be pointing towards both Western Areas and Sirius Resources due to the quality of their nickel concentrate and their relative freedom to sign a deal.

Western Areas managing director Dan Lougher confirmed that the company had been in talks with prospective buyers, including Glencore and Jinchuan, but had not yet been approached in regards to an acquisition.

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RPT-UPDATE 2-New rules to slash Indonesian coal exports in short term at least – by Wilda Asmarini and Yayat Supriatna (Reuters India – October 1, 2014)

http://in.reuters.com/

JAKARTA, Sept 30 (Reuters) – Indonesia’s coal exports are expected to fall by between 15 and 20 percent in October from September and could decline 5 percent this year as firms scramble to obtain government export permits to comply with new rules due to come into effect on Oct. 1.

The new regulations, intended to stamp out illegal mining and ensure ample coal supplies for domestic power plants, require exporters to get approval from the mining and trade ministries.

But the industry says the rules are poorly timed and could push many firms out of business with coal prices at a five-year low. Unregistered firms will not be allowed to ship coal past the deadline.

Many miners and traders have encountered delays and a backlog of firms have yet to be registered, Pandu Sjahrir, chairman of the commercial committee at the Indonesian Coal Mining Association (ICMA), told Reuters.

“A lot of the backlog happens to be at the coal and minerals directorate level. Everything has to be done manually,” Sjahrir said, adding that firms needed to obtain the signature of each director at the department.

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Commodity super cycle turning downward, says RBI – by Rajesh Bhayani (Business Standard – September 30, 2014)

http://www.business-standard.com/

In latest commodity super-cycle, inflation-adjusted prices of commodities rose 60-500% between 1999 and 2010

Mumbai – Global commodities prices have already reached inflexion points and are headed downward, according to the RBI (Reserve Bank of India). The central bank, as a part of its monetary policy announced today, published the analysis based on the last five decades’ data of prices of commodity both energy and non-energy, to show that commodity super cycle may be turning downwards.

Commodity super-cycles are long and rapid rises in prices across commodities, propelled by persistent increases in demand that outstrip supply. The policy statement said that, “since 1894, four super-cycles have been identified, with the last one starting from the late 1990s and attributed to rapid and sustained industrialisation and urbanisation in China and other emerging economies”.

During this latest commodity super-cycle, inflation-adjusted prices of commodities rose in the range of 60 to 500 per cent between 1999 and 2010, the year in which they peaked. Oil price rose by 467 per cent, metals by 202 per cent and agricultural prices by 77 per cent — the largest price increases among all the four commodity super-cycles. The sharp rise in prices are after adjusting for inflation and hence the issue of whether the super cycle is ending arises.

Nic Brown, Head of Commodities Research at London based Natixis said, “We would agree that weak global growth (“stable but secularly lower levels of growth”) is one of the key characteristics behind the relative weakness of commodity prices over the past few years.”

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India’s mass cancellation of mining licenses spurs debate – by Shivom Seth (Mineweb.com – September 29, 2014)

http://www.mineweb.com/

Will a recent government decision erode investor confidence or help reshape an industry with lacklustre performance record?

MUMBAI (MINEWEB) – The mass cancellation of coal licences has sparked off an uproar in India Inc. Many captains of industry have said it could cause serious supply disruptions and exacerbate India’s on-going power crisis. Worse, the economy would have to pay a heavy price for the Supreme Court’s decision to cancel coal blocks and get them auctioned by the government.

“The authority of the government is at stake here. The damage is unlikely to be confined to only coal blocks. Any administrative decision taken in the future in the mining sector would be fraught with uncertainity, and would fail to inspire confidence and carry credibility,” said a senior corporate official.

The Supreme Court, India’s highest court, recently ruled that allocations of 218 coal blocks for mining were all illegal except for four, and cancelled the whole lot. The total investment at stake: $32.55 billion (Rs 2,000 billion). Coal producers could also face penalties of upto $3 billion.

Amar Ambani at broking firm IIFL said the focus would now shift to investor uncertainty about investing in the Indian mining industry. The impact of the verdict would be highest on JSPL and Hindalco in the metals space, he added.

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