Mining the legacy of Genghis Khan – by Dave Tacon (Sydney Morning Herald – September 29, 2014)

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

It’s more than 800 years since Genghis Khan and his Mongol horde galloped out of central Asia, but today Khan looms large in the Mongolian capital Ulaanbaatar. He is the face of commerce emblazoned on bank notes and multiple brands of vodka. There is even a Grand Khan Irish Pub.

From the steps of parliament, a statue of Khan glares down from a bronze throne. On the banks of the Tuul River, 54 kilometres east of the city, he sits mounted on the world’s largest steel horse, one hand grasping a golden whip.

Under Khan’s advance, all those centuries ago, cities fell, east and west, their civilian populations put to the sword. At his peak, Khan ruled a quarter of the world’s population. Only the Black Death halted his men and heralded his empire’s gradual decline, which culminated in the humiliation of Mongolia’s annexation by Russia in 1783.

Mongolia emerged from the 1991 collapse of the Soviet Union a dusty backwater, but with its culture mostly intact, isolated by a national language spoken only by its own people and a population of around 2.5 million. The once mighty empire was now sandwiched between two dominant neighbours, Russia and China, with combined populations almost 500 times their own.

Still, the last 20 years have seen a meteoric rise in the fortunes of Mongolia. The country is experiencing its most profound social and economic changes since Khan’s reign.

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India turns to nuclear as energy crisis deepens – by Aditya Phatak (Phys.org – September 28, 2014)

http://phys.org/

India’s new prime minister is turning to nuclear energy to ease a power crisis made worse by the cancellation of hundreds of coal mining permits, but he faces scepticism both at home and abroad.

Energy-starved India relies on coal to produce two thirds of its electricity, but power blackouts are common and demand is rising quickly as the economy and middle class expand.

On Wednesday, the Supreme Court cancelled over 200 coal mining permits because the licensing process was deemed illegal, making the need for alternative energy sources yet more pressing.

Prime Minister Narendra Modi has made nuclear a priority as he seeks to fulfil his campaign pledge to kickstart the country’s flagging economy.

But to succeed, he will need to convince a sceptical public that nuclear is safe, and dispel foreign proliferation concerns to secure the imports of uranium and technology that India needs to produce atomic energy.

“Concerns of power disruptions raised post the Supreme Court judgement on the coal issue show how reliance on single source of energy is unhealthy,” said Amit Bhandari, energy and environment fellow at Gateway House, a Mumbai-based think-tank.

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On the Ground in China’s Fight to Quit Coal – by Matt Sheehan (Huffington Post – September 23, 2014)

http://www.huffingtonpost.com/theworldpost/

TONGCHUAN, CHINA — World leaders are gathering Tuesday at the United Nations in New York City, hoping to talk their way out of decades of gridlock on climate change. The high-minded proclamations will make international headlines, but the reality is they matter little compared with what’s happening in places like Tongchuan, a dusty, smog-shrouded city in the beating black heart of Chinese coal country. This is a region where a large chunk of the world’s carbon emissions originate, and this is where government pollution controls and anemic markets for coal may provide the best hope of averting a climate disaster.

Tongchuan has long been emblematic of China’s take-no-prisoners approach to environmental resources, scraping as much coal as possible from the earth and feeding it into local cement factories. But collapsing coal prices, depleted natural resources and government pollution controls are forcing the city to reinvent itself.

After riding a 10-year export and infrastructure binge, China’s coal markets have slumped as the economy attempts to move toward services and domestic consumption. The China National Coal Association estimates that 70% of coal producers are losing money, and early 2014 saw China’s first sustained drop in coal consumption in decades.

Those market forces have been complemented by aggressive anti-pollution measures that followed a series of air quality disasters in recent years. Tongchuan’s home province of Shaanxi has pledged a 13% reduction in coal consumption by 2017, and Greenpeace estimates that if China meets all of its coal targets, the country’s 2020 emissions would drop by an amount equal to the combined 2013 emissions of Australia and Canada.

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COLUMN-China throws cold water on nickel bulls – by Andy Home (Reuters India – September 23, 2014)

http://in.reuters.com/

(Reuters) – It’s now a full eight months since Indonesia turned off the supply of nickel ore to China’s giant nickel pig iron (NPI) sector.

The unexpected fulfilment in January of a long-standing promise to ban exports of unprocessed minerals such as nickel ore sent the London nickel market on a super-charged rally, which peaked in May at a high of $21,625 per tonne.

Much of those gains have since been given back as the market kicks its heels waiting for some tangible sign of supply stress, not least in China. On the London Metal Exchange (LME), benchmark three-month nickel was trading either side of $17,000 on Tuesday morning.

China, however, is not playing its expected role in the nickel story, the country’s latest trade figures representing another dousing of cold water for the many nickel bulls.

Not that there has been any resumption in Indonesian exports of nickel ore. China’s trade figures for August showed imports of just 39,000 tonnes, very much in line with the previous three months. This material is, in all likelihood, iron ore with a high nickel content that China’s customs department has misclassified.

Moreover, the latest figures from the International Nickel Study Group show Indonesian mined nickel output collapsing to 138,000 tonnes in the January-July period from 421,000 tonnes a year earlier.

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Big iron miners too bullish on steel growth, says Chinese expert – by Matt Chambers and Barry FitzGerald (The Australian – September 22, 2014)

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

BHP Billiton and Rio Tinto are over-estimating long-term Chinese steel production growth and iron ore prices are unlikely to rise from current depressed levels, according to a senior representative of China’s steel industry.

Li Xinchuang, deputy secretary-general of the China Iron and Steel Association that represents China’s biggest state-owned steel mills, said Chinese steel production, now at about 800 million tones per year, could not grow beyond 900 million tonnes.

“That will be the peak level, we understand it cannot go over 900 million tonnes — we think roughly 800 million to 870 million,” Mr Li said on the sidelines of the International Mining and Resources Conference in Melbourne.

BHP and Rio, who are increasing iron ore production and putting pressure on prices, are both forecasting Chinese steel production will peak at 1 billion tonnes per year or more. “It cannot, trust me, I have been in the business 30 years,” he said.

Asked whether BHP and Rio misunderstood China, Mr Li said: “Maybe they keep that story for investors, I don’t know.” Mr Li, who is also president of the China Metallurgical Industry Planning and Research Institute, said the figure was based on previous steel use rates when industrialised nations like the US and Japan peaked in their steel use.

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Axiom eyes legal win over Japanese giant Sumitomo – by Sarah-Jane Tasker (The Australian – September 23, 2014)

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

AUSTRALIAN-listed minnow Axiom Mining is confident of winning its “David versus ­Goliath” battle with Japanese giant Sumitomo Metal Mining to develop one of the world’s largest nickel laterite deposits.

Axiom chief Ryan Mount is undaunted by his battle opponent, a metals major and Japan’s No 2 copper producer, and is hopeful that when the judge delivers his decision this week on the project, in the Solomon Islands, Axiom will win.

In what has been the longest-running and most expensive case on the Solomon Islands, Sumitomo has fought to be recognised as the developer of the nickel asset, after it was taken off the Japanese giant and given to Axiom by the traditional owners of the land.

Analysts have estimated that Axiom has spent more than $10 million on its court action. They have also outlined that Sumitomo spending millions to challenge Axiom’s ownership of the Isabel project was a clear indication that the asset was of great significance to a major company.

“It was worth pursuing. It will be of significant value to our shareholders. We feel confident as to our rights on this matter,” Mr Mount said. “We didn’t initially believe it would take this long.”

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China economic stimulus is like drinking beer – by Clyde Russell (Reuters U.S. – September 18, 2014)

http://www.reuters.com/

LAUNCESTON, Australia, Sept 18 (Reuters) – Many years ago my first-year economics lecturer at university used beer to explain the law of diminishing marginal utility.

While the first beer on a Friday night tastes great and gives immense satisfaction, each subsequent drink delivers less until you stop enjoying yourself, and eventually the utility becomes negative at the point where the alcohol makes you ill.

This was one of the few economic theories I grasped instantly as it was relevant and easily understood by an 18-year enjoying the new-found freedom of university life.

These days it strikes me that the law of diminishing marginal utility applies to efforts by the Chinese authorities to stimulate their economy in order to maintain growth close to the target of 7.5 percent per annum.

Each subsequent stimulus effort appears to deliver less of a kick to economic growth, and in some instances just seems to further fuel the imbalances that imperil the Chinese economy.

Of course, not all the stimulus efforts are equal, unlike my beer example, and therefore couldn’t have been expected to deliver equal outcomes. The point is that they appear to be delivering less in the way of economic growth each time, and for shorter periods.

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Posco sees Indonesia as a hot spot – by Joo Kyung-Don (Korea JoongAng Daily – September 18, 2014)

http://koreajoongangdaily.joins.com/

CILEGON, Indonesia — Sweat comes easily and often in Indonesia, where average daytime temperatures reach a humid 33 degrees Celsius (91 degrees Fahrenheit). And the hottest place in the country just might be Krakatau Posco, Southeast Asia’s first integrated steel mill.

“If you look at the history of steel industry, there is no mill on the Equator because it’s not easy to work in hot weather,” says Min Kyung-zoon, president of Krakatau Posco. “We are doing something that is outside the realm of common sense.”

The mill is a joint venture of Korea’s largest steelmaker, Posco, and Indonesia’s state-run steelmaker, Krakatau, in which the Korean company has a 70 percent stake.

It takes about 90 minutes, depending on Jakarta traffic, to drive to the industrial city of Cilegon on the northwest coast of the island of Java. Here, Posco is trying not only to make appositive change in the city, but in all of Indonesia.

For Posco, the success of Krakatau Posco – which has an annual capacity of 1.5 million tons each of slabs and steel plates – is important because it is the company’s first integrated steel mill overseas.

Considering that Posco was established 46 years ago in Pohang, North Gyeongsang, primarily by acquiring foreign technologies and know-how, it also signals the company’s evolving role in the global steel industry.

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Iron ore mafia flourish despite police action – by Naresh Chandra Pattanayak (Times of India – September 18, 2014)

http://timesofindia.indiatimes.com/international-home

KEONJHAR: The authorities in the past few days have crack down on iron ore smugglers in Keonjhar district, making several seizures of illegally-extracted ore. However, such action has done little to daunt mineral mafia of the region.

Sources alleged that authorities here are hand in glove with the ore smugglers and arrest only the small fish, allowing actual criminals to operate freely.

On Friday, 130 MT of illegally extracted ore was seized from Dumirta village in Sidhamatha reserve forest. On Thursday, 309 MT of iron ore was recovered from the reserve forest. On Wednesday, the mining department seized 400 MT ore from Murga-Bilepada road near Deojhar railway siding.

Around 839 MT iron ore worth Rs 20 lakh have been seized from Joda mining area in the past few months. Police and mining department officials have also seized several tippers, trucks and light vehicles carrying stolen iron and manganese ore.

Despite multiples raids in various forest areas to curb mineral theft, mineral mafia are continuing their activities in Joda, Bamebari, Rugudi, Barbil and Bolani police limits with impunity. Illegal mining is rampant in Sidhamatha, Kundurpani, Roida, Chormalda,Thakurani, Mahaparvat, Kalaparvat, Tankura, Murga reserve forest and some mining leased areas that are lying abandoned.

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Japan’s predicament a boon for future of energy exporters – by Brian Milner (Globe and Mail – September 18, 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.

This is another of an occasional series from The Globe and Mail’s Brian Milner, who visited Japan to assess the results of dramatic efforts to revitalize the world’s third-largest economy.

One commercial office building in Tokyo’s busy Uchisaiwaicho district is notable for its constant police presence. That’s because it’s the headquarters of Tokyo Electric Power Co. (TEPCO), provider of power to nearly 30 million people and one of Japan’s more reviled companies.

TEPCO gained its spot in the Hall of Shame over its dreadful handling of the Fukushima nuclear disaster triggered by the massive earthquake and tsunami in March, 2011, as well as subsequent revelations of poor maintenance and safety flaws and anger over the slow pace of compensation. Huge anti-nuclear demonstrations followed, and the public outcry has scarcely abated. As recently as its annual meeting in June, management had to fend off activist shareholders demanding a permanent end to nuclear power.

Now, a year since the complete shutdown of the rest of Japan’s 48 reactors for safety checks, those demands have taken on new urgency. The Nuclear Regulation Authority, the government’s watchdog, has given the green light for another utility, Kyushu Electric Power Co., to restart two reactors at its Sendai plant in southwestern Japan. Other utilities are seeking the go-ahead to turn another 18 reactors back on.

Prime Minister Shinzo Abe needs to get at least part of the country’s substantial nuclear capacity back on line to cut a soaring energy import tab – including hefty government subsidies – that makes Japanese industry less competitive and presents one more obstacle to his recovery strategy.

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COLUMN-China coal restrictions may have little impact on imports – by Clyde Russell (Reuters U.S. – September 17, 2014)

http://www.reuters.com/

LAUNCESTON, Australia, Sept 17 (Reuters) – Who to believe? The traders and analysts who say China’s new regulations on coal quality is a body blow to Australian exports, or the companies and their association who say the impact will be insignificant.

In this case, it seems far more likely that the impact will be minimal, but not non-existent, as the new rules will lead to changes in the composition of coal China imports. A far bigger impact may come from the curbs on transporting low-quality domestic coal, which may actually boost imports.

In theory, the Chinese ban from the start of 2015 on coal imports above certain ash and sulphur contents appears to favour Indonesia, the world’s biggest shipper of thermal coal, over Australia, the world’s top exporter of metallurgical coal and number two for thermal coal.

China’s new rules aren’t uniform across the country, but for exporters, the most relevant is the ban on using coal with ash content higher than 16 percent and sulphur of 1 percent for cities in the southern Pearl River Delta, the eastern Yangtze River Delta and three northern cities including Beijing, Tianjin and Hebei.

The southeastern cities are biggest users of imported coal, given their distance from the bulk of China’s own coal output. The fear for Australian exporters is that 80 percent of the 54 million tonnes of thermal coal it exported to China in 2013 exceeded the new ash limit, according to consultants Wood Mackenzie.

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As mining curbs bite, India offers market to glut-hit iron ore – by Manolo Serapio Jr. (Reuters India – September 16, 2014)

http://in.reuters.com/

SINGAPORE – (Reuters) – An oversupplied global iron ore market may find some relief from an unlikely source as former No.3 exporter India turns into a big importer due to a cutback in domestic production.

The country may ship in up to 45 million tonnes over the next three years as home-grown iron ore output falls short of domestic steel production needs, an executive at an influential industry group said.

India imported just 0.37 million tonnes of the steelmaking raw material in 2013/14, government data showed. But already JSW Steel, India’s third-largest maker of the alloy, has said it will import 6 million tonnes of iron ore in 2014/15 against zero a year earlier.

“There’s no option but to import to meet the shortfall. We’re looking at between 10 and 15 million tonnes every fiscal year over the next three years,” Basant Poddar, vice president of the Federation of Indian Mineral Industries, the only industry group for mining firms in the country, told Reuters by phone.

“The mine closures all over India, starting from Karnataka, Goa, Odisha and Jharkhand, have created a massive disruption to supply,” Poddar said.

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China ban on low-grade coal set to hit global miners – by Lucy Hornby, Jamie Smyth and Neil Hume (Financial Times – September 16, 2014)

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

Beijing, Sydney and London – China’s top planning agency has banned the use of low-quality coal in a further effort to address the country’s problem with pollution and its growing glut of the fuel. The move comes as a blow to international miners already smarting from a steep drop in iron ore prices.

Huge new coal projects in the west of China combined with slower than expected growth in the east have already hit China’s coal imports, which for the first eight months of the year are 5 per cent lower than the same period last year. Prices have tumbled.

Australian thermal coal prices, the benchmark for Asia, have dropped more than 20 per cent this year, and could decline further as the door to China closes.

The National Development and Reform Commission said on Monday it would ban the burning of coal with ash content of more than 16 per cent or sulphur content of more than 1 per cent from 2015 in populous and prosperous eastern cities that are the focus of national efforts to fight air pollution.

That would, in effect, bar the import of lower-quality coal from Australia, Southern Africa and elsewhere, since the cities along the east coast are also the biggest consumers of imported seaborne coal.

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Rinehart rejects talk of Korean raid on Roy Hill – by Andrew Burrell (The Australian – September 16, 2014)

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

GINA Rinehart’s Hancock Prospecting has rejected speculation that Korea Development Bank is planning to buy a 5 per cent stake in the magnate’s flagship $10 billion Roy Hill iron ore project in the Pilbara.

A report published yesterday by a Seoul-based industry journal said the state-owned bank was planning to purchase the stake in partnership with Korean pension fund firms and insurance companies for 170 billion won (about $180 million).

The market value of Roy Hill is likely to have slumped in recent months given the weaker outlook for iron ore prices, which have plunged to $US82 a tonne, although the low-cost Roy Hill project would still be profitable at current prices. The report in the Korea IT Times appeared to suggest that Korea Development Bank would buy the stake from Hancock Prospecting.

“There is absolutely no truth to the report,” said a spokesman for Hancock Prospecting, Mrs Rinehart’s private company. Hancock Prospecting owns 70 per cent of Roy Hill, while Japan’s Marubeni has 15 per cent, South Korea’s Posco holds 12.5 per cent and Taiwan’s China Steel Corp has 2.5 per cent.

Sources said Posco would be an unlikely seller of its stake after chief executive Oh Joon-Kwon last month praised Roy Hill as a key asset for the Korean company.

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COLUMN-The real problem for commodity nations is currency, not prices – by Clyde Russell (Reuters India – September 15, 2014)

http://in.reuters.com/

LAUNCESTON, Australia, Sept 15 (Reuters) – The pressing problem for some resource-rich countries isn’t that prices for commodities have dropped sharply, it’s that their currencies haven’t dropped in tandem.

The plight of Australia and Indonesia, the major commodity exporters in the Asia-Pacific region, is driven home by the fact that their currencies have actually gained against the U.S. dollar this year, even as commodity prices have plunged.

This is a body blow to earnings in those countries and defies both economic logic and precedent, which should have seen the Australian dollar and Indonesian rupiah start to drop as revenue from resource exports declined.

While the Australian dollar did slip almost 4 U.S. cents last week to trade around 90 cents early on Monday, it is still stronger than it was at the end of last year, when it fetched 89.03 cents. In contrast, Australia’s two major export earners, iron ore and coal, have dropped dramatically. Spot Asian iron ore .IO62-CNI=SI has fallen 39 percent so far this year, hitting $82 a tonne on Sept. 12, a five-year low.

Thermal coal at Australia’s Newcastle Port, an Asian benchmark, dropped to $66.07 a tonne in the week ended Sept. 5, a five-year low and down 23 percent from the start of the year. What is clear is that commodity currencies have failed to respond this year to weaker commodity prices in the way they did in the 2008 global recession.

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