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COLUMN-China may lose pole position as copper price driver – by Clyde Russell (Reuters U.S. – August 27, 2014)

http://www.reuters.com/

Clyde Russell is a Reuters columnist. The views expressed are his own.

LAUNCESTON, Australia, Aug 27 (Reuters) – China has in recent years been viewed as the main driver of the global copper market, and while its influence remains strong, it’s possible that the rest of the world will take over in the short term.

Copper is currently one of the more divisive commodities among analysts, with opinions split over whether the industrial metal will continue its recent rally or lose ground over the rest of 2014.

The point is that considerable uncertainty exists over copper’s direction and much of that comes down to whatever view is held about the economic outlook for China, which consumes roughly 45 percent of the world’s copper.

While this is obviously a huge chunk of the market, it still means that the other 55 percent could exert a bigger influence, especially if its demand trend is changing.

London copper prices gained 3.4 percent between Aug. 14 and Tuesday’s close of $7,054 a tonne, although they are still down 4.2 percent since the start of the year.

The recent gains have largely been attributed to an improving outlook for growth in the United States and hopes that Europe may take steps to stimulate its struggling economies.

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UPDATE 1-Newmont withdraws mining arbitration case against Indonesia – minister – by Michael Taylor and Yayat Supriatna (Reuters India – August 26, 2014)

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Aug 26 (Reuters) – Newmont Mining Corp has withdrawn its international arbitration filing against the Indonesian government, the industry minister said on Tuesday, in a possible sign of a breakthrough over its seven-month dispute that halted exports.

Newmont’s Indonesian CEO Martiono Hadianto said the mining giant had reached a “constructive solution” over new mining rules, and expects to resume production at its copper mine soon. He declined to give additional details and a company spokesman could not be immediately reached.

U.S.-based Newmont, which declared force majeure at its Batu Hijau copper mine in June and then filed for arbitration in July, is in dispute with the Indonesian government over an export tax imposed in January that the U.S.-based miner says conflicts with its mining contract.

“I heard Newmont’s lawyer has withdrawn the case a few days ago,” Indonesia’s Industry Minister Mohamad Hidayat told Reuters, adding that investment board chief Mahendra Siregar had confirmed the news.

Indonesia’s Chief Economics Minister Chairul Tanjung is expected to make an announcement on Newmont’s arbitration on Wednesday, said Susyanto, the director of the law bureau for the mines ministry.

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China steel output growth doesn’t gel with coking coal – by Clyde Russell (Reuters U.S. – August 25, 2014)

http://www.reuters.com/

Clyde Russell is a Reuters columnist. The views expressed are his own.

LAUNCESTON, Australia – Aug 25 (Reuters) – Something doesn’t quite add up with China’s rising steel production, but falling coal output and imports so far this year.

China’s raw steel output was 480.76 million tonnes in the first seven months of 2014, up 2.7 percent from the same period a year earlier, according to data from the National Bureau of Statistics.

However, imports of metallurgical, or coking, coal used to make steel were down 12.6 percent to 36.01 million tonnes in the first seven months of the year, according to customs data.

Given that imports only meet roughly 10 percent of China’s coking coal needs, it’s essential to look at domestic coal output.

Total coal production in China in the first seven months of the year was 2.163 billion tonnes, a decline of 1.45 percent on the same period in 2013, with July’s output down 1.63 percent from the same month last year, according to data from the China Coal Transport and Distribution Association.

What isn’t clear is the breakdown of thermal to coking coal within those broader production figures.

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Insight – Behind Indonesia mining deal, newly minted minister and U.S. mining legend – by RANDY FABI, FERGUS JENSEN AND MICHAEL TAYLOR (Reuters U.K. – August 24, 2014)

http://uk.reuters.com/

JAKARTA – (Reuters) – As negotiations to resolve an increasingly bitter dispute over Indonesian mining rules teetered on the brink of collapse, the chairman of Freeport-McMoRan Inc (FCX.N) James “Jim Bob” Moffett flew to Jakarta for last-ditch talks.

Indonesia’s chief economics minister, Chairul Tanjung, said he had got to a point where he felt only talking directly to the 76-year-old U.S. mining legend might break a deadlock in the six-month row, which had already cost Southeast Asia’s top economy more than $1 billion and put thousands of jobs at risk.

In less than two hours the two men had reached an agreement, setting the stage to resume exports and restore badly needed government revenue to the world’s fourth most populous nation.

“I just convinced him that this was the maximum the government can give,” Tanjung said in an interview. “He believed me, I believed him and we shook hands. Very simple.”

Tanjung, one of Indonesia’s richest businessmen, was appointed minister in May and made reaching a deal to get mining exports going again a priority to revive an economy suffering its sharpest slowdown since the global financial crisis.

But a looming presidential election had made it even harder to reach a politically unpopular compromise with foreign miners.

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UPDATE 4-China says Australian tycoon’s attack “irrational and absurd” – by Ben Blanchard, Jane Wardell, Sonali Paul and Adam Jourdan (Reuters India – August 21, 2014)

http://in.reuters.com/

BEIJING/SYDNEY, Aug 21 (Reuters) – China’s foreign ministry has condemned a verbal attack by Australian mining mogul and politician Clive Palmer as irrational and absurd, after the businessman described China’s government as “bastards” who shoot their own people.

The Australian government has rebuked Palmer, who holds the balance of power in the parliament’s upper house. Foreign Minister Julie Bishop said she planned to contact the Chinese embassy to stress that the Australian parliament does not share Palmer’s “abusive” views.

“Palmer’s words about China in recent days are totally irrational and absurd. We strongly condemn them,” Ministry of Foreign Affairs spokesman Qin Gang said in a statement posted on the ministry’s official website late on Wednesday.

Qin’s statement came after a prominent Chinese newspaper, the state-run Global Times tabloid, said Australia should be taught a lesson. “China cannot let him off, or show petty kindness just because the Australian government has condemned him,” it said in an editorial in its Chinese and English editions.

“China must be aware that Palmer’s rampant rascality serves as a symbol that Australian society has an unfriendly attitude toward China.”

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UPDATE 2-Mongolia eyes economic boost from China president’s visit – by Terrence Edwards and David Stanway (Reuters India – August 21, 2014)

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ULAN BATOR/BEIJING, Aug 21 (Reuters) – Chinese President Xi Jinping proposed on Thursday the expansion of bilateral trade with Mongolia to $10 billion a year by 2020 as he arrived for a two-day visit aimed at deepening economic ties between the neighbours.

Xi’s arrival marks the first Chinese presidential visit in 11 years to Mongolia which has been hit by plunging commodity prices and a rapid decline in foreign investment. It is keen to agree to new deals on transport, energy and mining investment with its dominant trading partner.

The two countries signed a joint declaration upgrading their relationship to a “comprehensive strategic partnership”. They also signed agreements to cooperate further in areas such as economics, energy, mining and finance.

“Xi proposes to expand China-Mongolia trade to $10 billion by 2020,” China’s Xinhua state news agency said. Two-way trade was worth $324 million in 2002 but rose to $6 billion in 2013, accounting for more than half of Mongolia’s total foreign trade, Xinhua said.

In an article written by Xi for Mongolian newspapers, Xi said China would do all it could to help Mongolia develop. “China hopes that both countries can push cooperation on building inter-connecting railways and roads, the development of mines and processing,” Xi wrote.

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RPT-COLUMN-Reliance on cost-cutting the real BHP story – by Clyde Russell (Reuters India – August 20, 2014)

http://in.reuters.com/

Clyde Russell is a Reuters columnist. The views expressed are his own.

LAUNCESTON, Australia, Aug 20 (Reuters) – BHP Billiton’s plans to spin-off unwanted assets may have received a tepid welcome from investors, but the real news from the mining giant’s results is the limits to cost-cutting.

Delving into BHP’s results presentation on Tuesday shows the company has been successful in cutting expenses, with a 12 percent cut in cash costs at the flagship Western Australian iron ore operations, while the Queensland coal business recorded a 24 percent drop.

BHP said its productivity-led volume and cost efficiencies were $2.9 billion in the year to end June 2014, beating its target by $1.1 billion. Given the company’s net income for the period was $13.4 billion, the $2.9 billion in savings represents about 22 percent of the profit, which certainly looks impressive.

The problem comes when you start to look at the savings achieved, the potential for further cost-cutting and the likely trajectory of commodity prices.

BHP said it produced a record 225 million tonnes of iron ore in the 2014 financial year, which resulted in revenue of just under $23 billion, or roughly 34 percent of the group’s total revenue.

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Canadian sues Silvercorp over ‘false imprisonment’ in China – by Nathan Vanderklippe (Globe and Mail – August 20,2014)

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.

BEIJING — A Canadian man who spent years behind bars in China has filed a lawsuit accusing a mining company of conspiring with Chinese authorities to have him arrested and detained.

Kun Huang was an investigator for a hedge fund manager who in September, 2011, claimed that ore estimates at a Chinese mine owned by Vancouver-based Silvercorp Metals Inc. were too good to be true. Three months later, Chinese officials detained Mr. Huang at the Beijing airport, strip-searched him, seized his computer and placed him in a lengthy detention that culminated in a single-day closed-door trial and a two-year sentence for criminal defamation.

He was released on July 17, and returned to Canada the next day. Now, in a lawsuit filed Tuesday in the Supreme Court of British Columbia, Mr. Huang claims that Silvercorp masterminded his detention as a reprisal for his research, whose publication prompted a steep decline in the company’s share price.

Silvercorp, his court filing claims, effectively enlisted the local Chinese police as its “agent,” giving them money, encouragement and guidance “to falsely imprison and then later knowingly bring baseless criminal charges against Mr. Huang.”

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Australia rebukes mining tycoon over abusive attack on China – by Jane Wardell and Ben Blanchard (Reuters India – August 19, 2014)

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Aug 19 (Reuters) – Australian mining mogul and politician Clive Palmer was rebuked by the government on Tuesday for a tirade against China, in which he described its government as “bastards” who shoot their own people and want to take over the country’s resources.

Treasurer Joe Hockey said the remarks aired on Australian television on Monday were “hugely damaging”, noting that Palmer had benefited personally from doing business with China.

“Do not bring down the rest of Australia because of your biases,” he said. “They are a business partner for Australia, they’re our biggest trading partner, they buy a lot of our produce, and in doing so they help to lift the quality of life for everyday Australians.”

China is Australia’s biggest trade partner with two-way trade approaching $150 billion, representing more than 20 percent of Australia’s total trade.

Palmer, who holds the balance of power in the Australian parliament’s upper house, is currently locked in a legal battle with Chinese firm CITIC Pacific over cost blowouts and disputed royalty payments at an iron ore port in Cape Preston in Western Australia.

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Rio and BHP tighten grip on world iron ore – by John Addis (Sydney Morning Herald – August 18, 2014)

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

Mexican drug cartels have been diversifying into the iron ore business, smuggling ore worth about $US1 billion a year into China. But it’s the emergence of a more legitimate cartel – one run largely by Australians – that should worry China more.

Rio’s latest result shows how powerful the big three global producers have become. The company’s results for the six months to June 30, with underlying earnings rising 21 per cent to $US5.1 billion ($5.47 billion), are remarkable given that iron ore prices actually fell 20 per cent over the period.

After slashing costs, capital expenditure and debt, management hinted at higher dividends and more buybacks. If the mining boom is supposed to be over, no one told Rio Tinto.

The really interesting element to the result concerned production increases. Although lower iron ore and coal prices stripped $US1.4 billion from underlying earnings, volume increases, particularly in iron ore, offset that fall by more than $US900 million. All up, iron ore contributed more than 90 per cent of total profit.

With China slowing and the country’s government frantically shifting spending away from capital expenditure towards consumption, which dampens demand for ore, Rio Tinto and BHP are expanding output.

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COLUMN-Is China’s economy like Clouseau’s inflatable parrot? – by Clyde Russell (Reuters U.K. – August 14, 2014)

http://uk.reuters.com/

Clyde Russell is a Reuters columnist. The views expressed are his own.

LAUNCESTON, Australia, Aug 14 (Reuters) – Why does the Chinese economy remind me of Chief Inspector Jacques Clouseau?

One of the many memorable scenes featuring the late Peter Sellers as the bumbling French detective comes in the Revenge of the Pink Panther, when he disguises himself as a peg-legged Swedish sailor, complete with an inflatable rubber parrot on his shoulder. [here ]

Problem is the parrot leaks, requiring Clouseau to flap his arm to operate a pump to re-inflate the bird, which eventually pops off as too much air is put in.

The connection to the Chinese economy is that once again a set of softer-than-expected economic numbers has the market anticipating that the authorities will act to boost activity. Like Clouseau’s parrot, every time the economy loses some air, the expectation is that it will be pumped up again and it will return to health.

The release of economic data that failed to meet expectations on Wednesday is the latest case in point. Credit figures showed that the amount of money flowing into the Chinese economy fell to a six-year low in July, while growth in investment, retail sales and bank lending was short of the market consensus.

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Australian state approves $2 bln rail line for Adani coal project – by Sonali Paul (Reuters India – August 14, 2014)

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MELBOURNE – Aug 14 (Reuters) – India’s Adani Mining has won state approval to build a rail line for its $15 billion Carmichael coal project in Australia, it said on Thursday, bringing it a step closer towards making a final decision on whether to go ahead with the massive scheme.

The state of Queensland approved the A$2.2 billion ($2 billion) North Galilee Basin Rail project, a 300 kilometre (186 mile) railway to connect the Carmichael mine and potentially other mines in the untapped Galilee Basin to the east coast port of Abbot Point.

Despite analysts’ views that Adani’s project would be unprofitable at current coal prices, the company said it remained committed to pushing ahead with it to supply coal to power stations in India.

“Adani looks forward to continuing to work with our project partners and all levels of government to see this through,” Adani Mining, the Australian arm of Adani Enterprises, said in a statement.

Adani recently signed an agreement with POSCO Engineering & Construction Co Ltd to build the rail line. Costs and other details of the contract are due to be set by the end of this year.

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Asbestos industry still strong in developing world – by Katy Daigle (Canadian Manufacturing.com – August 12, 2014)

 http://www.canadianmanufacturing.com/

Quebec was the world’s biggest asbestos producer until it exited the business in 2012 after many questioned why it mined and exported such a material

The Associated Press -VAISHALI, India  – The executives mingled over tea and sugar cookies, and the chatter was upbeat. Their industry, they said at the conference in the Indian capital, saves lives and brings roofs, walls and pipes to some of the world’s poorest people.

The industry’s wonder product, though, is one whose very name evokes the opposite: asbestos. A largely outlawed scourge to the developed world, it is still going strong in the developing one, and killing tens of thousands of people each year.

“We’re here not only to run our businesses, but to also serve the nation,” said Abhaya Shankar, a director of India’s Asbestos Cement Products Manufacturers Association. In India, the world’s biggest asbestos importer, it’s a $2 billion industry with double-digit annual growth, at least 100 manufacturing plants and some 300,000 jobs.

The International Labor Organization, World Health Organization, the wider medical community and more than 50 countries say the mineral should be banned. Asbestos fibers lodge in the lungs and cause many diseases. The ILO estimates 100,000 people die every year from workplace exposure, and experts believe thousands more die from exposure outside the workplace.

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Metal production expands 17.11% – by Czeriza Valencia (The Philippine Star – August 13, 2014)

http://www.philstar.com/

MANILA, Philippines – Philippine metallic production rose by 17.11 percent in terms of value in the first quarter of the year on increased revenues from gold production, the Mines and Geosciences Bureau (MGB) said yesterday.

The aggregate value of metal production for the first three months of the year is placed at P21.98 billion, up by P3.21 billion from P18.77 billion recorded in the same period last year.

Gold production accounted for 38.56 percent of the total production value during the period with aggregate earnings of P8.48 billion, up 17 percent from P7.27 billion in the comparative period.

Higher gold production during the first quarter was due to “substantial” increase in production in the following projects: Didipio gold project of Oceana Gold Philippines Inc. in Nueva Vizcaya, Toledo copper project of Carmen Copper Corporation in Cebu, and Padcal copper-gold project of Philex Mining Corporation in Benguet.

Revenues from direct shipping nickel ore and nickel sulfides comprised 34.80 percent of the total metal production value for the period at P7.65 billion.

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Steel consortium undecided on size of Afghan iron ore investment – by Krishna N Das (Reuters India – August 11, 2014)

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NEW DELHI – (Reuters) – A consortium led by the Steel Authority of India (SAIL) (SAIL.NS) has yet to decide how much it will commit to an iron ore project in Afghanistan that was originally supposed to be a $10.8 billion investment, SAIL’s chairman said on Monday.

The steel ministry said in December that the group had proposed new terms and planned to invest about $2 billion in three iron ore mines and a steel plant.

But SAIL Chairman C.S. Verma said the consortium had not signed a final deal and total investments could only be decided after having a detailed project report.

“Conditions are quite difficult,” he said, referring to security problems and a lack of infrastructure in the area. “We are keeping all our options open.” “Only time will tell how we are able to take up this proposal,” he said after announcing SAIL’s April-June quarter results.

The consortium also includes Indian companies such as NMDC (NMDC.NS), Rashtriya Ispat Nigam, JSW Steel (JSTL.NS), Jindal Steel & Power (JNSP.NS) and Monnet Ispat & Energy (MNET.NS). As part of its investment, it could spend $75 million to $100 million on the initial exploration of the mines, Verma said.

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