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REFILE-Indonesia ends 6-month stoppage of metal concentrate exports – by Wilda Asmarini and Fergus Jensen (Reuters India – July 18, 2014)

http://in.reuters.com/

(Corrects company name in 5th paragraph to “Lumbung Mineral Sentosa” from “Lumbung Mineral Stocks”)

(Reuters) – Indonesia has resumed exports of metal ore concentrates, a mining ministy official said, ending a six-month stoppage resulting from a new policy to improve returns on resources shipped out of southeast Asia’s largest economy.

Indonesia in January banned unprocessed ore exports and levied an escalating tax on metal concentrate exports as part of the policy to force miners to build smelters and process minerals domestically.

Disputes and confusion over the rules halted about $500 million worth of monthly mineral ore and concentrate exports. Prior to the ban, Indonesia was the world’s top exporter of nickel or and a major supplier of iron ore and bauxite.

However, last week shipments of iron ore, lead and zinc concentrate left the country, after two firms agreed to pay a 20 percent export tax, coal and minerals director general Sukhyar told reporters late on Friday.

“There are two firms that have started to export; Sebuku Iron Lateritic Ores (SILO), and Lumbung Mineral Sentosa,” Sukhyar said, adding that SILO had sent two shipments or around 100,000 tonnes of iron ore concentrate and Lumbung had shipped around 8,000 tonnes of lead and zinc concentrate already.

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UPDATE 3-Indonesia threatens to take over Newmont mine if output stays shut – by Wilda Asmarini and Fergus Jensen (Reuters India – July 18, 2014)

http://in.reuters.com/

JAKARTA, July 17 (Reuters) – Newmont Mining Corp risks its Indonesian mining licence being taken over by a state-owned firm if the U.S. miner does not resume copper production, the Southeast Asian nation warned, escalating a six-month dispute over export rules.

The move represents a hardening of the stance of Indonesia’s outgoing government. The mining ministry earlier this week said it could terminate Newmont’s mining contract in response to the miner stopping production and filing legal arbitration over the export rules.

The developments mark the latest twist in the dispute between Indonesia and U.S. miners Newmont and Freeport-McMoRan Inc that has led to a halt in copper concentrate shipments from Southeast Asia’s biggest economy.

Indonesia plans to soon send a letter to Newmont saying that the company has defaulted on its contract, said Sukhyar, director general of coal and minerals at the mining ministry. “The default is due to the stopping of production, so we can say they are negligent,” Sukhyar told reporters on Thursday.

A Newmont spokesman did not comment on the risk of the company losing its mining licence at its Batu Hijau copper mine but said in an email that the company is eager to resume production as soon as the government issues it an export permit.

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India’s coal shortage a boon for Australian miners – by Vicky Validakis (Australian Mining – July 15, 2014)

http://www.miningaustralia.com.au/home

In what could be good news for Australia’s coal industry, India’s power plants are running out of stock, forcing the country to increase its import levels.

India already imports 20 per cent of its coal requirements and shipped in 152 million tonnes of coal last year.

However rising electricity demands are putting an increasing strain on local production, with state-run Coal India Limited (CIL) asked to up its output by importing more of the commodity to mix with domestic supply.

A source told The Economic Times that India’s power plants were not running at optimum levels, with more coal required to help in a ramp-up.

There are currently 65,000 MW of power generation projects out of action. Although pooling will raise the cost of coal, it is seen as a way to help underperforming plants generate more electricity.

The demand for coal in India is expected to come in at 551.60 million mt in 2015, however supplies are predicted to amount to just 466.89 million mt, leaving an 84.71 million mt shortfall.

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Barrick teams with Saudi Arabian miner on copper project – Rachelle Younglai (Globe and Mail – July 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.

Barrick Gold Corp. will work with a prominent Saudi Arabian miner to develop its copper mine in the country, a partnership that the Canadian company aims to replicate with other projects such as its mothballed Pascua Lama in the Andes.

The Saudi Arabian Mining Company (Ma’aden) will pay $210 million (U.S.) to own half of Barrick’s Jabal Sayid copper asset, which has been delayed due to regulatory hurdles in the Kingdom.

Barrick, the world’s largest gold producer, said the state-owned Ma’aden’s “extensive experience in the Saudi Arabian mining sector,” would help move the project to completion.

Jabal Sayid is expected to start operating in 2015 with annual production of about 100-130 million pounds of the red metal during its first five years of operation, according to Barrick.

The joint venture marks the first partnership the company has formed since John Thornton became Barrick’s executive chairman earlier this year. Mr. Thornton has spoken to media about developing a long-lasting relationship with China, currently the world’s biggest gold producer and consumer.

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Five hours’ flying time winds clock back to the beginning – by Paul Garvey (The Australian – July 10, 2014)

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

THE economic growth of China in the past decade has generated tens of billions of dollars in profits for Australia’s mining companies, but it was all about Japan in the heart of the company’s Pilbara iron ore operations yesterday.

Shinzo Abe made a flying two-hour visit to the West Angelas mine in the remote pocket of Western Australia, following through on an invitation made by Rio Tinto chief executive Sam Walsh in Tokyo last year.

The five-hour journey across the country from Canberra to the Pilbara left its mark on Mr Abe, giving him more time to talk with Tony Abbott.

“I was extremely impressed that I could take a five-hour flight and still be in Australia. I’m really amazed by how big this country is,” he said through an interpreter, addressing a gathering on the edge of the gaping West Angelas open-pit as huge trucks rumbled past hauling iron ore bound for Asia.

“The flight took twice as long as the summit meeting we had yesterday, but I actually believe that we had deeper discussions on the flight and we will really be able to deepen our relationship as well.”

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Indonesia Ore Ban to Remain Should Widodo Win Poll – by Jake Lloyd-Smith and Yoga Rusmana (Bloomberg News – July 10, 2014)

http://www.businessweek.com/

Indonesia’s ban on ore exports will probably remain in place and speculation that the curb may be relaxed if Joko Widodo becomes the country’s next president is misplaced, said Australia & New Zealand Banking Group Ltd.

Nickel fell as much as 2 percent in London yesterday as unofficial counts showed Jakarta Governor Widodo won the most votes in the world’s third-biggest democracy, putting him ahead of Suharto-era general Prabowo Subianto. While the market perceives Widodo’s market-friendly policies as an indication that the ban will be lifted or at least watered down, that’s unlikely, analysts including Mark Pervan wrote in a note.

The ban in the biggest mined nickel producer, which was implemented in January to induce investment in processing plants, spurred forecasts for global shortages of the metal used in stainless steel. Nickel rallied in May to the highest level since 2012, and outperformed all other base metals this year. Widodo, who’s known as Jokowi, would probably relax the ore ban, Mike Dragosits, senior commodity strategist at TD Securities in Toronto, said yesterday as prices retreated.

That decision is unlikely “given the upside to revenue is substantial, and the fact that the policy has been in place for six months already and appears to be encouraging investment in processing facilities,” Pervan said.

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India needs to restructure Coal India to raise output -govt report – by Krishna N Das (Reuters India – July 9, 2014)

http://in.reuters.com/

(Reuters) – India needs to restructure state behemoth Coal India Ltd quickly to raise output to feed fuel-starved power plants, the finance ministry said in a report, as the country grapples with rising imports amid a push for electricity to all.

Coal India (CIL), the world’s largest coal miner, accounts for about 80 percent of India’s production of the black rock but has failed to meet its output targets for years due to delays in obtaining environmental approvals to expand mines and what critics say are inefficiencies owing to its size.

Millions go without power in India and blackouts are common. “The process of restructuring CIL needs to be pushed through swiftly to boost coal production,” said the finance ministry in the Economic Survey report presented to parliament on Wednesday.

The report – submitted a day before Finance Minister Arun Jaitley delivers his maiden budget – did not say what kind of restructuring it was recommending for CIL.

Reuters reported in May that newly elected Prime Minister Narendra Modi could explore breaking up some of CIL’s eight local units and making state governments equity holders to help speed land acquisition and other such processes.

The government should also allow commercial mining by private companies, said the ministry’s report.

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Copper miners’ paths diverge over Indonesia export tax – by Michael Taylor and Allison Martell (Reuters India – July 8, 2014)

http://in.reuters.com/

JAKARTA/TORONTO – (Reuters) – Six months into a dispute with Indonesia’s government that has halted copper exports, two U.S. mining giants are using very different tactics in a bid to resume shipments – behind the scenes talks or raising the stakes with an arbitration claim.

Freeport-McMoRan Copper & Gold Inc and Newmont Mining Corp account for 97 percent of Indonesia’s copper production, exporting tens of thousands of tonnes of concentrate a month before a row over a new export tax halted shipments.

As the latest bid to broker a deal runs up against Indonesia’s presidential election, Freeport is pushing on with government-led talks, with chief executive Richard Adkerson in Jakarta again last week.

Newmont, however, has filed for international arbitration, pushing to uphold the letter of the law on its contract but drawing a rebuke from the government which has questioned its “good will” in talks.

“Freeport is using the carrot and I guess Newmont is using the stick,” said Chris Mancini, analyst at Gabelli Gold Fund. Gabelli Funds holds stakes in both companies.

In an effort to push miners to build domestic smelters and processing plants, Indonesia introduced new mining export rules in January.

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NEWS RELEASE: BHP BILLITON SHIPS ONE BILLION TONNES OF IRON ORE TO JAPAN – July 2, 2014

 

BHP Billiton today celebrated the shipment of its one billionth tonne of iron ore to Japan with customers, joint venture participants and employees in Port Hedland, Western Australia.

BHP Billiton President Iron Ore Jimmy Wilson and BHP Billiton President HSE, Marketing and Technology Mike Henry were joined by joint venture participants ITOCHU Corporation (ITOCHU) and Mitsui & Co., Ltd (Mitsui) to mark the milestone in front of the Saiko bound for Japan.

Mr Henry acknowledged Japan’s industrial transformation and the importance of two-way trade in driving economic growth.

“In the late 1960s and through the 1970s, Japan grew to become an economic powerhouse through its expertise in steel manufacturing, heavy industry, technology and electronics,” he said.

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Kyrgyzstan’s Centerra Gold shares vulnerable to possible seizure after key court ruling – by Peter Koven (National Post – July 4, 2014)

The National Post is Canada’s second largest national paper.

TORONTO – The government of Kyrgyzstan has lobbed many nationalization threats at Centerra Gold Inc. over the past 17 years. But a court ruling has turned the tables and made a large chunk of the government’s own Centerra shares vulnerable to potential seizure.

The strange turn of events is tied to Canadian junior miner Stans Energy Corp., which is also active in Kyrgyzstan. In 2012, a parliamentary committee revoked Stans’ licence for a rare earths project under highly suspicious circumstances, and the company launched legal action to protect its rights.

Those efforts culminated in a key ruling this week, as an arbitration court in Moscow ordered Kyrgyzstan to pay US$118.2-million to Toronto-based Stans.

It is highly unlikely that Kyrgyzstan will respect the ruling and pay out any cash. That leaves Stans the option of securing verdicts against one or more of the state’s foreign assets. And a logical one to go after would be Kyrgyzstan’s 32.7% stake in Centerra, currently worth almost $500-million.

David Vinokurov, vice-president of corporate development at Stans, declined to comment on whether the company would target Centerra, also based in Toronto, shares for payment. But he acknowledged that it would be a logical place to look.

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UPDATE 2-India’s Sesa sees 6-fold jump in iron ore output, Goa mining set to resume – by Krishna N Das (Reuters India – July 3, 2014)

http://in.reuters.com/

NEW DELHI, July 3 (Reuters) – India’s Sesa Sterlite Ltd expects its iron ore output to surge six fold this fiscal year as it resumes production in Goa in September after a 19-month mining ban in the state, an executive of the country’s top private iron ore miner said.

A pick up in production as mines in India’s biggest iron ore-exporting state restart could hurt global prices of the steelmaking raw material .IO62-CNI=SI that have already lost almost 30 percent this year in an amply supplied world market.

Sesa Sterlite’s total iron ore output from India, where it operates in Goa and neighbouring Karnataka, is expected to reach 9.29 million tonnes in the year to March 2015 from about 1.5 million a year ago, Aniruddha Joshi, a vice president at the firm, told Reuters in an interview on Thursday.

Most of the output will be exported as Indian steelmakers are not keen on buying the low-grade ore from Goa at global benchmark prices, Joshi said. The country is currently the world’s tenth largest exporter of iron ore.

“It’ll suffice to say that only China can use Goan ore,” Joshi said. “Because it’s hematite coarse fines which can be mixed with very fine concentrates that are only produced in China in high quantities.”

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Remembering Bre-X: Suicide and the gold ‘find of the century’ – by Douglas Goold (Globe and Mail – June 24, 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.

With its wood carvings, objets d’art and pool surrounded by palm trees, it was hard to imagine a more luxurious hotel than the Shangri-La in Jakarta. When I knocked on the door of Suite 1234, a gruff John Felderhof greeted me. It was Feb. 28, 1997, and I was on assignment for The Globe and Mail. What neither of us knew was that this would be the last interview the controversial vice-president of exploration for Bre-X Minerals Ltd. would give before the whole Bre-X fable unravelled.

Bre-X had grown from a Calgary-based penny gold stock to a $6-billion company based on its claim to have discovered one of the world’s largest gold finds in the jungles of Busang, Borneo. The story was so compelling and well-known that I was frequently stopped in the street by people who recognized me eagerly asking whether I thought the estimates would continue to grow.

It was hard to imagine they could. On a conference call a few weeks earlier, Felderhof had famously suggested the find could be as much as 200 million ounces, with a value of $70-billion (U.S.), then the equivalent to the GDP of the Philippines. Regulators were looking into the claim.

Felderhof was born in Holland but grew up in Nova Scotia, and was an old-fashioned explorer with a major discovery to his credit. But the Bre-X phenomenon was increasingly looking too good to be true.

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RPT-COLUMN-China’s iron ore mines won’t shut fast enough to offset global supply boost – by Clyde Russell (Reuters India – July 1, 2014)

http://in.reuters.com/

LAUNCESTON, Australia, July 1 (Reuters) – Iron ore prices rose the most in 10 months last week, but hopes that this marks the start of a new bullish phase are likely to be dashed.

Spot Asian iron ore .IO62-CNI=SI ended last week at $94.90 a tonne, a gain of 3 percent from the prior week, with prices bolstered by an improvement in the outlook for manufacturing in China following the June HSBC flash Purchasing Managers’ Index showing expansion for the first time in six months.

Iron ore prices are still down 30 percent from the $134.20 a tonne at the end of 2013, but they have recovered since briefly dropping to a 21-month low of $89 on June 16.

The bullish case for a recovery is largely based on expectations that Chinese domestic production will drop as high-cost mines are forced to close on unsustainable losses. The loss of domestic output will open the door to increased imports, thus absorbing the extra supply being brought online by the major mining houses.

This view is bolstered by the improving outlook for steel demand on the back of faster investment in railway and other infrastructure spending as the authorities undertake what’s been characterised by several analysts as a “mini-stimulus” to ensure economic growth remains above 7 percent per annum.

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China Finds $15 Billion of Loans Backed by Fake Gold Trades (Bloomberg News – June 26, 2014)

http://www.businessweek.com/

China’s chief auditor discovered 94.4 billion yuan ($15.2 billion) of loans backed by falsified gold transactions, adding to signs of possible fraud in commodities financing deals.

Twenty-five bullion processors in China, the biggest producer and consumer of gold, made a combined profit of more than 900 million yuan from the loans, according to a report on the National Audit Office’s website.

Public security authorities are also probing alleged fraud at Qingdao Port, where copper and aluminum stockpiles may have been pledged multiple times as collateral for loans. Steps by the Chinese government to rein in credit by raising borrowing costs in recent years created a surge in commodities financing deals that Goldman Sachs Group Inc. estimates to be worth as much as $160 billion.

“This is the first official confirmation of what many people have suspected for a long time — that gold is widely used in Chinese commodity financing deals,” said Liu Xu, a senior analyst at Capital Futures Co. in Beijing. “Any scaling back by banks of gold-backed financing deals might lead to a short-term reduction in Chinese imports and also spur some sales by companies looking to repay lenders.”

As much as 1,000 metric tons of gold may have been used in lending and leasing deals in China, where commodities including metals and agricultural products are used to get credit amid lending restrictions, according to World Gold Council estimates.

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Largest Philippine Coal Miner Plans $400 Million Plant Boost – by Cecilia Yap (Bloomberg News – June 24, 2014)

 http://www.bloomberg.com/

Semirara Mining Corp. (SCC), the Philippines’ largest coal producer, plans to spend $400 million to boost power plant capacity, forecasting that two-thirds of profit will come from generation in three years.

The company may sign a syndicated loan for 70 percent of the cost of the expansion as early as next quarter, Chief Executive Officer Isidro Consunji said in an interview.

Fresh supply is being added as the Southeast Asian nation saw power demand rise by 50 percent in the 10 years to 2012, more than three times the 16 percent increase in generation capacity over the same period, according to government data.

“It’s more logical to grow the power business,” Consunji said in a June 20 interview. “It’s simpler to run and is more profitable. We do what’s easy for us and we forget what’s not.” Semirara fell 1.3 percent in Manila yesterday. The stock has risen 27 percent this year, overtaking the benchmark stock index’s 15 percent advance.

The expansion will increase the Calaca coal-fired power plant’s capacity by 350 megawatts to 1,200 megawatts, Consunji said. It bought the plant from the government in 2009 for $362 million.

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