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BHP Billiton to follow China on its next growth journey – by Vicky Validakis (Australian Mining – June 6, 2014)

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

BHP Billiton will invest heavily in energy and food as it follows China on its transition from a construction-led economy to a consumption power-house.

Speaking to the media in Beijing where he wound up a 10-day tour of meeting BHP’s commodity customers in China, India, Japan and South Korea, BHP boss Andrew Mackenzie said while Chinese steel production would remain strong the company was also keen to meet the country’s other needs.

“We see a Chinese economy gradually shifting from construction to consumption,” he told reporters yesterday, adding “and so, will we transition.”

He said materials with high consumer demand included copper, energy and potash. “Copper is core. Coal is core. Oil and gas is core. Potash is core,” Mackenzie said.

“We’ve exited diamonds. We’ve exited arguably medium-sized ore bodies which don’t fit with our overall strategy to own the great ore bodies of uranium and copper and to some extent in oil and gas. And we reduced our exposure to liquefied natural gas.

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UPDATE 2-Newmont says declares force majeure at Indonesian copper mine – by Michael Taylor and Fergus Jensen (Reuters India – June 5, 2014)

http://in.reuters.com/

(Reuters) – Newmont Mining Corp said on Thursday it has notified the Indonesian government that it is invoking force majeure at its Batu Hijau copper mine and plans to put most of the mine’s employees on leave with reduced pay.

Newmont and fellow miner Freeport-McMoRan Copper & Gold Inc – accounting for 97 percent of Indonesia’s copper output – are in dispute with the government over an export tax imposed in January.

“Despite our best efforts, we have not been able to export copper concentrate since January, and we still do not have an export permit,” Martiono Hadianto, CEO of Newmont’s Indonesian operations, said in a statement. “We are left with no option but to declare force majeure.”

A declaration of force majeure, which literally means “higher power”, allows certain terms of an otherwise legally binding contractual agreement to be ignored. Newmont’s move came after the Indonesian government launched a drive this week to force a breakthrough in the dispute, which has contributed to slower economic growth.

Both Freeport and Newmont have previously argued that they should be exempt from the tax, which kicks in at 25 percent and rises to 60 percent in the second half of 2016, before a total concentrate export ban in 2017.

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China Swaps Gusto for Rigor as It Learns From Africa – by Franz Wild (Bloomberg News – June 3, 2014)

http://www.bloomberg.com/

China’s gung-ho foray into Africa is waning. As trade with the continent surpasses an annual $160 billion, its companies are avoiding risk by taking smaller stakes in projects close to making money.

Cowed by capricious commodity prices, political instability and a string of lost investments, Chinese financiers aren’t as gutsy as when state-owned giants used their heaps of cash to propel the nation’s “Go Out” drive and whip up business abroad 15 years ago.

“There was a lot of enthusiasm and momentum,” said Clement Kwong, whose Beijing-based Long March Capital Ltd. clubbed together with other investors last year to take over a South African gold company. “That momentum is definitely reined in by a new level of risk aversion and caution.”

China surpassed the U.S. as Africa’s largest trading partner in 2009. Trade volumes soared 11-fold in the decade through 2013, according to data from the Geneva-based International Trade Centre. The quest for profit now trumps the wider aim of creating a Chinese footprint abroad.

Smaller private companies are taking the lead from the state-owned giants that prepared the ground. After many African leaders doubled back on the initial fervor for China, the new players are less conspicuous and score quicker returns.

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Indonesian minister spearheads drive to restart copper exports – by Wilda Asmarin and Michael Taylor(Reuters India – June 4, 2014)  

http://in.reuters.com/

JAKARTA – (Reuters) – Indonesia’s chief economics minister is spearheading a series of high-level government and industry meetings on Wednesday, aiming to broker a deal with foreign miners to restart copper concentrate exports that were halted nearly five months ago over a controversial tax.

Billionaire businessman Chairul Tanjung, who was appointed to the role last month, has made restarting copper exports a top priority amid a widening trade deficit, a slowdown in first-quarter economic growth and the prospect of job layoffs at mines.

Tanjung was due to attend a cabinet meeting on Wednesday morning to thrash out a new tax deal that could potentially be put before miners, including Freeport-McMoran Copper & Gold Inc and Newmont Mining Corp.

“After the cabinet meeting I will receive a report from the negotiating team at the coordinating economic ministry,” Tanjung said on Wednesday, speaking ahead of the cabinet meeting in the capital Jakarta. “Let’s see the result. If the results are finalized, I will officially receive the Freeport and Vale CEOs,” he said.

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COLUMN-Asian coal miners, traders face up to grim realities – by Clyde Russell (Reuters India – June 4, 2014)

http://in.reuters.com/

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

NUSA DUA, Indonesia, June 4 (Reuters) – “There is no skin left on my teeth to hang on with,” was the lament of a coal trader, expressing a sentiment echoed time and again at the industry’s largest gathering in Asia.

Normally coal miners, traders and shippers are a fairly optimistic bunch, their good humour likely shaped by a tough industry that is increasingly unloved across the world despite being essential to keeping the lights on.

But the mood at the Coaltrans Asia conference in the Indonesian resort island of Bali this week was subdued, and the question on everybody’s lips was how much lower can coal prices go.

At a roundtable session, a well-known analyst talking about the outlook for prices was mobbed, while an expert on valuing coal mines cut a lonely figure, underscoring that nobody is currently interested in investing in coal production.

The price of coal at Australia’s Newcastle Port , an Asian benchmark, fell to $73.89 a tonne in the week to May 30, down 14.3 percent so far this year and close to the 4-1/2 year low hit in March.

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China Builds Sulawesi Smelters as Ore Ban Cuts Jobs: Commodities – by Yoga Rusmana (Bloomberg News – June 2, 2014)

http://www.bloomberg.com/

Since Indonesia banned ore exports, the global nickel industry has been rocked by surging prices, Chinese workers like Zhang Qi Guang are building smelters in Sulawesi and business at Eva’s Jewel restaurant has collapsed.

Indonesia, the world’s largest producer of mined nickel, halted shipments Jan. 12, sending prices up as much as 56 percent and prompting Morgan Stanley to forecast a global output deficit over the next five years.

The government’s rationale for the ban was that too much wealth was leaving the country because the raw ore is worth far less than refined metal. It figured the world would come to its doorstep to build smelters that extract nickel from the red earth. While some of those investments have begun, the downside is idle mines, tens of thousands of lost jobs and piles of unwanted ore waiting to be processed. Sales at Eva’s Jewel in the town of North Konawe fell as much as 80 percent.

“You never get the sweet thing unless you eat the bitter thing,” said Alexander Barus, vice president of PT Sulawesi Mining Investment, a joint venture of Jakarta-based Bintangdelapan Group and Chinese steelmaker Tsingshan Holding Group, which is building two smelters on Sulawesi. “We feel sad about the people, but just you wait two or three years.”

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Indonesian export ban not a hangup for Vale N.L. – by Ashley Fitzpatrick (St. John’s Telegram – May 30, 2014)

http://www.thetelegram.com/

Long Harbour first nickel expected by end of second quarter

A ban by Indonesia on the export of unprocessed ores containing nickel will not affect the startup of Vale’s new hydromet processing facility in Long Harbour.

As previously reported, the plan for the facility in Newfoundland and Labrador is to use nickel matte from Indonesia during startup, before transitioning to ore from the Voisey’s Bay mine in Labrador as a main feed. Workers inspect equipment at Vale’s hydromet nickle processing facility in Long Harbour. — Telegram file photo

The Indonesian nickel matte, at about 78 per cent nickel, is considered less likely to cause difficulties for the Long Harbour commissioning in comparison to the material from Voisey’s Bay, at about 20 per cent nickel, as individual parts of the multibillion-dollar plant are checked and made ready for regular use.

According to Vale’s vice-president of corporate affairs in Toronto, Cory McPhee, the mining giant has been conscious of the potential for the ban on raw exports from Indonesia for years, as the company has multiple processing facilities in that country.

“The Indonesian restrictions on exports of unprocessed ore were first signaled by the Indonesian government years ago with the 2009 Mining Law which included stipulations calling for value-added domestic processing,” McPhee said in an emailed response to questions Thursday.

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Mongolia Sees $1 Billion Investment From Doubling Area for Mines – by Michael Kohn (Bloomberg News – May 28, 2014)

http://www.bloomberg.com/

Mongolia is seeking to expand its area available to mining to a fifth of the country, and by the close of the decade to end its dependence on foreign oil, according to a senior government official.

The outlook hangs on the passage of laws governing mining and energy, Vice Minister for Mining Erdenebulgan Oyun said last week in an interview. Both could be signed off by parliament within a month, he said.

The mining plans alone could unlock $1 billion in developments this year, easing pressure on Mongolia’s mineral-dependent economy. As recently as 2011, its growth was a world-beating 17.5 percent. That moderated to 11.7 percent last year, amid a collapse in foreign investment that has continued into 2014. The government last month embarked on a 100-day race to improve economic performance via dozens of measures to boost investment and cut imports.

Replacing Mongolia’s 1991 Petroleum Law would expand investment opportunities to include different types of contracts between parties, and regulate new energy sources including the nation’s nascent oil shale industry.

“The law is outdated and many industries are unregulated,” said Erdenebulgan, speaking in Ulaanbaatar. The new law is based on the “best international petroleum laws from different countries.”

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Nationalist drum-beating a threat to Indonesia’s prospects – by Andy Mukherjee (Globe and Mail – May 27, 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.

SINGAPORE — Reuters – Indonesian politicians are playing with the fire of economic nationalism. If actual policies mimic their pre-election rhetoric, the country’s long-term growth potential will suffer.

Both presidential hopefuls are chanting the mantra of self-sufficiency. Joko “Jokowi” Widodo, the Jakarta governor and front-runner in the July 9 poll, is calling for a “mental revolution” to reduce the country’s dependence on foreign investment and technology.

He also wants to restrict the sale of national banks to foreign investors, according to local media reports. His rival, ex-army general Prabowo Subianto, wants more of Indonesia’s mineral riches exploited domestically.

The mining issue has already proved problematic. In January, Indonesia banned exports of unprocessed nickel and bauxite, and imposed steep taxes on overseas shipments of raw copper, zinc and iron ore.

The government wants to nudge mining companies – particularly large multinationals – to put up local smelters and refineries; but the miners don’t seem to be interested. Users may switch to other suppliers if Indonesia prices itself out of the market.

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Raise resources for education and healthcare through disinvestment and denationalization of coal – Editorial (Times of India – May 26, 2014)

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

PM-designate Narendra Modi wishes to put the Indian economy on a new footing. A good way to set the ball rolling would be to pick up the threads of two ideas mooted by Atal Bihari Vajpayee’s NDA government. Public sector companies should be put up for disinvestment, not through piecemeal sale of shares but rather through big bang transfers of controlling stakes.

Second, coal mining must be denationalized. Both measures will invite determined opposition from vested interests. But failure to do so will mean a far greater number of people are deprived of opportunities to better their lives.

State ownership of a commercial venture such as Air India represents throwing good money after bad. Borrowing more money to do this will increase the size of fiscal deficit and eventually push up inflation. In this situation, how will a BJP government make good its promise to invest in building capabilities of India’s ‘neo-middle class’ through scholarships, better healthcare and extensive public transport?

Disinvestment is the answer as it allows for transfer of resources from areas such as airlines and steel plants — where private companies are competitive and do the job anyway — to activities that improve the productive capabilities of Indians.

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Former mining tycoon sentenced to death in China – by Megha Rajagopalan (Mineweb.com – May 23, 2014)

http://www.mineweb.com/

Chinese court gives Liu Han, who led Hanlong Mining, a death sentence on gang charges.

BEIJING (REUTERS) – A former mining magnate with suspected ties to the family ofChina’s retired security tsar Zhou Yongkang was sentenced to death on Friday on charges of leading a gang on a crime spree spanning two decades.

The sentencing of Liu Han, handed down by a court in the central province of Hubei, was the culmination of one of the highest-profile cases against a private businessman since President Xi Jinping took office last year and began a campaign against pervasive graft.

Liu’s younger brother Liu Yong, also known as Liu Wei, was also sentenced to death. Microblog statements from state media outlets China Central Television and the Xinhua news agency said the brothers, along with their 36-member “mafia-style” gang, commmitted intentional homicide.

Xi’s crackdown has zeroed in on Sichuan province, where Liu’s company – privately held Hanlong Mining – is based. Sichuan was a power base for Zhou, the retired chief of China’s vast domestic security apparatus, who stands at the centre of the biggest corruption scandal in more than six decades, sources have told Reuters.

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Can India surpass China as Asia’s fastest growing large economy? – Gwynne Dyer (Straight.com – May 22, 2014)

http://www.straight.com/

SOON AFTER WINNING an absolute majority in the Indian parliamentary elections, prime minister-elect Narendra Modi promised “to make the 21st century India’s century”. If he can avoid tripping over his own ideology, he might just succeed.

“India’s century” is a misleading phrase, of course, because no country gets to own a whole century. It wasn’t ever really going to be “China’s century” either, although China is a huge country whose economy has grown amazingly fast over the past three decades. What Modi meant was that India, the other huge Asian country, may soon take China’s place as the fastest growing large economy—and it might even surpass China economically, in the end.

At first glance this seems unlikely. India’s GDP is currently less than a quarter of China’s although the two countries are quite close in population (China 1.36 billion, India 1.29 billion). Moreover, the Chinese economy’s growth rate last year, although well down from its peak years, was still 7.7 percent, while India’s grew at only 4.4 percent.

But China’s growth rate is bound to fall further for purely demographic reasons. Due partly to three decades of the one-child-per-family policy, the size of its workforce is already starting to decline.

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COLUMN – Modi the new hope for gold, but may disappoint – by Clyde Russell (Reuters India – May 21, 2014)

http://in.reuters.com/

LAUNCESTON, Australia – (Reuters) – Gold bulls tend to flit from one thing to the next in their search for a reason for the precious metal to rally, with the latest hope being Narendra Modi’s election victory in India.

The reasoning appears solid enough. Modi’s pro-business Bharatiya Janata Party is likely to roll back some of the tough measures taken by the former government to curtail gold imports as part of efforts to lower India’s current account deficit.

Gold is India’s second-biggest import by value behind crude oil and the former government progressively raised the import duty to 10 percent and imposed a rule that 20 percent of gold shipped in must be re-exported as jewellery.

These measures, which gold bulls had largely dismissed as irrelevant to Indian demand, served to crunch imports, which started dropping sharply from the third quarter of last year.

Indian demand fell 26 percent to 190.3 tonnes in the first quarter of 2014 from the same period a year earlier, according to data from the World Gold Council (WGC).

This followed falls of 16 percent in the fourth quarter of 2013 and 32 percent in the third quarter of last year, declines which saw India surrender its status as the world’s top gold consumer to China.

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Modi exploring breakup of Coal India, opening up sector – sources – by Krishna N. Das (Reuters India – May 21, 2014)

http://in.reuters.com/

NEW DELHI – (Reuters) – Prime Minister-elect Narendra Modi is exploring breaking up state behemoth Coal India Ltd(COAL.NS) and opening up the sector to foreign investment to boost output and cut imports, said two sources with knowledge of the matter.

Red tape, strikes, protests against land acquisition and delays in obtaining environmental approvals have kept coal output far below demand, making India the world’s No.3 importer even though it sits on the fifth-largest reserves.

Modi wants to fix the coal sector quickly to ensure unbroken electricity supply across the country, as in his home state of Gujarat where manufacturing has flourished. Coal generates more than half of India’s power and is the cheapest form of energy.

Any reform will begin with Coal India, as it accounts for 80 percent of India’s total coal output, said a source at Modi’s Bharatiya Janata Party (BJP). The world’s largest coal mining company has failed to meet its output targets for years.

“The story is about Coal India, whose productivity as we all know has been poor,” said the source, a member of the BJP’s economic policy team.

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Iron ore prices teeter – by Matt Chambers (The Australian – May 20, 2014)

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

IRON ore prices last night fell below $US100 a tonne for the first time in nearly two years, hit by uncertainty around China’s steel output and stronger than expected Australian supply that earlier sent mining stocks sliding.

The only other time iron ore prices have previously slipped below $US100 this decade, briefly in 2012, spot-market buying of the nation’s biggest export dried up to the extent that prices rapidly fell another 13 per cent.

Benchmark Chinese iron ore prices fell $US2.20 to $US98.50 late last night, their lowest since September 2012 and in line with indications of weak buying demand shown in Chinese and Singaporean futures yesterday.

Benchmark prices had slipped 2 per cent to $US100.70 in China on Friday night. The fall follows Treasury forecasts in last week’s federal budget showing the price would fall below $US90 a tonne within two years.

This is in line with downgraded forecasts as Australian miners unexpectedly ramp up boom-time expansion projects on or ahead of time, and as the outlook for Chinese demand growth looks less certain.

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