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Asia Mining

COLUMN-China PMI not that strong, but may be good for commodities – by Clyde Russell (Reuters India – April 1, 2014)

http://in.reuters.com/

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

LAUNCESTON, Australia, April 1 (Reuters) – China’s official Purchasing Managers’ Index for March probably isn’t as strong as it looks, but that’s likely not a bad thing for commodity demand in the next few months.

The National Bureau of Statistics (NBS) PMI rose to 50.3 in March from 50.2 in February, matching the consensus expectation and indicating that the factory sector expanded slightly in the month.

The official measure, which focuses more on large, state-owned enterprises, is somewhat at odds with the HSBC PMI, which fell to an 8-month low of 48 in March, its third straight month below the 50 level that separates expansion from contraction.

It’s likely that the HSBC survey is painting a more accurate picture of current conditions in China, given the NBS measure tends to be seasonally strong in March, as this is the first month after the Lunar New Year holidays, which this year straddled January and February.

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Why are platinum and palladium not meeting analyst expectations? – by Lawrence Williams (Mineweb.com – April 1, 2014)

http://www.mineweb.com/

The impact of the 10 week old strike which has halted production at a number of South Africa’s platinum mines so far seems to have had little impact on pgm prices. Why?

LONDON (MINEWEB) – While every now and again some analyst or other comments that perhaps palladium is outperforming gold, or platinum is, on the year to date both the pgms have moved up pretty well pari passu with gold overall. All three metals are around 7-8% up since the beginning of the year. Indeed gold moved up substantially further during the height of the Ukraine crisis and while the pgms followed they did not quite do so to the same extent. As gold has fallen back though, the pgms have caught up again.

Many analysts have been preaching the investment merits of the pgms in the light of the long running platinum strike in South Africa which has seen a number of mines effectively shut down so far for some ten weeks – with no end in sight to the strikes yet.

The more aggressive AMCU which has become the dominant player among the platinum mine unions, has been demanding an effective doubling of the workers’ wages which the mining companies have concertedly said they cannot afford – and with many of the deep narrow reef platinum producers finding it tough to make any kind of profit even at current platinum prices they do have a point.

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Nationalism takes centre stage in Indonesia’s election campaign – by Rieka Rahadiana (Reuters Canada – March 30, 2014)

http://ca.reuters.com/

JAKARTA (Reuters) – Dressed in the style of Indonesia’s first leader, even using replica 1950s microphones, presidential hopeful Prabowo Subianto roared to thousands of supporters at a recent rally in the capital: “Indonesia cannot be bought”.

It is a nationalistic tone that has been on the rise in campaigns by the major political parties ahead of elections to choose a parliament on April 9 and a new president on July 9.

The question of whether Indonesia is souring on the foreign money that helped bankroll much of its growth was thrust into the spotlight this year with a new law that aims to boost the country’s profits by banning the export of minerals unless they have been processed first.

That threatens the fortunes of some of Indonesia’s biggest investors, notably two major U.S. mining companies with large operations in the country – Freeport-McMoRan Copper & Gold and Newmont Mining Corp. To continue exporting, mining firms must now either pay 20-25 percent tax from this year, rising to up to 60 percent by the second half of 2016, or invest hundreds of millions of dollars on new smelters.

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Raoghat mines in Bastar: Iron in their souls – by Paramita Ghosh (Hindustan Times – March 29, 2014)

http://www.hindustantimes.com/

Hills can be unkind, if you are climbing them, or even if you are trying to save them. They have no properly marked-out roads, the clock here is meaningless, but there is shade, and the trees here are everything. The trees point to the sky like compasses; they pelt down flowers, sour-sweet fruits; their leaves are eaten by cows and men; they house the gods, and gods here are like relatives – so why can’t the people keep them?

The nearby Bhilai Steel Plant (BSP) iron-ore mine had led to massive deforestation in Dalli-Rajhara, destroyed fields of grain and corn, led to land seizure, so would its mine at Raoghat be any different? For over 10 years, Badri Gawde, 38, a social worker from Antagarh, a tribal-dominated no-frills town, 20 km from the Raoghat hills and 80 from Kanker city, had been asking himself this question. Lately, he had begun to ask it a little more insistently, holding public meetings, facilitating study trips for academics, tying-up with Chhattisgarh’s unruly bunch, the mine workers, and the state’s two-bit village officials, the sarpanches, and thinking himself up into a leader. Why not say he was a Maoist? And they did.

Gawde’s political pedigree is mixed. Ever since January 24, 2014, when he was picked up at Antagarh, and held in Raipur’s Central Jail under the draconian Public Security Act, he has become, like Lalgarh’s Chhattradhar Mahato, nobody’s man. Naresh Thakur, a Kanker Congress leader, admits Gawde was “with the party”, the state Congress chief, Bhupesh Baghel, said he was a BJP man.

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Coal Mines Face ‘Crunch Time’ as ARMS Mulls Closing Mine – by Jesse Riseborough (Bloomberg News – March 28, 2014)

http://www.businessweek.com/

A slump in coal prices to a four-year low means the biggest producers are facing tough decisions to shutter unprofitable mines, Asia Resource Minerals Plc (ARMS) Chief Executive Officer Nick von Schirnding said.

His company, Indonesia’s fifth-biggest exporter of the power-station fuel, is considering closing its largest pit where almost half its production last year was sourced. The world’s biggest exporters, Glencore Xstrata Plc, Rio Tinto Group and BHP Billiton Ltd., have either halted coal operations or shelved expansion plans amid the price decline.

“This is crunch time for our business and the coal industry,” Von Schirnding said today. “Our most challenged pit is Lati, and that we are looking at very, very carefully. Clearly if thermal-coal prices continue at this level for a significant time, we are, as others are, going to be very challenged.”

Prices last week dropped to about $73 a metric ton, the lowest since November 2009, amid a supply glut that’s projected by UBS AG to be the equivalent of 4 percent of annual seaborne trade this year. Asia Resource Minerals today reported a wider full-year underlying loss of $173 million after selling coal for 16 percent less than in 2012.

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Stars Aligned for Nickel Bull Market – by Tim Maverick (Wall Street Daily – March 27, 2014)

http://www.wallstreetdaily.com/

Russian President Vladimir Putin’s actions have certainly stirred the pot in the energy market, as our Investment Director, Karim Rahemtulla, recently pointed out. And now, the ripples have spread far beyond the energy market to other commodity markets.

You see, the threat of Western sanctions against Russia has put renewed focus on a base metal that’s been in the doldrums for years… nickel.

That’s because the world’s largest producer of the metal, which is used to make stainless steel and nonferrous alloys, happens to be Mother Russia’s Norilsk Nickel (NILSY). NILSY mines a whopping 17% of the world’s nickel each year. Sanctions against such a huge source of nickel would indeed be a big deal, and share prices are reacting accordingly.

Nickel is suddenly in bull market mode, and prices recently hit their highest level since April at $16,230 per metric ton on the London Metals Exchange (LME). That represents a gain of more than 20% since nickel’s low on January 9, at $13,334 per ton, and meets the technical definition of a bull market.

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China’s ‘airpocalypse’ good news for commodities – by Howard Winn (South China Morning Post – March 27, 2014)

http://www.scmp.com/news

The mining industry may be in the doldrums but Robert Friedland, the executive chairman and founder of Ivanhoe Mines, remains undaunted and sees commodity prices bouncing back in two or three years, as he told the Mines & Money conference in Hong Kong earlier this week.

We make no apologies for giving you yet more of him, as he tells the best stories in the sector. Of hard and soft rocks, mineral grades and so on, he gives you all that, but tells you why it is important, and where this stuff is being used.

Naturally he has an interest in telling these stories since Ivanhoe is developing some of the world’s most significant finds in copper, zinc and gold in Africa. His big themes this week include copper. So why zinc? The metal is now recognised, along with potash, as one of the most intense organic fertilisers.

Some 60 per cent of soils in China and India have been depleted of zinc. Agricultural productivity increases significantly when added to the land as fertiliser.

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COLUMN-Indonesia nickel, bauxite ban yet to hit China – by Clyde Russell (Reuters U.S. – March 27, 2014)

 http://www.reuters.com/

(The opinions expressed here are those of the author, a columnist for Reuters.)

(Reuters) – Indonesia’s ban on exporting unprocessed nickel and bauxite has been in force for more than two months, but the impact has yet to fully show up in Chinese imports.

China’s trade data for February shows nickel ore imports from Indonesia were about 3.1 million tonnes, down only 2.5 percent from the same month a year earlier.

Indonesia’s ban on exporting unprocessed minerals took effect on Jan. 12, and while there have been some moves to relax restrictions on copper and other ores, the total ban on nickel and bauxite remains.

Nonetheless, Indonesia’s share of China’s total nickel imports in February was 87 percent, showing the world’s biggest buyer of commodities hasn’t made a marked shift as yet to alternative suppliers.

In the first two months of the year China imported 9.2 million tonnes of nickel ore from Indonesia, a 29.1 percent jump over the same period in 2013.

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UPDATE 1-India’s Goa should cap iron ore output at 20 mln T/yr -court panel – by Krishna N Das (Reuters India – March 26, 2014)

http://in.reuters.com/

NEW DELHI, March 26 (Reuters) – Iron ore production in Goa, usually India’s top exporting state of the raw ingredient for steel, should be capped at 20 million tonnes a year when an 18-month old mining ban is lifted, a court-appointed panel said, less than half peak output and curbing potential shipments to key buyer China.

But even with that limit, additional supply from Goa could further pressure iron ore prices in a global market expected to be in surplus this year as top miners boost output and Chinese demand slows.

India’s Supreme Court is likely to implement the recommendation from the panel, which it appointed in November to look at lifting the ban that was imposed to curb illegal mining. The court earlier allowed the sale of about 15 million tonnes of iron ore that had sat in a stockpile.

The panel also said in a report seen by Reuters that Goa should consider setting up a state iron ore mining company to minimise environmental damage by private miners. While analysts expect a gradual recovery in Indian iron ore exports over the next two years, the pace is likely to be modest and far from a record high of more than 117 million tonnes set in the fiscal year through March 2010.

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COLUMN-Cheaper Asian LNG depends on coal, Japan nuclear – by Clyde Russell (Reuters U.K. – March 25, 2014)

http://uk.reuters.com/

(Reuters) – Asian spot liquefied natural gas prices have started their seasonal downturn after the winter peak, but how far they will fall depends on whether coal remains cheap and if Japan restarts some nuclear capacity.

LNG for May delivery was around $16.50 per million British thermal units (mmBtu), down from levels above $20 per mmBtu last month, reached as utilities re-stocked after peak winter demand. Last year, spot LNG LNG-AS fell 28 percent from the peak of $19.67 per mmBtu on Feb. 18 to a low of $14.13 on May 3.

Prices peaked at $20.50 per mmBtu on Feb. 7 this year, and a drop of a similar magnitude would see them fall to about $14.76 around May. However, much will depend on whether Japan does restart some nuclear generation, and whether it and China are willing to use cheaper coal despite the higher pollution.

None of Japan’s reactors, which used to supply about 20 percent of the nation’s electricity, are currently online, although two are now on a shortlist for a final round of safety checks.

Public scepticism remains high three years after the earthquake and tsunami that caused the destruction of the Fukushima plant, which led to the idling of nuclear generation.

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NEWS RELEASE: Royal Nickel Welcomes Construction of World’s First Processing Plant Capable of Producing Stainless Steel Directly Utilizing Nickel Sulphide Concentrate

Leading Chinese Stainless Steel Producer Tsingshan Expects to Bring Plant into Operation in 2014

Follows Strategic Alliance between Tsingshan and Royal Nickel

TORONTO, March 24, 2014 /CNW/ – Royal Nickel Corporation (TSX: RNX) (“RNC”) is pleased to report that Tsingshan Holding Group (“Tsingshan”), a party with whom RNC entered a strategic alliance in March 2013, is currently constructing the world’s first integrated nickel pig iron (“NPI”) plant to utilize nickel sulphide concentrate as part of the stainless steel production process. The plant is expected to begin operation within this year.

This significant innovation represents the first time that nickel sulphide concentrate will be directly used to create stainless steel. This innovation offers significant potential benefits to the producers of suitable nickel sulphide concentrate feed including lower costs due to simpler processing compared to traditional smelting and refining, and greater flexibility for more potential partners and customers. This plant is also expected to be possibly capable of handling nickel sulphide concentrate anticipated to be produced from RNC’s Dumont Nickel Project (“Dumont”).

Mark Selby, Interim President and CEO, commented, “The Tsingshan plant in China is an industry first and a positive development for projects such as Dumont.

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Philippine finance minister says government must get more revenue from mining – by Rosemarie Francisco and Erik dela Cruz (Reuters India – March 24, 2014)

http://in.reuters.com/

MANILA – (Reuters) – The Philippine finance minister said he will push mining companies to pay bigger shares of their revenue to the government even though the industry maintains that taxes are already too high and higher ones could kill the business.

Taxation of Philippine miners is a thorny issue that has delayed development of the country’s vast mineral resources. President Benigno Aquino, seeking to raise revenue from mining, has met stiff resistance.

Philippine Finance Secretary Cesar Purisima told the Reuters ASEAN Summit on Monday that the government should be getting one-half of gross revenue from mining. Last year, according to a government agency, direct state revenue from mining was worth only 2 percent of total output, though miners also pay corporate income tax of 32 percent and other fees to different agencies.

“Where I start is 50-50,” Purisima told the summit, held at the Reuters office in Manila. “The return of the government must be two-fold — as owner of the mineral, and two, as a taxing authority.”

Still, Purisima said it is the Philippine Congress that will decide the revenue-sharing formula, taking into account the industry’s position.

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Investors worried about Ukraine miss the real problem: China – by Eric Reguly (Globe and Mail – March 22, 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 — What’s scarier if you are an investor with an over-the-horizon view: The Ukraine crisis or the economic slowdown in China?

Blinded by the media glare, you would probably pick the Ukraine crisis, which began last month with the ousting of the country’s corrupt, pro-Moscow president and may have reached its climax this week with Russia’s annexation of Crimea – Vladimir Putin’s Anschluss moment.

But maybe the climax has yet to come. Investors in North America and the European Union are duly worried that the sanctions designed to punish Mr. Putin and his cronies will evolve into full-blown trade, investment and banking sanctions that would severely damage the Russian economy, the world’s eighth largest. Broad, punitive sanctions could in turn trigger retaliatory sanctions that could damage the fragile EU economy (less so the U.S. economy).

We got a hint of the possible mess to come on Friday, when Russian Prime Minister Dmitry Medvedev threatened to raise the price that Ukraine pays for natural gas and sue the country for $11-billion (U.S.) in arrears to Gazprom, the Russian state gas exporter.

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Investors return to Indonesia, but World Bank warns of challenges – by Peter Alford (The Australian – March 24, 2014)

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

WHILE a resumption of strong portfolio flows so far this year suggests the Indonesia story is getting renewed and favourable consideration from foreign investors, the World Bank has warned the country faces a highly challenging 2014.

The bank’s new Indonesian Economic Quarterly, pointedly titled Investment in Flux, appears as investment confidence, domestic and foreign, has got another lift from the confirmation of Jakarta governor Joko Widodo will contest, and most likely win, the 2014 presidential race.

The decision by Indonesian Democratic Party of Struggle doyenne Megawati Sukarnoputri that “Jokowi” — not she — would carry the party’s banner in July lifted the Jakarta stockmarket 4 per cent in the final two hours of trade on Friday, while the currency strengthened nearly 2 per cent against the US dollar.

The 52-year-old former small businessman from Jogjakarta is perceived by investors, domestic and foreign, as by far the most market rationalist of the main candidates. A Jokowi administration is expected to promote public-private investment in critically underfunded sectors like transport infrastructure and healthcare.

The Jokowi effect reinforces strengthening sentiment about Indonesia apparent since late January, which in turn reflects significant improvements in current account deficit, government fiscal deficit and inflation outlook since the third quarter of last year.

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INSIGHT-Russia’s leading role in the Indonesian mining revolution – by Randy Fabi and Fergus Jensen (Reuters U.S. – March 23, 2014)

http://www.reuters.com/

JAKARTA, March 24 (Reuters) – Russia’s two metal giants have emerged as big winners from Indonesia’s new mining law, after leading a drive to get Jakarta to stick to its controversial mineral ore export ban in the face of opposition from miners and Asian buyers.

In its six-month lobbying campaign last year, United Company Rusal and Norilsk Nickel delivered a blunt message to Indonesian officials: We will only invest billions of dollars in smelters if you ban bauxite and nickel ore exports.

The effort seemed to have paid off, despite a denial by Indonesia that it was influenced. When the law came into effect this year, Indonesia enforced a water-tight export ban for only two major minerals – nickel ore and bauxite.

The halting of $3 billion of annual nickel ore and bauxite exports has already lifted the price of nickel and helped support aluminium, boosting the fortunes of Rusal and Norilsk, the world’s top aluminium and nickel producers, respectively.

At the same time, it has strengthened the case for the pair to invest billions of dollars in Indonesia to build smelters to replace costly capacity in Russia, a key part of a recovery plan for struggling Rusal and in line with Indonesia’s own aims to earn more from its minerals resources.

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