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Export income dispute holds up Rio’s Oyu Tolgoi mine – Mongolia – by Terrence Edwards (Reuters India – July 4, 2013)

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ULAN BATOR, July 4 (Reuters) – The Mongolian government and Rio Tinto have not yet reached an agreement on whether the miner can repatriate earnings from the $6.2 billion Oyu Tolgoi mine, the country’s mining minister said, delaying first copper shipments.

The dispute could heighten investor concerns about the risks of mining in Mongolia and threaten Rio Tinto’s plans to grow its copper portfolio to ease dependence on iron ore.

Metals traders have been closely watching whether Rio gets official approval to export concentrate from Oyu Tolgoi amid a shortfall in shipments from the Grasberg mine in Indonesia, run by Freeport McMoRan Copper & Gold. The unlocking of ore shipments would increase supply in top copper consumer China and boost treatment and refining charges charged by smelters there.

Exports from the copper and gold mine were initially due to start on June 14, but were then postponed to June 21, before the Mongolian government told Rio to delay them again without setting a date. Uncertainty over the reasons for the delay has slashed the share price of other Mongolian miners.

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INTERVIEW-Indonesia trade minister eyes speedy end to Freeport contract talks – by Michael Taylor (Reuters India – July 2, 2013)

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JAKARTA, July 2 (Reuters) – A deadly tunnel collapse at Freeport McMoRan Copper and Gold’s Indonesian mine seven weeks ago should not delay contract talks with the U.S.-based firm, a member of the government negotiating team said, adding that he hoped to strike a deal as soon as possible.

Contract talks between Freeport Indonesia and the government were put on hold after a training area in a tunnel caved in on May 14, killing 28 people at the world’s No.2 copper mine in remote West Papua.

“It is tragic what happened, but Indonesia needs to be cognizant of where it needs to be going forward as an economic relevance to the world,” Trade Minister Gita Wirjawan told Reuters. “It is important for a conclusion to be reached sooner rather than later because it will reflect upon the desires of both Freeport and the Indonesian government.”

“ASAP,” said Wirjawan, when asked about the ideal time for the talks to be concluded. “I’m hopeful that there will be a meeting of minds between both sides.”

Open-pit mining at Freeport’s Grasberg mine is due to end after 2016, just five years before its current mining contract expires. Freeport estimates it will cost about $15 billion to turn the complex into a vast underground mine, an investment that only makes sense if it has a new contract with the Indonesian government beyond 2021.

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Mongolia neo-Nazis announce a change of tack – pollution control – by Carlos Barria (Reuters U.S. – July 2, 2013)

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ULAN BATOR – (Reuters) – A Mongolian neo-Nazi group has rebranded itself as an environmentalist organization fighting pollution by foreign-owned mines, seeking legitimacy as it sends Swastika-wearing members to check mining permits.

Tsagaan Khass, or White Swastika, has only 100-plus members but it is one of several groups with names like Dayar Mongol (Whole Mongolia), Gal Undesten (Fire Nation) and Khukh Mongol (Blue Mongolia), expanding a wave of resource nationalism as foreign firms seek to exploit the mineral wealth of the vast country, landlocked between Russia and China.

From an office behind a lingerie store in the Mongolian capital, the shaven-headed, jackbooted Tsagaan Khass storm-troopers launch bizarre raids on mining projects, demanding paperwork or soil samples to be studied for contaminants.

“Before we used to work in a harsh way, like breaking down doors, but now we have changed and we use other approaches, like demonstrations,” the group’s leader, Ariunbold Altankhuum, 40, told Reuters, speaking through a translator.

On a patrol to a quarry in grasslands a dusty two-hour ride from the capital, members wore black SS-style Nazi uniforms complete with lightning flashes and replica Iron Crosses. They questioned a mine worker against the sound of machinery grinding stones about paper work, opting to return in a week when the owner had returned.

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Rudd: China Boom Over – by Anthony Fensom (The Diplomat – June 27, 2013)

http://thediplomat.com/

Australia’s second-time Prime Minister Kevin Rudd has wasted no time hammering a nail in the coffin of the China boom after ending the political career of his predecessor. Making his first press statement Wednesday night after successfully challenging Julia Gillard for the Labor Party leadership, the Mandarin-speaking Rudd said Australians must diversify away from the Middle Kingdom.

“The global economy is still experiencing the slowest of recoveries. The China resources boom is over…and when China represents such a large slice of Australia’s own economy, our jobs, and the opportunities for raising our living standards, the time has come for us to adjust to the new challenges,” he said.

“New challenges in productivity. New challenges also in the diversification of our economy. New opportunities for what we do with processed foods and agriculture, in the services sector, and also in manufacturing…..Looking at our global economic circumstances therefore, we have tough decisions ahead on the future of our economy.”

China overtook Japan as Australia’s top trading partner in late 2007 due to China’s seemingly insatiable appetite for Australia’s energy and mineral resources, including iron ore, coal and gold. Two-way trade amounted to A$125 billion in 2012, with Australia becoming China’s sixth-largest source of imports.

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Mongolian president wins second term amid focus on mining curbs (Reuters India – June 27, 2013)

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ULAN BATOR – (Reuters) – Mongolia’s incumbent president, Tsakhia Elbegdorj, who wants more controls on foreign mining investments, has emerged as the winner of Wednesday’s polls with a narrow majority of votes cast, the country’s election commission said on Thursday.

Elbegdorj, 50, who has served as president since 2009, was the overwhelming favourite in the contest, played out amid worries about Mongolia’s faltering economy as well as the growing role of foreign mining firms.

The commission said Elbegdorj got 50.23 percent of the votes, beating a former wrestling champion, Bat-Erdene Badmaanyambuu of the Mongolian People’s Party, and health minister Udval Natsag, of the Mongolian People’s Revolutionary Party.

The lower-than-expected margin of victory could be traced to low turnout, said Julian Dierkes, an expert in Mongolian politics at the University of British Columbia, adding that participation was 10 percent lower than the last election.

“The consensus was that Elbegdorj was winning and I suspect that a lot of potential voters thought he was winning anyway, and didn’t vote,” said Dierkes, who is in Ulan Bator to monitor the election.

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Mongolia risk to hurt growth even with Oyu Tolgoi start-up, election – by Terrence Edwards and Sonali Paul (Reuters India – June 26, 2013)

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ULAN BATOR/MELBOURNE, June 26 (Reuters) – Mongolia’s efforts to protect its mineral wealth have scared investors so much that not even the first exports from its biggest mine and the expected re-election this week of a president who wants foreign capital will turn sentiment around.

With the country’s economic growth heavily tied to its vast copper and coal resources, Mongolia should have been celebrating the first copper sales to China from the $6.2 billion Oyu Tolgoi mine.

Instead, the government twice this month told mine operator Rio Tinto to delay the first shipment, partly due to a dispute over the repatriation of profits. Some analysts said the holdup was also aimed at keeping a lid on nationalism ahead of the presidential vote on Wednesday.

Industry experts believe exports will start soon, but the delays follow a year in which Mongolia introduced draft legislation to tighten control over mining activity and limit foreign investment.

“Whilst the country has lots of resource potential and holds Oyu Tolgoi, a world-scale mine, there’s too much headline risk,” said Darko Kuzmanovic, a portfolio manager at Caledonia Investments, which holds global mining stocks but has steered clear of Mongolia-focused miners.

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China’s Great Uprooting: Moving 250 Million Into Cities -by Ian Johnson (New York Times – June 15, 2013)

http://www.nytimes.com/

Articles in this series look at how China’s government-driven effort to push the population to towns and cities is reshaping a nation that for millenniums has been defined by its rural life.

BEIJING — China is pushing ahead with a sweeping plan to move 250 million rural residents into newly constructed towns and cities over the next dozen years — a transformative event that could set off a new wave of growth or saddle the country with problems for generations to come.

The government, often by fiat, is replacing small rural homes with high-rises, paving over vast swaths of farmland and drastically altering the lives of rural dwellers. So large is the scale that the number of brand-new Chinese city dwellers will approach the total urban population of the United States — in a country already bursting with megacities.

This will decisively change the character of China, where the Communist Party insisted for decades that most peasants, even those working in cities, remain tied to their tiny plots of land to ensure political and economic stability. Now, the party has shifted priorities, mainly to find a new source of growth for a slowing economy that depends increasingly on a consuming class of city dwellers.

The shift is occurring so quickly, and the potential costs are so high, that some fear rural China is once again the site of radical social engineering.

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Abe Offers $32 Billion to Africa as Japan Seeks Resources – by Isabel Reynolds & Takashi Hirokawa (Bloomberg News – June 1, 2013)

http://www.bloomberg.com/

Japanese Prime Minister Shinzo Abe pledged 3.2 trillion yen ($32 billion) to Africa as his government seeks to catch up with China in pursuing resources, markets and influence on the continent.

Abe announced the five-year commitment of public and private support in a speech today at theTokyo International Conference on African Development. Officials from about 50 nations are attending the meeting, held every five years, which is the biggest African development event outside the continent since it began in 1993.

Africa’s economic growth is luring Japanese exporters, while the government wants to tap the natural gas and oil there after the 2011 Fukushima disaster led to the closing of Japan’s nuclear plants. Chinese firms helped fuel $138.6 billion in China-Africa trade in 2011, almost five timesJapan’s commerce with the continent, according to the Foreign Ministry, citing International Monetary Fund data.

“China has become a far greater presence than Japan in Africa — it’s overwhelming,” said Kazuyoshi Aoki, a professor at Nihon University in Tokyo who specializes in African matters. “The difference lies in the level of determination. There’s a different perception of Africa’s importance.”

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UPDATE 3-Mongolia tells Rio Tinto to delay Oyu Tolgoi copper exports (Reuters India – June 21, 2013)

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ULAN BATOR, June 21 (Reuters) – Rio Tinto said its plan to start exporting copper from the $6.2 billion Oyu Tolgoi mine on Friday has been delayed at the request of the Mongolian government, heightening investor concerns about the risks of mining in the country.

Uncertainty over what was behind the delay sparked an exodus out of shares in other Mongolian miners on Friday, with Canadian and Australian listed miners exposed to the country sliding between 10 and 20 percent.

Journalists had been invited last week to attend a ceremony at the copper and gold mine on June 14 to mark the first exports. That was postponed to June 21, but the event was again cancelled at the last minute. Mongolia is due to hold a presidential election on June 26.

“Oyu Tolgoi is ready to start its first shipments of copper concentrate from its Mongolian mine and all necessary permits to do so have been received from relevant authorities,” Rio Tinto spokesman Bruce Tobin said on Friday.

“However, plans to start shipping on Friday 21 June have been postponed at the request of the government of Mongolia.” The company declined to comment on what was behind the latest delay.

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Rio Tinto’s Oyu Tolgoi mine in Mongolia to begin shipments – by Robb M. Stewart (Dow Jones/The Australian – June 20, 2013)

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

RIO Tinto plans to make its first shipment of copper and gold from the Oyu Tolgoi mine in Mongolia on Friday, an operation the mining company estimates will account for over 30 per cent of the country’s gross domestic product when it reaches full production in 2020, says a person familiar with the matter.

A ceremony marking the event would be held that day at the mine in the southern Gobi Desert, about 100km north of the Mongolia-China border, the person said.

The $US6.2 billion Oyu Tolgoi mine is key to Rio Tinto reducing its dependence on iron ore, which accounts for about 80 per cent of its earnings. Faced with volatile commodities markets, new Chief executive Sam Walsh is moving to simplify the company’s structure and is selling non-core and poor performing assets and targeting more than $US5bn in cost savings by the end of next year. A number of senior managers at Rio Tinto’s iron ore division in Western Australia were laid off this week.

The first copper-gold concentrate was produced at Oyu Tolgoi in January and Rio Tinto had forecast commercial output would begin by the end of June, provided it could settle a dispute with Mongolia’s government over costs and the further development of the mine.

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Nickel price to weaken further as pig iron sector cuts costs (Reuters/Economic Times – June 19, 2013)

http://economictimes.indiatimes.com/

SINGAPORE/LONDON: China’s nickel pig iron producers are turning in droves to a new technology that allows them to survive at lower prices, a move that suggests nickel prices, already mired at four-year lows, could fall further.

As nickel prices near $14,000 a tonne, however, output cuts by loss-making producers with higher costs could steady the market, analysts said.

Nickel, mainly used to make stainless steel, is down 17 percent this year. It is the worst performer of a industrial metals complex hit hard by China’s slowing growth. Fed by a commodity boom, prices peaked above $50,000 a tonne in 2007.

Production of nickel pig iron in China, a cheaper substitute for pure nickel used as feedstock by stainless steel mills, has more than quadrupled to an estimated 400,000 tonnes this year from 89,000 tonnes in 2008, according to Macquarie.

At the same time, technical innovations have slashed costs, which has in turn lowered the floor for nickel prices.

The break-even cost for nickel pig iron produced by rotary kiln electric furnace (RKEF) technology is now as low as $12,500 a tonne and its market share has soared, said Dennis Zamora, senior vice president for marketing and strategic planning at Nickel Asia Corp.

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Ibris Group plans $1.8 bln Indonesian nickel smelter – by Fergus Jensen (Reuters U.S. – June 19, 2013)

http://www.reuters.com/

JAKARTA – (Reuters) – Ibris Group, a Singapore-based miner, announced plans to build a $1.8 billion nickel pig iron plant in Sulawesi, the latest in a series of smelter projects after Indonesia began tightening controls on ore exports.

Indonesia, the world’s top nickel ore exporter, has been pushing for greater returns from its resource wealth. In 2009, it imposed a ban on unprocessed ore exports after January 2014.

The government, which has faced widespread criticism from miners and metal importers over the rules, has indicated it may relax the ore export ban for companies with smelter projects, however.

Singapore-based Ibris, which expects to export around 3 million tonnes of nickel ore this year, triple its 2011 level, plans to build the Rotary Kiln Electric Furnace smelter in two stages, with a total budget of around $1.8 billion.

“We will draw on our own funds as well as external investment. We have agreed with a consortium of financial investors to take a share of the project finance,” Ibris Group Chief Executive Arwan Ahimsa told reporters in Jakarta. Ibris would hold a 51 percent stake in the project.

“We have the engineering and basic design, and we are adjusting this to suit the site conditions, infrastructure requirements and support material,” Ahimsa said.

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Is China backtracking on attempts to control iron ore? – by Clyde Russell (Reuters India – June 17, 2013)

http://in.reuters.com/

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

LAUNCESTON, Australia, June 17 (Reuters) – It may be too early to start beating the drums of victory for free-market capitalism, but there are signs that China is stepping back from attempts to control the iron ore market.

Just three months after accusing major iron ore producers of manipulating prices, China plans to scrap it’s decade-old import licensing system, a move that may eliminate middlemen in the market, lower costs for steel mills and improve transparency.

It also looks like a strategic retreat for the world’s biggest buyer of iron ore in its battle to win pricing control from the big three producers, Brazil’s Vale and the Anglo-Australian pair of Rio Tinto and BHP Billiton .

The planned end of the licensing system will happen in the second half of the year, according to a Reuters report on June 13 that cited a source with knowledge of the matter. The current system requires import qualification licences to be granted by government-backed industry bodies like the China Iron & Steel Association.

It was designed to eliminate speculative traders from driving up prices and force the steelmaking industry to present a united front against the producers.

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Market appears too relaxed about China copper outlook – by Clyde Russell (Reuters India – June 14, 2013)

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(Reuters) – The market may be too sanguine about the outlook for copper prices, as import demand in top consumer China shows signs of increasing just as an anticipated global supply surplus is looking vulnerable.

Shanghai copper fell on Thursday when trading resumed after a three-day holiday, with the most active October contract dropping by as much as 3 percent to 51,350 yuan ($8,354) a tonne in early trade.

While the decline was largely a catch-up to weakness in London earlier this week, it’s indicative that traders aren’t overly concerned about the supply outlook.

The Shanghai slump came a day after Freeport-McMoRan Copper & Gold Inc declared force majeure on deliveries from its Grasberg operation in Indonesia, the world’s second-largest copper mine.

The legal clause allowing the company to miss contracted shipments comes after the mine was shut indefinitely after two accidents in May claimed the lives of 29 workers. Indonesian authorities want the mine closed until investigations into the incidents are completed, a process that may take several months.

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Chinese gold miners’ hope for riches shattered by Ghana crackdown – by Kathrin Hille (Financial Times/Globe and Mail – June 9, 2013)

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.

SHANGLIN, GUANGXI PROVINCE — When Wen Haijian left home on May 20 last year to dig gold in Ghana, he promised to bring back a fortune. Those hopes were shattered when an urn with his ashes returned last month.

“A gang of armed robbers came to his mine on April 16,” says his wife, sobbing in front of two framed pictures of Wen, a serious-looking, tall man with a square mustachioed face. “When he got up at night to check on the machinery, they shot him right in the head.”

In Shanglin, a poor county in the southwestern Chinese province of Guangxi with a population of 470,000 people, most of the inhabitants are old people, women or children because so many men have gone to Ghana. The county government estimates that 12,000 people from Shanglin are still in the west African country.

In Shuitai, Wen’s remote home village where almost everyone shares his surname, 100 of the 900 inhabitants are in Ghana. “On average, they go for three years,” says Wen Ruchun, a woman whose husband is in Ghana as well. “The first year, you build up the mine and earn your investment back, the second year you start making some money, and the third year you come home.”

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