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Asia Mining

In Indian mining town, the barons are back – by Rama Lakshmi (Washington Post – May 2, 2013)

http://www.washingtonpost.com/

Bellary, India — Until recently, this iron-ore mining district in southern India was a byword for cronyism and plunder. Now it represents redemption, though not everyone is cheering.

It was steel that made Bellary a boomtown; steel sought by China in the run-up to the 2008 Olympic Games. As demand soared, prices leapt 15-fold. Indians who cut corners and mined illegally while the government looked away got rich, including a modern-day robber baron named Gali Janardhana Reddy, whose 60-room mansion stood out among his spoils.

A government crackdown in 2011 shuttered the mines in the name of lawbreaking and corruption, and led to a prison sentence for Reddy, accused of treating Bellary like his private fiefdom.

But now other barons are back and unapologetically so. Their rebound reflects complicated attitudes about ambition, corruption and the law in an India where uneven enforcement of rules has fueled the rise of a new wealthy class in fields such as mining and real estate.

In a district election campaign underway here in the southern state of Karnataka, the candidates include a millionaire named Anil Lad, whose mining licenses were recently canceled for irregularities, as well as dozens of candidates fielded by a new political party launched by Somashekar Reddy, the mansion builder’s older brother.

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China’s ruthless foreign policy is changing the world in dangerous ways – by Jonathan Kay (National Post – April 30, 2013)

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

Are we witnessing the end of the “American age”? It depends whom you ask. But one thing is certain: Thanks to the near-bankruptcy of the American welfare state, Washington is losing both the means and desire to project power across the world. Inevitably, nations with deeper pockets — China, most notably — will fill the void.

This process already is underway in many parts of the world. That includes large swathes of Central Asia, where Beijing’s billions are beginning to revolutionize regional infrastructure and alliances — in dazzling but potentially dangerous ways.

Analyzing Beijing’s foreign policy is a relatively simple exercise. That’s because, unlike the United States and other Western nations, China doesn’t even pretend to operate on any other principle except naked self-interest.

On one hand, China has courted Israel as a partner in developing Mediterranean gas fields — but it also has been happy to do business with Israel’s arch-enemy, Iran, and has sold weapons that ended up in Hezbollah’s arsenal. In South Asia, meanwhile, China has cynically helped Pakistan check India’s regional role, even as China’s state-controlled press has warned Pakistan that Beijing may “intervene militarily” in South Asia if Pakistani-origin jihadis continue to infiltrate Muslim areas of Western China.

In the east, China’s policy has been to claim every square inch of the South China Sea, and intimidate every smaller country that dares to oppose its claims.

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Antam, Vale back on their feet due to increased sales volume – by Raras Cahyafitri (Jakarta Post – May 01 2013)

http://www.thejakartapost.com/

Listed nickel miners PT Aneka Tambang and PT Vale Indonesia are reporting increased net profits in the first quarter of the year due to higher sales volumes offsetting price pressure.

Aneka Tambang (Antam) reported booking Rp 462.43 billion (US$47 million) in net profits in the first three months of the year, up from Rp 379.19 billion in the same period last year, while Vale recorded $31.5 million in net profits, up 728 percent from $3.8 million.

“In the first quarter, our export volume of nickel ore increased and gold sales also rose, although their prices were almost similar to last year,” outgoing Antam president director Alwinsyah Lubis said after the company’s annual general meeting of shareholders on Tuesday.

Antam also reported that its sales volume for gold in the first quarter was up 63 percent to 93,526 troy ounces. Meanwhile, the firm’s gold sales were Rp 1.55 trillion, up 71 percent year-on-year, contributing 46.5 percent to Antam’s total revenues of Rp 3.34 trillion during the January-to-March period, up 35.5 percent from Rp 2.46 trillion in the same period last year.

Antam’s sales of nickel ore contributed about 33 percent of toal revenues, or Rp 1.12 trillion in the first three months of the year, up 67 percent compared to Rp 662 billion year-on-year, according to the company’s financial report.

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China’s slowing growth sending shockwaves through commodities sector – by John Shmuel (National Post – April 27, 2013)

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

China’s economy this month decelerated much faster than many economists had anticipated, sending shock waves throughout the commodity sector. Copper, known as the bellwether metal because it is particularly sensitive to changes in global economic growth, plummeted into a bear market last week. And Brent crude prices have contracted about 9% since peaking in late January.

The world economy depends on China to import more and more metals and oil to keep global demand healthy. The country has, after all, the world’s second-largest economy and it’s the biggest consumer of metals and energy. It’s a dependency that’s been in place for the better part of the past decade and that has helped fuel commodity prices and the stocks of the companies that produce them.

But China’s economy is clearly slowing. From double-digit growth just a few years ago, Chinese officials now expect the country’s gross domestic product to increase by 7.5% this year. And, of course, somewhere down the line, China’s economy will transition to an upper-income and slower one.

When that eventually happens, the global market will need another source of demand to fill the giant hole left behind by China. Which begs the question: Can another country ever become a China, so to speak? If not, alternative investors focused on commodities may be out of luck.

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Centerra Gold and Kyrgyzstan: time for a marriage counsellor – by David Trilling (Globe and Mail/Report on Business Magazine – April 26, 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.

The guys who had set up the roadblock agreed to meet me in the dirt lane outside the village of Barskoon’s school. At sunset, as arranged, a black Mercedes-Benz comes creeping along the edge of the soccer field. An electric window drops and a hand waves me over. The local “youth council” has arrived to talk about the gold mine.

The question at the heart of our meeting: Is a Canadian mining company here in the Central Asian nation of Kyrgyzstan taking advantage of the locals, as the young men say–or the other way around?

Naris Kalchayev and his two friends, all in their 20s, look a little out of place in the village. Kalchayev prefers speaking Russian over Kyrgyz. Wearing a turquoise baseball cap with a Superman decal pulled low over his eyes, he looks like a nightclub DJ—not a shepherd, like most of the local guys.

Kalchayev says he’s concerned about what’s happening on the remote plateau far above this sleepy hamlet. But it’s unclear if he is legitimately worried about the environment and corruption, or is just political muscle. He might be more persuasive if he didn’t use the words “blah, blah, blah” to punctuate his arguments.

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Sulawesi Mining to Invest $1.06b in Smelter – by Damiana Ningsih Simanjuntak (Jakarta Globe – April 26, 2013)

http://www.thejakartaglobe.com/

Sulawesi Mining Investment, an Indonesian-Chinese joint venture company, plans to invest $1.06 billion in a Central Sulawesi nickel mining operation, including a plan to build a smelter, an industry executive said on Thursday.

Alexander Barus, vice president of Bintangdelapan Mineral, the Indonesian firm in the venture, said that some $96 million would go toward the smelter and support the power plant in Morowali, Central Sulawesi, while $100 million would be for the mine and supporting facilities.

Halim Mina, vice president commissioner of Sulawesi Mining, said that the investment would be split into two stages. “For the first phase, the investment will stand at $340 million and the second phase at $640 million,” Halim said.

“The plan is for the first phase to become operational at the end of 2014,” he added, noting that about 30 percent of the first phase had already been completed.

He said the smelter’s output would mostly be exported to China, but gave no details, adding only that its products would be marketed domestically “in line with the demand” for nickel.

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Vale Says Some Progress Made on Contract Talks – by Muhamad Al Azhari (Jakarta Globe – April 24, 2013)

http://www.thejakartaglobe.com/home/

Vale Indonesia, the local unit of the global nickel giant, says it has made progress in mining contract renegotiations with the Energy and Mineral Resources Ministry.

“There are four items that we continue to discuss,” Vale president director Nico Kanter told reporters after a shareholders meeting in South Jakarta on Tuesday, declining to reveal more specific details on the talks. “We are optimistic. … If the government has good intentions, we also have good intentions.”

Nico said the company’s $2 billion nickel smelter plan will depend on the outcome of the renegotiations. “We have plans to boost the capacity of the smelter that we already have. Our target is to produce 120,000 tons of nickel in 2017,” Nico said.

Several miners are currently renegotiating their contracts after the passage of a 2009 mining law designed to elicit more local benefits from the sector, by increasing the royalties paid by miners and adding value to mineral commodities exports.

The 2009 law included an obligation for miners to submit plans to process raw materials domestically before 2014, limits on concession areas, higher royalties for the government and an obligation for foreign miners to gradually divest their shares to local entities five years after production commences.

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COLUMN-China iron ore moves unlikely to have desired effect: – by Clyde Russell (Reuters India – April 22, 2013)

http://in.reuters.com/

(Reuters) – The Chinese have launched another attempt to wrest some control of the global iron ore market from the dominant big three miners, but it’s likely this latest salvo will fall short of the target.

Beijing is planning new rules to force importers to use a domestic trading platform for the steel-making ingredient rather than one backed by the miners.

China, which buys about two-thirds of the world’s seaborne iron ore, will refuse to grant new licences to importers unless they use the China Beijing International Mining Exchange (CBMX) platform, according to a Reuters exclusive story .

This physical trading platform operates in competition to the globalORE system, based in Singapore and backed by the top three producers, Brazil’s Vale, and the Australian pair of Rio Tinto and BHP Billiton. The three are also members of the CBMX platform.

Under new rules, traders and steel mills seeking a new licence to import will now have to trade at least 500,000 tonnes of iron ore on the CBMX, a document on the regulations obtained by Reuters showed. Only Chinese firms are eligible for import licences.

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COLUMN-Asia’s coal appetite still defying forecasts for drop – by Clyde Russell (Reuters India – April 23, 2013)

http://in.reuters.com/

LAUNCESTON, Australia, April 23 (Reuters) – Asia’s coal markets are starting to resemble Waiting for Godot, Samuel Beckett’s absurdist play where the main characters wait in vain for something that doesn’t happen.

In coal’s case, the market is expecting demand, and by extension, prices, to drop amid anticipated slower economic growth in the region and rising electricity generation from alternative sources.

The problem is that so far coal imports by the big three Asian consumers, China, Japan and South Korea, are increasing, defying forecasts for the past several months of an imminent slowdown.

It’s not only that overall coal imports are gaining, it’s also that some suppliers are gaining market share, most oddly Australia, which is one of the highest-cost producers in the region. China’s coal imports jumped 20.2 percent in March from a year earlier to 20.52 million tonnes, and at 63.796 million tonnes are up 27.3 percent in the first quarter from the same period in 2012.

Japan’s imports were 15.821 million tonnes in March, an annual gain of 5.8 percent and the fiscal year that ended in March saw imports total 106.29 million tonnes, a record high and up 4.5 percent on the prior fiscal year.

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Indonesia could ease smelter rules for Freeport, Newmont -minister – by Yayat Supriatna and Fergus Jensen (Reuters India – April 23, 2013)

http://in.reuters.com/

JAKARTA, April 23 (Reuters) – Major miners in Indonesia, such as Freeport and Newmont, will get extra time to build smelters or sign pacts with smelters under construction, as they move to comply with a ban on exports of unprocessed minerals set for 2014, the industry minister said on Tuesday.

Mineral processing is politically sensitive in Southeast Asia’s largest economy, which is looking to garner greater benefits from its resources by developing processing industries, particularly where foreign firms are involved.

The comment spotlights division in the government over Indonesia’s rules on smelters, after remarks by the deputy mining minister last week that building smelters was not viable in some cases.

“We can give them extra time, facilities or incentives, but they have to start building a smelter or work with another company to build one,” Mohamad S. Hidayat told reporters.

“They have to follow our rules and regulations. No exception,” he added, referring to international mining giants Freeport-McMoRan Copper & Gold Inc and Newmont Mining Corp.

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Freeport near Indonesia supply deal, could ease contract renegotiations – by Yayat Supriatna and Michael Taylor (Reuters U.S. – April 22, 2013)

http://www.reuters.com/

(Reuters) – Freeport-McMoRan Copper & Gold Inc is near a deal to supply copper concentrate to an upcoming smelter in Indonesia, the smelter’s chairman said, which could help the U.S. miner in its contract renegotiations with the Southeast Asian nation.

The Indonesian government is pushing foreign miners, including Freeport’s local unit Freeport Indonesia, to add more value within the country, as well as trying to secure higher royalty payments and sales of controlling shares.

Last year Indonesia asked all miners to submit plans to build refineries or smelters ahead of a January 2014 ban on raw mineral exports. Freeport runs the world’s second-biggest copper mine, Grasberg, in west Papua province.

“After long negotiations, I just got a signal from PT Freeport (Indonesia) that they will be ready to sign a raw material supply contract with us soon,” PT Indosmelt’s chairman Natsir Mansyur told Reuters on Monday.

Besides PT Indosmelt, other smelters due to start construction before the 2014 deadline are PT Nusantara Smelting and PT Global Investindo, which together with the existing PT Smelting will give total copper concentrate capacity of 3.4 million tonnes, according to industry ministry data obtained by Reuters.

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China’s President Xi Jinping, a corrupt autocrat’s best friend – by Robert I. Rotberg (National Post – April 22, 2013)

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

African autocrats absolutely adore China’s President Xi Jinping. At a meeting last month with 13 prominent African leaders in Durban, South Africa, Equatorial Guinea’s hard-fisted President Teodoro Obiang Nguema Mbasogo led the others in lavishing praise on China. The front page of the weekend China Daily for March 29 trumpeted their obsequieousness and China-Africa friendship.

None of Africa’s despots dare bite the hand that has fed so well, and so consistently. While Chinese support keeps rolling in, these leaders enrich themselves and their inner circles while their people go without.

China directly supports the leaders and enables their continued internal tyrannies by refusing to “interfere” in local politics, by willfully ignoring well-documented trails of human rights violations, by turning a blind eye to egregious corrupt practices, and by protecting presidents such as Zimbabwae’s Robert Mugabe and Sudan’s Omar al-Bashir when the UN or other regional organizations threaten to investigate their regimes.

China has also helped to shield Bashir from the consequences of his indictment for war crimes by the International Criminal Court.

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China’s cooldown: Charting a new path for commodities – by Carolynne Wheeler and Barrie McKenna (Globe and Mail – April 20, 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.

BEIJING AND OTTAWA — Zhang Lianjin remembers the 2008 global financial crisis well. It nearly shuttered his brand-new metal casting factory in Wuhan, the steel centre of China.

Sales for the firm, SAFE-Cronite Asia, have been recovering slowly since the crisis. But while orders are still rising, so far this year they’re growing at only about half the pace the company was expecting. The company’s automotive business is strong, but there’s been a drop-off in orders tied to heavy machinery. And the broader steel industry in China is a worry.

“Many steel mills are really impacted. Some are even closing. There is too much [capacity] in steel mills in China, the economy is slowing down, the market doesn’t need so much and the production is much higher than the market needs,” said Mr. Zhang, the Beijing-based general manager of the European-owned company.

On top of overcapacity and massive overstocking, some competitors are also caught in a shadow banking crisis in which companies borrowed money against their inventory and find themselves unable to repay.

Now, firms like Mr. Zhang’s are having to adjust to the reality that China’s economy is maturing, and double-digit growth is a thing of the past.

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Gold slump tipped to fuel China’s acquisition hunt – by Sonali Paul and Sarah Young (Reuters U.S. – April 18, 2013)

http://www.reuters.com/

MELBOURNE/LONDON, April 18 (Reuters) – The collapse in bullion prices is set to rekindle gold mining takeovers as Chinese companies, sovereign wealth funds and private equity and hedge funds step in to rescue cash-strapped small and mid-sized miners.

Gold miners in China, the world’s biggest producer, have been chasing mines and listed companies in a bid to grow and match the largest global producers, like Barrick Gold Corp .

A seven-fold rise in gold prices between 2001 and 2011 spurred a run of gold mergers and acquisitions. Activity fell last year as major miners digested some big buys and smaller players held out for better offers, with global gold M&A tumbling to $14.6 billion from $43.3 billion in 2011, according to Ernst & Young.

But that is expected to pick up again this year as a 15 percent plunge in gold prices this month forces smaller miners, especially those with high-cost production or single assets, to seek partners to stave off a cash crunch.

“This might be the final shoe to drop that makes some people think ‘there’s no way I’m able to finance myself going forward, so I’ve got to think more seriously about my investors and give my investors a return by putting things together with people that have … got the cash’,” John McGloin, executive chairman of Africa-focused miner Amara Mining, told Reuters.

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The poetry of Potash Corp.’s attempted takeover by the Dead Sea – Editorial (Globe and Mail – April 12, 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.

There is a certain poetic justice in the difficulties that Potash Corp. of Saskatchewan Inc. is having as it tries to acquire a controlling interest in Israel Chemicals Ltd., although the government of Israel should not stand in its way, yielding to economic nationalism.

In 2010, the management of Potash Corp. was quite willing to let Canadian economic nationalism work against its proposed takeover by BHP Billiton Ltd., an Australian-British mining corporation; in the end, the federal government took the position that BHP’s purchase would not be of net benefit to Canada.

Yair Lapid, the new Israeli Finance Minister, has gone so far as to say that a takeover by Potash would be “an un-Zionist act.” Such an opinion as applied to a Canadian company presents a striking contrast with the Canadian government’s emphatic support for Israel, expressed in Prime Minister Benjamin Netanyahu’s invitation to John Baird, the Minister of Foreign Affairs, to help revive the Middle East process; Mr. Baird has described himself as a “true believer.”

Israel Chemicals, which mines the Dead Sea at Sdom (named after the Biblical Sodom), is the sixth-largest potash producer in the world, in a highly concentrated industry.

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