Australia/New Caledonia/Papua New Guinea Mining – Page 100

Iron ore miners brace for more volatility – by Paul Garvey (The Australian – July 10, 2015)

July 10, 2015

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

A head-spinning 24 hours in iron ore may only be the start, with investors warned to expect more volatility in the market for Australia’s biggest export.

An early morning panic in response to an unprecedented plunge in the iron ore price yesterday transformed into a surprise rally for Australian iron ore miners as Chinese markets rebounded.

Yesterday had been shaping up as a bloody day for Australia’s iron ore sector following an 11 per cent plunge in the spot iron ore price to just $US44.10 a tonne. Both the closing price and the scale of the fall were the worst seen since the introduction of spot prices in 2009.

But a rally in Chinese markets and a rise in iron ore futures helped Australia’s miners not only recover early losses but, in many cases, close the day higher.

Fortescue Metals Group, having hit a six-year low earlier this week, was the biggest winner with a 6.6 per cent jump to $1.785.

BHP Billiton and Rio Tinto ready for iron ore’s ‘new normal’ – by Amanda Saunders and Tess Ingram (Australian Finacial Review – July 9, 2015)

July 9, 2015

http://www.afr.com/

Australia’s big two iron ore miners, Rio Tinto and BHP Billiton, believe the commodity will continue to be a “wealth generation machine for Australia” and expect volatility to recede, despite the heavy price falls in recent days.

Iron ore may be headed for $US40 a tonne after crashing through $US45 on Wednesday night, dropping more than 10 per cent in a single day. But Rio and BHP say they are well prepared for the possible new normal in prices.

Rio Tinto iron ore boss Andrew Harding told The Australian Financial Review that the iron ore price “is moving around its long-term average after coming off an unprecedented high that was never sustainable”. “We are seeing a pattern play out now that is entirely consistent with the history of all internationally traded commodities,” he said.

OPTIMISM LONG-TERM

The miner has cut costs, and prepared its iron ore division “to manage these fluctuations over the long term”. He maintains that the “long-term picture for iron ore remains sound”, and the commodity will “continue to be a wealth generation machine for Australia”.

Coal habits die hard as Australian miners boost exports – Peter Kerr (Sydney Morning Herald – July 8, 2015)

July 9, 2015

http://www.smh.com.au/

Australian miners are continuing to expand coal shipments despite weak demand in China and sliding prices, with three ports in Queensland setting new export records for the 2015 financial year.

Minerals Council analysis found Australian coal exports rose 5 per cent in the past year, with new records set at Dalrymple Bay, Hay Point and Abbott Point.

Those ports take the bulk of the coking coal coming from Queensland’s Bowen Basin, where BHP in particular has ramped up production in recent years from the mines it shares with Mitsubishi.

As the lowest-cost producer in the coking coal business, BHP and Mitsubishi have been happy to increase exports on the back of two new mines – Daunia and Caval Ridge – coming into operation during the past two years.

The rising production has coincided with fading demand for steel in China, creating an oversupply of coking coal that has had prices slump 21 per cent in the past year, according to RBC Capital Markets.

COLUMN-Miners paint rosy iron ore picture by skirting tough issues – by Clyde Russell (Reuters U.S. – July 8, 2015)

July 8, 2015

http://www.reuters.com/

LAUNCESTON, Australia, July 8 (Reuters) – Australia’s major iron ore miners have had a torrid year so far, battling low prices, engaging in an ugly slanging match with each other and dealing with persistent questions about the wisdom of their expansion strategies.

It was therefore not surprising when the mining industry’s peak body launched a report on Tuesday that puts quite a different spin on the iron ore industry.

The Minerals Council of Australia’s report, entitled “Iron Ore: The Bigger Picture”, points out the enormous benefits the industry has brought Australia and will continue to provide.

The major Australian iron ore miners, Rio Tinto and BHP Billiton, are members of the council and sit on the board of directors, but the country’s third-biggest producer, Fortescue Metals Group, is absent from the list.

The report doesn’t really make an effort to explain how the major miners got their forecasts on Chinese demand so wrong, and it glosses over whether they really expected the price to fall as low as it has.

Iron Ore’s Bear Market May Deepen as Clarksons Forecasts $40 – by Jasmine NgDavid Stringer(Bloomberg News – July 7, 2015)

July 7, 2015

http://www.bloomberg.com/

Iron ore will probably extend declines after falling back into a bear market on Monday as low-cost supplies from Australia and Brazil are set to expand further this half while demand stumbles in China.

Prices may drop toward $40 a metric ton, according to Clarksons Platou Securities Inc. A deepening slowdown in China’s steel industry and higher iron ore exports from the largest miners are weighing on prices, said Sanford C. Bernstein & Co.

Iron ore’s return to a bear market highlights that the same factors of surging supply and stalling demand growth, which dragged prices to a decade-low early April, remain at the forefront. Recent losses followed figures showing inventories in China rebounded, while exports in June from Australia’s Port Hedland were at a record. The Minerals Council of Australia on Tuesday defended local miners’ policy of adding output, saying cuts would be a failed strategy that would aid competitors.

“Momentum is clearly negative and that is going to be hard to reverse in the immediate short term,” Paul Gait, an analyst at Bernstein in London, said in an e-mailed response to questions. “The revealed preference of the miners is for volume over value, for tons ahead of price.”

Overcoming fear of heights to stop new coal mining province – by Ric Davies (Brisbane Times – Juley 6, 2015)

July 6, 2015

http://www.brisbanetimes.com.au/

Perth geologist Ric Davies participated in a Greenpeace-organised event called “Acts of Courage”.

I’m scared of heights – tall buildings, cliff tops and lifts. Glass lifts really get my blood pumping. Even the thought of it makes me nervous. But I’m fine with aeroplanes and helicopters, which kind of sounds a bit contradictory.

On Saturday, I faced my fears and made my way 50 metres up to the top of the main mast on the Greenpeace ship, Rainbow Warrior to show my support for a responsible resources industry.

Did I mention I’m also a geologist and I work in, and support, the resources industry? We all use natural resources extensively in our daily lives, from the moment we wake up in fact. The fact that toothpaste contains mineral sands really spins me

The products of the resources industry are everywhere – cars, phones, computers, houses, hospitals, transport, power, even money. All of these come from the ground, from mineral resources and human ingenuity. There’s a saying that “what’s yours is mined’ which, when you think about it, is very true.

A forest of inconvenient truths on iron ore – by Matthew Stevens (Australian Financial Review – July 6, 2015)

July 6, 2015

http://www.afr.com/

Andrew Forrest may not like the idea much but there is a good chance that Australian iron ore will generate more national income over the next decade than it did through the 10 years of boom times that came so suddenly to a halt last November.

A report prepared for the Minerals Council of Australia (or Rio Tinto) by Port Jackson Partners predicts that the Pilbara’s powerful iron ore troika along with a subset of much smaller producers will sell $615 billion of iron ore between now and 2025.

That is 40 per cent more than the $430 billion of revenue that those same producers generated through 2005-14, the decade that was punctuated by peak iron ore pricing.

“Australia now has a 50 per cent share of the seaborne market, a share built on vastly expanded production volumes, which now exceed 650 million tonnes per year. This compares with 170 million tonnes in 2000. This will enable the industry to add more value to the Australian economy over the next decade than over the previous 10 years,” PJP predicts.

REFILE-Iron ore price fall a sign China’s economic might waning – by James Regan and Ruby Lian (Reuters U.S. – July 3, 2015)

July 3, 2015

http://www.reuters.com/

SYDNEY/SHANGHAI, July 3 (Reuters) – Iron ore prices dropped to the lowest in more than two months on Friday, sending shivers through the mining industry and heightening worries that Chinese economic activity is slowing just as ore piles up at its ports.

China uses more than a billion tonnes of iron ore a year to make steel – 14 times the consumption of the United States – but Beijing’s efforts to shift the economy to consumer-led growth means steel consumption is peaking faster than expected.

“It’s clear China can no longer consume all the iron ore that’s out there, so something’s got to give,” said James Wilson, a sector analyst for Morgans Financial in Perth.

Shares in Australia’s biggest mining houses, including Rio Tinto , BHP Billiton and Fortescue Metals Group led the Australian bourse lower after the price of the raw material fell by 5 percent.

Iron ore drop, Vale start could make Fortescue Metals a marginal producer – by Amanda Saunders (Australian Financial Review – July 3, 2015)

July 3, 2015

http://www.afr.com/

Even as Fortescue Metals Group races to hammer down production costs, the leaner miner faces the prospect of becoming the marginal producer of the large iron ore players, once Brazil’s Vale brings its new mega expansion project online, analysts say.

Iron ore crashed spectacularly overnight on Thursday – falling 6 per cent to $US55.63 a tonne – its biggest one-day decline in a year. It snatched back much of the modest recovery made since hitting a record low of $US47 a tonne in early April.

UBS mining analyst Glyn Lawcock told AFR Weekend that “the concern the market has is that the all-in cash delivered price that FMG needs to be cash-neutral is ultimately going to be the dictator of where the long-term price settles”.

Fortescue could become the highest-cost of the large producers – Vale, Rio Tinto and BHP Billiton, and newcomers Roy Hill and Anglo American, he said.

“As more low-cost supply comes on, and high-cost supply is pushed out, ultimately the risk is that Fortescue becomes the most significant size marginal player.

Miners, mugs, Mr Asia – and bat droppings – by Trevor Sykes (Australian Financial Review – July 2, 2015)

July 2, 2015

http://www.afr.com/

Pierpont’s favourite drinking companions are geologists. Their first qualification is that they’re always thirsty, having spent their formative years chipping at rocks in the arid outback of Australia, where the nearest pub is usually 100 miles or more away.

Their second qualification is that they’re literally a down-to-earth bunch. They are quite skilled scientists, but the science of geology inevitably entails plodding around a lot of harsh landscape, so they rarely become academically out of touch with the real world.

Finally – and best of all – any geologist who’s been in the profession for a few decades has an excellent knowledge of which ore deposits are likely to be profitable and which aren’t: a characteristic which has saved your correspondent from many an investment disaster.

So Pierpont was overjoyed when he heard that John Gaskell had written his memoirs, because John is a boy who has been around. He started life in Wigan but now lives in Australia after a career that has taken him through Malawi, Malaysia, Tennessee and a few other places. As there are rocks all around our planet, most geologists have worked in the backblocks of more than one country, which gives them a good perspective on the world.

Rio Tinto chief Sam Walsh tells rivals to stop sledging – by by James Chessell (Australian Financial Review – July 2, 2015)

July 2, 2015

http://www.afr.com/

Rio Tinto chief executive Sam Walsh may not have mentioned Fortescue Metals Group or Glencore by name.

But the rival mining companies were clearly on his mind as he delivered the speech at the Melbourne Mining Club’s annual gathering in London on Wednesday.

Addressing a 560-strong crowd packed into a marquee next to Lord’s Cricket Ground, Mr Walsh said 2015 had been characterised by “a lot of commentary, free expert advice, and even some sledging”.

Mr Walsh, who has held the top job at Rio since January 2013, said it was in Australia’s national interest to stick to the principles of open markets at a “challenging” time for many commodities, including iron ore, coal and aluminium.

“Some have called it a crisis of confidence and talked themselves and others into a gloom,” he said.

“It’s been suggested to me there’s a direct correlation between your position on the cost curve and the volume of your opinion. The higher on the curve, the louder you get.”

Coal bid sets up clash of mining heavyweights – by Neil Hume (Financial Times – July 1, 2015)

July 2, 2015

http://www.ft.com/intl/companies/mining

Ivan Glasenberg and Sir Mick Davies set to go head-to-head over the Hunter Valley

It is a tantalising prospect for deal junkies: Sir Mick Davis going head-to-head with his arch rival Ivan Glasenberg in a takeover fight.

And one that has become a possibility with news that X2 Resources, the private equity vehicle set up by Sir Mick, is in discussions with Rio Tinto about a possible bid for its Hunter Valley coal business in Australia.

There is no love lost between Sir Mick and Mr Glasenberg, two of the biggest names in the mining world. Their relationship soured three years ago when Glencore reworked its friendly merger with Xstrata into a full-blown takeover that ousted Sir Mick as chief executive.

Since then Sir Mick has come back leaner and, arguably, hungrier. He’s raised $5.6bn from investors to buy mining assets for X2, with additional debt backing from at least one leading bank. His notoriously large frame, which inspired part of his nickname, has slimmed down. But standing between Sir Mick and his first deal is the hyper-competitive man who removed him from his last job.

Mick Davis is ready to make a contrarian bet on thermal coal – by James Wilson and Neil Hume (Financial Times – June 30, 2015)

July 2, 2015

http://www.ft.com/intl/companies/mining

Mick Davis, former chief executive of Xstrata, knows coal. By the time Xstrata was sold to Glencore in 2013, Mr Davis had turned the miner into the world’s largest exporter of thermal coal, the type used in power stations. Coal lay behind Xstrata’s decade-long record as a corporate success story, riding the commodities boom.

So it is no surprise that Mr Davis could make coal his first deal for X2, the private company he has established with the aim of creating a mid-tier mining group. Having secured equity commitments of up to $5.6bn from investors, X2 is talking to Rio Tinto, the miner with listings in London and Sydney, about acquiring its Australian coal assets in New South Wales.

No deal has been finalised and X2 and Rio both declined to comment, but Mr Davis appears ready to take a contrarian bet on coal.

The commodity has been suffering from a supply glut for years. The price of thermal coal has halved since 2011, and opposition to fossil fuels’ role in contributing to climate-changing carbon dioxide emissions is growing.

But Mr Davis is probably focused on the opportunity to buy coal assets at a low point in the commodities cycle.

Fickle nickel stocks poised for a comeback – by Trevor Hoey (Australian Financial Review – July 1, 2015)

June 30, 2015

http://www.afr.com/

Nickel takes the prize for being the most volatile of the base metals and while it is hovering around the low point of where it has traded since 2004 it seems to have finally found a base.

Nickel takes the prize for being the most volatile base metal, and while it is hovering around the low point of where it has traded since 2004, when the mining boom started to gain traction, it does seem to have found a base in the vicinity of $US5.70 a pound.

Analysts at UBS noted last week London Metals Exchange’s (LME) nickel inventory stood at about 460,000 tonnes and that over the past two weeks stocks had eased a total of 12,000 tonnes in 11 straight days of declines.

The broker also said cancelled warrants could potentially be a lead indicator of physical metal demand. A substantial increase in April imports from China strengthens nickel’s macroeconomic case.

UBS is forecasting a significant increase in price in 2016 and sees the current sub-$US6 a pound price as representing good value.

Australia’s coal miners struggle to tell a good story amid falling public opinion and prices – by Clint Jasper (Australian Broadcasting Corporation Rural – June 29, 2015)

June 29, 2015

http://www.abc.net.au/news/rural/

Australia’s coal miners feel like they are being hit from all sides, as public opinion about their industry and the price of their ore both continue downwards.

The fall in overall public opinion for the mining industry in general, and ways to address it, have been a topic of discussion for speakers and on the sidelines of two major mining conferences.

At the recent Association of Mining and Exploration Companies convention in Perth, Queensland-based U&M Mining’s Darren Walker admitted the shift in public opinion about coal mining had made operating in today’s environment much more difficult when compared to the good days of the mining boom.

He said groups and activists with an anti-coal agenda had made significant strides in recent years. “That is in part due to the different views and opinions about coal, its uses and its effect on the environment,” he said.

“I think the way that it has changed is that now our company has found we certainly need to sell the story and listen to the community more.”