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

COLUMN-BHP downgrades China steel forecast but keeps iron ore strategy – by Clyde Russell (Reuters U.S. – August 25, 2015)

August 26, 2015

http://www.reuters.com/

LAUNCESTON, Australia, Aug 26 (Reuters) – One of the first steps in recovering from a debilitating condition like alcoholism is admitting you have a problem. It seems BHP Billiton has finally started down this path with iron ore.

In announcing a 52-percent plunge in annual profit on Tuesday, Chief Executive Andrew Mackenzie also lowered BHP’s forecast for the peak in Chinese steel output to between 935 and 985 million tonnes by the mid-2020s.

This was down from the previously long held target of 1 to 1.1 billion tonnes that had underpinned BHP’s massive expansion of its iron ore mines, which has more than doubled output in the past five years to a total of 254 million tonnes in the 2014-15 financial year.

The scaling back of BHP’s China steel forecast leaves Sam Walsh, the chief executive of rival Rio Tinto, as one of the last holdouts for a peak above 1 billion tonnes.

Walsh said after releasing Rio’s results, which saw a 43-percent drop in underlying earnings, that his company was “holding the line” on the 1 billion tonne by 2030 forecast, saying this represented growth of just 1 percent per year over the period.

BHP Billiton posts worst profit in 11 years, maintains dividend – by Peter Ker (Sydney Morning Herald – August 25, 2015)

August 25, 2015

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

Analysts say BHP Billiton is offering shareholders “the dividend yield of a lifetime”, after it grew dividends by 2 per cent during a year that its profits slumped by 52 per cent to their lowest level in more than a decade.

The $US0.62 dividend announced by BHP on Tuesday confirmed the miner’s pledge to maintain a “progressive” dividend despite the deliberate shrinking of the company through the spin-out of South32 earlier this year.

The pay out came as the resources giant posted a $US6.4 billion underlying profit, which was well below the $US7.5 billion that analysts had expected.

BHP has not posted a profit this low since the earliest days of the mining boom in 2004. The statutory profit was 86 per cent lower at $US1.9 billion. But despite the result, BHP’s London shares have surged by more than 8 per cent in early trading.

The company’s earnings were always going to struggle amid a broader collapse in commodity prices during the 2015 financial year.

Coal industry will be big loser from Paris climate deal – by Geoff Winestock (Australian Financial Review – August 24, 2015)

August 24, 2015

http://www.afr.com/business/mining/

A global agreement at the Paris climate change negotiations at the end of 2015 will cut the value of Australian coal exports by 8 per cent over the next 15 years and contract the economy by 1.6 per cent if governments around the world implement the policies they have proposed.

A study by economist and former Reserve Bank of Australia board member Warwick McKibbin shows that the coal industry, one of Australia’s biggest exporters, is shaping up as one of the big losers from pledges by China, Japan, the United States and Europe to curb carbon emissions.

Without any change there will be a 13 per cent increase in global coal production, Professor McKibbin estimates.

The value of Australia’s coal exports will be 8 per cent lower and global coal production will be 5 per cent lower by 2030 as a result of climate change policies to be proposed at Paris, the forecast shows.

While debate in Australia has focused on how ambitious to make this country’s emission reduction targets after 2020, the modelling underlines how choices by the rest of the world will be almost as important for the Australian economy.

Junior miners jump into medical marijuana, food service amid slump – by Euan Rocha, Nicole Mordant and Jim Regan (Reuters U.S. – August 23, 2015)

August 24, 2015

http://www.reuters.com/

TORONTO/VANCOUVER/SYDNEY – Many of the world’s junior miners are laying down their picks and shovels to start new ventures ranging from egg exporting to medical marijuana farming, as they as try to survive a crash in metals prices by shifting away from exploration.

Prices for copper, gold, iron ore, coal and almost every other metal have collapsed, stalling exploration work and hitting early stage miners particularly hard. These firms typically find the deposits that larger miners often then go on to acquire and develop into mines. But there’s scant demand for new sources of metal now.

Pivoting into other businesses has happened during mining funks in the past, including a spate of defections into the tech sector during the dotcom boom in the late 1990s. But now the concern is that when prices eventually do rebound, there will be fewer junior miners, and a reduced pool of new mine prospects.

“No one has any interest in a grassroots exploration project right now,” said Yari Nieken, chief executive of Chlormet Technologies, which has bought an e-cigarette company and has a license to grow medical marijuana pending.

Cheap Australian iron ore feeding China steel glut ‘like a bad virus’ – by Jasmine Ng (Bloomberg/Sydney Morning Herald – August 21, 2015)

August 21, 2015

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

Steel exports from China will surge to more than 100 million metric tons this year as local mills benefit from cheap iron ore to produce more than Asia’s top economy needs, according to Cliffs Natural Resources.

“It’s like a bad virus,” Lourenco Goncalves, chief executive officer of the largest US iron-ore producer, said in a phone interview from the company’s headquarters in Cleveland. “Australia continues to give iron ore to China almost for free, allowing them to produce more than they need.”

Shipments from the biggest producer are headed for a record this year as slowing local demand prompts mills to seek overseas buyers, driving down prices and spurring trade tensions from the US to India.

At the same time, the largest iron-ore miners including Australia’s Rio Tinto Group are boosting output to expand sales. China’s steel shipments were called extraordinary by Credit Suisse Group, which said last month they were now in line with total output from Japan, the No. 2 producer.

“What China is exporting alone is bigger than the second-biggest producer of steel in the world: it is crazy,” Goncalves said on Wednesday.

Bible in one hand, shovel in the other: Tony Abbott is for coal – by Laura Tingle (Australian Financial Review – August 20, 2015)

August 20, 2015

http://www.afr.com/

Booms and busts used to be in the very marrow of the Australian experience. The gold rushes remain a staple of our education. Until the last 20 years or so of continuous growth, the spectacular nature of the booms and busts in the economy set the rhythm and drama, not just of personal fortunes but politics.

Yet even in recent decades, there has been nothing like a mining boom to stir a swarm of political flies.

The trouble now is that the longest and most spectacular boom in our history has ended. But politicians don’t seem quite sure what to do about it.

Where to go next when your rhetoric is all supposed to be about jobs and growth, and reassuring people that the economy will continue to be okay, even as the boom fades?

You could focus on new areas of growth – for example, the government recently announced a doubling of the NBN workforce to 9000 – or you could grab on to signs that the resources boom isn’t entirely over with a project that is boasting will generate (a contested) 10,000 jobs.

COLUMN-Coal’s pain from yuan devaluation may be less than feared – by Clyde Russell (Reuters U.S. – August 18, 2015)

August 19, 2015

http://www.reuters.com/

LAUNCESTON, Australia, Aug 19 (Reuters) – In theory the devaluation of the Chinese yuan should be negative for the country’s coal imports and Asian prices, but so far it’s not quite panning out that way.

There’s nothing wrong with the logic behind the view that purchases of foreign coal by the world’s largest importer may decline, given the relative advantage domestic coal has just received from the weakening of the yuan.

The Chinese currency fell about 3 percent in domestic trade last week after it was pushed lower by the People’s Bank of China, a move widely interpreted as aiming to boost the competitiveness of the struggling export sector.

It wouldn’t have been a surprise if the price of the international coal that heads to China declined in dollar terms, or that the price of domestic coal rose in yuan to reflect the new currency rates.

But Chinese domestic prices remained largely steady, with no change in the benchmark price of thermal coal at Qinhuangdao SH-QHA-TRMCOAL, which held at 410 yuan ($64) a tonne last week.

Century Iron Mines sells eggs as Australia moves from mining to dining – by Andy Hoffman (Australian Financial Review – August 19, 2015)

August 19, 2015

http://www.afr.com/

The iron-ore business is so lousy that one Canadian mining company is shelving its biggest project and starting a new venture: selling Australian eggs to China.

The abrupt shift at Century Iron Mines was prompted by a global iron-ore surplus that sent prices plunging 68 per cent in four years. Chief executive officer Sandy Chim does not expect a recovery until 2018, so he’s taken a cue from Australian mining billionaires Gina Rinehart and Andrew Forrest, who are expanding into food production as demand rises across Asia.

“Australia is going from mining to dining,” Chim said by phone from Toronto, where the company created a unit called Century Food. The plan is to distribute eggs produced by Sunny Queen, a chicken-farmer cooperative in Queensland, to consumers in Hong Kong and Macau.

With the backing of Wuhan Iron & Steel and China Minmetals, the government-owned companies that own 30 per cent of Century Iron Mines, Chim is investing $C2 million ($2.04 million) in the egg venture. He’s drawing on capital originally intended for Century’s flagship Joyce Lake mine project straddling the Canadian provinces of Quebec, and Newfoundland and Labrador.

Australia Aims to Shield Mining Projects From Green Groups – by Rob Taylor (Wall Street Journal – August 18, 2015)

August 18, 2015

http://www.wsj.com/

Push to amend environmental laws comes after court decision overturning approval for Adani mine

CANBERRA, Australia—Australia’s conservative government plans to amend environmental laws to prevent green groups from challenging mining projects in which they have no direct involvement.

Opening another front in a long-running battle with the environmental movement, Industry Minister Ian Macfarlane told Parliament on Tuesday that “there is a strategy to destroy jobs” and that activists were blocking resource projects “regardless of the economic impact on the community.”

The push to amend environmental laws comes after a court earlier this month overturned approval for Indian conglomerate Adani Group to build one of the world’s biggest new coal mines on scrubland near the Great Barrier Reef.

Environmental groups went to court to try to stop the Carmichael coal mine project amid concerns the mine and associated infrastructure in the Galilee Basin of tropical Queensland state could endanger a rare lizard known as the yakka skink and another vulnerable species, the ornamental snake.

Nickel woes push South32 shares to fresh low point – by Michael Roddan (The Australian – August 18, 2015)

August 18, 2015

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

BHP Billiton spin-off South32, which launched on the sharemarket with high hopes in May, tumbled to a new low on the ASX today amid a global commodity crunch, with shares down more than 30 per cent from their high point shortly after listing.

The diversified miner (S32), which holds BHP’s former non-core coal and base metal assets, has been hit by weak commodity prices and soft global demand amid a rising US dollar.

The shares, which hit a peak of $2.37 after listing, fell as much as 3.4 per cent to $1.56 in today’s trade, taking the total decline from the posting-listing high to 34 per cent.

South32, a miner of metals such as nickel, coal, silver, aluminium and zinc, has seen commodity prices crash during its short life. Bloomberg’s commodities index slumped to its lowest point in 13 years recently.

The prices of nickel, copper and zinc are all hitting their lowest points since 2009, as concerns about slowing economic growth in China are pushing industrial metals down.

Glencore swoops on Sirius’ nickel – by Peter Ker (Sydney Morning Herald – August 18, 2015)

August 18, 2015

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

Glencore’s financial troubles have not prevented the Swiss giant from swooping on the remaining offtake from Sirius Resources’ Nova mine in WA. In a deal that completes the offtake process for Sirius for the time being, Glencore will buy half of the nickel and copper concentrate produced at Nova for the first three years of the mine.

The agreement comes after BHP Billiton agreed in March to buy half of the first three years’ concentrate from Nova, and Trafigura agreed to buy copper concentrate from the mine.

Both BHP and Glencore have nickel operations within a few hundred kilometres of the Nova mine but while the concentrate bound for BHP will go into its Nickel West smelter at Kalgoorlie, Sirius said the concentrate bought by Glencore would be shipped overseas out of either Esperance or Geraldton ports.

Nova is not expected to come into production until late 2016, and the fact that 100 per cent of production for the first three years has already been sold amid a weak nickel market is a tribute to the expected high quality of the Sirius concentrate.

[Australia] Samsung races to deliver Roy Hill – by Tess Ingram (Sydney Morning Herald – August 13, 2015)

August 13, 2015

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

Contractors building Gina Rinehart’s $10 billion Roy Hill project have been forced to send hundreds of workers to the Pilbara to try to avoid hefty penalty fees for delays finishing the project.

Head contractor Samsung C&T and its subcontractors have been racing to ensure they meet Roy Hill’s aggressive deadline to ship its first ore, which was slated for next month but now not expected until October.

If the first shipment does not sail by the end of October, Samsung faces penalty fees of almost $2 million for each day the project is late.

Sources said between 1000 and 1500 workers, unable to be accommodated at Roy Hill’s onsite accommodation, were being housed in various sites around the Pilbara town of Newman, about a three-hour round trip from Roy Hill.

A Roy Hill spokeswoman confirmed about 1100 workers were being housed in Newman “and have been for more than three months as part of Samsung’s efforts to meet schedule”.

How Rio Tinto plans to cut costs by $US1 billion – by Amanda Saunders (Sydney Morning Herald – August 10, 2015)

August 10, 2015

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

You might not think vending machines would feature in Andrew Harding’s cost cutting drive. But for the Rio iron ore boss, cost-cutting is coming down to micro detail, which can save millions for a business that will ship 340 million tonnes of iron ore this year.

Rio has started putting safety glasses and gloves in a vending machine that requires a staff access card to withdraw them. Previously, the equipment was left in boxes for workers to take, with no way of monitoring use.

“It’s tracking and about feeling accountable for the use of the product,” Mr Harding told Fairfax Media after the miner last week posted a 43 per cent fall in underlying earnings to $US2.9 billion for the June half.

“There is no restriction on them – it’s safety equipment. But instead of someone going ‘this is unlimited, what the hell’ kind of thinking, it reminds people that it’s an important item, contributing to cost reductions. People know that they need to be thoughtful about the use of them, they are not taking more than they need.”

Brazil the winner from the Andrew Forrest way – by Matthew Stevens (Australian Financial Review – August 10, 2015)

August 10, 2015

http://www.afr.com/

The only way Australia and its miners would benefit from any form of co-ordinated iron ore production constraint would be if Brazil could be convinced to add its name to our cartel.

But even with Brazil’s unlikely and illegal embrace of a cartel, the net gains for Australia would be marginal and fleeting, says the most authoritative and technical analysis conducted yet on Andrew Forrest’s contention that Australia’s economy is being abused by its biggest iron ore miners, Rio Tinto and BHP Billiton.

Forrest and his company Fortescue continue to rail about planned expansion, under which both their Pilbara competitors will add about 20 million tonnes to production over coming years, while Gina Rinehart introduces another 55 million tonnes to an already bloated global system.

Having initially taken the Forrest bait on the idea of some sort of market review, governments state and federal promptly backed off after some unusually blunt criticism from the likes of BHP boss Andrew Mackenzie.

But that didn’t settle things for good old Brian Fisher. Fisher is the economist who ran the Australian Bureau of Agriculture and Resource Economics during its pomp as government’s commodity industry number cruncher, and now directs his own firm, called BAEconomics.

Carmichael mine: End green sabotage of coal, says Tony Abbott – by Jared Owens and Dennis Shanahan (The Australian – August 7, 2015)

August 7, 2015

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

Bill Shorten has challenged Tony Abbott to propose “sensible” reforms to environmental laws, rather than “attacking the court system” for overturning the proposed Queensland Carmichael mega coalmine.

The Opposition Leader today accused Mr Abbott of “second-guessing our judges” by proposing a new environmental standard that “near enough is good enough”.

“If there’s a problem with the way the law is formed then we go back and debate it in parliament, but Mr Abbott seems to be creating a new test for environmental protection in this country that near enough is good enough – well it’s not,” Mr Shorten said.

“If Mr Abbott doesn’t like the law … he can always sit down with Labor and talk about sensible amendments which may need to be made … rather than just attacking the court system.”

Mr Abbott today touted the environmental benefits of Australian coal, describing it as “invariably … much better for the environment than the alternative”.