Australia/New Caledonia/Papua New Guinea Mining – Page 102

We’re not cannibals:Glencore – by Greg Roberts (The West Australian – June 4, 2015)

June 4, 2015

https://au.news.yahoo.com/thewest/

Global miner Glencore has taken a swipe at Australia’s mining giants, saying their mass iron ore and coal expansions had “cannibalised” revenue and hurt the economy.

Glencore itself had been the first to take the responsible path of stopping its own coal expansions, which was good for the Australian mining industry, coal chief Peter Freyberg told a Melbourne Mining Club lunch.

His comments came a day after US coal giant Peabody Energy said it would axe up to 210 jobs and cut production by nearly half at a north Queensland mine as it struggled with falling prices.

Glencore announced it would cut 80 jobs and production from its north Queensland Collinsville coal mine last week.

Mr Freyberg said Glencore was exercising market discipline, cutting mining output, combining some of its NSW coal operations with Peabody’s and putting its $7 billion Queensland Wandoan coal mine project on hold.

COLUMN-Big iron ore miners’ plan to displace everybody else losing steam – by Clyde Russell (Reuters U.S. – June 3, 2015)

June 3, 2015

http://www.reuters.com/

LAUNCESTON, Australia, June 3 (Reuters) – How well is the plan by big iron ore miners to displace high-cost iron ore from the seaborne and Chinese domestic markets going? Maybe just OK, certainly not great.

Much has been written about how the big three global iron ore miners will use their low-cost, high-output mines to muscle competitors out of the market, thus restoring the supply-demand balance and ultimately justifying the billions of dollars they spent boosting capacity well in excess of demand.

The problem for Brazil’s Vale and the Anglo-Australian pair of Rio Tinto and BHP Billiton <BHP Billiton> is that the signs are this isn’t working perhaps as well as they may have hoped.

Certainly Chinese trade numbers show that Australia in particular has increased market share in iron ore imports, but the momentum may be stalling.

In the first four months of the year, Chinese imports of the steel-making ingredient from Australia were 195.845 million tonnes, or 63.7 percent of the total 307.282 million tonnes.

Keep Metal Prices Lower for Much Longer – by David Stringer (Bloomberg News – June 3, 2015)

June 3, 2015

http://www.bloomberg.com/

BHP Billiton Ltd. delivered a sombre warning to global commodity markets that oversupply is very much here to stay. Tumbling prices are creating a testing environment for commodity producers, while demand is slowing to more routine levels amid a transition in China’s economy away from investment-led growth, the world’s biggest mining company’s Chief Executive Officer Andrew Mackenzie said Wednesday.

“In many markets, recently installed low-cost supply can now be stretched to meet growing demand,” Mackenzie said in a speech in Canberra. “Incremental supply, induced during periods of higher prices, will take longer to absorb and this means over-supply may persist for some time.”

Expansion by the biggest iron ore producers, including BHP and Vale SA, will see a global surplus swell to 215 million tons in 2018 from 45 million this year, UBS Group AG estimates. Teck Resources Ltd. plans to idle six Canadian coal operations amid a slump in prices and demand.

“The speed at which prices have returned to long run levels for each commodity has varied as a function of the time taken for low cost supply to come to market,” Mackenzie said.

China Inc circling Australian iron ore – by Tess Ingram (Sydney Morning Herald – June 1, 2015)

June 1, 2015

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

The sustained lull in iron ore prices has put iron ore miners under considerable pressure, with Chinese investors circling distressed Australian companies.

Chinese investors are circling distressed Australian iron ore miners, according to local dealmakers fielding growing interest in the commodity’s struggling mid-tier ranks.

The sustained lull in iron ore prices has put iron ore miners under considerable pressure, causing market values to plummet and a handful of Australian producers to suspend operations.

The price of iron ore has slumped close to 50 per cent in the past 12 months to hover at around $US63 a tonne, after slumping as low as $US47 a tonne in April.

Against this backdrop, an increasing number of Chinese entities had expressed interest in providing debt or equity to iron ore miners, acquiring an asset or attempting a takeover, Minter Ellison West Australian managing partner Adam Handley said.

Nothing dull about zinc if supply falls – by Trevor Sykes (Australian Financial Review – June 1, 2015)

June 1, 2015

http://www.afr.com/

Zinc was the hot tip at the Resources Investment Symposium held in Broken Hill last week.

Probably a natural call given that Broken Hill is home to the greatest silver-lead-zinc mine the world has ever known.

In its 130-year life Broken Hill has produced total of 50 million tonnes of lead and zinc combined plus 100 million ounces of silver. It has been mined almost continuously over that time and still has a long life ahead at deeper levels and in exploiting remnant ore.

In his opening address at the symposium, Emeritus Professor Ian Plimer of the University of Melbourne noted that the market for mining shares had been slow and sluggish for the past four years.

He said: “This market will turn around when there is a fundamental commodity shortage and I think that commodity will be zinc. I think we will go into shortage in the first quarter of next year.” It was a big call, because as far as investors are concerned, zinc is the least sexy of all the major metals.

At various times, investors have been excited about diamonds, gold, copper, oil and nickel, but some minerals just don’t seem capable of arousing them. Mineral sands are a good example. Australia is rich in them, but the market is never much better than lukewarm.

The iron ore price equation that makes Fortescue attractive for China – – by Anne Hyland (Australian Financial Review – May 29, 2015)

May 29, 2015

http://www.afr.com/

CITIC Group and Baosteel Group, which are said to be interested in Fortescue Metals Group, are two of the most politicised companies in China. Baosteel is China’s leader in the steel industry and CITIC was anointed to make significant investments outside China, such as the $10 billion Sino Iron project, which has been described as the worst mining investment in Australia in the past decade.

What is almost certain is that CITIC and Baosteel, which is developing an iron ore project with Aurizon, won’t bid against each other for Fortescue or other resource companies. It would be politically unpalatable in China and it’s typically not what China Inc does.

While there would be a dozen companies in China capable of taking out Fortescue, only one would get the green light, say veteran China observers.

At the Stockbrokers Association conference on Thursday, Li Xinchuang, president of the China Metallurgical Industry Planning Association, firmed up speculation with comments that Fortescue would benefit from a Chinese investor, while saying he didn’t believe the argument that there was a global oversupply of iron ore.

UPDATE 2-Australia iron ore magnate Rinehart weakened by court ruling – by Jane Wardell and James Regan (Reuters U.S. – May 28, 2015)

May 29, 2015

http://www.reuters.com/

SYDNEY, May 28 (Reuters) – Australian iron ore magnate Gina Rinehart’s eldest daughter won control of the $3 billion dollar family trust on Thursday in a judgment critical of Rinehart’s former control of the fund and attempts to block the long-running legal dispute.

The Supreme Court of New South Wales judgment loosens Rinehart’s legendary grip on her business empire, with almost 25 percent of Hancock Prospecting Pty Ltd held by the trust.

Rinehart owns the remainder of the family firm, which in turn owns 70 percent of Roy Hill, a Pilbara-based iron ore mine due to start shipments later this year.

South Korea’s POSCO, Japan’s Marubeni Corp and Taiwan’s China Steel Corp also have stakes in the mine, which will be Australia’s fourth-largest when it reaches full production.

Three of Rinehart’s four children – eldest Bianca Rinehart, Hope Welker and John Hancock – sued for control of the trust in 2011.

They alleged their mother acted with “gross dishonesty” as trustee, when she pushed out its vesting date until 2068, meaning all four children would not get their shares until they were in their 80s and 90s.

Gina Rinehart loses control of $5b family trust – by Louise Hall (Sydney Morning Herald – May 28, 2015)

May 28, 2015

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

John Hancock, the estranged son of Australia’s richest person Gina Rinehart, has won an epic legal battle over control of the family’s multibillion-dollar family trust, with his sister and ally Bianca Rinehart appointed trustee.

On Thursday, NSW Supreme Court Justice Paul Brereton appointed Bianca, 38, trustee of the Hope Margaret Hancock Trust, which was set up by her late grandfather Lang Hancock and is thought to be worth about $5 billion.

Justice Brereton also ordered Mrs Rinehart to hand up documents and accounts relating to the trust that John and Bianca had claimed were withheld from them for many years.

The decision follows a bitter and public three-and-a-half-year war that saw Mrs Rinehart and her youngest daughter, Ginia, 28, pitted against her eldest two children, John, 39 and Bianca. Hope Welker, 29, who initially launched the legal action against her mother, settled in 2013 for $45 million because of the “high degree of distress” the litigation was causing her.

Justice Brereton said: “Mrs. Rinehart has demonstrated that she is prepared to go to extraordinary lengths to retain control, directly or indirectly, of the Trust, and that she is capable of exerting enormous pressure and great influence to do so”.

Turn Out the Lights: Australia Calls Commodity Spending Boom End – by David Stringer (Bloomberg News – May 27, 2015)

May 27, 2015

http://www.bloomberg.com/

Australia, an engine room of the decade-long global commodity boom, is forecasting a staggering 90 percent plunge in spending on projects, calling time on its biggest resources bonanza since the 1850s gold rush.

After a collapse in prices from oil to iron ore, the value of Australia’s approved and financed mining and energy projects is forecast fall to about A$15 billion ($12 billion) in 2017, from A$226 billion at the end of April.

Planned iron ore projects worth at least A$10 billion have been canceled since October, according to the Department of Industry and Science. Billionaire Gina Rinehart’s Roy Hill — due to ship later this year — is Australia’s last remaining mining project being developed worth A$5 billion or more.

“The value of committed projects is about to start declining substantially,” Mark Cully, the department’s chief economist, said Wednesday in a statement. “It is clear that this will not be offset by new investments coming through the pipeline.”

Waning demand growth in key markets including China, the biggest commodities consumer, and programs by miners to cut capital expenditure mean there’s a lack of projects toward the end of this decade, the department said in a report.

China cash lining up for Fortescue Metals Group – by Matthew Stevens, Amanda Saunders and Julie-anne Sprague (Australian Financial Review – May 25, 2015)

May 26, 2015

http://www.afr.com/

Chinese-linked companies have applied to the Foreign Investment Review Board seeking permission for an investment involving Fortescue Metals Group.

Australia’s third-largest iron ore producer has held discussions with China’s largest steel producer, Baosteel, and China’s largest conglomerate, CITIC, about a recapitalision to shore up its balance sheet.

It is unclear if the applications to FIRB are from CITIC or Baosteel but sources said there is interest in Fortescue from one or more companies which are Chinese or part-Chinese owned.

There are no moves to take over Fortescue. Instead, the companies are interested in buying a stake or increasing an existing stake, sources said. A deal could involve the partial selldown by the company’s founder, chairman and biggest shareholder, Andrew Forrest.

Fortescue and Baosteel already work closely. In June 2012 the two companies merged their magnetite iron ore assets in the Pilbara into a venture called FMG Iron Ore Bridge, which is 88 per cent controlled by the Perth company and 12 per cent owned by the Chinese steel giant.

Oz Minerals CEO Andrew Cole eyes off four takeover targets – by Simon Evans (Australian Mining Review – May 25, 2015)

May 26, 2015

http://www.afr.com/

OZ Minerals chief executive Andrew Cole says the copper and gold company has four potential acquisitions it is doing due diligence on but will only proceed if the price tags are at a level that deliver good value.

Mr Cole says while geographic diversification may be an outcome if OZ does make an acquisition it is not necessarily a driver of the company’s acquisition strategy.

OZ operates just one mine, the Prominent Hill copper and gold mine in South Australia, which employs 1200 workers. He made the comments at the OZ annual meeting in Adelaide, where the company is in the process of shifting its head office to from its previous base of Melbourne.

OZ chairman Neil Hamilton said after the meeting the price paid by Evolution Mining for Barrick’s Cowal mine in New South Wales appeared to be a steep price. “It’s a robust number,” Mr Hamilton said.

Evolution bought the mine in a $US550 million ($702 million) transaction on Monday. Mr Hamilton declined to officially confirm if OZ had also been closely looking at the Cowal mine, as has been heavily speculated. “We don’t comment on speculation about sale processes,” Mr Hamilton said.

Australia’s gold miners drive M&A revival – by James Regan (Reuters U.S. – May 26, 2015)

May 26, 2015

http://www.reuters.com/

SYDNEY – May 26 Gold miners are spearheading a wave of merger and acquisition activity in Australia, riding a rebound in local gold prices to pounce on projects promising quick growth.

In the first signs of life since the country’s mining boom went bust three years ago, companies are buying assets from international rivals tightening their belts, and partnering with fellow Australian miners.

“Everyone is looking for assets that enable them to grow. We’ve seen more M&A in Australia in 2015 than in the past five years,” Ian Murray, chairman of Perth-based Gold Road Resources Ltd told Reuters, referring broadly to the level of interest in the sector.

Progressive central bank interest rate cuts aimed at knocking down the Australian dollar and falling labour and mining costs are adding fuel to the frenzy.

Gold output in the world’s second-biggest producing country after China reached a decade high last year and is tipped to rise further in 2015.

UPDATE 2-Barrick sells Australian Cowal gold mine to Evolution for $550 mln – by Sam Forgione and Sonali Paul (Reuters U.S. – May 25, 2015)

May 25, 2015

http://www.reuters.com/

NEW YORK/MELBOURNE, May 25 (Reuters) – Barrick Gold , the world’s top gold producer, has agreed to sell its Cowal mine to Evolution Mining for $550 million in a deal that will turn Evolution into Australia’s second largest producer of the precious metal.

The deal gives Evolution a large, low-cost mine that will boost its output to around 800,000 ounces a year, around one-third the output of top Australian producer Newcrest Mining .

“This is a truly transformational acquisition for Evolution,” Executive Chairman Jake Klein said after the deal was announced on Monday. “This is the high quality asset we have been looking for to cornerstone our business.”

Barrick put Cowal up for sale along with its Porgera mine in Papua New Guinea, among other assets, in an effort to cut debt by $3 billion by the end of this year.

Analysts congratulated Evolution for snaring Cowal for well below the $650 million price tag it had been expected to fetch.

Forrest fire: Twiggy’s secret bid to salvage iron ore price – by Andrew Burrell and Paul Garvey (The Australian – May 23, 2015)

May 25, 2015

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

For the second time in five years, Andrew Forrest has been comprehensively out-lobbied, out-manoeuvred and out-muscled in Canberra’s halls of power by his despised rivals BHP Billiton and Rio Tinto.

The billionaire chairman of Fortescue Metals Group is seething at being snookered again by two multinationals he believes are hellbent on pushing him out of business by driving down the iron ore price.

“This won’t be the end of it — he won’t stop now,” said a close ¬associate of Forrest’s after Joe Hockey bowed to the demands of BHP and Rio by announcing on Thursday that there would be no ¬inquiry into the iron ore market.

Another was more blunt: “He will keep going — he actually believes his own bullshit.”

Sure enough, at the crack of dawn yesterday, the indefatigable Forrest hit the national airwaves from Perth in a bid to reboot his campaign, suggesting BHP and Rio had sent “plane loads” of ¬lobbyists to Canberra in recent days to convince the government to call off the planned inquiry.

Fortescue’s Andrew Forrest maintains iron ore rage – by Paul Garvey (The Australian – May 22, 2015)

May 22, 2015

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

Fortescue Metals Group founder Andrew Forrest has vowed to continue his calls for greater scrutiny of mining giants BHP Billiton and Rio Tinto, despite the federal government’s official rejection of an inquiry into the iron ore market.

Joe Hockey yesterday declared that the inquiry — originally supported by Tony Abbott — would not go ahead, drawing an angry response from Mr Forrest.

The billionaire mining entrepreneur, who has been campaigning for months for governments to pressure BHP and Rio over their strategy to continue lifting iron ore production, said the “hysterical” lobbying of multinational mining giants caused the inquiry to stall.

In an opinion piece written for The Australian, Mr Forrest questioned what the mining giants had to fear from an inquiry.

“Those that paint me as an interventionist from behind their Singapore tax shields know the iron ore industry is an oligopoly in which the big three each wield more market power than Saudi Arabia in oil and where the barriers to entry are huge and built on decades of subsidies,” he said.