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

Mining Giants’ Push for Iron Ore Tests Mettle of Smaller Miners – by Rhiannon Hoyle (Wall Street Journal – July 22, 2015)

July 22, 2015

http://www.wsj.com/

The four biggest iron-ore suppliers accounted for 71% of all iron-ore shipments in 2014, and they aren’t slowing down

SYDNEY—Big Mining is tightening its grip on the iron-ore market.

As industry giants such as Rio Tinto PLC and BHP Billiton Ltd. dig up ever more of the steelmaking ingredient for export, the resulting supply glut has caused prices to slump. But the majors’ tactics are helping them squeeze out smaller rivals, increasing their oligopoly’s share of global trade in the ore.

The world’s four biggest iron-ore suppliers—Rio and BHP along with Brazil’s Vale SA and Australia’s Fortescue Metals Group Ltd.—accounted for 71% of the world’s iron-ore shipments in 2014, up from an average of 65% from 2009-13, according to Citi estimates. The bank now reckons that market share for the four could rise to 80% by 2018.

There is no sign the majors are ready to pull back.

BHP to open new coal mine in Borneo amid concern for orangutans – by Peter Ker (Sydney Morning Herald – July 22, 2015)

July 22, 2015

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

If you thought Shenhua and Adani had raised hackles with their plans to develop new coal mines in controversial parts of Australia, you ain’t seen nothing yet.

In a move likely to enrage environmental campaigners, BHP Billiton quietly flagged on Wednesday that it would soon start production of coal at the Haju mine in Indonesian Borneo. Haju will initially produce about 1 million tonnes of coal a year, which is pretty small compared to the coal mines BHP already operates in Queensland.

But Haju could be the start of a much larger coal project for BHP in Indonesian Borneo known as IndoMet, which is believed to have potential to produce around 5 million tonnes of coal per year, if it is ever fully developed.

That remains a big “if” given the depressed prices for coal, but Wednesday’s confirmation that first production will begin within 12 months will be a blow to environmental campaigners who have lobbied BHP and its joint venture partner Adaro Energy for the best part of a decade to abandon the project.

Gold price crashes as Chinese offload – by Stephen Cauchi (Australian Financial Review – July 20, 2015)

July 20, 2015

http://www.afr.com/

Nearly $1.5 billion was wiped off the value of Australian gold shares on Monday – including $1 billion from the biggest local gold miner Newcrest – after a price crash sparked by the surprise unloading of tonnes of bullion on the Chinese market.

Australian gold miners suffered huge losses in a market that was already suffering a number of stiff headwinds. Evolution Mining lost 14.5 per cent while Northern Star Resources, Regis and Newcrest Mining were all down between 7 and 10 per cent.

Gold plummeted from $US1132 an ounce to $US1092 in the space of minutes just after 11.30am after 5 tonnes of bullion was unloaded on the Chinese market.

However, the price rebounded to $US1109 shortly after and it stayed around that level for the remainder of the day.

“There was some heavy selling on the Shanghai Gold Exchange this morning,” said Victor Thianpiriya, ANZ precious metals analyst.

Commodities crash could turn Australia into a new Greece – by Andrew Critchlow (The Telegraph – July 19, 2015)

July 20, 2015

http://www.telegraph.co.uk/

The commodities boom made Australia the lucky country but rising debt and a slump in Chinese demand for resources signal tough times ahead Down Under

Last month Gina Rinehart, Australia’s richest woman and matriarch of Perth’s Hancock mining dynasty delivered an unwelcome shock to her workers in Western Australia: accept a possible 10pc pay cut or face the risk of future redundancies.

Ms Rinehart, whose family have accumulated vast wealth from iron ore mining, has seen her fortune dwindle since commodity prices began their inexorable slide last year. The Australian mining mogul has seen her estimated wealth collapse to around $11bn (£7bn) from a fortune that was thought to be worth around $30bn just three years ago.

This colossal collapse in wealth is symptomatic of the wider economic problem now facing Australia, which for years has been known as the lucky country due to its preponderance in natural resources such as iron ore, coal and gold. During the boom years of the so-called commodities “super cycle” when China couldn’t buy enough of everything that Australia dug out of the ground, the country’s economy resembled oil-rich Saudi Arabia.

BHP Billiton’s coal king Mike Henry digs in for a challenging time – by Matt Chambers (The Australian – July 18, 2015)

July 20, 2015

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

After 25 years working in and around the mining industry, Mike Henry has been given his first major role managing operations. And it’s a beauty.

In January, the former BHP Billiton marketing boss was made coal president, heading the mining giant’s lowest-margin business at a time when forecasts and prices for the commodity seem to be getting relentlessly worse and in which chief executive Andrew Mackenzie says he will not allocate capital.

But the 48-year-old Henry, who is regarded by company-watchers as a potential internal candidate to succeed Mackenzie, sees plenty of positives.

“I like a challenge and there’s lots to like here,” Henry tells The Weekend Australian from BHP’s coal headquarters on the Brisbane River. “In the first half (of 2014-15), we generated a 2 per cent return on capital and 2 per cent of BHP’s earnings before interest and tax,” he says, explaining coal’s current limited prospects for investment funds.

“My job is to take what we have and make sure that we’re getting the most we possibly can out of it.

Production cuts by Vale and Rio will not solve iron ore glut – by Neil Hume (Financial Times – July 17, 2015)

July 17, 2015

http://www.ft.com/home/us

The bruised and battered iron ore industry finally received some good news this week. First, Vale said it would withdraw 25m-30m tonnes of annual production from the market then Rio Tinto cut its total 2015 export forecast by 10m tonnes to 340m tonnes.

While welcome, it would be a mistake to think these announcements mark the beginning of a disciplined response from the industry’s biggest producers to an ongoing supply glut. They don’t.

Take Vale’s “cut”. After its share price jumped more than 6 per cent on the news, the Brazilian miner moved to clarify the remarks made by Peter Poppinga, its executive director of ferrous minerals.

Vale said there was no change to its output guidance for the year of 340m tonnes, or its longer-term target to produce 450m tonnes by 2018. Rather it was cutting production of high cost iron ore — the key ingredient in steelmaking — and replacing it with cleaner, lower cost output from some of its other mines.

Slump in nickel prices rattles small Australian miners – by Melanie Burton and James Regan (Reuters U.S. – July 15, 2015)

July 17, 2015

http://www.reuters.com/

A 30 percent slump in nickel prices this year has piled pressure on small Australian miners, forcing some of them to delay new projects and expansions as they wait for the market to recover.

Poseidon Nickel became the latest miner to succumb when it said on Thursday it would put its Lake Johnston mine on care and maintenance – a sign casualties were mounting amid near record metal stockpiles and weak demand from key consumer China.

Exchange stockpiles of the metal used to make stainless steel nearly doubled in the 18 months to June, pressuring benchmark prices to six-year lows of $10,430 per tonne last week, down 32 percent since the start 2015.

“When you’ve got 70 percent of an industry at break-even or loss making you’re going to see people defer projects and shut down,” said UBS analyst Daniel Morgan in Sydney.

“I think you’ll see a steady stream of these type of announcements for the next several months,” he added.

An iron ore civil war plays out on social media in Australia – by James Wilson and Neil Hume (Financial Times – July 16, 2015)

July 17, 2015

http://www.ft.com/home/us

“Our family. Our jobs. Our future,” is the message conveyed on the Facebook page and Twitter feed. Gazing out from the screen are a blonde woman, two blonde children, a pair of sheepdogs — and a miner wearing overalls.

This is the all-Australian family, with the mining sector at its heart, as envisaged by a campaign called “Our Iron Ore”. It is one of two competing public relations initiatives embroiled in bitter argument in Australia over this abundant commodity.

As the patriotic element of the “Our” campaign suggests, iron ore is anything but prosaic in Australia, whose economy relies heavily on the hundreds of millions of tonnes sucked in annually by China’s steelmaking industry. In Western Australia’s Pilbara region, the iron ore heartland, its price movements are part of everyday conversation.

In 2011, the price of iron ore scaled the heights of $190 per tonne and brought a bonanza for Australia. Four years later, the price has slumped by about 75 per cent: this month it fell below $45/t. Thousands of jobs are being cut and smaller, domestic miners are under pressure.

Vale’s designs on China add to Rio, BHP drive for more iron ore – by James Regan (Reuters U.S. – July 15, 2015)

July 16, 2015

http://www.reuters.com/

SYDNEY – As Rio Tinto and BHP Billiton ship more iron ore than ever to China, the Australia mining giants face a fightback from Brazil’s Vale for market share that threatens to drive already weak prices even lower.

Rio Tinto and BHP, which will release quarterly production data this week and next, have been racing to keep up exports to boost profits while lower prices eat into margins.

They now face stiffer competition from Vale, which is also working its mines harder, after the world’s biggest producer won approval for its giant Valemax ships to unload in China, cutting down on freight costs.

With a capacity of 400,000 tonnes each, the 34 Valemaxes are the world’s biggest bulk carriers and twice the size of vessels used by Rio and BHP, but a ban on entering Chinese ports had severely curbed the cost efficiencies of the larger ships.

“BHP and Rio have been looking to raise volumes in this environment to maximize every tonne,” said Morgans Financial analyst James Wilson.

Commodity price woes weigh on Australian miners – by Tess Ingram (Australian Financial Review – July 16, 2015)

July 16, 2015

http://www.afr.com/

Challenging market conditions continue to batter miners exposed to mineral sands, nickel and uranium, as quarterly reports reveal the extent of the sustained downturn on Australian producers.

Mineral sands prices are languishing well below their 2012 peaks, with prices for rutile sitting at about $US800 ($1085) a tonne, compared to a high of $US2050 a tonne, Deustche Bank said.

On Tuesday, Citi commodities analysts dropped their 2015 average nickel price forecast to $US13,960 a tonne “in light of year-to-date price weakness”, with the price trading as low as $US11,495 a tonne on the London Metals Exchange overnight.

Uranium is also in the doldrums, with prices about $US36 a pound, a long way from their high of $US130 a pound set in 2007.

In its June quarter report on Thursday, mineral sands miner Iluka Resources said revenue for the first half increased by 2 per cent to $349.6 million compared to the previous corresponding period, despite a dip in production volume across its suite of products.

COLUMN-China Shenhua’s Australian coal mine on troubled path – by Clyde Russell (Reuters India – July 14, 2015)

July 14, 2015

http://in.reuters.com/

LAUNCESTON, Australia, July 14 (Reuters) – A planned Chinese-owned coal mine in Australia has become the latest example in a long line of mud-slinging trumping sensible debate.

While it makes for great headlines, there are few things less edifying than seeing politicians, business and community leaders flinging gratuitous insults at each other.

The stoush is over the Australian federal government’s approval of a A$1 billion ($746 million) coal mine being developed by China Shenhua Energy Co in the Liverpool Plains region of New South Wales state.

It would be something of an understatement to say the 10-million tonne a year project has been controversial, with its approval showing splits in the ruling Liberal National coalition, while prompting threats of civil disobedience from farmers and legal action from a variety of opponents.

The main issue is that the proposed mine, known as Watermark, is in prime agricultural land and there is concern that not only will it take up land that could be used for farming, but also that the mine will deplete or degrade the region’s underground water table.

Iron ore miners unprepared for challenges, warns BHP – by Paul Garvey (The Australian – July 14, 2015)

July 14, 2015

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

Australia’s iron ore miners are unprepared for the massive exploration challenges ahead of them, BHP Billiton’s head of iron ore exploration has warned.

Speaking at the AusIMM iron ore conference in Perth on yesterday, BHP’s Joe Knight said current exploration methods would be unable to discover and define the quantity of new ore bodies needed to sustain the Pilbara’s soaring iron ore output.

The Pilbara is home to three of the world’s four largest iron ore miners — BHP, Rio Tinto and Fortescue Metals Group — and exports almost 800 million tonnes of ore a year.

That figure is set to grow to about 965 million tonnes a year by 2017, Mr Knight said, based on the current publicly announced plans of the region’s miners and explorers.

At that rate, Mr Knight said, companies would struggle to replace their mined resources unless they evolved their approach to exploration, given the forecast annual production was the equivalent of more than three so-called “tier one” iron ore deposits.

China imports of coal go into steep decline but there’s a silver lining for Australia – by Angus Grigg (Australian Financial Review – July 13, 2015)

July 13, 2015

http://www.afr.com/

China is demanding less coal and more wheat.

That’s the key message from first-half trade data released on Monday by the Customs Bureau, which showed China’s overall imports remained weak while exports were only marginally better.

In US dollar terms the value of trade in the world’s second biggest economy fell 6.9 per cent over the first half of the year as wheat imports surged and coal declined.

For Australia, these wildly divergent statistics are hard to ignore. Over the first six months of the year, the volume of China’s coal imports fell 37.5 per cent compared to the same period in 2014.

The volume of wheat imports was up 66.5 per cent over the same period. For coal, the decline is a combination of protectionism and falling domestic demand.

Australian miners linked to hundreds of deaths, injuries in Africa – by Will Fitzgibbon (Sydney Morning Herald – July 11, 2015)

July 13, 2015

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

Australian mining companies are linked to hundreds of deaths and injuries in Africa, which can go unreported at home. Some of the Australian Securities Exchange-listed companies include state governments as shareholders. One company recorded 38 worker deaths over an eleven-year period.

In Malawi, litigation continues against Paladin Africa Limited, a subsidiary of Perth-based Paladin Energy, and its subcontractor after an explosion disfigured one worker with such heat that his skin shattered when touched by rescuers. Two others died in the same incident.

Other allegations include employees in South Africa hacking a woman with a machete and Malian police killing two protesters after a mine worker reportedly asked authorities to dislodge a barricade on the road to the mine.

An investigation by the International Consortium of Investigative Journalists, in collaboration with 13 African reporters, uncovered locally-filed lawsuits, violent protests and community petitions criticising some Australian companies.

Debt Load Digs Into Mining Industry – by Rhiannon Hoyle (Wall Street Journal – July 12, 2015)

July 13, 2015

http://www.wsj.com/

Resources firms borrowed heavily to supply China; now boom is ending, prices are down

SYDNEY—When Australia’s richest person, Gina Rinehart, needed cash last year to build a massive iron-ore mine called Roy Hill in northwest Australia, five export-credit agencies and 19 banks teamed up to provide the US$7.2 billion required, sealing the largest project-financing deal in industry history.

The loan deal struck to fund the mine, cut into a vast red plain deep in the Australian Outback, now looks like the high point of a multiyear pileup of debt in the global mining sector.

As forecasts predicting endless growth in China’s appetite for raw materials became a matter of industry faith, mining companies borrowed extensively to build networks of pits, railway lines and port terminals. Megadeals abounded as a merger-and-acquisition frenzy took hold. Cheap borrowing costs, thanks to low global interest rates, fueled the splurge.

Now, as China’s hunger for resources ebbs and mining companies’ profits suffer amid falling commodity prices, those debts have become an albatross around the industry’s neck.