Australia/New Caledonia/Papua New Guinea Mining – Page 103

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.

[Australia iron mining] Friends, countrymen, lend me your ores – by Richard Denniss (Brisbane Times – May 22, 2015)

May 22, 2015

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

Richard Denniss is an economist and executive director of The Australia Institute.

Australia has a bigger share of the seaborne coal market than Saudi Arabia has of the world oil market. And Australia has a bigger share of the seaborne iron ore market than all of the OPEC counties combined have of the world oil market. Everyone knows that if OPEC doubled their oil supply the world oil price would fall. Yet Australians are being told that our decision to double our iron ore exports between 2007 and 2014 had no impact on the price of iron ore.

Someone is talking crap.

While it’s hard for mere mortals to turn water into wine, it’s easy to turn wine into water. Just take a glass of wine, add a very large quantity of water and, hey presto, you’ve got water. But if you add water, one drip at a time, to a glass of wine, it’s virtually impossible to decide when it stopped becoming wine and started becoming water.

So what’s watery wine got to do with the price of iron ore? Lots.

Between 2005 and 2014 Australia built or expanded almost 400 mines. Not surprisingly, doing so put enormous pressure on the cost of the labour, capital and raw materials need to build them.

Gold Fields Said to Be Among Final Bidders in Barrick Mine Sale – by David Stringer and Brett Foley (Bloomberg News – May 22, 2015)

May 22, 2015

http://www.bloomberg.com/

Gold Fields Ltd. is among final bidders competing to acquire a $400 million Australian mine from Barrick Gold Corp., people with knowledge of the matter said.

The Johannesburg-based producer and China’s Zijin Mining Group Co. submitted final offers for the Cowal gold mine in New South Wales state, according to the people, who asked not to be identified as the details are private. They are competing with local suitors Evolution Mining Ltd. and Independence Group NL, which also submitted binding bids, they said.

Barrick, the world’s biggest gold miner, said last month it has fielded interest for mines it’s seeking to divest in Australia, Papua New Guinea and Chile. The Toronto-based company plans to reduce net debt by at least $3 billion this year, partly by selling the assets and cutting staff at its head office.

Zijin Mining has also expressed interest in Barrick’s Porgera mine in Papua New Guinea, the people said. Representatives for Gold Fields, Independence Group and Evolution declined to comment, while spokesmen for Barrick and Zijin didn’t immediately respond to calls and e-mails seeking comment.

Vale iron ore deal a ‘reminder’ for Australia: Roy Hill – by Tess Ingram (Sydney Morning Post – May 22, 2015)

May 22, 2015

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

Roy Hill chief executive Barry Fitzgerald has said the iron ore expansion deals Brazilian miner Vale inked with China this week are a reminder Australian producers need to remain competitive in the global iron ore market.

Mr Fitzgerald, the man responsible for the development of Gina Rinehart’s $10 billion Roy Hill mine, joined majors BHP Billiton and Rio Tinto in warning of the Brazilian iron ore producer’s growing competitiveness with its Australian rivals.

“What it does remind me, and it should remind all of us, that we in the mining industry are in a competitive, international business,” Mr Fitzgerald told a Morgans Financial breakfast in Perth on Friday. “What we do needs to reflect the pressures and the actions of our competitors.”

On Tuesday, China agreed to fund Brazilian iron ore giant Vale’s major S11D expansion and invest in huge ships that will transport high-quality ore from Brazil to Asia for a lower cost.

The project, which should be finished next year, is expected to produce 90 million tonnes of high-quality iron ore at a unit cost of $US11 a tonne. Vale also announced this month it would begin shipping a blended product – Brazilian Blend fines – with an iron content of 63 per cent.

RPT-UPDATE 2-U.S. SEC fines BHP Billiton $25 mln in 2008 Olympics bribery probe – by Jonathan Stempel (Reuters U.K. – May 20, 2015)

May 21, 2015

http://uk.reuters.com/

BHP Billiton Plc will pay $25 million to settle charges that it violated a U.S. anti-bribery law by failing to properly monitor a program under which it paid for dozens of foreign government officials to attend the 2008 Summer Olympics in Beijing.

The accord resolves U.S. Securities and Exchange Commission charges that BHP, one of the world’s biggest mining companies, violated the Foreign Corrupt Practices Act when it sponsored the attendance of officials who were “directly involved with, or in a position to influence” its business and regulatory affairs.

BHP, which has offices in London and Melbourne, Australia, neither admitted nor denied wrongdoing in agreeing on Wednesday to settle the civil case. It also said the U.S. Department of Justice ended a related criminal probe without taking action, and that all U.S. investigations into the matter are complete.

The SEC said BHP invited 176 government officials to attend the Olympics at company expense, including 98 who worked for state-owned enterprises that were customers or suppliers, under a “global hospitality” program tied to its sponsorship of the games.

Tony Abbott and Joe Hockey lose their way on iron ore – by Jennifer Hewett (Australian Financial Review – May 21, 2015)

May 21, 2015

http://www.afr.com/

Pick your dollar-per-tonne figure. After a minor recovery from recent lows, the iron ore price seems to be at risk of falling back again. Certainly, there’s no sustained improvement in sight. Pick your reason.

The inevitable volatility of a global commodities market? Or Chinese futures traders relying on sentiment about oversupply, thanks to Rio Tinto and BHP Billiton’s statements about future production? Or Brazil’s iron ore industry receiving new assistance from the Chinese government? Or the big miners’ success beating back Andrew Forrest’s complaints and initial prime ministerial enthusiasm for an iron ore inquiry? Or a combination?

Australia’s most senior politicians are obviously confused about the right answer. The government’s formal backing away from an inquiry on Thursday just confirmed a belated and clumsy attempt by Tony Abbott and Joe Hockey to extricate themselves from a political contradiction. They had backed an inquiry after being persuaded by a powerful combination of forces, ranging from Forrest himself, to a ravaged budget, to radio broadcaster Alan Jones criticising the damage to the national interest.

At the time, they also thought a government-led inquiry would be better managed than the prospect of another Senate inquisition dominated by Labor and independents.

China to bankroll Vale iron ore expansion – by Amanda Saunders (Australian Financial Review – May 20, 2015)

May 20, 2015

http://www.afr.com/

China will help to bankroll a major expansion by Brazilian iron ore giant Vale and invest in huge Vale ships that will transport high-quality ore to North Asia – a deal that will reshape the global industry and put more pressure on Fortescue Metals Group.

On a state visit to China with Premier Li Keqiang, Chinese officials agreed to invest in up to eight of Vale’s huge iron ore carriers, known as Valemax ships.

More importantly, China will loan the company up to $US4 billion ($5 billion) to help fund a $US16.5 billion expansion called S11D. The project, which should be finished next year, will produce 90 million tonnes of high-quality iron ore that will be shipped to China at a cost almost as low as that achieved by industry leader Rio Tinto.

While Fortescue’s Andrew Forrest has repeatedly attacked BHP Billiton and Rio for continuing to expand into a weak iron ore market, Brazil’s plans are accelerating.

Vale plans to increase capacity to 450 million tonnes as early as 2018 from 330 million tonnes this year. Its expansion easily eclipses the combined tonnes BHP and Rio will put into the market over the next three to four years.

Friends desert Andrew Forrest on calls for iron ore inquiry – by Paul Garvey and Andrew Burrell (The Australian – May 20, 2015)

May 21, 2015May 20, 2015

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

Fortescue Metals Group chairman Andrew Forrest appears increasingly isolated in his campaign for a parliamentary inquiry into the iron ore market, with even West Australian Premier Colin Barnett, an outspoken critic of BHP Billiton and Rio Tinto, rejecting the proposal.

In a major blow to the billionaire, Tony Abbott yesterday backed away from his previous support for an inquiry to investigate allegations that the Fortescue Metals Group chairman’s main rivals, Rio Tinto and BHP Billiton, have driven down the iron ore price and tried to push smaller players out of business by threatening to flood the market with iron ore.

Mr Forrest last night hit out at the major miners’ efforts to derail the inquiry push. “You’d have to say the reaction from BHP and Rio to an inquiry is nothing short of hysterical,” Mr Forrest told The Australian.

“I’ve never seen two sensible, conservative companies work so hard to be less transparent.” The Prime Minister distanced himself from the inquiry calls, four days after he warned of “predator behaviour” that needed examining. Mr Abbott said the government hadn’t made any decision on the inquiry, which had met resistance from Resources Minister Ian Macfarlane and Trade Minister Andrew Robb.

Iron ore miners should leave the market if they can’t compete – by Richard Heaney (The Conversation U.S. Pilot – May 19, 2015)

May 20, 2015

http://theconversation.com/us

Richard Heaney is the Winthrop Professor at University of Western Australia

Iron ore prices are plummeting, federal budget tax receipts are shrinking and Fortescue Metals Group chairman, Andrew “Twiggy” Forrest, reckons he knows who is to blame: BHP Billiton and Rio Tinto.

Forrest says these competitors drove down prices by flooding the market with product and has pushed for a federal parliamentary inquiry into their actions – a prospect Prime Minister Tony Abbott is said to be considering.

Forrest told ABC RN Breakfast last week that, “When the chief executives of two of the most important companies to Australia both talk the market down, both say they’re going to oversupply the market there’ll be a lot of collateral damage to the Australian economy, employees by the tens of thousands, companies, and we no longer have a free market.”

On Tuesday, BHP Billiton CEO Andrew Mackenzie responded by saying his firm has been a “very responsible fair producer” that had already partially slowed production, adding that:

Rio Tinto’s Andrew Harding ‘stunned’ by Twiggy Forrest’s iron ore war – by Matthew Stevens, Julie-anne Sprague, John Kerin and Ben Potter (Sydney Morning Herald – May 20, 2015)

May 19, 2015

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

Rio Tinto iron ore chief executive Andrew Harding says he is stunned by the public campaign waged against the company by rival Fortescue Metals Group.

Mr Harding denied Rio Tinto is flooding the market with iron ore and expressed deep frustration with Fortescue founder Andrew Forrest’s aggressive public relations campaign, which he believes is winning political support by distorting reality.

Mr Forrest has led a public campaign against Rio Tinto and BHP Billiton for weeks that has won the support of Prime Minister Tony Abbott, who is supporting a parliamentary inquiry into the iron ore industry and the nation’s biggest taxpayers against several of his own cabinet ministers.

Mr Harding said there could be “extraordinary” ramifications for Australia in its strong reputation for promoting free and open markets.

“It is stunning. I am absolutely stunned,” he said in an interview. “As I keep saying, there is a reality dysfunction. The commercial reality of it all gets overlaid by the claim ‘that is rubbish’ and ‘that is not how it works’, but no one ever goes on to explain how it works in the alternative.

Rio Tinto puts aluminium assets on block in potential $1bn deal – by James Wilson and Neil Hume (Financial Times – May 17, 2015)

May 19, 2015

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

London – Rio Tinto is making a fresh attempt to sell unwanted aluminium assets in a potential $1bn deal, the latest sign of global miners’ attempts to restructure in the face of a commodities downturn.

The Anglo-Australian company has engaged Credit Suisse to find a buyer for its Pacific Aluminium business, a group of smelters in Australia and New Zealand, according to people aware of Rio’s plans.

The move is part of trend among mining groups, which are cutting back on non-core assets. BHP Billiton, the world’s largest mining company, is spinning off a collection of assets into a separate company called South32, which is due to start trading Monday.

Rio has not created a separate spinout vehicle but has sold $4bn of assets in the past two years, chief executive Sam Walsh said this month.

The company has tried to sell Pacific Aluminium, known as PacAl, in the past, but halted its efforts in 2013 after there was scant interest in its lossmaking operations. “The market was aware PacAl wasn’t going to sell . . . I am a realist. Let’s get on with life,” Mr Walsh said at the time.