Potash Corp tussle could be win for BHP – by Amanda Saunders (Australian Financial Review – June 29, 2015)

http://www.afr.com/

A takeover tussle between two of the world’s biggest potash players could have an unlikely winner: BHP Billiton.

Analysts say a deal between Canada’s Potash Corp and Germany’s K+S will mean the remaining players in the market have increased pricing power over the next decade.

BHP has its foot on a potash megaproject called Jansen in Canada, which CEO Andrew Mackenzie has said is the best potash asset in the world.

But BHP is yet to decide whether to develop it could hinge the success of exploration and acquisitions in its other two key growth commodities: oil and copper.

Mr Mackenzie told The Australian Financial Review this month that BHP may have to choose between copper, potash and conventional oil in about five years, and could take on partners or exit one of the plays to protect its progressive dividend.

Deutsche mining analyst Paul Young said a Potash Corp deal with K+S would probably be positive for BHP.

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Gina Rinehart’s Roy Hill Tells Workers To Take Pay Cut To Keep Jobs – by Anne Lu (International Business Times – June 26, 2015)

http://www.ibtimes.com.au/

Australia’s richest person has told her employees to take a pay cut or lose their jobs. Gina Rinehart’s Roy Hill project will cut pay rates for its employees to avoid job losses.

The $10 billion company will be deducting 5 to 10 percent from the salaries of about 60 percent of its workforce in a bid to save its employees. It will also offer lower salaries to new workers. The move is expected to affect about 540 workers, with the upper management group taking the biggest cut, though it will spare existing employees in the lower remuneration bands.

According to Barry Fitzgerald, the company’s chief executive, the decision was made after reviewing the cost base. The pay cuts, which he said was approved by the workers through a survey, was to maintain the “family-friendly roster,” which is 14 days on with 10 days off, and 14 days on with 11 days off. He said the roster was what attracted a number of people to join the company recently.

“We felt it was more important for our people to retain their job rather than pursue workforce reduction as a cost-saving strategy in response to market conditions,” Fitzgerald, who will be getting a 10 percent cut from his pay, said. He further explained that cutting salaries was a practical decision they agreed on to keep the company competitive over the long term.

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COLUMN-Adani walking away, or upping ante on Australian coal project? – by Clyde Russell (Reuters U.s. – June 25, 2015)

http://www.reuters.com/

LAUNCESTON, Australia, June 25 (Reuters) – Is India’s Adani Mining preparing to walk away from its A$10 billion ($7.7 billion) coal project in Australia’s Queensland state, or upping the ante in trying to speed up approvals for the huge project?

Adani surprised industry observers by confirming on Wednesday it had halted engineering work on its Carmichael coal project in the frontier Galilee basin in central Queensland.

The planned 40-million tonne per annum mine is supposed to start producing in 2017, with Adani intending to ship to India to meet the growing demand for power generation.

The explanation from Adani on why it stopped independent contractors from working on the mine, rail and port infrastructure was that it was rejigging the budget on the project as it faces delays in obtaining all the necessary government approvals.

Delays in getting approvals from the Queensland government meant that the previous project timelines were no longer achievable, Adani said in a statement.

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GLOBE EDITORIAL: It’s not as if it’s the Iranians – let Australians mine our uranium (Globe and Mail – June 25, 2015)

The Globe and Mail is Canada’s national newspaper with the second largest broadsheet circulation in the country. It has enormous influence on Canada’s political and business elite.

There’s no reason at all to object to the decision of Greg Rickford, the Minister of Natural Resources, to allow an Australian company, Paladin Energy Ltd., to develop a uranium mine in Newfoundland and Labrador, 140 kilometres northeast of Happy Valley-Goose Bay, with Australians holding the majority of the shares.

On the contrary, the odd thing is that Paladin had to seek permission to do so, as a foreign corporation – over and above the similarly unnecessary process of the foreign investment review under the Investment Canada Act, with its mysterious “net benefit” criterion. In the rejected takeover by BHP Billiton of Potash Corp. of Saskatchewan in 2010, Ottawa even more mysteriously declared Potash to be a “strategic asset,” not a term used in the ICA.

The federal government has had a “non-resident ownership policy in the uranium mining sector” since 1987. The policy allows for an exemption from the requirement of at least 51-per-cent Canadian ownership if there aren’t enough Canadians who want to build the prospective uranium mine in question.

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Adani halts engineering work on Aus coal mine project: report (The Hindu – June 24, 2015)

http://www.thehindu.com/

Adani Group has halted engineering work related to Australia’s largest proposed mine, raising speculation that it could abandon the contentious $16.5 billion project altogether

India’s mining giant Adani Group has halted engineering work related to Australia’s largest proposed mine, raising speculation that it could abandon the contentious $16.5 billion project altogether.

Adani last week advised four major engineering contractors to stop work on projects around the Carmichael mine in Queensland including a joint venture rail line and the expansion of Abbot Point port, Guardian Australia reported citing industry sources.

The report quoted sources as saying that the move to suspend preparatory work by WorleyParsons and Aecon, Aurecon and SMEC at this stage of a project was unheard of and made no sense as a savings measure even amid delays.

“It’s Adani’s practice not to comment on specific commercial arrangements,” a spokeswoman for Adani was quoted as saying by the daily.

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Australia’s Paladin Energy Ltd wins historic approval to operate Canadian uranium mine – by Peter Koven (National Post – June 23, 2015)

The National Post is Canada’s second largest national paper.

Paladin Energy Ltd. has achieved a first for an Australian company: It has won the right to operate a uranium mine in Canada.

The approval from Ottawa, announced Monday by the company, is a signal that Canada welcomes more foreign investment in its uranium industry. And that has positive implications for a struggling sector that could really use some outside capital.

“This is an historic decision that could have implications for all uranium companies and projects in Canada,” Raymond James analyst David Sadowski said in a note.

Paladin said the federal government approved its request to be the majority owner and operator of the Michelin uranium mine in Labrador. The company hopes to begin production when the sputtering uranium market rebounds.

This approval was unique because Canada has a Non-Resident Ownership Policy (NROP) governing its uranium sector.

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COLUMN-Technology may lower commodity prices, widen nation gaps – by Clyde Russell (Reuters U.K. – June 23, 2015)

http://uk.reuters.com/

LAUNCESTON, Australia, June 23 (Reuters) – The image of miners as mainly burly blokes in hard hats and high-vis vests is likely to change in the next decade to one of computer geeks controlling automated machines while sitting thousands of kilometres away from the pit.

That’s certainly the scenario outlined in a major report called “Australia’s future workforce?”, released last week by the Committee for Economic Development of Australia (CEDA), a think-tank encompassing businesses, community groups and academic institutions.

More than five million jobs, or about 40 percent of Australia’s current workforce, have a “moderate to high” likelihood of disappearing in the next 10 to 15 years, CEDA said in the report.

What is relevant for commodities in this scenario is that mining and agriculture are among the sectors likely to be affected the most because of technological advancements.

The report notes that technological changes, while disruptive, often lead to higher incomes and increased employment opportunities as more wealth is created and productivity boosted.

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China’s Zijin targets Australian gold miner in M&A spree – by James Regan (Reuters U.S. – June 22, 2015)

http://www.reuters.com/

SYDNEY – Zijin Mining Group launched a bid for Australian gold explorer Phoenix Gold on Monday, the Chinese company’s third planned acquisition of a foreign mining asset in less than a month.

Long-dormant M&A activity in Australia and other mining-intensive countries is showing signs of a rebirth, with Zijin the most acquisitive to date and with the deepest pockets.

“The company is open to opportunities around the world,” Zijin Executive Director and Vice President George Fang told Reuters. “It is a goal to find more gold or other assets.”

In May Zijin announced it was issuing shares to raise 10 billion yuan ($1.61 billion) for acquisitions. Before launching its A$47 million ($36.55 million) offer for Phoenix, it accumulated a 17.9 percent interest in the company.

Zijin, one of China’s largest gold mining companies, unveiled two acquisitions in May for more than $700 million, one in Papua New Guinea and one in Democratic Republic of Congo.

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A missed opportunity for marginal iron ore producers – by Stephen Bartholomeusz (The Australian – June 22, 2015)

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

Has the slide in the iron ore price over the past week signalled the closing of a small window for the recapitalisation of marginal producers?

For a few weeks the price had been firming to hold around the $US64 a tonne level, well above the $US47 a tonne seen earlier this year when the collapse in the price was seen as the death-knell for smaller and higher-cost producers. It was that plunge that triggered the failed Fortescue Metals campaign to try to force/coerce Rio Tinto and BHP Billiton into winding back their production.

But over the past week, the price, which had seen some previously mothballed production brought back into the market, has slipped back towards $US60 a tonne. That raises the possibility, indeed probability, that the firming of the price was an aberration.

The most likely explanation for the bounce in the price is that supply disruptions in April and May caused by weather affecting output from the Pilbara and the timing of shipments from Brazil coincided with a low-point in the inventory cycle of China’s steel producers. If that were the case, it would be a temporary phenomenon.

If the edging down in the price over the past week does reflect a gradual return to settings that better reflect the underlying balance of supply and demand, the period that preceded it could represent a missed opportunity for some of the smaller players trying to survive and position themselves for a potentially very prolonged period of much lower prices.

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Why would we choose not to make money? Rio’s iron ore boss speaks out – by Vicky Validakis (Australian Mining – June 22, 2015)

http://www.miningaustralia.com.au/home

Rio Tinto’s iron ore boss Andrew Harding says long-term demand for the commodity is strong, but warned high-cost producers would not last long in the current market.

Speaking to Rio’s M2M magazine, Harding said while demand growth for iron ore isn’t as strong as it was, the long-term outlook was sound.

Pointing to the continued urbanisation of people in China, India, Africa, and South America, Harding said the need for steel would remain strong.

“As developing countries urbanise, and people move from rural to urban ways of life, infrastructure needs change. They build tall apartment blocks and link up the urban areas with roads, railway lines, airports and bridges – all using massive amounts of steel,” Harding said.

Harding also highlighted the importance of demand from the developed world in replacing ageing infrastructure.

“Even though Japan, for instance, has had no to very low growth for a considerable period, it’s still been importing around 130 million tonnes of iron ore every year,” Harding explained.

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Mining rising out of the downturn – by Cole Latimer (Australian Mining – June 16, 2015)

http://www.miningaustralia.com.au/home

Mining has reached the bottom of the downturn and has begun its recovery, according to a new IBISWorld report.

The major commodities, across the board, have seen a revival in fortunes after shedding prices continually for the last few months, creating a horror year, causing revenue in the mining division to decline by 10.0% in 2014-15, to reach $211.8 billion.

Iron ore hit a four month high last week after dropping to all-time lows in in April, having now risen to more than 40 per cent of the trough since then.

Gold has also seen a slight rally over the last month, following weaker trading in Europe on the back of poor economic data from China, coupled with a slightly weaker US dollar.

“With the dollar now slipping again and with some of the other markets looking a bit [like they have reached unstable highs and are likely to decline], it may be that the precious metals look relatively cheap as a safe-haven asset class should investors feel the need for a haven,” William Adams, head of research at Fastmarkets, explained.

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BARRON’S INTERVIEW: Fortescue’s Andrew Forrest Battles on in Iron Ore War – by Robert Guy (Barrons Magazine – June 17, 2015)

http://online.barrons.com/home-page

Billionaire chairman of Fortescue Metals Group on iron ore, China and why he thinks the miner is worth more.

If there’s anyone that understands the joy and the inevitable pain of the waxing and waning of commodity cycles, it is Andrew Forrest.

Having topped the ranking of Australia’s wealthy in 2008 with an estimated fortune of over AUD9 billion, the billionaire founder and chairman of Fortescue Metals Group has watched his fortune – built on a 30% stake in the world’s fourth largest iron ore miner – shrink to a AUD2 billion as the price of the steel making ingredient has tumbled from a record $180 a tonne in 2011 to around $60 a tonne.

Not that he seems worried about the hit to the hip pocket when Barron’s Asia caught up with the one of Australia’s most colorful business identities on Wednesday. Forrest, who is also known by his nickname “Twiggy”, has a deep appreciation of how fortunate he is, with the mining mogul visiting Hong Kong to promote his anti-global slavery foundation, Walk Free.

“We can’t solve everything, so we’re going after one thing and that’s freedom.

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Coal is not dead, says Adani – by Mark Ludlow (Australian Financial Review – June 16, 2015)

http://www.afr.com/

Indian energy giant Adani, which plans to make a final decision on its $16.5 billion Carmichael Mine this year, believes coal will remain the cheapest source of energy for decades.

As Adani signed agreements with indigenous groups which could deliver benefits worth $250 million over the next 30 years, Adani Australia chief operating officer Samir Vora said talk about the end of fossil fuels was exaggerated.

“Coal is definitely the main source of energy – you can’t deny it. It’s growing every year no matter what anyone says,” he said in an interview.

“India is investing in new generation technology to make coal more efficient to bring down the carbon footprint. There is a balance for everything [like renewables] but coal will undoubtedly remain the main source of fuel for decades.”

Amid speculation Adani would not be able to finance the mega-mine in Central Queensland, Mr Vora said he was confident it would have the funds once final mining and dredging approval was granted by the state and federal governments.

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Shouldn’t India, like China, consider buying Australian iron ore assets? – by Kunal Bose (Business Standard – June 15, 2015)

http://www.business-standard.com/

Chinese iron ore production this year is likely to fall below 200 mt from 240 mt in 2014

The world is aware that Chinese steelmakers and investment groups are circling around distressed iron ore assets in Australia with a view to gaining control. Nothing surprising about the recent Chinese moves since these are part of by-now-long-established strategy of the world’s largest producer and consumer of steel to secure future supply of iron ore.

But shouldn’t some of our large producers of steel, which were forced to import rising quantities of iron ore in the past three years due to court-imposed curbs aimed at ending illegal mining, also consider buying assets in Australia and elsewhere when their valuations are so low? India, which not very long ago was the world’s third largest exporter of ore, had to import 15.5 million tonnes in 2014-15 to supplement reduced domestic supplies. Our steelmakers would often complain about domestic ore suppliers charging premiums over world prices.

What will also be a justification for them to seek a presence in Australian iron ore landscape is the difficulty in securing iron ore deposits here and then long gestation in opening mines. This is despite the country sitting on the world’s sixth largest iron ore resources estimated at well over 25 billion tonnes (bt). Business wanderlust led Indian groups in the past to acquire mines in more than one continent, though not all proved to be prized catches.

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Rio Tinto uranium shutdown creates demand urgency – by Kip Keen (Mineweb.com – June 15, 2015)

http://www.mineweb.com/

What braking on the Ranger 3 Deeps project means for supply.

HALIFAX, NV – The Ranger 3 Deeps uranium project in Northern Australia, mostly owned by Rio Tinto, is dead, or at least in deep sleep for now. And the shelving of Ranger 3 – with a feasibility study no longer going ahead – has important implications for uranium supply, and presumably uranium prices.

This was the conclusion of analysts David Talbot and Zain Nathoo, of Dundee Securities, in a recent note dissecting the impact of Energy Resources decision to halt progress on developing the underground project, which would have extended existing operations at the Ranger uranium mine (now processing stockpiles).

The uranium market is not that large, so decisions like these can quickly have profound effects on supply. In this case we have, as Talbot notes, what could have become – if it reached production – the world’s third largest uranium mine after McArthur River and Cigar Lake, producing some 9 million pounds uranium a year.

Talbot sees the withdrawal of Ranger 3 Deeps as creating urgency for uranium buyers to start looking at securing long term supply contracts.

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