Australia/New Caledonia/Papua New Guinea Mining – Page 105

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

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.

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

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.

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

June 16, 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.

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

June 16, 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.

Fired Miner’s 50% Pay Cut Just Start of Australian Wage Pain – by Michael Heath (June 14, 2015)

June 15, 2015

http://www.bloomberg.com/

For 20 years Australians doubled down on debt, confident that rising wages would inflate away the burden and grow their wealth. Now their luck seems to be running out.

Geologist Marzena Grochot has been forced to go back to her former career as a dental technician after losing her mining job that paid twice as much. Her plan to sell the family’s two-storey, four-bedroom house in Perth is also foundering in a weak market as the impact of collapsing mining investment spills out across the economy.

“It’s affecting everyone — people stop going out and spending money,” the 37-year-old said. “Even working in the dental industry, everything is slowing down because parents can’t afford any more braces for their kids and are postponing treatments.”

Australian wages fell in the first quarter for the first time on record as the wall of Chinese money scooping up the nation’s commodities receded. The implications are profound: stagnant pay limits household spending that accounts for about 55 percent of the economy; it impedes government efforts to repair the budget; and will force the central bank to maintain low interest rates for an extended period or cut even further.

Brace for surging BRICs, BHP chief Mackenzie warns – by Scott Murdoch (The Australian – June 11, 2015)

June 11, 2015

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

BHP Billiton chief executive Andrew Mackenzie has warned Australian miners to expect a surge of competition from rival countries selling to China, as the Asian giant strengthens business and diplomatic ties with a number of mineral-producing nations.

In Beijing, Mr Mackenzie told The Australian China’s growing relationship with Latin America, especially Brazil, could be a risk to Australia’s export levels in future.

Mr Mackenzie said Australian producers needed to ensure their Chinese customers were confident that security of supply would not be affected over the next few years.

Mr Mackenzie chaired a high-level meeting with Premier Li Keqiang and 14 top global chief executives at the Great Hall of the People on Tuesday to examine China’s economic transformation. The Chinese government has put in place an official target for the economy to grow by 7 per cent this year.

Ignorance pushed iron ore market into ‘dance of death’ – by Tess Ingram (Sydney Morning Herald – June 9, 2015)

June 9, 2015

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

Former Fortescue Metals Group chairman Gordon Toll says the heads of the world’s largest iron ore miners have exhibited “appalling ignorance of major economic market structures” and have created a global “debacle” that could last for decades.

Mr Toll, who now heads locally-listed magnetite hopeful Royal Resources, served as chairman of Fortescue from May 2005 to March 2007 while the company was in its development phase.

Adding his name to the list of prominent critics of the miners’ expansion strategies, Mr Toll said he was shocked shareholders of BHP Billiton, Rio Tinto, Vale and Fortescue had remained silent while their companies pressed ahead with expansion plans which would depress prices.

“The first thing is why are the shareholders not screaming and I think that’s part of the second thing which is both the executives of these companies and the shareholders are showing massive ignorance of major economics and market structures,” Mr Toll told Fairfax Media.

“I don’t believe Jimmy Wilson or Andrew Harding, any of those people, ever believed they were going to drive the iron ore price down to where they have driven it but that is because they do not understand major economics.”

Mining downturn opens door for ‘neglected’ Pilbara tourism industry – by Alexia Attwood (ABC North West WA – June 8, 2015)

June 8, 2015

http://www.abc.net.au/news/

The downturn in the Pilbara’s all dominating iron ore industry has opened a window of opportunity for the region’s tourism potential.

For half a century the Pilbara’s spectacular desert ranges and rugged coastline have been overshadowed by the multi-billion-dollar iron ore industry.

But the drop in iron ore price has prompted business and industry leaders to look for ways of diversifying the Pilbara’s economy to make it less reliant on the mining sector, and the formerly neglected tourism industry has been touted as the way forward.

“For our part of the Pilbara, tourism has been neglected for the last decade,” Bazz Harris from the Karratha Visitor Centre said. But the iron ore downturn has already had a positive impact on the affordability of holidaying in the Pilbara, Mr Harris said.

“The good thing is when people call us and say, ‘Hey, can I actually come to Karratha or is it going to cost me an arm and a leg?’, we can actually get people one night’s accommodation for 110 bucks, which is very normal,” he said.

Iron ore expansions drove down price: Glencore – by Matt Chambers (The Australian – June 5, 2015)

June 5, 2015

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

The most senior local executive at Swiss trading and mining giant Glencore has waded into the iron ore debate, saying rapid Australian expansions have driven down prices and cost the nation tax, royalties and superannuation dollars.

Speaking in Melbourne yesterday, Glencore coal mining chief Peter Freyberg said boomtime expansions that had seen Australian iron ore production surge and cost more than $US50 billion ($64bn) in development spending from Rio Tinto, BHP Billiton and Fortescue Metals, had been a negative exercise.

“The numbers speak for themselves — if you go back a couple of years, there were 500 million tonnes of (annual) export at $US100 a tonne,” Mr Freyberg said.

“That’s versus 700 million tonnes of exports today at $US60, so there’s a whole lot of revenue that’s gone missing following a bunch of investment.

“At the end of the day, (with respect to) the returns to Australia, into superannuation funds, through royalties, through taxes, it’s been a negative exercise.”

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.