Australia/New Caledonia/Papua New Guinea Mining – Page 108

Gina Rinehart’s Roy Hill mine is set for nasty losses – by Robert Gottliebsen (The Australian – February 9, 2015)

February 9, 2015

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

IF THE current iron ore price decline continues into 2017 and beyond, then Gina Rinehart’s massive $10 billion Roy Hill mine project is set for very large losses when it starts production next year.

And if the reports of safety problems in the construction phase are right, then the capital costs will blow out beyond $10bn, especially if unions start playing hard ball, as they often do when there is a safety cause.

Accordingly, it makes perfect sense for Gina Rinehart to sell her Fairfax shares because additional funding will almost certainly be needed. The fact that she is unhappy with Fairfax management and can exit at a small profit makes the sale even more sensible. It’s an investment that was made when the iron ore price was booming.

The royalties the family receives from Rio Tinto iron ore production provide an underlying base of additional funding which means that the Hancock empire is not about to fall over. Nevertheless, the Hancock empire is set for a nasty experience.

If the mine, rail and ports are constructed on budget, the hi-tech facility is expected to have operating costs that would enable it to be profitable on a cash basis even if the iron ore price stays at existing levels.

Uranium-rich Australian state to examine possible nuclear industry – by Morag MacKinnon (Reuters U.K. – February 8, 2015)

February 9, 2015

http://uk.reuters.com/

PERTH – Feb 8 (Reuters) – – South Australia, home to one of the largest uranium deposits in the world, will conduct an inquiry into the potential benefits and risks of establishing a nuclear industry there, the state government said on Sunday.

South Australian Premier Jay Weatherill said a commission would be set up to investigate the potential of the nuclear industry to deliver economic growth and combat climate change, and to examine the risks involved.

Australia’s uranium reserves are the world’s largest, according to the World Nuclear Association, accounting for almost a third of known global deposits, but it has no nuclear power plants of its own.

“This is an opportunity to explore practical, financial and ethical issues raised by deeper involvement in nuclear industries,” Weatherill wrote on his twitter account. BHP Billiton’s Olympic Dam mine in South Australia is one of the largest uranium deposits in the world.

In 2012, the global miner shelved a planned $20 billion expansion of the mine due to falling copper and uranium prices, dealing a big blow to South Australia’s economy.

Currency conspiracy theory wide of the mark with iron ore – by Clyde Russell (Reuters U.S. – February 5, 2015)

February 5, 2015

http://www.reuters.com/

LAUNCESTON – Some people love conspiracy theories and the latest is that the Australian central bank is deliberately weakening its currency to save the country’s big iron ore miners.

That’s the opinion of Lourenco Goncalves, chief executive of U.S.-based iron ore and coal miner Cliffs Natural Resources but, like virtually all such theories, it fails the test of logic and credibility.

Goncalves argues that the Reserve Bank of Australia (RBA) has manipulated its currency to help his much bigger rivals, the Anglo-Australian pair of Rio Tinto and BHP Billiton.

In comments made on Tuesday, the same day Australia’s benchmark rate was cut by 25 basis points to a historical low of 2.25 percent, the outspoken CEO said the RBA was “taking no prisoners” with the Australian dollar.

“They want to help BHP, they want to help Rio Tinto, they want to help that lady over there, Gina whatever,” Goncalves said, a reference to Australia’s richest person, Gina Rinehart, whose company is due to start up the 55 million tonne a year Roy Hill mine in Western Australia later this year.

Iron ore family embroiled in will dispute – by Ben Hagemann (Australian Mining – February 3, 2015)

February 3, 2015

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

The daughter of late iron ore magnate Michael Wright has issued a wish list of bizarre and extravagant “needs” to increase her claim on his estate.

Michael Wright died in 2012 with an estimated worth of $2.7 billion (as reported by The West Australian; $1.5 according to The Australian), which was built thanks to mining royalties inherited from his father Peter Wright, who was a business partner with Lang Hancock.

Olivia Mead, 19, the youngest child fathered by Wright has lodged claim against the Wright estate that the $3 million trust fund (only to be accessed when she turns 30) was not adequate.

Wright’s other two daughters Leonie Baldock and Alexandra Burton have been directors of Wright Prospecting, which in 2013 won a legal dispute against Hancock Prospecting over a 25 per cent stake in the Rhodes Ridge iron ore deposit.

Mead said in the WA Supreme Court on Monday she did not have a close relationship with her father “overall”, but that she visited him at least once a week in 2012 prior to his death in April. She said Wright told her he wanted to leave property for her, but property was not bequeathed to her in the will.

Anglo American set to sell Australian coal mines to boost returns – by Arash Massoudi, James Wilson and Neil Hume (Financial Times – January 22, 2015)

January 22, 2015

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

Anglo American is eyeing the sale of a cluster of coal assets in eastern Australia as the miner struggles to boost shareholder returns during a slump in commodities prices, people familiar with the matter said on Thursday.

The UK-listed miner, one of the world’s largest coal producers, is preparing to sell five mines in Queensland and New South Wales as part of a $3bn-$4bn asset disposal programme ordered by Mark Cutifani, chief executive.

Large mining companies including Vale and BHP Billiton are looking to dispose of or spin off non-core assets as they battle falling commodity prices and declining share prices. They are also under pressure to boost returns to investors. For Anglo American, a sale of assets would help strengthen its balance sheet.

Mines including Dawson and Foxleigh would be primed for a possible sale, the people close to the situation said. One of these people added that Bank of America Merrill Lynch was working with Anglo.

The miner said in December that it was selling the Callide mine as well as Dartbrook. Anglo and Bank of America declined to comment. The mines earmarked for potential sale produce coal used for steel making or power generation.

Coal’s King Canute moment – by Cole Latimer (Australian Mining – January 22, 2015)

January 22, 2015

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

As the coal price continues to falter and major producers are hit drastic action is being taken to reverse the tide.

The commodity has faced a massive decline. It has fallen in price by more than a third in a year from December 2013 to December 2014, as Chinese demand waned and a projects came online, flooding the market and causing excessive supply problems.

The Bureau of Resources and Energy Economics (BREE) said Australia exported 181 million tonnes of metallurgical coal in 2013-14, with this expected to increase to 185 million tonnes in 2014-15, while thermal coal exports are tipped to top 196 million tonnes in 2014-15.

Queensland alone managed to export 216 million tonnes of both thermal and coking coal for 2014, setting new export records.

Making matters worse for miners in Australia is the supply coming online from other competitors such as Indonesia, Colombia and South Africa, further flooding the market, while Russia has plans to quadruple its coal output levels by 2030.

At the same time, rising natural gas production in the United States means thermal coal will be diverted from domestic American markets where it is used as an energy source, to export destinations – particularly Asia.

Gold Comes To The Aid Of A Beleaguered Mining Industry – by Tim Treadgold (Forbes Magazine – January 21, 2015)

January 22, 2015

http://www.forbes.com/

Gold loves a crisis, which is why ongoing troubles in Europe helped push its price back through the $1300 an ounce level earlier today but, to see a gold rush magnified by a currency shift, take a look at what’s happening in Australia.

Down there a gold boom has broken out thanks to the effect of the falling Australian dollar on the gold price with the country’s gold miners also enjoying the benefits of cheaper fuel which is one of the biggest costs, especially in open pit mines.

The triple-whammy of a rising U.S. dollar gold price, falling Australian dollar and cheaper diesel fuel which is used in most mine-site equipment has boosted the Australian stock exchange gold index by 58% over the past 10 weeks.

Some of Australia’s leading gold mining companies have outperformed the index with Newcrest, the biggest ASX-listed gold stock, rising by 61% and the most successful explorer and deal-maker, Northern Star, rising by 137%.

The lift-off point for Australian gold was November 6 last year, the day after the U.S. dollar gold price bottomed at $1142/oz. On that day Newcrest shares were selling at A$8.51 on the ASX. Northern Star was at A91c. The exchange rate was US87.33c and Brent crude oil was at $83 a barrel.

COLUMN-BHP, Rio production show scale of commodity price challenge – by Clyde Russell (Reuters India – January 21, 2015)

January 21, 2015

http://in.reuters.com/

LAUNCESTON, Australia, Jan 21 (Reuters) – The latest production reports from mining giants BHP Billiton and Rio Tinto hammer home an uncomfortable truth: No matter how much output increases and costs are cut, falling commodity prices triumph.

Both BHP and Rio Tinto released reports this week that met market expectations and re-affirmed production guidance for the world’s top two mining companies.

While it’s no doubt positive for the Anglo-Australian miners that they are successfully executing plans to boost output while containing costs, the numbers make for some sobering reading.

Rio Tinto, the world’s second-largest iron ore producer after Brazil’s Vale, said it expected to mine 330 million tonnes of the steel-making ingredient at its Western Australia mines in 2015 on a 100 percent basis, up from 280.6 million tonnes last year. (www.riotinto.com)

The average price achieved in 2014 was $84.30 a tonne, Rio Tinto said, which would yield revenue of about $23.65 billion, on a 100 percent basis from the Pilbarra region. Rio Tinto’s actual share of that would be about $18.95 billion, as some of its mined output accrues to partners.

And given the structural oversupply in the market and muted demand growth from top importer China, it seems unlikely that the price will rally significantly in 2015.

Nickel miners shrug off sluggish prices – by Paul Garvey (The Australian – January 22, 2015)

January 21, 2015

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

NICKEL miners Western Areas and Panoramic Resources have shrugged off the sluggish nickel price with respective pieces of good news, with Western Areas flagging a big improvement in its guidance for 2015 and Panoramic surging on the back of a new discovery.

Western Areas said production costs at its high-grade Flying Fox and Spotted Quoll mines in Western Australia had fallen to their lowest in four years, clearing the way for the company to upgrade its guidance at its half-year result.

Each pound of nickel produced by Western Areas cost the company $2.23, compared with its guidance for the full year of between $2.70 and $2.80 a pound.

The lower production costs reflected higher nickel grades, a renegotiated contract with mining contractor Barminco, and optimisation efforts by the operations team.

Net cash at the company increased from $44.7 million to $53.7m, despite the falling nickel price and the payment of a dividend during the quarter. Western Areas executive director David Southam said the miner had outperformed during the December quarter.

COLUMN – A few rays of sunshine break through coal’s storm clouds – by Clyde Russell (Reuters India – January 19, 2015)

January 20, 2015

http://in.reuters.com/

LAUNCESTON, Australia – The new year has started positively for Asian coal, with prices rallying from a 5-1/2 year low, Chinese imports jumping to the highest in 11 months and renewed merger and acquisition interest.

While these are undoubtedly welcome developments for a sector that has witnessed four years of falling prices, there are still serious questions as to whether these swallows really do indicate a summer of good fortune ahead.

The spot price of thermal coal at Australia’s Newcastle port, an Asian benchmark, rose to $62.91 a tonne in the week ended Jan. 16, up 3 percent from $61.04 the prior week, which was the lowest since April 2009.

The obvious caveat here is that prices are still some way below the breakeven point for many miners in top exporters Australia and Indonesia, and it will take weeks of sustained gains to bring the sector as a whole back into the black.

Chinese imports were 27.22 million tonnes in December, the highest since January last year, again a positive sign but not enough to mask that imports for 2014 as a whole were down 10.9 percent to 291 million tonnes, the first annual drop in a decade.

Australian mining boom subsides with China’s economy – by Don Lee (Los Angeles Times/Duluth News Tribune – January 17, 2015)

January 19, 2015

http://www.duluthnewstribune.com/

KARRATHA, Australia — Joe Norton, a large man with a sunburned face, digs into a plate full of beef, potatoes, carrots and Brussels sprouts at Searipple, a mobile-home camp in Australia’s western frontier.

It isn’t the tastiest food in the world, the 54-year-old says, but it’s free, provided by his employer, iron mining giant Rio Tinto.

So is most everything else in his life: all of his meals, a manufactured house with microwave and flat-screen TV, a round-trip ticket every Friday to fly home, and not the least, his $180,000 salary.

Not bad for a man with an eighth-grade education doing semi-skilled work on railways transporting iron ore.

Yet the gig probably won’t last a lot longer, Norton reckons. Some of his fellow miners already have been sent packing as the company downsizes its contracted workforce. “They’re cleaning the fat,” he said.

With China’s slowing economic growth, one of the biggest mining booms in Australian history is over, leaving behind a trail of jobless workers and struggling local businesses in places such as Karratha, which thrived in recent years but now is at risk of becoming a ghost town.

Anglo American release a video about women in mining – by Vicky Validakis (Australian Mining – January 16, 2015)

January 16, 2015

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

Anglo American has released a video aimed at showing the opportunities open to women at its mining operations. The video features women working at Anglo’s metallurgical coal operations discuss how they made their way into the mining industry.

Gabrielle Horn, an automotive electrical apprentice, said she was working in hospitality when she saw an ad by Anglo in the local newspaper. “My dad encouraged me to apply and I got to choose what position I wanted,” Horn said.

“I love coming to work, things change every day so it’s always a different situation.” Claire Stevens, a technical services superintendent at Grasstree mine, said she actively sought a role in an underground mine because she was fascinated with how it worked.

COLUMN-Big iron ore miners supply strategy working partially – by Clyde Russell (Reuters U.S. – January 13, 2015)

January 14, 2015

http://www.reuters.com/

LAUNCESTON, Australia, Jan 14 (Reuters) – China’s record imports of iron ore in December capped a year of strong growth, while also proving that the strategy of the big miners is at least partially working.

China brought in 86.85 million tonnes of the steel-making ingredient in December, bringing the total for 2014 to 932.5 million tonnes, a gain of 13.8 percent over the previous year.

The jump in iron ore imports isn’t because China is producing more steel, with output of crude steel rising a mere 1.9 percent in the first 11 months of 2014 over the same period in 2013, according to official figures.

It’s also not because huge stocks of iron ore are being built up in warehouses, with inventories monitored by the Shanghai Futures Exchange SH-TOT-IRONINV dropping to 99.85 million tonnes in the week to Jan. 9, the lowest in 11 months.

The most logical explanation is that the 47-percent decline in the Asian spot iron price in 2014 .IO62-CNI=SI is displacing some high-cost Chinese domestic output.

This has been the strategy of the big three iron ore miners, Brazil’s Vale and the Anglo-Australian pair of Rio Tinto and BHP Billiton.

What’s wrong with BHP Billiton? – by Amanda Saunders (Australian Financial Review – January 7, 2015)

January 9, 2015

http://www.afr.com/

What is wrong with BHP Billiton? Well, a lot, according to Bernstein’s senior mining analyst, Paul Gait. London-based Mr Gait says the Big Australian is “a colossus with feet of clay” in a 54-page note that puts BHP through the wringer.

His views are understood to be in line with those held by pockets of the market in London. BHP shares have taken a hammering there in the past five weeks, falling 13 per cent since the start of December to 1324.50 pence on Tuesday. In Australia, BHP has plunged 29 per cent since August to $28.11.

BHP does not deserve the valuation premium it enjoys over its “high-quality” peers, particularly arch-rival in iron ore, Rio Tinto, Mr Gait said.

And he said it is doubtful BHP is ¬willing to take responsibility for capital discipline, including withholding supply. He accuses the mining giant of “hubris” over its potash strategy.

BHP has a set of some of the highest quality, best-run assets in the game across its four pillar commodities – iron ore, copper, coal and petroleum. That quality, combined with low operating costs and broad diversification have made BHP a “must-own” mining stock.

Iron ore won’t reach $US100 per tonne again, says BHP Billiton – by Philip Wen (The Age – December 12, 2014)

December 12, 2014

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

Shanghai: Mining giant BHP Billiton says iron ore prices are unlikely to eclipse $US100 a tonne again, with expectations of steel consumption growth in China slowing further next year.

“I’ve learnt never to say never and there’s always short-term variations, but I think that if you use basic economics … certainly $100 seems high,” BHP’s president of iron ore Jimmy Wilson told reporters in Shanghai on Thursday.

“It’s hard to see that significant bump [in demand] that we’ve seen coming from China happen again.” BHP’s senior management group, including chief executive Andrew Mackenzie, was in Shanghai to celebrate the shipping of its one billionth tonne of iron ore to China.

The first shipment departed from Port Hedland in 1973. “It took nearly 30 years for BHP Billiton to ship 100 million tonnes of iron ore to China and then only 12 more years to reach the one billion tonne milestone,” Mr Mackenzie said.

The milestone was testament to China’s extraordinary rate of development, he said. At current rates the next 1 billion tonnes milestone would take just five years to reach.

But though imports into China have surged, prices have nearly halved, dropping under $US70 a tonne for the first time in five years. The drop comes amid a supply glut brought on by aggressive expansion by major miners Rio Tinto, BHP and Vale – even as Chinese economic growth cools.