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Australia/New Caledonia/Papua New Guinea Mining

Barnett, Rio chief join Rinehart to pan Forrest collusion plan – by Matt Chambers (The Australian – March 27, 2015)

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

Gina Rinehart’s Hancock Prospecting has rejected fellow mining billionaire Andrew “Twiggy” Forrest’s call for an Australian iron ore cartel, adding to industry condemnation that has included Rio Tinto chief Sam Walsh calling the scheme “hare-brained”.

West Australian Premier Colin Barnett, who has called for BHP Billiton and Rio to stop flooding the market with excess iron ore and said their strategy was “dumb”, has backed away from the notion of joint action between suppliers, saying it would be ­illegal.

Mr Forrest, chairman and founder of Perth’s Fortescue Metals Group, has come under investigation from the competition watchdog this week for declaring that Rio, BHP Billiton and Fortescue should unite to cut production to drive prices higher.

The plan, labelled “extraordinary” and “concerning” by Australian Competition & Consumer Commission boss Rod Sims and “absolute nonsense” by Mr Walsh, would benefit Hancock’s Roy Hill project if it pushed prices higher, as Mr Forrest claims it would.

But Mrs Rinehart, the nation’s richest person, rejects the call. “There is nothing Australia can do about price other than be ready for it, and from an Australian perspective that means driving down our costs,” Hancock executive director, and Mrs Rinehart’s right-hand man, Tad Watroba, said yesterday from Hong Kong.

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Investors pinning hopes on a nickel comeback – by Barry FitzGerald (The Australian – March 27, 2015)

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

Talisman Mining (TLM)

It has got to be of some comfort to the band of ASX-listed nickel ­juniors that despite the price of the metal not going on with last year’s price rally, their market capitalisations have held up well.

Nickel got to $US21,000 a tonne last year on enthusiasm that Indonesia’s ban on the export of unprocessed ores was a big structural change that meant ­prices had to head higher. Prices for the steelmaking ingredient did for a while, but are now back at $US13,680 a tonne.

But again, the values of junior producers like Western Areas (WSA), Panoramic (PAN) and Mincor (MCR) have held up well, at least in the sense that they have not given back all of their gains achieved during last year’s price surge.

The fall in the dollar has helped. But the bigger reason seems to be that investors are betting that the nickel price is going to come storming back at some point. Macquarie’s equities desk estimates that the share ­prices of PAN and MCR appear to be factoring in a nickel price 50 per cent higher than the current price, and in the case of WSA, 27 per cent higher.

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COLUMN-Commodity price boom over, volume boom gathers pace – by Clyde Russell (Reuters U.S. – March 19, 2015)

http://www.reuters.com/

LAUNCESTON, Australia, March 19 (Reuters) – It’s become conventional wisdom that the commodities boom is over, and while the era of rising prices is gone, figures from the Australian government suggest the surge in volumes is well under way.

Exports of iron ore will jump 22.5 percent between the 2014-15 fiscal year and 2019-20, while liquefied natural gas (LNG) shipments will triple, according to the latest quarterly report from official forecaster, the Department of Industry.

Even the pressured coal sector is expected to post gains, with thermal coal exports climbing 16.6 percent over the period and those of metallurgical grades rising 7.3 percent.

Australia is the world’s top shipper of iron ore and metallurgical coal, number two in thermal coal and soon to take the lead in LNG, once the seven gas projects under construction are completed. But while the report, released on Wednesday, is relatively bullish about the outlook for export volumes, it’s another matter when it comes to prices.

Iron ore will average $60.40 a tonne in 2015, dropping to $56.80 next year before recovering to $64.60 in 2017, the department said. It expects the price recovery to continue to 2020, when it will reach $81.80 a tonne.

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‘Terrible timing’: Gina Rinehart bets on iron ore rebound with $13b mine (Sydney Morning Herald – March 18, 2015)

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

Gina Rinehart is digging what will likely be the world’s last big iron ore mine for years to come in the Australian outback. The timing couldn’t be worse for the billionaire mining heiress given tumbling prices and oversupply, but the message for other iron ore miners is clear – the fight for survival is going to get more difficult.

Since construction of the $13 billion Roy Hill mine began four years ago in partnership with South Korean steelmaker POSCO , Japan’s Marubeni Corp and Taiwan’s China Steel Corp, iron ore prices have slumped 70 per cent and forecasters see worse to come.

Blueprints for new mines are being abandoned from Australia to Guinea, with a West Africa mine shelved this month after Ivan Glasenberg’s commodities group Glencore conceded there was no prospect for a “profitable development”.

“If someone was to walk up today and say ‘I want to develop an iron ore mine,’ you’d think they were crazy or know something others don’t,” said James Wilson, an analyst for Morgans Financial in Perth.

Analysts blame a massive rise in production on overestimates of China’s appetite for imported ore by sector titans Vale of Brazil, Rio Tinto and BHP Billiton .

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Fortescue Pulls $2.5 Billion Bond as Price War Hits Iron Ore – by Benjamin PurvisBrett Foley (Bloomberg News – March 17, 2015)

http://www.bloomberg.com/

(Bloomberg) — Fortescue Metals Group Ltd., the world’s fourth-largest iron ore exporter, pulled plans to refinance some of its debt with a $2.5 billion bond as tumbling prices for commodities spook investors.

The stock hit a six-year low in Sydney trading Wednesday, matching the plunge in iron ore and crude oil prices, after the producer said the sale had been scrapped, citing volatile U.S. credit markets and a failure to achieve the terms it wanted.

Iron ore sank 47 percent in 2014 and extended losses this year as surging supplies from Fortescue, BHP Billiton Ltd. and Rio Tinto Group, outpaced demand growth, spurring a surplus just as economic growth slowed in China, the biggest buyer.

“This iron ore capacity war, the race to the bottom was always going to shake the tree and maybe we are starting to see that in earnest,” Evan Lucas, a markets strategist in Melbourne at IG Ltd., said by phone. “And it’s probably going to get worse before it gets better.”

Australia, the world’s biggest exporter of iron ore, on Wednesday cut its price forecast for 2015, saying the raw material will average $60 a metric ton, down from its estimate of $63 in December. Macquarie Group Ltd. overnight cut its forecast for the year by 20 percent to $54.

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Mining and geopolitical risk: A global breakdown – by Cole Latimer (Australian Mining – March 17, 2015)

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

Australia has always had an insular view of the mining industry.

It is often forgotten that many of the mining companies that operate here have a large suite of overseas operations, or are simply headquartered here but operate solely overseas.

There is more to the resources industry than what is happening on our island tucked away in the corner of the Pacific, and the vagaries of overseas machinations that affect it.

Yet, the mining sector has always viewed itself as a global industry, and one of the most important aspects of maintaining its ability to operate is remaining closely abreast of the constantly changing geopolitical landscape.

However as Deloitte points out: “As the pace of change accelerates it’s getting harder to predict the impact of these (shifting geopolitical) trends.” “It is becoming eminently clear that mining companies face rising regulatory, geopolitical, economic, and technological uncertainty.”

It goes on to state that despite best planning, much of the time miners will have to continue embracing uncertainty, essentially planning for the worst but hoping for the best.

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South32 looks better bet than parent BHP Billiton by Clyde Russell (Reuters U.S. – March 17, 2015)

http://www.reuters.com/

LAUNCESTON, Australia – (Reuters) – BHP Billiton has done a great job in making its spin-off South32 look attractive, perhaps to the point where it may be a better bet than its parent.

The world’s largest miner released documents on Tuesday outlining details for the new company, which will take over BHP’s aluminum, manganese, nickel, silver and some coal assets.

These assets are often described in the media as “unloved,” but the outlook for many of them is better than the core of iron ore, petroleum, copper and metallurgical coal that will remain with BHP. South32, so named for the line of latitude that links its main operating centers of South Africa and Australia, will get a head start from its parent.

The new company will assume only $674 million in net debt, about half the level analysts had expected, providing a boost to the management should they decide to pursue mergers and acquisitions. Analysts expect the new company, which will list in Australia, the United Kingdom and South Africa, will be worth up to $13 billion.

The South32 assets contributed net profit after tax of $738 million to BHP for the half year to December 2014, again an upside surprise that bodes well for the new company’s reception.

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Gina Rinehart blames high mining costs on government – by Julie-anne Sprague (Sydney Morning Herald – March 11, 2015)

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

Australia’s richest woman Gina Rinehart has attacked federal and state governments for inflicting high costs on local miners, which are battling plunging iron ore prices as global supply swells.

Mrs Rinehart, who is building on her father’s iron ore legacy by developing the $10 billion Roy Hill mine in Pilbara, also endorsed expansion strategies by BHP Billiton and Rio Tinto. The major miners have come under fire for flooding iron ore markets and depressing iron ore prices.

“You know if Australia doesn’t export, someone else will,” Mrs Rinehart told Fairfax Media on the sidelines of the Global Iron Ore & Steel Forecast conference, in Perth, on Wednesday.

Mrs Rinehart, who is estimated by BRW to have a $20 billion fortune, said it was high costs, rather than low iron ore prices that affected her Roy Hill project.

“What affects the project is high costs,” Mrs Rinehart said. “As I have said so many times it is really important government cost burdens are lowered. We have regulations; be it approval processes, be it permits, be it licences, be it the checks that have to go on after those compliances.” She said governments needed to take regulatory costs seriously.

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Iron ore strategy the road to ‘self-destruction’, warns Cliffs chief – by Paul Garvey (The Australian – March 12, 2015)

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

AUSTRALIA’S big iron ore ­miners are on a path towards “self-destruction” and could leave the country with a case to answer before the World Trade Organ­isation, the head of North America’s largest iron ore miner has warned.

Lourenco Goncalves, chief executive of US iron ore miner Cliffs Natural Resources, yesterday told the Global Iron Ore and Steel Forecast conference in Perth the surge in iron ore supply from producers such as BHP Billi­ton, Rio Tinto and Fortescue Metals could send the price of Australia’s most important export to permanently lower levels.

Iron ore prices have more than halved in the past year as surging production swamped cooling demand, although the key iron ore index rebounded slightly yesterday to end a six-day losing streak.

Mr Goncalves said the price of seaborne iron ore shipped by Australian miners could halve again from about $US60 a tonne to as low as $US30 as a result of the major miners’ expansion strategy. “You call that strategy? I call it self-destruction,” Mr Goncalves said.

On Tuesday, Rio Tinto iron ore chief Andrew Harding and his BHP counterpart, Jimmy Wilson, defended their companies’ roles in the creation of the supply glut, arguing that each tonne of supply they did not deliver would have been filled with lesser-quality ore from elsewhere.

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COLUMN-Who benefits from the iron ore supply glut? Nobody? – by Clyde Russell (Reuters U.S. – March 11, 2015)

http://www.reuters.com/

PERTH, March 11 (Reuters) – One question that skulks like an elephant in a room where the iron ore industry has gathered is who has benefited the most from bulging global supplies.

The Anglo-Australian pair of BHP Billiton and Rio Tinto are happy to tell you how they have successfully ramped up output at costs low enough to still rake in profits.

That was very much their message at this week’s Global Iron Ore & Steel Forecast conference in the Western Australia capital city.

The smaller miners suffering from the collapse in Asian spot iron ore prices are only too willing to speak of their battle to survive amid what they see as the destruction of the value of an industry that is Australia’s largest export earner.

The price of iron ore .IO62-CNI=SI hit its lowest on record on Tuesday, at $58 a tonne, with this year’s decline of 19 percent compounding last year’s slump of 47 percent.

Steel industry officials in China, the destination of two-thirds of the world’s seaborne iron ore, will also tell you how their industry suffers from overcapacity, poor profits and the economy’s shift to consumption-led growth.

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Cliffs Shuns Seaborne Iron Ore as Australia Unit for Sale – by Jasmine Ng (Bloomberg News – March 11, 2015)

http://www.bloomberg.com/

(Bloomberg) — Cliffs Natural Resources Inc., the largest U.S. iron ore mining company, is quitting the seaborne trade in the commodity after the world’s biggest suppliers flooded the market with low-cost output and hurt prices.

The Cleveland-based company will focus on the U.S. market, where demand for steel is increasing, Chairman and Chief Executive Officer Lourenco Goncalves said at an industry conference in Perth, Australia, on Wednesday. The company’s operations in Western Australia are for sale, he said.

Iron ore tumbled 47 percent in 2014 and has extended losses this year as surging low-cost supply from Rio Tinto Group and BHP Billiton Ltd. outpaced demand growth, triggering a global glut. Goncalves, who took over as CEO in August after an activist investor ousted the previous management, has sold mines and rationalized other operations in the face of the slumping prices. Cliffs’ stock lost 71 percent over the past 12 months, and is at the lowest since 2004.

“Here in Australia, we have a very good operation,” said Goncalves. “The asset is for sale, even if someone comes and buys to shut it down, that’s fair game. We’d like to sell to someone that will continue to keep the mine in operation.”

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BHP, Rio Tinto Say Chinese Demand for Iron Ore Not Fading – by Rhiannon Hoyle (Wall Street Journal – March 10, 2015)

http://www.wsj.com/

BHP executive says outlook for China’s resource demand remains compelling

SYDNEY—The world’s two largest mining companies say they are convinced China’s hunger for iron ore isn’t about to fade, even as the price plumbed new lows after Beijing’s official acceptance it is set for slower economic growth.

In an interview with The Wall Street Journal, BHP Billiton Ltd. ’s iron-ore president Jimmy Wilson said the outlook for China’s resource demand remained compelling, as the world’s second-largest economy expands from a larger base level.

He said demand for steelmaking ingredient iron ore from the country’s manufacturing sector had been running above BHP’s expectations in recent months and the country’s cooling property market could also be set for an uptick.

“I think we have to appreciate that China is getting bigger—they are targeting 7% [growth] and they are actually uncannily capable of delivering against those targets,” Mr. Wilson said. “We should never underestimate what is happening in China, and what continues to happen in China.”

His remarks echoed earlier comments from Rio Tinto PLC’s iron-ore chief executive Andrew Harding, who expressed optimism Beijing can maneuver the Chinese economy into a new stage of growth during a speech in Perth on Tuesday.

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Prospector of the year – by Kip Keen (Mineweb.com – March 6, 2015)

http://www.mineweb.com/

And this year’s award for ‘Amazing Exploration Genius’ goes to…Western Australia. In an industry overweight with large, usual male egos and aggressive credit-taking, we tend to celebrate the individual.

The amazing CEO. The hardened, relentless prospector. The brilliant geologist. And each year they get their awards for driving, overseeing and being lucky in making significant discoveries.

Often, the praise is well-deserved, when they have played an instrumental role in doing one of the hardest things you can do: find a major deposit. I do it myself. I sometimes profile the person who “made” the big discovery, usually the geologist who targeted the obvious discovery drillhole. It’s exciting.

So we like to celebrate the genius – a trait shared by society at large, obsessed as it is with celebrity, of all kinds. But in focusing on the individual in mining, we overlook some very important players: namely governments that expend significant financial and cerebral resources on supporting exploration.

Indeed, maybe, given what can be their driving role in discovery, it’d be worth a class of award on its own: Best government in exploration. Really.

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Layoffs and empty streets as Australia’s boom towns go bust – by Rebekah Kebede (Reuters India – March 6, 2015)

http://in.reuters.com/

(Reuters) – When Probo Junio got a visa to work in Australia, he thought he had won a ticket to the good life.

In 2013, the 45-year-old boilermaker left his hometown of Cebu in the Philippines, where he was getting paid about $10 a day, to work in Karratha in Western Australia for $30 an hour. Enough to support his relatives and build a new life Down Under.

What Junio didn’t expect was that Australia’s booming resources industry would go bust less than two years later, taking his job, and leaving him just 60 days to find work or go home.

“It’s very difficult because most of the companies don’t want 457 visa holders,” he said, referring to temporary permits for skilled workers.

Across the country, people like Junio are falling victim to downsizing. Jobs, once plentiful and well paid, are scarce. Real estate prices in boom towns are sinking and even the notoriously high coffee prices in mining capital Perth have leveled off at under $4.

Prices of iron ore and coal, the country’s two biggest export earners, have plunged during the last two years amid falling demand from China, in the wake of its economic slowdown.

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Iron ore glut hits new highs – by Sarah-Jane Tasker (The Australian – March 6, 2015)

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

PORT Hedland, the world’s largest bulk-export terminal, shipped the most iron ore on a daily basis last month as suppliers increased output through the facility despite the slump in prices.

The latest statistics from the port showed monthly throughput of 48.8 million tonnes of the steelmaking commodity in February — a 6.2 million tonne, or 14.8 per cent, jump on the same period last year. Actual iron ore exports for the month hit 35.6 million tonnes, a 28 per cent hike on last February’s tally.

The push by Rio Tinto, BHP Billiton and Fortescue Metals to increase tonnes into an oversupplied market has continued at a steady pace over the past few years. But the new supply is now hitting the market at a time when the price of the steelmaking commodity continues to fall and China forecasts its slowest growth in more than a decade.

A total of 1.27 million tonnes of iron ore was shipped from Port Hedland each day in February, according to Bloomberg. That surpassed the previous high of 1.21 million tonnes a day in September.

West Australian Premier Colin Barnett has previously accused the major miners of seemingly acting in “concert” with their new supply keeping the iron ore price at record lows, which is hitting his state’s budget.

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