Australia/New Caledonia/Papua New Guinea Mining – Page 111

BHP Sounds Warning as Casualties Mount in Iron Ore Price War – by Thomas Biesheuvel and Jesse Riseborough (Bloomberg News – February 24, 2015)

February 27, 2015

http://www.bloomberg.com/

(Bloomberg) — The first fractures are appearing in an escalating iron ore price war that’s putting more producers out of business.

The biggest mining companies led by Rio Tinto Group, BHP Billiton Ltd. and Vale SA have persisted with multi-billion dollar expansion plans, citing still-healthy earnings even in the wake of a price collapse. Now, for the first time, one of the big three has voiced concern they may have gone too far.

“I do fear that other competitors have an awful lot more capital waiting in the wings to invest in expanding,” Andrew Mackenzie, chief executive officer of BHP, the world’s largest mining company, told analysts on a conference call on Tuesday after reporting a 35 percent decline in underlying profit from his iron-ore division. “We do look to the future and see a degree of pressure downwards on iron-ore prices.”

BHP, Rio and Vale have been squeezing smaller rivals in their quest for market share, while demand growth in China, the biggest consumer, slows. From Sierra Leone’s jungle to Sweden’s Lapland, abandoned mines are beginning to dot the global landscape.

“They wanted to make sure no one else entered the market and to maximize their own market share,” said Seth Rosenfeld, an analyst at Jefferies International Ltd. in London. “They’ve now done that as they’re expanding and no one else is.”

Australian coal industry takes another step closer to the abyss – by Peter Ker (Sydney Morning Herald – February 27, 2015)

February 27, 2015

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

The downturn in the Australian coal industry has deepened, with three major mining companies warning on Friday that more jobs will be cut, mines will close and assets will be written down to a shadow of their former value.

Rio Tinto, Glencore and Brazilian miner Vale have all reiterated their pessimistic view of the coal sector’s future, revealing major changes to their local operations.

Glencore has made the most aggressive move, announcing that it will cut its Australian coal output by 15 million tonnes in 2015, or more than 20 per cent when compared to 2014 volumes.

In a move that is likely to put more than 100 jobs on the line, Glencore said the cuts would “more closely align” its coal output with customer demand, and some expansion projects would be slowed. “We will defer some projects and ensure that inventory management and blending are optimised,” the miner said in a statement.

The move comes less than a year after Glencore tried to merge its Australian coal division with Rio Tinto’s, underlining the predicament the Australian coal sector finds its self in.

New Caledonia: Nickel – Market Insights – by Robert Trzebski (Australian Mining – Febraury 26, 2015)

February 26, 2015

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

There are currently three key players in the nickel sector over in New Caledonia. French-owned ERAMET has been present in the country for over 120 years now and operate mines in New Caledonia through their subsidiary, SLN (Société Le Nickel).

They have in total five operations, which are mostly concentrated in the centre of the island at Kouaoua, Thio, Nepoui, and Tiebaghi, not to mention the biggest nickel processing plant in the world, Doniambo.
Vale are the second big player in town, and have the formidable Goro Nickel project under their ownership.

This mine is located in the South of the island. It began operations in August 2010, with over 55 million tonnes of estimated mineral reserve.

Estimated annual production is around 60,000 tonnes of nickel and 5,000 tonnes of cobalt. This is an open pit operation with a processing plant on site. The third and final significant player is SMSP in joint ownership with Glencore Nickel.

The Koniambo mine started open cut operations two years ago in the north of the country, again with a processing plant on site. Koniambo will be an important contributor to New Caledonia’s mining future, being a high-grade nickel deposit of 6.1 Mt of contained nickel that has a current forecast of 25 years of operations.

Miners pan moratorium state – by Paul Garvey (The Australian – February 26, 2015)

February 26, 2015

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

THE world’s mining companies have ranked Victoria as less attractive than the historically strife-torn nations of Ivory Coast and the Democratic Republic of Congo in the latest annual survey from Canada’s Fraser Institute.

The respected survey, in which mining executives rank the investment attractiveness of 122 nations and jurisdictions around the world on a variety of regulatory, social and geological factors, ranked Victoria as the least attractive place in Australia to invest.

NSW also performed poorly, ranking behind Burkina Faso — site of a military coup last year — and the military junta-ruled Myanmar. Victoria’s score was hard hit by poor scores in categories such as environmental regulation uncertainty and regulatory duplication and inconsistency.

The state was ranked 66th out of 122 jurisdictions for investment attractiveness, placing it just ahead of countries such as Laos, Liberia and Kazakhstan. Rob Annells, the executive chairman of Victorian oil and gas explorer Lakes Oil, said Victoria’s poor showing in the survey was of little surprise.

Victoria put a moratorium around onshore gas drilling under the former Liberal government which has since been extended by the new Labor government.

BHP in race between cost-cutting and commodity prices – Clyde Russell (Reuters U.S. – February 25, 2015)

February 25, 2015

http://www.reuters.com/

LAUNCESTON, Australia, Feb 25 (Reuters) – The jump in BHP Billiton’s shares after profits plunged shows a mindset akin to buying tickets for the Titanic’s second voyage because the gash in the hull from striking the iceberg isn’t as bad as feared.

BHP’s Australian-listed stock jumped almost 3 percent on Tuesday to close at A$33.06, and extended gains to A$33.54 in early trade in Sydney on Wednesday, a three-month high.

The world’s biggest mining company posted a 31-percent drop in half-year underlying attributable profits to $5.35 billion, but this was ahead of the consensus forecast of $5.1 billion. An increase in the interim dividend to $0.62 a share was also ahead of market forecasts, and this goes a long way to explaining the boost in the share price.

But delve deeper into BHP’s results for the half-year ended Dec. 31 and the impact of the rout in commodity prices becomes more apparent, as does the prospect of even lower profits in coming reporting periods.

Even Chief Executive Andrew Mackenzie adopted a sombre tone, telling a call with analysts that the price of iron ore, the miner’s main commodity, was likely to remain under downward pressure as more supply comes to market.

Rio Tinto boss Sam Walsh: Glencore merger is ‘fantasy’ – by Matt Chambers (The Australian – February 25, 2015)

February 24, 2015

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

RIO Tinto managing director Sam Walsh says a merger with Ivan Glasenberg’s Glencore will never happen because it would not clear regulatory hurdles even if Glencore came up with an offer that provided value for Rio.

And the mining boss claims BHP Billiton’s planned South32 spin-off, which BHP chief Andrew Mackenzie describes as a “key differentiator”, is just portfolio management that Rio has already completed.

At a Chatham House event in London, Mr Walsh said the much-hyped prospect of Glencore making a bid for Rio when a six-month “put up or shut up” moratorium ends, and then somehow taking Rio over, was fantasy.

“Part of the reason is value but part of the reason is the anti-trust and people who collect tax and what have you, they’re simply not going to let it happen,” he said.

Mr Walsh added that BHP’s failed $US160 billion takeover of Rio in 2007 fell over primarily because anti-trust regulators would not let it happen.

BHP Billiton spin-off a bright spot in commodities gloom – by Sonali Paul (Reuters U.S. – February 23, 2014)

February 24, 2015

http://www.reuters.com/

MELBOURNE – (Reuters) – When global miner BHP Billiton reports its half-year results on Tuesday, the only parts of the company that are likely to report profit growth are some of the unloved assets it aims to spin off by June.

Commentators had dubbed the company BHP plans to hand to shareholders “DudCo” before it was christened South32, as the aluminum, manganese, nickel, some coal and silver businesses barely contributed to BHP’s earnings.

But now those businesses are looking rosier as prices for aluminum and manganese are improving in a world where prices for BHP’s four biggest products, iron ore, petroleum, copper and coal, have all collapsed to near six-year lows.

Despite the improvement, BHP wants to shed the smaller assets so it can focus on its four core commodities, and still believes that shareholders will gain more if South32 is freed to develop assets that were starved of capital amid an iron ore and coal boom.

The world’s biggest miner is expected to report a 34 percent slide in half-year underlying attributable profit to $5.1 billion, but within that, Deutsche Bank sees earnings from aluminum nearly tripling while manganese earnings are seen improving by around 45 percent.

BHP’s iron ore outlook holds little cheer for small miners – by James Regan (Reuters India – February 24, 2015)

February 24, 2015

http://in.reuters.com/

SYDNEY, Feb 24 (Reuters) – Global miner BHP Billiton on Tuesday batted away suggestions of a turnaround in iron ore prices anytime soon – a bad omen for smaller producers struggling close to the break even point.

Chief Executive Andrew Mackenzie, releasing BHP’s half-year results, said iron ore demand in the all-important Chinese market was flat, although imports have increased by displacing higher-cost domestic supply.

But as supply costs have fallen, the price – around $62 a tonne – is now “more reflective of the medium-term fundamentals”, he said.

That’s a hefty enough price to keep BHP, the world’s third-biggest iron ore miner, and fellow mega-producers Vale and Rio Tinto in the black but is borderline for smaller rivals.

Atlas Iron, which plans output of about 14 million tonnes in fiscal 2015 against BHP’s 245 million tonnes, posted an underlying net loss of A$139 million ($108 million) for the half-year, against a A$61 million profit a year earlier.

Deep sea mining hopes hit by New Zealand decision – by Jamie Smyth (Financial Times – February 22, 2015)

February 25, 2015February 23, 2015

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

Sydney – A decision to block a deep sea mining venture off the New Zealand coast has cast a shadow over an emerging global industry that proponents say could revolutionise how minerals are extracted.

The sea floor is rich in copper, nickel, manganese, cobalt, zinc and a host of other minerals used in technology products. Improvements in undersea extraction technology have now put these within reach of miners.

New Zealand has lead the way in developing sea floor mining. But progress has now stalled following this month’s rejection by environmental regulators of a proposed project by Chatham Rock Phosphate off the coast of Canterbury, the second mine application refused within a year.

The decisions were welcomed by green groups, who fret that mining would damage vulnerable undersea ecosystems, which are relatively underexplored. But their delight is not shared by companies eyeing deep sea prospects.

“To say we are bitterly disappointed is an understatement,” said Chris Castle, Chatham Rock Phosphate’s managing director. “This will make it even harder, if not impossible for companies to attract capital for new projects in New Zealand.”

For almost 20 years deep sea mining has been flagged as a commercial opportunity. David Cameron, UK prime minister, claims it could be worth £40bn to the UK over a 30-year period.

COLUMN-Iron ore can’t go back to the future to annual pricing – by Clyde Russell (Reuters U.S. – February 23, 2015)

February 23, 2015

http://www.reuters.com/

LAUNCESTON, Australia, Feb 23 (Reuters) – Iron ore should go back to the future and reinstate annual contract pricing, according a former executive of top miner Rio Tinto. He’s wrong.

Mal Randall, who spent more than 25 years at Rio Tinto and also helped set up an Australian iron ore miner, said the move to iron ore spot pricing from 2010 onwards was a disaster, the Australian Financial Review reported on Monday.

Up to a few years ago, iron ore had been priced through annual talks between steelmakers and their largely Australian suppliers. This changed, largely at the behest of former BHP Billiton chief executive Marius Kloppers, who wanted to take advantage of a shortage of supply to generate higher returns for his iron ore mines.

“It was orchestrated and brought in by a guy that has no responsibility now, Kloppers who used to run BHP,” the newspaper quoted Randall as saying. “It’s great to make these changes and then he’s gone.”

Randall, who now chairs mineral sands company MZI Resources, is correct insofar as the spot market pricing is no longer working in the favour of the big miners.

Mining magnate Rinehart takes court action against TV series – by Jamie Smyth (Financial Times – February 13, 2015)

February 13, 2015

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

Sydney – Gina Rinehart, Australia’s richest person, has taken a television channel to court in an apparent attempt to block the broadcast of a hit miniseries detailing her colourful family and business history.

Lawyers for Mrs Rinehart told the New South Wales Supreme Court on Friday that the House of Hancock series was potentially defamatory, malicious and full of inaccuracies.

They applied to the court to force Channel Nine to hand over a copy of the second and final instalment of the show, which is due to be broadcast on Sunday, to see if there are grounds to seek an injunction to stop it airing.

Judge Peter Garling granted the application, saying that based on promotional material and interviews there was a prospect the show would air statements that are not entirely accurate or perhaps even falsified.

“I am satisfied the plaintiff is entitled to see it,” he said. The billionaire is now able to view the show before deciding whether to seek an injunction on Saturday.

Rio Tinto to defy mining pain with big payout while rivals suffer – by Sonali Paul and Silvia Antonioli (Reuters U.S. – February 10, 2015)

February 10, 2015

http://www.reuters.com/

MELBOURNE/LONDON – (Reuters) – Rio Tinto is expected to star among the top five global miners with a return of billions of dollars to shareholders at its annual results, even as the firm is set to report its worst half-year profit since 2009.

It will likely be all downhill for investors in the megaminers after Rio Tinto reports on Feb. 12 as they are all tipped to report sharp slides in earnings, gutted by weaker prices for almost everything they produce.

Iron ore will be the biggest source of pain, even though it remains the most lucrative product for Brazil’s Vale, Rio Tinto and BHP Billiton, and investors’ main concern is how the big miners are going to shore up cash flow. The top three producers have wounded the industry by flooding the market with new supply, knocking iron ore prices down nearly 50 percent in 2014, a steeper slide than anyone anticipated.

While boosting output, Rio has bolstered its cash flows by slashing costs, cutting capital spending and reducing debt, putting it in the best position to return cash to shareholders. BHP took the same steps, but has been whacked by plunging oil prices.

“In our opinion Rio has significantly greater flexibility (than BHP) at this point in time to pursue short-term capital management initiatives,” said Ben Lyons, a portfolio manager at ATI Asset Management.

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.