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Australia/New Caledonia/Papua New Guinea Mining

Door still open for mega-merger between Newmont Mining and Barrick Gold – by Peter Ker (The Age-Business Day – August 7, 2014)

 http://www.theage.com.au/business

A $US35 billion ($37.6 billion) merger of global goldmining companies Newmont Mining and Barrick Gold may not be dead, after the chief executive of Newmont told an audience in Melbourne that he would not “close the door” on a future deal.
The two North American gold companies conducted merger talks earlier this year but the deal fell over in April amid reports they had disagreed over how to handle their respective Australian assets.

While neither company is listed in Australia, a merged entity would wholly own the nation’s biggest goldmine, Boddington, and the nation’s second-biggest goldmine, Kalgoorlie’s Super Pit, as well as other smaller assets.
When asked if he had shut the door on the proposed deal, Mr Goldberg indicated a revival of the deal was not impossible.

“I wouldn’t shut the door on it – we are focusing on running our business as effectively and efficiently as we can going forward and we will see what happens,” he said.

“Clearly we overlap and we work together, [the Super Pit] is an example, and we have a joint venture in Nevada and I wouldn’t close the door on it at all.” But he said he had not heard from Barrick since April.

During a presentation to the Melbourne Mining Club on Thursday, Mr Goldberg said the deal had failed because there were not enough “redundancies” between the two companies.

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Bottom reached for coal, iron ore? – by Oliver Probert (Australian Journal of Mining – August 07, 2014)

http://www.theajmonline.com.au/

An ANZ commodities expert says iron ore and coking coal prices may have reached their bottom, and he’s singing from the same hymnbook as at least one mining executive.

A report from Mark Pervan, global head of commodity strategy for ANZ, this week said that with the stabilisation of the overall macro environment, commodity markets are entering the second half of 2014 on a positive note.

While an increase in commodity prices is likely to occur, the report says, it will be a modest one, however.

“Overall, the backdrop looks accommodating for commodity markets in H2 2014,” Pervan’s report states. “But the upside looks limited over the next month or two until we see this supported by a pick-up in physical demand, which is expected later in the year.”

Commenting specifically on mined bulk commodities, Pervan wrote: “Supply-side issues remain, but the bottom appears to have passed for coking coal and iron ore. Seasonal drops in power demand will cap any thermal recovery.”

Pervan’s confidence in iron ore was echoed by Atlas Iron chief executive Ken Brinsden, who was referenced in a number of mainstream media outlets for his comments at the Diggers & Dealers conference in WA this week.

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UPDATE 2-China’s Ramu nickel mine in PNG restarts after attacks – embassy – by Sonali Paul, Melanie Burton and Polly Yam (Reuters India – August 7, 2014)

http://in.reuters.com/

Aug 7 (Reuters) – A Chinese-owned nickel mine in Papua New Guinea has resumed production three days after an attack by armed villagers forced work to halt, a Chinese embassy official in the South Pacific country said on Thursday.

The $2.1 billion mine, forecast to produce 22,000 tonnes of nickel in 2014, is operated by Ramu NiCo, which is majority owned and run by Metallurgical Corporation of China Ltd (MCC) .

Equipment including nine excavators, a fuel truck and a lighting vehicle were burned and five Chinese workers were injured in the attack on Monday, the embassy said, confirming earlier media reports.

“The embassy strongly condemns these brutal attacks and makes urgent request to the PNG Government to take immediate and effective measures to prevent the violence from recurring and ensure the safety of the personnel and properties, and to bring those attackers to justice to deter such criminal acts,” an embassy official said in an emailed response on Thursday.

“With the assistance of the police force, now the situation is under control and the mining production has been resumed.”

Mining and energy projects are the major source of income for Papua New Guinea, but outbreaks of violence sparked by landowner disputes and environmental concerns are not uncommon.

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Miners talk up big asset sales – by Paul Garvey (The Australian – August 7, 2014)

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

IT’S long been said that the juiciest stories out of Diggers & Dealers come not from the procession of speakers at the conference ­podium, but instead from the Hannan Street bars packed full of delegates each night (and often well into the next morning).

This year was no different. If the chatter doing the rounds in the bars of the Palace and Exchange hotels is anything to go by, we should be standing by for a flow of deals in the months ahead.

While Kalgoorlie’s infamous skimpies went about their business behind the bar — this year’s collection of scantily clad barmaids were apparently flown in from the Gold Coast specially for the event — much of the talk ­focused on the big asset sales said to be in the works.

The sales process around BHP Billiton’s Nickel West smelter, just down the road from the ­action in Kalgoorlie, was a subject of significant gossip.

Despite reports Glencore had walked away from the process, there was talk the Swiss giant was in fact still in the fray albeit frustrated by BHP’s approach to the sale. Private equity group Apollo Global Management is understood to have its offer for the assets knocked back, while China’s Jinchuan is still very much in the running.

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COLUMN-Coking coal prices set for modest gains, thermal still marooned – by Clyde Russell (Reuters U.K. – July 5, 2014)

http://uk.reuters.com/

Clyde Russell is a Reuters columnist. The views expressed are his own.

LAUNCESTON, Australia, Aug 5 (Reuters) – Prices for thermal and coking coal appear poised to diverge, with the power-plant fuel remaining mired in the doldrums and the steel-making ingredient posting modest gains.

The halving of thermal coal prices since early 2011 has grabbed the most attention in the beleaguered industry, but coking coal has actually performed worse, dropping by almost two-thirds since its post-2008 recession peak in mid-2011.

The 2011 high was reached after severe flooding in Queensland state, the main coking coal producer in top exporter Australia.

Both types of coal have been plagued by oversupply, which has swamped the modest increases in demand in top importers China and India.

The problem for thermal coal has been supply hasn’t significantly been cut despite weak prices. Producers in the top two exporters Indonesia and Australia have been instead trying to cut costs and increase volumes in order to boost revenues.

Australian producers have another problem, the so-called “take-or-pay” contracts that commit them to paying for transport costs whether they actually ship coal or not.

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Australian plus-sized model Robyn Lawley opens up about her nude coal mining protest (News.com.au – July 31, 2014)

http://www.news.com.au/

MODEL Robyn Lawley has come clean about her revealing nude protest against coal mining, taking Prime Minister Tony Abbott to task over his green credentials.

The 25-year-old Lawley, currently in New York, posted an image on her Instagram account earlier this week showing her stomach, breasts and “Stop coal mining” scrawled across her stomach in red lipstick.

Robyn said the protest was in response to the Federal Government’s approval of the Carmichael Coal Mine in Queensland.
Today she has taken another swipe at Prime Minister Tony Abbott, criticising his scrapping of the carbon tax earlier this month.

“After running a campaign that bewildered the public and convinced citizens they would have to pay said tax through increased energy bills, our leaders were able to shut the (carbon price) system down,” Lawley said.

“What’s the big deal? That scheme was meant to be a powerful incentive for all businesses to cut their pollution and by investing the tax dollars in clean technology and solutions.”

The popular model also raised her concerns about the government’s support for the expansion of the massive Abbott Point Coal Terminal in north Queensland.

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High costs hurting mine investment, says Gina Rinehart – by Clive Mathieson (The Australian – July 29, 2014)

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

MINING magnate Gina Rinehart says the high cost of doing business in Australia is driving some multinational companies to pursue overseas projects that have the potential to further damage the country’s export revenue.

Mrs Rinehart, the chairwoman of ­the privately owned Hancock Prospecting and the nation’s richest person, lamented the decision by some companies to invest in lower-cost offshore projects that could drive down commodity ­prices and undercut Australian projects. “Sadly, too many multinational companies, even Australian companies, are focusing and preferring to invest in overseas countries with lower costs,” she told The Australian.

“For instance, Rio Tinto, which has been in Australia for decades, and made most of its revenue from Australia, is now arranging multi-billions of dollars of investment for a major resource project with substantial infrastructure in ­Guinea in Africa.

“When that’s operating, it will bring billions of tonnes of ore on to the market to compete against Australia, and push down commodity prices. Too few seem to recognise the impact this will have when we are competing with lower-cost countries and how it will hurt Australia for decades.”

Mrs Rinehart said Rio Tinto, Hancock’s partner in the giant Hope Downs iron ore project in Western Australia, should not be singled out, saying the nation must do more “to lower its costs and compete for investment”.

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Coal comfort: faster to start mine in Indonesia than here – by Andrew Fraser (The Australian – July 30, 2014)

 http://www.theaustralian.com.au/

PETER Lynch can tell you exact­ly the difference between setting up a mine in Indonesia and Australia — the former takes four years; the latter somewhere between seven and 10. And the cost of producing coal from Indonesia is about two-thirds that from Australia.

Mr Lynch is in a position to know. A veteran mining figure who worked for MIM and other companies, he was the first to realise the potential of the Galilee Basin in central Queensland in 2006. He pegged out 13 explor­ation permits covering 250sq km. In 2010, Clive Palmer made him an offer he couldn’t refuse, paying $130 million for Waratah Coal and control of the project.

Now chief executive of mining company Cokal, Mr Lynch saw potential in Indonesia, and in early 2011 started digging exploratory holes in a remote part of Central Kalimantan. Three years later, he has all his key approvals in place and is finalising his financial backing, with the aim of starting production in September next year — a bit over four years from when he first eyed the area. By contrast, the earliest date for coal to come out of the Galilee Basin is 2017, despite the approvals process starting several years earlier.

Mr Lynch’s tale illustrates the concerns the Business Council of Australia and Hancock Prospecting chairman Gina Rinehart have raised this week about Australia losing its competitive edge because of high labour costs and red tape.

On Monday, Environment Minister Greg Hunt approved Adani’s proposed Carmichael mine in the Galilee Basin, but the Indian company still needs to get approval for the construction of a proposed railway line to Abbot Point.

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COLUMN-Big 3 iron ore miners in volume, price sweet spot – by Clyde Russell (Reuters India – July 28, 2014)

http://in.reuters.com/

LAUNCESTON, Australia, July 28 (Reuters) – One thing has become clear from the latest production reports from the big three iron ore miners: They appear intent on ensuring their dominance by boosting low-cost output.

BHP Billiton mined a record 225 million tonnes of the steelmaking ingredient in the year to end-June, beating its own forecast by 4 percent. BHP said in its latest production report that it expects to increase output further, to 245 million tonnes in the 2014-15 financial year.

Fellow Anglo-Australian miner Rio Tinto boosted output 23 percent in the second quarter from the same period last year to 75.7 million tonnes. It also is forecasting higher annual output, with the quarterly report released on July 16 pointing to 2014 production of 295 million tonnes, up 11 percent from 266 million in 2013.

The world’s biggest iron ore miner, Brazil’s Vale , also had record output in the second quarter, posting a 12.6 percent gain to 79.45 million tonnes. The company is planning to boost its annual output to 450 million tonnes by 2018 from 306 million last year.

The three global iron ore giants have effectively gambled that they can continue to boost production and grab bigger slices of global demand, given that they can withstand lower prices due to their low-cost mines and economies of scale.

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World’s Best Mining Debt Defies Gold Woe in a Volcano – by David Stringer and Benjamin Purvis (Bllomberg News – July 27, 2014)

http://www.bloomberg.com/

Newcrest Mining Ltd. (NCM) bonds are delivering the best returns this year among metal producers even as the gold miner prepares for new writedowns at a floundering asset inside an extinct volcano.

Debt securities issued by Australia’s biggest gold producer returned 24 percent this year through July 25, compared with 15 percent for the world’s largest extractor Barrick Gold Corp. (ABX), according to a Bank of America Merrill Lynch index of dollar notes sold by investment-grade miners. Falling costs have buoyed the company, which last week flagged a charge of as much as A$2.5 billion ($2.4 billion) mainly on its Lihir mine in Papua New Guinea.

While the writedown may raise Newcrest’s gearing by as much as 6 percent, the miner forecasts cash flow will stay positive after production costs fell 8 percent in the three months to June 30 and gold rose 3.4 percent. Output expenses have been helped by a decline in the Australian dollar, which averaged 10 U.S. cents less in the first half than it did in the same period a year earlier. For every one-cent drop in the Aussie, earnings before interest and tax are boosted by A$28 million, the Melbourne-based company said in February.

“Cost-cutting initiatives and the recent move in the Australian dollar have provided some relief,” Tariq Chotani, a credit strategist at Commonwealth Bank of Australia in Sydney, said in a July 24 interview. “The company’s plan to reduce capital expenditure has also been a credit positive overall.”

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Anglo warns of ore price torpor – by Matt Chambers (The Australian – July 26, 2014)

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

MINING giant Anglo American says iron ore prices are set to remain depressed for the rest of the year as growing supply exceeds demand that is being tempered by a fragile Chinese housing market.

But the outlook is better for coking coal, with the British miner’s Wollongong-born chief executive Mark Cutifani expecting contract prices to rise from six-year lows of $US120 a tonne and change the fortunes of the company’s metallurgical coal unit, where first-half profits fell 86 per cent.

Anglo released first-half earnings last night, reporting a $US2.9 billion ($3.08bn) profit, in line with expectations. Net debt of $US11.5bn was lower than forecasts of $US12bn because of lower capital expenditure.

Anglo is the first of the big miners to deliver its June-half profit report and the first to offer its assessment of the global markets, with Rio Tinto and BHP Billi­ton both having stopped giving their views on economics and fundamentals in quarterly production reports.

“Uncertainty is likely to persist for the balance of 2014, though there are some encouraging signs that activity is strengthening in our key markets,” Mr Cutifani said. “Over the long term, we expect new supply to be constrained and to see tightening market fundamentals and a recovery in price performance.”

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Life reflected in BHP’s figures – by Terry McCrann (The Australian – July 26, 2014)

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

BHP Billiton’s production figures effectively fired the starter’s gun for the annual profit season. They also neatly captured in microcosm the big questions about the future course of the overall economy.

Indeed, they were a much better guide to the future and its uncertainties than the June quarter CPI figures, released on the same day, which sent sections of the economentariat into a frenzy of hyperventilating certainty.

That’s a certainty that will no doubt last until some other statistic sends them hyperventilating in the opposite direction.

There’s no great surprise in the significance of BHPB’s numbers — oh for the day when it returns to the simplified BHP, sloughing off the second “B” along with all the rubbish it bought with Billiton.

BHPB remains our biggest company by far. While it won’t generate a profit this year all-but equal to the profits of all the four big banks combined, as it did a few years ago, it will still post a 2013-14 profit which will put any individual bank profit in the shade.

BHPB is not just the resources boom in miniature, it all but is the resources boom. OK, perhaps in combination with Rio Tinto, given the latter’s edge in iron ore, the resource that really “is” the boom, both in terms of dollars generated and its dominant centrality in our role in the China story.

Then perhaps we should add Twiggy Forrest’s Fortescue as not just the third iron ore major but also more directly representative of the “boom” aspect of the “resources boom”.

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BHP boss urges [Australian] Senate to repeal MRRT (The Australian – July 22, 2014)

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

The chief of resources giant BHP Billiton has urged Labor and the minor parties to help the Abbott government repeal the mining tax, saying investment is being destroyed by “a lot of antics” in the Senate.

Andrew Mackenzie warned at a business panel that the minerals resource rent tax (MRRT) — which his company helped draft — remained a “massive” disincentive to investment flows into Australia.

The MRRT will survive until August 26 at the least after Labor, the Greens and crossbench senators, including from the Palmer United Party (PUP), blocked its repeal last week.

PUP founder and mining magnate Clive Palmer campaigned heavily against the MRRT before the federal election, but his senators joined Labor and the Greens last week to preserve $10 billion in spending linked to it, such as the Schoolkids and income support bonuses.

In what could be regarded as a message to Mr Palmer, Mr Mackenzie said there were “a lot of antics” going on in the Senate around the “highly volatile” MRRT.

“It’s not a big revenue raiser as a tax, which in itself makes it even worse, but it’s a huge disincentive to invest, massive,” he said.

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Australia could start uranium sales to India – by Shivom Seth (Mineweb.com – July 22, 2014)

http://www.mineweb.com/

Australian Trade Minister Andrew Robb told newspersons that Australian uranium sales to India were very close.

MUMBAI (MINEWEB) – With the International Energy Agency forecasting a doubling of nuclear power generation out to 2035, Australia has said it could soon start exporting uranium to India.

Australia holds about a third of the world’s recoverable uranium resources, and exports nearly 7,000 tonnes a year. Energy starved India is looking to nuclear power to supplement its existing options to fuel economic growth.

Australian Trade Minister Andrew Robb told newspersons that Australian uranium sales to India were very close, after he attended a G20 trade ministers meeting in Sydney last week, and held talks with an Indian trade delegation.

Prime Minister Julia Gillard had started talks on supplying uranium to India during a three day official visit to the country in 2012. Gillard had reversed the ban in 2011.

With a new government at the helm in Canberra in 2013, India and Australia were aiming to complete negotiations on a civil nuclear agreement for uranium supplies by the end of the year.

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Shaping the agenda for a sustainable mining industry – by Nigel Court (Australian Mining – July 22, 2014)

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

According to the UN Global Compact-Accenture CEO Study on Sustainability, 63 per cent of chief executives expect sustainability to transform their industry within the next five years. Mining and metals companies, in particular, have an important role to play in the evolution to a more sustainable world.

With operations on almost every continent, and materials integrated into most products and services, the sector is uniquely positioned to contribute to and influence this transition.

To successfully navigate this shift though, bold thinking is required, and those that look to shape the outcome rather than react to it will be best positioned for success.

But what defines “sustainability”? According to the World Economic Forum (WEF) Scoping Paper: Mining and Metals in a Sustainable World, developed in partnership with Accenture, a sustainable world will require the mining and metals sector to reliably and responsibly provide materials and products to global economies and communities.

By 2050, alternative measures of success will exist beyond profit and loss, where environmental and social costs, as well as their impacts, are considered and accounted for. The mining and metals sector has an opportunity now to strategically consider how these trends could affect both the demand for products and the means of providing sufficient supply.

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