Australia/New Caledonia/Papua New Guinea Mining – Page 116

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

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.

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

July 28, 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.”

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

July 25, 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.”

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

July 25, 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”.

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

July 23, 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.

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

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.

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

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.

How the mining zombies found a future in technology – by Tess Ingram (Australian Financial Review – July 21, 2014)

July 21, 2014

http://www.afr.com/

Failed listed resources companies are finding a profitable future above ground – in technology.

Since January, at least eight struggling resources companies, including Latin Gold and Macro Energy, have merged with technology companies. Start-ups and companies looking for alternative capital raising mechanisms are using the “zombie” companies as shell vehicles for backdoor listings on the Australian Securities Exchange.

Last week, Perth-based Intercept Minerals announced plans to acquire US online streaming business xTV for $12.5 million.

Operating conditions are difficult for the small end of the resources sector. The median spend on exploration activity fell 27 per cent in the first quarter, BDO’s March Explorer Quarterly Cash Update said, noting that it was the biggest such decrease since it started looking at the trends.

Perth-based analyst Peter Strachan estimates that more than two thirds of listed resources companies have less than $2 million net cash.

“Over the last few years there has been a capital strike,” Mr Strachan said. “A lot of exploration companies are sitting around watching the paint dry and thinking about how to make some money.”

From Mining Magnates To Beef Barons, The New Focus For Two Australian Billionaires – by Tim Treadgold (Forbes Magazine – July 17, 2014)

July 18, 2014

http://www.forbes.com/

One billionaire adding beef cattle to their mining interests is a curiosity. Two is a stampede.

In Australia, that’s just what has happened with the country’s richest person, Gina Rinehart, spending an estimate $40 million to buy a half share in two cattle-breeding properties covering 1.1 million acres of the Kimberley region in the country’s north.

Rinehart is following in the footsteps of Andrew Forrest, one of her rivals in the iron ore business, who invested an estimated $30 million in May to buy Harvey Beef which has extensive farming and processing interests in the south of Western Australia.

Both billionaires (Rinehart is worth an estimated $18.2 billion and Forrest $4.4 billion) have most of their fortunes tied up in the production of iron ore, the price of which has been falling thanks to its heavy dependence on demand for steel in China where a construction boom is slowing.

Fading Iron Ore Demand, Rising Food Demand

Neither Rinehart nor Forrest has described their move into farming ventures as a way of trimming their future exposure to iron ore, but that’s a reasonable interpretation thanks to the flattening outlook for iron ore demand.

Australia’s carbon reversal sets new tone for global climate talks – by Shawn McCarthy (Globe and Mail – July 18, 2014)

July 18, 2014

The Globe and Mail is Canada’s national newspaper with the second largest broadsheet circulation in the country. It has enormous influence on Canada’s political and business elite.

OTTAWA — Australian Prime Minister Tony Abbott’s move to repeal his country’s carbon tax provides an international boost for the Harper government, which has regularly attacked opponents who propose putting a price on emissions in Canada.

Australia’s reversal on carbon pricing comes at a critical time, just two months prior to a United Nations climate summit to be hosted by secretary-General Ban Ki-Moon, who is looking for countries to commit to post-2020 emission reductions and new policies to achieve those targets.

And it comes as Prime Minister Stephen Harper faces continued pressure to impose some form of carbon pricing in Canada, particularly in the booming oil sands where rising emissions threaten to swamp the government’s commitment to rein in carbon pollution.

Mr. Abbott visited Canada last month, and Mr. Harper commended him for ending the “job-killing carbon tax” as the Australian had pledged during last year’s general election in which he defeated the Labor Party-led coalition government. With their resource-based economies and relatively small populations occupying large land masses, Australia and Canada are among the world’s top per-capita emitters of greenhouse gases (GHGs).

India’s coal shortage a boon for Australian miners – by Vicky Validakis (Australian Mining – July 15, 2014)

July 15, 2014

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

In what could be good news for Australia’s coal industry, India’s power plants are running out of stock, forcing the country to increase its import levels.

India already imports 20 per cent of its coal requirements and shipped in 152 million tonnes of coal last year.

However rising electricity demands are putting an increasing strain on local production, with state-run Coal India Limited (CIL) asked to up its output by importing more of the commodity to mix with domestic supply.

A source told The Economic Times that India’s power plants were not running at optimum levels, with more coal required to help in a ramp-up.

There are currently 65,000 MW of power generation projects out of action. Although pooling will raise the cost of coal, it is seen as a way to help underperforming plants generate more electricity.

The demand for coal in India is expected to come in at 551.60 million mt in 2015, however supplies are predicted to amount to just 466.89 million mt, leaving an 84.71 million mt shortfall.

Nova asset ‘world class’, says Sirius as it publishes DFS – by Esmarie Swanepoel (MiningWeekly.com – July 14, 2014)

July 14, 2014

http://www.miningweekly.com/page/americas-home

PERTH (miningweekly.com) – A definitive feasibility study (DFS) into nickel developer Sirius Resources’ Nova project, in Western Australia, has confirmed that the project’s low cash cost would allow it to fall in the lowest quartile of nickel producers globally.

Sirius reported on Monday that the Nova project was expected to generate net cash flow of A$2.74-billion from a nickel revenue of some A$4.53-billion, over the project’s ten-year mine life.

C1 cash operating costs after by-product credits were forecast to be A$1.66/lb nickel in concentrate, which was better than the 2013 scoping study estimates.

The DFS slightly increased the expected capital expenditure for the project to A$473-million, up from the A$471-million estimated in the scoping study, with the capital cost now including extra risk mitigating measures.

The DFS was based on a processing rate of 1.5-million tonnes a year, to deliver about 26 000 t/y of nickel, 11 500 t/y of copper and 850 t/y of cobalt over a ten-year mine life.

The study was based on a maiden probable ore reserve of 13.1-million tonnes, grading 2.1% nickel, 0.9% copper and 0.07% cobalt, for 273 000 t of nickel, 112 000 t of copper and 9 000 t of cobalt.

BHP sell-off could undo Billiton deal – by Danny Fortson (The Australian – July 14, 2014)

July 14, 2014

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

The Sunday Times – A FEW days after Paul Anderson unveiled the largest merger in the history of the mining industry, the American boss of BHP went on a Sunday talk show to put politicians’ minds at rest. They were concerned that BHP, the 116-year-old national champion known as “the Big Australian”, was about to be lost to London.

Mr Anderson and Brian Gilbertson, head of smaller rival Billiton, had just announced a $US28 billion tie-up that would create a new natural resources Goliath.

Billiton was already listed in London. BHP, meanwhile, ran its giant oil operation from London. A relocation of the group headquarters from Melbourne seemed a distinct possibility. After all, the combined group would stretch across five continents and produce everything from diamonds and oil to nickel and iron. Why not run it from Europe’s financial capital?

The fears, Mr Anderson assured, were misplaced.

He said the merger was “a win-win”. There would be housekeeping to be done but a headquarters move would not be part of it. “I’m sure there will be two or three things in the portfolio that we will want to sell off … once we put the companies together,” he said.

Geologists seek work – any work – as mining boom goes bust – by James Regan (July 11, 2014)

July 11, 2014

http://www.reuters.com/

SYDNEY – (Reuters) – After 25 years working around the world as a highly paid geologist earning a six-digit salary, Phil Scheimer is back in Australia weighing up his future prospects: day labourer or pizza delivery man.

The collapse of the global mining boom is decimating the ranks of working geologists. With little chance of employment, many are being forced into unwanted career changes to pay the bills.

“I just want the phone to ring and for someone to say we’ve got work for you, any work,” says Scheimer from his home in Perth, a city in western Australia that rode the mining boom over the past decade but is now facing tens of thousands of people returning from mining camps jobless.

While scores of truck drivers, equipment operators, mechanics and other mining staff have also seen their numbers pared, geologists are among the hardest hit as companies abandon exploration and concentrate on working existing mines.

“Times are dire,” said Perth-based geology consultant Wendy Corbett. “I have been in the exploration industry for 41 years and this is the worst I have ever seen it.”

A second unemployed geologist, who has explored for nickel in Australia and Africa, said he had recently completed a three-day barista’s course and hoped for a steady paycheck after interviewing with a Sydney coffee house.

Five hours’ flying time winds clock back to the beginning – by Paul Garvey (The Australian – July 10, 2014)

July 10, 2014

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

THE economic growth of China in the past decade has generated tens of billions of dollars in profits for Australia’s mining companies, but it was all about Japan in the heart of the company’s Pilbara iron ore operations yesterday.

Shinzo Abe made a flying two-hour visit to the West Angelas mine in the remote pocket of Western Australia, following through on an invitation made by Rio Tinto chief executive Sam Walsh in Tokyo last year.

The five-hour journey across the country from Canberra to the Pilbara left its mark on Mr Abe, giving him more time to talk with Tony Abbott.

“I was extremely impressed that I could take a five-hour flight and still be in Australia. I’m really amazed by how big this country is,” he said through an interpreter, addressing a gathering on the edge of the gaping West Angelas open-pit as huge trucks rumbled past hauling iron ore bound for Asia.

“The flight took twice as long as the summit meeting we had yesterday, but I actually believe that we had deeper discussions on the flight and we will really be able to deepen our relationship as well.”