Twitter

Australia/New Caledonia/Papua New Guinea Mining

Rio Tinto digs deeper for next big discovery – by Brett Winterford (IT News.com – June 23, 2014)

http://www.itnews.com.au/

A group of a dozen physicists and geologists from mining giant Rio Tinto and the University of Western Australia is two years away from commercial production of a tool that could dramatically expand the scope of mineral exploration in Australia.

VK1, a collaboration between the mining giant and the university, is an airborne gravity gradiometer that harnesses quantum physics, superconduction, liquid helium cryogenics and aerial survey data to solve the ultimate challenge facing iron ore miners: how can we see underground?

Australia has become a reasonably mature exploration environment, according to Stephen McIntosh, head of exploration at Rio Tinto.

“It is relatively well-explored in the exposed parts of the continent – areas that don’t have cover over the mineral deposit, or some form of material that is younger sitting on top of the mineral deposit.

“The dilemma for Australia is that somewhere between 70 and 80 percent of the continent is covered by something. You actually have to see through a veneer of something to explore underneath the surface – to a mineral deposit a few metres to hundreds of metres below your feet.”

Read more

Cold comfort for mining sector – by Robin Bromby (The Australian – June 23, 2014)

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

GOLD is up — but not enough. As for the resources sector generally, one veteran says there’s never been a more difficult time.

The yellow metal had a nice bump (thanks, Iraq) and closed at $US1315 an ounce. While gold bugs celebrated, there was some sobering news from Virginia-based resources analyst SNL Metals & Mining. Over the past 10 years, the cost of building a mine has blown out from $US560 an ounce of gold production capacity in 2004 to more than $US2300 in 2013. This was based on a study of 192 mines with minimum output of 50,000 ounces commissioned over that period.

Of course, construction costs are not the only factor in project economics (grades are another) and the increase in the gold price since 2004 dulls some of the pain, but nevertheless it is, one, a stark example of the cost inflation in mining about which we have heard so much and, two, reminds one that new projects are expensive things.

As SNL points out, when it became obvious in 2006 that gold’s rise was no seven-day wonder, producers green-lighted more capital-intensive projects; and, chillingly, SNL notes that capital cost intensity will hit an average $US2400 an ounce this year before pulling back. In other words, good drill results are the easy part. It’s making the development economics right that is harder.

Meanwhile, Peter Strachan at StockAnalysis says he has never seen it so tough, with “the vast ­majority” of ASX-listed resources companies now the “walking dead, just hanging on by their fingernails”.

Read more

China Miners’ Loss Is BHP’s Gain as Iron Prices Slump 44% – by (Bloomberg News – June 20, 2014)

http://www.businessweek.com/

Rio Tinto Group and BHP Billiton Ltd. (BHP), two of the world’s biggest iron ore producers, are benefiting as falling iron ore prices pressure smaller rivals in China to shut down.

The price of iron ore has plunged 44 percent from its February 2013 peak on the back of record output. That’s hurting mining companies in China where 20 percent to 30 percent of mines have closed, according to the China Metallurgical Mining Enterprise Association.

The closures are helping Rio Tinto and BHP which, along with Vale SA (VALE5), already control about two thirds of global seaborne supply from their low-cost mines. About $40 billion a year of iron ore is mined in China, the country that’s also the world’s biggest buyer of the steelmaking component.

“Many smaller mines in China have stopped production due to the falling prices,” said Sarah Wang, a Shanghai-based analyst with Masterlink Securities Corp. “It’s the right time for BHP and Rio to seize the opportunity to boost their market share.”

BHP, the world’s biggest mining company, last month also flagged the closure of some Chinese ore mines.‘ “Most of them are smaller ones, while the bigger ones are also starting to be affected,” Liu Xiaoliang, the association’s general secretary, said in an interview. “Almost 70 percent of the ore processing companies have also closed.”

Read more

Former Xstrata head makes play for BHP Billiton’s nickel – by Rachelle Younglai (Globe and Mail – June 20, 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.

Mining magnate Mick Davis made an initial bid for BHP Billiton Ltd.’s nickel assets in Australia, but his offer was rejected as too low, a person familiar with the matter said.

X2 Resources, Mr. Davis’ privately held company, has been looking for assets to start building itself into a medium-sized miner, and has raised up to $3.75-billion for acquisitions. It is unknown whether Mr. Davis will increase his bid.

Before X2 , Mr. Davis ran Xstrata Plc, a global mining giant. Xstrata grew by buying out its rivals, including Canadian nickel producer Falconbridge, before it was taken over by Swiss-based Glencore in 2013.

X2 , whose team helped create Xstrata, is one of many private equity firms looking for acquisitions amid the downturn in the commodity industry.

Its strategy is to acquire unwanted assets from the senior miners, which have been re-evaluating their businesses and zeroing in on core operations in order to deal with lower metals prices.

According to analysts, BHP Billiton’s nickel assets, known as Nickel West, contributed just 2.7 per cent of the miner’s overall revenue.

Read more

RPT-New Zealand may kick start race to mine the ocean floor – by Sonali Paul and Gyles Beckford (Reuters India – June 16, 2014)

http://in.reuters.com/

(Reuters) – New Zealand decides this week whether to approve an underwater iron-ore operation that would likely become the world’s first commercial metals mine at the bottom of the sea.

A green light to allow New Zealand’s Trans Tasman Resources Ltd to start iron-ore dredging off the country’s west coast will encourage others looking to mine copper, cobalt, manganese and other metals deeper on the ocean floor but worried about regulatory hurdles.

Along the Pacific Rim of Fire, as deep as 6,000 metres underwater, volcano crusts, “black smoker” chimneys and vast beds of manganese nodules hold promise for economic powers like China and Japan as well as many poor island states busy pegging stakes on the ocean floor.

“A lot of people are watching the Trans Tasman Resources outcome,” said Michael Johnston, chief executive of Nautilus Minerals, which is working on a deep-sea project off Papua New Guinea and is also in talks with New Zealand.

Other countries in the Pacific looking at underwater mining include Fiji, Solomon Islands, Tonga and Vanuatu, which have all issued exploration licenses. Cook Islands in the South Pacific plans to put seabed exploration licenses up for bids later this year.

Read more

Iron ore miners brace for hit as commodity price plunges to nearly two-year lows – by Sarah-Jane Tasker (The Australian – June 16, 2014)

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

AUSTRALIA’S iron ore producers are likely to take a hit in the market today after the price of the bulk commodity fell to an almost two-year low over the weekend.

The top producers, BHP Billiton, Rio Tinto and Fortescue Metals Group, all saw their share price take a shave at market close on Friday when the iron ore price hovered at a 21-month low of $US91.50 a tonne.

The price of the steelmaking commodity lost more ground at the weekend and is now sitting at $US90.90. The price of Australia’s top export was down over 3 per cent last week, which was the eighth weekly loss in nine.

The iron ore price has now lost about 32 per cent this year, with the profit hit on producers likely to be seen when the next set of financials are released in August.

Iron ore futures in China also slid to a new record low on Friday, falling to their weakest level since the market started in 2009 as consumption of the commodity slows along with the pace of construction activity during China’s hotter summer months.

Read more

Solomon Islands nickel ore legal fight nears decision – by James Regan (Reuters India – June 12, 2014)

http://in.reuters.com/

SYDNEY, June 12 (Reuters) – A court ruling in the Solomon Islands may finally unlock a large nickel deposit that geologists have known about for half a century but have been unable to exploit because of ownership changes and legal wrangling.

Japanese giant Sumitomo Metal Mining and tiny Australian explorer Axiom Mining are fighting over the Isabel nickel laterite discovery and will submit final arguments to the Solomon Islands High Court on June 23, following a court case that has already run for 88 days.

A ruling is expected soon after and could lead to development of the deposit, at a time when nickel prices have soared following a ban in January on ore exports by Indonesia, the world’s biggest supplier.

Analysts estimate Isabel compares in size or grade to other large South Pacific nickel mines, such as Vale SA’s Goro mine in New Caledonia and the China-owned Ramu mine in Papua New Guinea.

Axiom, with a market value of just A$55 million ($52 million), would aim initially to ship unprocessed ore within two years to hungry Chinese buyers to make nickel pig iron.

Read more

Over 1 million tonnes of iron ore leaves Port Hedland during single tide – by Vicky Validakis (Australian Mining – June 10, 2014)

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

Iron ore production is surging in the Pilbara, with Port Hedland recording a new tonnage record for the largest departure of ore on a single tide.

The new benchmark of 1,270,721 tonnes was achieved with seven capesize vessels departing on Saturday. This beat the previous record set in April by almost 160,000 tonnes.

Port Hedland Port Authority also said it was the first time seven capesize vessels have sailed on a single tide. The port, Australia’s biggest for iron ore, increased exports by 3.55 per cent between April and May, setting a monthly record of 36 million tonnes.

The news comes amid figures which show that a ramp up in iron ore production was partly to thank for a 1.1 per cent gain in Australia’s economy in the three months to March. Annual growth was a seasonally adjusted 3.5 per cent, the Australian Bureau of Statistics said.

The mining industry made up 80 per cent of this growth. The nation’s three largest iron ore miners BHP Billiton, Rio Tinto, Fortescue Metals Group have all added extra tonnages to their businesses.

It is this ramp up that is being blamed for an oversupply in seaborne supply, and a 31 per cent fall in the price of the commodity which last traded at $US94 a tonne.

Read more

BHP Billiton to follow China on its next growth journey – by Vicky Validakis (Australian Mining – June 6, 2014)

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

BHP Billiton will invest heavily in energy and food as it follows China on its transition from a construction-led economy to a consumption power-house.

Speaking to the media in Beijing where he wound up a 10-day tour of meeting BHP’s commodity customers in China, India, Japan and South Korea, BHP boss Andrew Mackenzie said while Chinese steel production would remain strong the company was also keen to meet the country’s other needs.

“We see a Chinese economy gradually shifting from construction to consumption,” he told reporters yesterday, adding “and so, will we transition.”

He said materials with high consumer demand included copper, energy and potash. “Copper is core. Coal is core. Oil and gas is core. Potash is core,” Mackenzie said.

“We’ve exited diamonds. We’ve exited arguably medium-sized ore bodies which don’t fit with our overall strategy to own the great ore bodies of uranium and copper and to some extent in oil and gas. And we reduced our exposure to liquefied natural gas.

Read more

UPDATE 1-New Caledonia allows conditional restart of Vale nickel mine – by Cecile Lefort (Reuters U.S. – June 1, 2014)

http://www.reuters.com/

SYDNEY, June 2 (Reuters) – New Caledonia authorities said on Monday they have authorised a conditional restart of Brazil-based Vale’s nickel operations, which were suspended more than three weeks ago after acid-tainted effluent spilled into a river.

The leak sparked violent riots by young Melanesians that caused more than $20 million in damage to buildings, equipment and vehicles and left three policemen with gunshot wounds.

Police remained on alert as protesters maintained a presence near the plant. “The situation is calm and some (protesters) are still camping near the plant,” said a local government spokeswoman.

Some protesters, who have been frustrated by the lack of response from indigenous Kanak chiefs to the chemical spill, are seeking the permanent closure of the mine – something Vale said last week was not on the table. Vale could not immediately be reached for comment on when production would restart.

The Southern Province of the French-administered Pacific island noted it was Vale’s sixth major incident at the $6 billion Goro site and set hightened safety standards as a condition of the mine operations resuming.

Read more

Under fire Australian miners look to repair their image – by Jamie Smyth (Financial Times – June 1, 2014)

 

http://www.ft.com/home/us

Bulga, Australia – Tony Brown typically spends his days ferrying tourists to and from the Great Barrier Reef. But last month, the charter boat operator flew to Europe where he helped persuade Deutsche Bank and HSBC not to fund the expansion of a coal port that green groups claim could destroy the Unesco World Heritage-listed site.

“The dredging required to build the port is a risk to the reef and the A$6bn tourist industry that depends on it,” says Mr Brown, who has vowed to continue the fight to block what would become the world’s largest coal port at Abbot Point in Queensland.

The decision by the banks is the latest victory in a global campaign being waged against the funding of fossil fuel projects and companies by green groups, which allege they are causing catastrophic global warming.

Read more

Rio Tinto leader Ray Ahmat cuts a trail for others – by Sarah-Jane Tasker (The Australian – May 31, 2014)

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

RAY Ahmat, the first local Aboriginal superintendent at Rio Tinto Alcan’s bauxite mine in Weipa, has outlined the opportunities to develop local talent after taking out a top award at an industry function.

Mr Ahmat received the Overall Indigenous Award at the Queensland Resources Council’s Indigenous Awards last night for his contribution as a role model in the state’s sector.

He leads a large operational team of more than 170 people at the mine, on the Western Cape of York Peninsula in Queensland, managing pre-mining and post-mining activities.

Mr Ahmat, born and bred in the region, said his parents were strong role models in his life. His father had worked at the mine for 32 years and his mother spent 28 years at the operation.

“I got to where I am to seeing what they did,” he said. Mr Ahmat, who is a Yupungathi traditional owner, joined the miner 15 years ago as a truck driver before moving up the chain to superintendent — a path he hopes he can encourage others in his community to follow.

Read more

China prospects forged in steel – by Barry Fitzgerald (The Australian – May 31, 2014)

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

MINERS, commodity experts and China watchers believe this year’s dramatic fall in iron ore is a short-term issue, suggesting that the price of Australia’s biggest export earner will rally to around $US110 a tonne in response to China’s ¬urbanisation and industrialisation demand imperative.

A procession of speakers at the Australia in China’s Century Conference in Melbourne yesterday cautioned against reading too much into the near 30 per cent decline in iron ore prices so far this year to $US95.70 a tonne — a price at which Australia’s highest-cost producers will be feeling the pinch.

They cited a combination of reasons for their faith in the ability of iron ore prices to rebound to around $US110 a tonne. While that would represent a 15 per cent improvement on the current price, it would nevertheless still be 18 per cent below the full-year average in 2013, which matched the year-end price of $US135 a tonne.

Fortescue chairman and major shareholder Andrew Forrest told the conference that Chinese steel production was continuing to run at record levels despite patchy economic indicators.

“The Chinese ability to manage poverty out of its country is unprecedented and their consumption of steel is still running at record rates,” Mr Forrest said.

Read more

COLUMN-Goro nickel project is not just Vale’s problem now – by Andy Holm (Reuters India – May 29, 2014)

http://in.reuters.com/

The opinions expressed here are those of the author, a columnist for Reuters. May 29 (Reuters) – It’s hard not to have a grudging respect for Brazil’s Vale when it comes to the company’s Goro nickel project in New Caledonia. Others would surely have walked away from what must be one of the most problematic start-ups in the history of base metals.

Over-budget and years late even before the plant was first switched on in 2010, it has since been plagued by technical set-backs, unscheduled closures and, now, violent attack by locals. Vale has remained commendably undaunted throughout.

Yet each new start has swiftly been followed by new adversity. Even rebranding the operation as Vale New Caledonia (VNC), that tried-and-tested corporate exercise in drawing a line under historical problems, hasn’t worked.

Goro, using the relatively new high-pressure-acid-leach (HPAL) technology, continues to defy Vale’s boundless optimism and to drain money from its bottom line.

Until Jan. 12 this year it was, however, just Vale’s problem. But in the wake of the Indonesian nickel ore ban that kicked in on that date, Goro risks becoming a bigger problem for the entire nickel market.

Read more