Australia/New Caledonia/Papua New Guinea Mining – Page 119

COLUMN-Tale of two iron ore curves: Which to believe? – by Clyde Russell (Reuters U.S. – May 26, 2014)

May 26, 2014

http://www.reuters.com/

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

LAUNCESTON, Australia, May 26 (Reuters) – Iron ore swaps traded in Singapore are suggesting that the worst may be over for the steelmaking ingredient, but futures in the Chinese city of Dalian point to further price weakness.

Both can’t be correct, but the divergence of the two contracts does raise the question as to which group of investors has a more accurate gauge on the current balance of risks.

The Singapore Exchange (SGX) iron ore swaps <0#SGXIOS:> tend to be favoured by miners and traders, while the Dalian Commodity Exchange (DCE) futures <0#DCIO:> are mainly used by Chinese steel mills and domestic investors.

The SGX iron ore swaps curve tends to move into backwardation prior to a price decline, reversing the process ahead of a rally by moving into contango.

The shape of the current SGX curve is extremely mild backwardation from the second month onwards, with the second-month contract priced at $97.25 a tonne early on Monday, the six-month at $96.58 and the 12-month at $97.

Opinion: Are [Australian] mine camps like concentration camps? – by Ben Hagemann (Australian Mining – May 23, 2014)

May 23, 2014

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

The moment anyone drops a clanger in parliament, the media are all over it like gulls on a hot chip, but nothing fires them up more than a comment that might possibly be about Nazis.

Queensland MP Jo-Ann Miller is under fire for comparing FIFO camps to concentration camps, and as any high-school politics student could tell you, that wasn’t a very bright thing to do.

Obviously Australian mining camps are nothing like Nazi death camps. They are also nothing like English concentration camps in South Africa during the Boer war. They are not even like the American concentration camps that were packed to the gills with Japanese descendants after World War II.

She didn’t say “Nazi concentration camps”, so let’s not blow this out of proportion to score political points. To me, a former FIFO worker, I know that mining camps are frequently likened to concentration camps by those who live in them. It’s a way of expressing your dissatisfaction with the conditions.

You’re kept away from your family, your friends, and your favourite past-times for weeks on end. You have to eat food that isn’t like what you cook at home, and although it will comprise a range of different dishes every night, it’s usually of quite average quality and starts to look like the same, homogenous slop every night after the first swing on site.

Big miners to blame for iron ore fall, says Glencore Xstrata chief Ivan Glasenberg – by Amanda Saunders (Sydney Morning Herald – May 21, 2014)

May 21, 2014

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

Glencore Xstrata chief Ivan Glasenberg has criticised iron ore miners for putting pressure on prices for the commodity through aggressive brownfields expansions.

Speaking before the latest reading of iron ore spot prices in China showed the price had fallen a further 1 per cent overnight to $US97.50, Mr Glasenberg said Glencore had an advantage over its competitors because it did not produce iron ore.

“We are not big players in iron ore market … prices are coming off because we see massive expansions coming there from our major competitors,” Mr Glasenberg told shareholders at the company’s second annual meeting, on the shores of Lake Zug, in Switzerland, on Tuesday night.

“A large amount of them have these brownfields expansions, they continue to expand … and put more supply into the market. “So we are not heavily exposed to iron ore, except on the trading side, and therefore we believe we have an opportunity against our peers there.” Mr Glasenberg has historically not been shy about pointing out shortcomings among his pure-play mining competitors.

Iron ore prices teeter – by Matt Chambers (The Australian – May 20, 2014)

May 20, 2014

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

IRON ore prices last night fell below $US100 a tonne for the first time in nearly two years, hit by uncertainty around China’s steel output and stronger than expected Australian supply that earlier sent mining stocks sliding.

The only other time iron ore prices have previously slipped below $US100 this decade, briefly in 2012, spot-market buying of the nation’s biggest export dried up to the extent that prices rapidly fell another 13 per cent.

Benchmark Chinese iron ore prices fell $US2.20 to $US98.50 late last night, their lowest since September 2012 and in line with indications of weak buying demand shown in Chinese and Singaporean futures yesterday.

Benchmark prices had slipped 2 per cent to $US100.70 in China on Friday night. The fall follows Treasury forecasts in last week’s federal budget showing the price would fall below $US90 a tonne within two years.

This is in line with downgraded forecasts as Australian miners unexpectedly ramp up boom-time expansion projects on or ahead of time, and as the outlook for Chinese demand growth looks less certain.

Nickel, aluminium show signs of revival – by Peter Ker (Sydney Morning Herald – May 16, 2014)

May 16, 2014

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

They’ve been the dregs at the bottom of the diversified miners’ bottle for years, but nickel and aluminium are starting to show signs of life.

The two commodities have been bywords for poor performance over recent years, having dealt financial losses and multi-billion dollar impairments on their hapless owners at the big end of the mining industry.

But evolving attitudes in the developing world seem to be changing the rules of engagement in both industries, and tempting investors to think again. The nickel resurgence is more advanced and better understood.

Prices for the metal – used to create stainless steel – soared 56 per cent after January 10 when the Indonesian government placed a ban on certain raw metal exports.

The decision was designed to create jobs by forcing exporters to build processing plants on Indonesian soil, rather than exporting their raw ores overseas. As the world’s biggest nickel exporter, Indonesia’s removal from global trade has led to expectations of a shortage and price rises.

COLUMN-China the hidden culprit behind Australia’s tough budget – by Clyde Russell (Reuters U.K. – May 14, 2014)

May 14, 2014

http://uk.reuters.com/

(The opinions expressed here are those of the author, a columnist for Reuters.)

May 14 (Reuters) – Many Australians will castigate the country’s new conservative government for a tough first budget that saw cuts to welfare and hikes to taxes, but some of the blame lies with China.

Just as China’s rapid growth of the past decade fuelled a commodity boom in Australia, the slowing of the Chinese economy and its uncomfortable transition to a more consumer-led model means the end of the resource bonanza down under.

While the headlines from the Liberal/National coalition’s federal budget on Tuesday focused on Treasurer Joe Hockey’s cuts to family payments and health, and tax increases for the wealthy, much of the underlying story was contained in the economic forecasts.

Australia’s two biggest export earners are iron ore and coal, and they will be joined by liquefied natural gas (LNG) once the seven projects currently under construction are operating. The last is slated to come onstream by 2018.

China is Australia’s biggest trading partner, accounting for about 36.7 percent of exports. The government’s budget papers paint a picture of muted prices for these commodities, which will impact on the collection of royalties and taxes.

BHP Says in Talks for Nickel Unit Sale as Metal Price Rockets – by Elisabeth Behrmann and David Stringer ( Bloomberg News – May 14, 2014)

May 14, 2014

http://www.businessweek.com/

BHP Billiton Ltd. (BHP), the world’s biggest mining company, is holding talks for the sale of all or part of its Australian nickel unit as prices rose to two-year highs.

“The review is considering all options for the long-term future of Nickel West, including the potential sale of all or parts of the business, Melbourne-based BHP said today in an e-mailed statement. Talks with interested parties have begun, spokeswoman Eleanor Nichols said by phone.

The sale announcement comes as nickel surged 10 percent in the past week and follows comments from BHP Chief Executive Officer Andrew Mackenzie that he wants to run a smaller collection of assets. Glencore Xstrata Plc (GLEN), the global commodities trading and mining group, said in March it was assessing a bid for the assets, which could fetch about $800 million according to a report by RBC Capital Markets.

‘‘For BHP, it’s something that doesn’t move the needle any more,” Chris Drew, an analyst in Sydney with RBC, said today. “The overall size of the business means it’s not material enough for them to justify maintaining or potentially putting capital into, so it’s better off in someone else’s hands.”

Aluminium’s day dawns as iron ore dims – by Matt Chambers (The Australian – May 12, 2014)

May 12, 2014

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

Tinto’s much-maligned aluminium business could be a surprise saving grace for the miner as iron ore prices soften, with the company’s cost-cutting drive set to produce strong cashflows and boost the chance of big returns to shareholders.

The turnaround in aluminium, which Deutsche Bank is forecasting will contribute $US2 billion ($2.1bn) of annual free cashflow to Rio by 2017, comes as chief executive Sam Walsh predicts an end to the Chinese overcapacity that has hobbled the industry in recent years.

While there is no hope of recovering the $US25bn of value wiped from the aluminium unit’s book value since Rio paid $US40bn in cash for Alcan just before the global financial crisis, some investors are positioning themselves for a rebound.

“We have shareholders on our portfolio because they believe our aluminium business is going to be very prospective,” Mr Walsh told the company’s annual meeting in Melbourne last week. “That’s their call, but it is an indication that people expect there will be improvement in the business.”

Deutsche Bank analysts also sense a change.

Queensland Government announces $16b coal mine in Galilee Basin, subject to Federal approval – by Melinda Howells (Australian Broadcasting Corporation – May 9, 2014)

May 9, 2014

http://www.abc.net.au/news/

The Queensland Government has signed off on a $16 billion coal development in the Galilee Basin in the state’s central region that could become the largest coal mine in Australia.

The Carmichael Coal Mine north-west of Clermont will produce up to 60 million tonnes of coal each year and includes a 189-kilometre rail line. The project, which is being run by Adani Mining, a wholly owned subsidiary of India’s Adani Group, now goes to the Federal Government for final approval.

Deputy Premier Jeff Seeney says a processing plant, workers’ accommodation and an airport will also be built. “The coordinator-general has approved the project subject to an extensive list of environmental and social conditions,” he said. “If it proceeds, the Carmichael project would not only be the largest coal mine in Australia but one of the largest in the world.

“But it would also be a vital project in opening up the hugely significant Galilee Basin.” He says the coordinator-general had “worked closely” with the Commonwealth Department of Environment in finalising the report.

Bauxite: Will Australia fill Indonesia’s shoes? – by Oliver Probert (Australian Journal of Mining – May 07, 2014)

May 9, 2014

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

Indonesia’s move to ban the export of mineral ores has left analyst Wood Mackenzie asking the question: where will China look to satisfy its growing appetite for bauxite?

The analyst’s most recent forecasts indicate that global alumina refinery production will rise to almost 140mt by 2018, which means we’ll see bauxite demand rise by almost 80mt to 350mt. China is the main global player in the aluminium market. It represents 40% of global supply, and 60% of global demand for the metal.

With China’s alumina refinery production forecast to rise by almost 17mtpa by 2018 and a further 40mt by 2030, Wood Mackenzie estimates the Asian giant will consume as much as 240mt of bauxite by 2030.

Until recently, Indonesia was the main supplier of bauxite to China, accounting for around 65% of overall supply last year. But in an attempt to create jobs by encouraging producers to build refineries on mainland Indonesia, the government enforced a ban on mineral ore exports in January.

The ban has created a significant supply gap for China to fill, and while swollen stockpiles and source diversification will soften the blow in the short to medium term, Wood Mackenzie believes the ban could be transformative to the global bauxite market in the longer term.

Nickel soars to two-year high on Goro mine halt, shortages – by Eric Onstad and Harpreet Bhal (Globe and Mail – May 9, 2014)

May 9, 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.

LONDON — Reuters – Nickel raced to its strongest level in more than two years on Thursday as industrial consumers scrambled to secure supplies and speculators extended their buying spree after Vale halted its Goro nickel operations in New Caledonia.

Though the Goro shutdown was not expected to have a major impact on physical nickel supplies, it served to fire up bullish sentiment and chart-based purchases.

The nickel market, which has soared nearly 40 per cent this year, was already nervous about shortfalls from top producer Indonesia and worried about potential Russian supply problems.

“Today we’ve seen some panicked consumer hedging and the hedge funds have already been in there for a while,” said analyst David Wilson at Citi in London.

Three-month nickel on the London Metal Exchange (LME) surged 6.1 per cent to a high of $19,786 a tonne, the strongest since March 2, 2012. It later retreated to $19,451 a tonne at 1421 GMT, up 4 per cent from Wednesday’s close, with trading volumes of over 10,700 lots compared with Wednesday’s full-day volume of 5,121.

UPDATE 2-New Caledonia says to take legal action over Vale nickel spill – by Cecile Lefort and Melanie Burton (Reuters India – May 9, 2014)

May 9, 2014

http://in.reuters.com/

(Recasts with statement from New Caledonian provincial government)

May 9 (Reuters) – New Caledonia’s southern provincial government said on Friday it was starting legal proceedings against Vale over environmental damaged caused by an effluent spill at the miner’s nickel operations.

Vale said in an earlier statement that the spill contained some acid, but that subsequent test results carried out on a nearby river and the sea showed conditions appeared to have returned to normal.

The mining giant said it had suspended 80 percent of its nickel production in New Caledonia and planned a complete shutdown later on Friday, helping to send nickel prices up nearly 6 percent. A spokesman for Vale could not immediately be reached for further comment.

The southern province of New Caledonia was starting legal proceedings under its environmental code after the spill had killed about 1,000 fish, and swimming and fishing had been suspended in the area, it said in a statement. The local government did not say when it might allow Vale to resume operations, but said pollution had been contained to a river.

Nickel at Two-Year High as Vale Ordered to Suspend Plant – by Agnieszka Troszkiewicz (Bloomberg News – May 8, 2014)

May 8, 2014

http://www.bloomberg.com/

Nickel reached a two-year high in London after Vale SA suspended activity in New Caledonia, stoking concern supply might fall short of reviving demand.

The suspension at the plant was ordered after a spill, according to the island archipelago’s Southern Province government. Nickel surged 41 percent in London trading this year after leading global miner Indonesia barred exports of raw ores in January. The potential for sanctions against Russia also aided prices, according to Societe Generale SA.

“Clearly with the nickel market already tightening on Indonesia and possible sanctions against Russia, this is adding to the general sense that the market is facing a supply shortage over the coming months, if not years,” Robin Bhar, an analyst at Societe Generale in London, said by phone today.

Nickel for delivery in three months gained 4.5 percent to $19,487 a metric ton by 1:48 p.m. on the London Metal Exchange after touching $19,786, the highest level since March 2, 2012.

The spill was yesterday and operations were suspended, Cory McPhee, a Vale spokesman in Toronto, said by e-mail today.

Glencore Xstrata plumbs new depths at nickel mine – by Neil Hume and James Wilson (Financial Times – May 6, 2014)

May 7, 2014

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

Glencore Xstrata has revealed further problems with one of the “greenfield” projects it inherited through its takeover of rival mining group Xstrata, underlining the difficulties of developing large mines from scratch in far-flung locations.

Koniambo, a nickel mine on the Pacific island of New Caledonia, has been dogged by cost overruns and delays since it was approved by Xstrata seven years ago.

The budget has risen from $3.8bn to more than $6bn, and production forecasts have been revised several times.
Glencore had expected output to reach 26,000 tonnes of nickel this year, rising to 55,000 tonnes in 2015.

But in a trading statement released on Tuesday, the Swiss-based company said Koniambo had produced just 1,000 tonnes of nickel in the first quarter of 2014 because of problems with power supplies and maintenance. “Forecast full-year production levels are being reviewed in light of the quarterly operational performance and the start-up experiences to date,” Glencore said in a statement.

Koniambo is one of several instances where Glencore has had to revise the engineering plans left by the previous Xstrata management team.

Fortescue Metals to diversify beyond China – by Jamie Smyth (Financial Times – May 6, 2014)

May 6, 2014

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

Fortescue Metals Group, one of the “big three” Australian iron ore miners, is expanding its customer base beyond China as global investors fret over how a slowdown in Chinese economic growth will affect steel demand.

Nev Power, Fortescue’s chief executive, said the company was supplying some customers in South Korea, and wanted to trial iron ore sales to Japan and across Asia.

“We will keep an open mind as other economies such as India develop. The Taiwanese are developing a steel mill in Vietnam so there is starting to be diversification. I think there are opportunities for us,” he said.

The price of iron ore – used in steelmaking – suffered one of its biggest one-day falls in March over fears that a cooling Chinese economy would damp demand for the raw material at a time when production reached record highs.

Iron ore prices fell again last week following a warning by Vale, the Brazilian miner, that supply had outstripped demand for the first time in a decade due to softening China demand. Mr Power said price volatility was being driven by the rundown of high stock levels at Chinese ports, and Beijing’s recent crackdown on iron ore import loans.