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

BHP, Rio warn strong Australian dollar will lead to more job losses – by Amanda Saunders (Sydney Morning Herald – May 26, 2014)

May 30, 2014

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

Mining giants BHP Billiton and Rio Tinto have warned the combination of high costs, high taxes and the strong Australian dollar has put a “vice-like grip” on the $60 billion coal industry that will force further mine closures and job losses this year.

About 12,000 jobs have been cut from the sector over the past two years amid a string of mine closures and delays to projects by companies ¬including BHP, Rio, Glencore, Vale and Peabody Energy.

BHP global coal president Dean Dalla Valle said there would be “difficult times ahead in a period of such oversupply”, particularly given many operators are not making money at ¬current depressed prices.

“You will see the industry adjust itself, shake itself out. You are going to see more exits from the market.” While both miners remain confident in the long-term outlook, they predict a brutal period ahead for the industry as prices remain under intense pressure.

The contract price of premium hard-coking coal has fallen to $US120 a tonne in the June quarter from $US330 a tonne in 2011, while thermal coal prices have dropped to $US74 a tonne on the spot market from $US125 in mid-2011.

COMMENT: Riots at Goro cause $30M in damage – by Marilyn Scales (Canadian Mining Journal – May 28, 2014)

May 30, 2014

Marilyn Scales is a field editor for the Canadian Mining Journal, Canada’s first mining publication. She is one of Canada’s most senior mining commentators.

It appears that Vale SA has run into a spot of trouble at the Goro laterite nickel mine in New Caledonia. Turns out it was a rather large spot that will take $30 million to repair.

Following a 10,000-litre acid spill that ran into a nearby creek and killed thousands of fish earlier this month, Vale was ordered to suspend operations. This is reportedly the fifth such spill in as many years. The first spill occurred during plant commissioning in 2009. It was a reported 40,000 litres, 2,500 of which found its way into the local river.

The recent riots were sparked when local youths protested the reopening of the plant, even with the promise of more stringent safety precautions. There are many who would like to see the project permanently shuttered. Over 48 hours, activists torched vehicles, equipment and buildings at the mine site. They blockaded the roads near the mine, reportedly using mining equipment including excavators to keep the police at bay.

‘We are at crossroads,’ Rio Tinto boss warns – by Sarah-Jane Tasker (The Australian – May 28, 2014)

May 29, 2014

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

MINING giant Rio Tinto’s Australian boss has warned Australia is at a “crossroads” and must engage in serious structural reform if it is to regain its competitiveness and prosperity.

Phil Edmands, managing director Australia, argued today that the alternative to structural reform was to decline into “mediocrity and obscurity”.

Outlining that Australia faces a serious fiscal challenge, Mr Edmands, in a speech in Canberra to mark Minerals Week, said that there was a gap between Commonwealth spending and tax receipts which, without action, will only get larger given Australia’s demographic challenges.

“Restraining expenditure is certainly a necessary part of the answer — but equally important is the need for a far more efficient, less complex and better targeted tax system,” he said in his first speech since taking over from David Peever in April.

Mr Edmands also attacked Australia’s high company tax rate, saying it remained above the OECD average, adding that Australia had been pushed out of the top 20 in the latest global competitiveness report from the World Economic Forum.

UPDATE 1-Australia’s opposition leader concedes carbon, mining taxes to go – by James Regan (Reuters India – May 28, 2014)

May 28, 2014

http://in.reuters.com/

CANBERRA, May 28 (Reuters) – Australia’s opposition Labor Party on Wednesday said two contentious taxes on mining and carbon emissions introduced during its years in power would likely be repealed this year.

Before being elected prime minister last September, Tony Abbott made abolishing the taxes a centrepiece of his campaign.

But there have been questions over Abbott’s ability to meet his promises, given signs of opposition from independent lawmakers including billionaire Clive Palmer’s party, which will hold the balance of power in the upper house from July.

“The mining tax, I suspect will be repealed despite Labor’s position,” opposition leader Bill Shorten said in response to questions at a meeting of mining executives in Canberra. Shorten also said that he believed the carbon tax would go this year, after a new upper house senate is sworn in July.

Opponents of the carbon tax say it has added to the costs facing industry and the public and done little to cut emissions, something disputed by its supporters.

COLUMN-Pain of low coal prices finally too much for Australian miners – by Clyde Russell (Reuters U.S. – May 27, 2014)

May 27, 2014

http://www.reuters.com/

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

LAUNCESTON, Australia, May 27 (Reuters) – Like a pot of water being slowly brought to boil, it’s taken a long time for Australian coal miners to reach the point where the pain becomes too much to bear.

In recent weeks a slew of announcements of mine closures, production cuts and job losses has served to underscore that ultimately the sustained low-price environment would have to result in lower output from the world’s largest coal exporter.

So far the announced closures have been modest, but the chances are increasing that they are merely the harbinger of more cutbacks in the beleaguered coal industry. The cost of producing about half of Australia’s thermal coal and about 45 percent of its coking coal is above the prevailing prices, Morgan Stanley said in a report on Monday.

The spot price of thermal coal at Newcastle Port , an Asian benchmark, was $74.33 a tonne in the week to May 23, close to a 4-1/2 year low of $72.98 hit in March. It has lost 45 percent since the post-2008 recession high of $136.30 reached in January 2011.

Rio, Guinea Agree on Terms for $20 Billion Iron-Ore Mine – by Jesse Riseborough (Bloomberg News – May 27, 2014)

May 27, 2014

http://www.businessweek.com/

Rio Tinto Group (RIO), the world’s second-biggest mining company, agreed financial terms with the government of Guinea for a potential $20 billion iron-ore mine, port and rail project that may start by the end of this decade.

The accord will underpin talks with new investors for the rail and port component of developing the Simandou resource, Rio and its project partners Aluminum Corp. of China Ltd., International Finance Corp. and the government of Guinea said yesterday in a joint statement. The parties gave no commitment on when production will start.

Simandou is the world’s largest untapped iron-ore resource and Rio has estimated the mine could produce 100 million tons of the steelmaking ingredient a year. The project could double the West African nation’s current gross domestic product and add 45,000 jobs in the country, according to the statement.

The accord doesn’t commit Rio to building the project and analysts have said a legal dispute over the ownership of adjacent ground at Simandou could delay first production into the next decade. The agreement signed yesterday covers two of four mining permits for an ore-rich area in the southeast of Guinea.

Protesters burn vehicles, buildings at New Caledonia nickel mine – by Cecile Lefort and Melanie Burton (Reuters U.S. – May 26, 2014)

May 27, 2014

http://www.reuters.com/

SYDNEY – (Reuters) – Dozens of protesters caused tens of millions of dollars in damage to vehicles, equipment and buildings at Vale’s nickel mining site in New Caledonia, as anger boiled over at a chemical spill into a local river.

The $6 billion Vale plant at Goro in southern New Caledonia was closed earlier this month after some 100,000 liters of acid-tainted effluent spilled, killing about 1,000 fish and sparking protests at the mine site.

The Vale plant had been expected to produce about 40,000 metric tons of nickel this year, out of global supply of around 2 million metric tons. But it has been beset by problems in recent years, including several chemical spills and violent protests.

Tensions between the local population and Brazil-based Vale escalated over the weekend with young protesters frustrated at the latest spill by the Brazilian-based giant and a lack of response from indigenous Kanak chiefs, according to local media reports. Television footage showed images of burnt mining vehicles and equipment.

“There was damage at the site, but no damage to the plant. We had burned vehicles, one administration building was damaged, but no damage to the plant itself,” Vale spokesman Corey McPhee told Reuters.

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.