Twitter

Australia/New Caledonia/Papua New Guinea Mining

UPDATE 2-BHP and Australian rivals raise iron ore targets as competition grows – by James Regan (Reuters India – April 16, 2014)

http://in.reuters.com/

SYDNEY, April 16 (Reuters) – Australian miners are racing ahead with plans to expand iron ore production to capture more of the Chinese market for the steelmaking ingredient, amid strong competition from the world’s biggest supplier Vale of Brazil.

Efforts to beat already ambitious output targets comes as a crackdown in China on using commodities as collateral to raise cash risks unleashing iron ore sales from tens of millions of tonnes sitting in Chinese port warehouses, pressuring prices.

Fortescue Metals Group Ltd, which is raising production 57 percent this year, says its needs iron ore prices to stay between $110-$120 a tonne for the next 12-18 months in order to pay off a targeted $2.5 billion in debt.

The Australian Bureau of Resources and Energy Economics forecast an average price of $110 a tonne this year but only $103 a tonne in 2015. By 2016, Citigroup sees the price falling to $80.

Iron ore was quoted at $117.10 .IO62-CNI=SI on Wednesday. BHP, the world’s biggest diversified mining company, on Wednesday lifted full-year iron ore production guidance by 5 million tonnes to 217 million as it pushes ahead with new mine work in Australia.

Read more

UPDATE 2-Bad weather cuts Rio Tinto’s iron ore shipments – by James Regan (Reuters India – April 15, 2014)

http://in.reuters.com/

SYDNEY, April 15 (Reuters) – Rio Tinto’s iron ore shipments fell 8 percent in the first-quarter from the previous quarter due to weather-related disruptions in Australia and Canada, but the miner said it was on track to meet its full-year target.

Production still jumped 16 percent on the same quarter a year ago as the world’s No. 2 iron ore producer behind Brazil’s Vale ramps up production at its Australian mines to meet growing demand from China.

“It appears they were hit a litle harder than we expected by the weather, though we don’t see any issues in meeting their full-year target,” said RBC Capital Markets analyst Chris Drew.

Iron ore has replaced other industrial and precious commodities such as coal, gold and silver as the mineral with the most profit potential, delivering bumper earnings for giant low-cost miners such as Rio and BHP Billiton.

Iron ore prices .IO62-CN=SOI have recovered 12 percent since a steep dip in March on weaker Chinese steel prices. At the current price of $117 a tonne, Rio Tinto enjoys a profit margin of over $60 a tonne.

Read more

COLUMN-BHP’s “unloved” assets may be better long-term bet – by Clyde Russell (Reuters U.K. – April 14, 2014)

http://uk.reuters.com/

LAUNCESTON, Australia, April 14 (Reuters) – “Unloved” was a word that popped up several times in relation to BHP Billiton’s mooted plans to spin-off its non-core aluminium, nickel and manganese businesses.

It’s worth looking at the language used to describe and frame corporate plans as this is more often revealing that the bland statements companies tend to issue.

BHP Billiton didn’t use the word “unloved” itself, that was the description applied by news outlets, among them Reuters, the Sydney Morning Herald and the Wall Street Journal.

What BHP Chief Executive Andrew Mackenzie did say was the world’s largest mining company was looking at a range of options in the “next phase of simplification,” but would only pursue those that enhanced shareholder value.

BHP has identified four key pillars of its business – iron ore, copper, coal and petroleum – with potash a potential fifth. This leaves the so-called unloved assets as aluminium, alumina, bauxite, nickel and manganese.

Read more

Coal sector muscles up to green activists – by Sarah-Jane Tasker (The Australian – April 14, 2014)

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

AUSTRALIA’S coal industry is hitting back at its vocal opponents and returning fire with the tools used by anti-coal activists as it steps up its campaign to gain support for the struggling sector.

The industry, which has ­increasingly become a target by activists determined to close coalmines, has taken the unusual step to publicly muscle up in its fight with the green movement and launch an active campaign.

The Minerals Council of Australia, backed by the world’s largest coalminers, such as BHP Billiton, Rio Tinto and Glencore, will today launch a website — Australians for coal — to give a voice to the sector.

Brendan Pearson, chief executive of the Minerals Council, said the website was an ­opportunity for the silent majority to have a say and not let what he says are the small number of noisy extremists get free air.

“A small number of fringe ­activist groups are doing their level best to undermine the sector,” he said.

Read more

The LNG race: The lessons Canada can learn from Australia – by Iain Marlow and Brent Jang (Globe and Mail – April 12, 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.

GLADSTONE, AUSTRALIA and VANCOUVER – On a warm evening in late February, on an island just off the coast of eastern Australia, workers started to pour the concrete roof of an enormous liquefied natural gas tank that stretches 90 metres in circumference and rises 10 storeys into the sky.

The workers toil away late at night to avoid the searing heat of Australia’s late summer sun. They had recently built the roof for an identical adjacent container, both part of the $24.7-billion Australian ($25.5-billion Canadian) joint venture Australia Pacific LNG, owned by American oil and gas firm ConocoPhillips Co., Australian energy giant Origin and China’s state-owned Sinopec.

The two enormous tanks will hold natural gas tapped from the deep coal beds further inland and piped hundreds of kilometres to the LNG export terminal on Queensland’s Curtis Island. Facing the sheltered harbour of the industrial port city of Gladstone, the gas will be chilled until it condenses to one-six-hundredth of its original size – essentially from the size of a beach ball down to a table tennis ball – making it possible to load the liquid gas onto LNG carriers with enormous domed tanks and ship it off to the surging economies of Asia.

Read more

BHP polishes up nickel unit as demerger talk swirls – by James Regan (Reuters India – April 11, 2014)

http://in.reuters.com/

SYDNEY, April 11 (Reuters) – Breakthroughs in the way BHP Billiton processes nickel ores could help the world’s biggest miner find a buyer for its ailing Nickel West division in Australia.

Nickel West is among businesses that also include aluminium and manganese which BHP has grouped into a single division set aside in 2012 for underperforming assets deemed non-core to its portfolio. BHP has said it is actively studying the “next phase of simplification” of the company but declined to comment on media reports that senior executives favoured a demerger.

Chief Executive Andrew Mackenzie has said BHP will focus on its large iron ore, copper, coal and petroleum businesses, while selling off smaller, less profitable operations. Macquarie Bank last month in a research note put a value of $4.6 billion on the nickel assets.

Improvements in the way BHP mines nickel together with better market dynamics and exploration successes could save Nickel West from closure.

A programme at Nickel West to extract full value from ore that would otherwise be uneconomic to treat due to high contents of talc is opening up more of BHP’s rich Mount Keith and Yakabindie deposits in Western Australia for mining, enhancing the potential appeal to outside investors.

Read more

Nickel the new market star – by Peter Kerr (The Age – April 10, 2014)

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

Nickel’s transition from laggard to market darling is continuing apace, with a perfect storm of factors driving positive sentiment for the metal.

Australia’s three pure-play nickel stocks are surging this week on the back of a rising commodity price, elections in Indonesia and even a hint of takeover speculation.

The fun started in January, when one of the world’s major nickel suppliers, Indonesia, imposed a ban on exports of some unprocessed types of nickel, in a bid to try and lure miners to build processing facilities on Indonesian soil.
After years in the doldrums, the reduced exports sparked a rise in nickel prices that is still underway three months later.

With a 20 per cent rise under its belt since January, the benchmark nickel price (measured at the London Metal Exchange) is now at its highest price in 54 weeks.

LME Nickel for three month delivery was $16,718 per tonne this morning, which equates to about $US7.58 per pound in the local parlance.

Read more

CFMEU slams Rio Tinto’s warning on robots replacing Aussie workers – by Ben Hagemann (Ferret.com – March 31, 2014)

http://www.ferret.com.au/

The Construction, Forestry, Mining and Energy Union (CFMEU) has struck back after Rio Tinto’s warned that Australian mining labour forces could be replaced by robots.

Rio Tinto CEO Sam Walsh has cautioned Australia against allowing resource projects to shut because of local cost pressures, and warned that Australian society and Australian workers had to ensure they didn’t price themselves out of the market.

He said that the carbon and mining taxes were an issue, and that Rio Tinto is banking on the repeal of both the mining and carbon taxes. “It’s awfully important Australia maintains its competitiveness,” Walsh said.

He said Rio Tinto’s push into the “robotisation” of mining was partly due to the massive wages the company has been forced to pay in Australia. Walsh first introduced automated workshops when he headed Nissan’s manufacturing operations, and said that was done because Australians didn’t want to do the hard, dirty work.

“Some people have expressed concern about automation but quite frankly it’s getting harder and harder to attract young people to remote areas,” he said.

Read more

It Is Staggering How Much Australia’s Mining Boom Has Changed Perth And Its People – by Chris Pash (Business Insider Australia March 28, 2014)

http://www.businessinsider.com/

Imagine this horror: your child has just reached dating age, and their first crush is on the son or daughter of someone you went out with in your youth, a relationship that ended disastrously.

It was once a common story in Perth, Western Australia, but less so now as the state continues to grow faster than any other in Australia, in both population and its economy.

That comfortable big-country-town feeling is fading, as fast as the red dust of the North West is being shifted to get at the valuable minerals beneath it.

The mining boom of the last decade has done many things for the state and for Australia, most notably being the economic factor that stopped Australia dipping into negative economic growth during the Global Financial Crisis. China is the biggest recipient of Australia’s exports. About half those exports are iron ore from Western Australia. Ten years ago, it was only 16%.

Back in the 1970s, about 1 million tonnes of iron ore was being shoveled from the ground each week. Now it’s about 1.5 million tonnes a day. Visitors from the east say the same things. “Great place, beautiful beaches, bloody expensive. You won’t believe what I paid for bacon and eggs. And the coffee at $5 is rubbish.”

Read more

China’s steel meltdown will ripple around the world – by Carl Mortished (Globe and Mail – March 27, 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 — There’s too much mining, and too much iron ore. Overproduction will take the price of steel’s raw material down by almost a third over the next few years, says Australia’s official forecaster. A supply glut could be just part of the problem, because a swathe of Chinese steel makers are burdened with too much debt – and Beijing is not keen on bailouts.

Australia’s iron triumvirate – Rio Tinto Group, BHP Billiton Ltd. and Fortescue Metals Group Ltd. – are ramping up production, and chasing market share at the expense of prices. The frenzied digging means that the country’s exports of ore are expected to rise by almost a fifth to 680 million tonnes this year.

Australia’s Bureau of Resource and Energy Economics is predicting that by 2019, the iron ore price will fall from last year’s average of $126 (U.S.) per tonne to $87.

The price has already declined by a fifth since the beginning of this year, moving close to $100 per tonne, amid concerns that China’s export engine is slowing.

Read more

Rio set for potash push – by Matt Chambers (The Australian – March 24, 2014)

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

Rio Tinto could start building a Canadian potash project within three years, according to its joint venture partner, as the big miner chases a fertiliser push by BHP Billiton to position itself at the forefront of a global food boom.

There is also growing speculation Rio will make a bigger plunge into the sector through an acquisition or joint venture of neighbouring junior Western Potash, or even by joining BHP.

Last week, Rio revealed it had made a “tier-one” potash discovery at its KP405 lease near Regina, in Saskatchewan’s Elk Point Basin. This is the basin where BHP is spending $US3.8 billion ($4.2bn) sinking big mine shafts and building associated infrastructure about 200km to the north to be ready for expected growth in global demand for the crop fertiliser.

Rio’s Russian partner, Acron, has called the find “massive” and, based on a Rio report, capable of supporting a long-life, low-cost potash mine. Still, KP405 is lower grade, has been proved up to a fraction of the certainty and is less than a third the size of the resource BHP is targeting. It is also nearly twice as deep, meaning mining methods will be different and probably more expensive.

Read more

Miners target funds to spread the message on coal – by Annabel Hepworth (The Australian – March 24, 2014)

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

MINING giants are targeting Australia’s most influential superannuation funds to convince them that coal is here to stay in a dramatic escalation of a strike against environmentalists campaigning for the divestment of fossil fuel assets.

The Australian can reveal that the Minerals Council of Australia — whose members include BHP Billiton, Rio Tinto and Glencore — has been pitching the case for coal to more than 1000 powerbrokers at big investors.

As well as industry funds including Australian Super and Uni Super, the campaign has targeted investment managers Colonial First State, investment bank Goldman Sachs and the Australian arm of the world’s biggest asset manager BlackRock, as well as ratings agencies.

The move is an escalation of the industry’s plans to take on the fossil fuel divestment campaign, where green groups are pushing investors to dump their holdings in coal companies. The approach is modelled heavily on the South African divestment campaign against apartheid. The Greens have been demanding that the $96.6 billion Future Fund get out of coal.

Read more

The next age of mining? – by Cole Latimer (Australian Mining – March 21, 2014)

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

Are we entering the last age of the open cut mine? Is the end of open pit mining near? Speaking to a number of sources, the answer is clearly no, but as grades decrease and deposits become deeper, the increase of underground mining will continue apace as older open cut mines are worked out and new, deeper deposits are discovered.

Underground mining will soon count for a much larger proportion of total mining. According to a Rio Tinto seminar in 2010, in 2009 underground operations accounted for 26 per cent of all copper production, however Rio forecast that by 2025 underground operations would account for 40 per cent of global copper production.

This included major copper producers such as Chile and Australia, where massive open cut pits are the norm. But this is not to say open cut mining has been uneconomical. Surface mining has been, for some time, the most economical form of mining in Australia.

Underground contract mining specialist Pybar’s group business development manager David Noort told Australian Mining “open cut mines have been, economically, the most viable, which has been due to relatively near surface expressions”.

With wide open spaces and often remote locations, it has been the more cost effective form of mining, but globally it has already started coming to an end, with Noort explaining that “many of these higher grade expressions close to the surface have already been discovered, so we are left chasing ore down”.

Read more

UPDATE 3-Australia’s Rinehart seals funding for $10 bln iron ore project – by Sonali Paul (Reuters India – March 21, 2014)

http://in.reuters.com/

MELBOURNE, March 21 (Reuters) – Australian billionaire Gina Rinehart has secured $7.2 billion in debt for her Roy Hill iron ore mining project, completing all the funding for a giant mine in Western Australia due to start exporting in late 2015.

The 55-million-tonnes a year mine will make Roy Hill Australia’s fourth largest iron ore producer, adding to a looming supply glut built up by bigger rivals Rio Tinto , BHP Billiton and Fortescue Metals Group. “We look forward to becoming a major iron ore producer on an international scale,” Rinehart, chairman of Roy Hill and Asia’s richest woman, said in a statement.

The $10 billion project is already 30 percent built, the company said, including dredging for two deepwater port berths, an airport with a runway big enough for a Boeing 737 plane and villages to house 3,600 construction workers and 2,000 operational staff on site and at Port Hedland.

The debt financing, the biggest ever provided for a mining project, is made up of loans and guarantees from five Export Credit Agencies from Japan, South Korea and the United States and 19 commercial banks from Australia, Japan, Europe, China, Korea and Singapore.

Read more

Australian Nickel Processor Eyes Indonesian Ore Piles – by James Regan (Jakarta Globe – March 18, 2014)

http://www.thejakartaglobe.com/

Perth. At a small plant on the outskirts of Perth, metallurgists have been turning raw ore shipped from top Indonesian nickel miner Aneka Tambang (Antam) into a concentrate to meet the country’s new export guidelines.

After a year of tests, Australia’s Direct Nickel says it has now entered into a joint venture with Antam for a feasibility study on building a full-scale plant on Indonesia’s Halmahera island using its new nitric acid-based technology.

The agreement comes as Antam struggles to meet Indonesia’s tough new export rules, which prevent the company from shipping raw mineral ore to Chinese nickel pig iron producers and instead demand it processes the ore before export.

“We could not have asked for a better time to start planning our first commercial plant in Indonesia,” said Direct Nickel Chief Executive Russell Debney. Antam has warned its nickel ore production could fall by as much as 87 percent this year as sales to China dry up due to the ban.

“What they want now is cheaper alternatives to enable them to apply to the government for concessions to keep exporting,” Debney said.

Read more