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Australia/New Caledonia/Papua New Guinea Mining

Rio Tinto on track to save $3bn in costs – by Alex MacDonald (The Australian – December 12, 2013)

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

MINING titan Rio Tinto says it has already exceeded its target of cutting $2 billion in operating costs by the end of the year and said it will prioritise paying down debt next year.

Major resources companies such as Rio Tinto are moving to bolster their balance sheets and profits in the face of subdued prices for many commodities, as a decade-long mining boom cools.

Rio Tinto already announced plans to more than halve its capital expenditure to less than $8 billion by 2015 from last year’s level while its peer BHP Billiton announced plans to cut its capital spend below $15 billion in the future from $21.7 billion in the last financial year.

In an effort to boost profitability, mining companies are also slashing operating costs by reducing headcount, increasing production capacity at its operations, and revising supply contract agreements among other things. Rio Tinto announced in February plans to cut operating costs by $2 billion through such measures by the end of the year.

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The 2014 Metals Outlook: Nickel – by Cole Latimer (Australian Mining – December 9, 2013)

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

Australian Mining has investigated the current state of Australian metals and looks into how they will perform in the coming year. In the third part of this five part series we look at nickel.

The nickel industry has always been one of sharp busts and booms, with the busts now lasting longer and longer. To sum up the sector in a single word – volatile.

After an astounding leap in revenues in 2006-07, where it skyrocketed 132.9 per cent after shrinking 5.7 per cent the previous year, nickel has undergone a series of sharp price corrections, seeing an annualised fall of 12.1 per cent in revenues from 2008 through to this year.

This was due to prices retreating from unsustainably high levels. However after two years of serious gloom for the sector, following another brief spike in 2010-11, nickel is predicted to grow again, according to IBISWorld reports.

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Rio Tinto looks to cut costs before selling aluminium business – by Angela Macdonald-Smith and Michael Hobbs (Sydney Morning Herald – December 4, 2013)

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

Rio Tinto chief executive Sam Walsh has signalled he will take more costs out of the aluminium business before any potential spinoff, after taking what he says was ”one of the hardest decisions of my life” to close the loss-making Gove alumina refinery in Arnhem Land.

Mr Walsh said the focus for Rio’s reintegrated aluminium division, as for energy, diamonds and industrial minerals, was on ”improving the business, reducing the cost, running it for cash, taking advantage of the capital that is already invested”.

The aluminium unit delivered $US450 million of Rio’s $US1.8 billion savings in operating costs in the 10 months to October 2013, with $US1 billion in cuts targeted by the end of 2014.

In August the miner scrapped a plan to spin off the Pacific Aluminium business housing some of its Australian and New Zealand assets after failing to find a buyer, and decided to reintegrate it back into Rio Tinto Alcan. The move sparked speculation Rio may look to offload all of Alcan, but Mr Walsh’s comments show more work is first needed on eliminating costs.

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FEATURE-From kangaroos to SQUID, new technologies transform hunt for minerals – by Clara Ferreira-Marques (Reuters U.S. – December 5, 2013)

http://www.reuters.com/

LONDON, Dec 5 (Reuters) – From intelligent drills to analysing gum tree leaves, an unprecedented push to develop new methods and technologies promises to transform the way miners explore for deposits, allowing them to dig deeper, faster and more cheaply.

The results could ultimately unlock so-called ‘covered’ deposits: riches hidden under hundreds of metres of soil, rock or sea water, sometimes in or near previously explored areas. That could reverse the steady shift away from mining regions such as Australia and Canada to untested, frontier areas, in the search for the next blockbuster find.

Many flagship mines are ageing, producing less and less metal for every tonne of ore pulled out of the ground. This has driven up costs and prompted companies to explore in new parts of Africa or Asia, despite the additional political risks.

“Deposits are becoming increasingly hard to find, and both the technology that we have available to us and the approaches, are less useful when exploring deeper deposits,” said Dean Collett, a geoscience consultant working with Australia’s UNCOVER initiative, which promotes exploration of covered areas.

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Rinehart mining fight: Roy Hill livestock farmers stand up against mining project – by Claire Moodie (Australian Broadcasting Corporation – December 5, 2013)

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

In the heart of iron ore country in Western Australia’s Pilbara region, brothers Murray and Ray Kennedy are standing their ground against the mining industry.

The veteran pastoralists have run Roy Hill cattle station for over forty years but they have become an endangered species.

Many Pilbara stations have been bought up by mining companies but the Kennedys, now in their twilight years, have refused to move on. “I don’t see why we should,” Murray Kennedy said. “Not at 25 percent of the value of the property, no way, that’s just robbery.”

The brothers are well-known in the Pilbara for their tough negotiating skills and the colourful characters are rarely seen without their pet dingo, Baby. “She’s the boss,” Ray Kennedy said with a laugh.

“She rounds up Murray and I and we’ve got to do as we’re told. Simple, she’s a bloody female.” Baby even has her own security pass to the nearby Fortescue Metals Group’s (FMG) Christmas Creek mine and has a meeting room at the mine-site named after her.

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Rio Tinto to cut capital spending on aluminum, coal – by Eric Reguly (Globe and Mail – December 4, 2013)

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.

Rio Tinto, the mining giant that owns Montreal’s Alcan, provided more evidence that the era of massive spending on huge projects and acquisitions is over by pledging to shave billions of dollars off its capital spending budget.

The new era will see the Anglo-Australian miner focus on shareholder returns in an attempt to repair some of the damage triggered by years of overspending during the boom years, in the mistaken belief that strong global growth would propel commodity prices ever higher.

Rio CEO Sam Walsh on Tuesday said the company, the world’s second largest miner, after BHP Billiton, would cut capital spending by at least 20 per cent in each of the next two years. That means spending would fall to $11-billion (U.S.) in 2014 from $14-billion this year, and to $8-billion in 2015.

Speaking at investor conference in Sydney, Mr. Walsh said “We lost our way…We are taking decisive action. Don’t get me wrong, we have more to do.”

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Rio Tinto to Halve Capital Spending by 2015 in Focus on Cash – by Elisabeth Behrmann (Bloomberg News – December 3, 2013)

http://www.bloomberg.com/

Rio Tinto Group (RIO), the world’s second-biggest mining company, will cut capital spending to about $8 billion in 2015, less than half its outlay last year, as mineral producers conserve cash after prices fell.

“Our capex is reducing, and will come down further,” Sam Walsh, chief executive officer of London-based Rio, said today in a statement. “From where I stand, we continue to see market fragility and volatility.”

Rio’s cutback underlines efforts by the world’s largest mining companies to rein in spending as a decade-long boom in metal prices wanes. Vale SA (VALE5), the biggest iron ore producer, yesterday slashed its investment budget for a third straight year to $14.8 billion, the lowest since 2010.

“It’s quite a substantial drop and it does suggest that right now Sam Walsh is concentrated very, very hard on affordability,” Evan Lucas, a Melbourne-based markets strategist at IG Ltd., said by phone.

Rio fell 0.6 percent to A$65.49 at the close in Sydney. BHP Billiton Ltd., the world’s biggest mining company, declined 1.2 percent.

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NEWS RELEASE: Rio Tinto unveils breakthrough pathway for iron ore expansion in Australia

28 November 2013

Rio Tinto has set out its breakthrough plan to optimise the growth of its world-class iron ore business in Western Australia. Mine production capacity will rapidly increase towards 360 million tonnes a year (Mt/a) at a significantly lower capital cost per tonne than originally planned.

A series of low-cost brownfield expansions will bring on early tonnes to feed the expanded infrastructure currently being developed. From a base run rate of 290Mt/a by the end of first half 2014, mine production capacity will increase by more than 60 million tonnes a year between 2014 and 2017. The majority of the low-cost growth will be delivered in the next two years with mine production of more than 330 million tonnes in 2015.

This will be achieved primarily through a combination of expanding production at existing mines and securing further low-cost productivity gains, such as those delivered by Rio Tinto’s pioneering Mine of the Future™ programme, together with the proposed future development of the greenfield Silvergrass mine. Work continues on various further expansion options to optimise the next stage of the 360 programme.

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UPDATE 1-Rio Tinto to halt production at Gove alumina refinery (Reuters India – November 29, 2013)

http://in.reuters.com/

SYDNEY, Nov 29 (Reuters) – Miner Rio Tinto said on Friday it will stop alumina production at its Gove refinery in Australia, as the plant is no longer viable amid difficult market conditions.

Rio said it will start winding down production in the first quarter of 2014 and will continue the phase-out during the year. The process would take “some time”, it said.

The announcement was expected after Rio said earlier this week it had decided not to convert the Gove plant to use gas-fired power. The refinery, which employs 1,400 workers, is part of the Pacific Aluminium business that Rio tried to sell, but then reintegrated into its business in August.

The decision comes a day after the mining giant unveiled plans to increase its iron ore capacity towards 360 million tonnes by 2017, cutting costs by $3 billion by not digging new mines and slowing the expansion by about two years.

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Rio Tinto losing $30m a year from Arnhem Land refinery – by Dennis Shanahan (The Australian – November 27, 2013)

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

RIO Tinto’s decision not to switch its alumina refinery at Gove to cheaper gas supplies has sealed the fate of the plant, which employs 1500 and keeps the Northern Territory’s fourth-largest town of Nulunbuy alive.

The international mining giant confirmed yesterday that it was “reviewing the status” of the refinery in Arnhem Land, which employs hundreds of indigenous workers.

The Rio board is expected to make a decision this week on winding down the refinery operations and instead to export bauxite from the Gove mine on the Gulf of Carpentaria.

Rio Tinto is losing $30 million a year from the refinery and the Northern Territory and commonwealth governments had hoped an offer of subsidised gas to replace high-cost fuel oil to make alumina would keep the refinery open.

Yesterday, Northern Territory Chief Minister Adam Giles said he hoped Rio Tinto would keep the refinery open but the issue was “no longer about gas” for Gove.

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BHP talks up Canada potash prospects – by Peter Ker (Sydney Morning Herald – November 22, 2013)

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

BHP Billiton says it has been encouraged by recent work that suggests its push into the Canadian potash sector will be supported by further resources of the commodity close to its proposed Jansen mine.

BHP confirmed a gradual push into the potash sector in August, when it approved $US2.6 billion worth of spending on Jansen over five years, and since then the miner has described potash as having the potential to become a ”pillar” of the company alongside iron ore, coal, petroleum and copper.

Speaking at the company’s annual meeting in Perth on Thursday, BHP Billiton boss Andrew Mackenzie said exploration work had suggested that Jansen could be just the start of a ”basin-wide play” for BHP in the Canadian state of Saskatchewan.
”On its own Jansen is probably not a big enough resource for us to be a business that would rival our other four pillars, we need several Jansens,” he said,

”The news is good, we feel very confident that we now have many more Jansens that future generations of management can consider to think about this as a basin-wide play.”

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BHP Billiton confident of Chinese demand – by Peter Ker (Brisbane Times – November 20, 2013)

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

Chinese demand for Australia’s natural resources may prove to be stronger than currently believed, according to BHP Billiton chief executive Andrew Mackenzie.

Speaking at the opening of the mining giant’s new headquarters in Melbourne, Mr Mackenzie said early indications from the Chinese government’s recent economic policy summit were positive for Australia and its mining industry.

”If you read the small print – and no doubt we will hear more about this in a couple of weeks – from the third plenum that has just happened in China, I think even more than we might think they are going to require us to supply the resources to continue to develop not just China but much of north Asia as well,” he said.

”These resources are going to be fundamental to them securing the economic prosperity they crave for themselves and their citizens.”

The speech was delivered to a high-powered audience of current and former political leaders, including former prime minister Paul Keating, former treasurer Peter Costello and current parliamentary secretary to the Treasury Steve Ciobo, who read a message from Prime Minister Tony Abbott.

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[Australia’s] Port Hedland growth faces difficult berth – by Paul Garvey (The Australian – November 15, 2013)

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

IT MUST surely represent one of the most valuable pieces of undeveloped port real estate anywhere in Australia – an otherwise non-descript stretch of mangroves that stand to generate more than $US12 billion a year in revenues.

South West Creek has been earmarked as the site of two new berths at Port Hedland, Australia’s key iron ore export hub. Spare capacity at the port is becoming more and more scarce, and the South West Creek site represents one of the last remaining locations capable of squeezing in new berths.

Each berth is expected to allow for some 50 million tonnes of iron ore exports. With the benchmark price of iron ore currently sitting comfortably above $US120 a tonne, that’s a huge potential source of income for both the miners allocated capacity at the site, and the state government hungry to grow its pie of iron ore royalties even further.

But the will of both the state government and the parties allocated the space far from guarantees the development of the strategically important site. Despite iron ore prices continuing to dangle a very lucrative carrot for the parties, finding a path to the port’s development remains a major challenge.

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Mine ruling a test of political mettle, says Rio – by Sarah-Jane Tasker (The Australian – November 14, 2013)

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

MINING giant Rio Tinto has warned that a new planning application for its Warkworth coalmine in NSW is a “litmus test” for the ability of governments to deliver regulatory results to match their economic aspirations.

The miner has been fighting to expand its coalmine in the Hunter Valley region after the Land and Environment Court put the brakes on plans earlier this year, after Rio had already received government approvals to proceed.

Rio has appealed the court decision but its chances of winning are slim, leading the miner to look to a short-term measure to keep the operation open and 1300 people in a job. The company this week lodged an application to access 350m of land to keep its production at an economic level.

Rio Tinto Coal Australia managing director Chris Salisbury said that seeking access to the extra land was the only real option Rio had to avoid further significant impacts on production and jobs. “Importantly, it will also provide us with two years to look at options for further planning approvals to provide a longer-term future for the mine,” he said.

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NEWS RELEASE: What can we learn from the fate of Australia’s and Quebec’s mining tax plans?

This article was provided by the Ontario Mining Association (OMA), an organization that was established in 1920 to represent the mining industry of the province.

A recent trend in resource taxation philosophy found on both sides of the world came to light recently. It would seem both Australia at the national level in the southern hemisphere and Quebec at the provincial level in the northern hemisphere are heading in the same direction on this topic.

New Australian Prime Minister Tony Abbott and his government believe the mining tax imposed by the previous government was damaging to investment and jobs. The government is in the midst of repealing the tax, which it believes “fundamentally undermined confidence in Australia as an investment destination.”

The mining tax or “resource super profits tax” (RSPT), is a tax on any profit made by mining companies that is above 6% of their capital investment, in addition to corporate tax. Mr. Abbott’s government claims scrapping the mining tax will mean workers will be an extra $450 (Aus) a year better off. The RSPT did not net the government the tax dollars anticipated.

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