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Australia/New Caledonia/Papua New Guinea Mining

Copper: The metal that will build our future? – by Cole Latimer (Australian Mining – July 16, 2013)

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

As we slowly come off the back of the mining boom, a number of questions are starting to be asked. Has the boom been played out, where to next, what will happen to iron ore? But what all are asking is what will be the metal of the future? What should we be digging that will provide the greatest return?

Perhaps the future is a metal which is a major part of humanity’s past – copper. Iron ore has been the metal that really drove Australia’s mining boom. It was the hero of the hour.

On the back of seemingly unending demand from Asia to fuel the growth of China we saw commodity prices skyrocket and essentially drag our nation out of the Global Financial Crisis.

Coal was also surging head, as both China and India required the energy needed to turn them into first world nations. As
a background to this gold prices also spiked, reaching never before seen heights.

But now the good times are over for these metals and the prices have steadily dropped, stabilising at more reasonable levels, or in some cases plummeting to just above cost levels.

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UPDATE 3-Big iron ore miners go for volume even as glut looms – by James Regan (Reuters U.S. – July 17, 2013)

http://www.reuters.com/

SYDNEY, July 17 (Reuters) – Record iron ore output from BHP Billiton and other mining giants appears to defy logic, with demand for the steel-making raw material cooling in top customer China and a price-eroding supply glut looming.

But the sector’s heavy guns are digging more for less to tighten their stranglehold on the world’s second-biggest commodity market, as competitors struggle.

In mining parlance, this is known as a “rebalancing” strategy, designed to improve the operating margins of the majors to such an extent that smaller competitors or new projects may be all but squeezed out.

“The majors want to maximise those economies of scale,” said MineLife sector analyst Gavin Wendt. “As long as they keep margins well ahead of a declining iron ore price, they are winning.” BHP Billiton, Rio Tinto and Fortescue Metals Group, with their iron ore operations in Australia, and Brazil’s Vale are leading the charge.

Seaborne-traded iron ore prices, which have lost 10 percent so far this year, are forecast to hit their lowest in four years by the end of 2013 as these big miners dig deeper and faster.

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Outlook fails to quell ore appetite – by Arpan Muhkerjee (Dow Jones/The Australian – July 16, 2013)

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

DIRE predictions of slumping iron ore prices and warnings of the end of the commodities super-cycle aren’t deterring some deep-pocketed, long-view investors whose appetite for the steelmaking raw material is driving mining-asset mergers and acquisitions activity from Australia to Canada.

The short-term outlook for iron ore isn’t good.Prices have fallen 12 per cent since the start of the year and are down more than 20 per cent from the high of $US158.90 a tonne in February.

Some see iron ore slumping to $US90 a tonne or less due to rising supplies and slowing growth in top consumer China. UBS expects iron ore to average $117 a tonne this year, while Goldman Sachs has forecast $US80 a tonne in 2015.

“People are looking to buy cheap assets, so this is the perfect time when the downside (in prices) is still there,” said Helen Lau, senior analyst at UOB KayHian in Hong Kong. “Investors are able to negotiate even cheaper prices with miners.” Also weighing on prices is likely future iron ore supply rises.

Rio Tinto, Australia’s biggest iron ore exporter by volume, is pushing ahead with an expansion of output in the ore-rich Pilbara region.

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Mettle of big miners’ austerity to be tested – by Matt Chambers (The Australian – July 15, 2013)

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

THE nation’s biggest resource companies release quarterly reports this week in the first chance for investors to gauge progress in the big miners’ self-proclaimed new era of spending restraint and productivity.

BHP Billiton, Rio Tinto, Woodside Petroleum and Santos will report production, and energy firms revenue, from what has been a weaker quarter than it could have been from the nation’s resource-rich Pilbara in Western Australia. Rio and BHP experienced a very wet dry-season month of June in the Pilbara.

This is understood to have affected production from Rio, which reports tomorrow, and is likely to drag down its regional production, including minority partners’ interests, by a couple of million tonnes from the 61 million analysts had forecast.

Data from Rio’s Dampier and Cape Lambert ports in the Pilbara compiled by Credit Suisse backs this up, showing June exports this year were at their lowest in four years for the traditionally strong month. BHP, which reports on Wednesday, is said to have been hit to some extent.

While any impacts will be unwelcome, they are unlikely to worry investors and will be seen as one-offs that have a good chance of being compensated for over the rest of the calendar year.

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Global Iron Ore Shortage Looms Due to Rio Tinto’s Delay in WA Mine Expansion – by Vittorio Hernandez (International Business Times – July 12, 2013)

http://au.ibtimes.com/commodities/

JPMorgan warned of a global iron ore shortage because of Rio Tinto’s (ASX: RIO) plan to delay the expansion of its $5.4-billion iron ore mine in Western Australia. The bank reviewed Rio’s plan to boost its yearly production of the key steelmaking ingredient commodity by 70 million tonnes.

Although the second-largest global miner has began building the port and rail capacity, it has not yet committed to the mine expansion, which would delay the iron ore ramp-up by three years from the current 2016 target.

As it is, Rio is expected to report this week a 2-million-tonne shortage of iron ore production for Q2 due to the rains and conveyor belt problems. The delay in expansion plans is because Rio, like the other large miners, are reducing spending and cost due to lower demand and commodity prices in the international market.

Besides delaying expansions and slashing costs, mining companies are also reducing the compensation packages of their executives. Rio’s new iron ore chief executive, Andrew Harding, axed about 50 middle management position at the company’s iron ore office in Perth.

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New Caledonia weighs up impact of nickel mining – by Johnny Blades (Radio New Zealand International – July 12, 2013)

http://www.rnzi.com/index.php

Nickel mining is being blamed for New Caledonia’s soaring carbon emission rate and a nagging problem with pollution in the capital, Noumea, Nickel represents over 90 percent of New Caledonia’s overall exports and is the bedrock of the economy.

But as Johnny Blades found out, questions are being asked whether the territory’s heavy reliance on nickel mining is hindering its prospects of a sustainable future.

For a first time visitor to Noumea, it hits you as you drive towards the city. It’s different from many capitals in the Pacific region. You’re driving a multi-laned sealed motorway, being overtaken by BMW SUVs and Audis, passing lots of big buildings, housing developments. Signs of money are everywhere, and as you near the city itself, an explanation as it why there’s so much money floating around seems to present itself. The motorway winds around a large industrial complex with several tall chimneys belching dirty smoke into the air. So I pulled off the road to get a better look at it. It’s the power plant and smelter facility of SLN, Societe Le Nickel.

DOMINIQUE NACCI: The state-controlled mining company, SLN. SLN was owning over 70 percent of the tenements of New Caledonia, so it’s very important. And also New Caledonia owns about 25 percent of the world resource of nickel.

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Wave of sackings at nickel mine swamps Forrest’s Poseidon adventure – by Andrew Burrell (The Australian – July 11, 2013)

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

POSEIDON Nickel chairman Andrew Forrest’s bid to revive the historic Windarra project in the face of worsening nickel prices appears to have suffered a blow after more than 40 contractors were sacked amid speculation the company is attempting to preserve cash.

The suspension of drilling at the Windarra nickel site this week comes after Mr Forrest, the 32 per cent owner of Poseidon, and chief executive David Singleton returned empty-handed from New York last month following a bid to secure about $200 million in debt financing for the project. The job losses at Poseidon follow a wave of redundancies at other mining companies and contractors in the wake of weaker commodity prices.

Sources close to contracting firms at the Windarra site in Western Australia’s Goldfields told The Australian yesterday that about 45 workers were “completely shocked” to be told they had been sacked on Tuesday. They said the move was sudden and contracting firms working at the site had not been previously advised of any shutdown. “They even woke up people who were on night shift to tell them they’d been sacked,” said one worker.

Those made redundant include geologists, geotechnicians, drillers, field assistants, shift bosses, cleaners and caterers. At the meeting on Tuesday, the workers were told that technical problems involving dewatering at the site had forced the shutdown, but that Poseidon Nickel would work to fix the issue.

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Mining boom sparks a clash over sex worker rights in small-town Australia – by Rod McGuirk (Associated Press/Huffington Post – June 28, 2013)

http://www.huffingtonpost.ca/

MORANBAH, Australia — A lone woman checking into a motel in the Australian mining town of Moranbah can expect some blunt questioning from the owners: “Are you a working girl?” Turning on a heel and storming away indignantly will be taken as an admission to prostitution.

“That sort of reaction is really positive proof as far as I’m concerned,” said Joan Hartley, the 67-year-old owner of the Drover’s Rest Motel and champion of motel operators who want to rid their businesses of sex workers cashing in on a mining boom.

Moranbah in the coal-rich Bowen Basin is part of the new landscape of Australian mining. Workers are increasingly leaving their homes and families for weeks on end to earn big money in distant mines in the Outback. It’s a workforce known as fly-in, fly-out, or FIFO (feye-foh) for short.

Where the FIFO miners go, the FIFO prostitutes follow. With miners earning 110,000 to 160,000 Australian dollars ($100,000 to $150,000) a year, many sex workers find working the remote mining towns more lucrative than the economically moribund cities in which they live, despite the travel costs and a recent slowdown that has seen the mothballing of some inefficient mines.

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New South Wales Mineral Council News Release: MASSIVE COST OF PLANNING DELAYS REVEALED:

Jobs and billions of investment gone

Monday 1 July 2013
Ref: 56-13

Click here for full report: http://www.nswmin.com.au/default.aspx?ArticleID=555

NSW will pay a high economic price including the loss of billions of dollars in mining revenue and thousands of jobs if mining projects continue to be subjected to approval delays of 12 months or more, according to new research undertaken by PricewaterhouseCoopers (PWC). The detailed economic study found that inefficiencies in the NSW Planning System resulting in mining project delays of 12 months or more impose a massive cost to NSW.

“The PWC research shows that project delays of 12 months or more would cost NSW, over the next 20 years, 29,000 jobs across the state, $10.3 billion in lost investment and $600 million a year in lost mining royalties,” NSW Minerals Council CEO Stephen Galilee said today.

“These results confirm that slowing the State’s biggest export industry in NSW has an impact felt right across the state economy. It means lost jobs, lost investment and a loss of crucial mining revenue that helps fund infrastructure and services including hospitals, police, public transport and schools,” he said.

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Is the global boom in commodity prices finally over? – by Linda Yueh (BBC News – July 2, 2013)

http://www.bbc.co.uk/

Like Graham Greene’s The End of the Affair, it is hard to believe it is over and let go. But, it has been an extraordinary run, a decade of what has been called the commodity super-cycle.

It started, and perhaps will end, with China. The global integration of an economy that has grown at double digits since China joined the World Trade Organization (WTO) in December 2001 perhaps marked the start. Will China also now mark the end?

Until the last decade, the real price – so, taking off inflation – of commodities had fallen for 150 years. It was the reason why developing countries wished to diversify out of natural resources and into manufacturing.

Because agriculture prices fall over time, countries like Brazil, where more than 90% of exports were coffee during the immediate post-war period, would experience worsening incomes. This is why.

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Economy must return to sustainable footing after end of the mining boom – Brisbane Courier-Mail Editorial (June 29, 2013)

http://www.couriermail.com.au/

PRIME Minister Kevin Rudd yesterday stepped up his rhetoric in relation to China and what he has now definitively called the end of the boom.

The halcyon days of ever rising commodity prices and demand for the things we dig out of the ground are finished; now comes the long, hard recalibration of an economy back to a broader, more sustainable footing was the line Mr Rudd prosecuted.

There may be an element of political overreach in the sense that while the peak of the boom appears to have well and truly crested, in historical terms the demand and price we receive for our commodity exports remains relatively healthy.

Coming off once in a generation highs to more sustainable levels does not constitute a crash after all, but it does give you the opportunity to paint yourself as the only party with clear policy to boost manufacturing, innovation and agriculture within a lower Aussie dollar paradigm.

Mr Rudd, possibly Australia’s most renowned Sinophile, should be heeded though, for events in China in recent weeks give cause for some alarm in a country as dependent on their economic well-being as Australia is.

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Coal companies adjust to new realities as gas insulates Queensland from worst of global downturn – by John McCarthy (Brisbane Courier-Mail – June 29, 2013)

http://www.couriermail.com.au/

ABOUT 7000 jobs have been lost from the state’s coal sector in the past 15 months as the boom ends and companies shut mines and scale back production, according to the industry.

In the past week about 1000 jobs disappeared as some of the world’s biggest miners, Vale, Glencore and Peabody, adjusted to the new realities of the market in which the cost of producing coal is ”line ball” with prices.

Thousands more jobs have disappeared from service companies or contractors. Unions said the central Queensland towns of Tieri and Glenden would be devastated by the loss of about 450 jobs this week at the Oaky and Newlands mines, but have rejected any suggestion that big pay increases had been a factor.

The cost of abandoned coal and infrastructure projects is now about $10 billion in lost investment and the numbers of jobs that won’t be created would be in the thousands.

A handful of massive coal projects are also now extremely doubtful, particularly in the Galilee Basin, not just because of poor prices but also because of a lack of investment funds.

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Rudd: China Boom Over – by Anthony Fensom (The Diplomat – June 27, 2013)

http://thediplomat.com/

Australia’s second-time Prime Minister Kevin Rudd has wasted no time hammering a nail in the coffin of the China boom after ending the political career of his predecessor. Making his first press statement Wednesday night after successfully challenging Julia Gillard for the Labor Party leadership, the Mandarin-speaking Rudd said Australians must diversify away from the Middle Kingdom.

“The global economy is still experiencing the slowest of recoveries. The China resources boom is over…and when China represents such a large slice of Australia’s own economy, our jobs, and the opportunities for raising our living standards, the time has come for us to adjust to the new challenges,” he said.

“New challenges in productivity. New challenges also in the diversification of our economy. New opportunities for what we do with processed foods and agriculture, in the services sector, and also in manufacturing…..Looking at our global economic circumstances therefore, we have tough decisions ahead on the future of our economy.”

China overtook Japan as Australia’s top trading partner in late 2007 due to China’s seemingly insatiable appetite for Australia’s energy and mineral resources, including iron ore, coal and gold. Two-way trade amounted to A$125 billion in 2012, with Australia becoming China’s sixth-largest source of imports.

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MINING’S ROLE IN SOCIETY – by Anglo American CEO Mark Cutifani (June 26, 2013)

http://www.angloamerican.com/

This speech was given to the Minerals Council of Australia, Canaberra on 26 June 2013.

Distinguished guests, Colleagues of the Minerals Council of Australia, Ladies and gentlemen. Good morning. Thank you for that introduction Mitch and for the opportunity to speak here today.

Now, some of you may be wondering about the photo behind me [see image below]. Before I explain, let me set a little bit of context.

Mining – In Our Global Context

In 2010 the global mining industry, including the quarrying and petroleum sectors, represented 11.5% of the world’s GDP, as measured by revenues from products sold. Based on experiences in mining jurisdictions, if we include payments to service and support industries, mining’s direct contribution to global economic activity is estimated to be around 21%. But we need to think about mining in a much broader context. We produce products that make the world work.

Fuel for energy generation, products that support construction and industrial processes and most other value creating activities, are simple examples of how we literally make the world go around. So, let me get back to that photo showing two cornfields, one using phosphate fertilisers and one without. Since the turn of the last century it is estimated that the products of mining have supported a more than 100% increase in agricultural production per area unit under cultivation.

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Australia opposition says top priority to dump mine, carbon taxes – by Rob Taylor (Reuters India – June 26, 2013)

http://in.reuters.com/

CANBERRA – (Reuters) – Australia’s conservative opposition said its top priority if it wins elections in September will be to repeal taxes on mining profits and carbon, blaming both policies for stopping fresh investment in the vital resources sector.

Prime Minister Julia Gillard’s Labor government introduced a fixed carbon price about a year ago in a country with one of the world’s highest per capita levels of carbon emissions, with plans to transition to emissions trading from 2015.

The carbon scheme, along with a 30 percent tax on iron ore and coal mining profits, have been criticised by miners, who say it damages competitiveness and employment as Australia’s AAA-rated economy slows and China’s demand for minerals cools.

“Both the carbon tax and the mining tax are a drag on Australia’s energy and resources sector and make investments less attractive than investments in other countries,” opposition resources spokesman Ian Macfarlane told a mining conference.

Australian government data published last month said that A$150 billion ($139 billion) in planned resource projects had been delayed or cancelled since April 2012, as China’s economic slowdown weighs on decade-long mining boom.

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