Canada – a land of golden opportunity. As is Australia, Ghana etc – by Lawrie Williams (Lawrieongold.com – September 16, 2015)

http://lawrieongold.com/

I have just been sent a copy of a new Newsletter being put out by Peartree Securities – which reckons to be the largest provider of mining flow-through capital in Canada so knows something about junior mining. While the newsletter theoretically looks at Canadian resources in general it is most relevant to the hugely depressed junior gold sector and could well be being initiated at a most opportune time for investment in this volatile part of the market.

True resource analysts have been calling the bottom in the gold price dip for the past couple of years – and still gold has trended lower. As we have pointed out before, the lower the price falls, though, perhaps also the lower the downside investment risk in percentage terms. Gold has been fairly steady in its current range in US dollar terms of late and while some analysts – notably from the bullion banks – are calling for further falls still, triggered by US Fed interest rate raising forecasts.

We are of the opinion that, even so, any further downside is definitely limited given the likely minimalist rate raising that may be contemplated by the Fed if and when it actually takes place. While holding gold may not generate any interest, rates are still likely to remain in negative territory in real terms after any initial raise – a factor which just doesn’t seem to be being taken into account by the investment sector.

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COLUMN-For Rio Tinto, it doesn’t matter being right on iron ore – by Clyde Russell (Reuters U.S. – September 16, 2015)

http://www.reuters.com/

(Reuters) – There’s been considerable debate over who is right on the outlook for China’s vast steel sector – the bullish iron ore miners or the bearish analysts and steel producers.

Rio Tinto, the Anglo-Australian miner that’s likely to claim top spot among iron ore producers, has resolutely stuck to its view that China’s steel output will top out at 1 billion tonnes per annum, around 2030.

There’s been no shortage of people lining up to challenge that position, and even number three miner BHP Billiton has rowed back slightly from the 1 billion tonne forecast, to expecting peak output around 935 to 985 million tonnes in the mid-2020s.

The Chinese steel sector thinks peak steel was already achieved with last year’s total of around 823 million tonnes, and is forecasting that output will slip slightly in coming years.

There are more bearish forecasts about, with one research house saying in a recent report that steel output will retreat to 650 million tonnes by 2017 as property demand falls back to levels before the stimulus prompted by the 2008 global recession.

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Fortescue Metals inks deal with Australian Aboriginal Mining – by Anne Lu (International Business Times – September 16 2015)

http://www.ibtimes.com.au/

Fortescue Metals Group Limited inked an Iron Ore Sale and Purchase Agreement with Australian Aboriginal Mining Corporation Pty Ltd on Monday, the companyannounced in a statement.

The five-year deal will allow the indigenous-owned AAMC to transport up to two million tonnes of iron ore yearly from its Pilbara mining operation through Fortescue’s world-class port or rail facilities. Fortescue can then purchase the iron ore or sell it on behalf of AAMC.

The agreement will help create Australia’s first Aboriginal owned and operated iron ore mine.

“Today’s agreement underlines very clearly Fortescue’s commitment to provide meaningful opportunities for Aboriginal business development. The company is focused on building up Aboriginal communities through full economic participation rather than passive welfare,” said Fortescue CEONev Power.

Indeed, the company’s Billion Opportunities program has awarded more than AU$1.8 billion in contract value to Aboriginal businesses and joint ventures. Fortescue’s workforce is 13 percent Aboriginal.

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Rio Tinto CEO Sam Walsh still a China bull – by John Kehoe (Australian Financial Review – September 12, 2015)

http://www.afr.com/business/

The chief executive of global mining giant Rio Tinto, Sam Walsh, has expressed strong confidence in the Chinese government pulling “levers” to keep the economy on track, as he revealed that Rio’s internal economic measures for the nation were broadly in line with Beijing’s official estimates.

Mr Walsh admitted the world economy had become far more “volatile” and that potential “shocks” are in store for commodity markets, but was overall upbeat on China in the face of growing unease about its prospects.

Speaking in Washington on Friday, Mr Walsh pointed to reassurance from Chinese Premier Li Keqiang at the World Economic Forum on Thursday that China would avoid a hard landing and that Beijing will meet its 7 per cent growth target this year.

“Rio Tinto endorses that. We believe it will be around that,” Mr Walsh said, after delivering a speech at the US Chamber of Commerce.

“I am positive about China and I am positive about the Chinese leaders and what they can do in relation to pulling the levers they need to pull to keep the economy motoring,” he added.

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Western Australian resources worth nearly $100 billion – by Cole Latimer (Australian Mining – September 11, 2015)

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

New figures from the WA Department of Mines and Petroleum have highlighted the value of the state’s resources industry.

In statistics released today, the WA DMP said the industry was valued at $99.5 billion in 2014-15. Iron ore was the highest rated commodity, worth $54 billion in sales to Western Australia. This was despite falling Chinese demand for the metal.

“Western Australia produced 719 million tonnes of iron ore in 2014-15, a 15 per cent increase compared to the previous year, however the low iron ore price resulted in a decrease in the total value of sales,” WA DMP general manager for policy and co-ordination Richard Borozdin said.

Gold brought $9 billion worth of sales into the state, an increase of 1.5 per cent year on year.

Alumina was the third most value commodity to WA, reaching more than $5 billion in value, a 20 per cent jump compared to the previous corresponding period, which was buoyed by the weak Australian dollar.

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Robots Will Help Iron-Ore Miners Survive Price Rout – by Luzi-Ann Javier (Bloomberg News – September 10, 2015)

http://www.bloomberg.com/

When the rout in prices ends for the world’s iron-ore producers, those left standing probably will have more robots on their side.

Automated drills and driver-less trucks are among the new tools employed by the four biggest companies, including BHP Billiton Ltd., in a bid to preserve profit margins during a bear market that began more than two years ago. Using more technology helped reduce costs at Rio Tinto Plc by 8 percent since 2013, even as it boosted output by 5 percent, according to Paul Young, an analyst at Deutsche Bank AG in Sydney.

Improvements by top producers is defying a productivity collapse for the rest of the mining industry, which consultant McKinsey & Co. says declined as much as 28 percent in the past decade, forcing smaller operators to shut.

With demand for iron-ore slowing in China, the world’s biggest user, prices are probably headed lower as major suppliers expand output by tapping low-cost reserves, mostly in Australia, according to Citigroup Inc. The top four companies will see their share of the global market jump to 79 percent in 2018 from 64 percent in 2010, the bank said.

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Atlas MD David Flanagan optimistic about outlook for iron ore – by Jasmine Ng (Australian Financial Review – September 10, 2015)

http://www.afr.com/

Iron ore’s prospects for the rest of the year aren’t that poor as supplies from less efficient mines dwindle, according to Atlas Iron.

Chinese buyers are also replenishing inventories, boosting demand, said David Flanagan, managing director of the Perth-based company. Global supplies from high-cost mines will continue to shrink, he said in an interview on Wednesday. Atlas operates mines in Australia’s ore-rich Pilbara region.

The commodity’s been on a roller-coaster in 2015, sinking to a six-year low in April on rising low-cost output and weaker growth in China, the biggest buyer, before rebounding into a bull market the same month.

Ore then fell to a new low at the start of July as some banks forecast that prices would tumble below $US40, before rallying into another bull market and reaching a two-month high on Wednesday.

“There’s more opportunity for an uptick in iron ore prices than there is for a downward tick,” Flanagan said by phone. “There’s opportunity for more mines to close and there’s also opportunity for a buying rally leading into December.”

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Mick Davis’ timing haunts Glencore’s Glasenberg – by Robert Gottliebsen (The Australian – September 9, 2015)

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

Former Xstrata founder Mick Davis may have a wry smile at the sight of Glencore being forced to raise $US2.5 billion in new equity to reduce its debt.

Davis has a remarkable record for being part of groups that buy assets cheaply and sell them at high points in the market.

Glencore is in trouble partly because in 2013 it paid some $US40bn for the two thirds of Xstrata it didn’t own. Mick Davis had sold at the top of the market. It is true Xstrata shareholders received Glencore shares but they had time to sell them before the market declined sharply.

That sale was Davis’s second coup. Back in 1997 he became chief financial officer and an executive director of Billiton, which sold out to BHP four years later in 2001. BHP never made a success of most of those Billiton assets and a large number were floated off in South32 earlier this year.

After BHP took control of Billiton, Davis made his exit and established Xstrata in the belief that around Australia there were a large number of mining assets that were underpriced because there was a looming boom coming on the back of a big rise in demand for minerals from China.

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Australia’s proposed India uranium deal given cautious green light despite ‘risks’ – by Shalailah Medhora (The Guardian – September 8, 2015)

http://www.theguardian.com/

To counteract potential risks of the deal, Australia’s treaties committee recommends nuclear-armed India agree to a number of safeguards

The government-dominated treaties committee has given a cautious green light to a proposed uranium deal with India, but only if the nuclear-armed nation agrees to a number of safeguards.

India is not a signatory of the nuclear non-proliferation treaty (NPT) nor the comprehensive test ban treaty (CTBT), yet the emerging world leader is in dire need of energy.

As such, the committee report notes that: “It would be fair to say that, in this debate, there are no small risks or benefits. Every issue the committee has dealt with in this inquiry bears significant potential benefits and risks.

“The question for the committee is, then, given the benefits for Australia and India from the proposed agreement, can the risks be tolerated and ameliorated,” the report asked.

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Mining automation: The be all and end all? – by Cole Latimer (Australian Mining – September 8, 2015)

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

The fully automated mine has long since passed the days of concept and evolved into a reality.  If the industry is to survive and grow, on this planet and elsewhere, total automation of many of the processes is the way forward.

According to professor of mining engineering at the University of British Columbia, John Meech, autonomous vehicle operations can help increase productivity by between 15 to 20 per cent, and truck uptimes by up to a fifth, with Rio Tinto automated fleets recording a 12 per cent production increase compared to manned vehicles.

Rio Tinto, BHP, Roy Hill, and Fortescue are making massive strides forward in implementing autonomous haulage systems in the Pilbara, forging a new place for the technology, combining them with manned operations; particularly in terms of Rio’s Mine of the Future program and BHP’s automated operations centre, both located in Perth.

Hitachi is also trialling its autonomous vehicle systems at the Meandu coal mine in Queensland.

Total automation has also taken another angle with Vale, in Brazil, looking to go completely truckless by using mobile conveyor belts.

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Canada and Australia feel the squeeze in wake of Chinese economic slowdown – by Heather Stewart, Calla Wahlquist and Jared Lindzon (The Guardian – September 5, 2015)

http://www.theguardian.com/

Iron and oil producers proved resilient during the crash of 2008-09 but are now struggling as commodities prices decline

In the mining town of Port Hedland, 1,500km north of Perth, modest prefabricated homes called fibro shacks, which were changing hands for more than A$1m four years ago, are now failing to find a buyer at a third of the price. Apartment blocks hurriedly tacked together by developers at the peak of the country’s boom stand empty, because their promised supply of “fly-in-fly-out” mineworkers has dried up, along with the jobs they were brought in to do.

In 2011, the iron ore-rich Pilbara region of north-west Australia was on the frontier of a 21st century gold rush, this time with iron ore as the main prize – driven by China’s formidable appetite for natural resources to build up its infrastructure and modernise its economy.

Pilbara boasted salaries two-thirds higher than the national average and almost 80% of workers were flown into their jobs from Australia’s big cities. Now, mortgaged to the hilt on homes that lost value almost before the paint had dried, the mineworkers that remain are accepting longer hours and lower wages in an effort to keep up with the repayments.

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Rio Tinto shows Glencore’s Ivan Glasenberg who knows China best – by James Thomson (Australian Financial Review – September 4, 2015)

http://www.afr.com/

Finally, a little relief for Glencore chief Ivan Glasenberg, who watched the miner’s stock climb 6.6 per cent on Thursday night after two horror days of trading that saw it fall 6.7 per cent and then 8.4 per cent.

Glencore stock has hit record low after record low since Glasenberg delivered the company’s results on August 19. Obviously this has been a period of extreme volatility for global markets, and a global commodities trader with a debt pile of $42.7 billion won’t win any awards for defensive stock of the month. But a 26 per cent fall in 12 days isn’t pretty.

Thursday night’s jump came despite Standard & Poor’s revising its outlook on Glencore to “negative” from “stable” after lowering its price assumptions for aluminium, copper, and other metals, “reflecting a change in market conditions and uncertainties about China’s economic outlook.”

But it did take a little financial show of strength to get the shares moving in the right direction again. On Wednesday Glencore said it would pay back $US350 million ($500 million) of perpetual bonds next month, at the earliest possible date. It was a clever way of showing the company has cash to pay debt as it battles the commodity price slump.

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Rio Tinto Expects Solid Demand for Iron Ore – by Rhiannon Hoyle (Wall Street Journal – September 3, 2015)

http://www.wsj.com/

Mining company stays confident in China’s steel market, despite country’s slowdown

SYDNEY— Rio Tinto PLC told investors it expects world-wide demand for iron ore to keep growing despite China’s economic slowdown, as the company projected a rising appetite for steel in coming years.

On Thursday, Rio Tinto forecast 2.5% average annual growth in global steel demand for the next 15 years. Emerging markets are expected to take on an expanded role, with the mining company predicting that non-Chinese steel demand will rise 65% by 2030.

While Chinese steel output has waned recently, Rio Tinto said it remained confident in the country’s steel market. It stuck with an earlier projection that Chinese crude steel production will reach about one billion metric tons by the end of next decade. China produces roughly half the world’s steel, and its annual production is currently at roughly 800 million tons.

A global glut of steel and concerns over China’s economic prospects, have hurt prices for iron ore, the biggest ingredient in steelmaking.

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COLUMN – Seaborne coal market may shrink, total demand won’t – by Clyde Russell (Reuters India – September 3, 2015)

http://in.reuters.com/

LAUNCESTON, AUSTRALIA – It’s tempting to mould events to suit your view of how the world should be, and there seems to be plenty of that in the coal debate.

There is certainly enough evidence to suggest seaborne coal volumes are trending lower, but it’s probably a mistake to use the sector as a proxy for the total market.

Environmentalists are keen to see coal as a sunset fuel that should be phased out as soon as possible given its role as a major contributor to climate change.

They have been heartened by recent news of the closure of a small coal mine in Australia and the decision by the city council of Australia’s Newcastle, home to the world’s biggest coal export harbour, to divest from the fuel.

Falling imports by China and India, the two largest buyers of the dirty fuel, have also been cited as further evidence that coal is on the way out.

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Australian economy slows amid China ripples – by Jamie Smyth (Financial Times – September 2, 2015)

http://www.ft.com/

Sydney – Australia’s economy decelerated sharply as the slowdown in China, its biggest trading partner, dented exports and mining construction.

Economic output grew by a less than expected 0.2 per cent in the three months to the end of June. This follows even worse readings from fellow resource economies Canada and Brazil, which this week slipped into recession amid a slump in commodity prices.

Australia’s gross domestic product growth, published on Wednesday, was below consensus estimates of 0.4 per cent and sharply lower than the frst quarter’s 0.9 per cent.

“The major inhibitor to growth is the ongoing fall in mining investment,” said Michael Workman, economist at Commonwealth Bank of Australia. “Other growth detractors are falling mineral and energy commodity prices, thanks to a combination of oversupply by producers and weaker demand from the world’s major buyer, China.”

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