Australia/New Caledonia/Papua New Guinea Mining – Page 99

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)

September 8, 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.

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

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.

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

September 4, 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.

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

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.

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

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.”

Risk-adverse investment dollar shy of African mining – by Tess Ingram (Sydney Morning Herald – September 2, 2015)

September 2, 2015

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

African countries are at risk of being some of the worst hit by the mining downturn as the shrinking pool of increasingly risk-adverse capital is invested elsewhere, industry experts warn.

Plummeting commodity prices coupled with rapid political and economic changes in many African countries have made it increasingly challenging for many African jurisdictions to attract miners, explorers and the prospective financiers that help drive their economies.

At the Africa Down Under mining conference in Perth on Tuesday, industry experts urged African delegates and government ministers to better partner with mining companies during the downturn and offer innovative solutions to help operators generate profits and attract investment.

Gilbert + Tobin lawyer Michael Blakiston told the conference African countries risked deterring investment as investors “who do have capital, have choices of where to take it”.

Canada Illustrates Plight of Rich but Resource-Dependent Countries – by Kim MacKrael, Rhiannon Hoyle and Kjetil Malkenes Hovland (Wall Street Journal – September 1, 2015)

September 2, 2015

http://www.wsj.com/

Tepid economy, like those of Australia, New Zealand and Norway, shows perils of commodity swing

Ottawa, Sydney and Oslo – For a small group of the world’s most resource-dependent rich countries, the stalling economy of one of its members,Canada, is a stark reminder of how China’s slowing growth stands to shape the coming years.

The energy- and mineral-rich country’s economy contracted for a second consecutive quarter between April and June, as low prices for base metals and crude oil erode business investment and exports. Gross domestic product fell 0.5% on an annualized basis in the second quarter, Statistics Canada said Tuesday, and the first-quarter decline in GDP was revised to a 0.8% drop from an earlier estimate of a 0.6% contraction.

Output expanded in June, making the quarterly decline less sharp than many economists forecast, and the Bank of Canada has said it expects statistics to improve during the second half of 2015. But it has already lowered its growth forecast for the year to 1.1%, down from a previous forecast of 1.9%.

As the economies of the U.S. and many other wealthy countries begin to pick up speed, Canada’s woes so far this year are a harbinger of what could come for a small clutch of advanced economies that rely heavily on commodity exports—and demand from China—for their economic growth.

Clive Palmer launches $10 billion lawsuit against estranged Chinese partner – by Amy Remeikis and Peter Ker (Sydney Morning Post – August 31, 2015)

September 2, 2015

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

The legal war between Fairfax MP Clive Palmer and his estranged business partner Citic Limited has gone to another level, with Mr Palmer’s company Mineralogy seeking $10 billion in damages from the Chinese giant.

In the latest of many lawsuits between the two companies over the past three years, Mineralogy is suing Citic over what it claims to be a lack of royalty payments from Citic’s Sino Iron magnetite project in WA, which was built on Mr Palmer’s leases.

The two companies have previously argued over the royalty issue, which has been complicated by the agreement signed between the two companies in May 2006 which relies on the annual benchmark iron ore prices struck by BHP Billiton and Brazilian miner Vale to calculate one of the royalties owing to Mineralogy, known as “Royalty B”.

With iron ore now traded on daily market terms rather than on annual contracts, there is no way to calculate Royalty B. The two companies have since fought over numerous things, including access to the port used by the loss-making Sino Iron project and the shifting of millions of dollars out of certain accounts, but they now appear set to return to the original issue of royalties.

India Invites Australia Firms to Partner in Developing Mining Sector (The New Indian Express – September 1, 2015)

September 1, 2015

http://www.newindianexpress.com/

NEW DELHI: Steel and Mines Minister Narendra Singh Tomar today invited Australian companies to partner with their Indian counterparts to develop the domestic mining and exploration sector.

Tomar in his inaugural address at the Asia Pacific International Mining Exhibition (AIMEX) 2015 in Sydney today said that India and Australia can forge mutually beneficial relationships, an official statement said.

The Minister is leading a delegation, comprising heads of mining organisations and ministry officials to AIMEX 2015 — the world’s largest mining exhibition, it added.

“The total trade between India and Australia in 2013-14 was to the tune of 15 billion Australian dollars. We are hopeful that by forging mutually beneficial alliances, India will go on to feature in the top ten trade partners of Australia,” the statement quoted the Minister as saying.

India Day event was organised at the four-day exhibition with the objective of inviting proactive partnership of miners and explorers from across the world in the Indian mining industry, the statement said.

When a slump hits a vast iron ore mine in Australia – by Ali Moore (BBC News – August 31, 2015)

September 1, 2015

http://www.bbc.com/

Cloudbreak mine, Western Australia – Australia’s iron ore industry has hit a slump after decades of boom fuelled by rampant demand from China. This is threatening the livelihoods of thousands of miners and entire communities dependent on these vast opencast mines.

At Perth Airport, just after 05:00 local time, the boarding gate is a sea of fluorescent yellow and blue. This is a regular shuttle service to Fortescue Metals’ Cloudbreak mine – the passengers are fly-in-fly-out workers and they come dressed for the job.

In just under two hours they’ll land at one of the giant iron ore mines in the Pilbara, where the red dirt hides untold riches. But times have changed. The price of ore has plummeted, down around 70% from its 2013 peak.

Every mine worker boarding Flight 1970 knows what that means: cost cuts. They’ve seen hundreds of millions of dollars worth of cuts across the industry already and more are likely to come.

China’s economic slowdown means the country doesn’t need as much iron ore. It’s the key ingredient for steel, and if you’re not building as many apartments and bridges and roads as before, you don’t need as much of it.

WA chills as BHP Billiton, Rio Tinto and Fortescue cut $20b spending – by Julie-anne Sprague (Australian Financial Review – August 30, 2015)

August 31, 2015

http://www.afr.com/

A dramatic $20 billion cut in operational spending by the nation’s three biggest iron ore miners is chilling a West Australian economy already under stress from falling investment in resources-related construction.

Analysis by The Australian Financial Review reveals that since 2012, BHP Billiton, Rio Tinto and Fortescue Metals Group have cut the amount they spend on extracting resources by $US14.3 billion ($19.9 billion).

While this figure includes BHP and Rio’s global operations, the majority of the cuts have been generated from their West Australian iron ore operations.

This excludes massive cuts to capital expenditure. With laser like precision the miners are tightening the cost screws beyond cutting staff and salaries.

They’re cutting meals served on flights to remote mine sites, pulling biscuits from the tea rooms and reducing the number of uniforms issued to staff.

Australian gold output on the rise – by Lawrie Williams (Mineweb.com – August 31, 2015)

August 31, 2015

http://www.mineweb.com/

Surbiton Associates in its latest survey of the Australian gold sector notes rising production during the June quarter.

LONDON – The world’s second largest gold mining nation, Australia, saw gold output rise in the June quarter according to a survey by Melbourne-based consultancy, Surbiton Associates.
Gold production for the period totalled some 72 tonnes (2.31 million ounces), an increase of almost three tonnes or four per cent over the March 2015 quarter. With most Australian miners having June year-ends, Surbiton puts the fiscal year total (to end-June) at 285 tonnes.

In Mineweb’s analysis of global gold output in calendar 2014, derived from figures from London-based consultancy Metals Focus, China was the world’s leading producer that year with annual output of 462 tonnes with Australia second, just ahead of Russia, with a little over 272 tonnes.

So the latest Surbiton figures suggest Australian gold output could well be heading strongly higher in calendar 2015. (See: Gold’s top 20 – mines, miners and countries). China is also believed to be producing more gold this year than last.

Sun-Drenched Miners Look to the Skies to Cut Fuel Costs in Half – by David Stringer and Paul Allen (Bloomberg News – August 26, 2015)

August 27, 2015

http://www.bloomberg.com/

The DeGrussa copper and gold mine in Australia’s sun-scorched outback is getting a solar farm, the latest example of the industry embracing clean energy.

The plant will replace about 5 million liters (1.3 million gallons) of diesel a year, a fifth of the mine’s energy needs. Energy generated by the system may eventually cost about half that of diesel-generated power, according to Sandfire Resources NL, the deposit’s owner.

Miners including Rio Tinto Group are installing new solar plants from Chile to South Africa, betting they’ll deliver long-term savings even as tumbling oil prices cut power costs. The global solar-power market for mining companies may grow to about $2 billion a year by 2022 from about $42 million in 2013, according to Navigant Consulting Inc.

“Solar-power providers are specifically targeting mines right now and it’s about replacing diesel,” Dexter Gauntlett, a senior research analyst at Navigant said by phone from Portland, Oregon. With lower costs, “it becomes a no-brainer,” he said.

Iron and Steel: BHP’s big admission – by Kip Keen (Mineweb.com – August 26, 2015)

August 26, 2015

http://www.mineweb.com/

Steel demand in China is expected to be what BHP once thought.

HALIFAX – Just a couple of weeks ago I argued BHP and Rio should defend – in detail – their bullish steel demand forecasts in China given the growing number of forecasters that say the peak has already past.

Recall that Rio Tinto and BHP have long stuck to forecasts putting peak steel demand in China at, or over, a billion tonnes a decade or so from now. Others see it behind us already.

Well, I haven’t seen that defense, yet. We got a major revision of steel demand announced to the market instead.

In outlining its year-end financials August 25, BHP slashed its forecast of Chinese demand a decade or so from now by some 100 million tonnes steel.

A half year ago BHP argued peak demand would come in the mid-2020s somewhere around 1 billion to 1.1 billion tonnes.

NEWS RELEASE: Behre Dolbear Group’s Annual Where To Invest in Mining in 2015 (August 6, 2015)

August 26, 2015

http://www.dolbear.com/

TODAY it takes 10 years to discover, define, and determine the feasibility of a project and an additional 6 years or more until investors can expect returns from a greenfield mining construction project.

Markets have taken a volatile downward trend in recent months creating concern for host country governments and miners alike. Mineral prices have dropped over the last year. For example, iron ore and coal prices have fallen by half. The market correction has led to a sharp decline in foreign direct investment, forcing the governments of countries hosting new production to reassess their recent goals of extracting more benefit from the industry.

There is now a realization that governments must be more accommodating to remain competitive internationally. Lower export-related tax receipts are putting pressure on governments to adapt more austere budgetary measures.

Today, it takes six years or more until investors can expect returns from a greenfield mining construction project. It typically takes ten years to discover, define, and determine the feasibility of a project.