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Uncertainty over Brazil Samarco mine hinders restructuring, firm at risk – by Guillermo Parra-Bernal and Stephen Eisenhammer (Reuters U.S. – September 8, 2016)

http://www.reuters.com/

SAO PAOLO/RIO DE JANEIRO – Almost a year after a deadly dam spill at the Samarco mine, owned by BHP Billiton and Vale, there is still no date for restarting operations, complicating attempts to restructure Samarco’s debt and increasing the possibility the miner may be allowed to run out of money.

Vale and BHP have assured authorities they will cover the cost of Brazil’s worst ever environmental disaster, sources familiar with their thinking say, stopping short of saying they will keep Samarco, for whom the closed mine is the only real revenue stream, afloat.

Samarco’s debt is trading at distressed levels. The price on Samarco’s 4.125 percent dollar-denominated bond due in November 2022, for example, has fallen to 37.50 cents on the dollar to yield 24.17 percent.

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Rio versus BHP boils down to investors’ choice of commodity (Daily Times – September 8, 2016)

http://dailytimes.com.pk/

LONDON: The backgrounds of the leaders of the world’s top mining companies illustrate the choice facing investors, with BHP Billiton’s chief executive having worked in the oil industry and Rio Tinto’s new boss more focused on copper.

After aggressive cost-cutting and asset sales to drive down debt, the two mining giants are positioning themselves to capture growth as commodity markets begin to recover from a crash that dented company balance sheets.

French-born Jean-Sebastien Jacques has led Rio only since July, while his counterpart at BHP, Scotsman Andrew Mackenzie, has been in place for the turbulent past three years.

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Samarco dam failed due to poor drainage and design: investigation – by Marta Nogueira and Stephen Eisenhammer (Reuters U.S. – August 30, 2016)

http://www.reuters.com/

BELO HORIZONTE/RIO DE JANEIRO – The deadly collapse of a tailings dam last November at the Samarco mine, owned by Vale SA and BHP Billiton, was caused by drainage and design flaws, a report into Brazil’s worst-ever environmental disaster showed on Monday.

The 76-page report commissioned by the companies responsible for the spill, which killed 19 people, attributed the dam burst to a chain of events dating back to 2009, but did not assign blame or highlight specific errors in corporate or regulatory practice.

Norbert Morgenstern, a geotechnical engineering professor who headed the investigation, repeatedly told reporters he could not answer their questions when quizzed on whether there was negligence or malpractice on the part of the companies involved.

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Cracks seen before dam collapse at BHP, Vale joint venture: report – by Elizabeth Redman and Matt Chambers (The Australian – August 30, 2016)

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

Mining giant BHP Billiton says it was not aware that the tailings dam at its Samarco joint venture in Brazil was at risk of collapsing, despite a series of efforts over years to fix its structural defects.

The assertion follows the release of a report into the technical causes of the deadly dam collapse at the Samarco mine in November, 2015, which caused a massive spill of waste material, polluted a major river and killed at least 19 people.

According to a new report by geotechnical specialists, the dam’s collapse was a result of construction defects, a poor redesign and safety criteria not being met, with the failure accelerated by three small earthquakes. Cracks were evident at the tailings dam more than a year before it failed. The investigation was commissioned by BHP Billiton and Vale, along with their Samarco joint venture.

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BHP Billiton v Rio Tinto still a clash of the titans – by Peter Ker (Australain Financial Review – August 19, 2016)

http://www.afr.com/

Veteran mining analyst Glyn Lawcock has a soothing message for investors fretting over whether they should put their money into BHP Billiton or Rio Tinto.

“If you track it back long enough, the two of them are almost like porpoises; they go up together and they go down together. One might go down longer than the other occasionally, but sooner or later they come back together,” said the UBS expert this week.

While the dual-listed miners’ long-term trading trends are amazingly similar, picking the temporary diversions between BHP and Rio shares can be a lucrative sport. Take the past year; Rio’s Australian shares have declined by 2.5 per cent, while BHP’s have lost 17 per cent.

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BHP’s Saskatchewan potash project may be mothballed after $2.6-billion spent – by Jesse Riseborough (Bloomberg/Globe and Mail – August 17, 2016)

http://www.theglobeandmail.com/

BHP Billiton Ltd., the world’s biggest mining company, may end up “mothballing” its Canadian potash project by the end of this decade after completing two shafts at a cost of about $2.6-billion.

The shafts at the giant potash deposit in Saskatchewan are now at a depth of about 600 metres, with a further 300 to 400 metres to go, chief executive officer Andrew Mackenzie told analysts and investors in London on Tuesday. Upon their completion in 2018 or 2019, the board will decide whether to build the mine, he said.

“It’s certainly perfectly possible, if at that time the market is not going to be ready for potash, say, in three years subsequently, that we could mothball the shafts once we’ve completed them,” Mackenzie said.

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BHP may mothball $2.6 billion Jansen potash project if prices remain weak – by Cecilia Jamasmie (Mining.com – August 16, 2016)

http://www.mining.com/

World’s largest miner BHP Billiton (ASX, NYSE:BHP) (LON:BLT), the company behind the massive $2.6 billion (CAD $3.4 billion) Jansen potash project in Canada’s Saskatchewan province, may place it in the back burner if prices for the fertilizer ingredient don’t pick up by the end of the decade.

The company, which posted Tuesday its worst-ever annual loss, had already cut $130 million from the planned $330 million capital expenditure to develop and study the feasibility of the Jansen project in the current financial year.

And while BHP continues looking for a partner to finally take the venture off the ground, it now admits that the ongoing slump in potash prices may make it mothball the project.

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Rio Tinto, BHP Billiton warn staff Brendon Grylls’ mining tax will cost jobs – by Julie-anne Sprague (Australian Financial Review – August 12, 2016)

http://www.afr.com/

The world’s two biggest miners, Rio Tinto and BHP Billiton, have written to their staff, warning jobs and investment are at risk if a radical proposal to impose a $7.2 billion tax upon them succeeds.

As part of a plan to wrest back the leadership of Nationals WA, Pilbara MP Brendon Grylls proposed raising $7.2 billion over four years by lifting the production levy struck in state agreements in the 1960s from 25 cents per tonne to $5 a tonne. It would only apply to BHP and Rio and would be on top of the billions of dollars in royalties the miners already pay.

The Liberals govern in an alliance with the Nationals, which have three cabinet seats. In a letter to staff, Rio Tinto iron ore chief executive Chris Salisbury said there was no grounds for a new mining tax and “put jobs at risk”.

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$3 Billion Tax Attack On Mining Giants BHP Billiton And Rio Tinto – by Tim Treadgold (Forbes Magazine – August 9, 2016)

http://www.forbes.com/

The world’s two biggest mining companies, BHP Billiton and Rio Tinto , could face a $3 billion hit to their annual profits after a bizarre political upheaval in Western Australia (WA), home to their most profitable business units.

Brendon Grylls, a political maverick and emerging king-maker in WA, has proposed a special $5 per ton tax on the 600 million tons of iron ore produced annually by the two companies.

The possibility of a new tax is ringing alarm bells across Australian business and politics because it bears the hallmarks of a previous attempt to impose a special tax on profits earned by iron ore and coal miners.

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Cleanup at Tragic Brazil Mine Fails to Speed Return of Iron Ore – by R.T. Watson (Bloomberg News – July 27, 2016)

http://www.bloomberg.com/

Just four months after a deadly November mudslide destroyed an entire mining community in southwestern Brazil, the companies responsible were working toward a resumption of iron ore production by year end.

As recently as March, hundreds of people left homeless by the disaster were sleeping in new beds. Children who had lost their school were hitting the books at renovated buildings. Thousands of animals and fish had been saved or relocated away from areas polluted by billions of gallons of sludge.

All paid for by the mine and its owners, BHP Billiton Ltd. and Vale SA, which had agreed on a 12 billion reais ($3.66 billion) plan with the government to clean up after a dam holding mine waste burst in November. But the Samarco Mineracao SA joint venture remains idle nine months after the mudslide — unable to extract ore with no authorized place to put unwanted dirt and no startup date on the horizon.

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Chinese miners call for anti-dumping probe into iron ore imports – by Ruby Lian and David Stanway (Reuters U.S. – Juy 26, 2016)

http://www.reuters.com/

SHANGHAI – Chinese iron ore miners have called for an anti-dumping investigation into imports of the steelmaking raw material from top suppliers Australia and Brazil.

More than 20 Chinese miners in a statement on the Metallurgical Miners’ Association of China website said “a huge volume of low-priced imported iron ore has had a severe impact on the domestic mining industry and even posed a big challenge for the security of steel production”.

“The capacity of major iron ore miners has continued to grow and requires a massive Chinese market to absorb their great excess,” the statement posted on Tuesday said. Australia’s BHP Billiton and Rio Tinto, along with Brazil’s Vale, have embarked on massive expansion programs in recent years to supply the Chinese market.

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BHP Billiton gold output hits 14-year high as price surges – by Peter Ker (Sydney Morning Herald – July 25, 2016)

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

Declining production was the norm across BHP Billiton’s most important divisions during fiscal 2016, but that didn’t stop booming production in some of the company’s lower profile product groups.

The miner’s production of gold, for example, soared 21 per cent higher than the previous year to 226,682 ounces, with about 20 per cent of that owned by joint venture partners.

That was BHP’s biggest haul of the lustrous metal since it produced 286,971 ounces in the 2002 financial year. BHP does not own any gold mines per se, but produces gold as a byproduct at two mines better known for their copper; Escondida in Chile and Olympic Dam in South Australia.

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BHP, Anglo see only slight setbacks for iron ore production – by James Regan and Barbar Lewis (Reuters U.S. – July 20, 2016)

http://www.reuters.com/

SYDNEY/LONDON – BHP Billiton and Anglo American have reported setbacks in their iron ore production, but analysts said the contraction was nowhere near enough to dent the massive global supply glut that has driven prices to record lows.

Overnight on Tuesday, BHP Billiton narrowly missed its iron ore output target in the financial year just ended following the Samarco disaster in Brazil, while Anglo American on Wednesday reduced its full-year production forecast in Brazil.

Anglo American’s shares were down 7.1 percent at 755.6 pence by 1149 GMT, when BHP’s shares in London were down 2.6 percent at 924.1 pence, in line with the FTSE-350 mining sector index.

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Iron ore volatility masks positive shift in fundamentals – by Clyde Russell (Reuters U.S. – July 18, 2016)

http://www.reuters.com/

LAUNCESTON, AUSTRALIA – Iron ore’s wild price gyrations this year may be masking a small, but significant, shift in the underlying fundamentals for the steel-making ingredient.

While seaborne iron ore remains a well-supplied market, it appears the level of over-supply has been diminishing faster than many expected, leading to an improvement in the supply-demand balance.

This provides some fundamental justification for the rally in spot prices, with the China benchmark index up almost 35 percent so far this year. Let’s be clear, there is no reason to believe that iron ore is poised for a major, sustained rally. But there is reason to be hopeful that prices are more likely to pivot around the $50 a tonne mark, rather than revisit the December 2015 lows of $37 a tonne.

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BHP Billiton, Rio Tinto and Fortescue are in no rush to change iron ore balance – by James Thomson (Australian Financial Review – July 17, 2016)

http://www.afr.com/

It’s highly likely that Fortescue Metals Group will be the only one of the Big Three iron ore players to beat its production target this week when BHP Billiton, Rio Tinto and the Third Force present their numbers for the June quarter.

We already know that FMG has eclipsed its annual 2015-16 target of 165 million tonnes, with shipments hitting 169.4 million tonnes during the period. We also have a fair idea, from data from the Port Hedland port authority, that BHP missed its shipping target of 260 million tonnes for 2015-16, and is likely to report around 258 million tonnes.

Rio Tinto expects to ship 350 million tonnes out of the Pilbara and its Canadian operation in the 2016 calendar year. It’s on track to meet the target, but Macquarie says it will still need to strong finish to the year.

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