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Vale Port Halt Spurs Iron Rally Amid Trade Disruption Fears – by Yasmine Batista and Jasmine Ng (Bloomberg News – January 22, 2016)

http://www.bloomberg.com/

The global iron ore trade may be disrupted after Vale SA, the largest producer, was ordered by a Brazilian court to temporarily close one of its main ports following alleged environmental breaches. Prices of the raw material gained along with miners’ shares.

The court in Brazil’s Espirito Santo state ordered a halt to export and import activities through Tubarao after elevated levels of iron ore and coal dust were detected.

Vale received the news from federal police “with surprise” and will use “all appropriate legal measures to ensure the re-establishment of its activities,” its said in a statement Thursday.

Iron ore has plunged over the past three years as the world’s top producers including Vale and rivals BHP Billiton Ltd. and Rio Tinto Group in Australia boosted low-cost supply, spurring a glut just as China’s growth cooled.

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BHP Billiton’s Samarco nears $7b deal on Brazil dam disaster – by John Kehoe (Australian Financial Review – January 23, 2016)

http://www.afr.com/

BHP Billiton’s stricken Samarco iron ore joint venture is nearing a $7 billion settlement with the Brazilian government for environmental and community damages caused by a deadly dam disaster last year, the country’s attorney general said.

Talks had “advanced significantly” and a deal could be reached by early February, Attorney General Luis Inacio Adams told reporters after representatives from Samarco and the government met on Thursday, Reuters reported.

Under the preliminary plan still under negotiation, Samarco would be given up to 10 years to pay the 20 billion reais fine and need to address 38 requirements.

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Iron Ore Mining Giants Cool Supply Growth as Next Wave Builds – by David Stringer and Jasmine Ng (Bloomberg News – January 19, 2016) http://www.bloomberg.com/

http://www.bloomberg.com/

The surge in output from Australia’s two biggest iron ore producers is slowing as they complete $24 billion in expansions wagered on increasing demand from China’s mills. As steel output declines in China, the next wave of supply from miners who’ve made the same bet is likely to keep prices under pressure.

While Rio Tinto Group and BHP Billiton Ltd., the world’s No. 2 and No. 3 exporters, predict supply growth will slow this year, iron ore’s collapse may not reach its nadir until 2017 as material continues to be added from new operations in Brazil and Australia, according to CRU Group.

The consultancy estimates average benchmark iron ore will remain broadly flat over the next two years at around $40 a metric ton. The steelmaking ingredient trades at less than a quarter of its 2011 peak, and last month touched a new low of $38.30 in daily prices dating to 2009.

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Mining giant BHP pessimistic on iron ore, coal prices in next few years – by Sonali Paul (Reuters U.S. – January 20, 2016)

http://www.reuters.com/

MELBOURNE – BHP Billiton flagged on Wednesday that it sees no recovery in iron ore or coal prices in the next few years, while holding out hope for a rebound in copper and oil as it fights slumping earnings set to hit its long-protected dividend.

The top global miner reinforced the bleak outlook for most commodities in the near term, with markets slammed by oversupply as the economy slows in China, the world’s biggest metals consumer.

In a sign the company may cut its dividend, ending a long-held policy to maintain or raise its payout every year, BHP Chief Executive Andrew Mackenzie said in a quarterly production report that it was focused on defending its investment grade credit rating.

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Dividend cuts expected as top miners struggle – by Ian McGugan (Globe and Mail – January 18, 2016)

http://www.theglobeandmail.com/

Two giants of the global mining industry, already beset by plummeting metal prices, now face a new challenge – preparing their shareholders for sharply lower dividends.

BHP Billiton Ltd. and Rio Tinto PLC have both said in the past that they are committed to the payouts, but most observers doubt that sticking to the dividends is practical in today’s bleak environment for commodity producers.

At their current share prices in London, BHP’s dividend works out to a yield of more than 14 per cent, while Rio’s is equivalent to a payout of nearly 10 per cent.

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South32 may bid for Anglo American’s $1.4bn Brazil unit – by Paul Garvey (The Australian – January 15, 2016)

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

South32’s commitment to a steady-as-she-goes strategy and a conservative balance sheet appears to be tested by the array of large mining assets up for sale, with the BHP Billiton spin-off said to be weighing up a bid for Anglo American’s niobium and phosphate business in Brazil.

Bloomberg reported that South32 was looking to hire an adviser to help in the bidding process for the $US1 billion ($1.44bn) business ahead of a deadline for first-round bids next month.

Anglo has put the assets up for sale as part of a far-reaching $US4bn sell-off of non-core assets under chief executive Mark Cutifani. Major miners such as Anglo, Glencore and North America’s Barrick Gold have all sold or been looking to sell various mines around the world as they look to strengthen their balance sheets amid increasingly weak commodity prices.

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BHP hits 10-year low amid dividend fears – by Bryce Elder (Financial Times – January 12, 2016)

http://www.ft.com/

BHP looks certain to halve its dividend at full-year results next month, which would be its first cut in at least four decades, according to analysts.

The stock is, theoretically at least, the FTSE 100’s biggest income generator with a prospective yield of more than 10 per cent.

But BHP’s earnings are negative at spot prices, making a cut “inevitable”, said Barclays. Even a halved dividend will not be covered by free cash flow for at least three years, meaning deeper cost cutting is also required, it forecast.

HSBC also forecast BHP to cut by 50 per cent but also saw scope for acquisitions, such as buying Teck’s stake in the Antamina copper mine in Peru.

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Brazil mine disaster: Samarco downgrades Rio Doce waste levels – by Barry Fitzgerald (The Australian – January 9, 2016)

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

Satellite imagery has prompted the BHP Billiton and Vale-owned Samarco to claim that the volume of waste material released into the Rio Doce river system when its tailings dam in Brazil’s Minas Gerais state collapsed is less than first thought.

Initial reports after the devastating November collapse put the volume of tailings (a non-toxic mix of water, silica, fine iron ore and manganese) at more than 50 million cubic metres. That has now been downgraded to about 32 million cubic metres.

The lower figure nevertheless represents one of the biggest ever tailings dam failures. It was also one of the most deadly, with 17 people killed and two still listed as missing.

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Brazil cautious on re-starting hydro dams after mining spill – by Luciano Costa (Reuters U.S. – January 8, 2016)

http://www.reuters.com/

SAO PAULO – Four hydroelectric dams along Brazil’s Rio Doce remain closed for an indefinite time after a deadly mining spill in November flooded the river with thick mud, according to water agency ANA.

ANA said in an emailed statement that only one of four hydro plants along the 800 km (497 mile) river, which runs through states of Minas Gerais and Espirito Santo, had requested to power up as the others continue to assess potential damage from the spill.

The bursting of a dam at the Samarco iron ore mine on Nov. 5 caused Brazil’s worst environmental disaster, releasing between 30 million and 60 million cubic meters (7.9 billion to 15.9 billion gallons) of mining waste. The resulting flood killed at least 17 people, left hundreds homeless and polluted the river.

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BHP Billiton and Rio Tinto deal would be bonanza for bankers – by James Thomson (Australian Financial Review – January 4, 2016)

http://www.afr.com/

There should be no shortage of buying and selling in the resources sector in 2016. Many of the world’s biggest miners have been forced to put assets up for sale as they desperately try to protect their balance sheets from falling commodity prices.

But these deals are hardly the stuff of dreams. Rather, they are yet more symbols that the mining boom has become a game of survival.

However, there is one deal that would set the market alight and that bankers would love. While a merger between industry titans BHP Billiton and Rio Tinto is incredibly unlikely, it just might make some sense given industry conditions.

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Anger at Vale over Brazil mine accident fed by cautious, slow public response -by Stephen Eisenhammer (Reuters U.S. – December 31, 2015)

http://www.reuters.com/

RIO DE JANEIRO – Within hours of a deadly mining spill in November that would become Brazil’s worst environmental disaster, BHP Chief Executive Andrew Mackenzie was in front of a camera offering his sympathies to those affected.

Meanwhile, his counterpart at joint venture partner Vale SA, Murilo Ferreira, took nearly a week after the mine wastewater flood to talk to the press, setting the tone for a media strategy experts say has been slow and clumsy.

While both companies’ legal strategies seem similarly aimed at limiting their direct liability for the dam collapse that caused the disaster, a divergence in public relations tactics has left Vale, the world’s biggest iron ore miner, taking the brunt of social media outrage and street protests over the tragedy, which killed 17 and left hundreds homeless.

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BHP Billiton and partner Vale to launch external investigation into a dam disaster in Brazil that left 17 dead – by Robb M. Stewart (The Australian – December 22, 2015)

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

BHP Billiton has pledged to release publicly the findings of a New York-based law firm hired to determine the cause of a catastrophic dam burst at a mine in Brazil last month.

The Australian mining company said it and venture partners Vale SA and Samarco Minerao SA had jointly hired US law firm Cleary Gottlieb Steen & Hamilton to launch an external investigation into the cause of a breach of a mine-waste dam and a water dam at the iron-ore operation in Minas Gerais.

BHP said it planned to release the findings and also share the results with other resources companies.

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Top Iron Ore Shipper Cuts 2016 Forecast by 19% as Glut Grows – by Jasmine Ng (Bloomberg News – December 22, 2015)

http://www.bloomberg.com/

The world’s biggest iron ore exporter cut its price forecast for next year by 19 percent as supply continues to swell and slowing growth in China hurts demand in the biggest user.

Prices will average $41.30 a metric ton in 2016 compared with $51.20 forecast in September, Australia’s Department of Industry, Innovation & Science said in a quarterly outlook Tuesday. The department cut its average price for 2015 by 4.7 percent to $50.40 a ton.

Iron ore, the country’s largest export earner, lost 43 percent this year as low-cost miners including Rio Tinto Group, BHP Billiton Ltd. and Vale SA pressed ahead with expansions to defend market share, feeding a glut as demand in China faltered.

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BHP Billiton eyeing acquisitions as it considers dividend cut – by James Wilson and Neil Hume (Financial Times – December 20, 2015)

http://www.ft.com/

London – BHP Billiton is stepping up its hunt for acquisitions or new projects, hoping to take advantage of distressed prices at a low point in the commodity cycle and increasing the likelihood that the world’s most valuable mining company will make a dividend cut next year.

BHP is determined not to miss a chance to buy choice assets if rival miners are forced into sales as they try to survive the worst commodities downturn in a decade. The Anglo-Australian miner is looking for copper and deepwater oil projects.

But BHP is acutely aware of potential stresses on its own balance sheet, and particularly its pledge to maintain a strong credit rating, if it were to strike deals.

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BHP awaits court freeze order on Brazil assets over mine disaster – by James Regan (Reuters U.S. – December 21, 2015)

http://www.reuters.com/

SYDNEY – BHP Billiton BLT.L – has not received formal notification that its assets in Brazil have been frozen, a company spokesman said Monday, three days after a court ruled to hold the assets as compensation for the Samarco mining disaster.

“We have yet to receive any formal notification,” BHP Billiton’s Paul Hutchins said by telephone from the company’s Melbourne headquarters. “We hope to have an update tomorrow.”

A judge in Brazil’s state of Minais Gerais on Friday froze the Brazilian assets of BHP and domestic miner Vale SA after ruling their Samarco joint venture was unable to pay for damages following a dam collapse last month at Samarco’s iron ore mine in the state. The disaster killed 16 people, left hundreds homeless, and polluted a nearby river.

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