UPDATE 1-Protests close world No. 2 ferronickel mine in Colombia – by Luis Jaime Acosta and Peter Murphy (Reuters India – October 10, 2013)

http://in.reuters.com/

BOGOTA, Oct 9 (Reuters) – Cerro Matoso, the world’s No. 2 ferronickel producer owned by multinational BHP Billiton and located in Colombia, said it has temporarily shut its mine after two weeks of protests by indigenous groups, halting 4 percent of world output.

The impact of the stoppage on the nickel market is likely to be subdued amid a global surplus of nickel that has caused prices to tumble about a quarter in the last year but adds to near-constant disruption in Colombia’s mining sector this year.

The London-traded nickel contract ended 1.7 percent lower at $13,660 per tonne on Wednesday. Cerro Matoso took the decision to close its mine for workers’ safety, it said in a statement, adding that protesters were demanding “monetary indemnification”. It did not say why, merely that the dispute could only be resolved in the courts.

“This implies that from now there will be no ferronickel production or associated activities … until conditions enable the company to operate normally,” it said. A mining ministry source said the protesters were demanding compensation for alleged harm to their health from pollution caused by the open-pit project which the source said generates about $185,000 a day for the government in royalties.

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BHP BILLITON NEWS RELEASE: BUILDING ON AUSTRALIA’S COMPARATIVE ADVANTAGE

3 October 2013

BHP Billiton today further outlined its productivity agenda to capitalise on the next phase of the Asian growth cycle.

Speaking at the Australian National Conference on Resources and Energy, BHP Billiton President, HSEC, Marketing and Technology, Mike Henry, said the commodities that would feed future China growth would require Australia’s resources industry to continue to improve its competitiveness.

“We see moderation in the rate of GDP growth in China, and a reduction in manufacturing and investment share over time, but it is really important to note that there is still an incredibly large opportunity to be captured from a commodity demand perspective.

“Commodity demand growth will remain robust as the fundamentals of wealth creation, demographics and urbanisation continue to drive demand for resources. However the shifting dynamics of economic growth will challenge Australia’s traditional understanding of core ‘commodities’.

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Economists duel over benefits of Arizona copper mine – by Mike Sunnucks (Phoenix Business Journal – September 25, 2013)

http://www.bizjournals.com/phoenix/

A new economic study pours water on the projected benefits of a huge proposed copper mine 60 miles east of Phoenix.
But the authors of a previous study, commissioned by the multinational companies proposing the mine, are sticking by their more ambitious projections.

The competing studies look at the proposed Resolution Copper Mine in Superior. The mine would be one of the largest in the world and is proposed by U.K.-based Rio Tinto PLC and Australia’s BHP Billiton Ltd. The two companies are among the largest copper miners in the world.

The San Carlos Apache Tribe — which opposes the mine — commissioned a new study by University of Montana economist Thomas Power and his firm Power Consulting Inc. The study takes issue with a 2011 study commissioned by Resolution Copper Co. and conducted by Scottsdale-based Elliott D. Pollack & Co.

Resolution Copper is the company formed by BHP and Rio Tinto to develop the mine. The Pollack study projects the mine will create 3,719 jobs statewide worth $220.5 million in annual wages. That includes 1,429 direct mining jobs for the mine.

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Use it or lose it, miners warned by Coalition – by David Crowe (The Australian – September 18, 2013)

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

RESOURCE giants will be told to step up their spending on mammoth new projects or risk losing their rights to tap the deposits, under an Abbott government plan to accelerate investment and kill off fears of an end to the boom.

The incoming government aims to use its power over the vast gas deposits to bring forward up to $180 billion in new investment, sending a blunt message to companies to develop rather than hoard the nation’s resources.

As Tony Abbott and his ministers prepare to be sworn into office today, the resource plan marks another stage in an economic agenda that promises to lift growth, but will depend on stronger business investment to deliver results.

The policy is also set to reignite debate on the cost burdens – including high salaries – that global companies blame for stalling Australian projects and diverting their investments into cheaper projects in Africa and Asia.

Incoming industry minister Ian Macfarlane told The Australian that companies should extract “every molecule” of gas to boost exports and supply the domestic market.

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What’s good for BHP is good for us all – by Terry McCrann (The Australian – August 24, 2013)

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

THE world’s biggest resources company is Australia’s BHP Billiton. BHP is also, in a sense, Australia’s General Motors.

That’s the 21st-century Down Under equivalent of GM when it was the world’s biggest company; so that today, Down Under, what’s good for BHP is good for Australia. This means at its simplest that if BHP is doing well, so also will be the country more broadly.

BHP’s profit showed that the company was doing pretty well, if not quite so wonderfully as two years ago. That pretty much captured the broader economic state of play: a glass at least half-full. At a deeper level, the aphorism takes on a darker, more challenging message. That what BHP needs to do well is also precisely mirrored in what the nation overall needs to do well.

The darker emphasis comes in the clear message from BHP that it is not getting what it needs to do well; the logical inference is that the nation is therefore also not getting what it needs to do well.

There is one huge difference between BHP and the nation. If the company is not getting what it needs here, it can go somewhere else. It is doing exactly that. The one big greenfields project it has on its radar is potash. In Canada. BHP will also continue to spend $3 billion to $4bn a year on shale oil and gas. In the US.

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The Big Australian should strike a deal with Rio Tinto – by Terry McCrann (Melbourne Herald Sun – August 27, 2013)

http://www.heraldsun.com.au/

ALUMINIUM was the ghost at the BHP Billiton profit feast last week.

Although the aluminium, manganese and nickel division generated more than $9 billion of revenue, it contributed just $164 million of EBIT (earnings before interest and tax).

Compare and contrast that with the jewel in the BHPB crown – iron ore, which on a little more than double that revenue, at $20 billion, contributed more than 67 times as much EBIT, or $11.1 billion.

Incidentally, I never – and I’m equally certain, neither would most other commentators – have ever thought, in the good old days pre-China, that we’d end up describing lumpy, plentiful, iron ore as the ‘jewel” in anyone’s crown.

That it is, certainly in the corporate crowns of BHPB and Rio Tinto. It’s also made multi-billionaires of Gina Rinehart and Andrew Forrest. In contrast, aluminium ain’t going to make a billionaire of anyone. Thanks to China continuing to smelt uneconomically, aluminium has a knack of turning billionaires, corporate or otherwise, into mere millionaires.

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BHP to Pursue Potash Venture on Strong Return Expectation – by Nichola Saminather (Bloomberg News – August 25, 2013)

http://www.businessweek.com/

BHP Billiton Ltd. (BHP), the world’s biggest miner, will proceed with its plans for a Canadian potash project that has been called “misguided” by its biggest shareholder, driven by the prospect of strong investor returns.

“We are continuing on this investment because we strongly believe, and we’ve talked a lot about it with the board, this is going to offer very high returns for shareholders in the decades to come,” Chief Executive Officer Andrew Mackenzie said in an interview yesterday on the Australian Broadcasting Corp.’s ‘Inside Business’ program, according to an e-mailed transcript. “We have the best undeveloped green field mine on offer to the world and what we are doing, we will be prepared to respond very quickly to the market when it’s needed.”

Russia’s OAO Uralkali, the largest potash producer, in July quit a marketing venture with Belarus’s state producer that controlled about 43 percent of global exports and kept limits on production, and signaled prices may fall by as much as a quarter. BHP said Aug. 20 that its projections for the project assume a shift away from the current market dynamic.

Melbourne-based BHP last week said it’s seeking partners for the Jansen project after approving spending of $2.6 billion. The company has been approached and has approached possible purchasers of a stake in the project, Mackenzie said then. Jansen may cost $16 billion to build, Citigroup Inc. said last month.

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South Africa all but off BHP Billiton’s radar screen – by Martin Creamer (MiningWeekly.com – August 21, 2013)

http://www.miningweekly.com/page/americas-home

JOHANNESBURG (miningweekly.com) – South Africa has all but fallen off the radar screen of BHP Billiton, the world’s biggest mining company, which on Tuesday reported an 8.7% fall in revenue to $65.9-billion for the year ended June.

The name of the country did not cross the lips of new CEO Andrew Mackenzie and one got the impression that this region’s aluminium, thermal coal and manganese interests are hanging on by a thin thread in a company dominated by iron-ore, oil, copper and coking coal.

When BHP and Gencor/Billiton of South Africa merged at the start of the new millennium, the South African assets helped to lift the chin of a then downcast BHP.

The performance of then standalone BHP, which in merged form has paid out more in dividends than the rest of the mining world put together, was so mediocre that the Economist of London scoffed that the letters BHP really stood for Broken Hearted People, and not Broken Hill Proprietary.

But the powers that be are clearly in no mood to return the favour; instead they are directing any tender, loving care they still have towards potash risk at Jansen in Canada, which is still a cost centre.

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BHP’s sales plan latest blow to Canpotex pricing power – by Brent Jang (Globe and Mail – August 22, 2013)

The Globe and Mail is Canada’s national newspaper with the second largest broadsheet circulation in the country. It has enormous influence on Canada’s political and business elite.

VANCOUVER — BHP Billiton Ltd. is honing its strategy to sell Saskatchewan potash on its own to Asian customers, sidestepping Canada’s export marketing agency for the farming commodity.

The Australian mining giant, which this week announced a $2.6-billion (U.S.) investment in its Jansen mine southeast of Saskatoon, is crafting detailed plans to transport potash by rail. The company will use Canadian Pacific Railway Ltd. across Western Canada, then connect to Burlington Northern Santa Fe Corp.’s train system through Washington State, say BHP officials.

BHP is still working out the logistics of shipping potash from the Port of Vancouver in Washington, where a sprawling U.S. property has been set aside for a new export terminal that would be built in time for the company to launch sales in 2020.

The company’s plans highlight the new pressure being placed on Canpotex Ltd., Canada’s export agency for potash, one of two groups that together control roughly 70 per cent of global supplies of the fertilizer ingredient, used to boost crop yields on farms. Potash Corp. of Saskatchewan Inc., Mosaic Co. and Agrium Inc. are the agency’s members.

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For potash juniors, the pressure’s on – by Brenda Bouw (Globe and Mail – August 22, 2013)

The Globe and Mail is Canada’s national newspaper with the second largest broadsheet circulation in the country. It has enormous influence on Canada’s political and business elite.

Junior potash companies, already suffering from tight financing conditions, will start to feel more pain following an industry shakeup that has increased competition among suppliers of the crop nutrient.

The dismantling of the world’s largest potash oligopoly last month has already hit stock prices for potash companies, and is expected to lead to a drop in potash prices, which would lower margins for producers and make new projects less viable.

BHP Billiton Ltd.’s decision this week to push ahead with its Jansen project in Saskatchewan, expected to be the world’s largest potash mine, also threatens to create a glut of the mineral. BHP’s announcement follows a move by Russia’s OAO Uralkali to drop out of Belarusian Potash Co. (BPC), a joint venture with rival Belaruskali of Belarus.

Only those potash projects with low-cost projects as well as money and time to spare are expected to survive the next few quarters, analysts say.

“Even before Uralkali’s announcement last month and BHP’s Jansen update this week, the junior potash projects were already in trouble.

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After cost cuts, miners need to do more with less, BHP says – by Clara Ferreira-Marques (Reuters U.S. – August 21, 2013)

http://www.reuters.com/

LONDON – Aug 21 (Reuters) – Mining firms are wooing investors with aggressive cuts after years of profligate spending, but BHP Billiton says the greater challenge will be improving productivity, if major producers are to ride an eventual recovery.

BHP, Rio Tinto and others big and small have promised shareholders they will slash billions of dollars of spending, shedding jobs, reining in wages and cutting back on fringe costs, such as staff travel.

Rio says it tells employees in its iron ore unit to use low-cost airlines or teleconferencing – a far cry from a time when chartering flights to remote mines were the norm and tales abounded of truck drivers on six-figure annual dollar salaries.

But that was the easy bit, the chief financial officer of BHP Billiton, the world’s largest miner, told Reuters. “When you talk about costs there are two elements. One is how you tighten your belt and make the easy changes,” said Graham Kerr, a BHP veteran put in charge of finance last year.

“The second is productivity,” he said in an interview. “Getting more out of your existing people, your equipment and your infrastructure. Productivity will deliver more benefits over time, but takes a little more time to be done.”

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COLUMN-Diversified miners’ short-term challenges at odds with long-term views – by Clyde Russell (Reuters U.S. – August 21, 2013)

http://www.reuters.com/

Clyde Russell is a Reuters market analyst. The views expressed are his own.

LAUNCESTON, Australia, Aug 21 (Reuters) – The world’s top diversified mining companies are starting to resemble choir boys singing the same hymn about cutting projects and costs.

The recent financial results of BHP Billiton, Rio Tinto, Glencore Xstrata and Anglo American were remarkably similar, as were the accompanying comments by their chief executives.

All reported lower earnings, but not dramatically so, which may be a bit of a surprise given weaker commodity prices in the first half of 2013 and widespread concern of worse conditions to come.

And all four also repeated the mantra of cost cutting and slashing capital expenditure, while at the same time trying to give equity investors more of what they want in the form of dividends and higher share prices.

The question is whether this unanimity is the right path or whether the diversified miners are going too far in a bid to boost share prices.

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Miners Buying Hugo Boss Perfume as Chile’s Copper Booms – by Matt Craze & Javiera Quiroga (Bloomberg News – August 20, 2013)

http://www.bloomberg.com/ 

Since starting work at the Esperanza copper mine in northern Chile two years ago, Erick Moreno has tripled his salary and is preparing to buy his first home. The pay, he says, is so good that he’d never take a job elsewhere.

“I am going to die in this industry, I don’t see myself anywhere else,” Moreno said by phone from Antofagasta, a city on the edge of the mineral-rich Atacama desert. “When you start working in a mine, everything changes and in a very little period of time.”

While Moreno, 27, completed his engineering course at Antofagasta University, he says many fellow students dropped out to start work at the mines without graduating. Most of them already own their homes and drive sports cars, while many older miners have five or more houses, some far from the mines that litter the northern desert, he said.

Spending by high-earning miners is spreading through the economy, fueling a consumer boom and driving unemployment to its lowest since 1973. The nation, squeezed between the Andes Mountains and the Pacific Ocean, has become the wealthiest in Latin America, according to the International Monetary Fund, with gross domestic product per capita rising to about $16,300 this year from $4,780 ten years ago. World Bank President Jim Yong Kim last month congratulated the country on earning “high-income” status.

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BHP plans $2.6-billion potash investment in Saskatchewan – by Brent Jang (Globe and Mail – August 21, 2013)

The Globe and Mail is Canada’s national newspaper with the second largest broadsheet circulation in the country. It has enormous influence on Canada’s political and business elite.

VANCOUVER — Australia’s BHP Billiton Ltd. is strengthening its commitment to a multibillion-dollar potash investment in Saskatchewan even as an industry shakeup has increased competition in the market for the key crop nutrient.

BHP announced Tuesday that it will pour another $2.6-billion (U.S.) into its Jansen project over the next three years, earmarking funds to build, with other investors, what might become the world’s largest potash mining operation.

Melbourne-based BHP has already spent $1.2-billion so far on the Jansen mine, about 140 kilometres southeast of Saskatoon. But speculation about the company’s commitment to the Saskatchewan project arose three weeks ago, when one of the potash industry’s two main marketing groups abruptly disbanded, raising the prospect of a prolonged period of low prices for the resource.

Despite today’s gloomy market conditions, BHP chief executive officer Andrew Mackenzie said his company envisages demand growth for potash will average 2 to 3 per cent a year until 2030, bolstered by population growth and the consequent need to bolster food production.

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BHP delays $14 billion Canada potash push as profit drops – by Sonali Paul (Reuters U.K. – August 20, 2013)

http://uk.reuters.com/

MELBOURNE – (Reuters) – BHP Billiton’s new chief has put his stamp on the top global miner, mapping out a cautious approach to expanding into the potash market, which it sees as its next big growth business beyond 2020.

CEO Andrew Mackenzie outlined the low-risk course as he handed down his first results, reporting a 15 percent drop in half-year profit before one-offs, which missed forecasts largely due to Australian mining tax adjustments and other non-operational items.

BHP and Glencore Xstrata wrapped up the results season for the world’s big five miners, with BHP holding up slightly better than its peers as it stepped up output of iron ore, copper, coal and oil and slashed $2.7 billion in costs in the face of sliding commodity prices.

Major miners have come under pressure to rein in spending, sell off underperforming assets and tackle debt after years of rampant spending on new mines and acquisitions as commodity prices soared. Reflecting the austerity drive, BHP said it plans to invest $2.6 billion over the next four years digging shafts at the Jansen potash project, delaying production at least until 2020 from its original 2015 target, while inviting offers for stakes in the mine.

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