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Russia and SA aim to boost PGMs – by ANDRE JANSE VAN VUUREN AND YULIYA FEDORINOVA (Bloomberg/Business Day Live – November 13, 2014)

http://www.bdlive.co.za/

RUSSIA and SA will next year invite platinum group metal producers and users for talks as the countries seek ways to support falling prices.

The two nations, holding about 80% of the world’s reserves of the metals, met last Thursday in Pretoria “to collaborate on technology development and jointly exploring new applications for the metal” to grow demand, Phuti Mabelebele, a spokeswoman for SA’s mines ministry, said on Wednesday in an e-mailed response to questions.

The parties agreed to arrange a conference in the second half of next year to which they would invite mining companies, traders and consumers to “jointly consider appropriate options to achieve stability and sustainable growth”.

Platinum prices have tumbled more than 20% since Russia and SA said in March last year that they were looking for ways to buoy the market. Palladium gained about 8% in that period. SA mines about 70% of the world’s platinum and Russia 40% of its palladium.

The countries would meet for separate talks about the issue in the first quarter of next year in Russia, Ms Mabelebele said.

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K+S Raises Profit, Sales Goals as Potash Prices Improve – by Sheenagh Matthews (Bloomberg News – November 13, 2014)

http://www.bloomberg.com/

K+S AG (SDF), Europe’s largest potash supplier, unexpectedly raised its full-year profit forecast by 12 percent as prices for the crop nutrient recovered more quickly than previously thought. The shares rose the most in almost a year in Frankfurt trading.

Earnings before interest, tax and some hedging transactions, called EBIT I, may be as much as 640 million euros ($797 million), the Kassel, Germany-based company said today in a statement. Previously K+S predicted as much as 570 million euros and a Bloomberg survey shows analysts had estimated 567 million euros.

Chief Executive Officer Norbert Steiner started a 500 million-euro cost-cutting program to help counter a drop in potash prices, triggered by Russian rival OAO Uralkali bringing extra capacity into the market last year. A “slight upwards trend” in prices is now evident, the company said today.

“All in all 2014 is looking good so far,” Chief Financial Officer Burkhard Lohr said in a video posted on the company’s website. “The long-term perspective of our business is very optimistic. Our positive business trends are holding strong.”

The shares jumped as much as 6.1 percent, the biggest intraday gain since November last year, to 23.65 euros. The stock was trading 5 percent higher at 23.43 euros as of 9:06 a.m. local time. K+S has gained 3.7 percent this year for a market value of 4.5 billion euros.

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Russia’s Dependence on the West – by Grzegorz Kaliszuk (New Eastern Europe – November 3, 2014)

http://www.neweasterneurope.eu/

The conflict in eastern Ukraine, which has been lasting for nearly ten months, has had direct implications on the Russian economy. Foreign investments, as the best tool to integrate the world’s economies, are more and more often bypassing Russia. According to the Central Bank of Russia, the country is going to lose 90 billion US dollars of foreign investments as a result of the war.

The energy industry, which is the core of the Russian economy, is very close to the heart of the Kremlin. As a place where hundreds of different minerals are exploited every day, we generally associate the Russian energy industry with oil and natural gas. However, besides “black gold” and “blue fuel”, Russia’s coal mining is also a very significant part of its energy business. One-third of the world’s coal supplies are located in Russia, primarily in Siberia.

In 2012, the Russian Federation endorsed a long-term coal development programme. Its main aim is to increase Russia’s annual coal production to 430 million tonnes. The first step to success is its large coal reserve. The second are the specialised technologies which are usually purchased from other countries. The current level of exhaustion in the mining infrastructure shows an immediate upgrade is needed in up to 60 per cent of production sites (in 139 open-pit mines and in 93 underground mines).

The Russian coal industry is also a chance for the Polish economy. Until the end of the 1960s, Poland imported coal-mining technologies from Russia – now the boot is on the other foot and the Russian market is dominated by companies like Becker Mining Systems (Germany), Sandvik Mining Construction (Finland) and the export alliance of Czech Mining Technology.

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Germany’s Turn Against Coal Risks More Reliance on Russia – by Stefan Nicola, Tino Andresen and Brian Parkin (Bloomberg News – November 3, 2014)

http://www.bloomberg.com/

Germany is turning against coal as a fuel for generating electricity, a move that will boost the nation’s reliance on natural gas from Russia.

Alarmed that curtailing nuclear power has prompted utilities to burn the most coal in six years, Chancellor Angela Merkel’s government is working on a plan to reinforce Germany’s commitment to reduce fossil-fuel emissions. The Economy Ministry on Oct. 31 published a paper laying the groundwork for the most strict steps yet to limit coal in Europe.

The shift, if implemented, would force Germany to tap Russia for additional supplies, to import power from neighbors and to further subsidize renewables such as solar and wind. That would swell the country’s 100 billion-euro ($126 billion) annual fuel import bill and may raise the cost of electricity paid by consumers, already the second-highest in the European Union.

It would also run counter to efforts by the U.S. and EU to isolate Russia economically.

“The importance of gas, and with that the dependence on Russia, will increase,” said Guido Hoymann, an analyst at B. Metzler Seel Sohn & Co. KGaA. Cross-border exchanges of electricity also would rise, helping the nuclear plants just outside Germany’s border, he said.

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Moon exploration will reduce the shortage of rare earth metals – by Aram Ter-Ghazaryan (Russia Beyond the Headlines – October 26, 2014)

http://rbth.com/

Russian scientists are already referring to the Moon as a hub for flights to other planets. However, the main goal in exploring Earth’s satellite is to expand the production of rare earth metals.

As part of the Federal Space Program, Moon exploration operations will be launched in 2016. In 2018 the first spacecraft will be sent to the Moon to deliver comet material back to Earth. A manned flight is scheduled for 2030-2031. Future plans include the mining of rare earth metals required for the development of high-tech industries.

Looking for comet substances on the lunar south pole

Scientists from the Russian Academy of Sciences, the Moscow State University Sternberg Astronomical Institute and the Russian Federal Space Agency are participating in this Moon exploration project.

The first spacecraft to be sent to the Moon will be relatively simple. According to Vladislav Shevchenko, the Sternberg Institute’s Head of the Department of Lunar and Planetary Research, this is because the Russian space program has not carried out a Moon landing for over 40 years.

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Russian Mining Tycoons Seek to Trim Debt as Sanctions Sting – by Yuliya Fedorinova and Alex Sazonov (Bloomberg News – October 27, 2014)

http://www.bloomberg.com/

Russia’s mining billionaires are starting to feel the sting of economic sanctions.

Mikhail Prokhorov, whose investment empire stretches from the world’s largest aluminum maker to the Brooklyn Nets basketball team, recently explored whether fellow oligarchs, including Vladimir Potanin, were willing to buy a portion of his $2.7 billion stake in potash miner OAO Uralkali, two people familiar with the matter said. The reason: the sinking value of his Russian holdings means he’d like less debt and more cash, they said.

While Prokhorov aborted the plan after failing to get the price he wanted, it’s the latest example of the pressure on Russia’s commodity magnates as sanctions hit the economy at home and a global slowdown undercuts metals demand. Billionaires including Alexey Mordashov, who controls steelmaker OAO Severstal (SVST), and Potanin, the biggest shareholder in OAO Norilsk Nickel, have increased dividends from their businesses after selling some assets.

“Whenever you hear billionaires say they are not affected by sanctions and the general situation in Russia, that’s not quite true,” said Yulia Bushueva, who helps to manage about $500 million at Arbat Capital in Moscow. “It’s natural that they are looking at options to cut the debt. Others just want to get some extra cash in the current situation.”

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BCL’s Norilsk deal the first step in its hunt for nickel – by Allan Seccombe (Business Day Live – October 23, 2014)

http://www.bdlive.co.za/

BOTSWANA’S state-owned BCL, a nickel mining and smelting company, is embarking on a strategy to secure extra sources of metal, and its first step is the $337m purchase of Norilsk Nickel’s African assets.

The transaction, which secures a 50% stake in African Rainbow Minerals’ Nkomati mine in SA and 85% of Tati in Botswana, will be funded out of cash and debt, said BCL’s divisional manager of corporate strategy, Mack William.

BCL has a 1-million-tonne capacity at is smelter and it is currently using about 65%. Taking the Nkomati concentrate will lift the plant to full capacity, Mr William said in an interview.

The Botswana firm used to treat Nkomati’s concentrate, but a few years ago it diverted its concentrate to another smelter, he said.

BCL is undertaking a study at its metallurgical complex to grow capacity at the smelter and better utilise its concentrator, which has capacity for 3-million tonnes of ore a year. “It will position the smelter as the ultimate destination for all nickel concentrate in Southern Africa,” Mr William said.

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Norilsk to sell African nickel stakes to Botswana’s BCL for $337 mln – by Silvia Antonioli (Reuters India – October 20, 2014)

http://in.reuters.com/

Oct 20 (Reuters) – Russia’s Norilsk Nickel , the world’s top nickel and palladium producer, said it had agreed to sell stakes in two African nickel mines for $337 million to BCL, a Botswana-based copper mining firm looking to expand.

Norilsk will transfer to BCL its 50 percent interest in the Nkomati nickel and chrome mine, in South Africa, and its 85 percent stake in the Tati Nickel Mining Company, in Botswana, the two companies said on Monday.

BCL will also assume all attributable outstanding debt and environmental and rehabilitation liabilities associated with the assets.

Norilsk embarked on a new strategy last year that includes pulling out of international assets that it has identified as non Tier-1 mining operations. Tier-1 is an industry designation for what are typically the biggest and lowest-cost mines.

“The sale of the African operations marks a major milestone in our commitment to deliver the new corporate strategy. The transaction is part of the management’s roadmap to release capital from non-core assets and will have a positive impact on the company’s return on invested capital”, Pavel Fedorov, Norilsk Nickel First Deputy CEO said in a statement.

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Poland’s coal miners dig in for struggle over restructuring – by Henry Foy (Financial Times – October 19, 2014)

http://www.ft.com/intl/companies/mining

Knurow, Poland – Almost 1km below the rolling hills of southern Poland, four men, their faces coated in a slick layer of coal dust and sweat, pilot a colossal grinder as it rips metre-wide chunks of glistening black coal from the walls of a narrow tunnel.

At temperatures above 30C, by the dim light of torches and surrounded by the deafening cacophony of the screaming grinder and a thundering conveyor belt, such men and their machines work 24 hours a day, six days a week, churning out a fuel that was supposed to be the answer to Poland’s energy problems. But it has not worked out that way.

Over 300km north, in Warsaw’s government meeting rooms, lit by bulbs that rely on coal for almost 90 per cent of their power, the country’s politicians and bureaucrats have been debating how to rescue an industry in existential crisis: chronically lossmaking, inefficient and under threat from external pressures.

Poland’s vast coal reserves, the second-largest in Europe, were seen as the energy ace up its sleeve – offsetting reliance on Russian resources and providing enough cheap, domestic fuel to power decades of economic growth.

But then the US shale boom sent coal prices tumbling and exposed vast inefficiencies across the country’s state-owned miners. At the same time, environmental concerns have led to pressure from the EU for Poland to wean itself off the black stuff.

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Norilsk Sinks in Nickel Bear Market Wiping Out 46% Gain – by Halia Pavliva (Bloomberg News – October 8, 2014)

http://www.bloomberg.com/

OAO GMK Norilsk Nickel (NILSY), the best performer earlier this year among Russian shares traded in the U.S., sank to a six-month low on concern demand will weaken amid expectations for a slowdown in global economic growth.

American depositary receipts of the world’s largest nickel producer dropped 1.6 percent to $17.23 yesterday as the metal, used to prevent corrosion in stainless steel, slumped the most in two weeks. The stock has lost 20 percent since July, reversing a five-month rally that made it stand out as the benchmark Micex Index tumbled after President Vladimir Putin’s annexation of Crimea in March.

Nickel entered a bear market last month amid a slowdown in China, the largest metals consumer, and as stockpiles ballooned to a record. The International Monetary Fund on Oct. 7 cut its forecast for global growth, sparking concern that demand will ebb. Norilsk skirted the selloff in Russian equities triggered by sanctions over the nation’s role in the Ukraine war, surging 46 percent to an almost three-year high in July after months of nickel shortages.

“The company, which wasn’t affected by the sanctions, is now reacting to investors’ concern over economic growth, particularly in China, because that signals less demand for the metal,” Sergey Donskoy, an analyst at Societe Generale SA in Moscow, said by phone yesterday.

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Campaign to World Heritage List Cornish mining sites gaining momentum – by Lauren Waldhuter (Australian Broadcasting Corporation – October 6, 2014)

http://www.abc.net.au/news/rural/

An international campaign to have South Australia’s Cornish mining sites World Heritage listed is gaining momentum. In the mid 1800s thousands of Cornish miners flocked to Burra in the state’s Mid North and shortly after to Moonta on the Yorke Peninsula to mine two of the largest copper deposits in the world, at that time.

Philip Payton, a professor of Cornish and Australian Studies from the University of Exeter in the United Kingdom, says the sites deserve global recognition by the United Nation’s heritage organisation (UNESCO).

Cornwall’s own mine sites are already World Heritage listed but Professor Payton says that only tells part of the story. “It’s not really complete until people recognise that actually there’s an international linking,” he says.

“That it’s a global story and if places like Burra and the copper triangle don’t feature in that somehow, the experience in Cornwall is diminished.”

It’s estimated 500,000 Cornish migrants left England between 1815 and the start of World War I, as the once booming mining industry on their home soil slowed down. But their advanced mining skills were an asset to other projects emerging all over the world. “They were cutting edge,” said Professor Payton.

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UPDATE 1-Nickel miner Talvivaara gets debt cut plan, still lacks financing – by Jussi Rosendahl (Reuters U.S. – September 30, 2014)

http://www.reuters.com/

HELSINKI, Sept 30 (Reuters) – Finnish nickel miner Talvivaara lacks the long-term financing it needs to avoid bankruptcy, it said on Tuesday after an administrator proposed an eight-year restructuring plan that includes slashing its debts by up to 99 percent.

Talvivaara listed to great fanfare in London in 2007 when nickel peaked at around $51,000 per tonne.

But nickel prices have more than halved, and hurt by repeated production disruptions and environmental damage, the company last year suspended its mining operations and started a court-led debt restructuring process to avoid bankruptcy.

The administrator on Tuesday proposed Talvivaara’s unsecured debts of around 1.4 billion euros ($1.8 billion), including group internal debt, be cut by 97-99 percent. The plan could involve a share issue, which the administrator warned could dilute the company’s shares.

It shares fell as much as 24 percent on Tuesday. The company lamented on Tuesday that implementing the plan would need funds and creditor support, which is does not have.

“In order to ramp-up the Talvivaara group’s mining operations to full scale, a significant amount of new financing for the operative activities is required immediately,” it said in a statement.

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Metals and mining: Years of renewal – by David Miller and Alexei Lossan (Russia Beyond the Headlines – September 25, 2014)

http://rbth.com/

Global metals and mining firms face a difficult operating environment amid falling commodity prices. Russian companies are cutting costs and refocusing on domestic assets.

Russia’s metals and mining industry, the country’s second-most important sector after oil and gas, has faced its share of adversity since the salad days of the past decade, when commodity prices were pushed skyward by a hike in demand from China and India.

Today, as lower commodity prices put pressure on resource-producers around the world, many Russian metals and mining companies are nevertheless showing respectable profit margins, after shedding non-core operations and taking difficult steps towards rebuilding.

Iron ore prices fell to a five-year low in September as Chinese demand slackened off and economic activity in Europe and Japan remained weak. Even so, for Russian firms, signs are emerging that, in some areas, the future may be looking a little brighter.

“The global aluminum industry has turned a corner,” declared Rusal CEO Oleg Deripaska in a statement this summer after the firm, which produces almost 9% of the world’s aluminum, posted an income of $116 million in the second quarter of 2014.

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Russian business fears return to isolation during ‘evil empire’ – by Elizabeth Piper and Timothy Heritage (Reuters U.K. – September 26, 2014)

http://uk.reuters.com/

(Reuters) – Russian businessmen are backing Vladimir Putin over Ukraine but fear the country is being forced down a path toward less democracy, more central control of the economy and isolation that recalls the Soviet “evil empire”.

Like many other business leaders, Vladimir Potanin, one of Russia’s richest men, says Western sanctions and attempts to force the president to change policy risk opening a rift between Moscow and the West that will be difficult to repair.

“What is happening now, namely the isolation of our country from contacts with Europe, America and several other countries, causes real regret,” Potanin, a metals magnate who built his empire soon after the Soviet Union collapsed in 1991, said in an interview at the Reuters Russia Investment summit.

“Because, in a sense, we are returning to the days when Soviet people were regarded as coming from ‘the evil empire’ and now people are starting to place this cloak on Russians’ shoulders again,” he said, using the phrase coined by former U.S. President Ronald Reagan during the Cold War.

There is broad agreement in business circles that the Western sanctions, imposed on Moscow over its policy on Ukraine, have had the opposite effect to the one intended. Instead of undermining Putin, the sanctions have – at least so far – united the business and political elite.

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Polish miners call off Russian coal blockade after Warsaw pledges industry support (RT.com – September 25, 2014)

http://rt.com/

Coalminers blocking “cheap” Russian coal at the Poland-Russia border have reportedly reached a deal with the government in Warsaw to consider new coal trade laws that will better protect the country’s coal industry.

Coal deliveries from Russia have now resumed, according to a representative at the railway station in Russia’s Kaliningrad enclave, which borders Poland and the Baltic Sea but not mainland Russia.

“At 6:15am Moscow time, the train departed the Russian station Mamonowo and after sometime crossed the Russian-Polish border,” a representative said, RIA Novosti reported. According to the representative, another train will cross the border at 5pm Thursday local time.

“The decision to finish the protests at Braniewo is because we received a positive message from the prime minister, Eva Kopacz, and cabinet ministers,” ITAR-TASS reported Dominik Kolorz, leader of the Solidarity Union in the Slasko-Dabrowskie region, as saying.

On Wednesday, Polish PM Ewa Kopacz asked parliament to speed up the introduction of new coal trade laws, and announced she was commissioning a report on the country’s coal mining industry, Polish Radio reported. The policy shift came after over 200 Polish miners blocked the delivery of Russian coal at a railway crossing at the Branevo-Mamonowo border post.

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