International Media Resource Articles – Page 615

Why Miners Keep Expanding, as Prices Collapse – by Paul Kiernan and Rhiannon Hoyle (Wall Street Journal – October 22, 2015)

October 23, 2015

http://www.wsj.com/

Weaker currencies help many firms cut costs, fueling new projects and adding to a global glut

RIO DE JANEIRO—Even as iron ore prices have collapsed, Brazilian giant Vale SA is building a $16 billion iron-ore operation that it touts as “the biggest project in our history and in international mining.” How? Because its costs are collapsing as well.

From South America to Australia, plunging currencies in mineral-rich nations are helping some companies expand their mines—and contributing to a glut of production that has saturated markets and driven prices down.

The cost of producing many commodities is “dropping like a stone,” said Goldman Sachs’s head of commodities research, Jeff Currie, who describes it as a “negative feedback” loop. The dynamic helps explain why commodity busts can be so long-lived.

The hope for recovery in commodities markets rests with the prospect that producers will run out of money or tire of losses and shut their facilities, bringing supply back into balance with weakened demand.

The Commodities Boom Is Dead. Long Live the Commodities Boom. – by David Fickling (Bloomberg News – October 23, 2015)

October 23, 2015

http://www.bloombergview.com/

What’s going on with BHP Billiton? The world’s biggest miner bid for a share in a Chilean copper mine this year and is exploring for offshore petroleum in Australia and the Gulf of Mexico. Isn’t the commodities super-cycle meant to be over?

One way of thinking about it is to take a trip to your local supermarket. Its owners probably purchased a lot of steel, concrete and bricks while it was being built. Now the doors are open, they’re buying stuff that shoppers use every day: Food to fill their bellies, gasoline to fuel their cars, aluminum foil to wrap their lunch, electronic goods wired with copper, and stainless steel cutlery alloyed with nickel.

Similarly, the U.S. used up a lot of gravel, cement, and asphalt to build the Interstate Highway system. Once that was completed, the main beneficiaries were the oil companies powering the cars using it.

Sorting commodities into capital products that we use once, and operational ones we use again and again, helps make sense of what BHP Chief Executive Officer Andrew Mackenzie is up to.

Meet the `Miserable’ Metal: Aluminum Sinks to `09 Low on Surplus (Bloomberg News – October 23, 1015)

October 23, 2015

http://www.bloomberg.com/

Dwight Anderson had a point when it came to aluminum. The price sank to the lowest level in more than six years on Friday on concern that a global glut will endure, extending a losing run after the hedge fund manager dubbed the metal as miserable.

Three-month futures fell as much as 0.4 percent to $1,484.50 metric ton on the London Metal Exchange, the lowest level since June 2009, and traded at $1,486 at 12:28 p.m. in Singapore. The metal is set for an eighth daily loss.

Aluminum fell 20 percent this year as global supply exceeded demand, with output from top producer China surging even as economic growth slowed, spurring increased exports.

Anderson, founder of hedge fund Ospraie Management LLC, described aluminum in an interview this week as “miserable,” probably forcing closures and bankruptcies. BNP Paribas SA expects a surplus of 1 million tons this year.

“The fundamental outlook is weak for the metal with some miserable factors like oversupply not easing in China even as prices keep falling,” Wang Rong, an analyst at Guotai & Junan Futures Co. in Shanghai, said on Friday.

UPDATE 2-Vale posts $2 bln loss on weak Brazil currency, low iron ore prices – by Stephen Eisenhammer and Marta Nogueira (Reuters U.S. – October 22, 2015)

October 23, 2015

http://www.reuters.com/

Oct 22 (Reuters) – Brazilian miner Vale SA on Thursday posted a net loss of $2.1 billion in the third quarter due to low iron ore and nickel prices and a weakening real against the dollar.

The result was slightly less than analysts forecast, and shares in Vale rose by 2 percent in morning trade as investors responded favorably to the world’s No.1 iron ore miner cutting production costs and debt.

Vale produced a record amount of iron ore during the period and reduced cash costs to $12.70 a tonne, which it says is the lowest in the industry.

Despite rising production, Thursday’s loss is Vale’s fourth in five quarters. The company is struggling to absorb the cost of building a giant new mine in Brazil’s Amazon region as its cash take drops. The miner posted net revenue of $6.51 billion and adjusted EBITDA of $1.88 billion.

Commodities: Gina Rinehart is queen of Australia’s desert – by Jamie Smyth (Financial Times – October 21, 2015)

October 22, 2015

http://www.ft.com/

The ‘iron lady’ is opening an $11bn mine as rivals cut investment and her children vie for more control

It has taken two decades to develop, $11bn of investment to build and is at the centre of a bitter family feud. But Gina Rinehart, Australia’s richest person, is finally poised to achieve her ambition and that of her late father, Lang Hancock, to develop, own and operate an iron ore mine.

“This is the holy grail she has been aspiring to her whole life,” says Michael Yabsley, a former adviser, of the Roy Hill project that formally opens next month. “It’s Gina’s crowning glory.”

The first ore exports from Roy Hill, 1,100km from Perth, will be a landmark moment for Hancock Prospecting, a private company controlled by the 61-year-old heiress who has earned the nickname “iron lady” as much for her uncompromising personality as the commodity that built her family’s fortune.

Cut forecasters some slack, but don’t bet on accuracy either – by Nastassia Arendse (Mineweb.com – October 21, 2015)

October 22, 2015

http://www.mineweb.com/

Some get the call right more often than not.

Humans are inherently obsessed with knowing the outcomes of the future. In some cases, forecasters are bad at predictions. The business of forecasting happens all the time when it comes to financial markets, especially from the likes of Goldman Sachs, JP Morgan, Citigroup, and the myriad of other investment banks that employ analysts. The financial media and investors clearly believe that the forecasts add value, or they wouldn’t tune in.

The majority of investors subscribe to the investment newsletters and reports published by the Wall Street oracles. Most of them employ sophisticated and complex models that are used to forecast growth and other market factors. Evidence from events such as the dot.com bubble and the 2009 financial crisis show that you would perform just as well if you had simply guessed.

“There are too many different opinions and it is also not clear what the time horizon of the various forecasts is,” says Rowan Williams, Director at Nitrogen Fund Managers.

Is iron ore headed for US$40 per tonne? – by Cole Latimer (Australian Mining – October 22, 2015)

October 22, 2015

http://www.australianmining.com.au/

Pundits are predicting a massive decline and a new low for iron ore.

Vice president for Citigroup’s China commodities research group, Ivan Szpakowski, has pointed to a new recent low for the metal of US$40 per tonne next year, according to the Sydney Morning Herald.

it comes as the price of iron ore hits its lowest point since late July, and the benchmark 62% Fe import price at the port of Tianjin fell to the US$52.50, although it is yet to reach the seven year low seen in early July of US$44.59.

According to Szpakowski, the slowdown in Chinese demand coupled with oncoming oversupply thanks to record production rates from Vale and BHP is likely to drive down the price below US$50 per tonne by the end of this year, and to US$40 per tonne or lower by the end of the March quarter next year.

Now Oppenheimer properties edge out of De Beers’ Diamond Route – by Martin Creamer (MiningWeekly.com – October 20, 2015)

November 3, 2015October 21, 2015

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

JOHANNESBURG (miningweekly.com) – The Oppenheimer family, which three years ago sold out of diamond company De Beers, announced on Tuesday that it was delinking the properties of E Oppenheimer & Son from the Diamond Route, which takes in the 250 000 ha of cross-regional land that originally kept potential diamond thieves far away from diamond diggings, but which is today geared to conservation and ecotourism, incorporating new and largely undiscovered natural wonders, as well as historical and cultural elements.

In an opening address to the sixth Diamond Route research conference in Johannesburg, Nicky Oppenheimer, who launched the initiative at the World Summit on Sustainable Development in 2002 while chairperson of De Beers, said that long and hard thought had been put into separating “and it seems to me that this is the right time for the Oppenheimer properties to separate themselves from the Diamond Route”.

Oppenheimer emphasised that the decision was not being taken with any sense of conflict or anger but was the result of the “inevitable drifting apart that takes place when entities are no longer rubbing shoulders, joined at the hip”.

[Ivanhoe Mines] Despite commodity slump, Canadian firm seeks to launch major copper project in DR Congo (Mail and Guardian Afric – October 21, 2015)

October 21, 2015

http://mgafrica.com/

“Even if China is running out of steam or slowing down today, other countries are still asking for copper.”

COPPER prices have fallen 20% in the past 12 months, but Canada’s Ivanhoe Mines is taking the long view as it invests in a new giant deposit in the Democratic Republic of Congo, eyeing a future deficit in the market and rising global demand.

The discovery at Kamoa in the southeast of the vast mineral-rich country has been presented as one of the biggest finds in copper mining in many years, though DR Congo is already Africa’s top copper producer and one of the world leaders.

“We think we can begin production at the end of 2018,” Louis Watum, the head of Ivanhoe DRC, told a recent mining conference in Kinshasa.

But in the commodities market, mining companies have been struck by a sharp fall in prices, affected by the economic slowdown in top consumer China.

The Taliban Is Capturing Afghanistan’s $1 Trillion in Mining Wealth – by Eltaf Najafizada (Bloomberg News – October 21, 2015)

October 21, 2015

http://www.bloomberg.com/

Taliban fighters aren’t just making gains on the battlefield: They’re also bleeding away a revenue source that is crucial for Afghanistan to pay for its military without U.S. help.

The Afghan government will earn about $30 million in 2015 from its mineral sector for the third straight year, far short of a previous projection of $1.5 billion, according to Mines and Petroleum Minister Daud Shah Saba. That’s also a quarter of what smugglers — mostly linked to the Taliban and local warlords — earn annually selling rubies and emeralds, he said.

“Unfortunately we have failed to well manage and well control our mining sector,” Saba said in an interview. “With the current fragile and messy situation, it’s really hard to say when Afghanistan should expect any profits from it.”

Afghanistan’s struggles to generate cash signal that it could be decades before Kabul’s leaders wean themselves off funds from the U.S. and its allies. U.S. President Barack Obama last week decided to keep 5,500 troops in the country indefinitely after 2016, underscoring the Taliban’s strength after 14 years of war.

The illegal gold fuelling gang battles in South Africa – by Nomsa Maseko (BBC News – October 21, 2015)

October 21, 2015October 21, 2015

http://www.bbc.com/news The South African city of Johannesburg was built on enormous gold reef. Today, many of the mines have closed, but criminal gangs continue to work the disused and abandoned tunnels. It is dangerous and often deadly, and as well as digging in the disused mines, heavily armed gangs also steal gold from the remaining …

China’s miners ‘must learn’ from bungled foreign acquisitions – by Eric Ng (South China Morning Post – October 21, 2015)

October 21, 2015

http://www.scmp.com/

Industry observers say Chinese companies must learn from their bungled foreign acquisitions

Tianjin – China’s mining firms have a mixed record on overseas acquisitions, but they can learn valuable lessons from missteps made in the past few years and adjust their strategies, say mining-sector executives.

“Chinese firms are still climbing the learning curve, many failures have dotted the path in the past few years,” said Wang Side, vice-president of Chinalco Resources – a unit of Aluminium Corp of China, the No 2 producer of the metal.

According to Dealogic, Chinese firms made US$4.25 billion in overseas mining acquisitions in the year’s first nine months, from US$8.8 billion in the year-earlier period, when the volume was boosted by a US$7 billion acquisition by state-backed MMG in Peru. The deal volume in the first nine months of 2014 was US$4.4 billion, and US$3.3 billion in the same period of 2013.

Wang told an annual mining conference that he considered the three main reasons for Chinese outbound-investment failures to be poor timing, poor selection of investment targets and poor deal pricing.

Mining town Kambalda looks to 50th anniversary despite nickel turmoil – by Sam Tomlin (Australian Broadcasting Corporation – October 21, 2015)

October 21, 2015

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

Amid the toughest downturn the nickel town has ever seen, Kambalda residents say it is only a matter of time before the tide turns.

With an unprecedented slump in the nickel price leading to more than 100 job losses over the past 18 months, and the future of much of its infrastructure called into question, the mining town in Western Australia has faced a recent crisis of confidence.

But as the community looks at ways to celebrate the 50th anniversary of the area’s first nickel mines, locals say the town has plenty of life left in it.

And with the nickel industry starting to show some long-term optimism amid the gloom, they say the turnaround they have been hoping for is not too far away.

While mining has always been a fixture of the landscape, modern Kambalda had its genesis in a chance discovery by two prospectors in 1954.

Platinum fails to fill breach left by gold in South Africa – by Ed Stoddard (Reuters U.K. – October 21, 2015)

October 21, 2015

http://uk.reuters.com/

BRITS, South Africa, Oct 21 (Reuters) – When South African miner Papi Soke went from gold to platinum, he thought he was trading a sunset industry for one with a brighter future.

This month, the National Union of Mineworkers (NUM) shop steward was one of over 800 workers laid off at the Eland platinum mine, closed by Glencore.

“I don’t know what to do now. I am thinking of maybe going to a diamond mine,” the 34-year-old father of two, whose wife is expecting in December, told Reuters as he sipped juice in a mall in the mining town of Brits north of Johannesburg.

Glencore is not alone. Platinum producers Lonmin and Anglo American Platinum are also planning to cut jobs and the government has held meetings with companies and unions to try and prevent widespread lay-offs.

Impala Platinum is closing operations that will affect 1,600 jobs but it has said it hopes to absorb many of those workers elsewhere in its business.

Editorial: Gold reigns over a menagerie of minerals (Elko Daily News – October 21, 2015)

October 21, 2015

http://elkodaily.com/

They say all that glitters is not gold, but here in Nevada that amounts to only about 15 percent.

Gold mining accounts for 85 percent of mineral revenue in the state, Nevada Division of Minerals Administrator Rich Perry recently explained. Still, there are a couple dozen other minerals that are regularly mined here – in addition to resources such as geothermal, oil and gas — and some of them have significant economic potential.

Northeastern Nevada’s quest for diversification beyond gold may include some of these marginal minerals. So far, it’s been a mixed bag.

Elko County’s fracking “boom” seems to have stalled out as quickly as it started. Noble Energy has drilled several exploration wells but whether they go into production depends on test results and oil prices – which have been at rock bottom.

The drilling activity has boosted production of barite, including a grinding mill constructed by NOV Minerals at Elko’s railport.