International Media Resource Articles – Page 651

Commodities Plunge on Fears of China Cutback – by Alex MacDonald and John W. Miller (Wall Street Journal – July 8, 2015)

July 9, 2015

http://www.wsj.com/

Downturn serves as reminder of weak fundamental outlook

Prices for a raft of commodities sank to multiyear lows this week, as China’s inability to stem the slide in its domestic equity markets intensified fears about economic growth in one of the world’s largest consumers of oil, metals and food.

Coming after a brief period of rising prices, the sudden downturn served as a reminder to investors of the weak fundamental outlook for several commodities already beset by weak demand and excessive supply.

In many commodities, including important industrials such as copper, iron ore and aluminum, mining companies expanded output for years because they counted on Chinese growth. But now, “China’s infallibility and omnipotence” as a guaranteed buyer have been “pierced,” said Dan Rohr, an analyst for Morningstar Inc.

Copper, often seen as a barometer for the global economy and viewed recently as poised for a price rise because of supply issues, fell this week to a six-year low, dropping to around $2.45 a pound. Crude-oil prices, which had recovered earlier this year after a crash in the second half of 2014, have resumed their slide.

Coal habits die hard as Australian miners boost exports – Peter Kerr (Sydney Morning Herald – July 8, 2015)

July 9, 2015

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

Australian miners are continuing to expand coal shipments despite weak demand in China and sliding prices, with three ports in Queensland setting new export records for the 2015 financial year.

Minerals Council analysis found Australian coal exports rose 5 per cent in the past year, with new records set at Dalrymple Bay, Hay Point and Abbott Point.

Those ports take the bulk of the coking coal coming from Queensland’s Bowen Basin, where BHP in particular has ramped up production in recent years from the mines it shares with Mitsubishi.

As the lowest-cost producer in the coking coal business, BHP and Mitsubishi have been happy to increase exports on the back of two new mines – Daunia and Caval Ridge – coming into operation during the past two years.

The rising production has coincided with fading demand for steel in China, creating an oversupply of coking coal that has had prices slump 21 per cent in the past year, according to RBC Capital Markets.

Mining companies sucked into Chinese stock market’s vortex – by James Wilson and Neil Hume (Financial Times – July 9, 2015)

July 9, 2015

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

London – Just when miners thought there was light at the end of the tunnel.

A month ago commodities were showing signs of stabilisation and investors in mining were cautious that a bottom might have been reached for the sector after four years of negative shareholder returns. Now China’s stock market rout has sucked the industry into its vortex, with mining shareholders taking fright at signs of increasing economic difficulties for its number one customer.

Shares in some of the largest miners have in the past two weeks fallen to levels last seen a decade ago, mirroring a downward lurch in commodity prices. The benchmark price of iron ore, key to steelmaking and one of the most important of traded mined commodities, fell 11 per cent in just one day this week.

The sector’s fall underscores how tightly its fortunes are bound up with events in China, which became by far the largest consumer of mined commodities in the first decade of this century amid rapid industrialisation, and supposedly set in train a natural resources supercycle.

China still absorbs about half of global iron ore, coal, and copper exports, but the country’s slowing economic growth since 2011 unleashed a severe downturn for miners by reducing demand for commodities.

Iron ore tumbles amid China contagion – by Neil Hume (Financial Times – July 8, 2015)

July 9, 2015

http://www.ft.com/intl/markets/commodities

Iron ore, the key ingredient in steelmaking, suffered its biggest one-day fall since records began, dropping by more than 11 per cent to a seven-year low as worries about the Chinese economy continued to mount.

Ore with 62 per cent iron content for immediate delivery to China dropped $5.60 to $44.10 a tonne, according to an assessment from The Steel Index.

That was the biggest one-day percentage drop since TSI begun compiling records for physical iron ore transactions in 2008. Iron is critical to the profitability of several major mining companies such as Anglo American, BHP Billiton, Rio Tinto and Vale.

They have spent billions of dollars expanding their operations to meet expected demand from China but, if the iron ore price were to stay at the current level sustained period of time, it would call into question the ability of miners to fulfil promises of higher return for shareholders.

Over the past year iron ore has dropped almost 55 per cent as a tsunami of new supply has overwhelmed demand.

Home Runs: Alaska’s leaders must walk their salmon talk [B.C. Mines] – by Malena Marvin (Juneau Empire – July 9, 2015)

July 9, 2015

http://juneauempire.com/

Malena Marvin is the Executive Director of Southeast Alaska Conservation Council.

Walk up to most houses in rural Southeast Alaska, including ours, and the first thing you see is an impossibly long row of battered XtraTuf rubber boots. There are boots for the family, the friends who stopped by to chat, extras for the summer folks who came to visit or work as crew, and probably a pair or two with mysterious origins. Together, they tell a story of a certain way of life, one lived by the tidelines and on the water, and one defined by adventure and hard work outdoors.

Wrangellite or Skagwegian, Republican or Democrat, Native or newcomer, our families are diverse. But our family values in this place do have a few common elements. Jars full of berries and fish are the obvious one. A commitment to taking care of friends and neighbors is another. I also look across the islands and fjords of our region and see that few of us are more than one degree of separation from a family whose livelihood depends on fishing or tourism dollars.

It’s in reverence to our unique way of life, to these things that unify us, that today I’m asking Gov. Bill Walker to work harder for clean water, and to walk his talk about putting Alaska’s fish first when it comes to policy.

Fate of global rare earth miners rests on China smuggling crackdown – by David Stanway (Reuters U.S. – July 7, 2015)

July 9, 2015

http://www.reuters.com/

BEIJING – The fate of debt-ridden U.S. rare earth miner Molycorp rests on China’s efforts to crack down on networks that smuggled as much as 40,000 tonnes of the vital technology metals out of the country last year, driving down global prices.

Greenwood, Colorado-based Molycorp is the sole U.S. domestic supplier of rare earths used in everything from smartphones to military jet engines and hybrid vehicles. In 2011, it relaunched its huge Mountain Pass mine in California expecting prices to stay high after China, which dominates world supply, restricted exports. Last month it filed for bankruptcy protection as operating losses mounted.

Customs police in the eastern Chinese port of Qingdao last month arrested five traders following a nine-month investigation into a rare earth and ferromolybdenum smuggling ring worth nearly $18 million.

That was no one-off. Chinese authorities have been struggling since 2010 to smash an illegal supply chain in which rogue miners deliver ores to unauthorized separation facilities, with the finished products then disguised and shipped abroad.

“Traders go through all kinds of channels and make false product declarations at customs – marking it as alumina or even washing powder,” said Chen Zhanheng, vice-secretary general of the Association of China Rare Earth Industry.

Mining’s $143 Billion Stock Rout Signals Escalating China Fears – by Jesse Riseborough (Bloomberg News – July 8, 2015)

July 8, 2015

http://www.bloomberg.com/

Fears of faltering Chinese growth ignited a $143 billion meltdown in global mining stocks as investors confront sputtering demand in the world’s biggest consumer of commodities.

The Bloomberg World Mining Index of 79 producers dropped 17 percent in the past 10 days as prices for industrial metals such as copper, nickel and aluminum sank to six-year lows. The price of iron ore, a key profit driver for top-ranked BHP Billiton Ltd. and Rio Tinto Group, slumped 10 percent Wednesday to its lowest since at least 2009 as new supply floods the market.

China is set to grow at its slowest pace in a quarter of a century, sapping the country’s demand for commodities and crimping mining companies’ profits. Chinese authorities are struggling to contain a $3.5 trillion stock rout with a slew of market-boosting measures, rattling investors.

“It’s pretty bleak at the moment, there’s no getting away from that,” James Sutton, a portfolio manager at JPMorgan Chase & Co.’s $2 billion Natural Resources Fund in London, said in an interview. “Overwhelmingly it’s technical factors that are driving the severity of the move. Amazing moves to happen, just whipsawing around like this.”

INSIGHT-China’s ‘infrastructure for minerals’ deal gets reality-check in Congo – by Aaron Ross (Reuters U.S. – July 8, 2015)

July 8, 2015

http://www.reuters.com/

KOLWEZI, Democratic Republic of Congo, July 8 (Reuters) – W hen it was signed in 2007, China’s $6 billion ‘minerals for infrastructure’ deal in Congo stirred fears among Western countries that Beijing’s hunger for resources would erode their influence and saddle the vast central African country with unmanageable debt.

Eight years on, as Sicomines prepares to produce its first copper after long delays, the main lesson from the giant project is that investing in one of Africa’s most chaotic countries is a messy and frustrating business, no matter who you are.

While most mining projects in Congo go years before paying significant taxes under the mining code, Sicomines was meant to have an immediate economic impact. The government says the deal has already produced at least $800 million in infrastructure investment.

Chinese firms Sinohydro Corp and China Railway Group Limited are building roads and hospitals in exchange for a 68 percent stake in the Sicomines copper and cobalt mine, one of the largest in Africa with about 6.8 million tonnes in proven reserves.

China’s state-run Exim Bank and smaller Chinese banks are stumping up $3 billion for infrastructure plus a further $3 billion to develop Sicomines, with all the loans to be repaid with mining profits.

COLUMN-Miners paint rosy iron ore picture by skirting tough issues – by Clyde Russell (Reuters U.S. – July 8, 2015)

July 8, 2015

http://www.reuters.com/

LAUNCESTON, Australia, July 8 (Reuters) – Australia’s major iron ore miners have had a torrid year so far, battling low prices, engaging in an ugly slanging match with each other and dealing with persistent questions about the wisdom of their expansion strategies.

It was therefore not surprising when the mining industry’s peak body launched a report on Tuesday that puts quite a different spin on the iron ore industry.

The Minerals Council of Australia’s report, entitled “Iron Ore: The Bigger Picture”, points out the enormous benefits the industry has brought Australia and will continue to provide.

The major Australian iron ore miners, Rio Tinto and BHP Billiton, are members of the council and sit on the board of directors, but the country’s third-biggest producer, Fortescue Metals Group, is absent from the list.

The report doesn’t really make an effort to explain how the major miners got their forecasts on Chinese demand so wrong, and it glosses over whether they really expected the price to fall as low as it has.

Only half of nickel smelters to be built in Indonesia this yr-industry (Reuters U.S. – July 8, 2015)

July 8, 2015

http://www.reuters.com/

JAKARTA – Nickel producers in Indonesia may only build half of the 12 new smelters anticipated this year and some may not commence production immediately due to low global prices, a senior industry official said.

Indonesia, which had been China’s top nickel ore supplier, brought in export restrictions last year aimed at forcing mining firms to build smelting and processing facilities so the country could earn more from raw ores and concentrates.

I.D. Susantyo, chairman of the Indonesian Nickel Association, expected only five or six nickel smelters would be completed by the end of the year. That is half the number anticipated by the mining ministry in April.

Susantyo said not all of the smelters built this year would start production as global prices drop to six-year lows of around $10,700 a tonne, nearly half of their peak last year.

“With nickel prices dropping like this, even though they are completed, they may not be able to produce because the market price is lower than the cost of production,” he said.

After coal, can better health save West Virginia? – by Valerie Volcovici (Reuters U.S. – July 7, 2015)

July 7, 2015

http://www.reuters.com/

WILLIAMSON, WV – With coal trains chugging past in the distance, Jack Perry watches as his wife, Margie, plants row upon row of Hungarian pepper seedlings in the community garden that residents of this West Virginia coal town call the “Garden of Eatin’.”

“The peppers they sell at the stores don’t taste anything like this,” says Perry, a retired coal worker. His grandfather brought over the original batch of seeds in the early 1900s when he arrived from Hungary to work in southern West Virginia’s mines.

The coal industry that sustained those generations is on life support in Williamson and surrounding Mingo County, battered by exhausted mines and competition from natural gas. Williamson’s faded sign welcoming drivers to “the heart of the billion dollar coal field” now competes with billboards for weight loss and pain clinics, and the main street is lined with empty storefronts and pawn shops.

Unlike their neighbors in Kentucky, where there have been state-sponsored economic transition efforts, West Virginians have been largely left on their own to respond to coal’s decline. The state’s politicians have focused on fighting federal emissions regulations in Congress and in court, blaming the Obama administration for imposing what they say are crippling costs on the industry.

How German cities are turning former coal mines into parks [photos] – by Marielle Segarra (Newsworks.org – July 7, 2015)

July 7, 2015

http://www.newsworks.org/

I’m spending a few weeks in Germany as part of a German/American journalist exchange program through the RIAS Berlin Kommission and the Radio Television Digital News Foundation. During the trip, I’m sending back lessons on urban planning and revitalization from German cities. Today’s topic: how cities in the Ruhr region are embracing their heritage by repurposing industrial sites.

When I think of quintessentially European cities, I imagine cobblestone streets, historic brick buildings, magnificent cathedrals, sidewalk cafes, and chocolatiers on every corner. I think of cities with history stretching back hundreds, and even thousands of years. Paris. Or Brussels. Or Rome, or Prague, or Vienna, or Hamburg…

But of course, Europe has all kinds of different cities, each with their own unique aesthetic and history.

Last week, I visited several cities in Germany that don’t fit the mold. What’s most prominent about them isn’t ancient history, but rather, their more recent, industrial heritage.

The Ruhr region of Germany is a sprawling metropolitan area, with 5.2 million people and 53 cities with boundaries that blur together. For decades, the region was dotted with thousands of coal mines, steel mills, and other industry.

India overtakes US as 3rd largest steel producer, says Narendra Singh Tomar (Business Today India – July 7, 2015)

July 7, 2015

http://businesstoday.intoday.in/

India has overtaken the US to become the world’s third-largest steel producer and is working towards achieving 300 million tonnes (MT) target in the next 10 years, said Union Steel and Mines Minister Narendra Singh Tomar on Tuesday.

“So far, India was the fourth-largest steel producer in the world only after China, Japan and the US. However, during the first five months of this calendar year, India has achieved the 3rd position in the global steel production,” Tomar said.

Addressing a meeting of the Parliamentary Consultative Committee, attached to his Ministries, in Bengaluru, Karnataka, the Minister said Indian steel industry is growing at a reasonably good pace and last year the growth in crude steel production in India was more than 8 per cent.

“However, per capita steel consumption is quite low, 60 kg as against the world average of 216 kg. The low consumption no doubt indicates huge growth potential for Indian steel industry. India has fixed a target of 300 MT production capacity by 2025 and the steel ministry is working out action plan and strategies to achieve this target,” he said as per an official statement issued in New Delhi.

Iron Ore’s Bear Market May Deepen as Clarksons Forecasts $40 – by Jasmine NgDavid Stringer(Bloomberg News – July 7, 2015)

July 7, 2015

http://www.bloomberg.com/

Iron ore will probably extend declines after falling back into a bear market on Monday as low-cost supplies from Australia and Brazil are set to expand further this half while demand stumbles in China.

Prices may drop toward $40 a metric ton, according to Clarksons Platou Securities Inc. A deepening slowdown in China’s steel industry and higher iron ore exports from the largest miners are weighing on prices, said Sanford C. Bernstein & Co.

Iron ore’s return to a bear market highlights that the same factors of surging supply and stalling demand growth, which dragged prices to a decade-low early April, remain at the forefront. Recent losses followed figures showing inventories in China rebounded, while exports in June from Australia’s Port Hedland were at a record. The Minerals Council of Australia on Tuesday defended local miners’ policy of adding output, saying cuts would be a failed strategy that would aid competitors.

“Momentum is clearly negative and that is going to be hard to reverse in the immediate short term,” Paul Gait, an analyst at Bernstein in London, said in an e-mailed response to questions. “The revealed preference of the miners is for volume over value, for tons ahead of price.”

London resource stocks going nowhere fast – by Lawrence Williams (Mineweb.com – July 7, 2015)

July 7, 2015

http://www.mineweb.com/

Investec in London paints a mostly gloomy picture for resource stocks for the next 2 years.

Analysts at the London arm of the international specialist banking and asset management group Investec, continue to paint a gloomy outlook for resource stocks in the short to medium term. However they do suggest that the year-end may provide something of a clearer outlook and the possible indication that the sector may have bottomed out by then.

Even so they don’t see a meaningful recovery in commodity prices until 2017 and while this is not to say that some resource stocks may not outperform the market, the likelihood is that most will remain depressed, and there could well be casualties among the weaker ones.

Investec points to what it describes as tepid signals from China, weaker than expected U.S. growth and the problems surrounding a possible (perhaps probable) Greek exit from the EU as being the major factors accounting for commodity price weakness.

Looking at China in particular, although there is some stimulus being applied to the Chinese economy, a change in focus away from infrastructure building towards consumer driven growth, as the government aims for a self-sustaining economy, has been implemented.