International Media Resource Articles – Page 679

Deutsche Bank cuts [BHP Billiton] South32 valuation – by Amanda Saunders (Sydney Morning Herald – April 2, 2015)

April 1, 2015

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

South32, the company being created in the demerger of BHP Billiton, will be in a “perfect position” to pursue acquisitions of up to $US3 billion ($3.9 billion) in Australian coal, and offshore in base metals and manganese – but its stock is likely to trade at just about $2 a share, well short of market expectations, according to Deutsche Bank.

Deutsche mining analyst Paul Young cut his valuation of South32 from $US13 billion to $US11.2 billion after reviewing the more than 1500 pages of shareholder documents on the spin-off released by BHP last month. His valuation for the spin-off falls to $US7 billion when based on current spot prices for commodities.

While the new company’s growth and savings opportunities will be limited, parent BHP with its strong balance sheet has put it “in the perfect position to pursue [value enhancing] acquisitions up to $US3 billion”, Mr Young said.

Also playing in its favour is the fact that the largest miners are selling non-core assets following the fall in commodities prices, and have all but ruled out acquisitions.

South32 is expected to first eye greenfield mining assets, rather than entire companies, according to the analyst report. High up on its list would be Anglo American’s 40 per cent stake, valued at $US1.4 billion, in the maganese group Samancor.

[South Africa] Mining charter ‘silent’ on crucial ownership issue – by Liesl Peyper (Miningmx – April 1, 2015)

April 1, 2015

http://www.miningmx.com/

[miningmx.com] – SOUTH Africa mines minister, Ngoako Ramatlhodi, made the best of a very bad situation when he said yesterday he would allow the High Court to rule on the ‘once-empowered, always-empowered’ principle in the Mining Charter.

“It was a good PR exercise on behalf of the Department of Mineral Resources (DMR),” said Nicola Jackson and Eric van den Bergh, both partners at law firm Fasken Martineau’s global mining group.

“His announcement sends the right message to current (and future) industry stakeholders that the DMR values the participation of the industry players, and that it’s cognisant of the ramifications of the ‘once-empowered, always-empowered’ principle not being applied.”

Jackson and Van den Berg said that despite the practical issues that lie ahead, it was a good call for Ramatlhodi to look to the courts for clarification on the ‘once-empowered, always-empowered’ matter. “Any other route would only exacerbate the trust issues between government and the sector.”

However, whether Ramatlhodi and his legal team would successfully argue against the contentious principle in court remains to be seen. “It’s difficult [to predict the outcome], because the charter is a very nefarious, nebulous document,” said Chris Stevens, a director at Werksmans Attorneys.

Mining stocks hit as iron ore price slump continues – by Sarah-Jane Tasker and Matt Chambers (The Australian – April 1, 2015)

April 1, 2015

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

Australia’s iron ore miners continue to feel the pain of the brutal slump in the price of the commodity, with falls on the local market in early trading.

As the price of iron ore sits on the cusp of falling below $US50 a tonne, Fortescue Metals Group lost almost 2 per cent of its value after the market opened to sit at $1.92, while Atlas Iron’s stock was off 3.85 per cent at 12.5c.

BHP Billiton, the world’s largest miner, was 1.7 per cent lower this morning at $30.50, while its main rival, Rio Tinto, was off 1.28 per cent at $56.60.

Overnight, Chinese iron ore prices monitored by The Steel Index fell $US1.90, or 3.6 per cent, to $US51 a tonne, representing a record low since the index starting monitoring prices.

When current freight prices of about $US4.50 a tonne are removed, it is the lowest price Australian iron ore has been sold at since March 2006, when prices were still negotiated annually. The price could face a fresh round of negative news today, with China’s official manufacturing index data due.

U.S. Steel to idle some production at Minntac, affecting hundreds of workers – by John Myers (Duluth News Tribune – March 31, 2015)

April 1, 2015

http://www.duluthnewstribune.com/

The string of bad economic news on the Iron Range compounded Tuesday when U.S. Steel announced that it will dramatically slow production at its Minntac taconite facility in Mountain Iron starting June 1.

Local union officials said the move will put 700 Steelworkers off the job, nearly half of the nearly 1,500 people who work at Minnesota’s largest taconite mine and processing plant.

The Pittsburgh-based steel giant said the move was forced by an oversupply of iron ore due to continued low demand for its American-made steel — a problem made critical in recent weeks by the ongoing flood of foreign steel made with cheap foreign iron ore.

“Global influences in the market, including a high level of imports, unfairly traded products and reduced steel prices, continue to have an impact,” the company said in a brief statement Tuesday.

State Rep. Jason Metsa, DFL-Virginia, said he’s been told that three of the plant’s five production lines will be shut down in an effort to reduce a backlog of 3.2 million tons of taconite. Union officials said they had not yet been told which employees will be laid off.

Mercury in Mining a Toxic ‘Time Bomb’ for Indonesia – by Harry Pearl (Jakarta Globe – March 31, 2015)

April 1, 2015

http://thejakartaglobe.beritasatu.com/

Cisitu, Banten. Inside a dusty, cupboard-sized workshop in the remote mountains of western Java, Ateng spells out the toxic mix he uses to produce gold.

“I used 300 grams of mercury, in five ball mills, for two sacks of ore,” the 25-year-old says, flicking a blowtorch alight and taking aim at the amalgam of gold ore and mercury in front of him.

It’s a familiar calculation for Ateng, and one that in some form or another has been utilized for centuries — using mercury, a highly toxic liquid metal, to extract gold from ore. But here in Cisitu, a gold mining village deep in Gunung Halimun National Park, medical experts and environmental campaigners believe it could be the cause of a rash of illnesses among residents.

Rice fields and fishponds have been poisoned, environmental testing has found, and some residents are showing signs of severe mercury intoxication.

What’s more worrying to campaigners like Yuyun Ismawati, a Goldman Prize-winning environmental engineer and senior adviser at BaliFokus, is that a similar situation is being played out at hundreds of mining hot spots across Indonesia.

“You cannot see it now, but the cost of inaction could be huge,” says Ismawati, an Indonesian now based in the United Kingdom.

India seeks potash bargain after Belarus-China deal – by Rajendra Jadhav (Reuters U.S. – April 1, 2015)

April 1, 2015

http://www.reuters.com/

MUMBAI- (Reuters) – Belarus’ deal to sell potash to China at a lower-than-expected price has prompted India to seek a similar bargain ahead of the signing of new contracts this month, a move that could hit spot rates already under pressure due to stiff competition.

Belarusian Potash Company (BPC) last month agreed to raise the price of potash exports to China, the biggest consumer and which sets the benchmark, by $10 to $315 per tonne, undercutting Russian and North American rivals who were negotiating for a hike of $25-$30.

India, which imports all its potash needs, bought the crop nutrient at $322 per tonne on a cost and freight basis last year, the lowest level in seven years. It is seeking to keep the price at the same level this year.

India usually pays slightly more than China due to additional freight and as it buys in small consignments.

“The Chinese deal has highlighted the oversupply in the market,” said P.S. Gahlaut, managing director of state-run Indian Potash Ltd, the country’s biggest importer. “As far as India is concerned we cannot afford a price rise.”

Officials from Russia’s Uralkali, the world’s largest producer, are expected in India in the third week of April and any supply agreement around last year’s price will put pressure on spot prices that collapsed after Uralkali broke away from a joint trading venture with BPC in 2013.

Russian Miners With Billions of Dollars Weigh Dividend Increase – by Yuliya Fedorinova (Bloomberg News – March 31, 2015)

April 1, 2015

http://www.bloomberg.com/

(Bloomberg) — Russian metals exporters that are piling up cash after the ruble collapse are sharing the wealth with investors as the economy tilts into recession and global demand slows.

The weaker ruble has benefited Russia’s resource companies, which have costs in the national currency and revenues in dollars or euros. OAO Novolipetsk Steel, OAO GMK Norilsk Nickel and four other of Russia’s largest metals and mining companies together held $8.3 billion in cash and equivalents at the end of December, according to data compiled by Bloomberg. They had about $5.7 billion a year earlier.

Companies are using the windfall to reward shareholders, switching focus from debt repayments or investments. Prices for major materials have softened as China’s economic growth slowed last year to the weakest since 1990. Russia is sliding into its first recession in six years, as U.S. and European sanctions add to slowing consumer demand and a slump in oil prices.

“It makes no sense to start large investments now, and it’s better to pay excessive cash to the owners,” Kirill Chuyko, head of equity research at BCS Financial Group, said by phone on March 31. “The cost of capital for Russian companies increased, which also makes companies rethink their dividend policies.”

South Africa seeks court decision on mining black ownership rule – by Zandi Shabalala (Reuters U.K. – March 31, 2015)

April 1, 2015

http://uk.reuters.com/

PRETORIA – (Reuters) – South Africa’s mines ministry and the industry have agreed to ask the courts to help them resolve a dispute over a black ownership target of 26 percent for mining companies, the two sides said on Tuesday.

Mines minister Ngoako Ramatlhodi said there was “no consensus” on the issue as he gave details from an assessment of how the industry has complied with the targets set out for it in a state charter aimed at redressing the imbalances of white apartheid rule which ended two decades ago.

The main sticking point is the industry contention that once a company is 26 percent black-owned, it has effectively complied, even if some of the black shareholders then sell out. The government says companies must retain the 26 percent ratio as an absolute minimum.

Failure to meet the targets can result in mining permits or rights being revoked in an industry which is an increasingly hard sell to foreign investors in the face of often violent labour unrest, depressed prices and soaring wage and power costs.

South Africa’s Chamber of Mines said it had agreed with the ministry to approach the courts on the ownership target issue “in order to break the impasse, and to avert any confusion that may be damaging to investor perceptions”.

Illegal mining in Latin America: Minecraft (The Economist – September 16, 2014)

April 1, 2015

http://www.economist.com/

BONANZA, a tropical town in north-eastern Nicaragua, has attracted gold miners since 1880. Still true to its name, it yields over a thousand kilos of the metal every year. But it is a dangerous place. Last month heavy rain triggered a landslide, trapping 29 miners inside. Seven still remained unaccounted for by the time rescue workers abandoned the search.

The miners who died in Bonanza were informal workers, working on the basis that they sold any gold they found to Hemco, a Colombian-owned company which formally operates the concession. Informal mining is not necessarily illegal, but whether operating on the fringes of, or far outside, the law, workers run great risks. Twelve wildcat miners died in Colombia in May after a landslide at an illegal gold mine. In July eight died in Honduras.

Gold is not the only commodity to lure unlicensed prospectors but it has a particular appeal. Its price more than doubled between 2008 and 2011 (it has since come down again). In Madre de Dios, a jungle region in south-east Peru where 97% of local gold production in 2011 came from illegal mining, miners can earn $75 a day, up to five times the amount they might expect as a farm labourer. In Colombia nine out of ten gold mines are unlicensed. Low start-up costs mean miners can work in very small groups—although organised criminal groups also operate illegal mines at much bigger scale. Mercury, which is typically used to separate gold from ore, is cheap and readily available.

It is not only those underground who face danger. In Colombia, armed groups have muscled their way into the mining business, using violence to settle their disputes.

Tax breakthrough at Rio Tinto’s Mongolia copper mine -source – by Terrence Edwards (Reuters U.S. – March 31, 2015)

March 31, 2015

http://www.reuters.com/

ULAN BATOR – (Reuters) – Rio Tinto and Mongolia have made a breakthrough in a tax dispute that has been among issues stalling development of the $6.5 billion Oyu Tolgoi copper mine, according to an official familiar with the government’s position.

Disputes over costs and taxes have delayed an expansion of the mine that would extend its life beyond an estimated 15 years.

“Misunderstandings and issues surrounding the tax climates have been resolved,” the official told Reuters, without specifying the terms of an agreement or what other issues needed to be resolved for the next underground phase of the project to go ahead.

“The parties are working towards agreeing on the commercial terms of the underground project,” added the official, who asked not to be named because no announcement had been made yet. A Rio Tinto spokesman and a spokesman for Mongolia’s mining ministry declined to comment.

A spokesman for Rio’s Turquoise Hill Resources, which owns 66 percent of the mine, also declined to comment and pointed to a statement last week that said Oyu Tolgoi was appealing a ruling by Mongolia’s Tax Dispute Resolution Council to the country’s Administrative Appellate Court.

India: At the coalface – by James Crabtree (Financial Times – March 31, 2015)

March 31, 2015

http://www.ft.com/home/us

Failure to boost energy supplies will hurt Modi’s goal of turning India into a manufacturing force

A large, colourfully painted sign hangs above the entrance to the depths of Jhanjra, the largest underground mine in West Bengal’s Raniganj coal belt. The left side shows Indian mining as it once was, with roughly drawn cartoon figures wielding basic shovels and carrying woven baskets of coal, balanced on their heads. The right paints a more modern scene, featuring large yellow mining machines, operated by skilled technicians.

Take the cage-like lift down hundreds of metres into the darkness below, and walk for nearly an hour through narrow tunnels in stifling heat, and that second image suddenly becomes real as a cutting vehicle with fierce rotating metal teeth, known as a continuous miner and built by US manufacturer Caterpillar, rips tonnes of black rock from the coal face.

Appalachia Miners Wiped Out by Coal Glut That They Can’t Reverse – by Mario Parker (Bloomberg News – March 30, 2015)

March 31, 2015

http://www.bloomberg.com/

(Bloomberg) — Douglas Blackburn has been crawling in and out of the coal mines of Central Appalachia since he was a boy accompanying his father and grandfather some 50 years ago.

The only time that Blackburn, now a coal industry consultant, remembers things being this bad was in the 1990s. Back then, he estimates, almost 40 percent of the region’s mines went bankrupt.

“It’s a similar situation,” said Blackburn, who owns Blackacre LLC, a Richmond, Virginia-based consulting firm. Now, like then, the principal problem is sinking coal prices. They’ve dropped 33 percent over the past four years to levels that have made most mining companies across the Appalachia mountain region unprofitable.

To make matters worse, there’s little chance of a quick rebound in prices. That’s because idling a mine to cut output and stem losses isn’t an option for many companies. The cost of doing so — even on a temporary basis — has become so prohibitive that it can put a miner out of business fast, Blackburn and other industry analysts say.

So companies keep pulling coal out of the ground, opting to take a small, steady loss rather than one big writedown, in the hope that prices will bounce back.

De Beers toughens rules for diamond customers – by James Wilson and Avantika Chilkoti (Financial Times – March 29, 2015)

March 31, 2015

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

De Beers is making the biggest reforms in more than a decade to the way it sells most of its diamonds, amid concerns over the financial stability and transparency of some of its best customers.

The diamond group, which sells $6bn of unpolished diamonds annually and is the world’s largest supplier by value, is introducing tougher rules for companies wanting to join its coveted group of customers known as “sightholders”.

Under the new rules, expected to be announced this week, sightholders will have to present their accounts according to international standards. De Beers will also insist customers hold a specified proportion of equity in their businesses, making them less reliant on bank borrowing.

De Beers sells about 90 per cent of its mined output to sightholders, which play a vital role in the diamond trade, cutting and polishing rough stones and channelling them into global jewellery markets.

Only about 80 companies — most from traditional diamond trading and polishing centres such as Antwerp, Israel or India — are approved by De Beers to become sightholders and take part in regular sales, or “sights”, each year where they buy rough stones.

Former Xstrata CEO under pressure to make new mining deals – by Silvia Antonioli and Freya Berry (Reuters India – March 31, 2015)

March 31, 2015

http://in.reuters.com/

LONDON, March 31 (Reuters) – More than a year after he launched his private fund, former Xstrata boss Mick Davis is coming under pressure to build a new mining empire with the $6 billion in capital he has raised.

The renowned dealmaker set up X2 Resources 18 months ago after Glencore’s $46 billion takeover of Xstrata, when he was passed over for the top job in favour of his Glencore counterpart, Ivan Glasenberg.

Davis has since approached most large mining companies looking to buy a variety of assets, banking and industry sources said, but nobody has agreed to sell given a feeling that current prices are at rock bottom and may turn up again before long.

“Mick’s team has been looking at so many assets closely. But nobody wanted to sell to them. Vale didn’t want to sell, Rio didn’t want to sell, BHP didn’t want to sell,” said an industry source close to Davis. With his portfolio still empty, some sources expressed concern that some investors’ patience with Davis may run thin.

A banking source said: “Not all those investors are stuck on mining. So they say: if we can’t spend on this, we’ll go buy a bank or a supermarket.”

ENEMY OF MINE ENEMY: Mining companies and lobbyists are waging the real war on coal – by Jake Flanagin (Quartz – March 30, 2015)

March 31, 2015

http://qz.com/

It is indisputably better to be a coal miner today, in 2015, than in 1969—the year in which Congress passed the Federal Coal Mine Health and Safety Act.

Generally known in simpler terms as “the Coal Act,” the law precipitated the establishment of a number of crucial regulatory bodies, including the Mining Safety and Health Administration (MSHA)—a sort of Occupational Safety and Health Administration (OSHA), tailor-made for underground and surface-mining operations.

The act itself, in addition to creating this regulatory framework, laid down a set of nationwide health and safety standards for US miners, who, prior to, suffered some of the highest work-related mortality rates in the country.

The passage of the Coal Act, in conjunction with the establishment of MSHA, is generally credited with the precipitous decline in prevalence of coal worker’s pneumoconiosis (CWP, or “black lung”) between 1970 and 1995. This is an important distinction, because while life for the average coal miner today may be measurably better than it was 1969, it is not necessarily so when compared to industry-wide conditions in 1995.