International Media Resource Articles – Page 719

U.S. Seen as Biggest Oil Producer After Overtaking Saudi Arabia – by Grant Smith (Bloomberg News – July 4, 2014)

July 8, 2014

http://www.bloomberg.com/

The U.S. will remain the world’s biggest oil producer this year after overtaking Saudi Arabia and Russia as extraction of energy from shale rock spurs the nation’s economic recovery, Bank of America Corp. said.

U.S. production of crude oil, along with liquids separated from natural gas, surpassed all other countries this year with daily output exceeding 11 million barrels in the first quarter, the bank said in a report today. The country became the world’s largest natural gas producer in 2010. The International Energy Agency said in June that the U.S. was the biggest producer of oil and natural gas liquids.

“The U.S. increase in supply is a very meaningful chunk of oil,” Francisco Blanch, the bank’s head of commodities research, said by phone from New York. “The shale boom is playing a key role in the U.S. recovery. If the U.S. didn’t have this energy supply, prices at the pump would be completely unaffordable.”

Oil extraction is soaring at shale formations in Texas and North Dakota as companies split rocks using high-pressure liquid, a process known as hydraulic fracturing, or fracking. The surge in supply combined with restrictions on exporting crude is curbing the price of West Texas Intermediate, America’s oil benchmark. The U.S., the world’s largest oil consumer, still imported an average of 7.5 million barrels a day of crude in April, according to the Department of Energy’s statistical arm.

BHP Billiton looks to catch up to Rio Tinto in ironman contest – by Amanda Saunders (The Age – July 7, 2014)

July 7, 2014

http://www.theage.com.au/business

Miner BHP Billiton is confident it can ”close the gap” with iron ore arch-rival Rio Tinto on margin per tonne within a few years.

And it is likely to develop the $20 billion outer-harbour project at Port Hedland rather than expand its inner-harbour operation if it moves to produce beyond its current annual run rate target of 270 million tonnes. BHP president of iron ore Jimmy Wilson says the miner is trailing Rio on margin per tonne, and ”our desire absolutely is to close that gap”.

He said the miner would never be in a competition with Rio on volumes but stressed ”where we would like to compete is on the cost of production side, more importantly, the margin per tonne that we make”.

”While we are marginally behind Rio at the moment, we’ve got to back the fact that we are going to eliminate that gap in the foreseeable future,” he says.

”What is the foreseeable future? I’d be disappointed if it took more than a couple of years. ”I do respect our competitors – Rio, Fortescue, Vale – [and] none of them is standing still either. So, I think, at the end of the day, you are going to see an improvement come through for all of those businesses.”

How politics nearly ruined deal to end South Africa’s longest strike – by ED CROPLEY, JOE BROCK AND ZANDI SHABALALA (Reuters India – July 7, 2014)

July 7, 2014

http://in.reuters.com/

JOHANNESBURG – (Reuters) – Forty-eight hours after talks to end South Africa’s longest strike hit a brick wall when the mining minister suddenly pulled out, a bishop and an anti-establishment corporate lawyer engineered a deal at a secret meeting in a ritzy hotel.

The events, revealed by interviews with key players in the five-month platinum strike, expose the impotence of the bargaining structures that have underpinned labour relations since the end of white-minority rule in 1994.

They also cast a shadow over the ruling African National Congress (ANC), which admonished the minister for inviting the lawyer to the talks after he had left the ANC to be elected to parliament for the ultra-leftist Economic Freedom Fighters (EFF).

The chastened minister then withdrew from the negotiations, almost scuppering an agreement between the world’s three biggest platinum firms and the striking Association of Mineworkers and Construction Union (AMCU), which has informal ties to the EFF.

“They did not tell me how to withdraw,” the minister, Ngoako Ramatlhodi, told Reuters. “They just told me: ‘We think you have done enough. We want you to go slow on this.'”

Trafigura Among Six to Enter BHP Nickel Sale, Review Says – by Ben Sharples (Bloomberg News – July 06, 2014)

July 7, 2014

http://www.businessweek.com/

Trafigura Beheer BV and Sherritt International Corp. (S) are among six companies to enter the sale process for BHP Billiton Ltd.’s Australian nickel unit, according to a report from the Australian Financial Review.

Glencore Plc, X2 Resources, Jinchuan Group Co. and MMG Ltd., a unit of China Minmetals Corp., are also among bidders that have started due diligence on BHP’s Nickel West business, the newspaper reported today, without saying where it got the information. Emily Perry, a Melbourne-based spokeswoman for BHP, declined to comment in an e-mailed response.

BHP said in May it’s considering selling all or part of its Australian nickel unit as prices surge amid an Indonesian export ban on the steel hardening agent. The due diligence process may take months and BHP is keen to finalize a deal by the end of the year, the newspaper said. The business may be worth more than A$800 million ($749 million), according to the newspaper.

Michael Oke, a spokesman for London-based X2 Resources, Francis de Rosa, a Sydney-based spokesman for Glencore, and Kathleen Kawecki, a Melbourne-based spokeswoman for MMG, didn’t immediately respond to e-mails sent outside of normal business hours seeking comment on the sale process. Three calls to Gao Tianpeng, the general manager of Jinchuan’s asset operation department, went unanswered.

Amsterdam-based Trafigura and Toronto-based Sherritt didn’t immediately respond to e-mails seeking comment.

Canadian company hopes to find copper in Methow Valley – by Craig Welch (Seattle Times – July 5, 2014)

July 7, 2014

http://seattletimes.com/html/home/index.html

Less than 2 miles from the heart of one of the most popular outdoor recreation spots in Washington, a Canadian company plans to drill holes to hunt for copper. The Forest Service says it doesn’t have the authority to stop the project.

MAZAMA, Okanogan County — Behind the general store and the outdoor gear shop — above the inn and horse corral — granite walls and pine-covered hills rise thousands of feet to form a towering nob called Goat Peak.

This fixture overlooking the North Cascades’ upper Methow Valley — one of the most popular outdoor playgrounds in the state — is where residents and visitors, including many from Seattle, walk dogs, run trails, cross-country ski, snowmobile, hike, bike and even paraglide.

Now a Canadian mining company wants to explore the earth beneath this recreation hot spot to see if metals marbled into the rock are plentiful enough for a copper mine. And despite mountains of opposition, the U.S. agency overseeing exploration maintains it’s powerless to stop the project.

Not 2 miles from the heart of Mazama, Vancouver-based Blue River Resources is proposing to drill as many as 15 bore holes 1,000 feet deep to see how much copper and molybdenum ore is there. The drilling could go on 24 hours a day for months, and would require the company to haul thousands of gallons of water up the mountain. The drilling could start later this summer.

Can mining companies survive US$90/t iron ore prices? – by Dorothy Kosich (Mineweb.com – July 4, 2014)

July 4, 2014

http://www.mineweb.com/

If iron ore prices continue at near-record lows, mining companies with substantial debt or expensive operations may “bear the brunt of the impact”, S&P warns.

RENO (MINEWEB) – If iron ore prices “stagnate” at US$90 per ton through 2015, some miners’ key credit metrics might worsen significantly, based on scenario analysis on 10 major iron ore producers, Standard & Poor’s Ratings Services observed this week.

“In particular, miners with large iron ore exposure, but are unable to cut costs and are saddled with debt, will face a severe deterioration in earnings and credit metrics,” warned S&P Credit Analysts May Zhong, Diego H. Ocampo, Andrey Nikolaev, Amanda Buckland, Elad Jelasko, and Xavier Jean.

“Whether this deterioration triggers a downgrade depends critically on a mining company’s financial flexibility. If a miner can defer its capital expenditure and conserve cash, its credit quality should be able to withstand sliding iron ore prices,” said the analysts. “In addition, diversified mining companies are well placed, as they can rely on commodities with more resilient prices, such as oil.”

“Another important factor is the movement of mining companies’ local currencies, which could affect their costs and revenues,” S&P observed.

“We observed that major players – Australia’s BHP Billiton Ltd. and Rio Tinto, PLC, and Brazil’s Vale S.A, – can accommodate declining earnings should iron ore prices stay at US$90 per ton through to the end of 2015,” said the credit ratings agency.

Davis sees IPO for X2 at future point – by David McKay (Miningmx.com – July 2, 2014)

July 4, 2014

http://www.miningmx.com/

[miningmx.com] – WHEN NEWS FILTERED through last year that Mick Davis was planning to establish his own firm, the natural assumption was that he was joining the ranks of other former mining executives in private equity.

Davis’s former banker, for instance, Ian Hannam has established an investment firm of his own aimed at capitalising on opportunities in Zimbabwe. There are a bunch of others.

Then in April, Ivan Glasenberg and Mark Cutifani, the CEO of Anglo American, told Reuters at the FT Commodities conference that private equity and mining was like mixing oil and water.

Private equity gears up assets with steady cash flows which are used to repay interest. Then the asset is sold for a higher value after a six to seven year investment period.

“The problem with the commodities space, if you have a high gearing (debt), is that you are not running Boots pharmaceutical where you have a pretty constant earnings base,” said Glasenberg. “In mining you just don’t know your earning base.” Davis, however, said X2 Resources differs from private equity.

“X2 Resources’ proposition is that of building another diversified mining company.

What Mick [Davis] wants – by David McKay (Miningmx.com – June 30, 2014)

July 4, 2014

http://www.miningmx.com/

[miningmx.com] – ONE OF THE best quotes about Mick Davis, the founder CEO of Xstrata, comes from former JP Morgan banker Ian Hannam who assisted with a number of transactions for Davis.

He said: “There are four people who claim they brought Billiton to London: [Brian] Gilbertson, myself, Adrian Coates [a well-known banker in London, then at HSBC] and Davis. The answer is – it was Davis. He saw the opportunity and managed to persuade Gilbertson that it would create a platform to build a new company to rival Rio [Tinto]”.

Since the listing of Billiton in 1997, Davis has been the primum mobile of some of the highest profile mining deals in London, including Billiton’s merger with BHP, a string of transactions during the decade or so during which Xstrata was built into the fourth largest diversified miner, Xstrata’s ultimately frustrated ‘merger of equals’ with Anglo American, and finally, the marriage of Xstrata to Glencore in 2013, the largest transaction in the City that year.

The Glencore-Xstrata combination was also described in terms of ‘a merger of equals’ when first unveiled in 2012. The fact that the final arrangement ended with the departure of Davis, and nearly all of his senior management team, suggests that in global mining finance, mergers are illusory, created to save the actors from over-paying for those acted upon.

That’s why it’s so tempting to style Davis’s swift return to the UK’s corporate scene as head of X2 Resources as an act of ‘unfinished business’, although, Davis was off stage so briefly, it’s hard to describe X2 Resources as a return so much as a continuum.

Rio Tinto looks to catch up in potash – by Emiko Terazono (Financial Time – July 3, 2014)

July 4, 2014

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

Miner’s Canadian joint venture is latest in oversupplied market

Dark clouds are gathering over the potash industry again. Last week, Rio Tinto and its partner, Russian fertiliser group Acron, said they would push ahead with the development of the Albany project in Saskatoon, Canada.

In its first disclosure of the size of the asset, north Atlantic Potash, the 50-50 joint venture between Rio and Acron, said the project area contained 1.4bn tonnes of assumed potash resources, a key fertiliser ingredient, of which 329m are estimated to be recoverable.

The announcement does not bode well for an already oversupplied sector where several other major developments, the biggest being BHP Billiton’s Jansen mine with its 5.3bn tonnes of measured resources and 1.3bn tonnes of inferred potash, are also on the drawing board.

Rio, which invested in the joint venture in 2011, has not disclosed how much it has spent on the project, but it sees it as a “tier one” exploration asset.

According to last week’s announcement, the next steps for Rio and Acron are a continuation of the environmental assessment and the pre-feasibility study.

Major Partner Won’t Expand Stake In Mine Near Ely – by CBC Minnesota (July 3, 2014)

July 4, 2014

http://minnesota.cbslocal.com/

MINNEAPOLIS (AP) — A major partner gave up the right Thursday to take a bigger stake in the proposed Twin Metals copper-nickel mine near Ely in northeastern Minnesota, which has been a target of criticism from environmentalists who fear it will harm the nearby Boundary Waters Canoe Area Wilderness.

Chilean-based mining company Antofagasta PLC said it has terminated its option to buy another 25 percent of Twin Metals Minnesota LLC. The announcement said Toronto-based Duluth Metals Ltd. is now assuming control of the joint venture.

Duluth Metals owns 60 percent of Twin Metals Minnesota. Antofagasta, which could have upped its stake to 65 percent, said it’s now “evaluating its options” for what to do with its 40 percent interest in the joint venture and its 10 percent direct ownership stake in Duluth Metals.

“By doing this today Antofagasta has signaled they intend to walk away from the project,” said Aaron Klemz, spokesman for the Friends of the Boundary Waters Wilderness. An Antofagasta spokesman denied that.

“No they’re not walking away,” spokesman Robin Wrench said by phone. He said Antofagasta still likes the project for the long-term, it’s just not exercising its right to buy a larger stake. The move means Antofagasta is only responsible for 40 percent of the project’s future funding, not 65 percent, he said.

“You can’t breathe in air with 7000 micrograms of sulfur dioxide.” [Norilsk Nickel – Kola Peninsula] – by Amelia Jaycen (Barents Observer – July 03, 2014)

July 4, 2014

http://barentsobserver.com/en

BarentsObserver.com is an open internet news service, which offers daily updated news from and about the Barents Region and the Arctic. The site is run by the Norwegian Barents Secretariat in Kirkenes, Norway.

Putin presses Norilsk Nickel to move to a functioning, upgraded plant, dismantle the obsolete polluter in Nikel.

Russia’s Ministry of Natural Resources and Ecology on Tuesday told representatives of “MMC” Norilsk Nickel of the planned decommissioning some of Nikel plant rundown facilities by 2016 and reorganization of metallurgical production at the Monchegorsk plant, which must be upgraded and modernized, the ministry said in a press release yesterday. Monchegorsk is owned by the same company and located some two-hour drive south of Murmansk on the Kola Peninsula.

The program involves modernization and renovation of all stages of processing and consolidation of smelting and refining capacity to a more modern venue including technological upgrading and expansion of refinery at Monchegorsk during 2016-2017. Capital investments in the program total more than 50 billion rubles, the release says.

The decision was made in the course of inter-ministerial consultations, and the updated reconfiguration of Monchegorsk is to be accompanied by a special Russian-Norwegian working group. The parties scheduled a technical workshop for September 2014 in Moscow to plan the next steps.

UPDATE 2-India’s Sesa sees 6-fold jump in iron ore output, Goa mining set to resume – by Krishna N Das (Reuters India – July 3, 2014)

July 4, 2014

http://in.reuters.com/

NEW DELHI, July 3 (Reuters) – India’s Sesa Sterlite Ltd expects its iron ore output to surge six fold this fiscal year as it resumes production in Goa in September after a 19-month mining ban in the state, an executive of the country’s top private iron ore miner said.

A pick up in production as mines in India’s biggest iron ore-exporting state restart could hurt global prices of the steelmaking raw material .IO62-CNI=SI that have already lost almost 30 percent this year in an amply supplied world market.

Sesa Sterlite’s total iron ore output from India, where it operates in Goa and neighbouring Karnataka, is expected to reach 9.29 million tonnes in the year to March 2015 from about 1.5 million a year ago, Aniruddha Joshi, a vice president at the firm, told Reuters in an interview on Thursday.

Most of the output will be exported as Indian steelmakers are not keen on buying the low-grade ore from Goa at global benchmark prices, Joshi said. The country is currently the world’s tenth largest exporter of iron ore.

“It’ll suffice to say that only China can use Goan ore,” Joshi said. “Because it’s hematite coarse fines which can be mixed with very fine concentrates that are only produced in China in high quantities.”

Randgold CEO Bristow Hunts One Last Big African Discovery – by Kevin Crowley (Bloomberg News – July 3, 2014)

July 4, 2014

http://www.bloomberg.com/

Mark Bristow, the chief executive officer of Randgold Resources Ltd. (RRS), said he’s hunting one last major discovery to cap his career before retiring.

The 55-year-old South African has overseen Randgold’s development from a junior mining-exploration company into a gold producer with assets across sub-Saharan Africa including Mali, the Democratic Republic of Congo and Senegal. The next big find could be in Ivory Coast, he told reporters.

“I’d like to find one more asset, for me it would be a perfect finish to my career,” he said in Johannesburg yesterday. “We pour the gold and I’m out of here. I don’t want to hang around. I don’t want to be the chairman or anything like that. I’ve got other things to do.”

Bristow, a geologist by training, led the discoveries of three gold mines in Mali holding 20 million ounces in deposits, over the course of his 30-year career at Randgold. The stock’s return has averaged the equivalent of 27 percent annually in the past decade, compared with the 0.4 percent gain by Barrick Gold Corp. (ABX), the largest producer, and the 2.7 percent decline by Newmont Mining Corp. (NEM), the second biggest, according to data compiled by Bloomberg.

With the Kibali mine in Congo that went online at the end of 2013, Randgold can produce gold profitably across its operations even if the price of bullion falls to $1,000 an ounce, 32 percent lower than the current spot price, for the next five years, Bristow said. The challenge is the five years beyond that.

COLUMN-Copper is unexpected victim of Indonesian export ban – by Andy Home (Reuters India – July 3, 2014)

July 3, 2014

http://in.reuters.com/

The opinions expressed here are those of the author, a columnist for Reuters.

(Reuters) – When Indonesia banned the export of unprocessed minerals in January of this year, the consensus view was that the most significant impact would be on the nickel and aluminium raw material markets in that order.

Copper barely warranted a mention.

Analysts at Macquarie Bank, for example, issued a research note on January 14, two days after the ban came into effect, examining the implications in a question-and-answer format. The only reference to copper came in the 19th bullet point under the telling heading: “Have copper producers been let entirely off the hook?”

Six months on, though, and one of the country’s two giant copper mines is on care and maintenance and the other has cut production by half. There have been no concentrate exports since January.

Not only is this the single biggest hit to copper mine supply this year but it is acting to accelerate a fracturing of the copper concentrates pricing model.

Both Freeport McMoRan, which owns and operates the Grasberg mine, and Newmont Mining, major stakeholder in and operator of the Batu Hijau mine, appear to have been blind-sided by the January rule changes.

Mining sector tipped to rise again – by David McKay (Miningmx.com – July 3, 2014)

July 3, 2014

http://www.miningmx.com/

[miningmx.com] – THE long-standing adage about mining is that it consists of a hole in the ground with a fool at the bottom and a liar at the top. As derogatory as that may sound to an industry where its top 40 largest companies turn over $731bn, and provide the minerals crucial to modern life, the loss of investor confidence in the sector since 2012 suggests many among the investment ranks were prepared to believe it.

Mining companies spent $348bn between 2005 and 2012, but generated only $126bn in net cash returns. It was a poor performance that was reflected in how resource equities fared. The HSBC Global Mining index shed 46% of its value from 2011 to 2013 as the reality of how little had been returned in yield by the big-spending mining companies hit home.

That’s why at a market capitalisation of $157bn, Facebook is worth nearly double Rio Tinto ($86bn) even though the Anglo-Australian miner generated $50bn from continuing operations during its 2013 financial year.

In comparison, the social media phenomenon generated $2.5bn in the first quarter of this year and some $641m in profit whereas Rio Tinto produced an annual loss of $3bn, including impairments and currency exchange losses.

The market forces that affect Facebook and Rio Tinto are, of course, vastly different, but the fact remains that in a universe of investment, the promises of riches that would flow from China’s industrialisation in the early 2000s had, in the hands of the diversified mining companies, resulted in very little.