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Mackenzie forges BHP Billiton’s path with touch from the past – by James Wilson (Financial Times – June 10, 2014)

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

For BHP Billiton, less is more. Diamonds from the edge of the Arctic, copper from Arizona’s desert and titanium from dunes by the Indian Ocean: all are assets that the world’s most valuable resources group accumulated and subsequently decided it could perfectly well live without.

To that list of assets, sold by the miner since 2012, can be added facilities from nickel plants in Australia to South African manganese mines. An array of BHP Billiton’s assets are up for potential divestment in what Andrew Mackenzie, chief executive, says is a retreat from complexity.

“The case for continued simplification of our portfolio is compelling,” he told investors last month. This could go beyond piecemeal sell-offs, with the miner looking at “structural options” – an allusion to a possible spin-off of assets into a separate vehicle.

What shape this could take is open to question. But if most assets deemed non-core are included it would in effect leave BHP without most of what it agreed to acquire when, in 2001, it announced its landmark merger with Billiton.
Then, the Billiton assets were “a sensational fit” with BHP, in the words of Paul Anderson, first chief executive of the combined group. Now, with a few exceptions they are fringe businesses.

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UPDATE 1-Iron ore drops; stays below $100/tonne as glut weighs – by Manolo Serapio Jr (Reuters India – June 11, 2014)

http://in.reuters.com/

SINGAPORE, June 11 (Reuters) – Iron ore slipped and stayed close to its weakest level since September 2012 at below $100 a tonne as brisk supply and poor demand from Chinese mills for spot cargoes led to prices being cut by nearly a third this year.

Tighter access to lending in China, the world’s top importer of iron ore, also weighed on the market, traders said, as banks tidy up their financials with the end of the first half of the year approaching.

“Many buyers are not able to open letters of credit at this time and this liquidity issue is partly why we’re not seeing a lot of buying activity in the spot market,” said an iron ore trader in Shanghai.

“It’s not easy to do business right now.” Iron ore with 62 percent iron content for immediate delivery to China .IO62-CNI=SI fell 0.7 percent to $93.60 a tonne on Tuesday, according to data compiler Steel Index.

The steelmaking raw material fell below $100 a tonne on May 19 and has since stayed below that level, touching a bottom of $91.80 on May 30, its lowest in more than 20 months. Iron ore has dropped more than 30 percent this year.

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 Latest breakdown bodes ill for SA platinum miners – by Lawrence Williams (Mineweb.com – June 10, 2014)

http://www.mineweb.com/

LONDON (MINEWEB) – As we reported here earlier, the latest round of government mediated talks between the Association of Mineworkers and Construction Union (AMCU) and the platinum miners running the mines which account for 30-40% of South Africa’s platinum output, broke down yesterday and the new South African Mines Minister, Ngoako Ramatlhodi, and his team have withdrawn from the negotiations – at least for now. However platinum exports are so key to the South African economy that one suspects further efforts will be forthcoming.

With the South African government mediators ditching recent platinum strike negotiations we look at potential outcome regardless of who wins or loses.

The principal mining companies involved – Anglo American Platinum (JSE:AMS), Impala Platinum (JSE: IMP) and Lonmin (LON:LMI) have thus released a joint statement to the effect that this latest round of negotiations ‘have been dissolved without an outcome’.

AMCU’s President, Jospeh Mathunjwa issued his own statement thus: “AMCU made many concessions. We actually moved twice to make employers move closer to us,” he said, but added that the union did not compromise its demand for a 12,500 rand ($1,200) a month basic wage, which excludes allowances. And it is these allowances, which in percentage terms are quite significant, which are the key here. The mining companies have moved to say they will meet the demands for a R12,500 minimum wage by 2017, but this would include these benefits and the union says this is unacceptable and has clung to its position no matter what. It has not given any significant ground in its demands right from the start.

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Over 1 million tonnes of iron ore leaves Port Hedland during single tide – by Vicky Validakis (Australian Mining – June 10, 2014)

 http://www.miningaustralia.com.au/home

Iron ore production is surging in the Pilbara, with Port Hedland recording a new tonnage record for the largest departure of ore on a single tide.

The new benchmark of 1,270,721 tonnes was achieved with seven capesize vessels departing on Saturday. This beat the previous record set in April by almost 160,000 tonnes.

Port Hedland Port Authority also said it was the first time seven capesize vessels have sailed on a single tide. The port, Australia’s biggest for iron ore, increased exports by 3.55 per cent between April and May, setting a monthly record of 36 million tonnes.

The news comes amid figures which show that a ramp up in iron ore production was partly to thank for a 1.1 per cent gain in Australia’s economy in the three months to March. Annual growth was a seasonally adjusted 3.5 per cent, the Australian Bureau of Statistics said.

The mining industry made up 80 per cent of this growth. The nation’s three largest iron ore miners BHP Billiton, Rio Tinto, Fortescue Metals Group have all added extra tonnages to their businesses.

It is this ramp up that is being blamed for an oversupply in seaborne supply, and a 31 per cent fall in the price of the commodity which last traded at $US94 a tonne.

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Outlook for mining is about the future of jobs – by Gavin Keeton (Business Day Live – June 9, 2014)

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

Keeton is with the economics department at Rhodes University.

THE platinum strike is in its fifth month. We learned last week that it has already caused a 0.6% annualised contraction of South Africa’s gross domestic product (GDP) in the first quarter. Mining production shrank a huge 25%. Manufacturing contracted, too, at an annualised 4.4%. Some of this is because manufacturers supplying the platinum mines are also being hurt by the strike. But it also reflects a deeper weakness in the economy as a whole, which was already causing great anxiety.

Since 1994, GDP has fallen in only four quarters. GDP declined for one quarter in 1998 and for three quarters in 2008-09. Both times the causes were external. This time, the contraction is entirely self-inflicted.

The social costs of the strike are huge. Religious leaders speak of hungry adults stealing from children at school feeding projects. HIV-positive mine workers on antiretrovirals have been denied access by strikers to the mine clinics where they receive these life-saving drugs. To survive, most strikers will have borrowed from money lenders at exorbitant interest rates.

Their debt repayments will swallow up any increase they gain in wages as part of a settlement. The indebtedness of the mining companies is also rising as without income, their obligations under existing loans escalate. This will reduce future profitability and so the Treasury will bear some of the long-term costs of the strike through reduced tax revenues.

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UK hits 30-year anniversary of miners’ strike – by Alasdair Soussi (Al Jazeera.com – March 6, 2014)

http://www.aljazeera.com/

The strike led to a humiliating and lasting defeat for the miners and a political triumph for Margaret Thatcher.

Glasgow, United Kingdom – Few confrontations in the history of modern Britain come close to the industrial dispute that gripped England, Scotland and Wales in March 1984. Fracturing communities, pitting workers against the forces of law and order and even causing lives to be lost, the bitter clash became one of the greatest trade union struggles since the British General Strike of 1926.

That struggle was the British miners’ strike and today marks 30 years since the head of Britain’s Coal Board, Ian MacGregor, announced plans to cut production – the equivalent of 20 pits or 20,000 jobs – leading to a year-long walkout that would see British Prime Minister Margaret Thatcher and National Union of Mineworkers (NUM) President Arthur Scargill come to blows and change the face of Great Britain forever.

“It was the longest industrial dispute in Britain in the 20th century and directly involved roughly 120,000-130,000 workers from March 1984 onwards,” Dr Jim Phillips, a senior lecturer of economic and social history at the University of Glasgow, told Al Jazeera.

“It might be seen as pivotal in the sense of Britain’s economic trajectory – moving out of an industrial economy into a more service, finance, and capital-related economy. Some of the 150 or so pits that operated in 1984 were, in narrow economic terms, loss-making and so required some degree of cross subsidy from more financially viable pits to remain in operation… The coal industry was also losing business during the recession of the early 1980s.”

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Meet the Russian CEO on a Mission to Guard Potash Prices – by Yuliya Fedorinova (Bloomberg News – June 10, 2014)

http://www.businessweek.com/

OAO Uralkali Chief Executive Officer Dmitry Osipov favors stable potash prices as he considers how to manage output at the world’s biggest producer of the fertilizer.

That’s a relief for investors and peers after the company’s decision, under his predecessor, to end a venture with Belarus and ramp up production led to a price slump of about 30 percent.

“We are a responsible market player,” Osipov, 48, said in an interview in his Moscow office. “Market share is important for us, but we don’t want prices to fall. It’s too early to say what utilization rate we will have in the second half.”

Osipov, an academic researcher before rampant inflation in 1993 forced him to seek better paid work in industry, replaced Vladislav Baumgertner, 42, after the breakup of the marketing venture landed the then-CEO in a KGB jail in Belarus. While Uralkali has since stuck to a policy of higher output, running at near full capacity from about 70 percent previously, Osipov is keeping his options open for the second half of the year.

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Turkey needs new coal mining law after disaster -commission head – by Gulsen Solaker (Reuters India – June 10, 2014)

http://in.reuters.com/

SOMA, Turkey, June 10 (Reuters) – Turkey needs a new coal mining law to prevent a repeat of its worst ever industrial disaster in which 301 workers were killed, the head of a commission investigating the incident said on Tuesday.

The miners were killed last month in a mine fire in Soma, a small town 480 km (300 miles) southwest of Istanbul, fuelling anger in a nation which has long had one of the world’s worst workplace safety records.

The disaster highlighted gaps in Turkish regulation, not least the lack of specific rules for the coal industry, as well as insufficiently stringent inspections, local mining experts told Reuters after of the fire.

Ali Riza Alaboyun, a deputy from the ruling AK Party who heads the parliamentary commission investigating the accident, said the highly-complex nature of coal mines required a separate set of regulations.

“By doing this, we will be able to regulate inspections and training related to coal mines separately,” Alaboyun told reporters during a visit to Soma.

Eight suspects including the chief executive of Soma Mining, which operates the facility, have been provisionally charged with “causing multiple deaths by negligence”. The company has denied any negligence on its part.

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Platinum Price Posed For Big Rise If South African Strike Talks Fail Again – by Tim Treadgold (Forbes Magazine – June 7, 2014)

http://www.forbes.com/

Investors with a taste for precious metals will be watching the platinum market closely next week because if last ditch talks to end a five-month long strike by workers in South Africa’s all-important platinum mining industry are not successful the price of the metal could rise sharply.

That platinum has not reacted positively to the strike by 70,000 mine workers is one of the more interesting aspects of an event which has affected an estimated 40% of the world’s supply of platinum, a metal which plays an essential role in controlling noxious emissions from vehicle engines, as well having a market in the jewelry industry.

Normally, any commodity which has almost half of its supply effectively removed from the market, would enjoy a strong price response. That has not been the case with platinum, yet.

Worker, Management Stand-Off

There have been short-lived price spikes since the strike started over a claim by mine workers for a near tripling of entry level wages to around $1180 a month by the year 2017, and a mining company response which was a fraction of the claim.

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Anglo Will Flourish Under Cutifani Or Be Bought, Bernstein Says – by Firat Kayakiran (Bloomberg News – June 10, 2014)

http://www.businessweek.com/

Anglo American Plc (AAL) will either be successful at reorganizing its platinum business and starting production at the Minas-Rio iron ore mine in Brazil or be acquired, research company Sanford C. Bernstein Ltd. said.

The metals producer is reviewing global assets to shore up earnings after Chief Executive Officer Mark Cutifani took over last year amid cost overruns and delays at Minas-Rio. Cutifani set a goal of improving Anglo’s return on capital employed to at least 15 percent by 2016 from 8 percent in July.

“There is a free option on offer for Anglo,” Paul Gait, a London-based Bernstein analyst, said in a note today. “Either the company outperforms under Mark Cutifani’s leadership, and demonstrates the value of tons in the ground, or it fails to do so and is put out of its misery in fairly short order.”

Anglo, which controls the world’s largest platinum producer, has seen the output disrupted by a strike since January in South Africa. The Association of Mineworkers and Construction Union has called out more than 70,000 miners, including employees at Anglo American Platinum Ltd. Government-led talks yesterday failed to end the impasse.

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Coal isn’t dying – it just can’t compete – by Christina Simeone (Penn Live: The Patriot News – June 9, 2014)

http://www.pennlive.com/#/0

Christina Simeone is the director of the PennFuture Energy Center at PennFuture, a Harrisburg-based advocacy group.

Last week, the U.S. Environmental Protection Agency (EPA) released a proposal to reduce carbon pollution from existing power plants, the nation’s number one source of these emissions. In Pennsylvania, opponents of the rule are saying this is a “war on coal” aimed at killing the coal industry and destroying jobs. So, what is really going on?

First off, coal isn’t dying.

Coal is being out-competed in the domestic electric power markets by cheaper, relatively cleaner natural gas. However, at the same time, coal is breaking records in the international export markets, indicating economic viability.

Second, there is no “war on coal.”

There is a market correction under way. Historically, energy markets have been artificially cheap because the economic costs of pollution have not been factored into market prices — rather, these costs have been externalized to the public in the form of health-harming pollution. This externalization is called a market failure. If you like competitive markets, then you should support correcting market failures.

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Newmont Suspends Indonesian Operations As Minerals Export Issue Remains Unresolved – by Trefis Team (Forbes Magazine – June 9, 2014)

http://www.forbes.com/

Newmont Mining has announced the suspension of operations at its Batu Hijau mines in Indonesia. This follows the halt in production and processing of copper concentrate at its Indonesian operations after its copper concentrate storage facilities were filled to capacity.

The company had halted exports from Indonesia in January, as a law banning exports of unprocessed minerals from the country came into effect. Though last minute changes to the law permitted Newmont to export its copper concentrates, they imposed a 25% tax on exports which would rise to 60% by 2016. The company claimed that this tax violated the terms of its original investment agreement, or contract of work, with the Indonesian government.

The company is engaged in negotiations with the government regarding the export duty, leading to resumption of its exports from the country. The company invoked the force majeure clause of its contract of work, in order to suspend operations, after its storage facility was filled to capacity and production could not be continued.

The suspension of production will impact Newmont’s quarterly and annual results, though the extent of the impact will be determined by the duration for which operations remain suspended.

A law enacted in Indonesia in 2009 banned exports of unprocessed minerals from the country with effect from January12, 2014.

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Under attack, coal maintains its political muscle – by Adam Beam (Minneapolis Star Tribune – June 8, 2014)

http://www.startribune.com/

Associated Press – FRANKFORT, Ky. — The coal industry is shedding thousands of jobs and facing the government’s most severe crackdown on carbon emissions yet. But king coal still flexes its political muscle in Kentucky and West Virginia, where Republicans and even Democrats try to out-coal one another by cozying up to the industry and slamming President Barack Obama.

In other coal-producing areas such as Ohio and Virginia, Democrats have been able to win even with the industry against them. That’s not an option for politicians in the heart of Appalachia.

Many people here still cling to coal as a source of work and cultural pride, so almost everyone running for office seeks the mantle of coal savior, or at least defender.

Kentucky Sen. Mitch McConnell, a Republican up for re-election, chided his Democratic opponent, Alison Lundergan Grimes, for accepting money from “anti-coal activists,” including a group that worked closely with the Obama administration on the regulations. Grimes counters that McConnell and his super PAC have taken campaign money from a group whose goals include reducing the number of coal-fired power plants in Texas.

After the new emissions rules were announced June 2, she took out radio and newspaper ads to criticize Obama’s “war on coal.”

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Non-mining areas key issue in Vale’s contract renegotiation [Indonesia] – by Raras Cahyafitri (Jakarta Post – June 10, 2014)

http://www.thejakartapost.com/

The Energy and Mineral Resources Ministry and nickel miner PT Vale Indonesia are still hammering out issues relating to Vale’s contract renegotiation.

The ministry’s director general for minerals and coal, R. Sukhyar, recently said Vale had agreed to return around 83,000 hectares (ha) of its concession area to the government.

However, he said, both parties were still negotiating to accommodate requests by the local administration regarding the utilization of areas that had not been mined or explored. These areas have been left idle.

A meeting attended by several governors and regents of areas where Vale holds concessions was held last week. According to Sukhyar, local administrations were seeking assurance that Vale’s activities would benefit the regions.

“It’s important to know Vale’s future plans. If they conflict with governors and regents’ plans, we have to settle. In the future, if none of the plans are realized, Vale’s operation can be reviewed,” Sukhyar said.

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Smith River is too valuable to mine [Nickel] – by Jeff Thompson (SF Gate.com – June 9, 2014)

http://www.sfgate.com/

Jeff Thompson is executive director of California Trout, a nonprofit organization that has been working to protect and restore wild trout, steelhead, salmon and their waters throughout California since 1971.

The Smith River, stretching from Southern Oregon into the far reaches of Northern California, is the only major California river that remains undammed from its headwaters to its mouth. That’s no small thing. More than 7,000 dams and diversions clutter California’s rivers, making the Smith the last truly wild major river here.

A mining company based in the United Kingdom has set its sights on developing a nickel mine along one of the Smith’s major tributaries in Oregon. The proposed mining area is within a national forest; federal law allows mining on such lands. Just because mining can take place on this land, should we allow it happen?

Is it fair – or even logical – for a private corporation to reap a profit while placing California’s last wild river in harm’s way? Millions of dollars and countless hours have gone into protecting and restoring the Smith River watershed. Ninety percent of the land around the river and its tributaries are managed by public agencies. This tremendous investment of time and money has a singular goal: to protect one of the last salmon strongholds left in the lower 48 states, which provides essential support for a multimillion-dollar salmon fishery.

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