International Media Resource Articles – Page 764

COLUMN-BHP, Rio Tinto show commodity game has changed – by Clyde Russell (Reuters U.S. – October 23, 2013)

October 23, 2013

http://www.reuters.com/

Clyde Russell is a Reuters market analyst. The views expressed are his own.

LAUNCESTON, Australia, Oct 23 (Reuters) – The latest production reports by Anglo-Australian mining giants BHP Billiton and Rio Tinto show just how much the commodity market has changed in the past year.

BHP and Rio’s quarterly statements underline that mining is now a game of producing the highest volumes at the lowest costs, while at the same time scaling back on spending.

This seems like a logical response to concerns over slowing demand growth from top consumer China, whose appetite for commodities drove a decade-long boom in developing projects to boost supply.

The jury is still out on whether the major resource companies stopped spending in time to avoid a major bust in commodity prices, or whether new supply still in the pipeline will deliver a crashing end to the China-led boom. Certainly both BHP and Rio made much of their efforts to boost volumes at lower costs, while scaling back capital expenditure.

Before he was a billionaire, Andrew ‘Twiggy’ Forrest ran with a colourful crowd – by Paul Garvey (The Australian – October 23, 2013)

October 23, 2013

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

BEFORE he became the nation’s greatest philanthropist, Andrew Forrest was a fast-talking salesman who borrowed millions of dollars from a convicted drug dealer and employed disgraced former West Australian premier Brian Burke to help him smash the BHP Billiton-Rio Tinto duopoly in the Pilbara iron ore industry.

Mr Burke, a lobbyist and former close adviser to Mr Forrest, boasts in a new book to be published next week that he was able to lean on bureaucrats and MPs to have key legislation passed for the entrepreneur in just a few months, despite the process normally taking 18 months.

Twiggy: The High-Stakes Life of Andrew Forrest, by Andrew Burrell, a Perth-based journalist with The Australian, also details how four judges in four separate court cases have questioned the businessman’s ethics and truthfulness during his colourful career. Mr Forrest rejected repeated approaches to co-operate with Burrell and to respond to claims made by others in the book.

The unauthorised biography investigates how Mr Forrest transformed himself, through boundless energy and cunning, from a corporate pariah after being removed as chief executive of Anaconda Nickel in 2001 into one of Australia’s most successful entrepreneurs and a philanthropist who is feted by the establishment.

Landmark Canada/EU trade agreement could have major implications for miners – by Kip Keen (Mineweb.com – October 23, 2013)

October 23, 2013

http://www.mineweb.com/

If mining doesn’t seem to factor large in CETA, there are still major implications for the sector when the investor protection elements are considered.

HALIFAX, NS (MINEWEB) – A major trade agreement between Canada and Europe could provide significant protection from expropriation, among other things, to Canadian companies investing in Europe and vice versa.

Probably the most significant development in the Comprehensive Economic and Trade Agreement (CETA) for miners on both sides of the Atlantic is the inclusion of an investor-state provision that, in practice, ensures foreign companies a process to recoup damages in cases of expropriation or instances where political process is grossly discriminatory against a foreign company.

“From what we know this is a remarkable agreement,” said Riyaz Dattu, a lawyer with the firm Osler, Hoskin & Harcourt who specializes in international trade law. “It’s going to be like what we already have with the United States and Mexico under NAFTA (North American Free Trade Agreement), but it is broader in the sense that it covers all the European Union countries.

Indonesia mining at risk over export ban – by Ben Bland (Financial Times – October 22, 2013)

October 22, 2013

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

Indonesia’s mining industry will collapse if the government moves ahead with a planned ban on the export of raw minerals, the country’s chamber of commerce has warned.

The southeast Asian nation, which is facing strong economic headwinds, is the biggest exporter of coal for power stations, nickel ore and tin, and a leading shipper of bauxite and copper. But on January 1 it is set to implement a law prohibiting the export of unprocessed metals as part of a drive to refine the ores and potentially generate higher margins.

Mining companies and independent economists are critical, arguing that at current depressed global prices for both raw and refined minerals, it is not a financially viable option in infrastructure- and energy-poor Indonesia, especially with no commitment to invest from the government.

The US Agency for International Development has argued that the push towards refining coupled with the ban would create few jobs and could lead to $6.3bn of lost economic benefits annually by prioritising spending on refineries with “poor commercial prospects” over investment in the country’s decrepit education, health and infrastructure systems.

Metal bulls pin their hopes on zinc as mines close – by Martin Sandbu (Financial Times – October 22, 2013)

October 22, 2013

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

So you think the commodities supercycle is over? For zinc bulls, it may be just beginning.

The price of zinc has remained subdued since the financial crisis even as copper, gold and tin rose to record highs. But the metal, used to rustproof steel in everything from cars to building materials, is gaining an increasingly vocal following among analysts and investors who believe that it could witness a sharp rally in the coming years.

“Certainly when you compare it to other metals, I would say the outlook for zinc is one of the most constructive,” says George Cheveley, a metals and mining portfolio for Investec Asset Management.

Wood Mackenzie, a leading consultancy, predicts that zinc prices will average more than $3,500 a tonne from 2016-2018 – compared with just $1,940 so far this year.

After years of falling prices, a zinc boom could deliver sizeable profits to major miners such as Glencore Xstrata, the world’s biggest producer and trader of zinc; Canada’s Teck; as well as trading houses such as Noble Group which have carved out positions in the market.

Nickel Reaches 9-Week High as Export-Ban Prospect Spurs Buying – by Joe Richter (Bloomberg News – October 22, 2013)

October 22, 2013

http://www.bloomberg.com/

Nickel jumped to a nine-week high in London as investors purchased the metal to close out bets on mounting concern that ore exports will be halted next year from Indonesia, the world’s largest producer.

A government ban on shipments from Indonesia of ores including bauxite, used to make aluminum, and nickel may take effect next year to aid local processing. Nickel got a boost from investors who bought the metal to liquidate bets on lower prices, according to Citigroup Inc. Prices have tumbled 13 percent this year, the most among the six main metals traded on the London Metal Exchange.

There is “growing nervousness about a potential export ban on Indonesian ores that kicks in at the beginning of the new year,” Edward Meir, an analyst at INTL FCStone in New York, said in a report.

Nickel for delivery in three months climbed 3.4 percent to settle at $14,850 a metric ton at 5:51 p.m. local time on the LME. Prices reached $14,880, the highest since Aug. 19.

The metal slumped this year as stockpiles tracked by the LME expanded to a record, reaching 231,480 tons today, according to daily exchange data. Open interest, or the number of futures outstanding, fell 4.9 percent last week from a record on Oct. 11.

Outokumpu asks EU to let it keep Italian steel plant: sources – by Silvia Antonioli and Maytaal Angel (Reuters India – October 22, 2013)

October 22, 2013

http://in.reuters.com/

LONDON, Oct 22 (Reuters) – Finnish stainless steel maker Outokumpu has asked the European Commission to let it keep the Italian steel plant the company agreed to sell to gain approval for its purchase of ThyssenKrupp’s Inoxum unit.

The Acciai Speciali Terni plant has been valued at more than 500 million euros ($677 million) by Outokumpu, but is now expected to sell for less than that due to weakness in the global steel market.

Two sources familiar with the matter told Reuters that Terni, one of Europe’s biggest and most modern plants, will lose 80-100 million euros this year, and that Outokumpu believes it is not anti-competitive to keep it under current conditions.

The Terni plant, about 100 km (62 miles) north of Rome, was valued by one analyst at up to $1 billion over a year ago. “They have been trying to convince the EU that they should keep Terni since the market situation has completely changed from last year – the sector got much worse,” an industry expert said.

Refraining from selling the plant could allow more flexibility in valuing it, the expert said, leading to a lower writedown in the company’s books.

BHP raises iron ore target as Australian expansions accelerate – by James Regan (Reuters India – October 22, 2013)

October 22, 2013

http://in.reuters.com/

SYDNEY – (Reuters) – Global miner BHP Billiton (BHP.AX) upgraded its iron ore production target for fiscal 2014 while petroleum output hit a quarterly record, as it ramps up output to capture more of a slower-growing market for raw materials.

Iron ore benefited from multi-billion-dollar expansion work underway in Australia that will lift fiscal 2014 output to 212 million tonnes, up from a previous target of 207 million, BHP (BLT.L) said in its fiscal first-quarter production report.

In petroleum, liquids output rose 16 percent, helped by a shift in focus at its U.S. shale holdings to focus more on oil production as U.S. gas prices sag.

BHP has warned mining companies face slowing demand growth for raw materials from China and elsewhere requiring greater emphasis on economies of scale to keep costs down.

The world’s biggest mining company has already cut planned spending for 2013/14 by 25 percent to $16 billion, and has earmarked a further decline for the following year.

Is copper really in surplus? – by Geoff Candy (Mineweb.com – October 21, 2013)

October 22, 2013

http://www.mineweb.com/

While many assume the red metal either to be already in surplus or very nearly there, French bank Natixis believes the level of Chinese stocks tells a different story.

GRONINGEN (MINEWEB) – In a note out late last week, French bank, Natixis, queries the assumption that the copper market is already in surplus. While it doesn’t dispute that the copper market could move into surplus over the next few years, the bank maintains that saying it is already in surplus could be premature.

The reason for the dispute is the level of stocking or destocking in China that has taken place over the last few months – an issue that caused problems for copper price predictions previously.

According to Natixis, if one goes only by the level of copper stocks held in exchange warehouses, which it defines as those belonging to the LME, SHFE and Comex, then it does look decidedly like the market is in surplus, as these stocks have risen by about 110,000 tonnes since the beginning of the year.

30%-50% of junior miners not expected to survive – BCSC report – by Dorothy Kosich (Mineweb.com – October 21, 2013)

October 21, 2013

http://www.mineweb.com/

“Retail and institutional markets have virtually disappeared for the financing of junior mining companies,” a senior mining executive recently told a B.C. Securities Commission survey.

RENO (MINEWEB) – A report recently released by the British Columbia Securities Commission found some senior mining executives feel the market is at its lowest and should slowly start to recover in one to two years. However, other executives felt the market has yet to hit its lowest point and don’t expect conditions to significantly improve for another three to five years.

Of the in-depth interviews conducted with 15 mining executives, the participants agreed that there “will be an eventual exodus of mining companies and exploration endeavors,” said the report, BC Junior Mining at the Crossroads: Executive Management’s Perspective, which was authored by KPMG and commissioned by the B.C. Securities Commission.

“Between 30% and 50% of junior are not expected to survive,” said one participant in the interviews. “30% is fine, and perhaps required, but 50% is not.”

Mining group Eramet plans more savings as nickel stays weak – by by Gus Trompiz (Reuters India – October 21, 2013)

October 21, 2013

http://in.reuters.com/

PARIS – Oct 21, 2013 (Reuters) – Eramet on Monday said it would step up cost saving measures to counter the effects of a depressed nickel market, which contributed to a five percent fall in the mining group’s third quarter sales.

Benchmark prices of nickel, mainly used in stainless steel, sank to a four-year low in July due to poor industrial demand and rising stocks, leaving a swathe of global production operating at a loss.

Eramet reported a 5 percent year-on-year fall in third-quarter sales to 754 million euros ($1.03 billion), which included a 23 percent decrease for its nickel division.

“The Group is stepping up its measures to decrease its costs and capital expenditure, adjust its productions to its markets and reduce its working capital requirements,” Eramet said in a statement, without giving details.

The company reiterated that current operating profit in the second half would be “significantly lower” than in the first half, when Eramet reported a 9 million euro loss.

Tanzania: Barrick Gold – Compensation to Villagers Brings Joy -by Mugini Jacob (All Africa.com – October 18, 2013)

October 18, 2013

http://allafrica.com/

IT has been all smiles with the locals in the neighbourhood of North Mara Gold Mine since last week after word went around that African Barrick Gold(ABG) has released compensation amounting to 8.12 bn/-.

The villagers have been anxiously waiting for the compensation after a special task force formed by the government completed evaluation on the areas needed by the mine to expand its operations.

Paulo Ludovick is one of those who will share the spoils after accepting to sell part of his land to the ABG, the leading Tanzanian gold producer with several gold mines located in the lake zone region.

“People will pocket 8bn/-. It has never happened in a single episode, and it is just a small piece of land”, Mr Ludovick told the’ Daily News’ About 382 men and women are on the list of the ABG’s latest compensation initiative to communities living near Nyamongo area in Tarime District of Mara Region.

The compensation has been dubbed phases 33 and 26. Compensation of many phases have been done in the past and payment of other several phases are being prepared, according to a credible report from the Tarime District Council made available to the ‘Daily News’ this week.

Is BHP looking to escape the nickel market? – by Ryan Newman (The Motley Fool – October 18, 2013)

October 18, 2013

http://www.fool.com.au/

BHP Billiton’s (ASX: BHP) rivals are once again suspecting that the miner could be on the move to offload its largest nickel assets as part of its strategy to heavily reduce costs and increase its focus on core operations.

As reported by The Australian Financial Review, it is believed that the miner had placed its Nickel West and Cerro Matoso mines up for sale earlier in the year. This belief was bolstered when the company’s new CEO, Andrew Mackenzie, notably excluded nickel from his “four pillar” strategy in May, which outlined the company’s core operations and focus areas moving forward.

Speculation has once again heightened that the sale of the assets could be a very real possibility – particularly after the company was forced to impair its Nickel West asset by US$1.2 billion, according to BHP’s annual report.

Meanwhile, many believe that right now could be the bottom of the nickel market which would increase the interest in BHP’s assets. Whilst now may not prove to be the most profitable time to part ways with the mines, it would allow the miner to focus more heavily on reducing operating costs and increasing productivity in other key areas.

Potential Indonesian nickel export ban bodes well for prices, poorly for pig iron – by Freya Berry (Mineweb.com – October 18, 2013)

October 18, 2013

http://www.mineweb.com/

While it is not certain the ban will go ahead unchanged, if it does, analysts say, it would be a game-changer for prices.

LONDON (REUTERS) – A potential ban on nickel ore exports by Indonesia next year and production cutbacks could lift the price of this year’s worst-performing base metal by more than 20 percent off multi-year lows, analysts said.

Indonesia, the world’s top exporter of nickel ore, has said it plans to bring in a ban on unprocessed ore exports from Jan. 1, 2014. Its ore is currently shipped to China to produce nickel pig iron, a cheap substitute for higher grade nickel in stainless steel.

It is not certain that the ban will go ahead unchanged, but if it does analysts said it would be a game-changer for prices. Benchmark nickel on the London Metal Exchange has fallen by around a fifth since January to four-year lows, weighed down by over-supply, and was trading at $13,963 a tonne at 1529 GMT on Thursday.

“It’s such an important swing factor for the market that you could see a decent rally in the nickel market if a ban is strictly enforced – at least 20 or 30 percent,” said Daniel Smith, head of metals research at Standard Chartered.

Rio [Guinea iron ore] rail line will displace 10,000 – by Matt Chambers (The Australian – October 18, 2013)

October 18, 2013

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

RIO Tinto’s $US20 billion ($20.8bn) Simandou iron ore project in Guinea will see more than 10,000 people relocated to make way for a railway to move the raw material to the coast, raising potential issues over who will be responsible for their wellbeing.

The extent of the relocations were revealed yesterday by Rio’s iron ore counsel Philip Edmands in a talk to a resources and energy law association conference.

“We need to move in excess of 10,000 people and there is a patchwork quilt of titles that have to be acquired,” Mr Edmands told the AMPLA conference in Adelaide yesterday.

The complex, 670km multi-user railway to take iron ore from the Simandou concessions, which Rio hopes it will start building in 2018, will include two viaducts, 24km of tunnels and 29 bridges, and is expected to help open up the heavily populated hinterland.

The number of displaced people is larger than many were expecting, given the project’s latest social and environmental impact statement says 15 settlements, with a total of just “270 structures”, would need to be physically moved to make way for the railway.