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

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.

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

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.

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

“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.”

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

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.

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

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.

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

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.

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

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.

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

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.

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Fewer junior miners in BC could help spur sector – by Henry Lazenby ( – October 17, 2013)

TORONTO ( – Having fewer junior firms in British Columbia’s mining sector could help to breathe new life into an ailing industry segment, a group of 15 senior executives told a study commissioned by the British Columbia Securities Commission (BCSC).

The report compiled by professional services firm KPMG and entitled ‘BC Junior Mining at a Crossroads: Executive Management’s Perspective’, found that senior mining companies should also clean up their balance sheets to increase investors’ confidence in the mining sector, after which a recovery of junior mining companies would follow.

From the start of the year to August, about 85, or 5%, of the 1 673 mining companies listed on Canada’s TSX and TSX-V failed, compared with about 6% in the oil and gas industry. These did not include companies taken off the exchanges owing to merger and acquisition activity, going-private transactions or those companies that have graduated to bigger exchanges.

Author of the Mercenary Geologist website Mickey Fulp recently told Mining Weekly Online it would take a lot of time to “wash out the bad” companies and many were, by now, merely hanging on, creating danger for the unsuspecting investor.

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UPDATE 2-Outotec to cut up to 500 jobs as miners slash spending – by Ritsuko Ando (Reuters India – October 17, 2013)

HELSINKI, Oct 17 (Reuters) – Finnish mining technology company Outotec lowered its full-year sales and profit margin forecasts and said it planned to cut up to 500 jobs as a sluggish global economy forces miners to rein in spending.

In a further sign of tough times for Finland’s industrial firms, its warning on Thursday came just after engineering company Metso said it faced a fall in sales and profit due to weakness in its pulp, paper and power unit.

Shares in Outotec, whose job cuts represent 10 percent of the workforce, slid 15 percent by 0930 GMT while Metso lost 6 percent.

Outotec said it was seeing delays in customer payments. One project, worth 30 million euros ($40.5 million) in its order backlog, was cancelled in September.

Mining companies have over the past year been pulling back on spending in the face of weaker prices as many boom-year projects turned sour, and many have scrapped or delayed plans.

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AFRICA INVESTMENT-South Africa’s migrant mine labour conundrum – by Ed Stoddard (Reuters U.S. – October 17, 2013)

LUSIKISIKI, South Africa – Oct 17 (Reuters) – South Africa’s system of migrant mine labour has come under renewed scrutiny, with government and company officials blaming it for a host ills bedeviling the industry and the country, including last year’s wave of violent wildcat strikes.

But there is no easy fix for such an entrenched feature of the social fabric and the cure is proving as bad as the disease as it means job losses on a grand scale with devastating consequences for what are now called the “labour-sending areas.”

This migrant labour force, which built a gold industry that has produced a third of the bullion ever mined, was sourced from “homelands” far from the shafts where most black South Africans were forced to to eke out an existence under apartheid.

Many have also come from neighbouring countries such as Lesotho and Swaziland. It generated vast profits, not least because migrants were paid bachelor wages even if they had families to feed, and controlled the movement of Africans as the workers were confined to hostels on mine property.

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Friedland’s Ivanhoe pulls 90m good grade platinum metals intersection – by Lawrence Williams ( – October 16, 2013)

The latest drilling results from Robert Friedland’s Ivanhoe Mines’ Platreef project in South Africa include a huge 90 m intersection of medium grade platinum group metals.

LONDON (MINEWEB) – Readers of Mineweb may recall a recent article in which we highlighted some of the thick medium grade platinum group metals deposits currently being drilled to the north of the Bushveld Complex geological formation in South Africa, which currently is the source of over 70% of the world’s newly mined platinum output.

However, current production nearly all arises from the very narrow Merensky reef and the slightly wider, but still narrow, UG2 reef which underlies it. These reef horizons run from a few centimetres to around a little over a metre in thickness. Most of this production comes from underground mining in exceedingly difficult conditions where the narrow, shallow dipping, reef structures have proved so far to be unsuitable for significant mechanisation, meaning the operations are labour intensive, with many areas becoming uneconomic to mine at current platinum prices.

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Vedanta Resources, CSR and the Struggle for India’s Soul – by Joseph Kirschke (Engineering and Mining Journal – October 9, 2013)

By any measure, 2013 has been a dismal year for Vedanta Resources plc, the $11.4-billion U.K.-based mining, oil and gas conglomerate with two-thirds of its operations in India.

On August 13, its woes culminated in a referendum by Dongria Kondh tribal villagers blocking efforts to extract bauxite from their sacred Niyamgiri hills, which stretch 92 miles through eastern Orissa.

After a decade of protests and worldwide condemnation, the verdict in the court of public opinion was swift. “Two days before India celebrated its 67th Independence Day, a tiny village deep inside the forests of Orissa tasted the fruits of freedom,” trumpeted Mumbai’s Business Today echoing the media, populist, nongovernmental organization (NGO) and international activist voices dogging the proposed refinery by the company’s subsidiary, Vedanta Aluminum Ltd.

But Vedanta Resources, 65% owned by Indian business mogul and onetime scrap metal dealer Anil Agarwal, is no stranger to controversy: industrial accidents, environmental mishaps and human rights abuses have stained its reputation across the subcontinent—and the world beyond.

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Quo vadis Amplats, Griffith & Cutifani’s Anglo? – by David McKay ( – October 16, 2013)

[] – AN analyst at Johannesburg asset management company, Stanlib, planted the idea recently that although the South African government had formally rejected mines nationalisation as policy, a subtler expression of state interference had become practice.

This is, of course, a reference to the repeated government and union interference in restructuring activities of the publicly-listed Anglo American Platinum (Amplats).

The logic is that in allowing government to dictate the final shape of its restructuring plans, Amplats had granted the state a role in its affairs as if it owned it. As a stakeholder, the state has more influence over Amplats than shareholders who finance it. That has now been extended to unions.

So it is that Amplats agreed to adjust its restructuring plans a third time falling in with demands from the Association of Mineworkers & Construction Union (AMCU) to provide voluntary separation packages to employees identified for retrenchment, and replacing contractors with full-time employees.

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Mining M&A Decline Imperils Explorers’ Aspirations – by Liezel Hill (Bloomberg News – October 15, 2013)

Mining acquisitions valued at less than $1 billion have slumped to an eight-year low as the industry’s largest players rein in spending after a drop in commodities prices.

The slump threatens hundreds of exploration and development companies that don’t have revenue, more than half of which are based in Canada. Being bought by a larger miner is proving increasingly elusive as companies such as Toronto-based Barrick Gold Corp. (ABX), the biggest gold producer, avoid acquisitions and new projects in favor of improving existing operations.

“Buyers are being very cautious on where they deploy capital,” said Matthew Hind, the Toronto-based head of Canadian metals and mining investment banking for Credit Suisse Group AG. “Players are in the process of re-evaluating their balance sheets and pipelines.”

There were 76 takeovers of companies in the third quarter, with a combined valuation of $1.73 billion, according to data compiled by Bloomberg. That’s the lowest volume since the fourth quarter of 2004, the data show.

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