International Media Resource Articles – Page 771

The Pretium gold resource controversy in context and a letter from the frontline – by Lawrence Williams (Mineweb.com – October 25, 2013)

October 25, 2013

http://www.mineweb.com/

The disagreement between two respected engineering companies over the Pretium resource in BC, Canada has generated much controversy but should not detract from a still exciting project.

LONDON (MINEWEB) – The Canadian resource sector has been abuzz with people taking sides on the Pretium controversy over the Brucejack resource estimation and whether Strathcona, or Snowden, both highly respected engineering companies, are correct in their different handling of samples and results.

Personally, as a mining engineer by background, I suspect with a deposit of this type with a very large number of ultra-high grade gold intersections in its Valley of the Kings section, within a much lower grade more disseminated orebody, that neither will accurately represent ultimate mining grade terms and, if, and when, a mine is developed at Brucejack, selective mining methods could enable the orebody to be mined to a far higher grade than the bulk sampling would suggest, should economics suggest that is the most profitable long term route for shareholders.

Do I have an interest in Pretium? From a technical point of view perhaps yes – it looks to be one of the most exciting recent gold discoveries in Canada.

Nickel Glut Extends to Fourth Year on China Supply: Commodities (Washington Post/Bloomberg News – October 21, 2013)

October 25, 2013

http://www.washingtonpost.com/

Oct. 21 (Bloomberg) — The global glut of nickel will extend into a fourth year in 2014 as new technology lowers costs for Chinese furnaces producing record amounts of a lower-grade substitute that helped drive prices into a bear market.

Chinese producers will supply 456,000 metric tons of nickel pig iron in 2014, or 49 percent more than last year, Morgan Stanley estimates. Costs at their rotary kiln electric furnaces more than halved to $11,000 a ton in five years, according to Beijing Antaike Information Development Co. That implies they’re still profitable even after prices slumped 16 percent since the start of 2013, reaching a four-year low of $13,205 in July.

China expanded NPI output from 3,000 tons in 2005 to make the stainless steel needed for its construction boom after costs for pure nickel reached a record $51,800 in 2007. While slumping prices previously shut furnaces in China and curbed excess supply, the new technology means they can now compete with traditional refineries. The cumulative surplus since 2007 will have reached about 589,000 tons by the end of 2014, or almost four years of U.S. demand, Morgan Stanley says.

“Most traditional nickel producers cannot compete on price and are having to close or scale back operations,” said Gavin Wendt, the founder and senior resource analyst at Sydney-based Mine Life Pty., who has followed the mining industry for more than two decades.

BHP’s outlook optimistic, AGM hears – by Matt Chambers (The Australian – October 24, 2013)

October 24, 2013

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

BHP Billiton says the global economy is picking up, with positive signs in the US and Japan, boding well for plans to drive an 8 per cent increase in overall production over the next two years and for shareholders hoping for capital returns.

In the company’s annual general meeting in London tonight, BHP chairman Jac Nasser and recently installed chief executive Andrew Mackenzie gave an optimistic outlook for global growth and the demand for the iron ore, petroleum, copper and coal that BHP produces.

“The (2012-13) period was challenging, with slowing global growth and weaker commodity markets,” Mr Mackenzie told the first BHP annual general meeting he has fronted as chief executive since taking over from Marius Kloppers this year.

“However, we are already seeing signs of recovery in the global economy.” Mr Mackenzie said a productivity drive pursued by the miner in the wake of shareholder calls for restraint as Chinese growth slowed last year was paying off.

BHP was now confident of boosting production by 8 per cent, based on converting all its production to copper equivalent, over the next two years, he said.

Platinum Shortages Extending as Car Sales Quicken: Commodities – by Nicholas Larkin (Bloomberg News – October 24, 2013)

October 24, 2013

http://www.bloomberg.com/

Platinum and palladium will be the best performing precious metals next year as record global car sales will keep them in short supply for a third year, according to the most-accurate forecasters.

The metals, used in catalytic converters, will be in a shortage for the longest stretch since 2005 for platinum and 2000 for palladium, Barclays Plc and Johnson Matthey Plc data show. Platinum will gain 13 percent to average $1,635 an ounce by the fourth quarter of 2014, according to the mean of eight estimates by the most-accurate analysts tracked by Bloomberg in the past two years. Palladium will gain 10 percent to average $823 an ounce, the most for a quarter since 2001.

While gold and silver have slumped 20 percent or more because of diminishing faith in them as a store of value, investors are bullish on platinum and palladium. Growth in car sales is projected to accelerate to 4.8 percent in 2014 from 2.7 percent this year, according to LMC Automotive Ltd., at a time when metal stockpiles are contracting as mining companies fail to keep pace with demand.

“Platinum and palladium markets show the tightest supply and demand among precious metals and probably will throughout next year as well,” said Daniel Briesemann, an analyst at Commerzbank AG in Frankfurt and the most-accurate palladium forecaster tracked by Bloomberg over the past two years. “Industrial demand should stay high.”

UPDATE 2-Mining slump weighs on Nordic suppliers Sandvik, Metso – by Niklas Pollard and Johannes Hellstrom (Reuters India – October 24, 2013)

October 24, 2013

http://in.reuters.com/

STOCKHOLM, Oct 24 (Reuters) – Swedish machinery and tool maker Sandvik said on Thursday a sharp fall in demand from a shrinking mining industry was showing signs of levelling out.

But the slump still hit its earnings, and led to a fall in orders at Finnish rival Metso, which also stepped up a programme of cost cuts.

The global mining industry is under pressure to reduce overheads as demand for raw materials levels off after a decade of strong growth, and sector heavyweights led by BHP Billiton and Rio Tinto have slashed capital spending by billions of dollars.

The cuts have translated into job losses and plunging order intakes for a cluster of Nordic suppliers.

Sandvik, which together with Swedish peer Atlas Copco supplies more than half the world’s underground mining gear, said the order intake in its mining business fell 17 percent year-on-year in the third quarter. The rate of decline eased from the second quarter, however.

Sprott open letter challenges WGC/GFMS gold demand figures – by Lawrence Williams (Mineweb.com – October 23, 2013)

October 24, 2013

http://www.mineweb.com/

Eric Sprott, challenges the most generally accepted data on gold supply/demand and feels that analyst reliance on this severely impacts their predictions and thus the gold price itself.

LONDON (MINEWEB) – Strong precious metals advocate, Eric Sprott, thinks there is something haywire in the gold supply/demand statistics published regularly by the World Gold Council and relying on data compiled for it by Thomson Reuters GFMS. In Sprott’s view, and this is accompanied by his own research figures, the GFMS data is flawed – yet it tends to be the industry standard taken as the definitive position by gold follower around the globe.

In this context, Sprott has written an ‘Open Letter’ to the World Gold Council, putting forward his company’s own take on the real position in the gold supply/demand equation and draws the conclusion that global gold demand exceeds available new supply by a substantial margin. To read the ‘Open Letter’ in full click here.

Indeed Sprott’s analysis of the position echoes, and expands on, some of the conclusions drawn by Mineweb in some recent articles – not least in terms of the gold flows to Asian and Middle Eastern nations in general, and to China and India in particular.

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.