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Iron Ore

UPDATE 5-Vale to scale back investment as global economy bites – by Jeb Blount (Reuters U.S. – December 3, 2012)

http://www.reuters.com/

RIO DE JANEIRO, Dec 3, 2012 (Reuters) – Brazil’s Vale SA , the world’s second-largest mining company, cut estimated 2013 capital spending by 24 percent after a global slowdown and a drop in iron ore prices led the company to rethink expansion.

The retrenchment comes after sluggish growth in the United States, China and Europe diminished demand for metals and weighed on the price of iron ore, Vale’s main product.

Iron ore , a key ingredient in steel, fell to a three-year low in September, and is currently hovering around $115 a tonne. Vale forecasts a $110-$140 a tonne range in the coming year.

Vale will invest $16.3 billion in 2013, down from the $21.4 billion budgeted this year for new projects, research and development and to maintain existing mines and plants, according to a regulatory filing on Monday.

“The outlook for slower expansion of global demand for minerals and metals in the medium term requires rigid discipline in the allocation of capital and greater focus in maximizing efficiency and reducing costs,” the company said in the statement.

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Bay Street: Steel slump puts crimp in Labrador Trough – Julie Gordon (Reuters Canada – December 3, 2012)

http://ca.reuters.com/

TORONTO (Reuters) – “Strike while the iron is hot,” the old saying goes, and a legion of iron ore miners setting up in Canada’s remote Labrador Trough want to do just that. But, for now, they have to wait.

Iron ore, the main component of steel, has turned ice cold in recent months, with the benchmark price .IO62-CNI=SI plunging to $86.70 a tonne in September from $149.40 in April. It has since recovered to about $116 a tonne.

The downward spiral has jeopardized the viability of the sub-Arctic region’s vast iron ore deposits just as the first new mines in decades were opening. Some projects are being put on hold.

As a consequence, shares of junior miners such as Alderon Iron Ore Corp (ADV.TO: Quote), Champion Iron Mines Ltd (CHM.TO: Quote) and Century Iron Mines Corp FER.TO, have tumbled as projects that looked rich at $150 a tonne suddenly lost their luster.

Still, analysts say the region’s potential remains compelling. They caution, though, that investors must look closely at the contenders to judge which are best placed to ride out the bad times and prosper over the long term.

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Labrador City’s huge worker shortage threatens small businesses – by John Shmuel (National Post – December 3, 2012)

The National Post is Canada’s second largest national paper.

Finding employees is one of the biggest issues businesses here have

When construction began on a new hotel in Labrador City this year, the developers didn’t even have to finish building it before every room was booked for the next three years.

Welcome to one of northern Canada’s most rapidly growing boom towns. The fuel behind it all are the massive iron ore mines near Labrador City and its twin town, Wabush. The area’s mines have been ramping up in recent years as rising global demand for steel is creating an insatiable appetite for iron.

High pay for working in the mines, which can start at nearly $50 an hour even with minimal experience, has attracted a flood of workers from Atlantic Canada and the rest of the country. It has also, however, created a series of challenges in a region of Canada that is more accustomed to losing workers to other provinces.

“Finding employees is one of the biggest issues businesses here have,” says Jeannot Gamache, of Labrador Rewinding Inc., a motor repair business in Wabush that has been around since 1994.

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Wisconsin governor expects $1.2b iron ore project to return to Iron Range – by Dorothy Kosich (Mineweb.com – November 29, 2012)

http://www.mineweb.com/

In the last session of the Wisconsin Legislature, an iron mining reform bill failed by one vote. However, another pro-mining measure is expected to be introduced in January.

RENO (MINEWEB) – Wisconsin Gov. Scott Walker said Wednesday that he is confident that Gogebic Taconite will resurrect an iron ore mining project south of Lake Superior.

In comments made to the Associated Press after a speech to the Wisconsin Manufacturers & Commerce, Walker said Florida-based Gogebic Taconite is still interested in mining in Wisconsin.

A special committee of Wisconsin’s State Senate is scheduled to meet today and get a briefing from Tim Sullivan, the former CEO of mining heavy equipment manufacturer Bucyrus. He is chairman of the Wisconsin Mining Association.

The committee will hear testimony from local government representatives and regional economic development officials on the issue of state-local distribution of tax revenue raised by future mining operations.

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Cliffs Natural Resources idles iron-ore production on weak demand – by Henry Lazenby (MiningWeekly.com – November 19, 2012)

http://www.miningweekly.com/page/americas-home

TORONTO (miningweekly.com) – New York- and Paris-listed Cliffs Natural Resources on Monday said it would idle mine expansion in Quebec and a portion of production at two US operations as a result of weak iron-ore prices.

The company, which is the largest producer of iron-ore pellets in the US, said it would idle iron-ore production at its Bloom Lake mine Phase 2 expansion, in Quebec, and at two of its US iron-ore operations, Northshore Mining, in Minnesota, and at the Empire mine, in Michigan.

Cliffs said it was adjusting its 2013 operating plans for its North American iron-ore businesses to align with expected sales volumes. These production decreases were driven by increased iron-ore pricing volatility and lower North American steelmaking utilisation rates.

“Disciplined capital allocation is core to our operating strategy and reducing higher cost production will enhance our financial flexibility in both the short and longer term. Despite today’s announcement, we are still committed to our investments in Canada and believe Bloom Lake will deliver significant long-term value over time,” Cliffs chairperson and CEO Joseph Carrabba said.

At the Bloom Lake mine, Cliffs had suspended certain components of the second phase of expansion, including the completion of the concentrator and load-out facility. As a result, construction related to these activities was halted and third-party contractors were demobilised immediately.

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BHP to ramp up iron ore production from existing mines – by Sonali Paul (Reuters/Vancouver Sun – November 14, 2012)

http://www.vancouversun.com/index.html

PERTH – BHP Billiton expects to expand its iron ore capacity by nearly a fifth just by working its mines, rail lines and port harder as it looks to control costs in a softer iron ore market, the global miner’s iron ore chief said on Wednesday.

Uncertainty over iron ore prices due to stuttering demand for the steel making ingredient from China has prompted a rethink of expansion plans by most iron ore miners, including top global iron ore miner Vale.

BHP has slowed its growth plans, like Australia’s no.3 iron ore miner Fortescue Metals Group, while their bigger rival Rio Tinto is pressing ahead with an expansion that will give it at least a third more capacity than BHP and more than double Fortescue’s capacity.

“Looking forward, things are not as rosy as they were in the past. The imperative to grow as aggressively as we were in the past has diminished slightly,” Wilson said at a conference.

Caught out by escalating costs, a sharp slide in iron ore prices and a persistently strong Australian dollar, BHP shelved plans in August to build a $20 billion iron ore harbour at Port Hedland in Western Australia that would have eventually doubled its iron ore capacity to 440 million tonnes.

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More mineral riches from the smoky waters of Minnesota – by John Chadwick (International Mining – November 2012)

International Mining is a global technical magazine written for miners by miners. John Chadwick is the publisher. john@im-mining.com 

Ore riches that built America have much more to offer. Minnesota’s Iron Ranges to the west of Lake Superior – Vermilion, Mesabi and Cuyuna from the northeast of Duluth down to the south-southwest – have been the most important ore deposits in US history, and continue to be so, providing well over 90% of the iron ore the country needs. Just a few of the great historical landmarks include the establishment, in 1901, of the world’s first multi-billion dollar corporation, US Steel.

Before that, in May 1890, Edmund Longyear (founder of one of the companies that was to become, much later, Boart Longyear) brought the diamond drill to the Iron Ranges. This exploration tool was to be a key to unlocking the riches of the region.

There was also the Minnesota Mining and Manufacturing Co (3M) founded in 1902 at the Lake Superior town of Two Harbors. However its only connection with the Iron Ranges was location. The deposit was set up to mine for grinding-wheel abrasives proved to be of little value.

William Boeing made profits from the Mesabi Range and just a few other great names with Iron Ranges associations include Henry Bessemer, Frederick Weyerhaeuser, Andrew Carnegie, John D. Rockefeller, Kelsey D. Chase, and J.P. Morgan.

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Vale’s former boss Agnelli eyes Guinea potential again – by Clara Ferreira-Marques (UK Reuters – November 7, 2012)

http://uk.reuters.com/

Nov 7 (Reuters) – A mining venture co-founded by the former boss of Vale, Roger Agnelli, is among suitors eyeing BHP Billiton’s slice of the Mount Nimba iron ore deposit in Guinea, sources familiar with the matter said.

Other suitors for BHP’s share of the joint venture that holds the Nimba mining concession include the world’s largest steelmaker ArcelorMittal, which has a mine just over the border in Liberia, the sources said.

A dealmaker by background, Agnelli is staging a return to West Africa with billionaire banker Andre Esteves. Two years ago, Agnelli led Brazilian miner Vale’s push into Guinea, controversially taking a stake in iron ore assets that included blocks of the Simandou deposit confiscated by the government from rival Rio Tinto.

Agnelli, 53, was ousted from Vale last year after a decade at the helm. Analysts said his plans for a multinational Vale, did not chime with the Brazilian government’s own, more nationalistic view.

He is returning to mining and Guinea through B&A Mineracao, a partnership between his venture AGN Participacoes and Esteves’ investment bank BTG Pactual Group, just after Vale’s new bosses shelved their major commitment in the country.

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Vale partner says Guinea seeks to seize iron ore rights – by Richard Valdmanis, Clara Ferreira-Marques, and Saliou Samb (Reuters Canada – November 3, 2012)

http://ca.reuters.com/

DAKAR/LONDON (Reuters) – The mining arm of Israeli billionaire Beny Steinmetz’s business empire has accused the government of Guinea of seeking to “illegally seize” its assets through a probe into how it won rights to mine part of a major iron ore deposit.

Privately owned BSG Resources, which has been working in the West African country with Brazilian mining major Vale (VALE5.SA: Quote), confirmed it had received a letter from a government commission alleging improper behavior and graft in its winning of rights to develop blocks in the Simandou region.

The Financial Times reported on Saturday that a government committee backed by philanthropist George Soros had launched a corruption probe into the award process for the blocks in 2008 and sent the letter to BSG including a range of charges.

The blocks were stripped from Anglo-Australian miner Rio Tinto (RIO.AX: Quote) and the licenses passed to BSGR in 2008, under a previous administration. Simandou, in Guinea’s hilly and forested southeast, is estimated to hold what could be the world’s largest unexploited iron ore reserves.

“This is the fifth and most clumsy attempt by an already discredited Government of Guinea in an ongoing campaign to illegally seize BSGR’s assets,” BSGR said in a statement.

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India emerges as unknown factor for Asia’s iron ore market – by Clyde Russell (Mineweb.com – October 31, 2012)

http://www.mineweb.com/

It’s likely that China will account for the bulk of growth in seaborne iron ore demand, with recession-plagued Europe expected to be steady at best and modest growth likely from the rest of the world.

LONDON (REUTERS) – India is emerging as the unknown factor for Asia’s iron ore market in 2013, which otherwise looks to be in a fair balance between supply and demand.

The key results from a Reuters poll of analysts on Monday showed median forecasts for iron ore prices next year at $120 a tonne and for Chinese import demand to gain 6 percent to 774 million tonnes from an estimated 730 million this year.

The scenario that the poll presents is for solid growth in iron demand from the world’s biggest user and steady prices as well, given Asian spot prices closed Monday at precisely $120 a tonne, near the highest level since late July.

It’s also likely that China will account for the bulk of growth in seaborne iron ore demand, with recession-plagued Europe expected to be steady at best and modest growth likely from the rest of the world.

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Iron ore: The lore of ore – The Economist (October 13, 2012)

http://www.economist.com

The most important commodity after oil deserves more attention than it gets

THE development of a process to turn raw earth into steel merits a high spot on a list of mankind’s most ingenious achievements. The metal provides the backbone of skyscrapers, bridges and motorways, and the carapace and internal organs of cars, fridges and washing machines. Given steel’s ubiquity—it makes up 95% of global metal production—iron ore, the raw material from which it is made, attracts strangely little attention.

The trade in iron ore makes it the second-largest commodity market by value after crude oil. Some 2 billion tonnes of the stuff will be dug up in 2012. The price swings of the past few months say plenty about the world economy, as well as the febrile state of global commodity markets. Between June and September spot prices for iron ore fell from around $140 a tonne to close to $85, a three-year low, way off a record high of over $190 a tonne set in February 2011. Prices have recovered a bit since, settling at around $100 a tonne. Had the oil price undergone similar upheavals it would have provoked endless discussion.

Iron ore lacks the clout of oil for several reasons. The market is smaller, worth less than a tenth of the $3 trillion of crude traded every year. Unlike oil, iron is plentiful—it makes up 5% of the Earth’s crust. The difficulty is finding it in sufficient concentrations and then shifting millions of tonnes of dirt to where it is needed. Iron ore is also largely a physical market; the ability to make big speculative punts on oil generates far more interest about where prices are heading.

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Vale profits to drop 61%: Analysts – by Jeb Blount and Sabrina Lorenzi (Reuters/Sudbury Star – October 23, 2012)

The Sudbury Star is the City of Greater Sudbury’s daily newspaper.

RIO DE JANEIRO (Reuters) – Vale SA (VALE5.SA: Quote, Profile, Research, Stock Buzz) the world’s No. 2 mining company, is expected to report that third-quarter profit tumbled 61 percent from a year earlier as output slipped and the price of iron ore and other metals dropped to three-year lows.

Profit is also likely to be hurt by the company’s decision to set aside about $540 million for the possible payment of back royalties in a dispute with Brazil’s government.

Net income likely fell to $1.92 billion in the three months ending September 30 from $4.93 billion the year before, according to the average estimate of 19 analysts in a Reuters poll.

If results expected late on Wednesday confirm the estimate, it will mark the company’s worst quarterly profit in 33 months. Falling prices and weak demand in China, Vale’s largest market, have led the Rio de Janeiro-based company to delay spending, close operations and consider cuts to investments and dividends.

“Third quarter results are likely to suffer from a steep drop in prices,” BTG Pactual Group analysts Edmo Chagas, Antonio Heluany and Gregory Goldfinger wrote in a Monday report.

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Northern Iron wants Domtar as railroading partner – by Ian Ross (Northern Ontario Business – October 2012)

Established in 1980, Northern Ontario Business provides Canadians and international investors with relevant, current and insightful editorial content and business news information about Ontario’s vibrant and resource-rich North. Ian Ross is the editor of Northern Ontario Business ianross@nob.on.ca.

Northern Iron Corp. is knocking on Domtar’s door to gain access to a railroad right-of-way to advance a proposed open-pit iron ore operation in northwestern Ontario.

The Vancouver junior miner has a series of iron deposits spread out over 14,600 hectares, east of Ear Falls and south of the Red Lake gold mining district, that includes the former Griffith open pit, once operated by Stelco. The project contains an historic estimate of more than 500,000 million tonnes that the company is trying to prove up.

The company wants to build an on-site processing plant that converts iron ore into premium hot briquetted iron (HBI) for the North American and global steel industry. They’ve secured two advance orders of 960,000 tonnes of HBI from two Chinese state-owned companies if the mine goes ahead with production in 2016 as planned.

But to move product out, the company wants to gain access to a railway right-of-way that runs 120 kilometres south from the Griffith site to Amesdale, a spot on the Canadian National Railway’s (CN) main east-west line.

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ArcelorMittal eyes Canadian iron ore stake sale: sources – by Euan Rocha (Montreal Gazette/Reuters – October 19, 2012)

http://www.montrealgazette.com/index.html

Deal could potentially avoid Investment Canada hurdle

TORONTO – ArcelorMittal, the world’s largest steelmaker, is exploring the sale of a minority stake in its Canadian iron ore business, sources familiar with the situation said.

The company has retained RBC Capital Markets and Goldman Sachs to assist in the process, which has been going on for a few months, said one of the sources, adding that a deal is likely to be announced before the end of the year.

ArcelorMittal (NYSE: MT) is one of Canada’s top exporters of iron ore to steel markets around the world and its operations account for about 40 per cent of Canada’s iron ore output. It operates two large open-pit mines in the province of Quebec, where it also owns the Port-Cartier industrial complex that includes a pellet plant, storage areas and port facilities for shipping.

ArcelorMittal Mines Canada, which traces its origins back to the Quebec Cartier Mining Co., produces 15 million tonnes of iron ore concentrate and more than 9 million tonnes of iron oxide pellets annually.

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Vale reports production declines across wide band of commodities – by Dorothy Kosich (Mineweb.com – October 18, 2012)

http://www.mineweb.com/mineweb/view/mineweb/en/page102055?

Bloomberg Industries says Vale’s share of the global seaborne iron-ore market has declined from 28% in the first half of 2011 to 26% for the same period of this year.

RENO (MINEWEB) – Vale has reported production declines in iron ore, pellets, manganese, copper, potash and phosphate rock for the first nine months of this year.

While the Brazilian mega-miner’s coal output increased a record 144.4% during the period, pellet output was up 3.8% and nickel production stayed flat.

For the first nine months of this year, Vale reported iron ore production of 234.5 million metric tons, a 2.2% drop over the 240 million metric tons of production reported during the first nine months of 2011.

“At Carajas we have not been able to match last year’s performance,” said Vale. “Issues with environmental permitting led to the continuation of mining in some older pits, which has entailed lower productivity, lower Fe content and higher costs.”
“Current performance is definitely not consistent with the high quality of our assets and corrective measures are underway,” the company said in its 3Q12 production report.

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