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Iron Ore

Cliffs CEO: Essar jeopardizes Range facility- by Bill Hanna (Mesabi Daily News – October 17, 2015)

http://www.virginiamn.com/

‘If they go online, I will shut down a plant the same day’ Vuppuluri: ‘Very sad and pained to hear such a statement’

CLEVELAND — The Cliffs Natural Resources CEO said he will close one of the company’s operations on the Iron Range if the Essar Steel Minnesota taconite plant in Nashwauk goes into production.

“If they go online, I will shut down a plant up there the same day,” Lourenco Goncalves said in an exclusive interview with the Mesabi Daily News last Thursday. “We have fully planned for the worst case scenario.”

Essar Minnesota CEO Madhu Vuppuluri said in response on Saturday that he is “very saddened to hear that statement that could have such an impact on employees and communities of the Iron Range.”

The $1.9 billion India-based Essar project under construction is scheduled to begin producing taconite pellets in the second half of 2016, most likely the third quarter.

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UPDATE 2-Rio Tinto lifts iron ore shipments despite China risks, draws on inventory – by James Regan (Reuters U.S. – October 16, 2015)

http://www.reuters.com/

SYDNEY, Oct 16 (Reuters) – Rio Tinto on Friday posted a 17 percent rise in third-quarter iron ore shipments and said it was on track to meet a full-year target of 340 million tonnes, shrugging off risks from slower economic growth and peaking steel output in China.

In a sign market conditions may be improving, the miner dipped into its inventories – 4 million tonnes from its Australian operations and 1 million from the Canadian business – after production fell short of shipments.

Rio Tinto shipped 91.3 million tonnes over the quarter, outstripping production of 86.1 million tonnes, data from the company’s quarterly production report showed.

“Clearly, the iron ore market is reasonably tight,” said Shaw Stockbroking mining analyst Peter O’Connor in a note to clients.

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Supreme Court rejects Rio Tinto’s efforts to dismiss Innu class-action lawsuit – by Ross Marowits (Canadian Press/Vancouver Province – October 15, 2015)

http://www.theprovince.com/

MONTREAL – The Supreme Court of Canada has refused to end a class action lawsuit filed by two Innu communities against the Iron Ore Co. of Canada and the Quebec North Shore and Labrador Railway Co.

The country’s highest court dismissed with costs their appeal of a Quebec Court of Appeal ruling. No reasons were provided Thursday as is customary when the court makes such a decision.

The Innu First Nations of Uashat Mak Mani-Utenam (Uashaunnuat) and Matimekush-Lac John claim the IOC, which is majority owned by Rio Tinto (NYSE:RIO), has violated their rights for nearly 60 years and are seeking $900 million in compensation.

The Innu claim the mines and other facilities have ruined the environment, displaced members from their territory and prevented them from practising their traditional way of life.

They also say a 578-kilometre railway between Schefferville and Sept-Iles has opened up their territory to “numerous other destructive development projects.”

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LMEWEEK-BHP gloomy on iron ore price, but cautiously optimistic on China – by Maytaal Angel and Eric Onstad (Reuters U.S. – October 14, 2015)

http://www.reuters.com/

LONDON, Oct 14 (Reuters) – BHP Billiton, the world’s largest miner, was downbeat on Wednesday about iron ore prices as low-cost producers continue to swamp the market and as the intensity of China’s demand for the steel making raw material ebbs.

However, there were some positive signs on the economic outlook for top commodity consumer China, BHP officials told a briefing during the LME Week industry gathering.

A global glut and falling Chinese steel demand have dragged spot iron ore prices .IO62-CNI=SI to less than $60 a tonne from a high of nearly $200 in 2011. The price is forecast to drop to $50 over the next two years, a Reuters poll showed.

“By the end of this year, there will be additional iron ore coming from Australia, from Brazil,” Arnoud Balhuizen, president of the group’s marketing unit, told a media briefing. “Our expectation is that the iron ore market cost curve will continue to flatten and continue to come under pressure.”

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Gina Rinehart scores WA royalties win against mining major Rio Tinto (The Australian – October 14, 2015)

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

BILLIONAIRE Gina Rinehart has had a multi-million dollar High Court win against mining giant Rio Tinto.

The High Court of Australia ruled that Rio Tinto subsidiary Mount Bruce Mining (MBM) is liable to pay royalties to Ms Rinehart’s Hancock Prospecting and joint venture partner Wright Prospecting in relation to iron ore mined in the Eastern Range and Channar areas of the Pilbara in Western Australia.

The High Court dismissed an appeal from the NSW Court of Appeal in relation to a tenement sale agreement reached in 1970 between Ms Rinehart’s father Lang Hancock and his business partner Peter Wright about the payment of royalties by MBM.

Rio Tinto temporarily lost control of the tenements and later regained control to mine the rich iron ore region. The sale made Ms Rinehart the richest woman in Australia and one of the richest people in the world.

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Essar-Cliffs tension at fevered pitch – by Ian Ross (Northern Ontario Business – October 7, 2015)

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.

Cut off from its iron ore supply, Essar Steel Algoma has filed a request for a temporary restraining order in an Ohio court against Cliffs Natural Resources. In an Oct. 6 news release, Essar said the matter is before a federal judge in Cleveland, Ohio.

“Essar Steel Algoma fully expects Cliffs to honour the supply agreement until such time as the matter has been justly resolved,” the Sault Ste. Marie plate and sheet producer said in a statement.

Hours earlier, Cliffs announced it had halted shipments to Essar by terminating its longstanding agreement to supply Essar with taconite iron ore pellets. The decision took effect Oct. 5.

A spokesperson with Cliffs was unavailable for comment. Essar spokeswoman Brenda Stenta said a “swift ruling” is expected on the matter. “There is no immediate impact to operations.”

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Wealth of iron ore in Guinea’s Simandou buried by corruption, politics – by Eric Reguly (Globe and Mail – October 3, 2015)

The Globe and Mail is Canada’s national newspaper with the second largest broadsheet circulation in the country. It has enormous influence on Canada’s political and business elite.

LONDON — Aerial photographs of the 110-kilometre Simandou mountain range in southern Guinea depict a surreal landscape. Wherever the forest and grasslands are scraped away, the exposed earth is rust red or burnt orange, as if a child had splattered ketchup on a sheet of green paper. The vivid colours are the product of the unusually rich iron oxides in Simandou’s iron ore lode.

Simandou has been called the El Dorado of iron ore; it’s thought to be the biggest untapped resource of its kind on the planet and is worth a fortune. The problem is, too many companies want a piece of it and the intrigue and alleged corruption that have surrounded its exploitation seem lifted from a John le Carré espionage novel.

The battle for Simandou’s iron ore has gripped the mining world for more than a decade. It has pitted two of the world’s biggest miners – Rio Tinto Group and Vale SA – against each other and ensnared an unlikely resources player in the form or Beny Steinmetz, the buccaneering Israeli billionaire who built an empire out of diamonds and recruited Vale as his Simandou partner.

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COLUMN-Australia takes cautious, maybe premature, bullish iron ore view – by Clyde Russell (Reuters U.S. – October 1, 2015)

http://www.reuters.com/

Oct 1 (Reuters) – – It’s a brave analyst these days who would call a bottom in the iron ore price, which makes the call for better times by 2017 from the normally cautious Australian government forecaster all the more interesting.

While any forecast for iron ore prices to rise is worth more than just a glance, there are a few things to note about the Australian Department of Industry’s Resource and Energy Quarterly, published on Wednesday.

The most important is that the government forecaster isn’t calling for a dramatic rebound in iron ore, rather for modest gains.

The second is that the recovery isn’t expected until 2017, with next year expected to show further losses for the steel-making ingredient. The report projected that iron ore will rise to average $60.40 a tonne in nominal terms in 2017, up from $51.20 in 2016 and $52.90 this year.

By way of comparison, the department’s June quarter report forecast iron ore would average $54.40 a tonne in 2015 and $52.10 in 2016, but didn’t provide forecasts for further out years.

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Iron Ore Seen Below $40 by Citi as Roy Hill `Whale’ Starts – by Jasmine Ng (Bloomberg News – September 28, 2015)

http://www.bloomberg.com/

New supply from Gina Rinehart’s Roy Hill iron ore mine will contribute to a slump below $40 a metric ton next year, according to Citigroup Inc., which said lower steel output in China would also hurt the commodity.

The project in Australia’s ore-rich Pilbara is poised to start shipments in October, and its expansion toward annual output of 55 million tons will probably have a large impact on prices, analysts including Ivan Szpakowski said in a report. Surging production will combine with steel-output cuts in China to push prices below $40 in the first half, Citigroup said.

Iron ore’s retreated 20 percent this year on rising low-cost output and faltering demand growth in China, and the addition of the new cargoes from Roy Hill to the global seaborne market may add to oversupply.

Roy Hill Holdings Pty Ltd. Chief Executive Officer Barry Fitzgerald told reporters in China last week the project is on target to achieve full capacity over 15 months. Citigroup described the new mine in the report on Monday as an “impending whale” that would ship almost all of its output to China.

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Vale Gain Spells Iron Pain With Giant Mine Ahead of Schedule – by Danielle Bochove and Juan Pablo Spinetto (Bloomberg News – October 1, 2015)

http://www.bloomberg.com/

The world’s top iron-ore producer has some bad news for the oversupplied market: its biggest project is running ahead of schedule.

S11D, part of the Carajas mining complex in northern Brazil, is on track to beat a targeted December 2016 start date, Vale SA Chief Financial Officer Luciano Siani said in an interview Wednesday.

The project — the industry’s largest and, according to Vale, the most profitable — will add 90 million metric tons of annual capacity to global supply, although Vale intends to control the speed at which it hits the market, Siani, 45, said in Toronto, where he is holding meetings with investors and analysts.

“We will manage the ramp up in order to preserve the premium for this high grade ore,” he said.
While S11D coming on stream sooner than planned would be a boon for Vale’s debt-reduction ambitions, it looms as another strain on an iron-ore market buffeted by a series of expansions by Vale and its main rivals in Australia at a time of slowing Chinese growth.

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Rio Tinto and BHP Billiton to keep dividends despite pressure, says Macquarie – by Stephen Cauchi (Australian Financial Review – September 28, 2015)

http://www.afr.com/

BHP and Rio Tinto would have to trim their dividends in coming years due to crashing commodity prices, according to research released on Monday by Macquarie, with Rio tipped to be the better performer of the two.

Both companies remain committed to progressive dividend policies, in which dividends rise in line with earnings per share. The dividends would continue, said Macquarie. But the bank nevertheless trimmed its forecasts for both companies.

For BHP, “we now only factor a flat payment of $US1.24 a share for the next three years, a payment of $US6.5 billion”.

For Rio, “we have reduced our dividend growth assumptions … with our dividend compound annual growth rate reducing from 4 per cent to 2 per cent over the next three years.”

BHP’s dividend per share in 2015, averaged over 12 months, was $1.68. Rio’s interim 2015 dividend per share was $1.44.

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Vale offers contrarian view of China steel output (Bloomberg/Sydney Morning Herald – September 24, 2015)

http://www.smh.com.au/

Vale reacted to claims steel consumption in China has peaked and, in a view that contrasts with a rising number of global banks, says demand in the top user still has some way to go.

“China’s steel consumption peak is still ahead of us but of course the growth will be much more gradual,” said Claudio Alves, Vale’s global director of ferrous marketing and sales. Vale aimed to boost its market share, he said.

The largest miners are seeking to figure out the implications of slowing growth on China’s demand for everything from iron to copper. While Vale’s view echoes outlooks from Rio Tinto and BHP Billiton, ANZ Bank brought forward its peak-steel estimate to 2014 from 2020 and Credit Suisse Group said local consumption will shrink 10 per cent by 2018. Citigroup warned on Tuesday commodities may see further losses amid excess supplies and a sluggish global economy.

“Despite the slowdown of the growth speed, China still remains the economic engine of the world,” Mr Alves said before the start of a conference in Qingdao. Further urbanisation and infrastructure projects will underpin demand for iron ore, steel, copper and other base metals, according to Alves.

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UPDATE 2-Vale vows deeper iron ore cost cut as China’s steel demand peaks – by Manolo Serapio Jr and Ruby Lian (Globe and Mail – September 23, 2015)

http://www.reuters.com/

QINGDAO, China, Sept 23 (Reuters) – Iron ore miner Vale said it will cut its production cost to less than $13 per tonne by 2018, as the world’s largest producer of the commodity maximises profit margins in an era of weak prices.

A global glut and falling Chinese steel demand have dragged iron ore prices to less than $60 a tonne from a high of nearly $200 in 2011. The price is forecast to drop to $50 over the next two years, a Reuters poll showed.

“Vale is progressing to reach the lowest cash cost of the industry and will be competitive at any price scenario,” Claudio Alves, global director of marketing and sales at Vale, told a conference in China’s port city of Qingdao.

The cost reduction will come after the completion of Vale’s 90-million-tonne expansion project known as S11D in the Brazilian Amazon, Alves said, as the miner focuses on producing more high-quality material.

Vale’s overall cost stood at $15.80 per tonne by the second quarter.

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BHP’s Andrew Mackenzie more bullish on China – by John Kehoe (Australian Financial Review – September 17, 2015)

http://www.afr.com/business/mining/

BHP Billiton chief executive Andrew Mackenzie has signalled that China may have turned a corner, saying he had shifted from a slight “bear” on the world’s second largest economy three months ago to once against siding with the China “bulls”.

Mr Mackenzie, speaking in Washington, said BHP’s key commodities including iron ore, coal, copper and oil were “still flowing” through Chinese ports and there was no inventory build-up.

“If we compare to three or four months ago, things are a little better, not worse,” Mr Mackenzie said after delivering a speech to the US Chamber of Commerce.

BHP’s business activity offers a sneak peak into key sections of the Chinese economy, because the miner is a large supplier of commodities used to construct buildings, bridges, cars and other metals-intensive objects.

A range of recent disappointing economic data suggests Australia’s biggest export market may be slowing faster than most economists had anticipated.

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Moving forward [Iron Ore Company of Canada] – by Ty Dunham (St. John’s Telegram – September 16, 2015)

http://www.thetelegram.com/

IOC’s Wabush 3 project approved for development

The Iron Ore Company of Canada (IOC) has received approval for the expansion of the Wabush 3 pit.

The Iron Ore Company of Canada in Labrador City received the long awaited approval for the Wabush 3 open mining pit development. — Photo by Ty Dunham/The Aurora

The provincial government gave the green light to the environmental assessment last week, giving company the go-ahead on a critical project that will provide sustainability over the amount of ore that goes to the plant to meet the rate of production.

Marsha Power Slade, senior adviser for external relations and corporate affairs for IOC, said while IOC started focusing on the project 2 1/2 years ago, discussions on the expansion began five to seven years ago.

She added the additional pit would allow for greater ore flexibility due to its low strip ratio.

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