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Iron Ore

Ignorance pushed iron ore market into ‘dance of death’ – by Tess Ingram (Sydney Morning Herald – June 9, 2015)

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

Former Fortescue Metals Group chairman Gordon Toll says the heads of the world’s largest iron ore miners have exhibited “appalling ignorance of major economic market structures” and have created a global “debacle” that could last for decades.

Mr Toll, who now heads locally-listed magnetite hopeful Royal Resources, served as chairman of Fortescue from May 2005 to March 2007 while the company was in its development phase.

Adding his name to the list of prominent critics of the miners’ expansion strategies, Mr Toll said he was shocked shareholders of BHP Billiton, Rio Tinto, Vale and Fortescue had remained silent while their companies pressed ahead with expansion plans which would depress prices.

“The first thing is why are the shareholders not screaming and I think that’s part of the second thing which is both the executives of these companies and the shareholders are showing massive ignorance of major economics and market structures,” Mr Toll told Fairfax Media.

“I don’t believe Jimmy Wilson or Andrew Harding, any of those people, ever believed they were going to drive the iron ore price down to where they have driven it but that is because they do not understand major economics.”

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Mining downturn opens door for ‘neglected’ Pilbara tourism industry – by Alexia Attwood (ABC North West WA – June 8, 2015)

http://www.abc.net.au/news/

The downturn in the Pilbara’s all dominating iron ore industry has opened a window of opportunity for the region’s tourism potential.

For half a century the Pilbara’s spectacular desert ranges and rugged coastline have been overshadowed by the multi-billion-dollar iron ore industry.

But the drop in iron ore price has prompted business and industry leaders to look for ways of diversifying the Pilbara’s economy to make it less reliant on the mining sector, and the formerly neglected tourism industry has been touted as the way forward.

“For our part of the Pilbara, tourism has been neglected for the last decade,” Bazz Harris from the Karratha Visitor Centre said. But the iron ore downturn has already had a positive impact on the affordability of holidaying in the Pilbara, Mr Harris said.

“The good thing is when people call us and say, ‘Hey, can I actually come to Karratha or is it going to cost me an arm and a leg?’, we can actually get people one night’s accommodation for 110 bucks, which is very normal,” he said.

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Goldman Says Iron Rally on Borrowed Time as China Buys Less -by Jasmine Ng (Bloomberg News – June 7, 2015)

http://www.bloomberg.com/

Iron ore imports by China contracted in May from April and the same month a year earlier, highlighting weakening demand in the largest buyer as Goldman Sachs Group Inc. repeated a forecast for a rally in prices to reverse.

Cargoes fell 12 percent from April to 70.87 million metric tons, and were 8.4 percent lower than a year earlier, according to customs data on Monday. That’s the lowest monthly total since February. Adjusted for the number of days in the month, the imports in May were at the slowest pace since November.

While prices posted the biggest monthly advance in almost two years in May as China’s port stockpiles fell by a record, Goldman Sachs is among banks predicting that the rally won’t last as global supplies are set to expand further amid a glut. In many commodity markets, recently installed low-cost supply can now be stretched to meet demand, BHP Billiton Ltd. Chief Executive Officer Andrew Mackenzie said last week.

“This rally is living on borrowed time,” Goldman analysts Christian Lelong and Amber Cai said in a note on Monday, targeting a drop back below $50 a ton. While higher prices may last in the short term, rates need to drop again to force the closure of higher-cost mines to balance the market, they said. Last month, Goldman said iron ore’s jump offered investors an opportunity to bet on renewed declines.

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Iron ore expansions drove down price: Glencore – by Matt Chambers (The Australian – June 5, 2015)

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

The most senior local executive at Swiss trading and mining giant Glencore has waded into the iron ore debate, saying rapid Australian expansions have driven down prices and cost the nation tax, royalties and superannuation dollars.

Speaking in Melbourne yesterday, Glencore coal mining chief Peter Freyberg said boomtime expansions that had seen Australian iron ore production surge and cost more than $US50 billion ($64bn) in development spending from Rio Tinto, BHP Billiton and Fortescue Metals, had been a negative exercise.

“The numbers speak for themselves — if you go back a couple of years, there were 500 million tonnes of (annual) export at $US100 a tonne,” Mr Freyberg said.

“That’s versus 700 million tonnes of exports today at $US60, so there’s a whole lot of revenue that’s gone missing following a bunch of investment.

“At the end of the day, (with respect to) the returns to Australia, into superannuation funds, through royalties, through taxes, it’s been a negative exercise.”

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State of Minnesota lowers mineral royalty for U.S. Steel – by John Myers Duluth News Tribune – June 3, 2015)

http://www.duluthnewstribune.com/

Minnesota’s top elected officials voted unanimously Wednesday to cut the fees the state charges U.S. Steel Corp. to mine iron ore on state lands on the Iron Range.

The vote is an effort to help the big U.S. steelmaker navigate through tough economic times pushed by a flood of cheap foreign steel and iron ore.

The Executive Council—the governor, lieutenant governor, secretary of state, treasurer, auditor and attorney general—voted to cut the royalty rates for U.S. Steel operations for 15 months, a break that could hit more than $4 million.

Royalties are the fees mining companies pay to whoever owns the mineral rights where they mine, in this case, the state of Minnesota.

The move means less money coming in to the state’s Permanent School Trust Fund and other funds stocked by the mining fees.

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COLUMN-Big iron ore miners’ plan to displace everybody else losing steam – by Clyde Russell (Reuters U.S. – June 3, 2015)

http://www.reuters.com/

LAUNCESTON, Australia, June 3 (Reuters) – How well is the plan by big iron ore miners to displace high-cost iron ore from the seaborne and Chinese domestic markets going? Maybe just OK, certainly not great.

Much has been written about how the big three global iron ore miners will use their low-cost, high-output mines to muscle competitors out of the market, thus restoring the supply-demand balance and ultimately justifying the billions of dollars they spent boosting capacity well in excess of demand.

The problem for Brazil’s Vale and the Anglo-Australian pair of Rio Tinto and BHP Billiton <BHP Billiton> is that the signs are this isn’t working perhaps as well as they may have hoped.

Certainly Chinese trade numbers show that Australia in particular has increased market share in iron ore imports, but the momentum may be stalling.

In the first four months of the year, Chinese imports of the steel-making ingredient from Australia were 195.845 million tonnes, or 63.7 percent of the total 307.282 million tonnes.

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Keep Metal Prices Lower for Much Longer – by David Stringer (Bloomberg News – June 3, 2015)

http://www.bloomberg.com/

BHP Billiton Ltd. delivered a sombre warning to global commodity markets that oversupply is very much here to stay. Tumbling prices are creating a testing environment for commodity producers, while demand is slowing to more routine levels amid a transition in China’s economy away from investment-led growth, the world’s biggest mining company’s Chief Executive Officer Andrew Mackenzie said Wednesday.

“In many markets, recently installed low-cost supply can now be stretched to meet growing demand,” Mackenzie said in a speech in Canberra. “Incremental supply, induced during periods of higher prices, will take longer to absorb and this means over-supply may persist for some time.”

Expansion by the biggest iron ore producers, including BHP and Vale SA, will see a global surplus swell to 215 million tons in 2018 from 45 million this year, UBS Group AG estimates. Teck Resources Ltd. plans to idle six Canadian coal operations amid a slump in prices and demand.

“The speed at which prices have returned to long run levels for each commodity has varied as a function of the time taken for low cost supply to come to market,” Mackenzie said.

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Mine closures, job losses on Brazil’s iron ore frontline – by Stephen Eisenhammer (Reuters U.S. – June 1, 2015)

http://www.reuters.com/

CONCEIÇÃO DO MATO DENTRO, Brazil, June 1 A giant truck carries chunks of sparkling mountainside to a web of yellow conveyor belts at a huge mine in eastern Brazil, a few more hundred tonnes of iron ore that are good for its owner Anglo American but bad for a battered global market.

Part of a new generation of massive mines contributing to a supply glut, the Minas-Rio mine has the scale and modern design to produce iron ore, the main ingredient in steel, at well below the costs of more traditional projects.

“We’ll be competitive wherever the price is,” Paulo Castellari, the iron ore head for Anglo in Brazil, said on a recent visit.

But only a four-hour drive away, in the sleepy town of Itatiaiucu, workers at older mines are being laid off. Almost everyone in the town of 12,000 people follows the price of iron ore and for the last year they have watched it drop in half to near the lowest level in a decade. With it, about 20 percent of mining jobs in the town have been cut, the local union says.

“I go to work every day wondering if I’ll be next,” said José Roberto, 55, who has worked for 27 years at a local mine now owned by steelmaker ArcelorMittal, where the union says 30 of about 300 workers have been laid off in recent months.

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China Inc circling Australian iron ore – by Tess Ingram (Sydney Morning Herald – June 1, 2015)

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

The sustained lull in iron ore prices has put iron ore miners under considerable pressure, with Chinese investors circling distressed Australian companies.

Chinese investors are circling distressed Australian iron ore miners, according to local dealmakers fielding growing interest in the commodity’s struggling mid-tier ranks.

The sustained lull in iron ore prices has put iron ore miners under considerable pressure, causing market values to plummet and a handful of Australian producers to suspend operations.

The price of iron ore has slumped close to 50 per cent in the past 12 months to hover at around $US63 a tonne, after slumping as low as $US47 a tonne in April.

Against this backdrop, an increasing number of Chinese entities had expressed interest in providing debt or equity to iron ore miners, acquiring an asset or attempting a takeover, Minter Ellison West Australian managing partner Adam Handley said.

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Finding Minnesota: The ‘Grand Canyon Of The North’ – by Mike Binkley (CBS Minnesota – May 31, 2015)

 

http://minnesota.cbslocal.com/

HIBBING, Minn. (WCCO) – This year, thousands will take a side trip to a giant hole in the ground in northern Minnesota that locals like to call “the Grand Canyon of the North.”

It’s not a natural wonder. It’s a panoramic collection of cliffs, ridges and valleys that have all been carved up by humans. The Hull Rust Mahoning Mine on the edge of Hibbing is the second largest open pit iron ore mine in the world.

Beauty was not the main objective when miners first arrived there in the 1890s, but after 120 years of blasting, digging and hauling, beauty is what many visitors see. Anne Varda, whose family includes three generations of miners, is now president of the adjacent tourist center.

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NEWS RELEASE: Official opening of the Port of Saguenay rail link and intermodal rail yard – Vital rail link for the regional mining industry in Quebec

SAGUENAY, QC, May 29, 2015 /CNW Telbec/ – The Honourable Denis Lebel, Minister of Infrastructure, Communities and Intergovernmental Affairs and Minister of the Economic Development Agency of Canada for the Regions of Quebec, on behalf of the Honourable Lisa Raitt, Minister of Transport, was joined today by Mr. Serge Simard, Parliamentary Assistant to the Premier for the Saguenay–Lac-Saint-Jean region and Member for Dubuc, on behalf of the Honourable Robert Poëti, Quebec Minister of Transport, Mr. Jean Tremblay, Mayor of the City of Saguenay, and Mr. Richard Létourneau, Vice Chairman of the Board of Directors of the Saguenay Port Authority to mark the official opening of the rail link connecting the Grande-Anse terrminal in the Port of Saguenay to the Roberval-Saguenay rail line and of the intermodal rail yard at the Port of Saguenay.

The 12-kilometre rail link and the intermodal rail yard at the Port of Saguenay will facilitate the transfer of goods from the railway network to ships docking at the Grand-Anse marine terminal. Traffic will be bidirectional.The new rail link will provide shippers with additional transportation options, increase the efficiency and capacity of port operations, and facilitate interprovincial and international trade.

The Grande-Anse terminal in the Port of Saguenay benefits from its deep water location, its industrial development potential, and its geographic location near urban services in the heart of a region that has direct access to the regions of Northern Quebec and has a number of heavy industries, particularly in the aluminum manufacturing and forestry sectors.

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The iron ore price equation that makes Fortescue attractive for China – – by Anne Hyland (Australian Financial Review – May 29, 2015)

http://www.afr.com/

CITIC Group and Baosteel Group, which are said to be interested in Fortescue Metals Group, are two of the most politicised companies in China. Baosteel is China’s leader in the steel industry and CITIC was anointed to make significant investments outside China, such as the $10 billion Sino Iron project, which has been described as the worst mining investment in Australia in the past decade.

What is almost certain is that CITIC and Baosteel, which is developing an iron ore project with Aurizon, won’t bid against each other for Fortescue or other resource companies. It would be politically unpalatable in China and it’s typically not what China Inc does.

While there would be a dozen companies in China capable of taking out Fortescue, only one would get the green light, say veteran China observers.

At the Stockbrokers Association conference on Thursday, Li Xinchuang, president of the China Metallurgical Industry Planning Association, firmed up speculation with comments that Fortescue would benefit from a Chinese investor, while saying he didn’t believe the argument that there was a global oversupply of iron ore.

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The History of Erie Mining Company (Hometownfocus.us – May 29, 2015)

http://www.hometownfocus.us/

A project to document the history of the pioneering research, preliminary pilot plant, and construction and operation of the world’s first completely integrated taconite mine.

In early 2014, a team of willing and dedicated former Erie Mining Company/ LTV Mining employees began meeting monthly at the Hoyt Lakes City Hall. The team set as its purpose to document the initial development of Minnesota’s taconite Industry by preparing a history of the pioneering research, construction and operation of Erie Mining Company and the establishment of the town site of Hoyt Lakes.

Partnering with the St. Louis County Historical Society, the group established a goal of publishing a quality book, containing both the technical and pictorial history of the mine, plant site, railroad, power plant and harbor, town sites of Hoyt Lakes, Taconite Harbor, and Murphy City as well as the personal stories and experiences of the employees, contractors, vendors, and “town folk” who built and operated one of the world’s largest and most innovative green field mining operations, and one of our nation’s largest private capital enterprises of the past century.

The group contacted local historians, the Minnesota Historical Society and others, who confirmed that there are no comprehensive, historically accurate books documenting the history of the Erie Mining Company, or for that matter, any of Minnesota’s taconite mining and processing operations.

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UPDATE 2-Australia iron ore magnate Rinehart weakened by court ruling – by Jane Wardell and James Regan (Reuters U.S. – May 28, 2015)

http://www.reuters.com/

SYDNEY, May 28 (Reuters) – Australian iron ore magnate Gina Rinehart’s eldest daughter won control of the $3 billion dollar family trust on Thursday in a judgment critical of Rinehart’s former control of the fund and attempts to block the long-running legal dispute.

The Supreme Court of New South Wales judgment loosens Rinehart’s legendary grip on her business empire, with almost 25 percent of Hancock Prospecting Pty Ltd held by the trust.

Rinehart owns the remainder of the family firm, which in turn owns 70 percent of Roy Hill, a Pilbara-based iron ore mine due to start shipments later this year.

South Korea’s POSCO, Japan’s Marubeni Corp and Taiwan’s China Steel Corp also have stakes in the mine, which will be Australia’s fourth-largest when it reaches full production.

Three of Rinehart’s four children – eldest Bianca Rinehart, Hope Welker and John Hancock – sued for control of the trust in 2011.

They alleged their mother acted with “gross dishonesty” as trustee, when she pushed out its vesting date until 2068, meaning all four children would not get their shares until they were in their 80s and 90s.

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Gina Rinehart loses control of $5b family trust – by Louise Hall (Sydney Morning Herald – May 28, 2015)

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

John Hancock, the estranged son of Australia’s richest person Gina Rinehart, has won an epic legal battle over control of the family’s multibillion-dollar family trust, with his sister and ally Bianca Rinehart appointed trustee.

On Thursday, NSW Supreme Court Justice Paul Brereton appointed Bianca, 38, trustee of the Hope Margaret Hancock Trust, which was set up by her late grandfather Lang Hancock and is thought to be worth about $5 billion.

Justice Brereton also ordered Mrs Rinehart to hand up documents and accounts relating to the trust that John and Bianca had claimed were withheld from them for many years.

The decision follows a bitter and public three-and-a-half-year war that saw Mrs Rinehart and her youngest daughter, Ginia, 28, pitted against her eldest two children, John, 39 and Bianca. Hope Welker, 29, who initially launched the legal action against her mother, settled in 2013 for $45 million because of the “high degree of distress” the litigation was causing her.

Justice Brereton said: “Mrs. Rinehart has demonstrated that she is prepared to go to extraordinary lengths to retain control, directly or indirectly, of the Trust, and that she is capable of exerting enormous pressure and great influence to do so”.

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