Iron Ore – Page 76 – Republic of Mining

Fortescue founder asks Australians to fight Rio, BHP iron ore plans – by James Regan (Reuters U.S. – May 11, 2015)

May 11, 2015

http://www.reuters.com/

SYDNEY – May 11 Fortescue Metals Group Chairman Andrew “Twiggy” Forrest on Monday called on Australians to urge the government to stop expansion plans by iron ore miners Rio Tinto and BHP Billiton, saying they were jeopardizing the economy.

The plea by the billionaire philanthropist and founder of the world’s fourth-biggest iron ore miner was condemned by the national mining lobby, the Minerals Council of Australia, for threatening to set the country on an “interventionist path.”

Forrest has accused Rio and BHP of over-producing to drive out competitors from the $60 billion-a-year Chinese import market despite Fortescue quadrupling its own production in the last seven years.

“These big companies say they must flood the market next year and the year after and the year after even though it will crash the price further,” Forrest said in an editorial in Sydney’s Daily Telegraph. “Every time they say this the price falls again.”

Iron ore prices .IO62-CNI=SI are trading off their lows at $60.50, but still 55-percent under last year’s peak. For every $1 price fall, the Australian economy lost A$800 million ($632 million) in foreign income, according to Forrest.

Vale to divide and conquer by lifting high-grade iron ore output – by James Wilson (Financial Times – May 10, 2015)

May 11, 2015

http://www.ft.com/intl/companies/mining

Vale is keen to build up its supply of higher-quality iron ore in a move that could increase pressure on some rival producers in the global market for the steelmaking commodity.

The Brazilian miner is one of a quartet of companies that dominate the global market in iron ore, where prices have plummeted over the past year as a glut of supply — mainly from Australian producers — has encountered weakening Chinese demand.

Vale’s recent indications that it would be prepared to hold back some supply have helped to arrest the slide in the iron ore price, while underpinning a rally in the company’s shares in the past month.

In an interview Luciano Siani, chief financial officer, did not rule out Vale cutting its growth plans for next year. The miner expects to produce 340m tonnes of iron ore this year and has previously estimated that 2016 output will be 376m tonnes.

However, Mr Siani said Vale would be likely to “push to the fullest” its production of the highest grade of iron ore, which commands a premium price from steelmakers. By contrast Vale would be more likely to “manage” its more “standard” iron ore supplies, he said.

Waterloo Region reaps dividends by being conduit to Baffin Island – by Greg Mercer (Waterloo Region Record – May 9, 2015)

May 11, 2015

http://www.therecord.com/waterlooregion/

BRESLAU — The sun is just starting to peek above the horizon as a handful of men in work boots suck on their last cigarettes outside the airport terminal, getting ready for the long commute.

In a few minutes, they’ll join dozens of others boarding the Boeing 737 for the five-and-a-half hour charter flight to Mary River, Baffin Island — where a small army of pipe fitters, machinists, cooks, engineers and other tradespeople are helping build and supply one of the world’s largest and most ambitious iron ore mining projects.

For hundreds of workers passing through the Region of Waterloo International Airport three times a week, Waterloo Region is a southern hub for the buried riches of the Far North. And that connection is pumping millions into the local economy.

The Mary River Project, run by an Oakville-based company called Baffinland, aims to move its first shipment of iron ore — the main raw material used to make steel — this summer.

The ore deposits in that part of Baffin Island, first discovered by a prospector in 1962, are so rich and pure they’re the stuff of legend. Pilots used to report the minerals would scramble their compasses as they flew over.

The Betrayal of Brazil – by Michael Smith, Sabrina Valle and Blake Schmidt(Bloomberg News – May 8, 2015)

May 8, 2015

http://www.bloomberg.com/

As a massive corruption scandal unfolds, Brazilians are facing some stark truths: The powerful and connected are still dividing the country’s riches among themselves. The past decade’s economic miracle was in large part a mirage. And the future is again on hold.

In mid-2013, Brazilian federal police investigator Erika Mialik Marena noticed something strange.

Alberto Youssef, suspected of running an illicit black-market bank for the rich, had paid 250,000 reais (about $125,000 at the time) for a Land Rover. The black Evoque SUV ended up as a gift for Paulo Roberto Costa, formerly a division manager at Brazil’s national oil company, Petrobras. “We were investigating a money-laundering case, and Petrobras wasn’t our target at all,” says Marena. “Paulo was just another client of his. So we started to ask, ‘Why is he getting an expensive car from a money launderer? Who is that guy?’”

Marena had spent the previous decade building cases against money launderers, and Youssef had been a perennial target. He’d been arrested at least nine times for using private jets, armored cars, clandestine pickups by bagmen, and a web of front companies to move illicit cash. But Youssef had been spared serious jail time by testifying repeatedly against other doleiros, Brazilian slang for specialists in laundering unreported cash.

Essar ramps up construction [Iron Range] – by Beth Bily (Business North.com – May 8, 2015)

May 8, 2015

http://www.businessnorth.com/news.asp

The business news source for Northeastern Minnesota and Northwestern Wisconsin.

While recent news about price, demand and employment hasn’t been favorable for Iron Range mining operations, the largest mining construction project here during this century is nonetheless moving ahead, executives say.

Essar Steel Minnesota, a $1.9 billion project located north of Nashwauk on the former Butler mining site, is ramping up for a summer of large-scale activity with the goal of completing construction on the taconite mine by the end of this year. It’s permitted to produce 7 million tons of taconite pellets annually and is expected to operate for approximately 80 years.

Reestablishing mining operations here has been decades in the making. Butler ceased production at the site in the mid-1980s. Later, various would-be developers announced plans to reopen the site to mining. But for years, the plans never made it off the drawing board. That changed in 2007, when India-based Essar purchased what was formerly known as Minnesota Steel Industries.

At a ground breaking for Essar Steel Minnesota in 2008, executives then promised a mining operation that would be up and running within 27 months.

Glencore blames rivals for creating metals glut – by Silvia Antonioli (Reuters U.K. – May 7, 2015)

May 8, 2015

http://uk.reuters.com/

LONDON – The head of global mining and trading company Glencore (GLEN.L) said rivals were to blame for an oversupply of metals which depressed its share price.

Despite a partial recovery in the last few months, Glencore’s shares are down about 6 percent from a year ago, under pressure from a rout in prices for most of the commodities it produces and trades.

“Unfortunately our competitors in the world have produced more supply than demand and commodity prices are down for that reason,” Glasenberg said at the company’s annual meeting.

“I am doing my level best to convince my competitors we should understand the words demand and supply,” he added in response to a question from an investor about the share price.

Glasenberg has criticised rivals such as Rio Tinto (RIO.L) and BHP Billiton (BLT.L) (BHP.AX) at various times, blaming them for oversupplying the market, particularly in iron ore, a commodity Glencore has little exposure to.

Quebec prepared to buy rail to help rescue iron-ore mine – by Sonja Elmquist and Frederic Tomesco (Bloomberg News/Montreal Gazette – May 5, 2015)

May 5, 2015

http://montrealgazette.com/

Quebec is prepared to buy a rail line and port facilities that service a shuttered Cliffs Natural Resources Inc. iron-ore mine to pave the way for the operation to reopen under new owners.

The government also is open to buying 20 percent of the Bloom Lake mine to facilitate a deal, Economy Minister Jacques Daoust said. Purchasing the rail and port facilities could lower the mine’s operating costs by as much as $20 a ton, he said.

“We’re trying to ensure the survival of the mine,” Daoust said Friday in an interview at Bloomberg headquarters in New York. “If the last 20 percent is a problem, I will fix it.”

Cliffs suspended production at Bloom Lake in January and sought creditor protection for the operation. That put pressure on the Quebec government, which wants to boost economic activity in Cote-Nord, a region with 10.7 percent unemployment. Bloom Lake employed about 600 people when it was operational, according to Investissement Quebec, a government agency.

As recently as 2013, Bloom Lake was considered a critical part of Cleveland-based Cliffs’ strategy to build its export business to mitigate its dependence on U.S. customers.

COLUMN-Iron ore reality check shows small, but significant change – by Clyde Russell (Reuters U.K. – May 4, 2015)

May 4, 2015

https://uk.finance.yahoo.com/

LAUNCESTON, Australia, May 4 (Reuters) – It’s time for a reality check all round in the iron ore market.

In recent weeks there has been a strong rally in prices, tentative signs that the headlong expansion of capacity will be reined in, calls for a producer cartel of some sorts and a small miner scrappily hanging on in the face of seemingly overwhelming adversity.

All of this makes for great drama and news headlines, but also should lead to questions and analysis as to whether anything has actually changed in the iron ore market.

The first reality check is that despite the near 27 percent rally in the spot Asian iron ore price between April 6 and April 27, the price remains extremely weak.

Iron ore ended last week at $56.20 a tonne, having retreated from the $59.20 reached on April 27, leaving the steel-making ingredient down 21 percent so far this year. It’s also roughly half of what it was this time last year and not much better than a quarter of the record $191.90 a tonne in February 2011.

Vale ups stakes in iron ore war – by Stephen Bartholomeusz (The Australian – May 1, 2015)

May 1, 2015

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

Of far greater consequence to Rio Tinto, BHP Billiton and Australia than Andrew Forrest’s complaints about their volume and cost-driven iron ore strategies is what the “other” major seaborne producer does in response to the crash in iron ore prices.

They might be encouraged by the commentary that accompanied Vale’s first-quarter results overnight.

The Brazilian group is the larger of the three major seaborne iron ore producers and is in the midst of an ambitious and expensive ($US17 billion) program to increase its production by 40 per cent, to almost 460 million tonnes a year from last year’s 327 million tonnes.

As with all the other producers, Vale is slashing costs to try to dampen the impact of the dive in iron ore prices and was able to proclaim that, for the first time in its history, cash costs were less than $US20 a tonne. A significant component of the $US13 a tonne reduction in cash costs was a 20 per cent, or $US4.50 a tonne, fall in freight costs.

Vale has traditionally been competitive with Rio (RIO) and BHP (BHP) in production costs and its ore is generally of higher quality. Its disadvantage has been distance from China and the impact that freight costs have had on its landed costs.

Vale Delays Possible Base-Metal Division IPO – by Paul Kiernan (Wall Street Journal – April 30, 2015)

May 1, 2015

http://www.wsj.com/

Nickel prices have fallen sharply from when the base-metal IPO idea was hatched

RIO DE JANEIRO—Brazilian mining firm Vale SA said Thursday it has pushed back the timeline of a possible initial public offering of its base-metals division after an expected rebound in nickel prices failed to materialize.

Vale had said in December that it was considering selling between 30% and 40% of the division on Toronto’s stock exchange around August. On Thursday, Chief Executive Murilo Ferreira said his management team’s new goal is to be ready to present a recommendation to Vale’s board of directors by the end of this year so that Vale might have the option of carrying out the transaction in 2016.

When they hatched the idea for the nickel IPO, Vale executives were predicting nickel prices would rise to around $21,000 per metric ton. Thanks to higher prices and production ramp-ups at a number of new or troubled facilities, they estimated the base-metals division would generate cash flows of between $4 billion and $6 billion this year.

Rio Signals Ready to Step Up on Dealmaking as Market Bottoms – by David Stringer (Bloomberg News – May 1, 2015)

May 1, 2015

http://www.bloomberg.com/

With the mining sector seen nearing the bottom of the cycle, Rio Tinto Group signaled to analysts it’s ready to resume mergers and acquisitions.

The company is prepared to look for a deal if it can secure the right asset at the correct valuation and win investor backing, Morgan Stanley said after an analysts’ meeting this week with Chief Financial Officer Chris Lynch.

An acquisition would be Rio’s first since 2012, according to data compiled by Bloomberg. As asset valuations get pushed lower, larger producers may be changing their attitude toward deals, according to Argo Investments Ltd.

“If they can buy tier-one assets at valuations that are closer to the bottom of the cycle, then that’s not a stupid thing to do,” said Jason Beddow, chief executive officer of Argo Investments, which manages about A$5 billion ($4 billion) in Australia and holds Rio shares.

The value of completed mining deals fell in 2014 to $51.3 billion, the lowest annual total in 10 years, according to data compiled by Bloomberg.

Iron ore wars get personal as Rio tells Fortescue to get its house in order – by Michael Smith (Australian Financial Review – April 30, 2015)

May 1, 2015

http://www.afr.com/

Fortescue Metals founder Andrew Forrest has not been shy about telling Rio Tinto and BHP Billiton how to run their iron ore operations. Rio Tinto’s iron ore boss Andrew Harding is now offering Forrest some advice of his own: get your own house in order and leave us alone.

“The response to that is to fix your own business – not give business advice to others, and definitely not create an environment in Australia where this long-term strategy, which is good for the country, and good for the company, is cast into question,” Harding said in an interview with The Australian Financial Review.

The comments highlight the growing tension between the nation’s three big iron ore producers as the debate about how to manage supply and demand in a low-price environment spills over into the political arena.

It is not the first time Harding has defended the strategy to run the company’s mines at full capacity. But the campaign on both sides is intensifying and becoming more personal.

Harding has made it clear Rio Tinto is not going to blink. He doesn’t believe BHP Billiton has either, despite some contrary interpretations of last week’s decision to defer infrastructure spending at Port Hedland.

UPDATE 2- Vale posts $3.2 bln loss on iron ore’s relentless fall – by Stephen Eisenhammer (Reuters U.S. – April 30, 2015)

April 30, 2015

http://www.reuters.com/

(Reuters) – Brazil’s Vale SA , the world’s No. 1 producer of iron ore, on Thursday posted its third straight quarterly loss under pressure from falling prices of the commodity as demand growth from China slows.

The miner reported a net loss of $3.2 billion in the first quarter, compared with a net profit of $2.4 billion in the same period last year. The result compares with a forecast net loss of $2.4 billion according to a Reuters poll.

The first-quarter loss was wider than that in the third and fourth quarters of last year. Vale has been hit by a tumble in the price of the main steel-making ingredient .IO62-CNI=SI, which is near its lowest in a decade having fallen 47 percent in the past 12 months.

Prices have fallen due to huge new capacity from Brazil and Australia that is beginning to flood the market, just as growth slows of Chinese demand for steel.

As well as weaker iron ore prices, Vale said the depreciation of the Brazilian real against the dollar had cost the company $3.02 billion in the quarter.

Brazil’s Vale Considers Cutting Iron-Ore Output – by Paul Kiernan (Wall Street Journal – April 30, 2015)

April 30, 2015

http://www.wsj.com/

Company remains committed to capacity growth, but may freeze some higher-cost production

RIO DE JANEIRO—The world’s largest iron-ore producer gave the strongest signals yet Thursday that it could temper output in the face of an oversupplied global market.

Peter Poppinga, head of the ferrous division at Brazil’s Vale SA, said that while the company remains committed to increasing its annual iron-ore capacity to 450 million metric tons in a few years from around 350 million tons now, it may idle up to 30 million tons of higher-cost production. He reiterated that the strategy was “new” and came in addition to an existing plan to buy less ore from third parties.

Vale and fellow iron-ore majors Rio Tinto PLC and BHP Billiton PLC have been criticized by smaller rivals and many analysts in recent months for increasing their output of the steelmaking ingredient despite stagnating demand from China, the world’s main market. Together the three companies account for some 60% of global iron-ore exports, and all have continued to invest in new supply even as prices collapsed in recent months.

The Brazilian company has faced heat for plowing ahead with a particularly costly, $16.4 billion expansion of its Carajás mining complex in the Brazilian Amazon. Company executives on Thursday again brushed aside suggestions that they might stretch out the project’s timeline.

Why Africa’s mining industry can weather the commodity-price storm – by Rolake Akinkugbe (Euromoney.com – April 2015)

April 30, 2015

http://www.euromoney.com/default.aspx

The correction in the global commodity cycle shouldn’t derail investors’ search for new exploration frontiers in sub-Saharan Africa (SSA), given the region’s high-quality mining and metal assets, and still-growing steel demand in China. In any case, efforts to boost local value-added processing should remain on track.

Minds have been refocused on sub-Saharan Africa’s (SSA) mining and metals sector since oil prices began their downward climb in June. Only 18 months earlier, the region’s mining industry had come under heavy scrutiny after a series of labour disputes and worker strikes in South Africa’s mines.

Meanwhile, iron-ore, gold and copper prices have been depressed, raising concerns over export revenues for a number of African mineral producers. Should growth in China, which consumes almost 50% of global metal supplies, stagnate, then Africa’s mining sector could be in for a protracted depression.

However, there is some cause for optimism. Despite global economic uncertainty over the past two years, the budget for non-ferrous metals exploration in SSA has remained relatively robust, helping to underpin continued industry investment.