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Iron Ore

Gina Rinehart children seek profits from iron ore projects including Roy Hill and Hope Downs – by Louise Hall (Sydney Morning Herald – November 11, 2014)

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

Gina Rinehart’s two estranged children are seeking to claw back profits from the mining magnate’s major iron ore projects which they say are rightfully theirs.

But lawyers for Mrs Rinehart, Australia’s richest person, claim John Hancock and Bianca Rinehart’s latest legal action in their long-running family feud should not be allowed to go ahead because it is an abuse of process.

In an urgent hearing in the Federal Court on Tuesday, lawyers for Mrs Rinehart and her flagship company, Hancock Prospecting, asked Justice Peter Jacobson to suppress details of the childrens’ allegations of fraudulent concealment and deceptive conduct because any publicity could affect the US$10 billion ($11.6 billion) Roy Hill iron ore mining project.

The barrister for Mr Hancock and Bianca Rinehart, Christopher Withers, told the court his clients were seeking a constructive trust and an account of profits of four mining tenements, including Roy Hill and Hope Downs.

John Sheahan QC, for Hancock Prospecting, asked the court to suppress the case until he could apply for a stay on the grounds it was an abuse of process.

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Iron ore rhetoric should shift from China demand to oversupply – by Clyde Russell (Reuters U.S. – November 7, 2014)

http://www.reuters.com/

LAUNCESTON, Australia, Nov 7 (Reuters) – One of the recurring themes in iron ore’s precipitous decline this year has been the weak state of Chinese demand. The problem with this is that it simply isn’t true.

It doesn’t take much of a search to find media and analyst reports that reference softness in China’s steel market as one of the major reasons for Asian spot iron ore’s 43-percent decline this year to a five-year low of $75.60 a tonne on Thursday.

“Iron ore falls further as Chinese buying interest stalls” was a Reuters headline from Oct. 17.

Just in case anybody thinks I’m picking on my own colleagues, this one is from competitor Bloomberg on Thursday: “Iron drops to lowest since 2009 as APEC curbs dent demand” – a reference to steel mills closures ahead of the upcoming meeting of the Asia-Pacific Economic Cooperation group in Beijing as part of measures to control pollution.

It’s not just news reports, analysts have also pointed to the slowing growth of China’s economy.

“In China, slowing industrial trends and deteriorating property fundamentals are having an adverse impact on bulk commodity demand – prices of iron ore and thermal coal both hit five-year lows,” said a recent research report from a major bank.

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Iron Ore Has Biggest Weekly Loss Since May on Supply Glut – by Jasmine Ng (Bloomberg News – November 7, 2014)

http://www.bloomberg.com/

Iron ore capped the biggest weekly decline in more than five months amid expanding global surplus, with Vale SA’s opening of a port in Malaysia highlighting rising supplies and investments by the world’s largest shippers.

Ore with 62 percent content delivered to Qingdao lost 4.7 percent this week to $75.84 a dry metric ton, according to data from Metal Bulletin Ltd. The decline completed three weeks of losses, deepening a bear market. Prices, which rose 0.6 percent today to snap a five-day losing streak, reached $75.38 yesterday, the lowest since September 2009.

The raw material lost 44 percent this year as producers including Brazil’s Vale, the world’s largest shipper, and BHP Billiton Ltd. and Rio Tinto Group (RIO) in Australia expanded supplies and spurred the glut. Data this week showed record exports of the steel-making raw material from Australia’s Port Hedland last month. Mill closures ordered by China this week to curb air pollution for a global summit were also seen hurting demand.

“Demand in China is weak because some mills were asked to stop production before the APEC meeting,” Ben Cheung, head of metals at ABN Amro Group NV in Hong Kong, said before the price data was released. “The major producers are still expanding supply to try to increase market share. The over-supply situation doesn’t look like it will be alleviated next year.”

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Conductor missing as freight train derails in Quebec – by Eric Atkins (Globe and Mail – November 6, 2014)

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.

A freight train conductor is missing after the derailment of a Quebec North Shore and Labrador train near Sept-Îles, Que.

A spokeswoman for Iron Ore Co. of Canada, which owns the short-line railway, says the locomotive was found submerged in the Moisie River on Thursday morning and that a landslide is the likely cause.

Claudine Gagnon of Iron Ore Co. said the train was travelling north carrying empty rail cars to the mine, and it is not known how many locomotives were involved.

“Our first priority is to locate our employee,” Ms. Gagnon said, adding the company is not identifying the person at this time. The Transportation Safety Board of Canada says it has deployed a team of investigators to the site of the derailment.

QNS&L railway runs 418 kilometres between Iron Ore Co.’s mine in Labrador City and the St. Lawrence Seaway port of Sept-Îles. The Iron Ore Co., which is majority owned by global mining company Rio Tinto PLC, produces ore pellets for making metals.

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Iron Drops to Lowest Since 2009 as APEC Curbs Dent Demand – by Jasmine Ng (Bloomberg News – November 5, 2014)

http://www.bloomberg.com/

Iron ore declined to the lowest level in more than five years as China ordered some steel mills to reduce production, curbing demand in the world’s biggest user just as increased supplies exacerbate a global surplus.

Ore with 62 percent content delivered to Qingdao fell 2 percent to $76.46 a dry metric ton today, the lowest price since September 2009, according to data from Metal Bulletin Ltd. The drop extends two weeks of losses at the end of October.

The raw material lost 43 percent this year, underperforming all 22 members of the Bloomberg Commodity Index, as producers including BHP Billiton Ltd. expanded supplies and spurred the glut. Some mills in the largest buyer were ordered to suspend output before a summit of world leaders at the Asia Pacific Economic Cooperation forum in Beijing. A recovery in prices may take as long as 18 months, according to Anglo American Plc.

“Steel mills in north China should be working at a reduced rate due to the APEC meeting,” Christian Lelong, an analyst at Goldman Sachs Group Inc. in Sydney, said today before the price was released. “That should be playing a role” in iron ore’s drop, he said by e-mail.

Asia’s biggest economy will host the APEC gathering in the capital from Nov. 7-12, prompting authorities to order factory shutdowns to try to ensure clean air during the event.

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Steelworkers president optimistic for future of Wabush Mines – by Ty Dunham (St. John’s Telegram – November 4, 2014)

http://www.thetelegram.com/

Businesses and families are feeling the slowdown of the iron ore market, especially those affected by the idling of Wabush Mines in February.

The recent news of Cliff’s Natural Resources choosing to shut the mine down permanently after negotiations with potential buyer MFC Industrial fell through has prompted many to worry about their future in Wabush.

But MFC is continuing to explore options to take over the mine, which is why United Steelworkers (USW), Local 6285 president Jason Penney is remaining optimistic.

“From what we’ve been told, as royalty holders they have certain contractual rights, which will allow them to re-enter the plant,” explained Penney. He said it’s not a matter of if MFC reopens the mine, but when.

“MFC seems like a very solid and strong company. This is not their first rodeo. And they’re adamant that they’ll reopen the mine. We just

hope it can be done in a quick time frame.” While it isn’t the preferred route, Penney said it’s better than the alternative. “There’s no doubt we’re disappointed by the sale. This way will be longer. The important thing I want people to remember is all hope is not lost.”

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UPDATE 3-Vale posts surprise loss, shares dive – by Stephen Eisenhammer (Reuters U.K. – October 30, 2014)

http://uk.reuters.com/

Oct 30 (Reuters) – Vale posted a surprise $1.44 billion loss, and its shares tumbled to a 5-1/2-year low as investors worried about the cost of the Brazilian miner’s expansion plans and a possible cut to its dividend in a new era of lower iron ore prices.

Vale SA cited low iron ore prices and a weak local currency for the third-quarter loss. A Reuters poll of seven analysts had forecast quarterly net profit of $956 million. A year earlier, Vale had a net profit of $3.5 billion.

Shares in Vale, the world’s largest producer of iron ore, fell as much as 4 percent on Thursday even as Brazil’s benchmark Bovespa stock index rose 2 percent.

Vale is attempting to boost production and cut costs as it competes with Australian rivals Rio Tinto Ltd and BHP Billiton Ltd at a time when slack demand from steel makers has pushed iron ore prices near five-year-lows.

Vale, and Brazil in general, enjoyed years of rapid growth as Chinese demand for commodities boomed. But Chinese growth has begun to slow, pressuring commodity prices and hurting Vale as well as the wider Brazilian economy.

Vale mined a record amount of iron ore during the quarter, but the slight production rise was not enough to offset the plunge in price. Rivals Rio and BHP have added capacity and cut costs more quickly.

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Ebola Fight Means Taking 5,000 Temperatures at Mittal’s Ore Mine – by Thomas Biesheuvel (Business Week – October 28, 2014)

http://www.businessweek.com/

Kleber Silva takes his temperature twice a day, enters the results in his BlackBerry and sends them to the company he works for, ArcelorMittal.

Silva, the head of iron ore for the world’s biggest steelmaker, is home from Liberia for three weeks. When he returns to the African nation next month, he’ll still be in the 21-day incubation period for the Ebola virus. The temperature checks won’t end, and neither will his need for vigilance.

Silva’s experience is typical for those working to keep businesses going, even as a health crisis explodes around them. His job is to keep safe almost 5,000 ArcelorMittal employees working in Liberia, along with their families. The effort, which will cost $3 million by year’s end, is important both on a human scale, and financially: The company relies on the iron-rich Nimba mountains to feed its blast furnaces, and Liberia depends on mining to generate a fifth of its economy.

“We want to keep this mine alive,” Silva said in an interview at ArcelorMittal (MT)’s London offices. “For the country, for the people, for the company. We need to deal with the crisis, deal with the outbreak, but have the vision beyond this. This will not stay forever.”

The outbreak has infected more than 10,000 people in West Africa, killing almost half. It threatens to erase the progress Liberia has made since it emerged from civil war more than a decade ago with Finance Minister Amara Konneh forecasting zero growth this year because of the disease.

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Minister promotes N.L. iron ore in China – by Ashley Fitzpatrick (St. John’s Telegram – October 30, 2014)

http://www.thetelegram.com/

Lab West waiting as Derrick Dalley presses mining sector investment

Eight months after the idling of the Scully Mine in Wabush, less than a month after putting a pin in construction of a mine-fuelling power line and facing continued, dismal pricing for iron ore, the Government of Newfoundland and Labrador is actively promoting iron mining in Labrador West.

Natural Resources Minister Derrick Dalley told The Telegram Wednesday the potential in iron ore was key to his presentations and conversations during a 10-day mission to China earlier this month.

He took to the microphone at industry gatherings in Shanghai and Beijing, at the Canada Natural Resources Forum and Canada Mineral Investment Forum. He met with the Canadian Ambassador to China, representatives for China’s National Development and Reform Commission, and Ministry of Land and Resources, and steel producers from companies including Wisco and Hebei Iron and Steel.

“From my perspective, it was a great opportunity to reinforce the relationship that we had forged in recent years, to understand the China economy, but as well to present on behalf of the province some opportunities and to encourage Chinese investment,” he said.

The province, it was noted in a statement issued earlier this month, provided $13,900 to help Mining Industry NL representatives make the trip and maintain a trade show booth at China Mining, the continent’s largest mining conference.

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CEO Mocks Analyst, Refuses To Answer His Question On Public Webcast Because His Stock-Price Target Is Too Low – by Myles Udland (Business Insider – October 29, 2014)

http://www.businessinsider.com/

Lourenco Goncalves, CEO of the mining and natural resources company Cliffs Natural, doesn’t take questions from haters.

On Cliffs’ earnings conference call on Tuesday morning, Goncalves told Wells Fargo analyst Sam Dubinsky that he wouldn’t answer Dubinsky’s questions because “you already know everything about my company.”

“You have a $4 price target and you think we can’t sell assets, so I’m going to take the next question, I’m not going to answer you,” Goncalves said. It is a jarring exchange.

In a note to clients following the report, Dubinsky wrote that Goncalves was “pretty bold” on the earnings call. It was also Goncalves’ first earnings call as CEO since being named to the position on Aug. 7.

And the exchange, or really just the shutting down of Dubinsky’s questions by Goncalves, shows some of the complications inherent in the relationship between companies and analysts.

It is Dubinsky’s job, as a research analyst, to publish his assessment of the companies in his coverage area and, based on this work, publish a recommendation on how he believes the stock will perform going forward.

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New Cliffs CEO sees ‘zero hope,’ no asset sale in Ontario’s Ring of Fire – by Peter Koven (National Post – October 29, 2014)

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

The new chief executive of Cliffs Natural Resources Inc. doubts that Ontario’s “Ring of Fire” will be developed for decades to come, or that anyone will buy his company’s rich chromite assets in the region in the near future.

Lourenco Goncalves, 55, said in an interview Tuesday that he has “zero hope” that a solution will be reached to spur on development in the region anytime soon.

“I don’t believe under my watch, and I plan to stay [alive] for the next 50 years… that the Ring of Fire will be developed,” he said.

A handful of junior mining companies, including KWG Resources Inc. and Noront Resources Ltd., are more optimistic and are interested in buying Cliffs’ Ring of Fire properties. But according to Mr. Goncalves, they all have the same problem: “They do not have any money.”

His comments have to be discouraging for the Ontario government, which made the Ring of Fire the centerpiece of its northern development plans. To date, Cleveland-based Cliffs is the only large mining company to take a serious interest in the area.

The Ring of Fire, located in the remote James Bay Lowlands, was discovered amid much fanfare in 2007. It is thought to hold about $60-billion of chromite, base metals and other minerals.

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Cliffs Turnaround Plan Derailed by Iron Ore at 5-Year Low – by Sonja Elmquist (Bloomberg News – October 27, 2014)

http://www.bloomberg.com/

Other assets are being sold off quickly. The sale of a minority holding in a graphite
mining company was completed in August. Goncalves said he’s trying to sell a chromite
project in Canada’s Ring of Fire mining region “as soon as I can.”

Activist investor Casablanca Capital LLC’s plan to revive the fortunes of the largest iron ore producer in the U.S. is crumbling as the price of the commodity drops to a five-year low.

Casablanca went public in January with demands for Cliffs Natural Resources Inc. (CLF) to spin off or sell foreign mines and return more cash to investors. Casablanca won a proxy contest in July with the election of its slate of directors on the Cliffs board, one of whom was appointed chief executive officer.

With the iron ore market now in a worse state than it was at the start of the year, Cliffs may struggle to sell mines for a satisfactory price. Instead of raising its dividend, the Cleveland-based miner may have to eliminate the payout entirely, analysts at Citigroup Inc. and Nomura Holdings Inc. say.

A higher dividend “was something Casablanca promised before I joined,” Chairman and CEO Lourenco Goncalves said by phone in an Oct. 14 interview. “I’m not Casablanca.”

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Cliffs books $5.9bn loss on iron-ore, coal asset write-downs – by Henry Lazenby (MiningWeekly.com – October 28, 2014)

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

TORONTO (miningweekly.com) – US miner Cliffs Natural Resources reported a third-quarter net loss of $5.9-billion, or $38.49 a share, after booking a $5.7-billion write-down of its iron-ore and coal assets.

The Cleveland, Ohio-based company, who came under new management in July, following activist shareholder Casablanca Capital’s victory in a proxy contest, wrote down $4.5-billion related to the Bloom Lake iron-ore project, in Quebec, $28-million related to the shuttered Wabush iron-ore mine, in Labrador, $390-million related to its Asia Pacific Iron Ore (APIO) business segment and $539-million related to its North American Coal assets.

The company also booked a $254-million charge on its chromite assets, after indefinitely pulling out of Ontario’s Ring of Fire earlier this year.

Excluding the one-off charges, the company reported an adjusted profit of $33-million, or $0.21 a share, compared with an adjusted net income of $144-million, or $0.88 a share, in the same three-month period ended October 30 a year earlier.

Consolidated revenues of $1.3-billion were 16% lower year-on-year, mainly owing to iron-ore pricing sliding 32% in the past year, while metallurgical coal pricing declined 17%.

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Mali eyes $9.5bn rail projects to unlock iron ore, bauxite deposits – by Tiemoko Diallo and Bate Felix (Reuters/The Africa Report – October 27, 2014)

http://www.theafricareport.com/

Bamako – Landlocked Mali aims to diversify its mining sector away from gold with Chinese-built rail projects worth $9.5 billion that would link it to the Atlantic coast, even as slowing Chinese growth and falling commodity prices cool investment.

The West African nation – the continent’s third-largest gold producer – said last month it had signed a string of investment deals with China totalling $11 billion, with most of this going to finance the rail deals.

Chinese authorities, however, have not confirmed the investment. Mali said $8 billion would finance a 900-km (560-mile) railway to Guinea’s port capital Conakry and $1.5 billion would renovate a rail link to Senegal’s capital Dakar, Mali’s main gateway port.

The improved transport links would attract investors to under-explored resources such as iron ore, bauxite and uranium that are bulkier and more costly to transport than gold. “The infrastructure will enable Mali to end its dependency on gold,” said Lassana Guindo, an adviser at the mines ministry.

President Ibrahim Boubacar Keita is striving to kick start Mali’s economy after a brief French-led war in early 2013 against northern Islamist rebels dragged it into recession.

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BHP CEO defends iron ore strategy as best play in gloomy market – by Silvia Antonioli (Reuters U.S. – October 23, 2014)

http://www.reuters.com/

LONDON – (Reuters) – BHP Billiton’s chief executive said its strategy of high-volume iron ore production was the best way to profit in a gloomy market, defending a plan that has come under growing criticism for depressing prices.

Iron ore, the biggest earner for global miner BHP Billiton, has lost about 40 percent of its value this year, reaching five-year lows, as big increases in new supply from top three miners Vale, Rio Tinto and BHP have exceeded lackluster demand.

Analysts expect the price decline to continue in the next few years under the weight of extra supply.

BHP has said it intends to boost production at existing assets by 65 million tonnes to 290 million a year by June 2017 and plans to cut its production costs to overtake rival Rio Tinto as the cheapest iron ore supplier to China.

“The lowest-cost producer has a right to continue to produce at very high margins in a free market,” BHP Chief Executive Andrew Mackenzie told reporters after the company’s annual general meeting in London.

“We have always been of the view that the iron ore market is more likely to decline than rise, and therefore producing the maximum amount we can now is very sensible.”

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