Iron Ore – Page 82 – Republic of Mining

Iron ore giants win first round in global battle but knockout unlikely – by Clyde Russell (Reuters U.S. – October 23, 2014)

October 23, 2014

http://www.reuters.com/

LAUNCESTON, Australia – Oct 23 (Reuters) – There is now no doubt that the big three global iron ore miners are producing record amounts in their bid to dominate the industry. The question remains, what will happen if they succeed?

Anglo-Australian giants Rio Tinto and BHP Billiton both reported record output in their latest quarterly reports, and affirmed they were on track to boost production even further.

Top producer, Brazil’s Vale is also increasing output, with Brazilian trade figures showing iron ore exports rose 16.7 percent in September from August to 33 million tonnes.

These figures show that the output side of the plan to dominate global seaborne iron ore trade is going quite well for the big three.

In the case of BHP and Rio Tinto, they are well-placed to continue to put pressure on competitors based in their home turf of Western Australia state, as well as those in other parts of the world.

With the lowest cash costs, in the region between $20 to $30 a tonne, and plans to strip out even more costs, they can survive and prosper even if iron ore prices remain weak.

NEWS RELEASE: Government of Quebec Forms a Partnership with Champion Iron and Adriana Resources to Advance Labrador Trough Rail Feasibility

October 23, 2014

MONTREAL, QUEBEC and TORONTO, ONTARIO–(Marketwired – Oct. 21, 2014) – The board of Champion Iron Limited (ASX:CIA)(TSX:CIA)(“Champion” or the “Company”) is pleased to advise that the Government of Québec and Lac Otelnuk Mining Ltd., a joint venture between Adriana Resources (“Adriana”) and WISCO International Resources Development & Investment Limited, have formed a partnership with Champion, “La Société ferroviaire du Nord québécois, société en commandite (“SFNQ”).

The SFNQ was formed recently, following the tabling by the Québec government of its 2014-2015 budget in June, as a partnership of government and industry and assigned the responsibility of managing the implementation of the Feasibility Study for a new Labrador Trough rail line.

The Québec government has set aside a maximum of C$20 million from its Plan Nord Fund to contribute to the study. For its part, Champion’s contribution of sunk costs is valued up to C$6 million. Among other major economic and wide-reaching social benefits, the new rail infrastructure when developed will enhance the Québec-based mining industry’s ability to service world markets with competitive long-term tariffs.
Champion’s subsidiary Champion Iron Mines Limited is a founding partner of the SFNQ, which is open to all miners in the region.

Champion’s Chairman and CEO Michael O’Keeffe said, “The SFNQ partnership includes the Government of Québec and fellow mining group Lac Otelnuk Mining Ltd, with an open invitation to others from within industry to join this important initiative”.

Mining: End of Iron Age – by Honore Banda (The Africa Report – October 21, 2014)

October 23, 2014

http://www.theafricareport.com/

Douala, Cameroon – Low prices and high supplies are driving iron ore prices down. Analysts say large companies will survive the crunch but many smaller producers and explorers may be faced with tough decisions.

In a red and muddy clearing along Cameroon’s densely forested border with the Republic of Congo, a fleet of diggers stands idle. High above the canopy of trees, dark clouds start to gather. It is an ominous portent for an iron ore project billed as transformative for the country.

Three years ago, the Mbalam mining project, spearheaded by Australian explorer Sundance Resources, was hailed by Cameroon’s President Paul Biya as a potential game changer for the Central African country. Now, as Sundance courts fresh investors to shore up its dwindling cash reserves while iron prices fall, the prospects look bad for the construction of a $5bn railway needed to make the mine economical.

Across the continent, a similar pattern emerges. From Guinea to Angola, mining projects set up to feed China’s seemingly insatiable appetite for raw materials face an uncertain future.

Demand from the world’s largest consumer of iron ore is now cooling, and the determination of the three biggest producers – Rio Tinto, Vale and BHP Billiton – to plough ahead with expansion plans is bad news for smaller rivals, many of whom have chosen Central and West Africa’s undeveloped – and thus higher cost – deposits as their way into the mix.

Iron Ore Risks Extending Collpapse on Supplies: Moody’s – by Phoebe Sedgman (Bloomberg News – October 20, 2014)

October 21, 2014

http://www.businessweek.com/

The collapse in iron ore prices may have further to run as global supply increases and steel-demand growth slows, according to Moody’s Investors Service, which said it may reduce ratings on producers.

About 300 million metric tons of new and expanded supply will come on stream over the next few years, analysts including Carol Cowan said in an e-mailed report received today. Global steel-production growth in 2014 remains muted with China, the key driver of consumption, continuing to slow, Moody’s said.

Iron ore tumbled 39 percent this year after companies including Rio Tinto Group (RIO), BHP Billiton Ltd. and Vale SA raised low-cost output in Australia and Brazil, spurring a global glut. The market is in the midst of a transition without precedent in recent commodity history as supply surges and some higher-cost mines are displaced, according to Macquarie Group Ltd.

“Iron ore prices have collapsed,” Moody’s said in the report, which was dated Oct. 17. “With slowing global steel-production growth rates, iron ore prices remain vulnerable to the downside and we expect continued volatility.”

Ore with 62 percent content delivered to Qingdao, China, posted a third straight quarterly loss in the three months to September, and dropped to $77.97 a ton on Sept. 29, the lowest level since September 2009.

Iron ore price collapse claims more victims (Northern Miner – October 17, 2014)

October 20, 2014

The Northern Miner, first published in 1915, during the Cobalt Silver Rush, is considered Canada’s leading authority on the mining industry.

Cliffs Natural Resources (NYSE: CLF) and London Mining (LSE: LOND) have become the latest casualties of falling iron ore prices, with Cliffs declaring a US$6 billion non-cash impairment charge in the third quarter on its iron ore and coal assets, and London Mining placed into administration.

London Mining says it will try to work with its administrator, PwC, to maintain its Marampa iron ore mine in Sierra Leone as a going concern, while Cliffs is working with its banking group to get an amendment that will eliminate the debt-to-capitalization covenant of 45% currently present in its revolving credit facility, as the non-cash impairment charge will increase the debt-to-capitalization ratio over that threshold.

Iron ore prices have fallen to five-year lows and are down about 40% so far this year at about US$80 per tonne. When London Mining’s Marampa iron ore mine in Sierra Leone entered production in December 2011, iron ore was selling for about US$140 per tonne, well above today’s levels.

It’s not the first time Marampa, which was operated between 1933 and 1975 by the Sierra Leone Development Company and William Baird, has suffered from depressed prices. The mine was closed for a period of time in the 1960s due to low prices for the metal.

Iron Ore Risks Extending Collpapse on Supplies: Moody’s – by Phoebe Sedgman (Bloomberg News – October 20, 2014)

October 20, 2014

http://www.bloomberg.com/

BHP won’t rush to follow Rio to automate as its manned trucks beat robots – by Matt Chambers (The Australian – October 20, 2014)

October 20, 2014

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

BHP Billiton’s mining truck drivers are outpacing their robotic counterparts when it comes to efficiency and loading at West Australian iron ore mines, indicating the miner is a long way from any decision to follow rival Rio Tinto in a large-scale driverless truck rollout.

For a little more than a year, BHP has been trialling Caterpillar autonomous trucks at its newest Pilbara region iron ore mine, Jimblebar.

The trial was recently extended to March and a decision to add three more trucks to the nine-truck fleet was taken.

But despite autonomous Caterpillar trucks making up a little over a third of the 25 trucks at the overperforming Jimblebar — the mine came on early, ramped up quicker than expected and will now produce more than flagged — they are only moving 16 per cent of the dirt and ore.

The fact annual truck hours in the manned fleet across BHP iron ore have grown from 4500 to more than 6000, a one-third improvement, is a big factor.

“We’ve seen a very material improvement in the manned truck productivity level,” BHP iron ore mines boss Eduard Haegel said at the company’s Perth office last week.

BHP Billiton And Rio Tinto Risking A Monopoly Investigation – by Tim Treadgold (Forbes Magazine – October 14, 2014)

October 14, 2014

http://www.forbes.com/

Two of the world’s biggest mining companies, BHP Billiton and Rio Tinto , might be attracting the attention of government anti-monopoly and trade regulators in attempts to protect their share of the world iron ore market.

A powerful Australian politician warned earlier today that both miners ran the risk of breaching international trade rules by deliberately expanding to thwart competition.

Colin Barnett, head of the Western Australian state government, said that the directors of BHP Billiton and Rio Tinto should be worried about how European and World Trade Organization regulators might react to recent statements from some of their executives.

Time For The Directors To Be Nervous

“If I was sitting around a board table in one of those big companies I’d be pretty nervous about what the WTO and European regulators would think about this,” he said.

“It’s a precarious area they’re going into.” The problem, as Barnett sees it, is that BHP Billiton and Rio Tinto might be behaving in a monopolistic way — a timely observation given that a day earlier the Nobel prize for Economics was awarded to a French academic who specializes in the behavior of monopolies and oligopolies.

Why are iron ore prices falling so quickly? – by Eric Reguly (Globe and Mail – October 14, 2014)

October 14, 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.

ROME- Iron ore mines are to Australia what the oil sands are to Canada. The Aussie iron ore business is enormous, capital intensive, profitable and has an insatiable customer – China – just as the oil sands can depend on the United States to consume almost all of its output. The Aussie and Canadian industries share another trait: falling prices.

The value of both iron ore and oil is plummeting. But the similarities end there. Oil is falling because of excess supply and waning demand in the Western world, in good part because zombie Europe is on the verge of a new recession. But global demand for iron ore is still climbing, if at a somewhat slower pace than last year. So why are iron ore prices falling, and why are they falling so much faster than oil?

The price for iron ore in China, the world’s biggest consumer of the material used to make steel for everything from office towers to dishwashers, is down about 30 per cent this year (compared to a 20-per-cent drop for oil). The spot price for iron is off about 40 per cent, though it bounced back a few bucks this week to reach $83 (U.S.) a tonne.

Iron ore is falling even though Chinese demand for steel is up about 5 per cent year on year, while demand for imported iron ore is up 15 per cent or so, outpacing import demand in 2013.

COLUMN-Glencore-Rio proposal not the right iron ore deal – by Clyde Russell (Reuters U.S. – October 7, 2014)

October 8, 2014

http://www.reuters.com/

Oct 7 (Reuters) – The hullabaloo surrounding Glencore Plc’s spurned approach to rival miner Rio Tinto shows why this is probably the wrong deal at the right time.

Glencore’s proposal to create a $160 billion behemoth is certainly audacious, and may even make sense for shareholders of both companies if priced attractively.

But even if it were successful, such a deal would do little resolve the key problems bedevilling the outlook for many commodity markets, and the companies that produce those resources.

The logic of Glencore taking control of Rio Tinto would be for the former to get access to the latter’s iron ore operations in Australia, which are the lowest cost among major producers.

Iron ore is the missing arrow in Glencore’s quiver, and the assumption behind a deal would be that the Swiss-based company would be able to use its trading nous to extract more value from the well-run Rio Tinto mines.

Assuming that all the anti-trust and other regulatory obstacles could be overcome, and that Rio Tinto shareholders could be won over, then the potential for the deal to be rewarding for Glencore is compelling.

UPDATE 3-BHP aims to slash iron ore costs to become cheapest supplier – by Silvia Antonioli and Sonali Paul (Reuters India – October 6, 2014)

October 6, 2014

http://in.reuters.com/

LONDON/MELBOURNE, Oct 6 (Reuters) – BHP Billiton aims to cut its iron ore production costs by more than 25 percent and squeeze more tonnes from its mines as it aims to overtake rival Rio Tinto as the world’s cheapest producer, the world’s largest miner said on Monday.

BHP, the No. 3 iron ore producer behind Brazil’s Vale and Rio Tinto, outlined the cost-cutting and expansion plan even as iron ore prices have slumped 42 percent this year, as it sees demand picking up over the medium term.

“We will continue to squeeze the lemon because at the end of the day it’s just so value accretive,” Jimmy Wilson, the head of BHP’s iron ore division, told reporters in a video conference ahead of an analyst tour of its West Australian mines.

Miners’ focus has shifted to cost cutting as iron ore prices have dropped from about $190 a tonne in 2011 to less than $80 now, sinking to five-year lows as supply growth from the mega producers has exceeded demand growth by more than two to one.

BHP said it aims to cut production costs, excluding freight and royalties, to less than $20 a tonne in the medium term, from $27.50 for financial year 2014. That compares with Rio Tinto’s cash cost of $20.40 a tonne in the first half of 2014.

“The name of the game in the past was volume above and before everything else. Now cost is much more important and we are finding a lot more opportunities,” Wilson said.

Reform essential for WA’s future success – by Kevin Skinner (Australian Mining – October 2, 2014)

October 2, 2014

http://www.miningaustralia.com.au/home

Kevin Skinner works with Field Public Relations.

The government agency charged with driving the reform of Western Australia’s $121 billion a year resources industry says it is essential that the current reforms within the sector continue – and in close consultation with the industry – if the sector is to emerge successfully from the current easing in mineral commodities demand and pricing.

Addressing the Paydirt 2014 Australian Nickel Conference in Perth today, the Director General of WA’s Department of Mines and Petroleum, Richard Sellers, said it was essential however, that any reforms did not add to the cost of doing business in Western Australia, nor detracted from its appeal as a destination for global investment in exploration and mining.

“One of the most successful outcomes to date of our reform is the slashing of the tenement titles approvals processes and backlog to its best level in more than two decades,” Sellers said.

“When you consider there are more than 22 000 active mineral titles operating in Western Australia covering an area of almost 550 000 square kilometres, or just over one fifth of the State’s land mass, the Department’s moves to cut the backlog of outstanding titles applications have seen this drop from more than 18 000 in 2007 to just over 4000 today,” he said.

NEWS RELEASE: “Stones of Shame” returned to IOC/Rio Tinto: Innu First Nations demand that IOC/Rio Tinto pay its rent

October 2, 2014

MONTREAL, Oct. 1, 2014 /CNW Telbec/ – In a historically symbolic gesture, the Innu First Nations of Uashat mak Mani-utenam and Matimekush-Lac John returned two enormous iron ore stones from the mining pits of the Iron Ore Company of Canada (IOC), majority owned by the mining giant Rio Tinto, to IOC/Rio Tinto’s head office (1000, Sherbrooke Street West in Montreal, Quebec). The stones were erected in the Innu communities of Uashat and Mani-utenam in September 1970 to mark 100 years since the discovery of the rich deposits of iron ore in the Schefferville area, which deposits were mined by IOC as of 1954. This act, intended both to heal and to send a message, kicks off a campaign themed “IOC/Rio Tinto must pay its rent” which aims to denounce the violation of the Innu’s rights by IOC/Rio Tinto, particularly its refusal to negotiate a fair economic agreement.

“These stones represent the only thing we have ever received from all of IOC/Rio Tinto’s mining developments on our lands. Our peoples have yet to receive any revenue, compensation, indemnity or royalties whatsoever from IOC/Rio Tinto. We have already reached agreements with all of the other iron ore mining companies, four in total, in our territory, yet the one that was the first to move into our territory and the one which caused us the most harm, IOC/Rio Tinto, is the last one without an agreement with us – the true owners of the land. As a result, we wish to return to IOC/Rio Tinto these “stones of shame” to send a message that the era when companies like IOC/Rio Tinto could profit from our resources all the while ignoring us is over”, stated Mike McKenzie, Chief of Uashat mak Mani-utenam.

It is worth remembering, that as of 1954, IOC/Rio Tinto operated twenty mines in the Schefferville area before abandoning them (while savagely destroying the city of Schefferville) in 1982 and that the company continues to operate nearly ten iron ore mines on the territory of the Innu of Uashat mak Mani-utenam and of Matimekush-Lac John in the area of Labrador City.

End of the Iron Age – by James Wilson and Neil Hume (Financial Times – September 29, 2014)

September 30, 2014

http://www.ft.com/home/us

A collapse of ore prices throws miners’ strategies into doubt and threatens an industry shakeout

Iron is one of the most abundant elements on earth but pulling it out of the ground efficiently can be a daunting undertaking. Snaking through the low, green hills of southern Brazil is a 530km pipeline, the decisive link in Anglo American’s $8.2bn Minas-Rio project to extract iron ore in the Brazilian interior and ship it from a new Atlantic port. Way over its original $3.6bn budget and two years late, Minas-Rio is finally close to the point of “first ore on ship”.

For years, huge mining projects such as these have formed the backbone of global economic expansion. The world’s most important commodity after crude oil, iron ore has been devoured by Chinese steel mills, emerging as the raw material for an infrastructure-led growth spurt.

But Minas-Rio is about to deliver its first ore into a much less welcoming world. The price of iron ore has plunged more than 40 per cent this year, the worst performance across metals and bulk commodities in 2014. From an average price of $135 per tonne last year, the benchmark iron ore contract sank last week to less than $80 for the first time since the global financial crisis.

“The iron ore market is in the midst of a transition without precedent in recent commodity history,” says Macquarie, the Australian bank.

Behind the change is a big increase in iron ore exports – and not just the 26.5m tonnes that Minas-Rio will bring to market when fully operational in 2016.

Iron Ore Seen Weak by Albanese as High-Cost Mines Hurting – by Jasmine Ng and Rishaad Salamat (Bloomberg News – September 29, 2014)

September 29, 2014

http://www.bloomberg.com/

Iron ore prices that retreated to a five-year low this month will remain weak for a sustained period as supply exceeds demand and China’s economy slows, according to Tom Albanese, former head of Rio Tinto Group.

High-cost producers are facing a “pain point” at prices of about $80 a metric ton, Albanese, chief executive officer of London-based Vedanta Resources Plc (VED), said in interviews with Bloomberg Television and a reporter today. While low-cost producers would still be able to make good money in iron ore, there will be closures of higher-cost mines over time, he said.

The raw material lost 42 percent this year as Rio Tinto and BHP Billiton Ltd. (BHP) expanded supplies, pushing the market into a glut just as demand growth slowed in China. Australia’s state forecaster cut its price estimates for this year and 2015 last week and predicted further closures of high-cost producers. Iron ore is heading for “pitiless pricing” on the expansions by major miners, according to Credit Suisse Group AG.

“At $80, the prices are at a pain point for many higher-cost producers,” said Albanese, who headed Rio from 2007 to 2013. “In this environment, you now have supply probably in excess of demand. It doesn’t take much to drive prices lower.”