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Iron Ore

Boardroom coup likely to see Cliffs on the selling block – by Peter Kerr (Sydney Morning Herald – August 5, 2014)

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

The miner at the centre of a $US2.65 billion ($2.84 billion) boardroom coup has conceded it will probably fall under the control of an activist hedge fund intent on breaking up its structure and selling its assets.

In a transition that is expected to put the fifth biggest iron ore export business in Australia on the selling block, Cliffs Natural Resources said overnight that hedge fund Casablanca Capital was expected to control six seats on the company’s 11-member board.

”The election of individual director candidates is not yet complete,” Cliffs said in a filing to market regulators in the US. ”However, based on the preliminary voting results, all six of the Casablanca Nominees and five of the Board Nominees have been elected for a term that will expire on the date of the 2015 annual meeting of shareholders.”

The comments support claims by Casablanca immediately after last week’s annual meeting of Cliffs’ shareholders, when the hedge fund claimed to have won control of the miner after a long campaign seeking higher dividends and asset sales.

Cliffs owns coal and iron ore assets across several locations in the US, Canada and Australia, including an iron ore export business in Western Australia.

That business, known as the Koolyanobbing operations, is profitable and exports about 11 million tonnes of iron ore a year through the port of Esperance.

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Quebec Innu upset with IOC’s deal with Labrador Innu (St. John’s Telegram – August 2, 2014)

http://www.thetelegram.com/

First Nations groups say they have claim to territory where the company is conducting mining operations

Two Innu First Nations groups in Quebec are claiming rights over lands in Labrador where the Iron Ore Company of Canada (IOC) has already concluded an agreement with Labrador’s Innu Nation.

The Uashat mak Mani-utenam and Matimekush-Lac John Innu First Nations in Quebec are objecting to IOC’s claims that the company has settled aboriginal issues regarding IOC’s projects on an area they say is their traditional territory. The groups are calling on the IOC to come to an agreement with them as well.

The request comes shortly after IOC signed an agreement with the Labrador Innu Nation, which the groups consider, “a curious development,” considering the fact their groups have rights to the area.

“We have never ceded nor otherwise lost our rights to our traditional territory, our Nitassinan, which territory we have possessed, occupied and administered since time immemorial,” Matimekush-Lac John Chief Réal Mckenzie stated in a news release issued Friday.

“Governments and the mining industry allow other aboriginal groups with no legitimate claim to our territory to encroach on our lands at our expense. We can no longer tolerate such an attitude which aims to capture our resources and the benefits which derive from them.”

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Guinea’s Simandou iron ore trove: huge potential for the hugely patient – by Saliou Samb (Reuters India – August 5, 2014)

http://in.reuters.com/

BEYLA, Guinea, Aug 5 (Reuters) – In a remote, southeastern corner of Guinea, the mist-shrouded Simandou mountain range rises above the lush forest. Buried under its green slopes lies some of the planet’s finest iron ore, a treasure long coveted by the world’s mining giants.

But any profit, for Guinea or the firms, will remain locked in the russet ground until an export outlet to the coast is cleared, a task that will involve building 650 kilometres (400 miles) of railway, 35 bridges, and 24 km of tunnels.

Coupled with the need for a new port to load the ore onto ships, the initial price tag would be around $20 billion, making it Africa’s biggest mining project ever, to be carried out in one of the continent’s most unstable and rundown nations.

“The logistical challenge is such that the whole project remains on hold until the infrastructure can be put in place to get the ore out,” said Madani Dia, a Guinean mining analyst.

Lack of adequate infrastructure – ports, roads and railways – to expand the trade and export of Africa’s mineral riches is one of the biggest brakes on the continent’s faster growth.

Global firms including Rio Tinto and Brazil’s Vale have for years been eying Simandou, and most recently miner and commodity trader Glencore has expressed interest in Guinea’s iron ore, a presentation obtained by Reuters shows.

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Cliffs’ boardroom shake-up presents buying opportunities for Canadian miners – by Peter Koven (National Post -August 5, 2014)

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

A boardroom shake-up at Cliffs Natural Resources Inc. has raised the likelihood that its international assets will hit the market, creating some intriguing buying opportunities for Canadian miners in their own backyard.

These assets include a large but troubled iron ore mine in Quebec, and a huge chromite deposit in Northern Ontario’s “Ring of Fire” that one company has already expressed interest in buying.

Cleveland-based Cliffs has been engaged in a vicious proxy war with hedge fund Casablanca Capital LP for the past six months. That battle ended in an apparently decisive victory for Casablanca last week, as the New York-based activist fund said it claimed six of the 11 seats on Cliffs’ board. Cliffs has not yet confirmed the final numbers.

Casablanca has been very open about its plans for Cliffs: It wants the company to focus on its core U.S. iron ore operations and look at divesting everything else, including assets in Canada and Australia.

The fund had plenty of shareholder support for this strategy, because Cliffs’ recent international forays have simply not worked out. In Canada, the company spent a staggering $4.9-billion in cash to buy the Bloom Lake iron ore mine in the 2011 takeover of Consolidated Thompson Iron Mines Ltd.

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UPDATE 2-Brazil’s Vale profit falls; prices undermine record output – by Stephen Eisenhammer (Reuters India – July 31, 2014)

http://in.reuters.com/

(Reuters) – Brazilian miner Vale SA posted a sharp decline in profit from the previous quarter as lower iron ore prices undermined record production of the steel-making ingredient.

Vale, the world’s largest producer of iron ore, reported second-quarter net income of $1.43 billion, down 43 percent on the previous quarter and below the average analyst estimate of $1.89 billion in a Reuters survey.

“It was a very challenging environment where the price of our most important product has dropped by 15 percent,” Chief Financial Officer Luciano Siani said in a video accompanying results.

Net income was more than three times higher than the year-ago quarter, when a one-time foreign exchange charge slashed profit to $424 million. Prices for iron ore .IO62-CNI=SI have dropped by nearly 30 percent this year, hitting a 22-month low in June.

Iron ore production rose 12.6 percent to 79.45 million tonnes from a year earlier, as better weather conditions combined with ramp-ups at its two main mine sites in Brazil.

Mega miners Vale and Australia’s Rio Tinto Ltd and BHP Billiton Ltd are ramping up output and slashing costs in an attempt to increase market share.

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Mittal, Glencore Said to Be Among Potential Simandou Bids – by Thomas Biesheuvel and Jesse Riseborough (Bloomberg News – July 31, 2014)

http://www.bloomberg.com/

Lakshmi Mittal’s ArcelorMittal (MT) and Glencore Plc are among potential bidders for Guinea’s Simandou project, the world’s largest untapped iron-ore deposit, after it was seized from Israeli billionaire Beny Steinmetz in April, according to people familiar with the matter.

ArcelorMittal, the world’s biggest steelmaker, has declared an interest in the bidding process for two licenses covering the Simandou project in Guinea, according to four people who asked not to be identified as the talks aren’t public. Glencore is also interested, people familiar with its plans said.

Leading mining and steelmaking companies are jostling for a share of the riches contained in Simandou, a remote, iron-bearing mountain range, to take advantage of prices for the raw material that have risen about 50 percent since 2008. Guinea has estimated that Simandou may cost $20 billion to develop, largely because it needs a 650-kilometer (400-mile) rail link.

Spokesmen for ArcelorMittal and Baar, Switzerland-based Glencore declined to comment. The Wall Street Journal reported last month that Glencore was interested in Simandou.

The iron-ore position of Glencore pales in comparison with rivals BHP Billiton Ltd., Rio Tinto Group and Vale SA. (VALE5) Still, Chief Executive Officer Ivan Glasenberg has previously expressed reluctance to invest in expensive new mining operations known as “greenfield” projects.

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Cliffs and Casablanca – the start of a beautiful friendship? – by Northern Miner Editorial (July 30, 2014)

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

It’s the biggest shareholder revolt of the current downturn in mining, but as we go to press it looks like Casablanca Capital has succeeded fulsomely in its long-shot bid to swamp the 11-member board of Cliffs Natural Resources with six of its own nominees.

Cleveland-based Cliffs is a major producer of iron ore and metallurgical coal worldwide, but its share price has suffered in the past three years owing to a combination of low iron ore and coal prices, and overexpansions into such ill-fated projects as its chromite project in Ontario’s Ring of Fire region.

Earlier this year, Cliffs idled its high-cost Wabush iron ore mine in Labrador and suspended an expansion of its Bloom Lake iron ore mine in Quebec, and is now set to idle its Pinnacle coal mine in West Virginia for more than six months starting in late August.

In the lead-up to the vote, Cliffs woes showed in its second-quarter net loss of US$2 million on revenues of US$1 billion. That compares with net earnings of US$133.1 million, or US82¢ per share, on revenues of $1.4 billion in the same quarter of 2013.

Based in New York and founded in 2010 by Donald G. Drapkin and Douglas Taylor, Casablanca Capital describes itself as an “event-driven and activist investment manager.”

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The reindeer herders battling an iron ore mine in Sweden – by Stuart Hughes (BBC News – July 30, 2014)

http://www.bbc.com/news/

Northern Sweden – There are eight seasons in the Sami calendar. Each coincides with a stage in the life of their reindeer.

In the mountains near the border between Sweden and Norway, at the height of the summer season the Sami call Giessie, the reindeer herders mark the newborn calves that are just beginning to roam this land.

For a few short months, the sun never dips below the horizon. It is a way of life that the Sami, Europe’s only indigenous people, have followed for thousands of years. It is now one they say faces an uncertain future. A British company, Beowulf Mining, has been carrying out test drilling for iron ore in the area.

It says analysis of samples from its proposed Kallak iron ore mine are encouraging – the ore extracted from deep beneath the ground appears to be of a high quality.

Kallak is one of the largest known iron ore deposits in Scandinavia that has yet to be exploited. Beowulf is waiting for the Swedish authorities to decide whether to approve its application for a 25-year mining concession.

Eventually, the company hopes to extract up to 10m tonnes of iron ore a year at the mine.

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Expanding iron mine returns Minnesota to its road-moving ways – by Dan Kraker (Minnesota Public Radio News – July 30, 2014)

http://www.brainerddispatch.com/

Virginia – Every day, 10,000 cars zip along Highway 53, one of the Iron Range’s most vital transportation arteries.

Just a few hundred feet from the roadway, between Virginia and Eveleth, hidden by a strip of trees, the earth falls away into a mammoth mine pit, where four-story tall trucks scrape red ore out of the ground. The proximity of the road to the excavation site points to the need to move the highway away from the expanding mine – a project that could cost more than $400 million.

“If you were in our mine pit now you would see that we are as close to that highway as we can be,” said Sandy Karnowski, a spokeswoman for Cliffs Natural Resources, which operates United Taconite.

Four years ago Cliffs approached the Minnesota Department of Transportation about moving the highway. When the state first built the road in 1960, it agreed to move it if the mineral rights owner ever wanted to access the ore underneath.

“If United Taconite cannot mine the ore under the current highway, it would reduce the life of mine, which would impact the jobs and the economic impact we have to the area,” Karnowski said.

It may seem crazy, to move an entire highway, but it’s not as unusual as it sounds. On the Iron Range, there’s a long history of moving roads – and entire towns — to make way for mining.

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High costs hurting mine investment, says Gina Rinehart – by Clive Mathieson (The Australian – July 29, 2014)

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

MINING magnate Gina Rinehart says the high cost of doing business in Australia is driving some multinational companies to pursue overseas projects that have the potential to further damage the country’s export revenue.

Mrs Rinehart, the chairwoman of ­the privately owned Hancock Prospecting and the nation’s richest person, lamented the decision by some companies to invest in lower-cost offshore projects that could drive down commodity ­prices and undercut Australian projects. “Sadly, too many multinational companies, even Australian companies, are focusing and preferring to invest in overseas countries with lower costs,” she told The Australian.

“For instance, Rio Tinto, which has been in Australia for decades, and made most of its revenue from Australia, is now arranging multi-billions of dollars of investment for a major resource project with substantial infrastructure in ­Guinea in Africa.

“When that’s operating, it will bring billions of tonnes of ore on to the market to compete against Australia, and push down commodity prices. Too few seem to recognise the impact this will have when we are competing with lower-cost countries and how it will hurt Australia for decades.”

Mrs Rinehart said Rio Tinto, Hancock’s partner in the giant Hope Downs iron ore project in Western Australia, should not be singled out, saying the nation must do more “to lower its costs and compete for investment”.

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The creeping hyperbole of Iron Range mining politics – by Aaron Brown (Minneapolis StarTribune – July 29, 2014)

http://www.startribune.com/

Last week I was called into town to do another “Iron Range political pundit” interview with Northland’s NewsCenter’s Nick Minock. The story was about something presumptive Minnesota GOP U.S. Senate nominee Mike McFadden had said about nonferrous mining projects in Northern Minnesota. McFadden had suggested that projects like PolyMet and Twin Metals, which have been mired in environmental review, have the potential to have the same economic impact the Bakken oil fields had on western North Dakota. I was asked, is that true?

In short, no. In long form, hell no. The sheer amount of money and people working to extract oil in the Dakotas will not come close to being matched by Northern Minnesota’s PolyMet or Twin Metals, even if these projects are permitted, financed and open to rousing success — none of which is assured for reasons outside the control of a solitary U.S. Senator. It was a piece of political hyperbole, one which McFadden all but copped to later.

I’ve written before that the controversial “mining issue” will flare up throughout Election 2014, with particular flourish in the MN-8 Congressional race, the U.S. Senate race and governor’s race. Each of these races have indeed featured the same dynamic: Republicans who support new mining arguing that Democrats who support new mining don’t support new mining enough. I’ll call this the Mesabi Daily News Rule, which states: Any deference to the concerns of project opponents, even if patronizing and entirely rhetorical, is equivalent to outright opposition.

The MDN rule essentially allows this GOP gambit, which is based on the notion that Iron Range voters who support mining and distrust the Twin Cities in a general sort of way will flock to Republican candidates.

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Cliffs fights for its life against hedge fund – by John Myers (Duluth News Tribune – July 28, 2014)

http://www.duluthnewstribune.com/

The view from Cliffs Natural Resources’ Minnesota operations looks pretty good.

One of the state’s largest players in the taconite iron ore business, the company’s Northshore Mining, United Taconite and Hibbing Taconite plants are running near capacity with solid domestic markets and long-term contracts with U.S. steelmakers.

The company has more than 1,850 employees on the Iron Range with a payroll of $251 million.

There even was good news from Michigan’s Upper Peninsula this year when Cliffs announced its Empire taconite operations wouldn’t close after all, with a new contract for its ore keeping it running into 2017.

Even after weathering a cold spring and slow start to the shipping season, the company expects to produce about 22 million tons of taconite in the U.S. this year, up from 21 million tons last year. Northshore Mining is back to near full capacity after a temporary slowdown in 2013.

But on a global scale the view is less rosy. The Cleveland-based mining company is fighting for its life, with the decisive battle set for Tuesday. That’s when Cliffs will hold its annual shareholder meeting and election of corporate officers, and it’s when New York-based hedge fund Casablanca Capital will make its play to take over Cliffs.

Casablanca in January announced that it wanted to take control of Cliffs, saying the company was overextended overseas and was spending too much money on new projects.

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COLUMN-Big 3 iron ore miners in volume, price sweet spot – by Clyde Russell (Reuters India – July 28, 2014)

http://in.reuters.com/

LAUNCESTON, Australia, July 28 (Reuters) – One thing has become clear from the latest production reports from the big three iron ore miners: They appear intent on ensuring their dominance by boosting low-cost output.

BHP Billiton mined a record 225 million tonnes of the steelmaking ingredient in the year to end-June, beating its own forecast by 4 percent. BHP said in its latest production report that it expects to increase output further, to 245 million tonnes in the 2014-15 financial year.

Fellow Anglo-Australian miner Rio Tinto boosted output 23 percent in the second quarter from the same period last year to 75.7 million tonnes. It also is forecasting higher annual output, with the quarterly report released on July 16 pointing to 2014 production of 295 million tonnes, up 11 percent from 266 million in 2013.

The world’s biggest iron ore miner, Brazil’s Vale , also had record output in the second quarter, posting a 12.6 percent gain to 79.45 million tonnes. The company is planning to boost its annual output to 450 million tonnes by 2018 from 306 million last year.

The three global iron ore giants have effectively gambled that they can continue to boost production and grab bigger slices of global demand, given that they can withstand lower prices due to their low-cost mines and economies of scale.

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UPDATE 2-Brazil’s Vale hits iron ore record, base metals output lags – by Stephen Eisenhammer (Reuters U.K. – July 24, 2014)

http://uk.reuters.com/

(Reuters) – Brazil’s Vale SA produced record amounts of iron ore in its latest second quarter, rising to the task of battling Australian rivals for market share, but weaker performance at other divisions fanned some concern ahead of results next week.

Iron ore production rose 12.6 percent to 79.45 million tonnes from a year earlier, Vale said on Thursday, as better weather conditions combined with ramp ups at its two main mine sites in Brazil. The Brazilian company is the world’s largest producer of the mineral.

Vale is expected to post an annual decline in second-quarter net income of more than 40 percent when it reports on July 31, according to an average of analyst forecasts compiled by Reuters.

Giants Vale, Rio Tinto Plc and BHP Billiton Plc are all increasing iron ore capacity in a move expected to squeeze higher-cost producers out of the market. But with iron ore prices .IO62-CNI=SI languishing near 22-month lows during the period, analysts had been looking to Vale’s nickel division to pick up some of the slack.

Some of those analysts were subsequently disappointed as nickel production fell 5.2 percent to 61,700 tonnes due to maintenance at the Sudbury mine in Canada. Its VNC project on the French Pacific island of New Caledonia also suspended operations after an acid spill in May.

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Beleaguered Cliffs posts Q2 loss, beats expectations – by Henry Lazenby (MiningWeekly.com – July 24, 2014)

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

TORONTO (miningweekly.com) – US iron-ore and coal producer Cliffs Natural Resources, which is locked in a proxy fight with an activist shareholder for control of the board, on Wednesday reported a net loss for the three months ended June 30, as lower iron-ore and metallurgical steelmaking coal prices and reduced sales pressured the balance sheet.

The Cleveland, Ohio-based miner reported a loss of $2-million, or $0.01 a share, compared with a net income of $133-million, or $0.82 a share, in the second quarter of 2013.

The year-over-year consolidated revenues were 26% lower at $1.1-billion, mainly impacted by a 24% drop in sales volume from the company’s US iron-ore operations.

Seventeen Wall Street analysts had on average expected a loss of $0.06 a share, based on revenue of $1.17-billion.

The cost of goods sold decreased by 17% to $1-billion, mainly driven by reduced volumes, lower idle costs and favourable foreign exchange rates when compared with the second quarter of 2013.

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