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Iron Ore

Lacking buyers, Cliffs Natural looks to exit Quebec’s Bloom Lake mine – by Bertrand Marotte (Globe and Mail – November 19, 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.

MONTREAL — Hobbled by an iron ore price plunge and high costs, Cliffs Natural Resources Inc. says it is “pursuing exit options” for its Eastern Canadian iron ore operations which may result in the closure of the Bloom Lake mine.

The U.S. iron ore producer, cut to junk status by Standard & Poor’s last month, said on Wednesday that a “potential investment” in Bloom Lake is not “achievable within a time frame acceptable to Cliffs.”

Closing costs at the mine, located north of Sept-Îles, Que., would be in the range of $650-million (U.S.) to $700-million over the next 5 years, the company said. About 500 people work at Bloom Lake.

The price for iron ore – a key ingredient in steel-making – has slipped to its lowest level in more than five years. It is now in the $72-per-tonne range and could fall to less than $60 as output continues to rise and global demand remains weak, Citigroup Inc. said in a report.

A slump in Chinese demand and a global iron ore glut as Australian producers ramp up production have pushed prices down. “The drop in the iron ore price is forcing the closure of some of the higher-cost ore mines,” Raymond James analyst Adam Lowe said.

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NEWS RELEASE: Cliffs Natural Resources Inc. to Pursue Exit Options for its Eastern Canadian Operations

CLEVELAND, Nov. 19, 2014 /CNW/ — Cliffs Natural Resources Inc. (NYSE: CLF) announced today that it is pursuing exit options for its Eastern Canadian iron ore operations which may result in the closure of the Bloom Lake mine.

Lourenco Goncalves, Cliffs’ Chairman, President and Chief Executive Officer said, “Despite the continued interest of the prospective equity partners in Bloom Lake and in its high quality ore, the potential investment is not achievable within a time frame acceptable to Cliffs. With expansion no longer viable, we have shifted our focus to executing an exit option for Eastern Canadian operations that minimizes the cash outflows and associated liabilities.”

The Company previously disclosed that to make Bloom Lake viable, the development of the mine’s Phase 2 was necessary. The investment was estimated to cost $1.2 billion. In the event of a closure, the estimated closure costs are expected to be in the range of $650 million to $700 million in the next five years.

Cliffs stated also that the Company’s subsidiary, Cliffs Quebec Iron Mining Limited, along with Bloom Lake General Partner Limited and The Bloom Lake Iron Ore Limited Partnership, recently lost an arbitration claim they filed against a former Bloom Lake customer relating to the August 2011 termination of an iron ore sales agreement. In November 2014, the arbitrators decided in favor of the former customer and awarded it damages in an amount of approximately $71 million as well as attorneys’ fees and accrued interest from the date of termination of the offtake agreement in August 2011.

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West African Mining Projects Take Hit From Ebola Crisis – by Patrick McGroarty, David Gauthier-Villars and Alex MacDonald (Wall Street Journal – November 18, 2014)

http://online.wsj.com/home-page

Epidemic Delays Rollout of Jobs Meant for Residents of Guinea, Liberia and Sierra Leone

Liberia, Guinea, London – When Guinea’s government pledged to open its vast iron-ore reserves this year after countless delays, Moïse Foulah prepared for a boom. His business, after all, is selling explosives to mining companies—and they were piling into Guinea and its neighbors.

Instead, a promising corner of the global economic frontier is pocked with stalled mining projects. The Ebola epidemic has scared off ships and planes; prompted expatriates to abandon their posts; and delayed the rollout of thousands of jobs meant for residents of the three poor West African countries hardest hit by the virus: Guinea, Liberia and Sierra Leone.

“All the projects are at a standstill,” Mr. Foulah, chief executive of the mining-explosives firm ECP Guinée.

Steel giant ArcelorMittal SA has delayed a $1.7 billion expansion at its iron-ore mine in Liberia. One of Sierra Leone’s biggest investors, London Mining PLC, filed for bankruptcy last month after falling iron-ore prices and Ebola concerns hampered its ability to attract financing to address long-standing woes. And in Guinea, Rio Tinto PLC has stopped work on a $20 billion iron-ore mine deep in territory hard hit by the virus.

As a result, the sector that officials in the region were counting on to pull their poor nations out of poverty has become a victim of the worst Ebola outbreak on record.

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Small Brazilian iron ore miners soldier on amid low prices – by Stephen Eisenhammer and Marta Nogueira (Reuters U.S. – November 12, 2014)

http://www.reuters.com/

Nov 12 (Reuters) – Small Brazilian iron ore miners are proving resilient in the face of low global prices, pushing ahead with expansion projects even as that reduces the chance of a quick rebound in prices.

Interviews with five iron ore “juniors” operating in Brazil showed players in this section of the industry, helped by cheap development bank loans and the flexibility to sell locally or abroad, are not being forced out of business at the pace larger rivals hope.

The price of iron ore has fallen 40 percent this year as new capacity from major Australian mining companies entered the market just as Chinese demand growth slowed.

The “big three” in iron ore, Brazil’s Vale, Australia’s BHP Billiton and Rio Tinto, argue the self-inflicted price drop will drive higher-cost producers out of the market, making it possible to retrieve market share and for the price to rise.

But such a process is complicated. Many predicted a similar process when coal prices dropped last year, but coal mines have been slow to close, keeping prices down.

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As China demand slows, Indian iron ore imports surge to record – by Manolo Serapio Jr (Reuters India – November 11, 2014)

http://in.reuters.com/

SINGAPORE, Nov 11 (Reuters) – India’s iron ore imports jumped to a record 5 million tonnes in April-October, industry data showed, as a deepening shortage at home forces steelmakers to turn overseas for the raw material.

Gathering momentum in Indian imports should absorb some of the global surplus of iron ore and help stabilise prices that have been hammered by slowing demand from top buyer China.

But analysts warned that shipments to India, a country that holds vast reserves of iron ore and which was once the world’s No. 3 supplier, would not wholly make up for the drop in Chinese appetite or fuel a sharp rebound in global prices from their lowest since 2009.

India imported 5.06 million tonnes of iron ore in the first seven months of the fiscal year ending in October, according to data emailed to Reuters by industry consultancy SteelMint. The firm tracked shipments from 17 major ports.

Data collected separately by consultancy OreTeam puts April-October imports at 4.9 million tonnes. Official government data only covers April-August, with imports totalling 2 million tonnes.

Mining curbs due to court action against illegal mining have constricted iron ore supply in India.

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NEWS RELEASE: Labec-century-awarded-the-2014-explorer-of-the-year-award-cim-newfoundland-branch

TORONTO, CANADA–(Marketwired – Nov. 10, 2014) – Century Iron Mines Corporation (“Century” or the “Company”) (TSX:FER) is pleased to announce that its 60% owned joint venture, Labec Century Iron Ore Inc. (“Labec Century”), received the “2014 Explorer of the Year Award” from the Canadian Institute of Mining, Metallurgy and Petroleum (“CIM”) – Newfoundland Branch at its annual awards banquet in St. John’s on November 8, 2014.

The award recognizes the significant advancements in iron ore resource development and exploration at the Joyce Lake DSO (“Direct Shipping Ore”) deposit, which is 100% owned by Labec Century and located in Newfoundland and Labrador.

“Receiving this award is a great honour. Labec Century is proud to have discovered the Joyce Lake DSO deposit from early stage prospecting in a previously unknown DSO area in the Labrador Trough. It means a lot to us, coming from this prestigious professional association, and we are truly grateful for this recognition,” said Sandy Chim, Chairman of Labec Century and President and CEO of the Company.

The Joyce Lake project is the first DSO discovery in the area in three decades. Century and Labec Century together have invested almost eight years of work and approximately $30 million to bring the project to its current advanced stage of feasibility and environmental studies, which are expected to be completed in the first quarter of 2015.

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Iron ore and the dangers of living by the sword – by Andy Home (Reuters U.S. – November 11, 2014)

http://www.reuters.com/

LONDON – (Reuters) – The price of spot iron ore has sunk to $75.50 per ton this week, its lowest level since 2009. The scale of the price collapse has been breath-taking. Iron ore has dropped by over 35 percent since the start of the year, a significantly worse performance than any other industrial metal.

But what’s really shocking is that the price is now at a level that until recently was collectively deemed impossibly low. It was only in April that José Carlos Martins, executive officer of ferrous and strategy at Vale, the world’s largest producer of iron ore, told analysts that “one thing is for sure, the price will not go below $110 on a sustainable basis”.

This was not irrational producer exuberance. Martins was only voicing the prevailing consensus view when he went on to argue that “we have many times seen the price going below this level but recovering very fast”. Well, here we are with the price trading not just below $110 but a lot lower still. And sustainably so.

That tells you that something has gone very wrong with the iron ore narrative. This market is in a place it was not supposed to be.

And while big producers such as Vale, Rio Tinto and BHP Billiton are sticking to that narrative, they are now facing the unpredictable consequences of a pricing war they collectively started.

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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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