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Iron Ore

China Miners’ Loss Is BHP’s Gain as Iron Prices Slump 44% – by (Bloomberg News – June 20, 2014)

http://www.businessweek.com/

Rio Tinto Group and BHP Billiton Ltd. (BHP), two of the world’s biggest iron ore producers, are benefiting as falling iron ore prices pressure smaller rivals in China to shut down.

The price of iron ore has plunged 44 percent from its February 2013 peak on the back of record output. That’s hurting mining companies in China where 20 percent to 30 percent of mines have closed, according to the China Metallurgical Mining Enterprise Association.

The closures are helping Rio Tinto and BHP which, along with Vale SA (VALE5), already control about two thirds of global seaborne supply from their low-cost mines. About $40 billion a year of iron ore is mined in China, the country that’s also the world’s biggest buyer of the steelmaking component.

“Many smaller mines in China have stopped production due to the falling prices,” said Sarah Wang, a Shanghai-based analyst with Masterlink Securities Corp. “It’s the right time for BHP and Rio to seize the opportunity to boost their market share.”

BHP, the world’s biggest mining company, last month also flagged the closure of some Chinese ore mines.‘ “Most of them are smaller ones, while the bigger ones are also starting to be affected,” Liu Xiaoliang, the association’s general secretary, said in an interview. “Almost 70 percent of the ore processing companies have also closed.”

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Northwest iron ore junior promotes “green steel” works – by Ian Ross (Northern Ontario Business – June 16, 2014)

Established in 1980, Northern Ontario Business provides Canadians and international investors with relevant, current and insightful editorial content and business news information about Ontario’s vibrant and resource-rich North. Ian Ross is the editor of Northern Ontario Business ianross@nob.on.ca.

An iron ore company president’s plans to develop a northwestern Ontario deposit have gotten a whole lot bigger and much, much greener. Producing “green steel” is what’s on the mind of Henry Wetelainen of Bending Lake Iron Group, who’s promoting the concept of creating a future industrial zone, southwest of Ignace.

His First Nation family-owned company, based in Thunder Bay, has a hugely ambitious project proposal to build an open-pit mine and adjacent steel works complex while generating its own power. “If we don’t have adequate power supply, the project just can’t go,” said Wetelainen. “That’s just reality.”

In northwestern Ontario, power supply is a huge thorn in the side of mining companies. The transmission capacity doesn’t yet exist to feed potentially 10 new mines over this decade, never mind the Ring of Fire.

A regional energy task force estimates there’s a shortfall of between 800 and 1,000 megawatts, which stands to stifle industrial growth. So Wetelainen and his team decided to take matters into their own hands by creating their own power corporation.

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Iron ore miners brace for hit as commodity price plunges to nearly two-year lows – by Sarah-Jane Tasker (The Australian – June 16, 2014)

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

AUSTRALIA’S iron ore producers are likely to take a hit in the market today after the price of the bulk commodity fell to an almost two-year low over the weekend.

The top producers, BHP Billiton, Rio Tinto and Fortescue Metals Group, all saw their share price take a shave at market close on Friday when the iron ore price hovered at a 21-month low of $US91.50 a tonne.

The price of the steelmaking commodity lost more ground at the weekend and is now sitting at $US90.90. The price of Australia’s top export was down over 3 per cent last week, which was the eighth weekly loss in nine.

The iron ore price has now lost about 32 per cent this year, with the profit hit on producers likely to be seen when the next set of financials are released in August.

Iron ore futures in China also slid to a new record low on Friday, falling to their weakest level since the market started in 2009 as consumption of the commodity slows along with the pace of construction activity during China’s hotter summer months.

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UPDATE 1-Iron ore drops; stays below $100/tonne as glut weighs – by Manolo Serapio Jr (Reuters India – June 11, 2014)

http://in.reuters.com/

SINGAPORE, June 11 (Reuters) – Iron ore slipped and stayed close to its weakest level since September 2012 at below $100 a tonne as brisk supply and poor demand from Chinese mills for spot cargoes led to prices being cut by nearly a third this year.

Tighter access to lending in China, the world’s top importer of iron ore, also weighed on the market, traders said, as banks tidy up their financials with the end of the first half of the year approaching.

“Many buyers are not able to open letters of credit at this time and this liquidity issue is partly why we’re not seeing a lot of buying activity in the spot market,” said an iron ore trader in Shanghai.

“It’s not easy to do business right now.” Iron ore with 62 percent iron content for immediate delivery to China .IO62-CNI=SI fell 0.7 percent to $93.60 a tonne on Tuesday, according to data compiler Steel Index.

The steelmaking raw material fell below $100 a tonne on May 19 and has since stayed below that level, touching a bottom of $91.80 on May 30, its lowest in more than 20 months. Iron ore has dropped more than 30 percent this year.

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Over 1 million tonnes of iron ore leaves Port Hedland during single tide – by Vicky Validakis (Australian Mining – June 10, 2014)

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

Iron ore production is surging in the Pilbara, with Port Hedland recording a new tonnage record for the largest departure of ore on a single tide.

The new benchmark of 1,270,721 tonnes was achieved with seven capesize vessels departing on Saturday. This beat the previous record set in April by almost 160,000 tonnes.

Port Hedland Port Authority also said it was the first time seven capesize vessels have sailed on a single tide. The port, Australia’s biggest for iron ore, increased exports by 3.55 per cent between April and May, setting a monthly record of 36 million tonnes.

The news comes amid figures which show that a ramp up in iron ore production was partly to thank for a 1.1 per cent gain in Australia’s economy in the three months to March. Annual growth was a seasonally adjusted 3.5 per cent, the Australian Bureau of Statistics said.

The mining industry made up 80 per cent of this growth. The nation’s three largest iron ore miners BHP Billiton, Rio Tinto, Fortescue Metals Group have all added extra tonnages to their businesses.

It is this ramp up that is being blamed for an oversupply in seaborne supply, and a 31 per cent fall in the price of the commodity which last traded at $US94 a tonne.

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Anglo Will Flourish Under Cutifani Or Be Bought, Bernstein Says – by Firat Kayakiran (Bloomberg News – June 10, 2014)

http://www.businessweek.com/

Anglo American Plc (AAL) will either be successful at reorganizing its platinum business and starting production at the Minas-Rio iron ore mine in Brazil or be acquired, research company Sanford C. Bernstein Ltd. said.

The metals producer is reviewing global assets to shore up earnings after Chief Executive Officer Mark Cutifani took over last year amid cost overruns and delays at Minas-Rio. Cutifani set a goal of improving Anglo’s return on capital employed to at least 15 percent by 2016 from 8 percent in July.

“There is a free option on offer for Anglo,” Paul Gait, a London-based Bernstein analyst, said in a note today. “Either the company outperforms under Mark Cutifani’s leadership, and demonstrates the value of tons in the ground, or it fails to do so and is put out of its misery in fairly short order.”

Anglo, which controls the world’s largest platinum producer, has seen the output disrupted by a strike since January in South Africa. The Association of Mineworkers and Construction Union has called out more than 70,000 miners, including employees at Anglo American Platinum Ltd. Government-led talks yesterday failed to end the impasse.

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INFRASTRUCTURE: Quebec Liberals promise $20M rail study under revived Plan Nord – by Marilyn Scales (Canadian Mining Journal – June 9, 2014)

Marilyn Scales is a field editor for the Canadian Mining Journal, Canada’s first mining publication. She is one of Canada’s most senior mining commentators.

Fresh off last month’s election win, Quebec’s new Liberal government has boosted its commitment to Plan Nord. Once again the province is throwing its weight behind plans that recognize now vital natural resources development is to the provincial economy.

On June 4, Quebec finance minister Carlos Leitao pledged over a billion dollars to the Plan. The 2014-15 budget will pump $63 million into major road infrastructure. A whopping $1 billion has been set aside for the province to acquire equity interests in mining, oil and gas companies so that the province can share in potential profits. A total of $100 million will be invested in educational facilities to train northern residents and, in particular aboriginals, in the skilled trades. Over $600 million will go to the forestry industry for silviculture, new equipment, and biomass projects. The promotion of Northern Quebec as a tourist destination will get a $3.2 million boost.

Of particular interest to Quebec’s growing iron ore industry is the $20 million pledged to study the feasibility of creating a new multi-user rail line providing access to the Labrador Trough. Two rail lines now connect the iron mines with the port of Sept-Iles: the Cartier Railway is a subsidiary of ArcelorMittal and serves the Mont-Wright mine; and the Quebec North Shore and Labrador Railway serves the Iron Ore Company of Canada.

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Vale Proves Too Rich for Barclays on Iron’s 30% Plummet – by Juan Pablo Spinetto and Julia Leite (Bloomberg News – June 9, 2014)

http://www.bloomberg.com/

The biggest drop in iron-ore prices in five years is a signal to Barclays Plc and Seaport Group that Vale SA (VALE5)’s outperformance in the bond market is about to end.

The $2.25 billion of bonds due 2022 returned 9 percent in the past six months, exceeding the 7.4 percent average gain for notes from emerging-market mining companies with investment-grade ratings. The Vale bonds yield 4.06 percent, the least relative to similar securities from London-based Rio Tinto Group since September, data compiled by Bloomberg show.

Vale, which gets about 95 percent of earnings from its ferrous business, posted a bigger-than-forecast drop in first-quarter profit after selling its ore for 25 percent less than the benchmark global price, which fell to the lowest since September 2012 on May 30. Investors should sell after the bond rally as reduced demand cuts prices for iron ore, according to Michael Roche, an emerging-market strategist at Seaport Group, which this month started recommending clients buy debt from Southern Copper Corp. instead of Vale securities.

“I’m still worried about China, I’m still thinking global growth is very muted, I’m still worried about Europe,” Roche said in a telephone interview from New York. “I am going to take that superior performance over the last six months and take a profit.”

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Pioneer Mine video: Crossing over from black and white to digital (The Ely Echo – June 8, 2014)

 

http://www.elyecho.com/

This week a new video on YouTube brings to life the underground world of Ely’s historic Pioneer Mine. Great photos, mainly in black and white, cross into the digital world. It’s a great step forward for presenting and preserving our mining history. Here’s why that’s important.

Today’s mining news is not about iron ore, it’s about copper, nickel, gold, platinum, palladium and other platinum group metals (PGMs). Just as iron built this country’s infrastructure and helped the United States to win two world wars, copper and other PGMs are helping us advance our digital infrastructure, from televisions to cellphones.
But in order to better understand where we’re going we need to understand where we’ve been. Thanks to volunteers with the Ely Arts and Heritage Center, that’s being done today.

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Quebec iron firm says mine railway feasibility study could stimulate investment – by Ross Marowits (Montreal Gazette – June 6, 2014)

http://www.montrealgazette.com/index.html

THE CANADIAN PRESS – MONTREAL – A Quebec iron ore exploration company says the provincial government’s financial support to study building a railway link in northern Quebec’s Labrador Trough region could stimulate investment and create new jobs.

“At a time of uncertainty in investment markets regarding the outlook for iron ore, this decision will be seen as a defining point in the history of the mining industry in Quebec,” said Champion Iron chairman Michael O’Keeffe.

Iron ore prices have slumped to two-year lows, prompting miners to delay projects. Analyst Jackie Przybylowski of Desjardins Capital Markets doesn’t believe there is as much demand for a multi-user rail line as the industry thought in the past couple of years.

“Although a feasibility study is a good start, it certainly doesn’t guarantee that a rail line is going to get built,” she said. The Quebec government committed in Wednesday’s budget up to $20 million towards a feasibility study on the construction of a railway line connecting the iron ore deposits with the Port of Sept-Iles. Funding for the study will be conducted with private partners.

The new government said developing the mining potential of the region is a “cornerstone” of its relaunched Northern Quebec economic development plan.

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Diversity back in vogue for miners as iron ore price tumbles – by STEPHEN EISENHAMMER, SONALI PAUL AND SILVIA ANTONIOLI (Reuters U.K. – June 5, 2014)

http://uk.reuters.com/

(Reuters) – After pouring billions of dollars into producing more iron ore to feed China’s construction boom, the world’s mega miners now face a self-induced price slump and are counting on other commodities to revive their allure to investors.

Base metals copper and nickel, oil and gas, as well as more offbeat commodities such as fertilizer potash, are increasingly important differentiators between the kings of iron – Vale , Rio Tinto and BHP Billiton – and could be welcome sources of growth this year as iron ore languishes near two-year lows.

BHP’s oil and gas portfolio and Vale’s nickel production have attracted positive attention. Glencore Chief Executive Ivan Glasenberg, meanwhile, has spoken of the advantage of smaller exposure to iron ore, saying it provided an “opportunity against our peers.”

Lack of diversity has not been an issue in recent years as Chinese demand for steel to build cities, railways and ports tripled iron ore prices from 2008 to 2011 – a windfall for the “big three” who produce 70 percent of the world’s seaborne iron ore.

But in May the price fell below the $100 mark for only the second time in four years, as production jumps just as Chinese demand growth appears to be slowing. Although many analysts see the price perking up again later this year, the fundamentals are worsening and the trend is downward.

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Ferro giants- the world’s biggest iron ore producers (Mining-Technology.com – May 29, 2014)

http://www.mining-technology.com/

The top ten iron ore producers account for over 90% of the world’s total iron ore output. Mining-technology.com profiles the ten biggest iron ore producing countries based on latest production and reserve data.

China

China, the largest producer, consumer and importer of iron ore, produced 1.3 billion tonne (bt) of iron ore in 2012, accounting for about 44% of the world’s output. The country’s crude ore reserves as of 2013 stood at 23bt containing 7.3bt of iron – the fourth largest in the world. China’s run-of-mine iron ore output is, however, of low quality, containing about 22% iron.

Over half of the nation’s domestic iron ore production comes from mines located in Hebei and Liaoning provinces while Beijing, Shanxi province and Inner Mongolia are the other iron ore producing regions. Ansteel Mining, a wholly-owned subsidiary of Anshan Iron and Steel Group (Ansteel Group), is the biggest iron ore producer in the country.

Australia

Australia produced 519 million tonnes (mt) of iron ore in 2012 accounting for about 18% of global iron ore output. The country’s estimated iron ore reserves of 35bt, containing 17bt of iron, makes it the world’s richest iron ore reserves holder.

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Vale steels itself for changing times – by Joe Leahy (Financial Times – June 3, 2014)

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

The helicopter circles over a range of verdant mountains in the Carajás National Forest, a park in Brazil’s Amazonian state of Pará.

In spite of the thick jungle on their lower slopes, some of the peaks are strangely bare. This is a clue as to what lies below the surface – a giant iron ore body known by miners as Carajás Serra Sul S11D, which decodes as Carajás southern mountain range iron ore body 11, block D.

The discovery is so large it will boost the production of Brazilian miner Vale, the world’s second-largest iron ore miner by volume, by nearly a third after it comes on-stream in 2016 compared with the company’s expected production this year of 312m tonnes. Vale claims it is the largest such project in the iron ore industry.

“We are flying above the S11D,” says Jamil Sebe, Vale’s director of northern region ferrous metal projects, above the noise of the helicopter rotors. “Where you have iron, you don’t get trees, that’s one of the ways to discover iron ore.”
Conceived during the commodity supercycle of the past decade, the $20bn project to develop S11D comes as the environment for the industry is changing radically.

Iron ore prices in May suffered their sixth monthly consecutive drop, marking a record losing streak for the steelmaking ingredient.

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TWO MINING BEHEMOTHS BATTLE AN ISRAELI BILLIONAIRE – by Patrick Radden Keefe (The New Yorker – June 2, 2014)

http://www.newyorker.com/

One day in November, 2008, two rival groups of mining executives convened for a meeting in a black office tower on the southern tip of Manhattan. They represented two of the largest mining companies in the world: Brazil’s Vale, and its Anglo-Australian competitor, Rio Tinto. Vale was interested in acquiring a stake in one of Rio Tinto’s most prized projects: a mountain range in the tiny west African nation of Guinea, which contained the planet’s richest deposit of untapped iron ore and was known as Simandou.

When they met that day, executives from Rio Tinto acknowledged that their legal claim to Simandou was under threat. In the summer of 2008, the government of Guinea had rescinded its right to develop the concession, and a new player had emerged on the scene: an Israeli billionaire named Beny Steinmetz, who had made his name in the diamond trade and now had designs on Simandou.

The negotiations between Vale and Rio Tinto eventually fell apart, but Rio Tinto’s concerns turned out to be well founded. Guinea granted Steinmetz’s company, B.S.G.R., exploration rights to half of the Simandou deposit. Then, in 2010, B.S.G.R. announced that it was forming a joint venture to develop the ore—with Vale. The leadership at Rio Tinto was incensed: not only had they lost half of their precious asset to Steinmetz but he had then gone into business with their chief competitor, with whom they had only recently been negotiating a joint venture themselves.

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