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Iron Ore

UPDATE 2-Hedge fund plans proxy fight with Cliffs to install new CEO – by Allison Martell (Reuters U.S. – February 12, 2014)

http://www.reuters.com/

Feb 12 (Reuters) – The activist investor squaring off with Cliffs Natural Resources Inc named its preferred candidate for chief executive officer on Wednesday and said it plans to nominate enough new directors to form a majority of the iron ore miner’s board.

Hedge fund Casablanca Capital, which owns about 5.2 percent of Cliffs, said it is backing Lourenco Goncalves, former CEO of Metals USA, to take the top job at hard-hit Cliffs.

Last month Casablanca publicly urged Cliffs to spin off its international operations and form a master limited partnership from its U.S. assets, but the fund declined to say what its next steps would be if Cliffs refused.

Cliffs, a relatively high-cost producer, has been battered by weak iron ore prices. Operational issues and worse-than-expected costs have plagued its Bloom Lake Mine in Quebec, once seen by analysts as a key growth project.

After months of uncertainty, the company said on Tuesday it has decided to indefinitely suspend a planned expansion at Bloom Lake, and idle Wabush, another Canadian mine, slashing capital spending and cutting some 500 jobs.

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India rejects call to ban iron ore exports from top producing state – by Krishna N Das and Jatindra Dash (Reuters India – February 12, 2014)

http://in.reuters.com/

NEW DELHI/BHUBANESWAR, India, Feb 12 (Reuters) – India’s mines ministry has rejected suggestions by a powerful government panel to ban exports of iron ore and limit output from the eastern state of Odisha, dispelling fears the country’s top producer faced curbs similar to those imposed elsewhere.

The bans in two other producing states, Karnataka and Goa, have helped spur sales by miners from Australia, Brazil and South Africa, pushing India to ninth place last year among world exporters of the steelmaking raw material to top market China.

The panel, led by Justice M.B. Shah, asked the ministry to consider the restrictions to ensure that future generations are “not required to import iron ore” and to crack down on illegal mining, after recommending the same steps for Karnataka and Goa.

Bans in these two southern states, following the findings of the Shah Commission set up in 2010, have already slashed India’s exports of iron ore by about 85 percent, or 100 million tonnes, in the past two years, pushing the country from its 2011 ranking of No. 3 among world exporters to China.

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UPDATE 2-Miner Cliffs to slash 2014 capital spending, cut 500 jobs – by Nicole Mordant (Reuters U.S. – February 11, 2014)

http://www.reuters.com/

Feb 11 (Reuters) – Under pressure from an activist shareholder, Cliffs Natural Resources Inc said on Tuesday it will slash capital spending, forego a planned expansion at a key Canadian mine and shut another mine in Canada, cutting about 500 jobs.

Cliffs, a Cleveland-headquartered iron ore and coal producer, said it plans to reduce its capital spending in 2014 by more than 50 percent to between $375 million and $425 million as it cuts back its Bloom Lake Mine expansion and idles production at its Wabush Mine.

The miner has recently been targeted by an activist shareholder who wants the company to be broken up and Cliffs to spin out its “riskier” international operations, including the Bloom Lake and Wabush mines, into a separate business from its strong cash-generating U.S. operations.

Cliffs acquired Bloom Lake as part of its takeover of Consolidated Thompson Iron Mines Ltd in 2010 but higher-than-expected costs at the mine have weighed on Cliffs’ earnings. Cliffs delayed a planned expansion in 2012, and a year ago took a $1 billion goodwill writedown related to the Consolidated Thompson deal.

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NEWS RELEASE: Alderon and the Innu Nation of Labrador Sign Impacts and Benefits Agreement

VANCOUVER, BRITISH COLUMBIA–(Marketwired – Jan. 23, 2014) – Alderon Iron Ore Corp. (TSX:ADV)(NYSE MKT:AXX) (“Alderon” or the “Company”) and the Innu Nation of Labrador (“Innu Nation”) are pleased to announce that The Kami Mine Limited Partnership (“Kami LP”), an affiliate of Alderon, has signed an Impacts and Benefits Agreement (“IBA”) with respect to the development of the Kami Iron Ore Project (“Kami Project”) located in western Labrador. The IBA is a life-of-mine agreement that establishes the sharing of benefits that will ensure a continued positive relationship between the Innu Nation and the Kami LP. The IBA represents full and final settlement to the Innu Nation.

“The successful conclusion of the IBA further strengthens Alderon and the Kami LP’s positive working relationship with the Innu Nation,” says Mark Morabito, Executive Chairman of Alderon. “This IBA is the result of over three years of consultation and negotiation and we look forward to a beneficial future for both parties as we continue to develop the Kami Project.”

“We are pleased with this IBA as it gives financial benefits to the Innu people and opportunities for business contracts and jobs as well as environmental protection for Innu traditional pursuits,” says Innu Nation Grand Chief Prote Poker.

By entering into the IBA, the Innu Nation has given its consent and support to the Kami Project in keeping with the provisions of the Agreement.

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Record iron-ore and coal production at BHP Billiton’s operations – by Staff (Business Day Live – January 22, 2014)

http://www.bdlive.co.za/ [South Africa]

GLOBAL resources group BHP Billiton has reported a strong operational performance for the six months ended December 2013, with production records achieved across 10 operations and several commodities.

Releasing its operational update for the second half of the year on Wednesday, the group said it had maintained strong momentum in the period. Full-year production guidance was retained for its petroleum, copper, iron-ore and coal businesses.

Iron-ore production was up 19% in the half-year to a record 98-million tonnes, while metallurgical coal production rose 22% to a record 22-million tonnes. Alumina production improved 8% to a record 2.6-million tonnes.

“A strong operating performance across our diversified portfolio in the December 2013 half-year delivered a 10% increase in production, and volumes are expected to grow 16% over the two years to the end of the 2015 financial year,” CEO Andrew Mackenzie said.

“Iron ore and metallurgical coal were particularly strong and are very well positioned to achieve guidance, notwithstanding the general uncertainty that exists as we enter the wet season,” he added.

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Rio Tinto Slashes Costs as Iron-Ore, Coal Output Hit Records – by David Stringer and Jesse Riseborough (Bloomberg News – January 16, 2014)

http://www.bloomberg.com/

Rio Tinto Group (RIO), the world’s second-largest mining company, beat its 2013 cost-cutting targets as fourth-quarter iron ore production advanced to a record on increased Chinese demand.

Output climbed 7 percent to 55.5 million metric tons last quarter from 52 million tons a year earlier, London-based Rio said today in a statement, in-line with the 55.7 million-ton median estimate of five analysts surveyed by Bloomberg.

Rio cut cash costs by more than $2 billion and halved exploration spending across its suite of commodities to $948 million last year, beating the targets set by Chief Executive Officer Sam Walsh after he replaced Tom Albanese in February following failed aluminum and coal deals. The cuts came even as production of iron ore, thermal coal and bauxite rose to records, Walsh said.

“What Rio is trying to articulate is that it’s delivering on its promises, it has a very solid business and it’s leveraged to the iron ore price,” said Peter Esho, chief market analyst at Invast Financial Services Pty. in Sydney.

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Shrugging off China risks, Australia miners dig deep for more iron ore – by James Regan (Reuters India – January 15, 2014)

http://in.reuters.com/

SYDNEY, Jan 15 (Reuters) – Australian miners shoveled record tonnages of iron ore in the December quarter, supported by billions of dollars worth of expansion plans coming on stream and despite signs of weakening demand from top consumer China.

Iron ore continues to generate big returns even as prices fall, and miners in Australia – the world’s biggest supplier – are counting on economies of scale to maintain profits for the steel making material.

Production data from Rio Tinto, BHP Billiton and Fortescue Metals Group will be released over the next two weeks, but port data already shows record tonnages were shipped in the last quarter even as Chinese demand lost steam.

Chinese iron ore purchases fell 5.6 percent to 73.4 million tonnes in December, down from a record 77.8 million in November and ore prices have dipped to a six-month low.

And weaker steel prices have prompted some mills to reduce production, putting China’s average daily crude steel output at 1.961 million tonnes in late December, the first time the pace fell below 2 million tonnes since last February.

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Walsh’s steely resolve for change of culture helps Rio Tinto turn around – by Andrew Burrell and Paul Garvey (The Australian – January 4, 2014)

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

SOON after arriving in London a year ago to begin his reign as chief executive of Rio Tinto, Sam Walsh took a stroll from his Kensington home to check out an antiques fair at nearby Sloane Square.

The avid collector of milk jugs — he has more than 350 of the cherished antiques stashed away in his other house in Perth — was in his element as he prepared to browse the collectables. “I walked up to the very first stand and picked up a Royal Worcester milk jug,” recalls Walsh. “And the lady looked at me and said, ‘Australian accent, interested in milk jugs, we know who you are — we’ve been expecting you!’ ”

Walsh roars with laughter when telling the story, partly because he cheerfully revels in the fact his passion for delicate milk jugs breaks all the stereotypes of the knockabout mining industry. But he knows too that it’s much harder to be anonymous — even at an antiques fair — when you’re running one of the biggest companies in one of the world’s financial capitals.

It’s even harder, it may be suggested, when you’re trying to lead the turnaround of a company that had spectacularly lost its way under predecessor Tom Albanese, culminating in more than $US14 billion in writedowns as a result of the failed 2007 acquisition of Canadian aluminium producer Alcan and the disastrous takeover of African coal play Riversdale Mining in 2011.

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Steel consortium slashes Afghan ore plant plan – by Krishna N Das and Jessica Donati (Reuters India – December 31, 2013)

http://in.reuters.com/

NEW DELHI/KABUL – (Reuters) – An Indian consortium has slashed a planned $10.8 billion iron ore investment in Afghanistan by 80 percent because it has been unable to get funding for the project.

The consortium has proposed new terms which would see just 130.57 billion rupees invested, according to figures released on Tuesday in India’s steel ministry year-end report.

Led by state-owned Steel Authority of India Ltd (SAIL) (SAIL.NS), the group was forced to renegotiate the terms of the deal with the Afghan government after India’s finance ministry refused to fund the project.

The original proposal called for investment in three iron ore blocks at Hajigak in Afghanistan and in a 6 million-tonne-per-year (MTPA) steel plant.

But the finance ministry told the consortium, according to an official involved, to draw up a fresh viability study. Under the new proposed terms, the size of the plant would fall to 1.2 MTPA.

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Schefferville enjoying resurgence thanks to iron ore venture – by Robert Gibbens (Montreal Gazette – December 23, 2013)

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

MONTREAL — In 1982 Brian Mulroney, then head of the Iron Ore Co. of Canada, suddenly announced the shutdown of the company’s Schefferville mines in Quebec-Labrador. The news hit Montreal 1,000 kilometres away like a thunderbolt.

Mulroney said the Schefferville mines, built in the early 1950s, were no longer economic at prevailing prices and IOC would focus on its newer mines and concentrators 217 kilometres south at Carol Lake, near Labrador City.

Now — more than 30 years after Mulroney’s coups de grâce — life is returning to Schefferville and the billions of tonnes of high-grade iron ore deposits lying along the 210-kilometre Millennium Iron Range.

In September, New Millennium Iron Corp. and India’s Tata Steel, through a 20-80 joint venture called Tata Steel Minerals Canada, began shipping beneficiated ore by rail from Schefferville to the Port of Sept-Îles. The ore is loaded into 150,000-tonne ore carriers for delivery to Europe.

This is known as the “DSO Project” and it is the New Millennium partners’ initial iron ore production effort at Schefferville.

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End of boom? Not for Australia’s iron ore miners – by James Regan (Reuters U.K. – December 18, 2013)

http://uk.reuters.com/

VALLEY OF THE KINGS, Australia – (Reuters) – A fleet of charter flights ferry thousands of workers to and from this outback mine site. The resort-like housing offers gourmet food, cheap alcohol, swimming and well-equipped gymnasiums.

Australian iron ore mining seems immune from the spending crunch afflicting other commodities as a slowdown in Chinese growth cools a decade-long mining boom.

Rio Tinto (RIO.AX), BHP Billiton (BHP.AX) and Fortescue Metals Group (FMG.AX) are bulking up in Western Australia’s iron-rich Pilbara desert as if the mining boom had never ended. A place where capital expenditure is still measured in the billions.

The miners are speeding up transformation of an area the size of Peru into a moonscape of rust-red pits linked via thousands of kilometres (miles) of rail lines to giant iron ore ports perched on the easternmost edge of the Indian Ocean.

“All this discussion about the end of the mining boom, we don’t see it,” said Fortescue Chief Executive Nev Power, before leading uniformed workers through dawn exercises at the company’s King’s mine. “We sell all we mine.”

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Iron ore, chrome rates under pressure on poor demand – by Sadananda Mohapatra (Business Standard – December 17, 2013)

http://www.business-standard.com/ [India]

Prices of iron ore and chrome ore are witnessing downward pressure on poor demand from within the country, precipitated by stagnated consumption growth of finished steel products, traders and analysts said.

In Odisha, the major iron ore producing state, the rates have been hovering around Rs 5000 to Rs 6000 per tonne for 62 to 65 grade mineral for last one month. “The rates will stay at current levels for next one month or so. Actually it should be coming down as demand for the mineral is not so strong. But supply problems are supporting the rates,” said an official of Altrade Group, which has five iron ore mines in the state.

Major miners such as Essar and Rungta have rolled over the rates of iron ore lumps from November levels in anticipation of weak demand from sponge iron makers, a major user of the raw material.

“The iron ore rates have been trading at similar levels for past one month due to sluggish demand from sponge iron makers as steelmakers are preferring to use imported scrap instead of sponge iron.

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Taconite future looking bright in 2014, 2015 – by John Myers (Duluth News Tribune – December 17, 2013)

http://www.duluthnewstribune.com/

Minnesota’s taconite iron ore producers will make less product in 2013 than they did in 2012, but the downturn looks to be brief.

It appears 2013 will end up with about 38.9 million tons produced and shipped from the Iron Range, according to state estimates. That’s down about 2 percent from 39.7 million tons produced in 2012, said Bob Wagstrom, who tracks taconite production for the Minnesota Department of Revenue.

Most of the difference was spurred by a million-ton drop in production at Cliffs Natural Resources’ Northshore Mining, which idled two production lines for most of 2013 after losing a customer. Some of that loss was buffered by an increase at U.S. Steel’s Minntac plant in Mountain Iron, Wagstrom said, and by continued increasing production by Magnetation, which has several small plants that recover useable ore from old mine waste sites.

“With the exception of Northshore, everybody was right at last year or even a little up for this year,” Wagstrom said. Northshore officials already have announced that they will restart their idled lines in 2014, boosting production. And Wagstrom said that with continued incremental increases by Magnetation and Mesabi Nugget — the state’s first iron nugget plant near Hoyt Lakes — taxable production could total about 40 million tons in 2014, a level not seen since 2000.

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Rinehart mining fight: Roy Hill livestock farmers stand up against mining project – by Claire Moodie (Australian Broadcasting Corporation – December 5, 2013)

http://www.abc.net.au/

In the heart of iron ore country in Western Australia’s Pilbara region, brothers Murray and Ray Kennedy are standing their ground against the mining industry.

The veteran pastoralists have run Roy Hill cattle station for over forty years but they have become an endangered species.

Many Pilbara stations have been bought up by mining companies but the Kennedys, now in their twilight years, have refused to move on. “I don’t see why we should,” Murray Kennedy said. “Not at 25 percent of the value of the property, no way, that’s just robbery.”

The brothers are well-known in the Pilbara for their tough negotiating skills and the colourful characters are rarely seen without their pet dingo, Baby. “She’s the boss,” Ray Kennedy said with a laugh.

“She rounds up Murray and I and we’ve got to do as we’re told. Simple, she’s a bloody female.” Baby even has her own security pass to the nearby Fortescue Metals Group’s (FMG) Christmas Creek mine and has a meeting room at the mine-site named after her.

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Rio Tinto to cut capital spending on aluminum, coal – by Eric Reguly (Globe and Mail – December 4, 2013)

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.

Rio Tinto, the mining giant that owns Montreal’s Alcan, provided more evidence that the era of massive spending on huge projects and acquisitions is over by pledging to shave billions of dollars off its capital spending budget.

The new era will see the Anglo-Australian miner focus on shareholder returns in an attempt to repair some of the damage triggered by years of overspending during the boom years, in the mistaken belief that strong global growth would propel commodity prices ever higher.

Rio CEO Sam Walsh on Tuesday said the company, the world’s second largest miner, after BHP Billiton, would cut capital spending by at least 20 per cent in each of the next two years. That means spending would fall to $11-billion (U.S.) in 2014 from $14-billion this year, and to $8-billion in 2015.

Speaking at investor conference in Sydney, Mr. Walsh said “We lost our way…We are taking decisive action. Don’t get me wrong, we have more to do.”

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