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Vale Sees China Slowdown Blunted by Brazil Real Depreciation – by Juan Pablo Spinetto & Laurie Hays (Bloomberg News – June 17, 2013)

http://www.bloomberg.com/

Vale SA (VALE5), Brazil’s largest exporter, said further local currency depreciation could counter cost rises and a slowdown in Chinese iron-ore demand as it seeks to regain market share from Rio Tinto Group and BHP Billiton Ltd. (BHP).

The real, the worst-performing emerging-market currency in the past three months, probably will weaken to about 2.40 from 2.15 per U.S. dollar, bolstering Brazil’s competitiveness, said Jose Carlos Martins, Vale’s executive director for ferrous and strategy. China’s iron-ore and steel demand growth is set to slow to about 5 percent from 10 percent in the first five months of the year, he said.

“The Brazilian currency will devalue further,” Martins, 63, said in a June 14 interview at the company’s Rio de Janeiro headquarters. “The slowdown in China is negative, devaluation is positive because not only our costs in dollars will be reduced but also investments will be lower.”

Vale is seeking to return to profit growth and boost investor confidence by cutting costs, selling assets and focusing on the iron-ore business, its most lucrative unit. The company, the worst-performing major mining stock this year, posted first-quarter profit that surpassed analysts’ expectations for the first time in eight quarters.

The real lost 7.8 percent against the dollar in the past three months through yesterday to the weakest level in four years as faltering economic growth and speculation the U.S. Federal Reserve will pare back monetary stimulus lures money away from Latin America’s biggest economy.

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Is China backtracking on attempts to control iron ore? – by Clyde Russell (Reuters India – June 17, 2013)

http://in.reuters.com/

Clyde Russell is a Reuters market analyst. The views expressed are his own.

LAUNCESTON, Australia, June 17 (Reuters) – It may be too early to start beating the drums of victory for free-market capitalism, but there are signs that China is stepping back from attempts to control the iron ore market.

Just three months after accusing major iron ore producers of manipulating prices, China plans to scrap it’s decade-old import licensing system, a move that may eliminate middlemen in the market, lower costs for steel mills and improve transparency.

It also looks like a strategic retreat for the world’s biggest buyer of iron ore in its battle to win pricing control from the big three producers, Brazil’s Vale and the Anglo-Australian pair of Rio Tinto and BHP Billiton .

The planned end of the licensing system will happen in the second half of the year, according to a Reuters report on June 13 that cited a source with knowledge of the matter. The current system requires import qualification licences to be granted by government-backed industry bodies like the China Iron & Steel Association.

It was designed to eliminate speculative traders from driving up prices and force the steelmaking industry to present a united front against the producers.

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$3bn hit for WA’s biggest mine moguls – by Paul Garvey (The Australian – June 10, 2013)

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

ALMOST $3 billion has been wiped off the net worth of some of Perth’s most prominent mining executives this year, underscoring the pain being felt at the top end of a West Australian economy that appears to be cooling rapidly.

An analysis of data by The Australian has found that the average value of the shareholdings held by 10 of the biggest names in WA’s resources-dominated economy has fallen by more than 38 per cent from the peaks of the past six months.

The biggest fall in dollar terms has been felt by Andrew Forrest, whose major shareholding in Fortescue Metals Group has shed almost $2.1bn since the iron-ore miner reached its 2013 peak of $5.39 a share on Valentine’s Day.

In percentage terms, those hardest hit have come from the mining services sector.

Ron Sayers, the founder of drilling contractor Ausdrill, has seen his stake in the company plummet by 61.7 per cent in less than four months. Ausdrill stock has come under particular pressure in recent months, as investors bet on mining companies cutting back on discretionary spending on exploration drilling in an effort to rein in costs.

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BHP Billiton CEO ANDREW MACKENZIE – SPEECH TO THE MELBOURNE MINING CLUB

Above video from the Brisbane Times website: http://www.brisbanetimes.com.au/

BHP Billiton CEO ANDREW MACKENZIE – SPEECH TO THE MELBOURNE MINING CLUB

CHECK AGAINST DELIVERY

London – 6 June 2013

Tonight I amhere to talk about our global industry: where we have come from; where we are today; and where we are going.

Mining was a low-growth businessfor much of the 20th century so we were caught off-guard by the pace of China’s early-21st century urbanisation and industrialisation. It has changed our industry:

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Contractors rush to Roy Hill as projects dwindle – by Andrew Burrell (The Australian – June 10, 2013)

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

GINA Rinehart’s $9.5 billion Roy Hill iron ore project has emerged as the potential saviour for scores of contractors and suppliers hit hard by the mining slowdown, with almost 2000 of them set to attend briefings this week to discuss opportunities from the huge development in Western Australia’s Pilbara region.

The turnout expected at meetings in Perth, Port Hedland and Newman starting today dwarfs the 800 who attended similar briefings just 10 months ago, before the deep anxiety over weaker commodity prices infected the sector.

The slump has forced mining companies to slash costs and defer or abandon some projects, leading to a string of profit downgrades by contractors including Transfield, WorleyParsons, Ausdrill, Calibre and Emeco.

Amid talk in WA that the state’s once-booming economy is headed for a recession, mining contractors desperate to fill their order books will clamour for work on Roy Hill, which is shaping up as one of the biggest mining projects in the west for several decades.

It is believed the main construction contractor, South Korean giant Samsung, will deliver contracts worth at least $4bn to local companies, providing a crucial injection into the economy.

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Least-mined Bushveld SA’s biggest iron-ore resource: Paul Jourdan – by Martin Creamer (MiningWeekly.com – June 4, 2013)

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

CAPE TOWN (miningweekly.com) – South Africa’s Bushveld Complex was the country’s largest but least-mined iron-ore resource, independent South African mineral policy analyst Paul Jourdan told the International Mining and Metals third African Iron Ore conference here on Tuesday.

While the Bushveld hosted between 25-billion tons and 27-billion ton of iron-ore, it was the Kalahari basin with 3-billion tons in the Northern Cape where most of the mining was under way.

“The future resources are very much in the Bushveld Complex,” said the former Department of Trade and Industry (DTI) deputy director-general and former Mintek head, who is currently working with the DTI, the Department of Mineral Resources, the Department of Science and Technology and the State-owned Industrial Development Corporation (IDC) on mineral value chain development.

Kumba Iron Ore was by far the largest miner, followed by Assmang, Evraz Highveld Steel and Vanadium and smaller start-ups. South African production was now at some 55-million tons a year, with plans for expansion.

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Liberia wants neighbours to cooperate to boost mining hopes – by Clara Ferreira-Marques (Reuters India – June 4, 2013)

http://in.reuters.com/

LONDON, June 4 (Reuters) – West African neighbours Guinea, Sierra Leone and Liberia should work together to resolve a dire lack of rail, port and power infrastructure that has held back the region’s mining ambitions, a senior Liberian government official said.

Sam Russ, deputy minister of operations at the ministry of mines in Liberia, said the region should collaborate on export links to make the most of major iron ore deposits, pointing to potentially lucrative cooperation with Guinea to the north.

The billions of dollars required to build rail or road have frozen many West African iron ore projects and rendered others all but impossible in an environment of uncertain prices and tough access to cash. Russ told an investor conference in London that cooperation could help resolve that.

“Our economies are certainly too small to take on these massive investments. If we think about collaborating, we can do a lot,” Russ said, pointing to the proximity of some deposits.

Key for Liberia – an emerging iron ore producer but also one of the region’s least explored destinations – would be cooperation with Guinea. That could, he said, help unlock the potential of Guinea’s giant Simandou mine and benefit Liberia.

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Billionaire Rinehart Builds Rails as Iron Ore Plunges: Freight – by Elisabeth Behrmann & Sungwoo Park (Bloomberg News -June 4, 2013)

http://www.bloomberg.com/

Gina Rinehart, Asia’s richest woman, built her fortune by heeding her own counsel. Now she’s testing that acumen by building her own iron ore railroad in Australia’s remote north — just as prices enter a bear market.

Samsung C&T Corp. (000830), South Korea’s second-largest builder, has started initial work after winning a A$5.6 billion ($5.4 billion) contract in March to build the railroad, plant and port for Rinehart’s Roy Hill mine. The 340-kilometer (211-mile) line to Port Hedland, the world’s biggest bulk terminal, will run parallel to two other rail networks and one planned route.

While Rinehart could cut costs by sharing infrastructure with competitors, according to UBS AG, she’s proceeding with her own railroad after passing on a potential investment accord with one of them: rival iron ore mining billionaire Andrew Forrest. The 59-year-old heiress, the world’s 35th-richest person, is seeking funding for her project, including the line, as costs peak and prices drop amid forecasts of a global supply glut.

“She’s taking on a lot of risk in terms of market outlook and the amount of capital that she’d going to need to build it,” Tom Price, a Sydney-based commodity analyst at UBS, said by phone. “It just seems like a very expensive path.”

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$18bn cut for Pilbara iron ore miners – by Malavika Santhebennur (Australian Mining – May 31, 2013)

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

Pilbara iron ore producers could be in for an $18 billion annual revenue cut. The revenue hit comes as prices for steelmaking raw material fell to a seven-and-a-half-month low of $US112.90 a tonne. That is 22 per cent less than the average for the March quarter of $US145 a tonne.

This came as a result of new rounds of destocking by steel mills in China as steel prices decline and the industry faces over-capacity, The Australian reported. Based on the slumped prices, if production reaches 550 million tonnes this year, revenue would fall $18 billion of what was expected in the March quarter.

The share market closed 0.88 per cent lower due to weakness in iron stocks. Rio Tinto was down 1.35 per cent, BHP Billiton was down 1.18 per cent and Fortescue fell by 3.35 per cent. But smaller mining companies felt much of the brunt with Atlas Iron down 6.1 per cent and Mount Gibson down 4 per cent.

The Organisation for Economic Co-operation and Development downgraded its prediction for Australia’s economic growth this year, and the International Monetary Fund did the same for China, even as construction steel prices fell considerably there.

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Minnesota lawmakers raise taconite tax to help pay for Iron Range school construction – by John Myers (Duluth News Tribune – May 24, 2013)

http://www.duluthnewstribune.com/

Minnesota’s per-ton tax on taconite iron ore produced in the state will increase a dime this year, and the extra money will be dedicated to help rebuild and retool Iron Range schools.

The taconite provision was included in the 2013 Legislature’s final omnibus tax bill, which Gov. Mark Dayton signed into law Thursday.

The per-ton tax on taconite will increase to $2.56. Half the increase is part of an annual inflationary increase — this year, about 5.3 cents per ton produced. But there’s also an additional increase of a nickel per ton.

“We’re capturing that 10.3 cents to build and rebuild facilities for schools within the taconite tax relief area,” said state Rep. Tom Anzelc, DFL-Balsam Township, who served on the House Tax Committee and helped craft the taconite tax changes. “It’s something that’s long overdue and the school districts simply can’t handle on their own.”

That money will be made available for school construction and improvement projects through bonds issued by the Iron Range Resources and Rehabilitation Board. The extra money for school construction projects won’t affect other recipients of taconite tax revenue, such as homeowners, counties, towns and city governments and the Iron Range Resources and Rehabilitation Board. They all should get about the same amount as last year out of the taconite tax pool.

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Sweden’s LKAB Doubles Spending to Find ‘Elephant’ Iron Mine – by Niklas Magnusson (Bloomberg News – May 22, 2013)

http://www.bloomberg.com/

LKAB is doubling spending on exploration in Sweden’s Arctic as the state-owned company targets finding a deposit to match its Kiirunavaara mine, the world’s largest contiguous body of iron ore.

LKAB will boost its exploration spending to 200 million kronor ($30 million) annually from 100 million kronor and is hiring more geologists to guide it to potential deposits, Chief Executive Officer Lars-Eric Aaro said in a May 20 interview.

“There’s a saying in mining, especially when you’re looking for big volume bodies, that if you’re looking for elephants you have to go to elephant land — and our part of the world is elephant land,” he said. “We now have the equipment to look at rocks deeper down but what’s under there is so far totally unknown. But, the geology is there and there could be a new Kiirunavaara mine — it will just be deeper underground.”

Sweden sits on 60 percent of Europe’s known iron ore and 2 percent of the global total. Prime Minister Fredrik Reinfeldt has said that the resource ore is equivalent to what oil has meant for Norway since it was discovered in the 1960s.
LKAB, which is moving parts of the towns of Kiruna and Malmberget to ensure it can continue production in those two locations, had sales of 27 billion kronor and a profit of 8.8 billion kronor last year.

LKAB paid a dividend of 5 billion kronor to the Swedish state for 2012, equivalent to 0.6 percent of the government’s forecast income in 2013, as well as taxes of 3.77 billion kronor. Those contributions to Sweden’s budget are likely to increase as LKAB opens new mines and expands.

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Swedish City Is Displaced by Race for Arctic Iron – by Niklas Magnusson and Johan Carlstrom (Bloomberg Business Week – May 21, 2013)

http://www.businessweek.com/

Swedes living in the Arctic town of Kiruna are packing up their belongings before their homes are bulldozed to make way for iron ore mining driven by Chinese demand.

LKAB (LKAB), Sweden’s state-owned mining company, opened a new level yesterday, more than 1 kilometer (3,281 feet) below the town, to be able to continue tapping the world’s largest contiguous body of iron ore. Many of the 18,000 who live above the deposit in the Scandinavian nation’s fourth-richest county will move a few kilometers east to accommodate the mine.

The extreme measure underscores the lengths to which governments and companies are willing to go to gain access to commodities prized by importers like China, the world’s fastest-growing major economy. And with LKAB producing 90 percent of all iron in the European Union, the willingness of Swedes to move is proving key to the whole region’s access to the metal.

“The move is of course crucial for the continuation of mining in Kiruna,” LKAB Chief Executive Officer Lars-Eric Aaro said in a May 20 phone interview. “Being Sweden’s seventh-largest exporter and third-biggest taxpayer, in addition to the dividend we pay the state each year, this is a national matter.”

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UPDATE 2-POSCO moves closer to iron ore access for $12 bln India steel plant – by Suchitra Mohanty and Krishna N Das (Reuters India – May 10, 2013)

http://in.reuters.com/

NEW DELHI, May 10 (Reuters) – POSCO’s planned $12 billion steel project in India moved a step forward on Friday after a court handed a decision on a mining licence to the federal government, raising the South Korean firm’s chances of getting preferential access to iron ore.

The world’s fourth-largest steel producer has waited eight years to get necessary clearances, land and an iron ore mining licence to start work on the project, billed as India’s largest foreign direct investment.

While the project planned in eastern Odisha state may still face hurdles from protesters and over issues such as land ownership, a supportive federal government is expected to clear the path for POSCO’s top concern – a captive mine that will give it steelmaking raw material iron ore.

“This is positive for the company because the central government has been supporting this project,” said Rakesh Arora, a metals expert and head of research at Macquarie Capital Securities (India). “There’s no doubt that without iron ore, this project was not starting at all.”

India was concerned about the delays and Prime Minister Manmohan Singh himself is monitoring the project’s progress, Trade Minister Anand Sharma had said in January.

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Poor Decisions Are Sending This Company [Cliffs Natural Resources] Downhill – by Mike Thiessen – (Motley Fool – May 8, 2013)

http://beta.fool.com/

Mike is a member of The Motley Fool Blog Network — entries represent the personal opinion of the blogger and are not formally edited.

Once a darling of fund managers and retail investors alike, Cleveland-based Cliffs Natural Resources (NYSE: CLF) has suffered an epic share-price collapse as well as a number of strategic setbacks. Buffeted by low market prices for its core iron ore and coal products and slackening demand from emerging-market customers in China and elsewhere, the company has had to implement several painful cost-control measures to shore up its finances.

Even worse, its much-touted acquisition of the Bloom Lake mine complex in Quebec has thus far provided disappointing results. Cliffs has delayed a key expansion at the mine and has given only vague guidance about when these activities might resume. Given the high hopes that the company expressed for Bloom Lake as recently as June of 2011, this comes as a serious setback. Shareholders have punished the firm by pushing its price-to-book ratio below 0.6. If Cliffs cannot turn around its fortunes soon, more drastic steps may need to be taken.

Financial Comparison with the Competition

As a major producer of basic raw materials like iron ore pellets, coking coal and lump ore, Cliffs competes with some of the largest and most recognizable names in the mining industry. These include London-based Rio Tinto (NYSE: RIO) and Melbourne-based BHP Billiton (NYSE: BHP).

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Rio Tinto to press on with iron ore expansion plans – by James Regan and Sonali Paul (Reuters India – May 7, 2013)

http://in.reuters.com/

SYDNEY/MELBOURNE, May 7 (Reuters) – Rio Tinto, the world’s No.2 iron ore miner, is set to press on with plans to boost production at its Australian mines by a quarter by 2015, shrugging off pressure to slow spending and conserve cash as the commodity boom cools.

In spite of forecasts of a looming global supply glut, shareholders expect Chief Executive Sam Walsh to tell the firm’s annual general meeting in Sydney on Thursday that it’s full speed ahead with a 70 million tonnes-per-year increase that will take output to 360 million tonnes annually by 2015.

The plan means that a major additional chunk of iron ore production will enter the world market in the next few years and will add to concerns about increased supply that could weigh on a recovery in prices.

“They should continue to expand what is a high margin, high returning project, one of the best returning mining projects in the world, because growth now will mean yield in the future,” said Ben Lyons, who helps manage A$400 million ($409.42 million)at ATI Asset Management, which holds Rio shares.

Rio Tinto’s board is not expected to make a final decision on the expansion plans, estimated to cost up to $5 billion, until later this year.

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