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Iron Ore

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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Greenland explores Arctic mineral riches amid fears for pristine region – by Terry Macalister (The Guardian – January 5, 2014)

http://www.theguardian.com/uk

London Mining’s £1.5bn iron ore mine and new oil drilling licences for BP and Shell spark concern for environment

London Mining, a British mineral company, is trying to attract Chinese and other international investors to build a £1.5bn iron ore mine just outside the Arctic Circle in Greenland.

The move comes as BP and Shell join others exploring for oil and gas in the pristine waters off Greenland, as concerns grow that the wave of industrialisation in the region will damage the pristine environment.

Greenland and the wider Arctic is seen as one of the new frontiers for exploiting mineral wealth, but uncertain national boundaries have also opened up potential political, if not military, conflicts.

London Mining, whose board includes a former British foreign minister in Sir Nicholas Bonsor, has already opened talks with Chinese mining group Sichuan Xinye and others about helping finance a new mine at Isua.

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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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Rio Tinto to Halve Capital Spending by 2015 in Focus on Cash – by Elisabeth Behrmann (Bloomberg News – December 3, 2013)

http://www.bloomberg.com/

Rio Tinto Group (RIO), the world’s second-biggest mining company, will cut capital spending to about $8 billion in 2015, less than half its outlay last year, as mineral producers conserve cash after prices fell.

“Our capex is reducing, and will come down further,” Sam Walsh, chief executive officer of London-based Rio, said today in a statement. “From where I stand, we continue to see market fragility and volatility.”

Rio’s cutback underlines efforts by the world’s largest mining companies to rein in spending as a decade-long boom in metal prices wanes. Vale SA (VALE5), the biggest iron ore producer, yesterday slashed its investment budget for a third straight year to $14.8 billion, the lowest since 2010.

“It’s quite a substantial drop and it does suggest that right now Sam Walsh is concentrated very, very hard on affordability,” Evan Lucas, a Melbourne-based markets strategist at IG Ltd., said by phone.

Rio fell 0.6 percent to A$65.49 at the close in Sydney. BHP Billiton Ltd., the world’s biggest mining company, declined 1.2 percent.

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NEWS RELEASE: Rio Tinto unveils breakthrough pathway for iron ore expansion in Australia

28 November 2013

Rio Tinto has set out its breakthrough plan to optimise the growth of its world-class iron ore business in Western Australia. Mine production capacity will rapidly increase towards 360 million tonnes a year (Mt/a) at a significantly lower capital cost per tonne than originally planned.

A series of low-cost brownfield expansions will bring on early tonnes to feed the expanded infrastructure currently being developed. From a base run rate of 290Mt/a by the end of first half 2014, mine production capacity will increase by more than 60 million tonnes a year between 2014 and 2017. The majority of the low-cost growth will be delivered in the next two years with mine production of more than 330 million tonnes in 2015.

This will be achieved primarily through a combination of expanding production at existing mines and securing further low-cost productivity gains, such as those delivered by Rio Tinto’s pioneering Mine of the Future™ programme, together with the proposed future development of the greenfield Silvergrass mine. Work continues on various further expansion options to optimise the next stage of the 360 programme.

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Vale to Pay $9.6 Billion to Settle Decade-Long Tax Fight – by Juan Pablo Spinetto – (Bloomberg News – November 28, 2013)

http://www.bloomberg.com/

Vale SA (VALE5), the world’s biggest iron-ore producer, agreed to pay 22.3 billion reais ($9.6 billion) to settle a decade-long tax dispute with Brazil over profits of its foreign units, ahead of a deadline tomorrow.

Vale will pay 5.97 billion reais at the end of this month and 16.4 billion reais in 179 monthly installments, plus interest, after its board decided to join a settlement program offered by the government, the Rio de Janeiro-based company said in a filing late yesterday. Shares jumped.

Brazil’s biggest exporters including Vale, brewer Cia. de Bebidas das Americas and steelmaker Gerdau SA (GGBR4) have been fighting a combined 75 billion reais in tax claims on profit of their foreign subsidiaries, according to the country’s tax agency. The net present value of Vale’s liabilities is $6.6 billion, below the $10 billion that was being anticipated by investors, according to JPMorgan Chase & Co. estimates.

“We view this announcement as positive for Vale,” JPMorgan analysts including Rodolfo Angele wrote in a note to clients. “We now can turn the page on the uncertainties surrounding this legal imbroglio to focus on industry and company fundamentals.”

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NEWS RELEASE: Vale will participate in income tax settlement

11/27/2013

Our Board of Directors has approved its participation in the federal tax settlement (REFIS) for payment of amounts relating to Brazilian corporate income tax and social contribution on the net income of its non-Brazilian subsidiaries and affiliates from 2003 to 2012, as established by Brazilian Law No. 12,865/2013 of October 9, 2013 and Provisional Measure 627 (MP 627) of November 11, 2013.

Participating in the REFIS will result in income tax payments of R$ 5.965 billion at the end of this month and R$16.360 billion in 179 monthly installments, adjusted by the Central Bank of Brazil policy interest rate (SELIC). Vale estimates that the net present value of the tax payments is R$ 14.425 billion.

“The proposed terms have allowed for a considerable reduction in the amounts in dispute, and the decision to participate in the REFIS is consistent with our goal of eliminating uncertainties and directing managerial focus on Vale’s businesses,” CEO Murilo Ferreira commented. “The tax payment will be funded by our operating cash flow, not requiring additional indebtedness, and not causing significant changes in our financial planning, which will continue to support our growth and value creation initiatives, the distribution of dividends to shareholders and the maintenance of a solid balance sheet,” Ferreira said.

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Vale Tax Appeal Suspended as Justice Requests Revision – by Mario Sergio Lima & Juan Pablo Spinetto (Bloomberg News – November 26, 2013)

http://www.bloomberg.com/

Vale SA (VALE5), the world’s biggest iron-ore miner, had its appeal of a 30.5 billion-real ($13.3 billion) government tax claim suspended by Brazil’s Superior Court as the deadline approaches for an out-of-court settlement.

Justice Ari Pargendler, one of five presiding judges, asked to revise the case in a session today in Brasilia. The request followed Justice Napoleao Maia’s proposed approval, Justice Sergio Kukina’s rejection and Justice Benedito Goncalves abstinence. Vale shares fell the most since July.

The case, in which the Rio de Janeiro-based miner is arguing that earnings from foreign operations can’t be taxed in Brazil if they were paid abroad, probably will resume next week, Roberto Duque Estrada, a lawyer for the company, said from the tribunal. That would be after a Nov. 29 deadline for companies to accept a government proposal to scrap fines, interest and legal charges if they agree to pay in one tranche or reduce taxes and interest if they settle in installments.

“The market already priced in this dispute and just wants it to be over,” Leonardo Brito, an analyst at hedge fund Teorica Investimentos, said by telephone from Rio before today’s suspension. “This and the new set of mining rules that Brazil is establishing are pending like swords over the company’s head.”

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BHP Billiton confident of Chinese demand – by Peter Ker (Brisbane Times – November 20, 2013)

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

Chinese demand for Australia’s natural resources may prove to be stronger than currently believed, according to BHP Billiton chief executive Andrew Mackenzie.

Speaking at the opening of the mining giant’s new headquarters in Melbourne, Mr Mackenzie said early indications from the Chinese government’s recent economic policy summit were positive for Australia and its mining industry.

”If you read the small print – and no doubt we will hear more about this in a couple of weeks – from the third plenum that has just happened in China, I think even more than we might think they are going to require us to supply the resources to continue to develop not just China but much of north Asia as well,” he said.

”These resources are going to be fundamental to them securing the economic prosperity they crave for themselves and their citizens.”

The speech was delivered to a high-powered audience of current and former political leaders, including former prime minister Paul Keating, former treasurer Peter Costello and current parliamentary secretary to the Treasury Steve Ciobo, who read a message from Prime Minister Tony Abbott.

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