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Iron Ore

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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In Indian mining town, the barons are back – by Rama Lakshmi (Washington Post – May 2, 2013)

http://www.washingtonpost.com/

Bellary, India — Until recently, this iron-ore mining district in southern India was a byword for cronyism and plunder. Now it represents redemption, though not everyone is cheering.

It was steel that made Bellary a boomtown; steel sought by China in the run-up to the 2008 Olympic Games. As demand soared, prices leapt 15-fold. Indians who cut corners and mined illegally while the government looked away got rich, including a modern-day robber baron named Gali Janardhana Reddy, whose 60-room mansion stood out among his spoils.

A government crackdown in 2011 shuttered the mines in the name of lawbreaking and corruption, and led to a prison sentence for Reddy, accused of treating Bellary like his private fiefdom.

But now other barons are back and unapologetically so. Their rebound reflects complicated attitudes about ambition, corruption and the law in an India where uneven enforcement of rules has fueled the rise of a new wealthy class in fields such as mining and real estate.

In a district election campaign underway here in the southern state of Karnataka, the candidates include a millionaire named Anil Lad, whose mining licenses were recently canceled for irregularities, as well as dozens of candidates fielded by a new political party launched by Somashekar Reddy, the mansion builder’s older brother.

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Vale Gains as Cost Cuts End Two Years of Profit Disappointment – by Juan Pablo Spinetto – (Bloomberg.com – April 25, 2013)

http://www.bloomberg.com/

Vale SA (VALE) rose the most among major iron-ore producers after profit beat analysts’ estimates for the first time in two years on cost reductions and higher copper sales that offset lower prices for the steel ingredient.

Shares in the world’s third-largest mining company rose for a fifth straight day, gaining 2.2 percent to 32.82 reais at 10:41 a.m. in Sao Paulo. BHP Billiton Ltd. and Rio Tinto Group, the largest miners, both rose 0.7 percent in London.

First-quarter net income of $3.11 billion, or 60 cents a share, compared with a loss of $2.7 billion, or 52 cents, in the previous three-month period, according to a statement after the close of trading yesterday. Vale was expected to post per-share profit excluding items of 55.8 cents, the average of 13 analysts’ estimates compiled by Bloomberg. Vale, the worst- performing major mining stock this year, is seeking to bolster investor confidence by putting lower-return projects on hold, selling assets and cutting costs.

“Vale reported a much stronger-than-expected 1Q13, driven by lower costs and expenses and a stronger performance from the base metals business,” Goldman Sachs Group Inc. analysts Marcelo Aguiar and Diogo Miura wrote in a note to clients. “These drivers should provide a strong catalyst to consensus earnings upgrades and reduce the bearish sentiment towards Vale.”

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COLUMN-China iron ore moves unlikely to have desired effect: – by Clyde Russell (Reuters India – April 22, 2013)

http://in.reuters.com/

(Reuters) – The Chinese have launched another attempt to wrest some control of the global iron ore market from the dominant big three miners, but it’s likely this latest salvo will fall short of the target.

Beijing is planning new rules to force importers to use a domestic trading platform for the steel-making ingredient rather than one backed by the miners.

China, which buys about two-thirds of the world’s seaborne iron ore, will refuse to grant new licences to importers unless they use the China Beijing International Mining Exchange (CBMX) platform, according to a Reuters exclusive story .

This physical trading platform operates in competition to the globalORE system, based in Singapore and backed by the top three producers, Brazil’s Vale, and the Australian pair of Rio Tinto and BHP Billiton. The three are also members of the CBMX platform.

Under new rules, traders and steel mills seeking a new licence to import will now have to trade at least 500,000 tonnes of iron ore on the CBMX, a document on the regulations obtained by Reuters showed. Only Chinese firms are eligible for import licences.

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UPDATE 2-Vale Q1 profit falls despite big cost cuts – by Jeb Blount (Reuters U.K. – April 25, 2013)

http://uk.reuters.com/

RIO DE JANEIRO, April 24 (Reuters) – Brazil’s Vale SA , the world’s second-largest mining company, reported an 18 percent slide in first-quarter net profit as bigger-than-expected cuts in operating costs failed to offset lower sales and a hit from taxes and foreign exchange.

Despite the drop, the result beat analysts expectations and may help boost Vale’s stock as the company responds to investor calls for a tighter reign on spending amid concerns over weaker metals prices as growth in China slows.

Net income of $3.11 billion in the three months ending March 31 beat the $2.71 billion average estimate of eight analysts surveyed by Reuters and reversed a fourth-quarter loss, Vale’s first quarterly loss in a decade.

The result was still down on $3.79 billion a year earlier, and 25 percent below the average $4 billion quarterly profit the world’s largest producer of iron ore has recorded for the previous 11 quarters.

The lackluster outcome may add to nervousness that a decade-long mining boom led by ravenous Chinese demand for steel and other metals is ending, despite a rebound in iron ore prices after a steep drop last year. Like rivals BHP Billiton and Rio Tinto , who have been cutting costs and shunning expensive acquisitions, Vale slashed planned 2013 investment 24 percent in December.

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Report puts pressure on Cliffs’ WA mines – by Matt Chambers (The Australian – April 05, 2013)

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

US-BASED Cliffs Natural Resources of Cleveland has dismissed suggestions a looming US iron ore supply glut will force it into the $US1.75 billion ($1.67bn) sale of its Koolyanobbing iron ore mines in Western Australia to pay down debt.

In an extraordinarily bearish report from the US last week, Credit Suisse analyst Nathan Littlewood slashed his target price on Cliffs from $US30 to $US10, claiming the company was likely to need to consider selling assets or a multi-billion-dollar equity raising.

“We see the Asia-Pacific iron ore business as the most marketable asset in Cliffs’ portfolio and the most likely to be sold,” Mr Littlewood said.

“The recent Posco bid for Arrium tells us that there is interest from Asian steel mills in Australian iron ore outside of the Pilbara.” Posco walked away from a bid for Arrium, the former OneSteel, late last year when the target would not engage at the offer price.

In 2011, Cliffs agreed to sell its mined-out Cockatoo Island iron ore mine in the Kimberley region of Western Australia to Pluton Resources, leaving as its remaining asset the Koolyanobbing operation, which exports about 11 million tonnes of ore a year from near Esperance.

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Steel armor plate for US military must be produced in the US – by Steve Bennish (Dayton Daily News – April 4, 2013)

http://www.daytondailynews.com/

The U.S. Department of Defense has restored a rule mandating that steel armor plate purchased by the U.S. military be made in the United States, a move that will benefit Ohio steel companies.

Ohio Sen. Sherrod Brown, in announcing the decision Wednesday, said Cleveland’s ArcelorMittal and Cliffs Natural Resources, as well as Nucor in Marion, Ind, stand to gain. All are involved in the production of armor plate.

“This is a win for our military and for American companies like ArcelorMittal, Cliffs, and Nucor, that make steel for our military right here in the United States,” Brown said. “We know how to make steel armor plate here in America, and there’s no reason why countries like China and Russia should be making the steel used in our military’s vehicles and equipment.”
Brown said the rule is consistent with legislation he had proposed. AK Steel does not make armor plate.

Donald Gallagher, Executive Vice President and President – Global Commercial of Cliffs Natural Resources Inc., praised the change.

“As a leading supplier of steelmaking raw materials, Cliffs understands the critical importance of producing defense-oriented iron and steel products in the U.S. from a domestic supply chain,” Gallagher said. “This final rule acts as recognition that domestic steelmakers have the capability to manufacture sufficient quantities of armor plate from the initial melting stages of production.”

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Iron Ore Bear Market Looms as Supply Swamps Demand: Commodities – by Phoebe Sedgman (Bloomberg.com – April 4, 2013)

http://www.bloomberg.com/

Iron ore is heading toward its first surplus in at least a decade as output expands and Chinese steel mills, the biggest buyers, boost production at the slowest pace in five years.

Seaborne supply will advance 9.1 percent and demand 8.3 percent in 2013, led by exporters from Perth-based Fortescue Metals Group Ltd. (FMG) to Vale SA (VALE5), Morgan Stanley forecasts. A surplus will emerge in 2014 and keep widening until at least 2018, the bank predicts. Prices will slump as much as 34 percent to $90 a ton by the end of December, according to the median of seven analyst estimates compiled by Bloomberg.

Exports of the biggest seaborne cargo after oil are surging the most since 2010 after prices jumped as much as sevenfold in the past nine years. Goldman Sachs Group Inc. expects China’s imports to climb 4 percent in 2013, the least in three years. Its steel output will expand 2.6 percent as the nation’s economy grows at the second-slowest pace in the past decade, according to estimates from Morgan Stanley and economists surveyed by Bloomberg.

“We’ve got a steady lift of supply, mainly out of Australia,” said Tom Price, the Sydney-based analyst at UBS AG who has covered the market for about a decade. “We’ve observed for a couple of years now moderation in demand growth in China. A combination of those two is why we’re bearish.”

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Truckless $20 Billion Venture Seen Key to Vale Revival: Freight – by Juan Pablo Spinetto (Bloomberg.com – April 2, 2013)

http://www.bloomberg.com/

Vale SA (VALE5) is replacing trucks with 23 miles of conveyor belts and building a second railway through the Amazon to cut costs and retake the title of world’s second- largest mining company by value from Rio Tinto Group (RIO).

Vale’s Serra Sul project, part of the Carajas mining complex in northern Brazil, is the industry’s most expensive project ever at almost $20 billion. It will also be the first major iron-ore venture to fully replace in-mine trucks with conveyor belts, according to the miner. The project, which has absorbed $1.8 billion in investment so far, will allow Vale to reduce mine-to-port costs at Carajas to about $15 per ton, half the company’s current operational cost.

Vale, the world’s third-largest miner by value, is seeking to recover ground in the seaborne iron-ore market that it has lost to Australian rivals since 2007. The Serra Sul project will aid Vale shares as it cut costs per ton by tapping richer grades with improved technology, said Jonathan Brandt, an equity analyst at HSBC Holdings Plc.

“It’s quite an impressive project,” Brandt, who visited the venture in September, said in an interview from New York. “It should substantially lower their average cost per ton.”

Brandt, the second-most-accurate Vale analyst on the Bloomberg Absolute Return Rank (VALE), estimates the company will be able to extract, process and deliver ore to the Ponta da Madeira port for export at $20 to $23 per ton once all costs are included. That would be among the cheapest iron-ore operations in the world, he said.

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RPT-BHP freezes its mining projects in Gabon -sources (Reuters India – April 2, 2013)

http://in.reuters.com/

(Reuters) – Top global miner BHP Billiton is freezing all its projects in Gabon, mining ministry sources said on Friday, dashing government hopes for sizeable investments in manganese and iron ore production.

A spokesman for BHP could not immediately be reached for comment.

The company holds licences in the Central African country for the mining of manganese at Mounana, 650 km east of the capital Libreville, and at Okondja, 150 km further to the north.

Government officials had also said BHP signed a contract a year ago for the Belinga iron ore mine, in northeast Gabon, edging out China’s Comibel. BHP has declined to comment on this.

“We respect the decision by BHP to freeze its activities in Gabon,” said a senior official at the mining ministry who asked not to be identified. “At the same time this is a blow to the country, which hoped to become the world’s largest exporter of manganese.”

Gabon is the world’s second-largest producer of the mineral, an ingredient in making steel, after South Africa. France’s Eramet has been mining manganese at Moanda in southeast Gabon for some 50 years through its Comilog subsidiary.

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Africa’s ‘Pilbara’ needs champion – Investec – by Marin Creamer (MiningWeekly.com – March 27, 2013)

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

JOHANNESBURG (miningweekly.com) – The Cameroon-Congo-Gabon region, often likened to Australia’s iron-ore-rich Pilbara, needs a champion in the mould of Fortescue founder Andrew Forrest to assemble companies, governments, financiers and end-users in a region that could give the iron-ore top-three a run for their money.

Investec Securities analysts Hunter Hillcoat and Marc Elliott speculate whether the possible increased involvement of Glencore could be the start, given the significant expanse of iron-ore mineralisation, including the potential for meaningful direct shipping ore (DSO) volumes.

It offers one of the few opportunities globally for a substantial iron-ore production base outside of that controlled by the top three – Vale, BHP Billiton and Rio Tinto – yet it remains a long way from production.

Last year, Equatorial Resources CEO John Welborn urged junior iron-ore producers in Gabon, Cameroon and the Republic of Congo (ROC) to work together to ensure that export markets could access the region’s minerals, with the Metal Bulletin’s ‘Steel First’ reporting his view that iron-ore exploration companies Sundance Resources, Core Mining and the government of Gabon needed to consolidate to maximise the potential of the rich craton.

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BSG Says Guinea Preparing to Strip Rights to Vale Mine Venture – by Jesse Riseborough (Business Week – March 25, 2013)

http://www.businessweek.com/

BSG Resources Ltd., a company controlled by Israeli billionaire Beny Steinmetz, said the government of Guinea is preparing to strip its joint venture with Vale SA (VALE5) of the rights to its mining assets in the country.

A new government agency, Comite Technique de Revue des Titres et Conventions Miniers, or CTRTCM, has “been entrusted with the task of preparing the expropriation of VBG’s assets,” closely held BSG said today in a statement, referring to its venture with Vale, the world’s biggest exporter of iron ore.

The venture is planning a $10 billion iron ore mine in the country at Simandou and the dispute with the government comes amid a review into the agreements signed with mining companies. The company’s president was recently barred from entering the country “on baseless grounds of domestic security,” it said today. “The denial of entry is only the latest of a number of illegal acts by the Government of Guinea,” including the creation of CTRTCM, BSG said.

It’s “the latest example of an illegitimate government resorting to harassment to make it impossible for BSG Resources, and its VBG joint venture, to exercise their contractual rights legitimately awarded in Guinea,” the company said.

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Quebec Innu file $900-million lawsuit against Iron Ore Co. of Canada – The Canadian Press (Globe and Mail – March 21, 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.

MONTREAL – Two Quebec Innu communities have filed a $900-million lawsuit against the Iron Ore Co. of Canada, claiming the miner has violated its rights for nearly 60 years.

The Innu First Nations of Uashat Mak Mani-Utenam (Uashaunnuat) and Matimekush-Lac John (MLJ) said the IOC, which is majority-owned by Rio Tinto, caused harm by operating a large mining complex and railway on traditional territory (Nitassinan) in northeastern Quebec and Labrador since the 1950s without their prior consent.

The mining complex and activities are located in the communities of Schefferville, Labrador City and Sept-Îles.

“IOC and now Rio Tinto are the companies that have inflicted the most harm on the Uashaunnuat and MLJ and caused the most damage to our Nitassinan,” vice-chief Mike McKenzie of Uashat Mak Mani-Utenam said in a statement on Wednesday.

The lawsuit and a motion seeking an injunction to stop all mining activity were filed Monday in Quebec Superior Court. They claim that IOC’s mines and other facilities have ruined the environment, displaced members from their territory and prevented them from practising their traditional way of life.

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There’s lots more iron ore to mine, says DNR expert – by Anna Kurth (Hibbing Daily Tribune – March 18, 2013)

http://www.virginiamn.com/

HIBBING — Iron Range residents have been mining iron ore on the Mesabi Range since 1892. And before that, iron ore was mined from the Soudan Underground Mine near Tower since 1884.

And Peter Clevenstine believes they could be doing so for another hundred years. Clevenstine, manager of engineering and mineral development for the Minnesota Department of Natural Resources Division of Land & Minerals, spoke Thursday about iron ore resources to area residents at a Lunch and Learn session put on by the Hibbing Area Chamber of Commerce and the Society of Mining, Metallurgy & Exploration.

The iron mining business is booming in Minnesota. In 2001, the state took in $10 million in mineral revenue for the first time. Last year, the state collected just more than $50 million in mineral income. About 98 percent of it came from iron ore.

“Will resources continue to support this higher level of activity?” he asked. “… I think we could end it right now and say ‘yes, there’s more ore and things are looking very bright for the communities.’”

The Minnesota mining business is benefiting from three factors — an increase in world demand, industry consolidation and the Mesabi Range’s competitive advantage.

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UPDATE 2-Big miners:slower China steel growth to weigh on iron ore – by James Regan and Manolo Serapio Jr. (Reuters U.S. – March 19, 2013)

http://www.reuters.com/

PERTH, March 19 (Reuters) – Australia’s big iron ore miners have cautioned that China can no longer be counted on for unchecked opportunity, warning of volatile markets and softer prices as growth in China’s steel production slows.

The big miners are sticking to aggressive expansion plans to feed Chinese demand for iron ore, even after the market was rattled for much of last year by doubts over future demand from China.

Rio Tinto , BHP Billiton and Fortescue Metals Group, the world’s second, third and fourth biggest iron ore miners behind Brazil’s Vale, plan to add a combined 235 million tonnes of new mine capacity by 2015, nearly equal to Rio’s total output in 2012.

“We’re seeing steel demand growth slowing inevitably. That is going to put downward pressure on iron ore prices,” Greg Lilleyman, Rio’s head of Pilbara iron ore operations, told a conference here on Tuesday.

“We’re going to see downward pressure in the second half and perhaps beyond, but we still see pretty strong prices,” he added. BHP’s Tony Ottaviano, vice president of planning, said iron ore prices would “remain volatile” as more supply hits the market at a time of moderating Chinese demand.

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