Latin America Mining – Page 100

Grupo Mexico, S.A. de C.V. History (1892 – 2001)

May 15, 2015

For a large selection of corporate histories click: International Directory of Company Histories

Company History: Grupo Mexico, S.A. de C.V. is Mexico’s largest mining company and the world’s third largest producer of copper, fourth largest of silver, and fifth largest of zinc. It also engages in the mining and processing of other minerals, principally gold, lead, and molybdenum. In addition to its holdings in Mexico, Grupo Mexico owns ASARCO, Inc., a company with many mining facilities in the United States and a majority stake in Southern Peru Copper Corporation Grupo Mexico also holds the majority share in Mexico’s longest railway.

Under U.S. Ownership: 1892-1965

Grupo Mexico originated not with a Mexican company but with the activities of the Guggenheim family of the United States, through their M. Guggenheim’s Sons partnership, which had been investing in U.S. mining and smelting operations since 1880. In 1889 Simon Guggenheim persuaded some Mexican mine owners to send their silver ores to the Guggenheim smelter in Pueblo, Colorado. After Congress imposed a heavy duty on imported ores the following year, the Guggenheims established smelters in Monterrey (1892) and Aguascalientes (1895) and first leased, then bought, mines in Mexico yielding lead, iron, silver, and copper.

By 1901 Guggenheim-owned smelters were processing 40 percent of the lead and 20 percent of the silver mined in Mexico. Meanwhile, industrialists in the United States were forming a cartel-like trust of large smelting operations, founded in 1899 as the American Smelting and Refining Co. (ASARCO).

BHP Rejects Supply Restraint in Iron After Glasenberg Salvo – by Jasmine Ng, Martin Ritchie and Jesse Riseborough (Bloomberg News – May 14, 2015)

May 14, 2015

http://www.bloomberg.com/

BHP Billiton Ltd. defended its strategy of expanding iron ore output into an oversupplied market as prices decline, saying that the company’s approach was rational and it wouldn’t countenance cutting back on output.

“Our performance will be dependent on being the most efficient supplier and it shouldn’t be dependent on supply restraint,” Alan Chirgwin, iron ore marketing vice president, told a conference. “We have high-quality resources. We have a management team that’s operating in a very cost-disciplined way. We should be taking advantage of those things.”

Iron ore slumped 40 percent in the past 12 months as BHP and Rio Tinto Group in Australia and Brazil’s Vale SA expanded low-cost output to boost sales volumes and cut costs, spurring a surplus as China slowed. The strategy drew criticism from rivals including Fortescue Metals Group Ltd. and Glencore Plc, which said that the approach damages the industry. It’s also drawn flak from political leaders including Colin Barnett, the premier of Western Australia where BHP and Rio operate mines.

“What we’re doing very clearly is we’re operating our enterprise in a very economically rational way,” Chirgwin said in Singapore on Thursday. “We took action, so it wasn’t just words. In 2011, that’s the last time our board approved billions of dollars of additional investment in expansion.”

7 Police wounded in growing protest against Peru mining project (Fox News Latino – May 13, 2015)

May 14, 2015

http://latino.foxnews.com/index.html

Seven police were wounded in fresh clashes with local residents protesting Southern Copper’s Tia Maria mine project in the Peruvian province of Islay, part of the southern region of Arequipa.

National Police Gen. Enrique Blanco told Radio Programas del Peru that slingshot-fired rocks struck the police Tuesday in Cocachacra, where earlier that morning officers took down barricades blocking the entrance to the town, the epicenter of anti-mining protests that have left three dead and more than 200 injured.

He said four of the officers were taken by helicopter to a hospital in the regional capital of Arequipa, whose inhabitants launched a 72-hour protest action Tuesday in support of the 52-day-old “indefinite strike” in Islay.

In Lima, Peru’s government suspended talks with Southern Copper, a unit of Mexican mining giant Grupo Mexico, due to suspicion of possible secret negotiations between the mining company and protest organizers aimed at lifting the strike in exchange for monetary compensation.

The national government also froze the bank accounts of municipalities opposed to the project to prevent them from bankrolling the protests.

Canadian mining company spied on opponents and activists in Brazil – by Heriberto Araújo and Anna Veciana (The Guardian – May 13, 2015)

May 13, 2015

http://www.theguardian.com/international

Mining company Kinross’s ambitions to create most productive gold mine in Brazil plagued by health risks and threats to activists and opponents

Paracatu, Brazil – Despite her advanced age, Juliana Morais da Costa still retains enough strength in her hands to hold the heavy bateia. “I began to pan gold when I was five. We started at 5am until 4pm. It was tough work, but I did it because it was the only way to be economically independent,” remembers Morais, 86.

Her home city of Paracatu is the epicentre of Brazil’s mining production, in the north of the state of Minas Gerais, which generates almost one-third of Brazil’s total mining production.

The exploitation of gold started in Paracatu as early as 1722. But the days of the garimpeiros, or gold hunters, are long gone. Since the 1990s the hunt has moved from the river banks to underground deposits. Dynamite, excavators and chemicals replaced the garimpeiros, who were pushed out from a business that had sustained hundreds of families.

In 2005, Canadian company Kinross – which is listed in the New York Stock Exchange and owns gold mines in Chile, United States, Russia and Ghana, among other countries – took over the mining concession in Paracatu.

Anglo Should Exit Iron Ore for its Shareholders, Investec Says – by Firat Kayakiran (Bloomberg News – May 12, 2015)

May 13, 2015

http://www.bloomberg.com/

Anglo American Plc should sell its iron-ore assets and focus on diamond and platinum operations for the benefit of its shareholders, according to Investec Plc. The producer of minerals from Australia to Brazil could raise as much as $4.66 billion selling assets in South Africa and Brazil, analysts Marc Elliott and Hunter Hillcoat said.

“A disposal of the entire iron ore portfolio would be a game changing transaction, strengthening the balance sheet, reducing the risk profile of the group and potentially enabling a substantial re-rating,” the analysts said in a note.

Iron-ore prices reached a decade low of $47 a metric ton on April 2 before rebounding to $59. Investec forecasts prices will average $55 a ton this year before rising to $80 a ton by 2019.

Anglo, which owns about 70 percent of Kumba Iron Ore Ltd., Africa’s largest producer of the steel-making raw material, in October began shipments from its Minas-Rio mine in Brazil as prices slid after the largest producers including BHP Billiton Ltd. expanded capacity amid slowing demand from China.

Chinese iron ore mines face ‘annihilation’ as BHP, Rio Tinto, Vale boost output – by Jasmine Ng, Feiwen Rong and Jesse Riseborough (Sydney Morning Herald – May 13, 2015)

May 13, 2015

http://www.smh.com.au/

Iron ore production in China is poised to shrink further as cheaper imports and faltering demand threaten to close mines supplying mills in the top steelmaker. Most private mines in China have costs that are too high and produce ore of too low a quality to survive, according to Sanford C Bernstein & Co. Output that fell 20 per cent to 311 million metric tons last year would drop to 271 million tons this year and shrink further next year, Goldman Sachs said.

Iron ore retreated 39 per cent over the past 12 months as Australia’s Rio Tinto and BHP Billiton as well as Brazil’s Vale SA boosted low-cost production to cut costs and protect market share, spurring a glut as China slowed. The outlook for supply, and consequences for miners in China, will be in focus on Thursday as executives from the biggest producers address a conference in Singapore. BHP chief executive officer Andrew Mackenzie warned on Tuesday that lower prices were here to stay.

Georgi Slavov, head of basic resources research at Marex Spectron Group, said in an email: “Mines not part of larger cash or credit line-rich steel groups are facing annihilation. Utilization in China keeps dropping, which means more and more mines are struggling to meet the ends and produce.”

Vale to divide and conquer by lifting high-grade iron ore output – by James Wilson (Financial Times – May 10, 2015)

May 11, 2015

http://www.ft.com/intl/companies/mining

Vale is keen to build up its supply of higher-quality iron ore in a move that could increase pressure on some rival producers in the global market for the steelmaking commodity.

The Brazilian miner is one of a quartet of companies that dominate the global market in iron ore, where prices have plummeted over the past year as a glut of supply — mainly from Australian producers — has encountered weakening Chinese demand.

Vale’s recent indications that it would be prepared to hold back some supply have helped to arrest the slide in the iron ore price, while underpinning a rally in the company’s shares in the past month.

In an interview Luciano Siani, chief financial officer, did not rule out Vale cutting its growth plans for next year. The miner expects to produce 340m tonnes of iron ore this year and has previously estimated that 2016 output will be 376m tonnes.

However, Mr Siani said Vale would be likely to “push to the fullest” its production of the highest grade of iron ore, which commands a premium price from steelmakers. By contrast Vale would be more likely to “manage” its more “standard” iron ore supplies, he said.

Peru Sends 2,000 Police as Copper Project Protests Spread – by John Quigley (Bloomberg News – April 8, 2015)

May 8, 2015

http://www.bloomberg.com/

Peru sent police reinforcements to the Islay province as protests against Southern Copper Corp.’s Tia Maria mine project spread to more towns.

About 2,000 officers are being transferred to the coastal province in southern Peru as street protests against the project entered a 47th day, Interior Minister Jose Perez told reporters.

Southern Copper’s plans to build the $1.4 billion mine in the mountains above Islay’s Tambo Valley, about 780 kilometers (485 miles) south of Lima, are opposed by local farmers concerned that water and air pollution will damage their crops. One person died and four police officers were injured in clashes this week as the unrest spread to the seaside town of Mollendo.

President Ollanta Humala weighed options for declaring a state of emergency in Islay at a meeting Thursday. “We don’t rule out any decision that needs to be taken,” Perez said. “We’re prepared for this decision. More police are arriving at this moment.”

Police used a loader to clear boulders and rocks strewn across the highway between the port town of Matarani and Mollendo, where demonstrators set fire to buses Thursday, according to Canal N. Images broadcast by the Lima-based television station showed protesters blockading a highway Friday as tires burned along the side of the road.

Peru may declare state of emergency in province hit by anti-mining protests (Fox News Latino – May 7, 2015)

May 8, 2015

http://latino.foxnews.com/index.html

Peru’s government is studying the possibility of declaring a state of emergency in the southern province of Islay, where protests against Southern Copper’s Tia Maria project have left two dead and nearly 200 injured in recent weeks.

President Ollanta Humala’s administration is considering adopting a different strategy in response to the clashes in Islay, a province in the Arequipa region where local farmers launched an “indefinite strike” 45 days ago, Energy and Mines Minister Rosa Maria Ortiz told Radio Programas del Peru on Thursday.

“(Declaring a state of emergency) is one of the possibilities being considered. We haven’t decided yet. We’re going to continue discussing this matter at the Cabinet level and with the president,” Ortiz said.

She lamented that negotiations between the government and opponents of the copper project broke down once again on Thursday, when local authorities and grassroots leaders in Islay abandoned the talks without reaching an agreement.

The minister blamed the mine opponents for the failure of the talks, saying they had demanded cancelation of the project as a pre-condition.

Vale ups stakes in iron ore war – by Stephen Bartholomeusz (The Australian – May 1, 2015)

May 1, 2015

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

Of far greater consequence to Rio Tinto, BHP Billiton and Australia than Andrew Forrest’s complaints about their volume and cost-driven iron ore strategies is what the “other” major seaborne producer does in response to the crash in iron ore prices.

They might be encouraged by the commentary that accompanied Vale’s first-quarter results overnight.

The Brazilian group is the larger of the three major seaborne iron ore producers and is in the midst of an ambitious and expensive ($US17 billion) program to increase its production by 40 per cent, to almost 460 million tonnes a year from last year’s 327 million tonnes.

As with all the other producers, Vale is slashing costs to try to dampen the impact of the dive in iron ore prices and was able to proclaim that, for the first time in its history, cash costs were less than $US20 a tonne. A significant component of the $US13 a tonne reduction in cash costs was a 20 per cent, or $US4.50 a tonne, fall in freight costs.

Vale has traditionally been competitive with Rio (RIO) and BHP (BHP) in production costs and its ore is generally of higher quality. Its disadvantage has been distance from China and the impact that freight costs have had on its landed costs.

Vale Delays Possible Base-Metal Division IPO – by Paul Kiernan (Wall Street Journal – April 30, 2015)

May 1, 2015

http://www.wsj.com/

Nickel prices have fallen sharply from when the base-metal IPO idea was hatched

RIO DE JANEIRO—Brazilian mining firm Vale SA said Thursday it has pushed back the timeline of a possible initial public offering of its base-metals division after an expected rebound in nickel prices failed to materialize.

Vale had said in December that it was considering selling between 30% and 40% of the division on Toronto’s stock exchange around August. On Thursday, Chief Executive Murilo Ferreira said his management team’s new goal is to be ready to present a recommendation to Vale’s board of directors by the end of this year so that Vale might have the option of carrying out the transaction in 2016.

When they hatched the idea for the nickel IPO, Vale executives were predicting nickel prices would rise to around $21,000 per metric ton. Thanks to higher prices and production ramp-ups at a number of new or troubled facilities, they estimated the base-metals division would generate cash flows of between $4 billion and $6 billion this year.

Chile: Copper bottomed – by Henry Sanderson (Financial Times – April 27, 2015)

May 1, 2015

http://www.ft.com/intl/companies/mining

Facing higher costs and lower prices, copper producers are being asked to improve their environmental record

Black flags hang from the doors of the one-storey red brick houses in Caimanes, a village that lies in the hills north of Santiago on the course of the Pupio stream. The banners are the most obvious sign of a bitter environmental protest against a nearby dam, which holds waste from a copper mine — one of Chile’s largest — high up in the Andes.

Last November, a group of up to 150 villagers took matters in to their own hands and blocked access to the dam for 75 days, as the mine ground out copper — used in everything from smartphones to wiring on construction sites in China.

The campaigners felt confident: the previous month Chile’s Supreme Court had ruled that the London-listed mining company Antofagasta — majority owned by the Luksics, one of the country’s richest families — should either demolish the dam or come up with a plan to allow water to flow into the town.

“We deserve respect, it should not just be the mining company doing what it wants,” says Juan Olivares, vice-president of the committee for the defence of Caimanes, as he plans the group’s next move in the small green-painted room that serves as its headquarters.

Goldcorp Inc shareholder’s back company on “say on pay” – by Peter Koven (National Post – May 1, 2015)

May 1, 2015

The National Post is Canada’s second largest national paper.

TORONTO – After shareholders approved Goldcorp Inc.’s “say on pay” resolution at its annual meeting on Thursday, chairman Ian Telfer fired off a zinger at the proxy advisory firm that recommended against it.

“The ‘Glass Lewis’ is half empty, not half full,” he quipped, referring to Glass Lewis & Co. “Because 90 per cent of shareholders ignored their advice.”

Glass Lewis also advised shareholders to vote against the executive compensation packages at Barrick Gold Corp. and Yamana Gold Inc. And in both cases, an overwhelming majority of investors rejected those plans at annual meetings this week.

But it appears the Glass Lewis recommendation on Goldcorp got little to no traction, as 89 per cent ofshareholder votes were in favour of the company’s compensation plan. Chief executive Chuck Jeannes told reporters after the meeting in Toronto that he was “thrilled” with the result, which is non-binding.

“I was disappointed in the Glass Lewis recommendation. I don’t think it made sense because it was based on a comparison of our financial results with companies outside our sector,” he said.

UPDATE 2- Vale posts $3.2 bln loss on iron ore’s relentless fall – by Stephen Eisenhammer (Reuters U.S. – April 30, 2015)

April 30, 2015

http://www.reuters.com/

(Reuters) – Brazil’s Vale SA , the world’s No. 1 producer of iron ore, on Thursday posted its third straight quarterly loss under pressure from falling prices of the commodity as demand growth from China slows.

The miner reported a net loss of $3.2 billion in the first quarter, compared with a net profit of $2.4 billion in the same period last year. The result compares with a forecast net loss of $2.4 billion according to a Reuters poll.

The first-quarter loss was wider than that in the third and fourth quarters of last year. Vale has been hit by a tumble in the price of the main steel-making ingredient .IO62-CNI=SI, which is near its lowest in a decade having fallen 47 percent in the past 12 months.

Prices have fallen due to huge new capacity from Brazil and Australia that is beginning to flood the market, just as growth slows of Chinese demand for steel.

As well as weaker iron ore prices, Vale said the depreciation of the Brazilian real against the dollar had cost the company $3.02 billion in the quarter.

Brazil’s Vale Considers Cutting Iron-Ore Output – by Paul Kiernan (Wall Street Journal – April 30, 2015)

April 30, 2015

http://www.wsj.com/

Company remains committed to capacity growth, but may freeze some higher-cost production

RIO DE JANEIRO—The world’s largest iron-ore producer gave the strongest signals yet Thursday that it could temper output in the face of an oversupplied global market.

Peter Poppinga, head of the ferrous division at Brazil’s Vale SA, said that while the company remains committed to increasing its annual iron-ore capacity to 450 million metric tons in a few years from around 350 million tons now, it may idle up to 30 million tons of higher-cost production. He reiterated that the strategy was “new” and came in addition to an existing plan to buy less ore from third parties.

Vale and fellow iron-ore majors Rio Tinto PLC and BHP Billiton PLC have been criticized by smaller rivals and many analysts in recent months for increasing their output of the steelmaking ingredient despite stagnating demand from China, the world’s main market. Together the three companies account for some 60% of global iron-ore exports, and all have continued to invest in new supply even as prices collapsed in recent months.

The Brazilian company has faced heat for plowing ahead with a particularly costly, $16.4 billion expansion of its Carajás mining complex in the Brazilian Amazon. Company executives on Thursday again brushed aside suggestions that they might stretch out the project’s timeline.