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COLUMN-Indonesia to make it even harder for foreign miners – by Clyde Russell (Reuters India – April 23, 2014)

http://in.reuters.com/

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

LAUNCESTON, Australia, April 23 (Reuters) – Indonesia’s decision to start cancelling investment treaties with 62 countries has passed with little comment, but the move may have a greater impact than the recent banning of mineral ore exports.

Indonesia last month kick-started the process of terminating all of its bilateral treaties by notifying the Netherlands that its agreement to protect and promote investment would end in 2015, and signalling that the others would end as soon as possible.

The agreements, which are common between states, protect the rights of investors in each other’s country, and typically include clauses about fair treatment, no expropriation and guarantees that profits can be repatriated.

Most importantly for many investors in countries like Indonesia, with its patchy record on legal certainty, is the right of appeal to the Washington-based International Centre for Settlement of Investment Disputes (ICSID).

Among the countries that have treaties with Indonesia are major foreign investors including China, India, Australia, Britain, Singapore and Russia. However, the United States and Japan are among nations that don’t have agreements.

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[Norilsk Russia and Nickel Mining] Life behind closed doors in the Arctic is…..fun! – by Kate Baklitskaya (Siberian Times – April 22 2014)

http://siberiantimes.com/home/

Norilsk is home to the world biggest mining and metallurgy complex, and is shut off from the world in more ways than one.

From deep in Soviet times, it was ‘closed’ to outsiders, and currently remains exceptionally hard to visit for foreigners. It appears on lists of the top ten most polluted cities in the world, and yet has no road or rail connections to the ‘mainland’, as the rest of Russia is known here, and the sea port Dudinka, which is 100 km from Norilsk is closed for nine months a year. Yet, intriguingly, the 177,000 people living in Norilsk – which accounts for two per cent of Russia’s entire GDP – seem more contented than many others in Russia.

On a Saturday night, local photographer Nadezhda Rimskaya, 32, goes to OverTime bar to see the local rockabilly band. Nadezhda graduated from a college in St Petersburg but decided to return home and has been working here for the last four years. The concert finishes after midnight and the group of young people decide to go for a late dinner.

Luckily there are places where the kitchen remains open after midnight – for example Maxim pub. Indeed, Moscow-level restaurants and night clubs, bars and coffee shops, are increasing in Norilsk powered by the high demand, surprising as this may seem.

‘Norilsk misses just two things – oxygen and the internet’, says Nadezhda on her night out, referring to the general lack of oxygen in the air in the north and the absence of the high speed internet in the city. Everything else is fine here and in many ways much better than in many Russian cities. I’m honestly surprised when I hear people say that Norilsk is ‘horrible’. That’s just a misinformed stereotype.’

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Indonesian ban on unprocessed ore exports may help Vale – (CBC News Sudbury – April 17, 2014)

http://www.cbc.ca/sudbury/

A new commodities report projects a boost in the price of nickel over the next three years — and that will have an impact on mining companies in Sudbury.

The projected price hike is connected to what’s happening overseas in Indonesia, where that country recently put a ban on exports of unprocessed ore—an effort to encourage foreign investment in domestic refining activity.

The country produces about 28 per cent of the world’s nickel, so its withdrawal from the global market marks a significant drop in supply. Recent nickel prices have reflected this new reality, as it reached a six-month high this week at $8.11/lb.

“I have revised upward my price forecast for 2015 to $9 a pound,” said Patricia Mohr, a commodities specialist with Scotiabank.  “We started this year at prices just a little above $6, so it does represent quite an improvement.”

Miner Vale has operations in Indonesia, but spokesperson Cory McPhee said the company won’t be affected by the ban. “We’re a company that actually produces a refined nickel product in Indonesia,” he said.

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Nickel Prices Hit 14-Month High – by Ira Iosebashvili (Wall Street Journal – April 18, 2014)

http://online.wsj.com/home-page

Indonesia Ban, Russia-Ukraine Tensions Stoke Concerns Over Supply

Nickel prices are soaring amid growing concern about the availability of supply from Indonesia and Russia, the top two producers of the metal.

The price of the industrial metal, which is used to make steel stronger and more resistant to corrosion and extreme temperatures, hit a 14-month high on Thursday, bringing year-to-date gains to 29%.

Driving up prices in the $25 billion nickel futures market is a supply shortfall caused by a recently introduced export ban in No. 1 producer Indonesia, analysts and investors say. Further adding to the worry about global supplies is the situation in Ukraine: Some traders fear that nickel miners in Russia, which ranks second in terms of output, could face sanctions if tensions escalate. Together, the two countries account for more than a third of world nickel output.

If the export ban isn’t quickly resolved, analysts and investors expect supplies of the metal to fall short of global demand for the first time since 2010. Tensions regarding Indonesia and Russia have put the nickel market on a different footing than that of many other industrial metals, such as aluminum, where supplies are more plentiful.

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BHP Needs Rebound, Not Spinoffs, Amid Metal Slump: Real M&A – by Angus Whitley and Elisabeth Behrmann (Bloomberg News – April 17, 2014)

http://www.businessweek.com/

A spinoff of BHP Billiton Ltd.’s (BHP) least-loved assets may do little for shareholders of the world’s largest mining company.  BHP, which is wringing out costs after a decade-long mining boom ended, said this month it’s studying “structural options” to help narrow its focus to four commodities including iron ore. With mines aging and new oil and gas fields becoming harder to find, BHP’s return on invested capital has sunk to the lowest since 2003, according to data compiled by Bloomberg.

Separating the nickel, manganese and aluminum assets from BHP probably wouldn’t boost profit at either the new or old entity, said Sanford C. Bernstein Ltd. Profit margins for the unfavored business have evaporated at the bottom of the commodity cycle and CLSA Asia-Pacific Markets said a spun-off company may be valued at $7.5 billion, just 4 percent of Melbourne-based BHP’s market value.

“There’s a long history of the larger companies succumbing to the cyclical pressures,” John Robertson, director at EIM Capital Managers Pty in Melbourne, said by phone. “If you’re going to float off a large chunk of assets that currently have a low return on capital, unless somebody’s got a magic wand, it’s really not going to do much.”

In 2011, as China devoured everything from iron ore to copper to feed economic expansion, BHP’s return on invested capital was 35 percent, Bloomberg data show. The figure slumped to 10 percent two years later because of slower Chinese growth and costs that were still aligned with a resources boom.

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Scotiabank raises nickel price outlook in light of Indonesian export ban – by Craig Wong (Canadian Press/CTV News – April 14, 2014)

http://www.ctvnews.ca/

OTTAWA — Scotiabank is raising its outlook for the price of nickel — a key component in stainless steel — following an Indonesian export ban on unprocessed ore that took effect earlier this year. Nickel prices have been rising following the Indonesian ban that was enacted in an attempt to encourage foreign investment in ore processing in the country.

“While the export ban was announced more than four years ago with an unchanged starting date of January 2014, few market observers, including ourselves, believed that Indonesia would have the resolve to stick with this agenda,” Scotiabank said in a report Monday.

“However, after three months and no signs of the ban being eased or watered down, the nickel market has begun to panic, with prices moving up sharply.”

The bank said it now expects nickel to average US$7.66 per pound this year, up from earlier expectations for US$6.75. Scotiabank also raised its outlook for 2015 to US$9 from US$7 for 2016 to US$10 from US$7.50. The price of nickel was US$6.82 per pound last year.

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COLUMN-BHP’s “unloved” assets may be better long-term bet – by Clyde Russell (Reuters U.K. – April 14, 2014)

http://uk.reuters.com/

LAUNCESTON, Australia, April 14 (Reuters) – “Unloved” was a word that popped up several times in relation to BHP Billiton’s mooted plans to spin-off its non-core aluminium, nickel and manganese businesses.

It’s worth looking at the language used to describe and frame corporate plans as this is more often revealing that the bland statements companies tend to issue.

BHP Billiton didn’t use the word “unloved” itself, that was the description applied by news outlets, among them Reuters, the Sydney Morning Herald and the Wall Street Journal.

What BHP Chief Executive Andrew Mackenzie did say was the world’s largest mining company was looking at a range of options in the “next phase of simplification,” but would only pursue those that enhanced shareholder value.

BHP has identified four key pillars of its business – iron ore, copper, coal and petroleum – with potash a potential fifth. This leaves the so-called unloved assets as aluminium, alumina, bauxite, nickel and manganese.

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NEWS RELEASE: Royal Nickel Gains Exposure to the Drill-Ready Aer-Kidd Ni-Cu-PGE Project in Sudbury Basin

rr-royal nickel final 500Reminder: RNC will host a conference call/webcast today at 11:00 a.m. (Eastern time) to provide a nickel market update and discuss recent RNC news (access information below)

TORONTO, April 14, 2014 /CNW/ – Royal Nickel Corporation (“RNC”) (TSX: RNX) is pleased to announce it has gained exposure to the highly prospective Aer-Kidd nickel-copper-platinum group metals project in Sudbury through the acquisition of a 25% interest in Sudbury Platinum Corporation (“SPC”) for a consideration of CDN$1.5 million.

SPC, a private subsidiary of Transition Metals Corp., holds an option to earn up to 70% of the Aer-Kidd property.

“Opportunities to participate in compelling Sudbury area sulphide exploration plays such as Aer-Kidd are rare and I am pleased that RNC will gain exposure to the upside potential of this promising project. I am very enthusiastic about Aer-Kidd’s untested potential at depth given its location on the Worthington offset dyke between known high grade Ni-Cu-PGE resources at the Totten mine (Vale) and the Victoria project (KGHM),” said Mark Selby, interim President and CEO of Royal Nickel Corporation.

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BHP polishes up nickel unit as demerger talk swirls – by James Regan (Reuters India – April 11, 2014)

http://in.reuters.com/

SYDNEY, April 11 (Reuters) – Breakthroughs in the way BHP Billiton processes nickel ores could help the world’s biggest miner find a buyer for its ailing Nickel West division in Australia.

Nickel West is among businesses that also include aluminium and manganese which BHP has grouped into a single division set aside in 2012 for underperforming assets deemed non-core to its portfolio. BHP has said it is actively studying the “next phase of simplification” of the company but declined to comment on media reports that senior executives favoured a demerger.

Chief Executive Andrew Mackenzie has said BHP will focus on its large iron ore, copper, coal and petroleum businesses, while selling off smaller, less profitable operations. Macquarie Bank last month in a research note put a value of $4.6 billion on the nickel assets.

Improvements in the way BHP mines nickel together with better market dynamics and exploration successes could save Nickel West from closure.

A programme at Nickel West to extract full value from ore that would otherwise be uneconomic to treat due to high contents of talc is opening up more of BHP’s rich Mount Keith and Yakabindie deposits in Western Australia for mining, enhancing the potential appeal to outside investors.

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Nickel the new market star – by Peter Kerr (The Age – April 10, 2014)

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

Nickel’s transition from laggard to market darling is continuing apace, with a perfect storm of factors driving positive sentiment for the metal.

Australia’s three pure-play nickel stocks are surging this week on the back of a rising commodity price, elections in Indonesia and even a hint of takeover speculation.

The fun started in January, when one of the world’s major nickel suppliers, Indonesia, imposed a ban on exports of some unprocessed types of nickel, in a bid to try and lure miners to build processing facilities on Indonesian soil.
After years in the doldrums, the reduced exports sparked a rise in nickel prices that is still underway three months later.

With a 20 per cent rise under its belt since January, the benchmark nickel price (measured at the London Metal Exchange) is now at its highest price in 54 weeks.

LME Nickel for three month delivery was $16,718 per tonne this morning, which equates to about $US7.58 per pound in the local parlance.

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Activist investor George Armoyan calls for ouster of Sherritt CEO – by Peter Koven (National Post – April 10, 2014)

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

TORONTO – Activist investor George Armoyan has called for the chief executive of Sherritt International Corp. to be fired, raising the animosity between the two sides ahead of a scheduled proxy showdown at next month’s annual meeting. In a circular filed Wednesday, Mr. Armoyan revealed he has been pushing Sherritt to replace CEO David Pathe with a “qualified executive who has operating experience.”

“The guy is not an operator; he’s not a leader. He was just put in there by default,” Mr. Armoyan, the CEO of Clarke Inc., said in an interview. He added that some Sherritt insiders, including former directors, have indicated to him that there is a vacuum of leadership at the company.

He said he has nothing against Mr. Pathe, but simply does not think he is CEO material. He noted that Mr. Pathe was an associate lawyer on Bay Street who joined Toronto-based Sherritt as assistant general counsel in 2007. He kept getting promoted, and six years later he was CEO. In Mr. Armoyan’s mind, he is not qualified to lead a mining company and Sherritt could recruit a much stronger candidate.

Sherritt did not comment on Mr. Armoyan’s plan to replace Mr. Pathe, but did state that the activist has not provided “any alternative to Sherritt’s current strategic plan or any credible ideas to increase shareholder value.” Both sides have said they are committed to cutting costs and reducing debt.

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UPDATE 2-Russia’s Norilsk sees nickel price recovery in 2014 – by Polina Devitt (Reuters U.S. – April 7, 2014)

http://www.reuters.com/

MOSCOW, April 7 (Reuters) – Norilsk Nickel, the world’s biggest producer of nickel and palladium, sees nickel prices recovering this year, it said on Monday after reporting a 64 percent drop in net profits due to write-offs.

The Russian firm, part owned by Chief Executive Vladimir Potanin and aluminium giant Rusal, had to trim spending last year and focus on its lucrative Soviet-era operations in Russia’s far north to cope with weak prices for its key metals.

“Last year was a challenging and volatile year in commodity markets with prices for the majority of metals in the Norilsk Nickel portfolio declining that had a clear impact on our top-line performance,” Potanin said in a statement.

The management is cautiously positive on 2014 with improving commodity prices in the beginning of the year but is also concerned over a deteriorating emerging market risk appetite in the global investment community, he added. Norilsk has not been hit by the political tension over Ukraine so far, but all Russian companies would suffer should the situation escalate, its deputy chief executive, Andrei Bougrov, said last week.

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UPDATE 1-BHP Billiton weighs spin-off of unloved assets – by Sonali Paul (Reuters U.K. – April 1, 2014)

http://uk.reuters.com/

MELBOURNE, April 1 (Reuters) – BHP Billiton is weighing a range of options to simplify its portfolio of assets, including a possible spin-off of unwanted businesses such as aluminium and nickel into a separate company, the top global miner said on Tuesday.

“We continue to actively study the next phase of simplification, including structural options, but will only pursue options that maximise value for BHP Billiton shareholders,” the company said in a statement.

Chief Executive Andrew Mackenzie has said over the past year that the company plans to focus on its large iron ore, copper, coal and petroleum businesses, while selling off smaller, less profitable operations.

The company’s statement on Tuesday came shortly after The Australian Financial Review newspaper reported that BHP was considering spinning off non-core assets into a separate company, offering shares to existing shareholders.

BHP shares rose as much as 2.2 percent to a three-week high after the report. They last traded up 1.7 percent at A$37.10 in a weaker broader market. Spinning off a company with non-core assets would allow BHP to pare down at a time when it may be difficult to find buyers willing to pay a good price. It could also help flush out a buyer.

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Mine promises hope for Thompson – by Jonathon Naylor (Brandon Sun – March 27, 2014)

http://www.brandonsun.com/

THOMPSON — As one door closes, will another open? That’s the fundamental question facing this hearty northern mining city.

Nickel giant Vale’s announcement that it will shut down its smelter and refinery at the end of 2014 (later revised to the end of 2015) raised grim speculation about Thompson’s future. But overlooked is the fact that while those surface operations are nearly tapped out, Vale is concentrating on its subterranean prospects.

“Our recent exploration activities have focused on increasing the confidence of near-infrastructure reserves and resources with the goal of maintaining current production levels from our existing mines,” says Ryan Land, the personable manager of corporate affairs for Vale’s Thompson operations. “This strategy will continue in the near term, and will be re-evaluated on an ongoing basis in response to nickel market conditions.”

Not only does Vale still run three Thompson-area mines — T-1, T-3 and Birchtree — there remains the irresistible promise of a fourth, known as 1-D, a $1- billion-plus mega-development.

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Stars Aligned for Nickel Bull Market – by Tim Maverick (Wall Street Daily – March 27, 2014)

http://www.wallstreetdaily.com/

Russian President Vladimir Putin’s actions have certainly stirred the pot in the energy market, as our Investment Director, Karim Rahemtulla, recently pointed out. And now, the ripples have spread far beyond the energy market to other commodity markets.

You see, the threat of Western sanctions against Russia has put renewed focus on a base metal that’s been in the doldrums for years… nickel.

That’s because the world’s largest producer of the metal, which is used to make stainless steel and nonferrous alloys, happens to be Mother Russia’s Norilsk Nickel (NILSY). NILSY mines a whopping 17% of the world’s nickel each year. Sanctions against such a huge source of nickel would indeed be a big deal, and share prices are reacting accordingly.

Nickel is suddenly in bull market mode, and prices recently hit their highest level since April at $16,230 per metric ton on the London Metals Exchange (LME). That represents a gain of more than 20% since nickel’s low on January 9, at $13,334 per ton, and meets the technical definition of a bull market.

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