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Six of the best: good news stories that lit up 2016 – by David McKay (MiningMX.com – December 22, 2016)

http://www.miningmx.com/

THERE was a good deal of trepidation in January 2016 as analysts and executives forecast another year of nail-biting austerity. And whilst it’s not yet beer and skittles for the world’s mining sector, there were some moments of cheery illumination of which the following is a rough sketch.

1. Ivan Glasenberg: The recovery of Glencore.

Glencore’s €10.5bn swoop for 19.5% of Russian oil company, Rosneft this month signalled a return to deal-making for the Swiss-based firm which also brought the curtain down on its self-help programme.

Some 18 months earlier short traders ran Glencore’s stock down 27% using fears about runaway debt for tinder. The response from Glencore was described in November by one analyst as ‘stunning’.

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JPMorgan-Led Fund Shines as Glencore Survives ‘Darkest Days’ – by Luzi-Ann Javier and Susanne Barton (Bloomberg News – December 20, 2016)

https://www.bloomberg.com/

When shares of mining companies including Freeport-McMoRan Inc. to Glencore Plc were collapsing last year, a small fund run by JPMorgan Asset Management chose to hold on. Now, it’s reaping the rewards of a metals rebound that’s turning bears into bulls.

Old Mutual-JPM Natural Resources Fund has delivered a return of 79 percent this year, beating all but two of the 150 funds it competes with in North America and Western Europe that are tracked by Bloomberg. Glencore, one of its biggest holdings, has tripled after plunging 70 percent in 2015. Freeport lost about as much last year, only to double in 2016.

“Even during the darkest days at the back end of last year and two weeks of January, we held in there with mining companies that people thought were going to go bust,” said James Sutton, who helps oversee $2.5 billion in natural resources assets run by JPMorgan, including Old Mutual.

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Mining heavyweight Glencore could leave Sudbury in 5 years, says VP (CBC News Sudbury – December 19, 2016)

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

Company’s vice-president seeking $1.4 B from investors to continue deep mining operations in Sudbury

Glencore’s vice-president Peter Xavier says unless the company can raise $1.4 billion from investors, the life of its mining operations in Sudbury will end in 2021.

But in the face of “disruptive changes” from Asian exports — which Xavier estimates supply between one-third and a quarter of the world’s nickel — the company is trying to extend its presence by opening two new deep mining projects in the area.

And to mine deeper, the company needs to raise money. “The challenge for us in our future operations are at depth so you can imagine finding the time to find to develop, the challenge economically to bring those to a positive business case are getting more difficult,” Xavier said.

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[Sudbury Basin] Norman West find ‘promising’ – Glencore – by Mary Katherine Keown (Sudbury Star – December 15, 2016)

http://www.thesudburystar.com/

Norman West, located north of Capreol, is Glencore’s current pearl in the oyster in the Sudbury area, city councillors were told Tuesday.

“We got a pretty significant hit there last year and we’ve been following up ever since, and it’s looking more promising by the day,” said Peter Xavier, vice president of Sudbury Integrated Nickel Operations. “There’s still quite a bit of drilling to do from surface before we get to the next step.”

While the local operations are solid, Xavier did point out a few challenges the company faces. For example, low nickel prices and high hydro costs, as well as regulatory uncertainty around climate change and emissions can cause headaches.

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Glencore digging deep to stay in Sudbury: VP – by Darren MacDonald (Sudbury Northern Life – December 13, 2016)

https://www.sudbury.com/

With Nickel Rim expected to close in 2021, company is working on developing deeper mines

Glencore is working hard to develop new deposits in Sudbury ahead of 2021, when current deposits will largely be exhausted, city councillors were told Tuesday. That was the word from Peter Xavier, vice-president of the company’s Sudbury Integrated Nickel Operations, who updated the city on the state of their work in the city.

Glencore is the current owner of the mines, which date back to the late 1920s when it was owned by Falconbridge Ltd. Their largest deposit is the Nickel Rim South Mine, a deposit discovered in 2001 and brought into production in 2010.

“It’s the financial base of our operation,” Xavier said, adding they have done work in attempts to extend its life. “Unfortunately, those efforts haven’t proved to be successful.”

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Nippon Steel agrees with Glencore, Teck on 43 percent rise in first quarter coking coal – by Yuka Obayashi (Reuters U.S. – December 13, 2016)

http://www.reuters.com/

TOKYO – Japan’s biggest steelmaker Nippon Steel said on Tuesday it has agreed with Glencore Plc and Teck Resources Ltd on a coking coal price for first quarter of 2017 supplies that is 43 percent higher than the previous quarter.

The companies agreed on a price of $285 a ton for supplies of Australia’s premium hard coking coal for the January-March quarter next year, a Nippon Steel spokeswoman said, without giving any details.

If other international steelmakers follow this price, it would be the highest industry quarterly benchmark since the fourth quarter of 2011.

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Russia Sells $11 Billion Stake in Rosneft to Glencore, Qatar – by Elena Mazneva and Ilya Arkhipov (Bloomberg News – December 8, 2016)

https://www.bloomberg.com/

Commodity trader Glencore Plc and Qatar’s sovereign wealth fund agreed to buy a 10.2-billion euro ($11 billion) stake in Russia’s largest oil producer from the state in a triumph for President Vladimir Putin over sanctions imposed by the West.

The surprise deal gives the buyers a 19.5 percent stake in Rosneft PJSC, which the U.S. and European Union have targeted with punitive measures, and is the biggest foreign investment in Russia since the crisis in Ukraine. It also marks a stunning return to deal-making for Glencore Chief Executive Officer Ivan Glasenberg a little more than a year after his company was forced to raise cash from shareholders.

Glencore said in a statement Wednesday it would commit 300 million euros in equity, with the rest coming from the Qatar Investment Authority — itself Glencore’s largest shareholder — and bank financing.

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Glencore Pivots From Disposals to Dividends as Stock Rallies – by Jesse Riseborough (Bloomberg News – November 29, 2016)

https://www.bloomberg.com/

What a difference a year makes. Glencore Plc fended off questions in 2015 about its survival as commodity prices hit new lows, and now there’s talk that the company’s turnaround plan has gone so well that it could be months away from paying dividends again. Surging coal and zinc prices, a rebounding stock price and shrinking debt pile made Glencore one of mining’s biggest success stories this year.

Chief Executive Officer Ivan Glasenberg, who will provide an update on corporate strategy on Thursday, spent the past year ticking off items outlined in a crisis-induced debt reduction plan, including a goal to sell $4 billion to $5 billion in assets. The market rewarded him for it, with the stock tripling in 2016 and clawing back almost all of last year’s losses.

Now, backed by a strong rebound in profits from its coal and zinc divisions, Glasenberg is in a position to pay back shareholders for supporting him through Glencore’s darkest days as a publicly traded company.

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Miners go green in hunt for cost efficiencies, using renewable energy sources in far-flung locations – by Sunny Freeman (Financial Post – November 29, 2016)

http://business.financialpost.com/

Mining companies are digging into renewable energy as a way to reduce costs and offset the impact of volatile conventional fuel prices as the world shifts to a low-carbon economy.

Industry executives gathered last week at the Energy and Mines World Congress in Toronto focused on how innovation in energy – which can comprise as much as one-quarter of operating expenses in remote locations – can make mines more cost-effective and environmentally sustainable. “I think we will be surprised at the speed at which mining companies will start to adopt these things,” said Adriaan Davidse, mining innovation leader at Deloitte.

Amid rapid improvements in renewable technologies, wind and solar prices have fallen dramatically in recent years and are expected to keep dropping. In many parts of the world —especially in remote locations – the alternative energy solutions are becoming cheaper than conventional sources.

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Nickel will recover: Glencore’s Sudbury VP – by Mary Katherine Keown (Sudbury Star – November 25, 2016)

http://www.thesudburystar.com/

Nickel may be down, but it is not out and there are still plenty of opportunities to be found.

Peter Xavier, vice president of Sudbury Integrated Nickel Operations, a Glencore Company, delivered the keynote address at Thursday’s Chamber of Commerce luncheon. He said Sudbury continues to be the “meat and potatoes” of its nickel operations.
“(The company), more than ever, is driven out of Sudbury,” Xavier said.

Nickel prices dive and peak, but Xavier said that is not just due to demand. There are also structural changes within the market to consider. In recent weeks, nickel has surged to just more than $5 a pound US.

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A year on, Glencore emerges undiminished by asset sales – by David McKay (MiningMx – November 8, 2016)

http://www.miningmx.com/

THE sale by Glencore of its GRail coal haulage facilities in Australia for some $870m sees the Swiss-headquartered group lower net debt by $5.4bn through asset sales alone in just over a year, some $400m in excess of its target.

This is a quite breathtaking response to the crisis of last year in which shares in Glencore fell 16% in a day amid concerns among its key shareholders that its net debt target of $27bn by end-2016 was insufficient.

The company raised $2.5bn through an equity issue, and immediately cut the dividend. It then set down asset sales, adjusting its net debt target to the ‘low 20s’, meaning $21bn to $23bn. It could, in fact, do much better than that target before the year is out.

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Major mining assets change hands after commodity rout (Reuters U.s. – November 8, 2016)

http://www.reuters.com/

Major miners are selling assets after a global commodities rout last year left them with high levels of debt. A recovery in raw materials prices has taken away some of the pressure to sell, however, and deals have slowed.

China, whose stimulus package spurred this year’s commodities rally, is the biggest potential buyer. Following is a list of the main mining companies, some of the biggest sales so far and what assets are on offer:

BHP BILLITON LIMITED

Market capitalization: 72.7 billion pounds ($90.3 billion)(Reuters data)

Net debt: $26.1 billion (company reported in August)

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Glencore Raises Profit Forecast for Commodity-Trading Unit – by Jesse Riseborough (Bloomberg News – November 3, 2016)

http://www.bloomberg.com/

Glencore Plc, the world’s biggest commodity trader, improved its earnings forecast for its trading division after coal and zinc prices rallied to the highest in at least four years.

Earnings before interest and tax will be $2.5 billion to $2.7 billion for this year, Baar, Switzerland-based Glencore said in a third-quarter production statement Thursday. That’s a slight improvement on its previous estimate of $2.4 billion to $2.7 billion. The company didn’t give a reason for the revised forecast.

“This reflects improved trading conditions within the coal division,” Credit Suisse Group AG analysts led by Liam Fitzpatrick wrote in a note. Billionaire Chief Executive Officer Ivan Glasenberg has been turning around the business after a troubled 2015 which saw investors dump the stock on concerns its debt was too high to weather a prolonged downturn in commodities.

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10 years after takeover, Vale predicts ‘bright future’ for Sudbury mines (CBC News Sudbury – October 26, 2016)

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

Glencore declines to comment on 10th anniversary since Falconbridge purchase

Despite low nickel prices and rising costs, Vale is forecasting a bright future for its Sudbury mines. This week marks 10 years since the Brazilian iron ore company took over Sudbury-based Inco.

Stuart Harshaw is now Vale’s vice-president of Ontario Operations, but he started his career with the old Inco.He says his company has been good for Sudbury over the last decade and is quick to list off $4 billion in investments in local infrastructure, that he says would have been more difficult for a smaller company.

Most of the last decade has seen gloomy times for the mining sector, with slumping metal prices and rising costs with miners going deeper and deeper into the earth.But Harshaw predicts a rosy future for Vale operations in Sudbury, while acknowledging that changes lie ahead.

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Glencore secures 48 percent hike in thermal coal price – by James Regan (Reuters U.S. – October 24, 2016)

http://www.reuters.com/

Glencore and Japanese power utilities have settled quarterly thermal coal contract prices at $94.75 a metric ton, up from around $64 last quarter, sources confirmed on Tuesday, reflecting a surge in spot prices.

The Japanese buyers agreed to pay the higher price to secure supplies of high quality thermal coal from Australia, the Financial Times reported overnight. Glencore reached the settlement with Japan’s Tohoku Electric following two months of negotiations, an industry source with knowledge of the matter said.

“We were told it came in at $94.75, which was not unexpected given the surge in spot,” added a coal trader in Sydney.

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