Australia treasurer would block a Glencore-Rio Tinto merger – by Sonali Paul (Reuters U.S. – April 8, 2015)

http://www.reuters.com/

(Reuters) – Australia’s treasurer has told business representatives he would not allow Glencore Plc to merge with Rio Tinto due to concerns about losing tax revenue, a person familiar with his comments said on Wednesday.

Treasurer Joe Hockey said based on the tax implications he had seen from the treasury, he would not allow a Glencore takeover of Rio, Australia’s second biggest miner and one of its biggest taxpayers, the person said. He declined to be identified due to the sensitivity of the issue.

Treasurer Joe Hockey’s office declined to confirm the comments. Four people said Hockey had spoken at a private meeting on March 30 organized by the Business Council of Australia and including members of the Minerals Council of Australia, but three would not give details.

Glencore approached Rio Tinto about a merger last July that would have created a $160 billion mining and commodities trading giant. Rio revealed in October it had rebuffed the approach, but under UK takeover rules, Glencore is now free to make a new bid, following a six-month breather.

“Any takeover would have to go through the normal processes at FIRB (Foreign Investment Review Board),” a spokesman for Hockey said.

Read more

Mining firms in Sudbury benefit from energy program – by Carol Mulligan (Sudbury Star – April 8, 2015)

The Sudbury Star is the City of Greater Sudbury’s daily newspaper.

Making the Northern Industrial Electricity Rate Program permanent will help Sudbury’s two largest mining companies lower their costs and remain competitive globally, say their executives.

Sudbury Liberal MPP Glenn Thibeault announced Tuesday that the Government of Ontario will keep funding the program, which was to conclude in 2016, to the tune of about $120 million a year.

Twenty-three companies in Northern Ontario — including forestry companies and stainless steel producers — will benefit from the program.

Vale Ltd. will receive about $20 million annually to offset the cost of energy and Glencore’s Sudbury Integrated Nickel Operations will receive about $13 million.

Marc Boissonneault, Glencore vice-president of Sudbury Integrated Nickel Operations, said the program is one of the pieces of a puzzle that will allow his company to continue to mine beyond 2020.

Glencore has said its resources will run out in five years unless it develops two new mines, the Onaping Depth at its Levack complex and an extension of Nickel Rim Mine called the Nickel Rim Depth.

Read more

Miners Offer Bull Rings, Clinics as Protests Ice $25 Billion – by Firat Kayakiran and Andre Janse Van Vuuren (Bloomberg News – March 17, 2015)

http://www.bloomberg.com/

(Bloomberg) — Schools and clinics. Soccer fields and bull rings. Even plump guinea pigs — to eat. From South America to Africa, mining companies are throwing all that and more at communities to quiet growing opposition to controversial projects.

“There’s something like $25 billion worth of projects tied up or stopped,” Mark Cutifani, chief executive officer of Anglo American Plc, said in an interview. “We have to get all those relationships right.”

While opposition to mines is nothing new, the issue is a growing concern for miners like Anglo American and executives are increasingly speaking out. Billions of dollars are at stake, they say. Their opponents say the companies despoil the environment and often fail to benefit local economies, or at least not as much as they claim.

Push-back has been growing since the 1980s, when communities were rarely consulted about new mines. Now, local support is critical, according to Thras Moraitis, head of strategy at Xstrata Plc before its 2013 takeover by Glencore Plc.

“You can’t get a permit without involving full and prior consent of the local communities,” he said. Communities from Peru to South Africa are mobilizing to negotiate more successfully with the companies, according to two studies released late last year. Residents who are relocated to make way for mines are demanding more in return.

Read more

Can Mick Davis build another Xstrata? – by Stephen Bartholomeusz (Business Spectator – March 6, 2015)

http://www.businessspectator.com.au/

Mick Davis’s announcement overnight that his X2 Resources has raised $US5.6 billion could be a signal that he is about to begin the much-anticipated reprising of the game-plan that created Xstrata. Or else it could be another false dawn.

X2 announced that it had successfully completed its “initial” capital raising, securing $US5.6 billion in equity capital from a small number of “word-class” investors to create a new “mid-tier diversified” mining and metals group.

It described the raising, which comprises $US4 billion in committed capital available for immediate drawn-down and $US1.6 billion in conditional equity, as “one of the largest ever first-time raises by a private vehicle”.

The uncertainty about what the raising foreshadows relates to three earlier announcements by X2. The first, in 2013, not long after the merger/takeover of Xstrata by Glencore that saw Davis ousted as chief executive, announced that Noble Group and TPG had agreed to invest $US500 million each in X2.

The second, in March last year, was an announcement that X2 had secured $US2.5 billion in committed capital and another $US1.25 billion in conditional capital from five investors, including Noble, TPG, sovereign wealth and pension fund investors.

Read more

Former Xstrata CEO poised for a comeback with X2 Resources – by Eric Reguly (Globe and Mail – March 4, 2015)

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.

Mick Davis, the mining boss who sold Xstrata to Glencore for $50-billion (U.S.), has reached $5.6-billion in investor capital to finance a mining investment campaign that will almost certainly turn his comeback vehicle, X2 Resources, into an operating company this year.

X2 announced the finish of its capital raising effort from a roster of international “blue chip” investors Wednesday night in London. If debt leverage is added to the figure the new company would have considerable firepower, making it capable of buying assets or operating companies valued at $15-billion to $20-billion.

The $5.6-billion includes $4-billion in committed equity capital that can be spent immediately, and US$1.6-billion that can be spent under certain conditions. A year ago, X2 announced that it had raised $3.75-billion in unconditional and conditional capital, none of which has been spent. The new figure includes the amount raised last year.

The capital comes from 20 investors, of which only two have been identified. They are Noble Group of Hong Kong, one of the world’s largest commodities trading and infrastructure companies, and TPG Capital, the private American investment firm with $65-billion in capital under management. The others are sovereign wealth funds and pension funds, several of which are Canadian.

Read more

UPDATE 2-Trading cushions Glencore from commodity price plunge – by Silvia Antonioli (Reuters India – March 3, 2015)

http://in.reuters.com/

LONDON, March 3 (Reuters) – A 15 percent rise in earnings at Glencore’s trading division partially offset a hit last year from the slide in commodity prices, leaving the mining company’s core profit just two percent lower.

Swiss-based Glencore makes about a quarter of its earnings from commodities trading, which differentiates it from mining rivals and has allowed it to withstand a steep fall in oil and metal prices slightly better than its peers.

Glencore posted 2014 adjusted earnings before interest, tax, depreciation and amortisation (EBITDA) of $12.8 billion, in line with expectations. Earnings at its trading division rose to $3.0 while mining earnings fell 7 percent to $9.8 billion.

The company has also been helped by its relatively small exposure to iron ore, the first major commodity to start a violent downward spiral two years ago.

Still, the more widespread slide in oil and metals prices last year forced Glencore to take a $1.1 billion accounting hit, with about half stemming from a pause in the development of iron ore projects it inherited from Xstrata in 2013.

The rest of the charge was largely due to an oil exploration project in Cameroon and lower platinum prices.

Read more

Rio Tinto boss Sam Walsh: Glencore merger is ‘fantasy’ – by Matt Chambers (The Australian – February 25, 2015)

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

RIO Tinto managing director Sam Walsh says a merger with Ivan Glasenberg’s Glencore will never happen because it would not clear regulatory hurdles even if Glencore came up with an offer that provided value for Rio.

And the mining boss claims BHP Billiton’s planned South32 spin-off, which BHP chief Andrew Mackenzie describes as a “key differentiator”, is just portfolio management that Rio has already completed.

At a Chatham House event in London, Mr Walsh said the much-hyped prospect of Glencore making a bid for Rio when a six-month “put up or shut up” moratorium ends, and then somehow taking Rio over, was fantasy.

“Part of the reason is value but part of the reason is the anti-trust and people who collect tax and what have you, they’re simply not going to let it happen,” he said.

Mr Walsh added that BHP’s failed $US160 billion takeover of Rio in 2007 fell over primarily because anti-trust regulators would not let it happen.

Read more

Guinea’s Simandou Auction to Test Appetite for Iron Ore – by Scott Patterson (Wall Street Journal – February 11, 2015)

http://www.wsj.com/

Bidding for One of the Most Sought-After Deposits Comes Amid Soft Prices

Mining companies struggling with depressed commodity prices are about to have the opportunity to bid for one of the most sought-after iron-ore deposits in the world, testing the industry’s appetite for new iron-ore supply at a time when many experts say the world is awash in the steelmaking component.

The Guinean government plans to auction the northern half of the massive Simandou iron-ore deposit in the next few months, Guinea’s Minister of Mines Kerfalla Yansane told The Wall Street Journal on the sidelines of the Mining Indaba conference in Cape Town, South Africa.

“We’ll put it on the market and call for companies to come and compete,” Mr. Yansane said.

He said Guinea has signed memorandums of understanding with several large industrial companies to build infrastructure to aid the Simandou project, which lies hundreds of miles from the country’s port in Conakry. The project could cost $20 billion to $30 billion, including rail lines, due to its remote location deep in the hills of southeastern Guinea in West Africa, experts estimate.

The iron-ore deposits, which lie in the northern wing of the Simandou mountain range, are at the heart of an international legal dispute.

Read more

Renewable future for mine power shines bright – by Simon Rees (MiningWeekly.com – February 10, 2015)

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

TORONTO (miningweekly.com) – Renewable power is reliable, proven and continues to offer the mining industry an attractive means to obtain lower-cost energy at remote operations, Hatch director of renewable power Michel Carreau told an audience at a seminar hosted by the Canadian German Chamber of Industry and Commerce’s Competence Centre for Mining and Mineral Resources on Friday.

The mining and renewable energy sectors must continue engaging with each other to develop joint solutions, he added. “This is a meeting of two worlds that, until quite recently, hadn’t worked together.”

Before a mining company selects a renewable component – whether wind, solar or another option – it must consider the economic viability and rate of return against the estimated mine life. The longer a mine is operational, the greater benefits renewables can deliver.

“Levels are typically fixed. For example, 15 cents per kW an hour would be a good bargain across 25 years,” Carreau said. “And while fuel costs are lower right now, remember this is just a moment in time; it will go up [in price].”

The level of power penetration by a renewable component varies; most provide mine sites with between 10% and 20% of their energy when in use. The goal of both the industries is to push this to a much higher level over the next five to ten years.

Read more

Rio Tinto to defy mining pain with big payout while rivals suffer – by Sonali Paul and Silvia Antonioli (Reuters U.S. – February 10, 2015)

http://www.reuters.com/

MELBOURNE/LONDON – (Reuters) – Rio Tinto is expected to star among the top five global miners with a return of billions of dollars to shareholders at its annual results, even as the firm is set to report its worst half-year profit since 2009.

It will likely be all downhill for investors in the megaminers after Rio Tinto reports on Feb. 12 as they are all tipped to report sharp slides in earnings, gutted by weaker prices for almost everything they produce.

Iron ore will be the biggest source of pain, even though it remains the most lucrative product for Brazil’s Vale, Rio Tinto and BHP Billiton, and investors’ main concern is how the big miners are going to shore up cash flow. The top three producers have wounded the industry by flooding the market with new supply, knocking iron ore prices down nearly 50 percent in 2014, a steeper slide than anyone anticipated.

While boosting output, Rio has bolstered its cash flows by slashing costs, cutting capital spending and reducing debt, putting it in the best position to return cash to shareholders. BHP took the same steps, but has been whacked by plunging oil prices.

“In our opinion Rio has significantly greater flexibility (than BHP) at this point in time to pursue short-term capital management initiatives,” said Ben Lyons, a portfolio manager at ATI Asset Management.

Read more

Sudbury needs premier needs to act boldly [turn Laurentian in global Harvard of hardrock mining] – by Stan Sudol (Sudbury Star – February 9, 2015)

The Sudbury Star is the City of Greater Sudbury’s daily newspaper.

Note: this is the second of two parts.

Sudbury: Paris of the Mining World

While I can’t remember who coined the phrase, “Sudbury, the Paris of the Mining World” – I wish I had been that clever – there is an amazing amount of truth to the statement. Obviously, in no uncertain terms, does any part of Sudbury remind anyone – even in a drugged or drunken state – of Paris.

However, my lake-filled, mid-sized hometown does have a wide variety of retail, tourist, educational and other amenities that most tiny isolated mining towns do not and it is located only 400 km north of Canada’s largest city, Toronto.

A few years ago, a colleague who moved from Red Lake to Sudbury almost considered herself in “mining heaven” with the abundance of amenities not found in that tiny gold mining centre.

In addition to the Ontario government’s new differentiation and international student outreach policies, there are many other reasons why all post-secondary mining programs should be relocated to Sudbury’s Laurentian University.

Read more

BHP’s Spinoff Offers Glencore an Alternative to Rio: Real M&A – by Brett Foley, David Stringer and Angus Whitley (Bloomberg News – January 21, 2015)

http://www.bloomberg.com/

Rebuffed by Rio Tinto Group (RIO) last year, Glencore Plc (GLEN) will soon have another acquisition target to consider for expanding its mining empire: the company formed from the biggest spinoff in the industry’s history.

BHP Billiton Ltd. (BHP) plans to split off assets including its silver, manganese and aluminum operations to focus on larger businesses such as iron ore. The newly formed company — Perth, Australia-based South32 Ltd. — may appeal to Glencore because it’s being spun off near the bottom of the commodity cycle and it produces many of the same metals as the Swiss giant, said Aviate Global LLP.

South32 could command a market value of about $15 billion when it lists in coming months and earnings are set to surge in the next five years with prices of its materials poised to rise, said Macquarie Group Ltd. As his biggest rivals such as Vale SA and Anglo American Plc hunker down to ride out plunging prices of bulk commodities, Glencore Chief Executive Officer Ivan Glasenberg is looking for undervalued acquisition targets.

“He’s got a free pass into these assets,” Paul Gait, a London-based mining analyst at Sanford C. Bernstein & Co., said by phone. “Looking at it from Ivan’s perspective, I’d be thinking the current downturn isn’t going to last. It never does.”

Representatives for Glencore and Melbourne-based BHP declined to comment.

Read more

Copper tumble risks hampering Glencore’s takeover ambitions – by Silvia Antonioli (Reuters U.S. – January 14, 2015)

 http://www.reuters.com/

LONDON, Jan 14 (Reuters) – A sudden plunge in the price of copper pulled the shares of global miner Glencore to their lowest level on record on Wednesday and risks frustrating any intention to make a fresh move on larger rival Rio Tinto.

Copper prices slid to their lowest in 5-1/2 years after a downward revision to global growth forecasts by the World Bank and shares in Glencore lost as much as 12 percent to 236.20 pence on Wednesday. Glencore, among the large diversified miners, has the largest exposure to copper.

If sustained, the steeper fall in copper prices compared with that of iron ore so far this year, might derail any potential move by Glencore to take over Australian miner Rio Tinto , which is heavily exposed to iron ore.

After Glencore’s first takeover approach was rebuffed by Rio last summer, the market was widely expecting Swiss-based Glencore to make another attempt this year. The steeper fall last year in prices of iron compared with base metals made Rio a more affordable target for Glencore.

That has been partially reversed this year. Copper has lost almost 12 percent of its value, while iron ore has lost less than 5 percent.

Read more

SA-led titans display urge to merge – by Tina Weavind (Business Day Live – January 11, 2015)

http://www.bdlive.co.za/

HUNDREDS of billions of dollars will change hands this year if rumours of a spate of megamergers prove to be true. Some of the biggest predicted tie-ups are Glencore and Rio Tinto, SABMiller and its larger rival Anheuser-Busch InBev, and, further afield, oil giants Shell and BP.

The “GlenTinto” scenario has been around for a few years, but in October, Glencore announced it had finally made the call — and the idea had been rejected. The Swiss-based commodities conglomerate is run by South African Ivan Glasenberg, who owns 8.3% of its shares. Glencore took out a secondary listing on the JSE in 2013.

The company produces and trades about 90 products with a serious stake in agriculture and minerals. But its gaping hole is iron ore, which is Rio’s major cash cow. Glasenberg wants to fill the gap — and he is known for getting what he wants, as those who recall his relentless pursuit of Xstrata will attest.

Although he has been spurned at this point, speculation is that he has approached Rio Tinto’s biggest shareholder, Chinalco (the Aluminium Corporation of China), which has a 9.8% stake. The tie-up would create by far the biggest company in the industry, worth about $150-billion. To put that in context, consider that Anglo American’s market cap stands at about $26-billion.

One potential benefit of the deal would be the estimated cost-saving synergies of about $20-billion.

Read more

NEWS RELEASE: Glencore’s Sudbury Operations recognized with TSM Leadership Award

Award recognizes facility-level excellence in corporate responsibility

SUDBURY, ON, Dec. 22, 2014 /CNW/ – For its outstanding performance in the Towards Sustainable Mining (TSM) initiative, Glencore’s Sudbury Integrated Nickel Operations (Sudbury INO) has been recognized with a special TSM Leadership Award.

The TSM Leadership Award is granted only when an operation meets or exceeds a level “A” ranking in its results across all of the six performance areas of the TSM initiative (known as “protocols”)—safety and health, Aboriginal and community outreach, crisis management, tailings management, biodiversity conservation management, and energy use and greenhouse gas (GHG) emissions management. An operation’s TSM results must be externally verified to be eligible for this recognition. In addition to the TSM Leadership Award, Sudbury INO was also recognized with TSM Performance Awards for each of the six performance areas of TSM based on its 2013 results.

“The TSM Leadership Award is a rare distinction. It is given to operations that demonstrate leadership in these key areas. With this award, we celebrate the dedicated employees of Glencore’s Sudbury Integrated Nickel Operations for being a role model to other mining operations in Canada,” said Pierre Gratton, President and CEO, the Mining Association of Canada.

Marc Boissonneault, Glencore Vice President, said that he was honoured to accept the award on behalf of all employees at Sudbury INO.

“Many of the milestones that we have accomplished in our sustainable development performance are a direct result of the contributions of our employees across all levels in our organization and so this is quite special,” he said.

Read more