Steel majors in Asia and elsewhere are anxious about developments in India in relation to iron ore.
Steel industry stakeholders from across the world are closely watching any sign of restrictions on iron ore exports out of India.
In all likelihood, the restriction will be fiscal, and not physical, it is believed.
In the last few days, the market has been agog with rumours of an imminent 15 per cent Customs duty on iron ore shipments out of the country.
In anticipation, iron ore prices in Asia have firmed up. In addition, demand from Japan, Korea, Taiwan and Europe is beginning to become noticeable.
Spot supplies are increasingly seen going to these markets, and not to China.
China has been a major buyer of Indian iron ore. During January-May 2009, Indian export shipments to China aggregated 54.25 million tonnes, up about 11 per cent from the corresponding period previous year (48.9 million tonnes).
India accounted for one-fifth of China’s total imports of 242 million tonnes in the first five months of this year.
Slowdown in shipments to China because of diversion of spot cargo to other destinations has caused ocean freight rates for bulk commodities to soften in the last few days.
From a recent peak of over $93,000 a day, average daily earning rate for Capesize carriers declined to about $71,000 a day, according to a shipping industry official.
In India, there have been numerous representations for moderating the huge outflow of iron ore. The domestic steel industry has been vociferous in the demand.
If the Indian government imposes a stiff 15 per cent Customs duty, it will surely result in a substantial slowdown in iron ore exports.
Source: The Hindu
Sunday, July 5, 2009
South African Trade Team To Visit Pakistan
A high level mission from South Africa will visit Pakistan by the end of current month to interact with the Pakistani exporters, the Daily Times learnt on Saturday.
The buying mission of South African will be comprised of top importers and decision markers dealing in different major products. This mission will visit export-houses in Karachi, Lahore, Faisalabad and Sialkot to consider the business deals with the their local counterparts.
South African market – with foreign exchange reserves of $33.59 billion and total import volume $87.3 billion in year 2008 - offers tremendous opportunities for Pakistani export sector.
Keeping in view the vastness of South African market and huge import volume, Trade Development Authority of Pakistan (TDAP) had invited the business community of that country to visit Pakistan. The top importers and decisions making authorities related to business sector have planned to visit country during July 20-24. Apart from meeting with the higher government functionaries, delegation will meet the exporters of food and related goods (rice, confectionary, biscuits, candies, fruit juices, ready to eat food, convenience food, snacks, pies etc), textile and clothing and home textile exporters.
The meeting is also scheduled with the sports goods, pharmaceuticals, building materials and related items, leather upholstery, footwear, polysterfibers and yarn.
Exporters said that products like surgical equipments, textile products, rice, spices and sports goods have good market in South Africa because South Africa is the main shopping centre of seven neighboring countries.
South Africa’s main exports to Pakistan include synthetic staple fibre, hot rolled & flat rolled steel products, stainless steel, iron, chemicals, newsprint and uncoated craft paper, pig iron, ferro-alloys, scrap metal and preservatives. Pakistan’s main exports to South Africa include woollen fabrics, synthetic staple fibres and cotton, leather goods, bed and table linen, footwear, cotton yarn and fish.
Officials said that visit of South Africa, buying mission signifies greatly in the current situation when buying houses in its traditional USA and EU markets are reluctant to visit Pakistan due to bad security situation. “It will send a positive signal to the entire world that circumstances are no so worse as is being portrayed about the country in the world”, officials said.
Source: Daily Times, Lahore
The buying mission of South African will be comprised of top importers and decision markers dealing in different major products. This mission will visit export-houses in Karachi, Lahore, Faisalabad and Sialkot to consider the business deals with the their local counterparts.
South African market – with foreign exchange reserves of $33.59 billion and total import volume $87.3 billion in year 2008 - offers tremendous opportunities for Pakistani export sector.
Keeping in view the vastness of South African market and huge import volume, Trade Development Authority of Pakistan (TDAP) had invited the business community of that country to visit Pakistan. The top importers and decisions making authorities related to business sector have planned to visit country during July 20-24. Apart from meeting with the higher government functionaries, delegation will meet the exporters of food and related goods (rice, confectionary, biscuits, candies, fruit juices, ready to eat food, convenience food, snacks, pies etc), textile and clothing and home textile exporters.
The meeting is also scheduled with the sports goods, pharmaceuticals, building materials and related items, leather upholstery, footwear, polysterfibers and yarn.
Exporters said that products like surgical equipments, textile products, rice, spices and sports goods have good market in South Africa because South Africa is the main shopping centre of seven neighboring countries.
South Africa’s main exports to Pakistan include synthetic staple fibre, hot rolled & flat rolled steel products, stainless steel, iron, chemicals, newsprint and uncoated craft paper, pig iron, ferro-alloys, scrap metal and preservatives. Pakistan’s main exports to South Africa include woollen fabrics, synthetic staple fibres and cotton, leather goods, bed and table linen, footwear, cotton yarn and fish.
Officials said that visit of South Africa, buying mission signifies greatly in the current situation when buying houses in its traditional USA and EU markets are reluctant to visit Pakistan due to bad security situation. “It will send a positive signal to the entire world that circumstances are no so worse as is being portrayed about the country in the world”, officials said.
Source: Daily Times, Lahore
Nepal Finds New Iron Ore Deposit
A Nepalese government team that went to Nawalparasi to explore coal mining has instead found the third and possibly the largest iron ore deposit in the country.
The Department of Mines and Geology (DoMG) had initiated the exploration hoping to find coal deposits, given the past geological finding. However, its exploration team struck an iron ore deposit in Pokhari and Durlung villages, east of Arun Khola.
The deposit is 20 metres thick and two square kilometres in area. The quality of the ore and economic viability of extracting iron from it are yet to be ascertained.
Preliminary tests of the samples, nonetheless, have indicated that the ore could be of the best quality found so far in the country, said a senior DoMG official.
“We have forwarded the sample for detailed laboratory study, which will disclose its contents and quality,” Uttam Bol Shrestha, senior Divisional Mining Engineer at the department told myrepublica.com. Test report will come in next one-and-a-half month.
Although occurrence of iron ore has been reported in more than 85 localities across the country, government´s study has so far established only two reserves at Thoshe in Ramechhap district and Fulchowki in Lalitpur district as qualitatively and commercially viable for extraction.
However, the country has not been able to smelt the ores for commercial benefits.
The government never handed over the ore reserve of 10 million tons in Fulchowki to private extractors because the area lies in the area possessed by the Nepal Army. Besides, the mining factory could also threatened the rich bio-diversity available in the locality.
“We could never know the socio-economic benefits of iron mining, as environmentalists´ resistance to mining has prevailed without appropriate cost-benefit analysis,” said an official at Ministry of Industry.
Deposits in Thoshe, which is estimated to possess iron ore reserve of 10 million tons, on the other hand was extracted in bits and pieces during Rana regime for making arms and agricultural utilities.
It was also smelted and used for constructing bridges along Bhainse-Bhimphedi section of Tribhuvan Highway. The mine was, however, closed in later decades. Easy availability of finished iron in the market reduced significance of resuming its mining.
However, considering the latest technological viability and private sector´s interest, the department recently granted the prospection license to NNC Minerals for conducting further exploration and mining of Thoshe deposit.
Sources informed myrepublica.com that NNC Minerals is presently taking initiatives to bring in Chinese investment and technology for further study and mining. If things moved ahead positively, Nepal could have first ever commercial iron mining industry in the next few years, noted officials.
As for the newly found ore deposit, officials said they would need to conduct a detailed study of the site to assess the volume of deposits and determine commercial viability of its extraction.
However, as it was found after the department forwarded its annual programs and budget requirements at the Ministry of Industry and National Planning Commission, the officials doubt whether they will be able to conduct further study on it in the next fiscal year.
“The department receives a meager budget. Hence, there is a little room of pursuing the study before mid-July 2010, unless the government decides to give additional budget for it,” said Shrestha.
Source: Myreublica.com
The Department of Mines and Geology (DoMG) had initiated the exploration hoping to find coal deposits, given the past geological finding. However, its exploration team struck an iron ore deposit in Pokhari and Durlung villages, east of Arun Khola.
The deposit is 20 metres thick and two square kilometres in area. The quality of the ore and economic viability of extracting iron from it are yet to be ascertained.
Preliminary tests of the samples, nonetheless, have indicated that the ore could be of the best quality found so far in the country, said a senior DoMG official.
“We have forwarded the sample for detailed laboratory study, which will disclose its contents and quality,” Uttam Bol Shrestha, senior Divisional Mining Engineer at the department told myrepublica.com. Test report will come in next one-and-a-half month.
Although occurrence of iron ore has been reported in more than 85 localities across the country, government´s study has so far established only two reserves at Thoshe in Ramechhap district and Fulchowki in Lalitpur district as qualitatively and commercially viable for extraction.
However, the country has not been able to smelt the ores for commercial benefits.
The government never handed over the ore reserve of 10 million tons in Fulchowki to private extractors because the area lies in the area possessed by the Nepal Army. Besides, the mining factory could also threatened the rich bio-diversity available in the locality.
“We could never know the socio-economic benefits of iron mining, as environmentalists´ resistance to mining has prevailed without appropriate cost-benefit analysis,” said an official at Ministry of Industry.
Deposits in Thoshe, which is estimated to possess iron ore reserve of 10 million tons, on the other hand was extracted in bits and pieces during Rana regime for making arms and agricultural utilities.
It was also smelted and used for constructing bridges along Bhainse-Bhimphedi section of Tribhuvan Highway. The mine was, however, closed in later decades. Easy availability of finished iron in the market reduced significance of resuming its mining.
However, considering the latest technological viability and private sector´s interest, the department recently granted the prospection license to NNC Minerals for conducting further exploration and mining of Thoshe deposit.
Sources informed myrepublica.com that NNC Minerals is presently taking initiatives to bring in Chinese investment and technology for further study and mining. If things moved ahead positively, Nepal could have first ever commercial iron mining industry in the next few years, noted officials.
As for the newly found ore deposit, officials said they would need to conduct a detailed study of the site to assess the volume of deposits and determine commercial viability of its extraction.
However, as it was found after the department forwarded its annual programs and budget requirements at the Ministry of Industry and National Planning Commission, the officials doubt whether they will be able to conduct further study on it in the next fiscal year.
“The department receives a meager budget. Hence, there is a little room of pursuing the study before mid-July 2010, unless the government decides to give additional budget for it,” said Shrestha.
Source: Myreublica.com
ENRC Doubles Chrome Ore Pelletiser Capacity
London-listed Kazakh metals miner Eurasian Natural Resources Corp. said Friday it has doubled its chrome ore pelletiser capacity in Kazakhstan to 1.4 metrc million tons.
ENRC said in a statement that the pelletiser, in which it has invested $110 million, was second in Kazakhstan and was launched at Donskoy GOK chrome ore mine complex.
"The new plant will double the existing pelletising capacity of Donskoy GOK to 1.4 million tons" per year, the company said.
"The new plant will maintain the (ENRC's) ferroalloys division's output of high quality ferrochrome with high chrome content."
ENRC said in a statement that the pelletiser, in which it has invested $110 million, was second in Kazakhstan and was launched at Donskoy GOK chrome ore mine complex.
"The new plant will double the existing pelletising capacity of Donskoy GOK to 1.4 million tons" per year, the company said.
"The new plant will maintain the (ENRC's) ferroalloys division's output of high quality ferrochrome with high chrome content."
Saturday, July 4, 2009
China Still Looking For Lower Iron Ore Price
China's steel industry body is still looking for a lower iron ore price in negotiations with key suppliers, the president of Baosteel said on Saturday, adding that the nation's production was running high in July.
Xu Lejiang of Baosteel was tight-lipped with reporters about the tense negotiations over ore prices. But he said the China Iron and Steel Association was still working on a lower price for the nation's steelmakers.
Xu also said that China's steel production in July looked set to remain at the high levels it reached in June, and national production for all of 2009 could reach 500 million tonnes.
Source: Reuters
Xu Lejiang of Baosteel was tight-lipped with reporters about the tense negotiations over ore prices. But he said the China Iron and Steel Association was still working on a lower price for the nation's steelmakers.
Xu also said that China's steel production in July looked set to remain at the high levels it reached in June, and national production for all of 2009 could reach 500 million tonnes.
Source: Reuters
Asian Miners Scramble For Afghan Iron Ore Deposit
The biggest iron ore deposit in Asia is likely to be claimed by an Indian or Chinese firm after the two nations dominated the tender shortlist for Afghanistan's huge Hajigak reserve. Five Indian firms, a state-owned Chinese company and a joint Pakistani and Saudi venture now have three months to bid for the mining rights.
Analysts said China and India were keen to secure mineral supplies for their rapidly growing economies.
Thirty years of invasion, civil war and insurgency have meant the ore has never been mined despite being comprehensively mapped in the 1960s.
Exploiting the vast deposit 80 miles west of Kabul is a cornerstone of plans to build up the Afghan economy and in turn defeat the stubborn Taliban-led insurgency.
A British Geological Survey report on the Hajigak deposit said it was an "exceptionally favourable target for economic development".
Bidders will be expected to help construct an Afghan steel industry from the deposit, which is close to a large supply of coking coal at nearby Shabashak.
Muhammad Ibrahim Adel, Afghanistan's minister for mines, said bids should include offers to build infrastructure including a steel plant, a rail link and a replacement for an ageing fertilizer factory.
He told The Daily Telegraph: "This deposit is the mother of the steel industry in Afghanistan and it will give us a very good opportunity to develop the economy and create jobs for people and transfer technology. "I hope that the mining industry will develop the infrastructure of Afghanistan more than 50pc."
Developing Hajigak in the mountainous Bamiyan province could create 10,000 jobs in mining and another 10,000 in the steel industry he said.
Source: Daily Telegraph
Analysts said China and India were keen to secure mineral supplies for their rapidly growing economies.
Thirty years of invasion, civil war and insurgency have meant the ore has never been mined despite being comprehensively mapped in the 1960s.
Exploiting the vast deposit 80 miles west of Kabul is a cornerstone of plans to build up the Afghan economy and in turn defeat the stubborn Taliban-led insurgency.
A British Geological Survey report on the Hajigak deposit said it was an "exceptionally favourable target for economic development".
Bidders will be expected to help construct an Afghan steel industry from the deposit, which is close to a large supply of coking coal at nearby Shabashak.
Muhammad Ibrahim Adel, Afghanistan's minister for mines, said bids should include offers to build infrastructure including a steel plant, a rail link and a replacement for an ageing fertilizer factory.
He told The Daily Telegraph: "This deposit is the mother of the steel industry in Afghanistan and it will give us a very good opportunity to develop the economy and create jobs for people and transfer technology. "I hope that the mining industry will develop the infrastructure of Afghanistan more than 50pc."
Developing Hajigak in the mountainous Bamiyan province could create 10,000 jobs in mining and another 10,000 in the steel industry he said.
Source: Daily Telegraph
Teck In $1.74 Billion China Placement
Mining giant Teck Resources Ltd. has struck a $1.74 billion private placement designed to lighten its debt load, and its CEO says he hopes the deal will also boost the Vancouver-based company's relationship with China.
Teck said yesterday that China Investment Corp. will buy 101.3 million class B voting shares for $17.21 each, 17.5 per cent of the company's B shares, and will hold onto the stock for at least a year. The sale, which is still subject to regulatory approval, is slated to close July 14.
Teck says proceeds will go toward paying down some $10 billion (U.S.) in bank debt.
"This transaction provides an excellent opportunity to significantly strengthen our balance sheet," chief executive Don Lindsay said in a conference call. "We will have a financial relationship with a very deep-pocketed investor."
The announcement also reverses plans to implement rolling shutdowns at its six coal mines, which will now be needed to run at full production just to meet the demands of its customers for the rest of the year, Lindsay said.
Teck now predicts coal sales will be on the higher end of estimates, between 18 and 29 million tonnes.
Teck shares closed up 8.05 per cent at $19.99 (Canadian) in Toronto yesterday, with a 52-week high of $49.24 and low of $3.35.
Teck has been selling assets and cutting costs to pay down the debt acquired after the $14 billion purchase of Fording Canadian Coal Trust last July.
After the deal was struck, prices for most commodities fell. The deal closed in October, after Teck received its financing and just as Canada entered what has turned out to be a severe recession.
Last month, Teck struck a deal to sell a one-third interest in its Waneta Dam in southeastern British Columbia to BC Hydro for $825 million. It has also made about $700 million (U.S.) from the recent sale of many of its gold assets.
The miner had been hunting for a minority partner to take a 20 per cent stake of its coal business, but that plan has been sidelined. "We already have the money" from the deal with CIC, Lindsay said.
Source: Toronto Star
Teck said yesterday that China Investment Corp. will buy 101.3 million class B voting shares for $17.21 each, 17.5 per cent of the company's B shares, and will hold onto the stock for at least a year. The sale, which is still subject to regulatory approval, is slated to close July 14.
Teck says proceeds will go toward paying down some $10 billion (U.S.) in bank debt.
"This transaction provides an excellent opportunity to significantly strengthen our balance sheet," chief executive Don Lindsay said in a conference call. "We will have a financial relationship with a very deep-pocketed investor."
The announcement also reverses plans to implement rolling shutdowns at its six coal mines, which will now be needed to run at full production just to meet the demands of its customers for the rest of the year, Lindsay said.
Teck now predicts coal sales will be on the higher end of estimates, between 18 and 29 million tonnes.
Teck shares closed up 8.05 per cent at $19.99 (Canadian) in Toronto yesterday, with a 52-week high of $49.24 and low of $3.35.
Teck has been selling assets and cutting costs to pay down the debt acquired after the $14 billion purchase of Fording Canadian Coal Trust last July.
After the deal was struck, prices for most commodities fell. The deal closed in October, after Teck received its financing and just as Canada entered what has turned out to be a severe recession.
Last month, Teck struck a deal to sell a one-third interest in its Waneta Dam in southeastern British Columbia to BC Hydro for $825 million. It has also made about $700 million (U.S.) from the recent sale of many of its gold assets.
The miner had been hunting for a minority partner to take a 20 per cent stake of its coal business, but that plan has been sidelined. "We already have the money" from the deal with CIC, Lindsay said.
Source: Toronto Star
ArcelorMittal Suspends Senegal Iron Ore Project
World number one steelmaker ArcelorMittal is suspending development of its Faleme iron ore project in Senegal as a result of the global economic downturn, a company source in the West African country said on Friday.
The $2.2 billion project in the south-east of the country was due to begin producing steelmaking raw material iron ore in 2011, and full production capacity was estimated at 25 million tonnes per year.
"We are suspending the project for the time being because of the economic situation worldwide, but we hope to carry out the project as soon as the situation gets better," the source said, speaking on condition of anonymity.
The project, which included building a new port and railway line, would have created 10,000 jobs for Senegalese workers, the company said when announcing the inception of the plan in 2007.
ArcelorMittal officials in London and Luxembourg were not immediately available for comment on Friday.
"The government is saying, 'either you do it or we look for another company to do it,'" the source said.
"We are open to the option of doing it with a partner but for the time being we cannot do it alone," the source said.
The firm has cut output as it struggles with falling demand for steel. It reported slightly worse than expected first-quarter results in April, and had its ratings downgraded by Standard & Poor's in June.
Faleme is its second African project to be delayed in less than two months. In May, the firm said it was delaying the launch of a planned $1.5 billion iron ore mine in Liberia.
Source: Reuters
The $2.2 billion project in the south-east of the country was due to begin producing steelmaking raw material iron ore in 2011, and full production capacity was estimated at 25 million tonnes per year.
"We are suspending the project for the time being because of the economic situation worldwide, but we hope to carry out the project as soon as the situation gets better," the source said, speaking on condition of anonymity.
The project, which included building a new port and railway line, would have created 10,000 jobs for Senegalese workers, the company said when announcing the inception of the plan in 2007.
ArcelorMittal officials in London and Luxembourg were not immediately available for comment on Friday.
"The government is saying, 'either you do it or we look for another company to do it,'" the source said.
"We are open to the option of doing it with a partner but for the time being we cannot do it alone," the source said.
The firm has cut output as it struggles with falling demand for steel. It reported slightly worse than expected first-quarter results in April, and had its ratings downgraded by Standard & Poor's in June.
Faleme is its second African project to be delayed in less than two months. In May, the firm said it was delaying the launch of a planned $1.5 billion iron ore mine in Liberia.
Source: Reuters
Pre-Budget Survey Suggests Listing For Indian Coal Companies
The pre-budget economic survey on Thursday mooted for listing of Coal India's two sick subsidiaries — Eastern Coalfields Ltd and Bharat Coking Coal Ltd — by divesting 49 per cent government stake in the companies.
It also prescribed that transfer of management control of the two firms to a private party may be done partially through auction of 26 per cent of the government's shareholding.
"The two sick subsidiaries of CIL, namely ECL and BCCL should be listed, 49 per cent of shares sold to public and management control transferred to a private party (perhaps through an auction of 26 per cent of shares plus management control package)," the Economic Survey tabled in Parliament said.
The suggestion to revive the two firms by such measures comes at a time when the government is considering divesting up to 10 per cent of its stake in the country's largest coal producer, Coal India Ltd, paving way for its early listing.
Eastern Coalfields, which operates 110 mines mostly in West Begal and Jharkhand, has an estimated reserve of 40 billion tonnes. It aims to produce 31 million tonnes of coal in this fiscal from 28 in the last fiscal.
While BCCL with 78 mines has an annual production capacity of about 20 million tonnes, it aims to grow its output manifold and has already announced multi-billion dollar programmes to procure mining equipment.
Source: The Hindu
It also prescribed that transfer of management control of the two firms to a private party may be done partially through auction of 26 per cent of the government's shareholding.
"The two sick subsidiaries of CIL, namely ECL and BCCL should be listed, 49 per cent of shares sold to public and management control transferred to a private party (perhaps through an auction of 26 per cent of shares plus management control package)," the Economic Survey tabled in Parliament said.
The suggestion to revive the two firms by such measures comes at a time when the government is considering divesting up to 10 per cent of its stake in the country's largest coal producer, Coal India Ltd, paving way for its early listing.
Eastern Coalfields, which operates 110 mines mostly in West Begal and Jharkhand, has an estimated reserve of 40 billion tonnes. It aims to produce 31 million tonnes of coal in this fiscal from 28 in the last fiscal.
While BCCL with 78 mines has an annual production capacity of about 20 million tonnes, it aims to grow its output manifold and has already announced multi-billion dollar programmes to procure mining equipment.
Source: The Hindu
Friday, July 3, 2009
China Shenhua To Double Production By 2014
China Shenhua Energy Co Ltd plans to double its annual coal production capacity by 2014 from this year's level, the China Securities Journal reported on Friday, quoting unnamed company sources.
The goal for 2014, set at 400 million tonnes, will account for 15 percent of China's total coal production capacity, the paper said.
Shenhua will need 100 billion yuan ($14.6 billion) to fund the expansion plan over the next five years. The company has sufficient cash flow to fund the project, the paper said.
It produced 186 million tonnes of coal in 2008, up 18 percent from a year earlier, the company's annual report said.
Its parent, Shenhua Group Corp, China's largest coal producer, also plans to double its production capacity from 80 million tonnes currently, excluding the listed arm's capacity, the paper said.
Source: Reuters
The goal for 2014, set at 400 million tonnes, will account for 15 percent of China's total coal production capacity, the paper said.
Shenhua will need 100 billion yuan ($14.6 billion) to fund the expansion plan over the next five years. The company has sufficient cash flow to fund the project, the paper said.
It produced 186 million tonnes of coal in 2008, up 18 percent from a year earlier, the company's annual report said.
Its parent, Shenhua Group Corp, China's largest coal producer, also plans to double its production capacity from 80 million tonnes currently, excluding the listed arm's capacity, the paper said.
Source: Reuters
BHP Sells Yabulu Nickel Refinery
BHP Billiton Ltd., the world’s largest mining company, has sold the Yabulu nickel refinery in Australia after writing down its value by $675 million, in a retreat from production of the metal.
Clive Palmer, Australia’s fifth-richest man, bought the refinery for an undisclosed amount, Melbourne-based BHP said today in a statement. The refinery has a replacement value of A$2 billion ($1.6 billion), Palmer said in an e-mailed statement.
BHP closed the Ravensthorpe nickel mine in Western Australia in January, removing a main source of ore for Yabulu after nickel prices plunged. Global production of nickel, used to make stainless steel, may decline 12 percent from last year, Morgan Stanley said yesterday.
“BHP’s strategy is moving away from nickel,” said Michael McCormick, a fund manager at Belvedere Share Managers, which owns BHP stock. “BHP is getting so big that everything has to be of such a scale that they are probably thinking ‘We can’t move it and we’d rather concentrate on oil and iron ore’.”
BHP wrote down the carrying value of Yabulu by $500 million and also wrote off $175 million in unrecoverable tax benefits. Both writedowns will be recorded in the fiscal year ended June 30, 2009. The company said in November it would take a $2.1 billion one-time charge to write down the value of Ravensthorpe and Yabulu.
Palmer may have paid $100 million for the refinery, Citigroup Inc. said in a report today.
“This could flag BHP Billiton’s intention to eventually exit the nickel business,” Citigroup analyst Clarke Wilkins said. “We expect further scrutiny on whether the division remains a core business.”
Nickel, traded in London, plunged 56 percent last year as the global recession curbed demand.
“Despite nickel prices being down Yabulu is still profitable,” Palmer said in the e-mail. “This world-class plant is efficient and still has the opportunity to be expanded.”
BHP’s Australian nickel assets are “challenging” and the Yabulu refinery ranks in the third quartile on the cost curve, Goldman Sachs JBWere Pty said in February. BHP is scheduled to complete a review of Ravensthorpe’s future by the end of the year. It wrote down the value of the mine to zero in January.
Palmer said today in an interview that he may be interested in buying Ravensthorpe if it was offered for sale. It may cost $250 million to restart the mine, he said.
“We would certainly want to study it and if it was, we would go ahead and put an offer in,” he said.
BHP is the world’s third-biggest nickel producer and has operations in Australia and Colombia. Its Nickel West unit, comprised of mines, concentrators, refineries and smelters in Western Australia, exports about 100,000 metric tons of nickel each year, according to BHP’s Web site.
Yabulu produces 35,000 tons of nickel and 2,500 tons of cobalt a year, worth A$600 million in export value, Palmer said. It sources ore from New Caledonia, Indonesia and the Philippines and has further production capacity of 40,000 tons of nickel and 700 tons of cobalt, Palmer said.
Palmer, chairman of coal and iron ore company Mineralogy Pty., was the only person in the top-10 of the BRW Magazine’s annual rich 200 list whose wealth increased last year. Palmer’s fortune more than doubled to A$3.4 billion ($2.7 billion) according to the list that was published in May.
Palmer, the second-largest shareholder in Gladstone Pacific Nickel Ltd., is buying Yabulu through three closely held companies: Nickel House Pty, Nickel Process Pty and Nickel Consolidated Pty.
Source: Bloomberg
Clive Palmer, Australia’s fifth-richest man, bought the refinery for an undisclosed amount, Melbourne-based BHP said today in a statement. The refinery has a replacement value of A$2 billion ($1.6 billion), Palmer said in an e-mailed statement.
BHP closed the Ravensthorpe nickel mine in Western Australia in January, removing a main source of ore for Yabulu after nickel prices plunged. Global production of nickel, used to make stainless steel, may decline 12 percent from last year, Morgan Stanley said yesterday.
“BHP’s strategy is moving away from nickel,” said Michael McCormick, a fund manager at Belvedere Share Managers, which owns BHP stock. “BHP is getting so big that everything has to be of such a scale that they are probably thinking ‘We can’t move it and we’d rather concentrate on oil and iron ore’.”
BHP wrote down the carrying value of Yabulu by $500 million and also wrote off $175 million in unrecoverable tax benefits. Both writedowns will be recorded in the fiscal year ended June 30, 2009. The company said in November it would take a $2.1 billion one-time charge to write down the value of Ravensthorpe and Yabulu.
Palmer may have paid $100 million for the refinery, Citigroup Inc. said in a report today.
“This could flag BHP Billiton’s intention to eventually exit the nickel business,” Citigroup analyst Clarke Wilkins said. “We expect further scrutiny on whether the division remains a core business.”
Nickel, traded in London, plunged 56 percent last year as the global recession curbed demand.
“Despite nickel prices being down Yabulu is still profitable,” Palmer said in the e-mail. “This world-class plant is efficient and still has the opportunity to be expanded.”
BHP’s Australian nickel assets are “challenging” and the Yabulu refinery ranks in the third quartile on the cost curve, Goldman Sachs JBWere Pty said in February. BHP is scheduled to complete a review of Ravensthorpe’s future by the end of the year. It wrote down the value of the mine to zero in January.
Palmer said today in an interview that he may be interested in buying Ravensthorpe if it was offered for sale. It may cost $250 million to restart the mine, he said.
“We would certainly want to study it and if it was, we would go ahead and put an offer in,” he said.
BHP is the world’s third-biggest nickel producer and has operations in Australia and Colombia. Its Nickel West unit, comprised of mines, concentrators, refineries and smelters in Western Australia, exports about 100,000 metric tons of nickel each year, according to BHP’s Web site.
Yabulu produces 35,000 tons of nickel and 2,500 tons of cobalt a year, worth A$600 million in export value, Palmer said. It sources ore from New Caledonia, Indonesia and the Philippines and has further production capacity of 40,000 tons of nickel and 700 tons of cobalt, Palmer said.
Palmer, chairman of coal and iron ore company Mineralogy Pty., was the only person in the top-10 of the BRW Magazine’s annual rich 200 list whose wealth increased last year. Palmer’s fortune more than doubled to A$3.4 billion ($2.7 billion) according to the list that was published in May.
Palmer, the second-largest shareholder in Gladstone Pacific Nickel Ltd., is buying Yabulu through three closely held companies: Nickel House Pty, Nickel Process Pty and Nickel Consolidated Pty.
Source: Bloomberg
Victory In Sight For Miners In Iron Ore Talks
Australia's iron ore miners appear set for a win in their long-running battle with China's huge state-owned steel producers.
The promising signal emerged as the China Iron and Steel Association backed down from its tough position on price cuts amid growing government concern over speculation and uncertainty in the sector.
At the same time, China is battling to avoid the complete collapse of the 40-year-old benchmark pricing system, which would pitch the country’s steel sector into the uncharted waters of relying on short-term index and spot-pricing.
Business magazine and website Caijing magazine and the state-controlled Shanghai Securities News said officials attending a closed meeting of the China Iron and Steel Association late yesterday said they would accept a lower price.
After insisting for the past six months on a price cut of 40 per cent to 45 per cent, CISA is now ready to discuss a cut of 33-40 per cent and end the talks quickly, a source cited in the Shanghai newspaper said. Japanese and South Korean mills have accepted a 33 per cent price cut.
Caijing said that no serious talks among CISA and leading miners BHP Billiton, Rio Tinto and Vale had taken place in the past two weeks.
“I don't think there will be a lower price for Chinese mills, perhaps an adjustment in contract terms, like half a year contract, or quarterly contract,” Usteel.com analyst Du Wei told The Australian.
“The talks this year should help the Chinese to improve their negotiation skills and CISA should learn to have better judgment on market trends.”
The long-running nature of the talks and the aggressive stance taken by CISA has already split the Chinese steel sector, with smaller and medium sized mills reported to have struck separate deals at higher prices than that sought by the big producers.
According to the China Securities Journal, some big mills have reached agreements with miners and issued letters of credit to buy iron ore at a 33 per cent discount to the price last year.
CISA had been insisting that if prices do not fall more than 40 per cent - back to 2007 levels - steelmakers will run at a loss. But Caijing quoted an unnamed executive from leading steelmaker Hebei Steel Group saying that, with a 33 per cent cut they will still make a profit.
Iron ore spot prices are now about $65 free on board, compared with the contract price of $61 and China runs the risk of paying higher prices.
Increasingly rampant speculation on a higher contract price, which the Chinese government has been unable to control, has led to a record stockpile of iron ore amounting to 100 million tons, which is clogging up ports and warehouses around the country.
Source: The Australian
The promising signal emerged as the China Iron and Steel Association backed down from its tough position on price cuts amid growing government concern over speculation and uncertainty in the sector.
At the same time, China is battling to avoid the complete collapse of the 40-year-old benchmark pricing system, which would pitch the country’s steel sector into the uncharted waters of relying on short-term index and spot-pricing.
Business magazine and website Caijing magazine and the state-controlled Shanghai Securities News said officials attending a closed meeting of the China Iron and Steel Association late yesterday said they would accept a lower price.
After insisting for the past six months on a price cut of 40 per cent to 45 per cent, CISA is now ready to discuss a cut of 33-40 per cent and end the talks quickly, a source cited in the Shanghai newspaper said. Japanese and South Korean mills have accepted a 33 per cent price cut.
Caijing said that no serious talks among CISA and leading miners BHP Billiton, Rio Tinto and Vale had taken place in the past two weeks.
“I don't think there will be a lower price for Chinese mills, perhaps an adjustment in contract terms, like half a year contract, or quarterly contract,” Usteel.com analyst Du Wei told The Australian.
“The talks this year should help the Chinese to improve their negotiation skills and CISA should learn to have better judgment on market trends.”
The long-running nature of the talks and the aggressive stance taken by CISA has already split the Chinese steel sector, with smaller and medium sized mills reported to have struck separate deals at higher prices than that sought by the big producers.
According to the China Securities Journal, some big mills have reached agreements with miners and issued letters of credit to buy iron ore at a 33 per cent discount to the price last year.
CISA had been insisting that if prices do not fall more than 40 per cent - back to 2007 levels - steelmakers will run at a loss. But Caijing quoted an unnamed executive from leading steelmaker Hebei Steel Group saying that, with a 33 per cent cut they will still make a profit.
Iron ore spot prices are now about $65 free on board, compared with the contract price of $61 and China runs the risk of paying higher prices.
Increasingly rampant speculation on a higher contract price, which the Chinese government has been unable to control, has led to a record stockpile of iron ore amounting to 100 million tons, which is clogging up ports and warehouses around the country.
Source: The Australian
Thursday, July 2, 2009
300 Jobs Threatened At SA Fluorspar Mine
South African trade union Solidarity said on Wednesday that plans by mining firm Sallies to close its Witkop fluorspar mine outside Zeerust in North West could result in the retrenchment of about 300 employees.
It follows a Section 189 notice sent to Solidarity whereby Sallies blamed the indefinite closing of its mine on the current economic conditions, according to the trade union.
"The mine is expected to remain closed until enough orders have been placed to justify the reopening of the mine. The mine produces fluorspar, which is used in the manufacturing of steel, as well as hydrofluoric acid," Solidarity said.
The trade union stressed that the effort to close the mine could have severe consequences for the local community as well as for possible future mining activities at the mine.
"The so-called temporary closure of the mine will also affect future activities because skilled employees will take advantage of other opportunities. This means that if the mine reopens in the future, there will be a shortage of skilled employees to continue the operations," Solidarity spokesperson Jaco Kleynhans said.
Solidarity emphasised that all alternatives to retrenchment must be investigated during the consultations process that has begun between the employer and trade unions.
Source: The Sowetan
It follows a Section 189 notice sent to Solidarity whereby Sallies blamed the indefinite closing of its mine on the current economic conditions, according to the trade union.
"The mine is expected to remain closed until enough orders have been placed to justify the reopening of the mine. The mine produces fluorspar, which is used in the manufacturing of steel, as well as hydrofluoric acid," Solidarity said.
The trade union stressed that the effort to close the mine could have severe consequences for the local community as well as for possible future mining activities at the mine.
"The so-called temporary closure of the mine will also affect future activities because skilled employees will take advantage of other opportunities. This means that if the mine reopens in the future, there will be a shortage of skilled employees to continue the operations," Solidarity spokesperson Jaco Kleynhans said.
Solidarity emphasised that all alternatives to retrenchment must be investigated during the consultations process that has begun between the employer and trade unions.
Source: The Sowetan
Serov Steel Commssions Ferroalloy Preparation Plant
Ural Mining and Metallurgical Company has announced that its subsidiary, Serov Steel Works, has commissioned operations at its new ferroalloys preparation facility.
The new ferroalloys preparation facility will allow Serov Steel Works to prepare up to 100% of the ferroalloys it needs and to fully provide its electro smelting facilities with alloying materials.
The plant will be able to prepare up to 60 tonnes of ferroalloys per day, but until the situation improves, it will be working for the current needs of the plant. In addition, with the commissioning of its new ferroalloys preparation facility, Serov Steel Works will be able to save up to RUB 1 million monthly, as ferroalloys will be purchased at lower cost and brought to the required parameters at the plant.
Moreover, the control of percentages of materials used and of quality will allow Serov Steel Works to reduce losses of valuable alloying materials. Meanwhile due to the elimination of moisture from ferroalloys, the plant will be able to increase the quality of its steel.
Serov Steel Works’ new ferroalloys facility has cost about RUB 49 million in investment and includes a new jaw crusher, a new screen and a new drying drum.
Source: Steel Guru
The new ferroalloys preparation facility will allow Serov Steel Works to prepare up to 100% of the ferroalloys it needs and to fully provide its electro smelting facilities with alloying materials.
The plant will be able to prepare up to 60 tonnes of ferroalloys per day, but until the situation improves, it will be working for the current needs of the plant. In addition, with the commissioning of its new ferroalloys preparation facility, Serov Steel Works will be able to save up to RUB 1 million monthly, as ferroalloys will be purchased at lower cost and brought to the required parameters at the plant.
Moreover, the control of percentages of materials used and of quality will allow Serov Steel Works to reduce losses of valuable alloying materials. Meanwhile due to the elimination of moisture from ferroalloys, the plant will be able to increase the quality of its steel.
Serov Steel Works’ new ferroalloys facility has cost about RUB 49 million in investment and includes a new jaw crusher, a new screen and a new drying drum.
Source: Steel Guru
China Aims To Conclude Contract Talks By End-July
Chinese steelmakers, the world’s biggest, aim to conclude annual contract iron ore talks by the end of this month and may consider trimming their price cut demands, a company executive said.
“Some of the annual contracts, which ended June 30, still have a one-month grace period,” Tian Zhiping, vice president of Hebei Iron & Steel Group, said today in a phone interview. “The two sides should go on with the formal talks and settle the prices as soon as possible.”
The mills, who had demanded a cut of as much as 45 percent, are ready to discuss a reduction of between 33 and 40 percent, Caijing magazine reported yesterday. Rio Tinto Group, the world’s second-biggest exporter of the ore, is unlikely to budge from the 33 percent drop it agreed in May with Japanese steelmakers, said Umetal Research Institute analyst Hu Kai.
“Rio is more willing to sell to the spot market now because Chinese steelmakers have lost their credibility in honoring the long-term contracts,” said Shanghai-based Hu. “Some mills have started to buy ore at a provisional 33 percent price cut” level after cash prices rose, he said.
Cash prices have gained 20 percent to $78.20 a metric ton since Rio settled contract prices with Japanese steel mills on May 26, according to the Steel Business Briefing. This includes shipping costs of $17.75, according to the Baltic Dry Index. The contract price for the year to March 31 accepted by mills in Japan, Korea and Taiwan is about $61 a ton of ore from Australia.
‘Rio’s Stance’
“Whether we would agree to a cut less than 40 percent is dependent on Rio’s stance,” Hebei Steel’s Tian said. “It hasn’t offered a cut bigger than 33 percent. There also needs to be discussion on whether prices would be set on a half-year basis or on a quarter basis.”
Rio said June 30 that some contracts may revert to the spot market from the start of this month. “Rio Tinto has long been a supporter of the benchmark system but if customers choose to buy on the spot market instead they will,” Rio’s Perth-based spokesman Gervase Greene said.
Contract ore prices, effective from April 1, fell for the first time this year after rising for six straight years mainly because of Chinese demand. Mills, including Baosteel Group Corp, had delayed or cancelled contract shipments since September as slowing demand from automakers and builders forced them to trim production.
Source: Bloomberg
“Some of the annual contracts, which ended June 30, still have a one-month grace period,” Tian Zhiping, vice president of Hebei Iron & Steel Group, said today in a phone interview. “The two sides should go on with the formal talks and settle the prices as soon as possible.”
The mills, who had demanded a cut of as much as 45 percent, are ready to discuss a reduction of between 33 and 40 percent, Caijing magazine reported yesterday. Rio Tinto Group, the world’s second-biggest exporter of the ore, is unlikely to budge from the 33 percent drop it agreed in May with Japanese steelmakers, said Umetal Research Institute analyst Hu Kai.
“Rio is more willing to sell to the spot market now because Chinese steelmakers have lost their credibility in honoring the long-term contracts,” said Shanghai-based Hu. “Some mills have started to buy ore at a provisional 33 percent price cut” level after cash prices rose, he said.
Cash prices have gained 20 percent to $78.20 a metric ton since Rio settled contract prices with Japanese steel mills on May 26, according to the Steel Business Briefing. This includes shipping costs of $17.75, according to the Baltic Dry Index. The contract price for the year to March 31 accepted by mills in Japan, Korea and Taiwan is about $61 a ton of ore from Australia.
‘Rio’s Stance’
“Whether we would agree to a cut less than 40 percent is dependent on Rio’s stance,” Hebei Steel’s Tian said. “It hasn’t offered a cut bigger than 33 percent. There also needs to be discussion on whether prices would be set on a half-year basis or on a quarter basis.”
Rio said June 30 that some contracts may revert to the spot market from the start of this month. “Rio Tinto has long been a supporter of the benchmark system but if customers choose to buy on the spot market instead they will,” Rio’s Perth-based spokesman Gervase Greene said.
Contract ore prices, effective from April 1, fell for the first time this year after rising for six straight years mainly because of Chinese demand. Mills, including Baosteel Group Corp, had delayed or cancelled contract shipments since September as slowing demand from automakers and builders forced them to trim production.
Source: Bloomberg
China Iron Ore Talks Carry On After Deadline
Pricing talks between Chinese steelmakers and global iron-ore suppliers dragged on after they failed to reach agreement by a June 30 deadline, reports and industry officials said.
China's steel industry group has rejected iron-ore price agreements negotiated between Australian mining giant Rio Tinto and Japanese and South Korean mills.
A spokesman for Australian miner BHP Billiton Ltd, Peter Ogden, said on Wednesday that negotiations were continuing but declined to give further details. A Rio Tinto spokesman was not immediately available for comment.
An official at the China Iron and Steel Association refused to comment, saying any news would be posted on the group's web site.
However, the official Xinhua News Agency cited one CISA official, Chen Xianwen, as saying that the talks would persist.
Rio Tinto Ltd, the world's third-biggest miner, was leading the talks. It agreed with Japan's Nippon Steel Corp last month to cut its iron-ore prices by about one-third. The Chinese side had been seeking cuts of more than 40 per cent, but might soften its stance and settle on cuts somewhere between 33 per cent and 40 per cent below last year's prices, the Shanghai Securities News reported.
Other major ore suppliers are Billiton and Brazil's Vale SA.
CISA's 119 members represent 90 per cent of China's steel output. The group took over the price talks this year, replacing Shanghai-based Baoshan Iron & Steel.
Traditionally the industry has accepted the results of the pricing talks as an annual benchmark, but in recent years negotiations have become increasingly drawn-out and confrontational, with the Chinese side publicly complaining that it should have more say as the world's biggest iron-ore importer.
Chinese steel makers have objected to a planned tie up between Rio Tinto and BHP Billiton Ltd, which they say may give the miners an inordinate say over supplies and pricing.
Increasingly the mills have turned to the spot market for iron ore as they ramp up imports to build up stockpiles. As of late last month, domestic port inventories of iron ore had reached nearly 71.3 million metric tons, equal to more than a month's supply, the state-run newspaper China Securities Journal reported.
With the pricing deadline passed, iron ore miners have the right to dissolve current contracts and sell iron ore at spot prices. Those are now higher than the benchmark price, but more volatile.
It was unclear if spot prices are being used for sales to China's big steel mills now that the June 30 negotiating deadline has passed. A spokesman for Rio Tinto Ltd, the company taking the lead in price negotiations, refused to say.
Source: Business Day
China's steel industry group has rejected iron-ore price agreements negotiated between Australian mining giant Rio Tinto and Japanese and South Korean mills.
A spokesman for Australian miner BHP Billiton Ltd, Peter Ogden, said on Wednesday that negotiations were continuing but declined to give further details. A Rio Tinto spokesman was not immediately available for comment.
An official at the China Iron and Steel Association refused to comment, saying any news would be posted on the group's web site.
However, the official Xinhua News Agency cited one CISA official, Chen Xianwen, as saying that the talks would persist.
Rio Tinto Ltd, the world's third-biggest miner, was leading the talks. It agreed with Japan's Nippon Steel Corp last month to cut its iron-ore prices by about one-third. The Chinese side had been seeking cuts of more than 40 per cent, but might soften its stance and settle on cuts somewhere between 33 per cent and 40 per cent below last year's prices, the Shanghai Securities News reported.
Other major ore suppliers are Billiton and Brazil's Vale SA.
CISA's 119 members represent 90 per cent of China's steel output. The group took over the price talks this year, replacing Shanghai-based Baoshan Iron & Steel.
Traditionally the industry has accepted the results of the pricing talks as an annual benchmark, but in recent years negotiations have become increasingly drawn-out and confrontational, with the Chinese side publicly complaining that it should have more say as the world's biggest iron-ore importer.
Chinese steel makers have objected to a planned tie up between Rio Tinto and BHP Billiton Ltd, which they say may give the miners an inordinate say over supplies and pricing.
Increasingly the mills have turned to the spot market for iron ore as they ramp up imports to build up stockpiles. As of late last month, domestic port inventories of iron ore had reached nearly 71.3 million metric tons, equal to more than a month's supply, the state-run newspaper China Securities Journal reported.
With the pricing deadline passed, iron ore miners have the right to dissolve current contracts and sell iron ore at spot prices. Those are now higher than the benchmark price, but more volatile.
It was unclear if spot prices are being used for sales to China's big steel mills now that the June 30 negotiating deadline has passed. A spokesman for Rio Tinto Ltd, the company taking the lead in price negotiations, refused to say.
Source: Business Day
POSCO In $174 Million Ferromanganese Joint Venture
South Korea's leading steelmaker, said Thursday it plans to spend 220 billion won (US$174 million) to establish a plant that produces ferromanganese used to make automobile plates.
POSCO will own 65 per cent of the joint venture with Dongbu Metal Co., according to the company.
Construction of the plant will start in April 2010 and be completed by September 2011. It will produce 75,000 tons of high-quality ferromanganese, which is used in making plates for doors and other autobody parts.
The South Korean steelmaker, the world's fourth-largest, has been importing the material from China. POSCO said it will save 74 billion won annually by making the material domestically.
The company said it is also considering building a plant that produces ferrosilicon used in producing carbon steels, stainless steels and other alloys.
POSCO will own 65 per cent of the joint venture with Dongbu Metal Co., according to the company.
Construction of the plant will start in April 2010 and be completed by September 2011. It will produce 75,000 tons of high-quality ferromanganese, which is used in making plates for doors and other autobody parts.
The South Korean steelmaker, the world's fourth-largest, has been importing the material from China. POSCO said it will save 74 billion won annually by making the material domestically.
The company said it is also considering building a plant that produces ferrosilicon used in producing carbon steels, stainless steels and other alloys.
Wednesday, July 1, 2009
China Softens Iron Ore Price Demands
China has softened its demands for a large iron ore price cut after failing to agree terms with global miners by Tuesday's deadline, Chinese media reported, the first sign of a possible compromise meant to restore annual supply deals and avoid a total breakdown of the benchmark system.
Citing officials attending a closed meeting of the China Iron and Steel Association (CISA) on Tuesday, Caijing magazine and the official Shanghai Securities News said China was still expecting a better deal than the 33 percent reduction agreed by Rio Tinto with Japanese steel mills, but offered an olive branch.
China is now ready to discuss a smaller price cut of 33-40 percent rather than its previous demand of a 40-45 percent reduction and hopes to end talks quickly, the Shanghai newspaper quoted a source close to the situation as saying.
No substantive discussions between CISA and the three global miners -- Rio Tinto and BHP Billiton of Australia and Brazil's Vale -- had taken place over the last two weeks, Caijing reported.
Rio Tinto has shown no inclination to go lower than the one-third price cut, saying it is ready to sell to its customers on whatever basis they prefer.
Spot iron ore prices to China have risen by a fifth in just a month, and now trade at a 4-month high above $80 a tonne on a delivered China basis, equivalent to around $65 free on board. This is higher than the contract price of $61 that the Japanese and South Korean mills secured, giving miners the upper hand.
"By abandoning the benchmark price... Chinese mills run the risk that if the spot price rallies further, they could end up paying higher prices than the rest of the world," Macquarie analysts said on Wednesday in a report.
"The fact that spot and new benchmark prices have converged already must be a source of concern for the Chinese given that European, Japanese, Korean and Taiwanese import demand remains extremely depressed."
In another development, some domestic big steel mills have tacitly reached agreements with miners and issued letters of credit to buy iron ore at the price accepted by Japanese mills, the official China Securities Journal citing industry sources as saying.
Small Chinese mills, eager to fix production costs and prepare for demand upturn, had already signed private deals, ignoring threats from CISA that it would not recognise the deals and revoke import licenses.
Source: Reuters
Citing officials attending a closed meeting of the China Iron and Steel Association (CISA) on Tuesday, Caijing magazine and the official Shanghai Securities News said China was still expecting a better deal than the 33 percent reduction agreed by Rio Tinto with Japanese steel mills, but offered an olive branch.
China is now ready to discuss a smaller price cut of 33-40 percent rather than its previous demand of a 40-45 percent reduction and hopes to end talks quickly, the Shanghai newspaper quoted a source close to the situation as saying.
No substantive discussions between CISA and the three global miners -- Rio Tinto and BHP Billiton of Australia and Brazil's Vale -- had taken place over the last two weeks, Caijing reported.
Rio Tinto has shown no inclination to go lower than the one-third price cut, saying it is ready to sell to its customers on whatever basis they prefer.
Spot iron ore prices to China have risen by a fifth in just a month, and now trade at a 4-month high above $80 a tonne on a delivered China basis, equivalent to around $65 free on board. This is higher than the contract price of $61 that the Japanese and South Korean mills secured, giving miners the upper hand.
"By abandoning the benchmark price... Chinese mills run the risk that if the spot price rallies further, they could end up paying higher prices than the rest of the world," Macquarie analysts said on Wednesday in a report.
"The fact that spot and new benchmark prices have converged already must be a source of concern for the Chinese given that European, Japanese, Korean and Taiwanese import demand remains extremely depressed."
In another development, some domestic big steel mills have tacitly reached agreements with miners and issued letters of credit to buy iron ore at the price accepted by Japanese mills, the official China Securities Journal citing industry sources as saying.
Small Chinese mills, eager to fix production costs and prepare for demand upturn, had already signed private deals, ignoring threats from CISA that it would not recognise the deals and revoke import licenses.
Source: Reuters
Coal Shortage Threatens Orissa Projects
The ambitious dreams of the government in the Indian state of Orissa to set up 73 new industries in steel, power and cement sectors may not be realised if the Centre does not supply another 5000 tonnes of coal immediately. There is an estimated shortfall of about 100 tonnes to meet the requirements of industries in the coming days.
The state government on Tuesday accused the Centre for allotting Orissa very little coal to use even though it has the second largest coal deposit in India. The state has been allotted with only 7.67 per cent of the total allotted quantity for commercial use, while states like Jharkhand, Chhattisgarh and West Bengal have been allotted over 19 per cent of the total allotted quantity for each state. Orissa has coal reserves of 61.999 billion tonnes about 24.29 per cent of the country.
"Orissa has always been neglected by the Centre on allotment of coal reserves, despite having huge deposits. We had earlier pressed the demand for more coal blocks to the Centre, but nothing happened. We would again submit our demand for allotment of 5,000 tonnes coal blocks immediately," minister of industries (steel and mines) Raghunath Mohanty said. He was speaking at Coalnex, a conference on future coal needs of the state, jointly organized by Orissa chapter of CII and department of steel and mines.
State secretary for steel and mines Ashok Dalwai said, "The state will have an estimated additional requirement of non-coking coal for the proposed plants at 210 MTPA. While the 21 power projects will require 140 MTPA, 70 MTPA will be required for sponge iron-based steel projects. Considering the 50 per cent additional requirement of coal to be met partly by MCL and partly from captive coal-blocks, the shortfall is still estimated to be more than 100 MTPA." He said that other state government units have been allotted with 29.39 per cent of the total allotted coal reserves from the coalfields of Orissa, whereas the Orissa government units have been allotted only 16.10 per cent of the total coal reserve in Orissa Coalfields.
He added that the Centre has not only allotted very few coal blocks to Orissa, the quality of blocks are also poor and with several deficiencies.
Source: Times Of India
The state government on Tuesday accused the Centre for allotting Orissa very little coal to use even though it has the second largest coal deposit in India. The state has been allotted with only 7.67 per cent of the total allotted quantity for commercial use, while states like Jharkhand, Chhattisgarh and West Bengal have been allotted over 19 per cent of the total allotted quantity for each state. Orissa has coal reserves of 61.999 billion tonnes about 24.29 per cent of the country.
"Orissa has always been neglected by the Centre on allotment of coal reserves, despite having huge deposits. We had earlier pressed the demand for more coal blocks to the Centre, but nothing happened. We would again submit our demand for allotment of 5,000 tonnes coal blocks immediately," minister of industries (steel and mines) Raghunath Mohanty said. He was speaking at Coalnex, a conference on future coal needs of the state, jointly organized by Orissa chapter of CII and department of steel and mines.
State secretary for steel and mines Ashok Dalwai said, "The state will have an estimated additional requirement of non-coking coal for the proposed plants at 210 MTPA. While the 21 power projects will require 140 MTPA, 70 MTPA will be required for sponge iron-based steel projects. Considering the 50 per cent additional requirement of coal to be met partly by MCL and partly from captive coal-blocks, the shortfall is still estimated to be more than 100 MTPA." He said that other state government units have been allotted with 29.39 per cent of the total allotted coal reserves from the coalfields of Orissa, whereas the Orissa government units have been allotted only 16.10 per cent of the total coal reserve in Orissa Coalfields.
He added that the Centre has not only allotted very few coal blocks to Orissa, the quality of blocks are also poor and with several deficiencies.
Source: Times Of India
Sylvania, Ruukki Group Announce Merger
Finland wood and ferrochrome stock Ruukki Group on Tuesday jointly announced a friendly merger with London- and Australia-listed Sylvania, an operator that recovers platinum group metals (PGMs) and related metals from mine waste in South Africa. Sylvania separately has bids out for Australia-based SA Metals and Great Australian, which both have PGM and other interests in South Africa.
Source: Mineweb
Source: Mineweb
Tuesday, June 30, 2009
Cosco Chief Hits Out At Iron Ore Dominance
China's largest shipping company Tuesday said the global dominance of the three major iron ore producers “could be very harmful to the industry”.
One of Cosco’s senior executives detailed his concerns about the growing shipping power of Vale, BHP Billiton and Rio Tinto at a conference in London.
“I believe nobody sitting in this room could be in a dominant position in dry bulk, even Cosco,” said Simon Young, executive deputy director of the government-owned China Ocean Shipping (Group) Company’s research and development centre.
“Only those who can control exports of iron ore and also those who have larger ship-operating capacity — they’re the ones in the dominant position. This could be very harmful to the industry.”
Speaking at the World Dry Bulk Shipping Summit in London, Mr Young’s comments were clearly aimed at Vale, BHP Billiton and Rio Tinto, which between them control 70% of global seaborne trade in iron ore, which last year hit 845m tonnes.
The three majors “had a strong bargaining power” because they sold iron ore and were also active in the shipping markets, Mr Young said on the conference sidelines. But he declined to elaborate further about Cosco’s concerns, saying only that all shipowners and operators needed to be wary, not just his company.
The comments reflect rising Chinese distrust over all three miners’ plans to take greater control of freight costs, as well as merger plans between BHP Billiton and Rio Tinto for their iron ore operations in Western Australia.
Mr Young said that Vale, the world’s largest iron ore producer, was “the easiest to do business with”.
Niels Wage, vice-president of freight for BHP Billiton Marketing, which controls shipping operations for the world’s largest mining company, told Lloyd’s List that he did not think Mr Young’s comments were fair but would not comment further.
BHP Billiton operates between 10 and 20 capesize, 10 and 20 panamax and 10 and 15 handymax vessels at any one time, Mr Wage said.
Star Bulk Carriers director Koert Erhardt said BHP, Vale and Rio Tinto were more closely integrating with shipping, and added: “The role of shipowner is completely changing. We’re not sure who is doing what and when, making life more complicated.”
China has yet to settle annual iron ore contract prices with the miners, with at least one contract, for Rio Tinto, expiring Tuesday. Vale has taken advantage of depressed asset prices to embark on a capesize buying spree in 2009, and said in May that it had 20 vessels under its control and 12 contracts of affreightment. It also plans to own or operate a fleet of as many as 20 very large ore carriers by 2012. Rio Tinto also has bulk carriers on order.
Mr Young also attacked speculators in the dry bulk derivatives market, saying that too many banks and funds had been getting involved in the sector. He said their role had skewed forward freight agreements, with the dry market valued at more than $150bn in 2008.
Tom Beney, from commodities giant Cargill, which along with BHP is a significant freight derivatives trader, disagreed with the Cosco assessment.
Mr Young highlighted the global dry bulk market’s reliance on the world’s third-largest economy for economic revival.
“China will bring us more,” he told delegates, highlighting rising fixed asset investment, “generous” Chinese bank lending and a 10% year-on-year boost in car sales.
Source: Lloyds List
One of Cosco’s senior executives detailed his concerns about the growing shipping power of Vale, BHP Billiton and Rio Tinto at a conference in London.
“I believe nobody sitting in this room could be in a dominant position in dry bulk, even Cosco,” said Simon Young, executive deputy director of the government-owned China Ocean Shipping (Group) Company’s research and development centre.
“Only those who can control exports of iron ore and also those who have larger ship-operating capacity — they’re the ones in the dominant position. This could be very harmful to the industry.”
Speaking at the World Dry Bulk Shipping Summit in London, Mr Young’s comments were clearly aimed at Vale, BHP Billiton and Rio Tinto, which between them control 70% of global seaborne trade in iron ore, which last year hit 845m tonnes.
The three majors “had a strong bargaining power” because they sold iron ore and were also active in the shipping markets, Mr Young said on the conference sidelines. But he declined to elaborate further about Cosco’s concerns, saying only that all shipowners and operators needed to be wary, not just his company.
The comments reflect rising Chinese distrust over all three miners’ plans to take greater control of freight costs, as well as merger plans between BHP Billiton and Rio Tinto for their iron ore operations in Western Australia.
Mr Young said that Vale, the world’s largest iron ore producer, was “the easiest to do business with”.
Niels Wage, vice-president of freight for BHP Billiton Marketing, which controls shipping operations for the world’s largest mining company, told Lloyd’s List that he did not think Mr Young’s comments were fair but would not comment further.
BHP Billiton operates between 10 and 20 capesize, 10 and 20 panamax and 10 and 15 handymax vessels at any one time, Mr Wage said.
Star Bulk Carriers director Koert Erhardt said BHP, Vale and Rio Tinto were more closely integrating with shipping, and added: “The role of shipowner is completely changing. We’re not sure who is doing what and when, making life more complicated.”
China has yet to settle annual iron ore contract prices with the miners, with at least one contract, for Rio Tinto, expiring Tuesday. Vale has taken advantage of depressed asset prices to embark on a capesize buying spree in 2009, and said in May that it had 20 vessels under its control and 12 contracts of affreightment. It also plans to own or operate a fleet of as many as 20 very large ore carriers by 2012. Rio Tinto also has bulk carriers on order.
Mr Young also attacked speculators in the dry bulk derivatives market, saying that too many banks and funds had been getting involved in the sector. He said their role had skewed forward freight agreements, with the dry market valued at more than $150bn in 2008.
Tom Beney, from commodities giant Cargill, which along with BHP is a significant freight derivatives trader, disagreed with the Cosco assessment.
Mr Young highlighted the global dry bulk market’s reliance on the world’s third-largest economy for economic revival.
“China will bring us more,” he told delegates, highlighting rising fixed asset investment, “generous” Chinese bank lending and a 10% year-on-year boost in car sales.
Source: Lloyds List
China May Relent On 40 - 45 Per Cent Price Cut
China is expected to relent in its attempt to squeeze a 40-45 percent price cut from global iron ore producers as negotiations stretch beyond the June 30 deadline, the influential Caijing magazine reported.
Citing officials attending a closed meeting of the China Iron and Steel Association on Tuesday, the magazine said China was still expecting a better deal than the 33 percent reduction agreed by Rio Tinto with Japanese steel mills.
The report said no substantive discussions between CISA and the three global miners -- Rio Tinto and BHP Billiton (BHP.AX) of Australia and Brazil's Vale -- had taken place over the last two weeks.
Source: Reuters
Citing officials attending a closed meeting of the China Iron and Steel Association on Tuesday, the magazine said China was still expecting a better deal than the 33 percent reduction agreed by Rio Tinto with Japanese steel mills.
The report said no substantive discussions between CISA and the three global miners -- Rio Tinto and BHP Billiton (BHP.AX) of Australia and Brazil's Vale -- had taken place over the last two weeks.
Source: Reuters
Iron Ore Negotiations To Continue Past Deadline?
The annual iron ore price negotiations between the world's biggest iron ore miners and Chinese steel makers are likely to continue past the Tuesday deadline.
China is still in talks with major iron ore firms for the annual supply deal, Chen Xianwen, director of the market operations department of the China Iron and Steel Association (CISA), told Xinhua Tuesday.
The CISA heads the talks on behalf of China's steel-makers.
"We are officially in discussions still," said Gervase Greene, spokesman of Rio Tinto, in an email to Xinhua late Monday.
Chen said that the CISA still insisted that the iron ore prices should fall back to 2007 levels, which meant a price cut of more than 40 percent in the annual contracts of iron ore.
The CISA said in a statement on May 31 that China's steel companies would refuse to accept the 33-percent price cut reached between Rio Tinto and Japan's Nippon Steel Corp.
The price cut would lead to overall losses for Chinese steel companies, the CISA said in the statement.
The Chinese side was working to seek a cut of more than 40 percent.
Both Chen and Greene refused to comment further on how the talks were progressing.
If the CISA failed to reach a supply agreement with any of the three biggest mining companies -- Vale of Brazil, Rio Tinto and BHP Billiton -- Chinese steel makers may have to turn to the spot market for supplies.
Spot iron ore prices rose to the highest in four months and above the annual benchmark level agreed between the three miners and big steel makers elsewhere in Asia.
Source: Xinhua/China DGSHI News
Iron ore price talks between Chinese steel mills and global miners will drag on past Tuesday's deadline, said Tian Zhiping, the vice-general manager of Hebei Iron and Steel Group, China's second-largest steel maker.
"I hope China steel mills and iron ore miners can quickly reach an iron ore price agreement," Tian told Reuters by telephone. "It will not be today."
Source: Reuters
China is still in talks with major iron ore firms for the annual supply deal, Chen Xianwen, director of the market operations department of the China Iron and Steel Association (CISA), told Xinhua Tuesday.
The CISA heads the talks on behalf of China's steel-makers.
"We are officially in discussions still," said Gervase Greene, spokesman of Rio Tinto, in an email to Xinhua late Monday.
Chen said that the CISA still insisted that the iron ore prices should fall back to 2007 levels, which meant a price cut of more than 40 percent in the annual contracts of iron ore.
The CISA said in a statement on May 31 that China's steel companies would refuse to accept the 33-percent price cut reached between Rio Tinto and Japan's Nippon Steel Corp.
The price cut would lead to overall losses for Chinese steel companies, the CISA said in the statement.
The Chinese side was working to seek a cut of more than 40 percent.
Both Chen and Greene refused to comment further on how the talks were progressing.
If the CISA failed to reach a supply agreement with any of the three biggest mining companies -- Vale of Brazil, Rio Tinto and BHP Billiton -- Chinese steel makers may have to turn to the spot market for supplies.
Spot iron ore prices rose to the highest in four months and above the annual benchmark level agreed between the three miners and big steel makers elsewhere in Asia.
Source: Xinhua/China DGSHI News
Iron ore price talks between Chinese steel mills and global miners will drag on past Tuesday's deadline, said Tian Zhiping, the vice-general manager of Hebei Iron and Steel Group, China's second-largest steel maker.
"I hope China steel mills and iron ore miners can quickly reach an iron ore price agreement," Tian told Reuters by telephone. "It will not be today."
Source: Reuters
Benchmark Deadline Passes With No Agreement
The decades-old benchmark system for setting the price of iron ore looked to be on its last legs with no agreement expected by the 30 June deadline between major producers and Chinese steel mills.
Rio Tinto and BHP Billiton had until midnight last night to reach an agreement or risk moving to the volatile spot prices for its customers.
It would be the first time in the 42-year history of the benchmark system that no agreement has been reached by July 1.
"I think there is definitely going to be a move away from the benchmark towards spot pricing and index pricing," said a Fat Prophets mining analyst, Gavin Wendt.
The move may play into the hands of BHP Billiton, which has said the benchmark system should go.
Rio Tinto confirmed that some contracts may revert to spot market pricing today as China's steelmakers argue for a deeper cut than its Asian rivals agreed.
A Rio spokesman, Gervase Greene, said talks were continuing: "Rio has long been a supporter of the benchmark system but if customers choose to buy on the spot market instead they will."
China overtook Japan as the biggest buyer of iron ore in 2003. Until then, benchmark prices had usually been set by Japanese or European steel makers.
Although other Asian steel makers have accepted new benchmark prices, mills in the world's largest iron ore market - China - have held out for a better deal.
Benchmark agreements settled by Rio Tinto included a 33 per cent cut to last year's prices. The Chinese mills are insisting on reductions of 40 to 45 per cent.
Mr Wendt said the Chinese risked being left short of supply unless they signed a deal, especially if demand picked up in Europe.
"It is a high-risk strategy for sure. They are trying to play this game of brinkmanship," Mr Wendt said. "They are trying to stare down Rio, and Rio isn't blinking."
The Brazilian producer Vale has been waiting for Australian miners to settle contract prices before concluding its own agreements. It has agreed to cut prices by 28 per cent for ArcelorMittal.
Source: Sydney Morning Herald
Rio Tinto and BHP Billiton had until midnight last night to reach an agreement or risk moving to the volatile spot prices for its customers.
It would be the first time in the 42-year history of the benchmark system that no agreement has been reached by July 1.
"I think there is definitely going to be a move away from the benchmark towards spot pricing and index pricing," said a Fat Prophets mining analyst, Gavin Wendt.
The move may play into the hands of BHP Billiton, which has said the benchmark system should go.
Rio Tinto confirmed that some contracts may revert to spot market pricing today as China's steelmakers argue for a deeper cut than its Asian rivals agreed.
A Rio spokesman, Gervase Greene, said talks were continuing: "Rio has long been a supporter of the benchmark system but if customers choose to buy on the spot market instead they will."
China overtook Japan as the biggest buyer of iron ore in 2003. Until then, benchmark prices had usually been set by Japanese or European steel makers.
Although other Asian steel makers have accepted new benchmark prices, mills in the world's largest iron ore market - China - have held out for a better deal.
Benchmark agreements settled by Rio Tinto included a 33 per cent cut to last year's prices. The Chinese mills are insisting on reductions of 40 to 45 per cent.
Mr Wendt said the Chinese risked being left short of supply unless they signed a deal, especially if demand picked up in Europe.
"It is a high-risk strategy for sure. They are trying to play this game of brinkmanship," Mr Wendt said. "They are trying to stare down Rio, and Rio isn't blinking."
The Brazilian producer Vale has been waiting for Australian miners to settle contract prices before concluding its own agreements. It has agreed to cut prices by 28 per cent for ArcelorMittal.
Source: Sydney Morning Herald
Ten Vie For Indian Coal Mines
Coal India Ltd. short-listed ArcelorMittal, Rio Tinto Group and eight other companies to develop its abandoned mines to help ease a shortage of coal used in power plants in Asia’s third-biggest economy.
State-owned Coal India is offering 18 of its abandoned mines for development, Chairman Partha S. Bhattacharyya said by telephone, confirming a report in the Business Standard newspaper today. The offered mines hold combined reserves of 1.6 billion metric tons, Bhattacharyya said.
Finding partners may help the country’s monopoly miner increase production by 29 percent within three years and allow the nation to avoid costly imports. India aims to add 13,000 megawatts of new power capacity every year, President Pratibha Patil told parliament June 4. Coal fuels half of India’s power- generation capacity.
“We are amongst the companies considering,” the mines, Ian Head, a spokesman for Rio Tinto, said in an e-mail today.
London-based Rio Tinto, JSW Steel Ltd., GVK Power & Infrastructure Ltd. and Essar Mineral Resources Ltd. were short- listed, according to the Business Standard report.
“Steel producers have captive power plants and if they can get mines that can assure coal supplies, they would be interested,” said Pawan Burde, an analyst at Angel Broking Ltd. in Mumbai. “Secondary steel producers use sponge iron where they need thermal coal and they may be trying to secure coal for future expansion plans.”
Steel demand growth may almost double the pace previously estimated with the government planning to spend $8.95 billion to build networks of roads, telephones, electricity and irrigation.
Coal India aims to complete the bidding process by the year-end, Bhattacharyya said. The company invited separate bids for the mines, owned by three of its units, he said.
“Our portion of the equity will largely be the mines,” Bhattacharyya said. “The partners can have 50 percent of the coal provided they have customers in the country.”
Coal India produced 403.7 million tons in the year that ended March, according to data on the company’s Web site. The company signed a 20-year agreement on May 29 to supply the fuel to the coal-fired plants of NTPC Ltd., the country’s biggest power producer.
India’s coal shortage will be about 228 million tons by the year ending March 2012, J. Goel, chief general manager of sales and marketing at Coal India, said on Feb. 24. Demand may reach 731 million tons a year by then, government estimates show.
Source: Bloomberg
State-owned Coal India is offering 18 of its abandoned mines for development, Chairman Partha S. Bhattacharyya said by telephone, confirming a report in the Business Standard newspaper today. The offered mines hold combined reserves of 1.6 billion metric tons, Bhattacharyya said.
Finding partners may help the country’s monopoly miner increase production by 29 percent within three years and allow the nation to avoid costly imports. India aims to add 13,000 megawatts of new power capacity every year, President Pratibha Patil told parliament June 4. Coal fuels half of India’s power- generation capacity.
“We are amongst the companies considering,” the mines, Ian Head, a spokesman for Rio Tinto, said in an e-mail today.
London-based Rio Tinto, JSW Steel Ltd., GVK Power & Infrastructure Ltd. and Essar Mineral Resources Ltd. were short- listed, according to the Business Standard report.
“Steel producers have captive power plants and if they can get mines that can assure coal supplies, they would be interested,” said Pawan Burde, an analyst at Angel Broking Ltd. in Mumbai. “Secondary steel producers use sponge iron where they need thermal coal and they may be trying to secure coal for future expansion plans.”
Steel demand growth may almost double the pace previously estimated with the government planning to spend $8.95 billion to build networks of roads, telephones, electricity and irrigation.
Coal India aims to complete the bidding process by the year-end, Bhattacharyya said. The company invited separate bids for the mines, owned by three of its units, he said.
“Our portion of the equity will largely be the mines,” Bhattacharyya said. “The partners can have 50 percent of the coal provided they have customers in the country.”
Coal India produced 403.7 million tons in the year that ended March, according to data on the company’s Web site. The company signed a 20-year agreement on May 29 to supply the fuel to the coal-fired plants of NTPC Ltd., the country’s biggest power producer.
India’s coal shortage will be about 228 million tons by the year ending March 2012, J. Goel, chief general manager of sales and marketing at Coal India, said on Feb. 24. Demand may reach 731 million tons a year by then, government estimates show.
Source: Bloomberg
Anglo-American In Iron Ore Stake Talks
There is growing talk that Anglo American is negotiating with a number of parties as part of efforts to cut its stake in its Brazilian iron ore unit and possibly use the proceeds to fend off an approach by Xstrata.
Anglo last week rejected a proposal from Xstrata for the two companies to merge.
Anwaar Wagner, an Old Mutual Investment Group South Africa analyst, said that given Anglo's stretched balance sheet, it made sense to sell up to half of its Brazilian iron ore business or possibly introduce a partner that would put up the capital to develop its Brazilian iron ore projects.
Wagner was not able to say how much Anglo would be able to get for selling half its Brazilian iron ore unit, but said the sale price should be as close as possible to the cost price.
Anglo bought the Minas-Rio iron ore project, 70 percent of the Amapa iron ore system and 49 percent of LLX Minas Rio for $6.65 billion (R53bn at yesterday's exchange rate).
Wagner said the sale of an interest in the Brazilian iron ore unit would allow Anglo to develop its iron ore, nickel and copper projects more quickly.
There were plenty of investors, especially in China, Japan, South Korea and the Middle East, that would be interested in taking a stake in the iron ore projects, he said.
Weekend reports suggested that Anglo was in talks with a number of parties, including Dubai Natural Resources World, Gulf Industrial Investment of Bahrain, Aluminium Corporation of China (Chinalco) and Japan-based Sojitz.
George Hudson, a London-based spokesman for Chinalco, said the aluminium group did not comment on speculation.
Anglo has estimated that it would cost $3.6bn to develop the Minas-Rio project.
Anglo spokesman James Wyatt-Tilby declined to speak about the newspaper reports, stating that the group did not comment on speculation.
Fitch Ratings yesterday said a combination of Xstrata and Anglo had the potential to create a number of benefits, including increased commodity and geographic diversification.
In another development, newspaper reports indicated that Anglo had approached former Rio Tinto chairman Jim Leng and National Grid's John Parker as candidates to replace chairman Mark Moody-Stuart.
London's Sunday Times said others on the shortlist included Thomson Reuters chairman Niall Fitzgerald and BHP Billiton director Paul Anderson.
"We are making good progress towards appointing a new chairman," Wyatt-Tilby said.
Source: Business Report, South Africa
Anglo last week rejected a proposal from Xstrata for the two companies to merge.
Anwaar Wagner, an Old Mutual Investment Group South Africa analyst, said that given Anglo's stretched balance sheet, it made sense to sell up to half of its Brazilian iron ore business or possibly introduce a partner that would put up the capital to develop its Brazilian iron ore projects.
Wagner was not able to say how much Anglo would be able to get for selling half its Brazilian iron ore unit, but said the sale price should be as close as possible to the cost price.
Anglo bought the Minas-Rio iron ore project, 70 percent of the Amapa iron ore system and 49 percent of LLX Minas Rio for $6.65 billion (R53bn at yesterday's exchange rate).
Wagner said the sale of an interest in the Brazilian iron ore unit would allow Anglo to develop its iron ore, nickel and copper projects more quickly.
There were plenty of investors, especially in China, Japan, South Korea and the Middle East, that would be interested in taking a stake in the iron ore projects, he said.
Weekend reports suggested that Anglo was in talks with a number of parties, including Dubai Natural Resources World, Gulf Industrial Investment of Bahrain, Aluminium Corporation of China (Chinalco) and Japan-based Sojitz.
George Hudson, a London-based spokesman for Chinalco, said the aluminium group did not comment on speculation.
Anglo has estimated that it would cost $3.6bn to develop the Minas-Rio project.
Anglo spokesman James Wyatt-Tilby declined to speak about the newspaper reports, stating that the group did not comment on speculation.
Fitch Ratings yesterday said a combination of Xstrata and Anglo had the potential to create a number of benefits, including increased commodity and geographic diversification.
In another development, newspaper reports indicated that Anglo had approached former Rio Tinto chairman Jim Leng and National Grid's John Parker as candidates to replace chairman Mark Moody-Stuart.
London's Sunday Times said others on the shortlist included Thomson Reuters chairman Niall Fitzgerald and BHP Billiton director Paul Anderson.
"We are making good progress towards appointing a new chairman," Wyatt-Tilby said.
Source: Business Report, South Africa
China Signals End To Stockpiling
A record-breaking run of commodities exports to China that has sustained the Australian economy may be set to end, with Beijing officials and advisers announcing an end to "strategic" stockpiling, and massive iron ore contracts likely to expire today.
A key state planning official has signalled a halt to government buying of copper, aluminium and other high-value metals because prices have risen too high.
"We don't anticipate that the country will continue to build its reserves," said Yu Dongming, the head of the metallurgical department of the National Development and Reform Commission.
China's resource buying spree helped Australia be the only significant economy to record overall export growth since the global financial crisis began.
Chinese buying has more than offset precipitous falls in orders from Japan, Korea and Taiwan, and helped resources and share prices to recover.
Zhang Bin, an economist with the Government's most influential advisers, the Chinese Academy of Social Sciences, warned that Beijing was leaning against Chinese speculative buying of a range of commodities including Australia's most lucrative exports, coal and iron ore.
"The commission is acting to reduce pressure on commodities prices and discourage over-production in heavy industry, including guiding steel production and reducing the building of excess capacity," Dr Zhang told the Herald.
"Too much increase in inventories of commodities is not a good thing because the economy is still not that strong and cannot consume this level of imports of iron ore and coal."
A decline in exports to China would ripple through the Australian economy.
Robert Rennie, a currency analyst at Westpac, said the dollar could fall with export volumes and prices.
"I think the risks are weighted to the downside," Mr Rennie said. "If China does slow demand for those key commodities, it is not entirely clear there is another obvious buyer out there."
Analysts say recent exports to China may be as good as it gets for Australia.
"Iron ore imports seem to have started to slow down," said Paul Bartholomew, the Shanghai editor of Steel Business Briefing. "I can't see it bettering the 57 million tonnes … in April."
Chinese buying will also be complicated by the failure of Australian miners and the Chinese steel industry to agree on new contract prices this year.
If an agreement is not reached by midnight tonight, then a large proportion of iron ore sales contracts will automatically expire - for the first time in the 40-year history of benchmark contracting.
Source: Sydney Morning Herald
A key state planning official has signalled a halt to government buying of copper, aluminium and other high-value metals because prices have risen too high.
"We don't anticipate that the country will continue to build its reserves," said Yu Dongming, the head of the metallurgical department of the National Development and Reform Commission.
China's resource buying spree helped Australia be the only significant economy to record overall export growth since the global financial crisis began.
Chinese buying has more than offset precipitous falls in orders from Japan, Korea and Taiwan, and helped resources and share prices to recover.
Zhang Bin, an economist with the Government's most influential advisers, the Chinese Academy of Social Sciences, warned that Beijing was leaning against Chinese speculative buying of a range of commodities including Australia's most lucrative exports, coal and iron ore.
"The commission is acting to reduce pressure on commodities prices and discourage over-production in heavy industry, including guiding steel production and reducing the building of excess capacity," Dr Zhang told the Herald.
"Too much increase in inventories of commodities is not a good thing because the economy is still not that strong and cannot consume this level of imports of iron ore and coal."
A decline in exports to China would ripple through the Australian economy.
Robert Rennie, a currency analyst at Westpac, said the dollar could fall with export volumes and prices.
"I think the risks are weighted to the downside," Mr Rennie said. "If China does slow demand for those key commodities, it is not entirely clear there is another obvious buyer out there."
Analysts say recent exports to China may be as good as it gets for Australia.
"Iron ore imports seem to have started to slow down," said Paul Bartholomew, the Shanghai editor of Steel Business Briefing. "I can't see it bettering the 57 million tonnes … in April."
Chinese buying will also be complicated by the failure of Australian miners and the Chinese steel industry to agree on new contract prices this year.
If an agreement is not reached by midnight tonight, then a large proportion of iron ore sales contracts will automatically expire - for the first time in the 40-year history of benchmark contracting.
Source: Sydney Morning Herald
Delay In Lease Holding Up Orissa Iron Ore Project
A delay in allotment of the iron ore lease is holding up Tata Steel’s six million-tonne project at Kalinganagar, Orissa.
Mr B. Muthuraman, Managing Director, Tata Steel, said on the sidelines of a recent press meet that according to an agreement with the Orissa Government, the company was to have got the lease for iron ore mining after putting in place 25 per cent of the equipment required for the project.
“We have met our commitment and are waiting for the State to allot the mines,” he added. Tata Steel signed a memorandum of understanding with the Government in 2004 to set up the plant.
The company had lined up an investment of Rs 15,400 crore and acquired most of the 1,360 hectares needed for the project. It had also placed orders worth Rs 6,500 crore for equipment such as blast furnace, steel melting shop and other civilian structures. The first phase was to have kicked off by 2008 but was delayed for a host of reasons.
As for the delay in the other five-million-tonne steel project planned at Maoist-infested Bastar in Chhattisgarh, Mr Muthuraman said, “The only solution for the problem (by the Maoists) lies in development. We chose the State knowing well of the challenges ahead and have not given up. Land acquisition is in progress but the reality is that the project is delayed.”
Tata Steel signed an agreement with the State in June 2005 for which nearly 80 per cent of the 2,063.06 hectares identified for the project (across 10 villages in the Lohandiguda block) were acquired. There was opposition from farmers to the move.
The company’s subsidiary, Jamshedpur Utilities and Services Company, has already built a model house to rehabilitate villagers and plans homes for all those families displaced by the project.
“Though the greenfield projects in Chhattisgarh, Jharkhand and Orissa are delayed, the company has not shunned any projects. We will focus spending on value-creating assets with accelerated benefits. The brownfield expansion at Jamshedpur will be completed on time,” Mr Muthuraman said.
Tata Steel also plans to increase capacity at Jameshedpur to 10 mt from six mt in 2011. It has set aside a capex of $2 billion (nearly Rs 9,500 crore) over the next three years. The scrip was up two per cent at Rs 397 on Monday.
Source: The Hindu Business Line
Mr B. Muthuraman, Managing Director, Tata Steel, said on the sidelines of a recent press meet that according to an agreement with the Orissa Government, the company was to have got the lease for iron ore mining after putting in place 25 per cent of the equipment required for the project.
“We have met our commitment and are waiting for the State to allot the mines,” he added. Tata Steel signed a memorandum of understanding with the Government in 2004 to set up the plant.
The company had lined up an investment of Rs 15,400 crore and acquired most of the 1,360 hectares needed for the project. It had also placed orders worth Rs 6,500 crore for equipment such as blast furnace, steel melting shop and other civilian structures. The first phase was to have kicked off by 2008 but was delayed for a host of reasons.
As for the delay in the other five-million-tonne steel project planned at Maoist-infested Bastar in Chhattisgarh, Mr Muthuraman said, “The only solution for the problem (by the Maoists) lies in development. We chose the State knowing well of the challenges ahead and have not given up. Land acquisition is in progress but the reality is that the project is delayed.”
Tata Steel signed an agreement with the State in June 2005 for which nearly 80 per cent of the 2,063.06 hectares identified for the project (across 10 villages in the Lohandiguda block) were acquired. There was opposition from farmers to the move.
The company’s subsidiary, Jamshedpur Utilities and Services Company, has already built a model house to rehabilitate villagers and plans homes for all those families displaced by the project.
“Though the greenfield projects in Chhattisgarh, Jharkhand and Orissa are delayed, the company has not shunned any projects. We will focus spending on value-creating assets with accelerated benefits. The brownfield expansion at Jamshedpur will be completed on time,” Mr Muthuraman said.
Tata Steel also plans to increase capacity at Jameshedpur to 10 mt from six mt in 2011. It has set aside a capex of $2 billion (nearly Rs 9,500 crore) over the next three years. The scrip was up two per cent at Rs 397 on Monday.
Source: The Hindu Business Line
North American Tunsgten To Mothball Yukon Mine
North American Tungsten Corp. will temporarily close down its Cantung mine near the N.W.T.-Yukon border in October, the company announced on Monday.
In a release, president Stephen Leahy cited declining tungsten prices and increasing stockpiles of ore for the company's decision to suspend operations at the mine effective Oct. 15.
The mine will then be put on a "care and maintenance program," with the hopes that it can be brought back into production when market conditions improve, Leahy said.
"This has been a difficult decision as we have seen our tungsten team evolve to be among the best in the world," Leahy stated in Monday's release.
"I expect that a tungsten supply shortfall will develop as the world economy improves. We fully intend to pursue plans to return the mine to full operations after markets have significantly firmed."
Leahy said the company will now focus on exploring at its Mactung deposit this summer, although it says it will conduct exploration drilling at Cantung as well.
The Cantung mine is located in the western Northwest Territories, just east of the Yukon border. It is accessible by a 300-kilometre all-weather road from Watson Lake, Yukon.
Almost every business in the town will be affected by the mine's shutdown, said Norm Griffiths, president of the Watson Lake Chamber of Commerce.
"The grocery store does supply. There [are] supplies that come from just about all of the business aspects," Griffiths told CBC News on Monday.
"There is also many of the other stores who would be selling anything from bug dope to rain gear or any of the industrial-type clothing required. So yeah, it affects everybody all across the whole spectrum."
The Cantung mine has gone through several owners since prospectors discovered a tungsten deposit there in 1954. North American Tungsten reopened the mine in December 2001, according to the company's website.
Work was suspended two years later, when North American Tungsten was placed under creditor protection, but production resumed in 2005.
Source: CBC
In a release, president Stephen Leahy cited declining tungsten prices and increasing stockpiles of ore for the company's decision to suspend operations at the mine effective Oct. 15.
The mine will then be put on a "care and maintenance program," with the hopes that it can be brought back into production when market conditions improve, Leahy said.
"This has been a difficult decision as we have seen our tungsten team evolve to be among the best in the world," Leahy stated in Monday's release.
"I expect that a tungsten supply shortfall will develop as the world economy improves. We fully intend to pursue plans to return the mine to full operations after markets have significantly firmed."
Leahy said the company will now focus on exploring at its Mactung deposit this summer, although it says it will conduct exploration drilling at Cantung as well.
The Cantung mine is located in the western Northwest Territories, just east of the Yukon border. It is accessible by a 300-kilometre all-weather road from Watson Lake, Yukon.
Almost every business in the town will be affected by the mine's shutdown, said Norm Griffiths, president of the Watson Lake Chamber of Commerce.
"The grocery store does supply. There [are] supplies that come from just about all of the business aspects," Griffiths told CBC News on Monday.
"There is also many of the other stores who would be selling anything from bug dope to rain gear or any of the industrial-type clothing required. So yeah, it affects everybody all across the whole spectrum."
The Cantung mine has gone through several owners since prospectors discovered a tungsten deposit there in 1954. North American Tungsten reopened the mine in December 2001, according to the company's website.
Work was suspended two years later, when North American Tungsten was placed under creditor protection, but production resumed in 2005.
Source: CBC
Rio Still In Talks With Chinese Steel Mills
Rio Tinto, the world's No. 2 iron ore miner, is still in talks with Chinese steel mills over iron ore prices, the firm said today, dousing speculation that both sides had given up on a June 30 deadline.
Iron ore miners and their Chinese customers have until Tuesday to reach a pact on contract prices for the current fiscal year, but analysts have said the two sides appear too far part at this late hour to strike a deal in time.
"We are officially still in negotiations," a Rio Tinto spokesman said when asked if the parties had given up trying to hammer out a deal by the deadline.
Spot prices delivered in China have risen around 25 per cent this month to a four-month high above $US80 a tonne, adding around $US5 in the last week, on expectations millions more tonnes will hit the market unless the miners and mills reach agreement.
Spot prices are now trading at $US12 to $US15 a tonne over benchmark prices already set separately with Japanese and South Korean steel mills, which recently agreed a 33 per cent price cut.
The higher spot price could be encouraging producers to take a harder line with Chinese steel mills, which are holding out for a minimum price cut of 40 to 45 per cent.
Rio Tinto and world No. 3 iron ore miner BHP Billiton have argued against a benchmark price set below the spot level, saying it is unfair to producers and fails to accurately reflect market demand.
If the miners and Chinese mills reach a deal by Tuesday, the contract price would be backdated to April 1 and run until March 31, 2010.
BHP Billiton declined to comment on the state of play.
"We could see a lot more emphasis on the spot market next week," said DJ Carmichael & Co mining analyst James Wilson.
"That translates into volatility and that will be a positive for the price."
The Australians want the mills to agree to a 33 per cent price cut over last year, in line with benchmarks already set with Japan's Nippon Steel and JFE and Posco of South Korea or buy ore on the spot market.
Source: Reuters
Iron ore miners and their Chinese customers have until Tuesday to reach a pact on contract prices for the current fiscal year, but analysts have said the two sides appear too far part at this late hour to strike a deal in time.
"We are officially still in negotiations," a Rio Tinto spokesman said when asked if the parties had given up trying to hammer out a deal by the deadline.
Spot prices delivered in China have risen around 25 per cent this month to a four-month high above $US80 a tonne, adding around $US5 in the last week, on expectations millions more tonnes will hit the market unless the miners and mills reach agreement.
Spot prices are now trading at $US12 to $US15 a tonne over benchmark prices already set separately with Japanese and South Korean steel mills, which recently agreed a 33 per cent price cut.
The higher spot price could be encouraging producers to take a harder line with Chinese steel mills, which are holding out for a minimum price cut of 40 to 45 per cent.
Rio Tinto and world No. 3 iron ore miner BHP Billiton have argued against a benchmark price set below the spot level, saying it is unfair to producers and fails to accurately reflect market demand.
If the miners and Chinese mills reach a deal by Tuesday, the contract price would be backdated to April 1 and run until March 31, 2010.
BHP Billiton declined to comment on the state of play.
"We could see a lot more emphasis on the spot market next week," said DJ Carmichael & Co mining analyst James Wilson.
"That translates into volatility and that will be a positive for the price."
The Australians want the mills to agree to a 33 per cent price cut over last year, in line with benchmarks already set with Japan's Nippon Steel and JFE and Posco of South Korea or buy ore on the spot market.
Source: Reuters
No Last Minute Deal In Iron Ore Talks
The benchmark pricing system that has governed the global iron ore trade for 40 years is likely to unravel at midnight tonight. Insiders say Australian miners and Chinese steel makers are miles away from sealing a last-minute deal.
The Herald understands that China's lead negotiators, the Chinese Iron & Steel Association and Baosteel, have scheduled no negotiations today despite a large proportion of long-term contracts due to expire. [NB See - Rio Still In Talks with Chinese Steel Mills]
Relations have been so strained that there have been no substantial talks at all in the past fortnight, despite recent reports to the contrary.
"Last year everything happened at the last moment but there is no sign of any movement at all this time around," said one negotiating insider. "I don't think anything will happen [today]."
The negotiations have never before been strung out to this late stage.
Steel makers in Japan, Korea and other nations outside China agreed last month to a 33 per cent cut in the benchmark contract price.
The miners, led by Rio Tinto, have demanded that Chinese steel mills accept the same.
But CISA has demanded a 40 per cent cut, despite spot market prices rising 15 per cent since April and above the new Japanese benchmark price.
China has become the dominant iron ore buyer as steel makers elsewhere have shut their blast furnaces since the global financial crisis. It accounts for more than three-quarters of global seaborne trade so far this year.
Ore contracts vary depending on when and with whom they were set, with some not due to expire until September 30.
But the Herald understands that a large proportion of the multi-year supply contracts will automatically expire tonight, leaving Rio, BHP and other miners in uncharted territory.
The Australian miners hope to realise a long-term strategic objective of selling directly on to the spot price or to an index that tracks the spot market.
This would eliminate the freight subsidy paid by north-east Asian mills to Brazil's Vale (because spot sales are priced after freight costs).
The Chinese steel association has threatened to ban Australian imports and rely on stockpiles, domestic production and imports from other nations if a deal is not reached today.
The miners hope to split the Chinese industry so that mills ignore their industry association and buy Australian ore on the spot market or under new individual benchmark contracts.
Source: Sydney Morning Herald
The Herald understands that China's lead negotiators, the Chinese Iron & Steel Association and Baosteel, have scheduled no negotiations today despite a large proportion of long-term contracts due to expire. [NB See - Rio Still In Talks with Chinese Steel Mills]
Relations have been so strained that there have been no substantial talks at all in the past fortnight, despite recent reports to the contrary.
"Last year everything happened at the last moment but there is no sign of any movement at all this time around," said one negotiating insider. "I don't think anything will happen [today]."
The negotiations have never before been strung out to this late stage.
Steel makers in Japan, Korea and other nations outside China agreed last month to a 33 per cent cut in the benchmark contract price.
The miners, led by Rio Tinto, have demanded that Chinese steel mills accept the same.
But CISA has demanded a 40 per cent cut, despite spot market prices rising 15 per cent since April and above the new Japanese benchmark price.
China has become the dominant iron ore buyer as steel makers elsewhere have shut their blast furnaces since the global financial crisis. It accounts for more than three-quarters of global seaborne trade so far this year.
Ore contracts vary depending on when and with whom they were set, with some not due to expire until September 30.
But the Herald understands that a large proportion of the multi-year supply contracts will automatically expire tonight, leaving Rio, BHP and other miners in uncharted territory.
The Australian miners hope to realise a long-term strategic objective of selling directly on to the spot price or to an index that tracks the spot market.
This would eliminate the freight subsidy paid by north-east Asian mills to Brazil's Vale (because spot sales are priced after freight costs).
The Chinese steel association has threatened to ban Australian imports and rely on stockpiles, domestic production and imports from other nations if a deal is not reached today.
The miners hope to split the Chinese industry so that mills ignore their industry association and buy Australian ore on the spot market or under new individual benchmark contracts.
Source: Sydney Morning Herald
Monday, June 29, 2009
Rio Still In Iron Ore Negotiations
Rio Tinto, the world's second-largest iron ore miner, is still in talks with Chinese steel mills over benchmark iron ore prices, a company spokesman said on Monday, the eve of a deadline for agreement.
Iron ore miners and their Chinese customers have until Tuesday to reach a pact on annual iron ore contract prices.
"We are officially still in negotiations," the spokesman told Reuters.
Spot prices delivered in China have already risen around 25 percent this month to a four-month high above $80 a tonne, around $5 in the last week.
Spot prices are now trading at $US12 to $US15 a tonne over benchmark prices already set separately with Japanese and South Korean steel mills, which recently agreed a 33 per cent price cut.
The higher spot price could be encouraging producers to take a harder line with Chinese steel mills, which are holding out for a minimum price cut of 40 to 45 per cent.
Rio Tinto and world No. 3 iron ore miner BHP Billiton have argued against a benchmark price set below the spot level, saying it is unfair to producers and fails to accurately reflect market demand.
If the miners and Chinese mills reach a deal by Tuesday, the contract price would be backdated to April 1 and run until March 31, 2010.
BHP Billiton declined to comment on the state of play.
"We could see a lot more emphasis on the spot market next week," said DJ Carmichael & Co mining analyst James Wilson.
"That translates into volatility and that will be a positive for the price."
The Australians want the mills to agree to a 33 per cent price cut over last year, in line with benchmarks already set with Japan's Nippon Steel and JFE and Posco of South Korea or buy ore on the spot market.
Source: Reuters, WA Today
Iron ore miners and their Chinese customers have until Tuesday to reach a pact on annual iron ore contract prices.
"We are officially still in negotiations," the spokesman told Reuters.
Spot prices delivered in China have already risen around 25 percent this month to a four-month high above $80 a tonne, around $5 in the last week.
Spot prices are now trading at $US12 to $US15 a tonne over benchmark prices already set separately with Japanese and South Korean steel mills, which recently agreed a 33 per cent price cut.
The higher spot price could be encouraging producers to take a harder line with Chinese steel mills, which are holding out for a minimum price cut of 40 to 45 per cent.
Rio Tinto and world No. 3 iron ore miner BHP Billiton have argued against a benchmark price set below the spot level, saying it is unfair to producers and fails to accurately reflect market demand.
If the miners and Chinese mills reach a deal by Tuesday, the contract price would be backdated to April 1 and run until March 31, 2010.
BHP Billiton declined to comment on the state of play.
"We could see a lot more emphasis on the spot market next week," said DJ Carmichael & Co mining analyst James Wilson.
"That translates into volatility and that will be a positive for the price."
The Australians want the mills to agree to a 33 per cent price cut over last year, in line with benchmarks already set with Japan's Nippon Steel and JFE and Posco of South Korea or buy ore on the spot market.
Source: Reuters, WA Today
ICVL To Start Overseas Coal Acquisitions By 2011-12
International Coal Ventures (ICVL), a special purpose vehicle created by five giant PSUs to buy coal assets abroad, has set a target of acquiring at least one such property by 2011-12. Created by sharing holding between NTPC, Coal India, NMDC, Steel Authority of India and Rashtriya Ispat Nigam, ICVL is scouting for opportunities in four countries — Australia, Mozambique, the US and Canada.
“ICVL has set a target of buying a coal property by 2011-12. It should preferably be a 5 million-tonne asset,” PK Bishnoi, chairman and managing director of RINL and executive president of ICVL, told ET. “The idea is to get access to properties with estimated reserves of around 500 million tonnes,” he added.
The SPV has bid for a coking coal property in Mozambique after initial survey of the asset. Incidentally, Mozambique has one of the largest reserves of thermal and coking coal in the world. “The latter, however, has asked for certain clarifications with regard to the bid,” a source said.
ICVL can garner a kitty of nearly Rs 10,000 crore to fund its acquisitions, if it decides to leverage its equity base of Rs 3,500 crore. The war chest could be enlarged further to Rs 25,000 crore. To a specific question on the size of a potential deal, the source added: “There is no fixed price budget. Rather, it would depend on the market price prevailing at the time of the acquisition.”
Incidentally, the global economic downturn has led to a situation where sellers are using every opportunity to delay finalisation of potential deals in the hope of an improvement in asset valuations. ICVL has shortlisted some ten merchant bankers who are advising the company on potential acquisition targets. “Depending on their interests, offer and expertise, we are in talks with them on potential target assets,” the source added.
Source: Economic Times
“ICVL has set a target of buying a coal property by 2011-12. It should preferably be a 5 million-tonne asset,” PK Bishnoi, chairman and managing director of RINL and executive president of ICVL, told ET. “The idea is to get access to properties with estimated reserves of around 500 million tonnes,” he added.
The SPV has bid for a coking coal property in Mozambique after initial survey of the asset. Incidentally, Mozambique has one of the largest reserves of thermal and coking coal in the world. “The latter, however, has asked for certain clarifications with regard to the bid,” a source said.
ICVL can garner a kitty of nearly Rs 10,000 crore to fund its acquisitions, if it decides to leverage its equity base of Rs 3,500 crore. The war chest could be enlarged further to Rs 25,000 crore. To a specific question on the size of a potential deal, the source added: “There is no fixed price budget. Rather, it would depend on the market price prevailing at the time of the acquisition.”
Incidentally, the global economic downturn has led to a situation where sellers are using every opportunity to delay finalisation of potential deals in the hope of an improvement in asset valuations. ICVL has shortlisted some ten merchant bankers who are advising the company on potential acquisition targets. “Depending on their interests, offer and expertise, we are in talks with them on potential target assets,” the source added.
Source: Economic Times
Sunday, June 28, 2009
Iron Ore Spot Price Soars To Four-Month High
Chinese spot iron ore prices have surged to a four-month high, boosting BHP Billiton and Rio Tinto's fortunes as annual contract price talks with China head into uncharted territory.
Metal Bulletin-posted spot prices of iron ore at Chinese ports rose $US4 to $US81.50 a tonne in the past week, climbing above the equivalent price Rio and BHP recently negotiated with their other Asian customers.
The China Iron & Steel Association, which is the sole Chinese negotiator with BHP and Rio in this year's talks, has bucked convention by refusing to bow to a 33 per cent discount on benchmark iron ore fines contract prices agreed to by Japanese, Korean and Taiwanese steelmakers.
Instead, and despite opposition from individual Chinese steelmakers, CISA is holding out for a 40 per cent cut. If the talks, which started on April 1, stretch into July for the first time, the stakes will become higher. It will mean that, from Wednesday, some contracts can be dissolved, replacing the security of contracted ore with the volatility of the spot market.
CISA has said it is prepared to draw talks out beyond June 30, further putting at risk the traditional benchmark system. BHP is keen to kill off the traditional annual price negotiations and replace them with contracts based on price indexes.
Source: The Australian
Metal Bulletin-posted spot prices of iron ore at Chinese ports rose $US4 to $US81.50 a tonne in the past week, climbing above the equivalent price Rio and BHP recently negotiated with their other Asian customers.
The China Iron & Steel Association, which is the sole Chinese negotiator with BHP and Rio in this year's talks, has bucked convention by refusing to bow to a 33 per cent discount on benchmark iron ore fines contract prices agreed to by Japanese, Korean and Taiwanese steelmakers.
Instead, and despite opposition from individual Chinese steelmakers, CISA is holding out for a 40 per cent cut. If the talks, which started on April 1, stretch into July for the first time, the stakes will become higher. It will mean that, from Wednesday, some contracts can be dissolved, replacing the security of contracted ore with the volatility of the spot market.
CISA has said it is prepared to draw talks out beyond June 30, further putting at risk the traditional benchmark system. BHP is keen to kill off the traditional annual price negotiations and replace them with contracts based on price indexes.
Source: The Australian
Ferrochrome Benchmark Price Rises 29 Per Cent
South African ferrochrome producer Merafe Resources said on Friday the European benchmark ferrochrome price has been settled at $0.89 per pound for the third quarter of 2009.
The settlement is an increase of 29 percent from $0.69 per pound in the second quarter of 2009.
Source: Reuters
The settlement is an increase of 29 percent from $0.69 per pound in the second quarter of 2009.
Source: Reuters
Saturday, June 27, 2009
China Ferroalloy Production And Exports Down
Antaike, the state-owned metals information provider said that China's total ferroalloy output is expected at 14 to 15 million tonnes in 2009, down from 18.25 million tonnes in 2008.
The fall is attributed to poor market demand and weak prices and Antaike said that "Judging from the decline in local ferroalloy output during the first five months of this year, total national volume is expected to reach only 14 to 15 million tonne in 2009.”
State statistics showed that China produced 7.2786 million tonne of ferroalloys during the first five months of this year down by 5% from the same period a year ago.
Customs figures showed that total ferroalloy exports from China were 313,000 tonnes during January to May 2009 down 78% from the same period last year.
Meanwhile, both Antaike and the Chinese Chamber of Commerce of Metals, Minerals and Chemicals of Importers and Exporters, said it was unlikely China would relax its ferroalloy materials export policy despite the European Union seeking help from the WTO to consult with China regarding Chinese raw material export restrictions.
China now imposes a 20% export tax on ferrovanadium and a 5% export tax on vanadium pentoxide, or V205.
Source: Platts/Steel Guru
The fall is attributed to poor market demand and weak prices and Antaike said that "Judging from the decline in local ferroalloy output during the first five months of this year, total national volume is expected to reach only 14 to 15 million tonne in 2009.”
State statistics showed that China produced 7.2786 million tonne of ferroalloys during the first five months of this year down by 5% from the same period a year ago.
Customs figures showed that total ferroalloy exports from China were 313,000 tonnes during January to May 2009 down 78% from the same period last year.
Meanwhile, both Antaike and the Chinese Chamber of Commerce of Metals, Minerals and Chemicals of Importers and Exporters, said it was unlikely China would relax its ferroalloy materials export policy despite the European Union seeking help from the WTO to consult with China regarding Chinese raw material export restrictions.
China now imposes a 20% export tax on ferrovanadium and a 5% export tax on vanadium pentoxide, or V205.
Source: Platts/Steel Guru
Friday, June 26, 2009
SA - Xstrata/Anglo Merger 'Must Benefit Country'
South Africa's Department of Minerals and Energy will continue to engage with Anglo American and Xstrata on Xstrata’s proposed merger and would ultimately make a decision “in the best interests of the country”, according to spokesman Jeremy Michaels.
Minerals and energy director- general Sandile Nogxina held separate meetings with Anglo American CEO Cynthia Carroll and representatives of Xstrata yesterday after Xstrata last week proposed a “merger of equals” with Anglo American.
Anglo American has rejected the proposal and trades unions and government representatives have expressed fears about the effect such a merger would have on jobs and competition.
Xstrata emphasised it did not envisage making cost savings through retrenchments in SA.
Locally, Xstrata has coal, ferrochrome and platinum interests while Anglo American is prominent in platinum, coal, iron- ore and diamonds.
Outside SA, the two companies also cross-over in copper, nickel and zinc.
Michaels said Anglo and Xstrata had provided some details about the proposed merger but the department required more information before it could make a decision.
Anglo American and Xstrata declined to comment on their meetings with the department.
Source: Business Day
Minerals and energy director- general Sandile Nogxina held separate meetings with Anglo American CEO Cynthia Carroll and representatives of Xstrata yesterday after Xstrata last week proposed a “merger of equals” with Anglo American.
Anglo American has rejected the proposal and trades unions and government representatives have expressed fears about the effect such a merger would have on jobs and competition.
Xstrata emphasised it did not envisage making cost savings through retrenchments in SA.
Locally, Xstrata has coal, ferrochrome and platinum interests while Anglo American is prominent in platinum, coal, iron- ore and diamonds.
Outside SA, the two companies also cross-over in copper, nickel and zinc.
Michaels said Anglo and Xstrata had provided some details about the proposed merger but the department required more information before it could make a decision.
Anglo American and Xstrata declined to comment on their meetings with the department.
Source: Business Day
Vale In No Rush To Conclude Iron Ore Talks
Brazilian mining group Vale is in no rush to finish iron ore price talks with Chinese steelmakers and sees little possibility they could buy ore on spot markets, the company's chief executive said on Thursday.
"We are speaking with Chinese clients. What we want is to arrive at good terms, but we have to give it time," Roger Agnelli told a news conference in Rio de Janeiro.
He rejected the idea that Chinese steelmakers could turn to spot markets beyond the short term, saying prices would be too high.
With less than a week before the deadline to agree on a price for annual iron ore contracts, China is facing the choice of either buying all its ore on the spot market or accepting the same deal agreed by rivals.
A slight recovery in both steel and iron ore prices has undercut China's demands for a bigger price reduction than the 33 percent that other Asian mills agreed.
Agnelli also denied market speculation that Vale was seeking to merge with another mining company amid a flurry of consolidation in the industry.
"The markets speculate a lot; we are not interested," he said, regarding talk that Vale may try to acquire Anglo American or Xstrata after Anglo American rejected Xstrata's nil-premium merger bid.
Potential mining mergers have sparked talk that Vale may try to acquire a major industry player, though local analysts say Vale would probably target small companies as the economy slows.
The flurry of industry consolidation, including a possible joint venture between Vale rivals Rio Tinto and BHP Billiton could put takeover pressure on Vale a year and a half after its failed effort to buy Xstrata.
Vale, the world's largest iron ore miner, has for years been seeking to diversify operations by including a greater content of non-ferrous metals, a strategy that led to its 2006 purchase of Canadian nickel miner Inco.
Vale signed a preliminary accord on Thursday with state-run oil company Petrobras to buy a 25 percent stake in exploration rights for oil and gas blocks off Brazil's coast.
It said in a statement the accord laid the foundations for Vale's acquisition of exploration rights in the ES-M-466, ES-M-468 and ES-M-527 blocks off the coast of Brazil's Espirito Santo State, which Petrobras acquired via auction.
The partnership between Brazil's two biggest companies still has to be approved by authorities, Vale said.
Source: Reuters
"We are speaking with Chinese clients. What we want is to arrive at good terms, but we have to give it time," Roger Agnelli told a news conference in Rio de Janeiro.
He rejected the idea that Chinese steelmakers could turn to spot markets beyond the short term, saying prices would be too high.
With less than a week before the deadline to agree on a price for annual iron ore contracts, China is facing the choice of either buying all its ore on the spot market or accepting the same deal agreed by rivals.
A slight recovery in both steel and iron ore prices has undercut China's demands for a bigger price reduction than the 33 percent that other Asian mills agreed.
Agnelli also denied market speculation that Vale was seeking to merge with another mining company amid a flurry of consolidation in the industry.
"The markets speculate a lot; we are not interested," he said, regarding talk that Vale may try to acquire Anglo American or Xstrata after Anglo American rejected Xstrata's nil-premium merger bid.
Potential mining mergers have sparked talk that Vale may try to acquire a major industry player, though local analysts say Vale would probably target small companies as the economy slows.
The flurry of industry consolidation, including a possible joint venture between Vale rivals Rio Tinto and BHP Billiton could put takeover pressure on Vale a year and a half after its failed effort to buy Xstrata.
Vale, the world's largest iron ore miner, has for years been seeking to diversify operations by including a greater content of non-ferrous metals, a strategy that led to its 2006 purchase of Canadian nickel miner Inco.
Vale signed a preliminary accord on Thursday with state-run oil company Petrobras to buy a 25 percent stake in exploration rights for oil and gas blocks off Brazil's coast.
It said in a statement the accord laid the foundations for Vale's acquisition of exploration rights in the ES-M-466, ES-M-468 and ES-M-527 blocks off the coast of Brazil's Espirito Santo State, which Petrobras acquired via auction.
The partnership between Brazil's two biggest companies still has to be approved by authorities, Vale said.
Source: Reuters
Chinese Steel Mills Deny Having Stake In New Deposit
Two Chinese steel mills on Friday denied holding a stake in, or firm plans to develop, an iron ore deposit that local officials had touted as the biggest in Asia.
On Wednesday, the China News Agency reported officials in northeast China's Liaoning province as saying the newly discovered deposit had reserves of at least 3 billion tonnes, and could produce up to 5 million tonnes by 2015.
The announcement came as negotiations between Chinese steel mills and overseas iron ore suppliers approached the June 30 deadline, when term contracts revert to spot prices.
Benxi Iron and Steel Group owned a 20 percent stake in the deposit, the report had said. Bengang officially merged with Anshan Iron and Steel Group four years ago, but is still de facto independent.
"Bengang Group denies that it has a 20 percent stake in this deposit, or that it has signed any agreement with Shenzhen Yizongxin or the Liaoning Geological Bureau, although it is considering participating with the consortium in initial exploration and development work," Bengang Steel Plates Co Ltd, a Bengang-listed unit, said in a statement.
"But because this project has a number of approvals to go through, the outcome is not at all certain."
A Liaoning geological official reached by Reuters on Wednesday had said the main investor was a Shenzhen-based company, which he declined to name, and added the Liaoning government would also own 20 percent.
"After requesting more information from Anshan Iron and Steel Group, the listed company management and the group can state that we have absolutely no knowledge of this resource," Angang Steel Co (000898.SZ) said in a statement to the Shenzhen exchange.
"Moreover we have absolutely no intention to invest in its development and have never even discussed such a move."
Shares in Angang had been suspended on the Hong Kong and Shenzhen exchanges on Thursday, pending an announcement.
Some analysts had doubted how much of the deposit could be economically mined, noting that it was at least one kilometre below the surface. Iron content in the magnetite and hematite orebody ranged from a desirable 62 percent to a relatively unimpressive 25 percent.
After years of inactivity, China's geological bureaus have broken out of the Soviet pattern of simply exploring for resources, then handing them over to state-owned firms for development.
They now often develop deposits themselves and have expanded aggressively into overseas explorations.
However, the bureaux and the local governments where their deposits are located have also become more prone to exaggerating assets in order to attract and sign an investment partner.
Source: Reuters
On Wednesday, the China News Agency reported officials in northeast China's Liaoning province as saying the newly discovered deposit had reserves of at least 3 billion tonnes, and could produce up to 5 million tonnes by 2015.
The announcement came as negotiations between Chinese steel mills and overseas iron ore suppliers approached the June 30 deadline, when term contracts revert to spot prices.
Benxi Iron and Steel Group owned a 20 percent stake in the deposit, the report had said. Bengang officially merged with Anshan Iron and Steel Group four years ago, but is still de facto independent.
"Bengang Group denies that it has a 20 percent stake in this deposit, or that it has signed any agreement with Shenzhen Yizongxin or the Liaoning Geological Bureau, although it is considering participating with the consortium in initial exploration and development work," Bengang Steel Plates Co Ltd, a Bengang-listed unit, said in a statement.
"But because this project has a number of approvals to go through, the outcome is not at all certain."
A Liaoning geological official reached by Reuters on Wednesday had said the main investor was a Shenzhen-based company, which he declined to name, and added the Liaoning government would also own 20 percent.
"After requesting more information from Anshan Iron and Steel Group, the listed company management and the group can state that we have absolutely no knowledge of this resource," Angang Steel Co (000898.SZ) said in a statement to the Shenzhen exchange.
"Moreover we have absolutely no intention to invest in its development and have never even discussed such a move."
Shares in Angang had been suspended on the Hong Kong and Shenzhen exchanges on Thursday, pending an announcement.
Some analysts had doubted how much of the deposit could be economically mined, noting that it was at least one kilometre below the surface. Iron content in the magnetite and hematite orebody ranged from a desirable 62 percent to a relatively unimpressive 25 percent.
After years of inactivity, China's geological bureaus have broken out of the Soviet pattern of simply exploring for resources, then handing them over to state-owned firms for development.
They now often develop deposits themselves and have expanded aggressively into overseas explorations.
However, the bureaux and the local governments where their deposits are located have also become more prone to exaggerating assets in order to attract and sign an investment partner.
Source: Reuters
Iron Ore - Fluctuating Shipping Costs Having An Effect
Before Baosteel, on behalf of China's steel industry, took part in the negotiations with international miners in 2003, Chinese steelmakers were not as concerned about the iron ore prices as today.
Since 2005, the industry has been arguing that, as the world's largest iron ore importer, China deserves a bigger say in the negotiations with Rio Tinto, BHP Billiton and Vale on annual iron ore pricing. However, iron ore prices jumped over 71 percent in 2005 and by another 70 percent in 2008. This year, Japanese and South Korean firms have accepted a 33 percent cut on last year's price.
Though the China Iron and Steel Association (CISA) is still seeking a "China price", a 40 percent cut in the price of iron ore from Australia, many feel that the industry's weakness has been exposed through the negotiations.
Experts attribute the industry's weak stance in negotiations to the low industrial concentration of the country's steel industry.
In the negotiations, buyers are too scattered, compared with the Big Three suppliers who control over 70 percent of global iron ore trade, said Mei Xinyu, researcher with the Chinese Academy of International Trade and Economic Cooperation, affiliated to the Ministry of Commerce.
"It is tough to form a joint force among buyers of different countries and in China due to the large number of players," he said.
Despite the CISA banning steelmakers from making individual contracts with suppliers, there have been reports of small mills signing agreements with foreign miners.
A number of steel mills in Shanxi province have reportedly signed long-term contracts with foreign miners for this year's iron ore supply last week shortly after 35 Chinese mills signed supply contracts involving 50 million tons of imports with Vale.
Mei added the industry also made some controversial policies, which helped strengthen the buyers' position in talks. Increasing the tax rebates on steel exports has boosted China's demand for iron ore.
The Japanese and South Korean mills can afford a higher price for iron ore imports than Chinese players as many of them own shares in some Australian miners and can still make profit with the 33 percent price cut this year.
Zeng Jiesheng, analyst with Mysteel.com, added sea freight is another key factor affecting the costs of mills because the price agreed between steel mills and suppliers is usually FOB price.
He explained that most Chinese mills lack long-term shipment agreements and are hence exposed to the sea freight price ups-and-downs.
Since the benchmark price was inked by Japanese and South Korean mills last month, sea freight from Brazil and Australia to Chinese ports have increased $24 and $5 per ton respectively.
Its influence on steel mills' costs is larger than the around $6 gap between a 40 percent and 33 percent price cut, Zeng said.
He suggested that Chinese mills must learn from their Japanese rivals who are largely reliant on long-term iron ore supplies but sign annual shipment contracts for them at the same time.
Source: China Daily
Since 2005, the industry has been arguing that, as the world's largest iron ore importer, China deserves a bigger say in the negotiations with Rio Tinto, BHP Billiton and Vale on annual iron ore pricing. However, iron ore prices jumped over 71 percent in 2005 and by another 70 percent in 2008. This year, Japanese and South Korean firms have accepted a 33 percent cut on last year's price.
Though the China Iron and Steel Association (CISA) is still seeking a "China price", a 40 percent cut in the price of iron ore from Australia, many feel that the industry's weakness has been exposed through the negotiations.
Experts attribute the industry's weak stance in negotiations to the low industrial concentration of the country's steel industry.
In the negotiations, buyers are too scattered, compared with the Big Three suppliers who control over 70 percent of global iron ore trade, said Mei Xinyu, researcher with the Chinese Academy of International Trade and Economic Cooperation, affiliated to the Ministry of Commerce.
"It is tough to form a joint force among buyers of different countries and in China due to the large number of players," he said.
Despite the CISA banning steelmakers from making individual contracts with suppliers, there have been reports of small mills signing agreements with foreign miners.
A number of steel mills in Shanxi province have reportedly signed long-term contracts with foreign miners for this year's iron ore supply last week shortly after 35 Chinese mills signed supply contracts involving 50 million tons of imports with Vale.
Mei added the industry also made some controversial policies, which helped strengthen the buyers' position in talks. Increasing the tax rebates on steel exports has boosted China's demand for iron ore.
The Japanese and South Korean mills can afford a higher price for iron ore imports than Chinese players as many of them own shares in some Australian miners and can still make profit with the 33 percent price cut this year.
Zeng Jiesheng, analyst with Mysteel.com, added sea freight is another key factor affecting the costs of mills because the price agreed between steel mills and suppliers is usually FOB price.
He explained that most Chinese mills lack long-term shipment agreements and are hence exposed to the sea freight price ups-and-downs.
Since the benchmark price was inked by Japanese and South Korean mills last month, sea freight from Brazil and Australia to Chinese ports have increased $24 and $5 per ton respectively.
Its influence on steel mills' costs is larger than the around $6 gap between a 40 percent and 33 percent price cut, Zeng said.
He suggested that Chinese mills must learn from their Japanese rivals who are largely reliant on long-term iron ore supplies but sign annual shipment contracts for them at the same time.
Source: China Daily
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