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
Tuesday, June 30, 2009
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
Thursday, June 25, 2009
China Paying Over Benchmark Price For Coking Coal
China's steel production is soaring way over estimates and the country has paid above the benchmark price for a shipment of coking coal, which could transform the global market for the key steel-making ingredient, a key coal industry analyst said on Thursday.
"We have just heard of a spot sale from Australia to China of $132 per tonne, which is over the benchmark price of $129," Gerard McCloskey, of the McCloskey Group, told a coal industry conference.
He said if China was buying coking, or metallurgical, coal for over $130 per tonne, "this will herald what will happen the rest of the year." It has become a net importer of the coal since there have been several mine closures in China recently.
In an interview with Reuters, McCloskey said news of China paying over the benchmark price was a first. "We've seen a lot of spot business done lower than that into China -- $105, $115, so this is a major switch.
"China is going to be a major buyer through the year and maybe indefinitely, they seem to have closed up quite a lot of production," he said.
Paying that price shows China is really serious "and underlines their real need and the lack of availability of coking coal in China," McCloskey said.
"Their steel market is going like the clappers (vigorously) and they're importing a lot more iron ore in the last two months -- massive tonnages. "If it carries on, it's overwhelmingly significant," he said, adding it would transform the whole coking coal market.
The news comes as the global steel industry has started to show early signs of rebounding from the recession that dried up demand late last year, forcing steelmakers to cut production sharply.
Analyst Chris Plummer, managing director of Metal Strategies said that China was on track to produce 540 million tonnes of steel this year -- way above its previous estimate of 465 million tonnes.
"And it does not look like slowing down," he told the Coal USA 2009 conference organized by the McCloskey Group.
McCloskey said that trend was good for coking coal exports, especially to Asia. But, despite robust growth in China and India, he said the general outlook for coking coal remains poor and is "appalling" in North America, Europe and Brazil.
Source: The Guardian
"We have just heard of a spot sale from Australia to China of $132 per tonne, which is over the benchmark price of $129," Gerard McCloskey, of the McCloskey Group, told a coal industry conference.
He said if China was buying coking, or metallurgical, coal for over $130 per tonne, "this will herald what will happen the rest of the year." It has become a net importer of the coal since there have been several mine closures in China recently.
In an interview with Reuters, McCloskey said news of China paying over the benchmark price was a first. "We've seen a lot of spot business done lower than that into China -- $105, $115, so this is a major switch.
"China is going to be a major buyer through the year and maybe indefinitely, they seem to have closed up quite a lot of production," he said.
Paying that price shows China is really serious "and underlines their real need and the lack of availability of coking coal in China," McCloskey said.
"Their steel market is going like the clappers (vigorously) and they're importing a lot more iron ore in the last two months -- massive tonnages. "If it carries on, it's overwhelmingly significant," he said, adding it would transform the whole coking coal market.
The news comes as the global steel industry has started to show early signs of rebounding from the recession that dried up demand late last year, forcing steelmakers to cut production sharply.
Analyst Chris Plummer, managing director of Metal Strategies said that China was on track to produce 540 million tonnes of steel this year -- way above its previous estimate of 465 million tonnes.
"And it does not look like slowing down," he told the Coal USA 2009 conference organized by the McCloskey Group.
McCloskey said that trend was good for coking coal exports, especially to Asia. But, despite robust growth in China and India, he said the general outlook for coking coal remains poor and is "appalling" in North America, Europe and Brazil.
Source: The Guardian
Mechel "To Deliver 2Mn Tonnes To Asia" This Year
Russian steel and coal producer Mechel said on Thursday it had signed contracts to deliver about 2 million tonnes of coking coal concentrate to unnamed buyers in China, Japan and South Korea this year.
The company will also ship 2.3 million tonnes of steam coal to these countries this year as it pursues its strategy of expanding in Asian markets.
Mechel, controlled by businessman Igor Zyuzin, did not provide any financial details associated with its coking coal contracts.
China in particular has become an increasingly important market for Russian coking coal producers as domestic steel output slumps.
"I would like to emphasize that entering into new large contracts with Chinese companies allows us to increase the load of our coal mining facilities that is of particular importance in the current challenging business environment," Mechel Senior Vice President Vladimir Polin said in a statement.
Mechel's first quarter coking coal production plummeted 76 percent year-on-year to 1.0 million tonnes as orders from domestic steel producers dried up.
During a conference call earlier this month company executives said key Russian steel producers MMK and NLMK were no longer purchasing its coking coal.
Source: Reuters
The company will also ship 2.3 million tonnes of steam coal to these countries this year as it pursues its strategy of expanding in Asian markets.
Mechel, controlled by businessman Igor Zyuzin, did not provide any financial details associated with its coking coal contracts.
China in particular has become an increasingly important market for Russian coking coal producers as domestic steel output slumps.
"I would like to emphasize that entering into new large contracts with Chinese companies allows us to increase the load of our coal mining facilities that is of particular importance in the current challenging business environment," Mechel Senior Vice President Vladimir Polin said in a statement.
Mechel's first quarter coking coal production plummeted 76 percent year-on-year to 1.0 million tonnes as orders from domestic steel producers dried up.
During a conference call earlier this month company executives said key Russian steel producers MMK and NLMK were no longer purchasing its coking coal.
Source: Reuters
Nystar Estimates Global Zinc Output Down 15 Per Cent
Belgian zinc producer Nyrstar S.A. said zinc smelters and miners have cut output by approximately 1.7 million metric tons each in the current downturn.
The company estimates zinc miners have reduced output by approximately 15.2% of total world mine capacity in 2009 and smelters by 16.2% of total world smelting capacity.
Source: Commodity Online
The company estimates zinc miners have reduced output by approximately 15.2% of total world mine capacity in 2009 and smelters by 16.2% of total world smelting capacity.
Source: Commodity Online
Teck To Cut Output At Highland Valley Copper Mine
Canada's Teck Resources expects to reduce copper output at its Highland Valley mine in British Columbia, Canada, by about 16,000 tonnes in the second half of the year and 52,000 tonnes in 2010, due to geotechnical issues, it said on Thursday.
"Access to some of the ore in the Valley Pit is expected to be restricted for at least the next 18 months," the company said in a statement on its website.
"The shortfall is expected to be partially made up from lower grade ore from the Lornex and Highmont pits."
Teck has revised its 2009 production forecast for the operation in British Columbia, Canada to 117,000 tonnes of contained copper, with 2010 output forecast at a preliminary 85,000 tonnes.
Highland Valley, which produced 122,300 tonnes last year, had been expected to boost output by about 10,000 tonnes this year due to anticipated improvements in ore grades and recoveries.
The company statement did not elaborate on details of the geotechnical issues but said they were distinct from two geotechnical events last year that had been substantially dealt with.
It said remedial actions at the mine were expected to include at least 40 million tonnes of additional stripping and placement of a buttress.
Highland Valley's life-of-mine ore reserves are expected to be reduced by about two percent, although the size of the reduction will depend on the final design of remedial actions, the company said.
The problems at Highland Valley have reduced the company's total copper mine output target for 2010 to 342,500 tonnes from an earlier expected 395,000 tonnes, with the start-up of the Carmen de Andacollo concentrator in Chile.
Teck said it had engaged third party geotechnical consultants to further assess the extent of the issues. That work was expected to be completed by the end of 2009.
Source: Reuters
"Access to some of the ore in the Valley Pit is expected to be restricted for at least the next 18 months," the company said in a statement on its website.
"The shortfall is expected to be partially made up from lower grade ore from the Lornex and Highmont pits."
Teck has revised its 2009 production forecast for the operation in British Columbia, Canada to 117,000 tonnes of contained copper, with 2010 output forecast at a preliminary 85,000 tonnes.
Highland Valley, which produced 122,300 tonnes last year, had been expected to boost output by about 10,000 tonnes this year due to anticipated improvements in ore grades and recoveries.
The company statement did not elaborate on details of the geotechnical issues but said they were distinct from two geotechnical events last year that had been substantially dealt with.
It said remedial actions at the mine were expected to include at least 40 million tonnes of additional stripping and placement of a buttress.
Highland Valley's life-of-mine ore reserves are expected to be reduced by about two percent, although the size of the reduction will depend on the final design of remedial actions, the company said.
The problems at Highland Valley have reduced the company's total copper mine output target for 2010 to 342,500 tonnes from an earlier expected 395,000 tonnes, with the start-up of the Carmen de Andacollo concentrator in Chile.
Teck said it had engaged third party geotechnical consultants to further assess the extent of the issues. That work was expected to be completed by the end of 2009.
Source: Reuters
Angang Shares Suspended Ahead Of Iron Ore Clarification
Trading in shares of Chinese steelmaker, Angang Steel Co Ltd, was suspended on Thursday after the stock rose for a second straight day on news that China had found Asia's biggest iron ore deposits.
Angang was halted in Hong Kong and Shenzhen under exchange requests and it will issue a statement later to clarify recent media reports, a company spokesman told Reuters.
China is likely to let its state-owned steel firms, including the parents of Angang and Bengang Steel operate the newly found iron ore deposits in the northeastern province of Liaoning, Guangzhou Daily reported on Thursday.
The asset will be gradually sold to the listed companies, the newspaper quoted an analyst as saying.
Angang rose 3.22 percent in Hong Kong to HK$13.48 before the suspension in late morning. It rose 5.3 percent in Hong Kong and surged 7.4 percent in Shenzhen on Wednesday after China said it found the deposit, which has estimated reserves of at lest 3 billion tonnes.
Both Angang and Bengang Steel, which rose to its 10 percent limit on Wednesday, were suspended on Thursday morning.
The discovery is positive as it should help to bring down Chinese steel producers' production cost and enhance their bargaining power in iron ore contract price negotiations, CIMB said in a research report on Thursday.
"Angang told us that it is keen to bid for ownership of the iron ore deposits," it said. But Morgan Stanley forecast Angang's share price will fall relative to the country index over the next 60 days.
"Yesterday's share performance, which appeared to benefit from a government announcement that a major iron-ore mine had been discovered in Liaoning province, appears vulnerable to a pull-back," it said in a research note on Thursday.
Morgan Stanley said its check with industry contacts revealed that the mine is 1 kilometre underground and the average grade is less than 30 percent ferrous content, which would make it a very high cost mine with little positive impact to China's steel industry or Angang.
Source: Reuters
Angang was halted in Hong Kong and Shenzhen under exchange requests and it will issue a statement later to clarify recent media reports, a company spokesman told Reuters.
China is likely to let its state-owned steel firms, including the parents of Angang and Bengang Steel operate the newly found iron ore deposits in the northeastern province of Liaoning, Guangzhou Daily reported on Thursday.
The asset will be gradually sold to the listed companies, the newspaper quoted an analyst as saying.
Angang rose 3.22 percent in Hong Kong to HK$13.48 before the suspension in late morning. It rose 5.3 percent in Hong Kong and surged 7.4 percent in Shenzhen on Wednesday after China said it found the deposit, which has estimated reserves of at lest 3 billion tonnes.
Both Angang and Bengang Steel, which rose to its 10 percent limit on Wednesday, were suspended on Thursday morning.
The discovery is positive as it should help to bring down Chinese steel producers' production cost and enhance their bargaining power in iron ore contract price negotiations, CIMB said in a research report on Thursday.
"Angang told us that it is keen to bid for ownership of the iron ore deposits," it said. But Morgan Stanley forecast Angang's share price will fall relative to the country index over the next 60 days.
"Yesterday's share performance, which appeared to benefit from a government announcement that a major iron-ore mine had been discovered in Liaoning province, appears vulnerable to a pull-back," it said in a research note on Thursday.
Morgan Stanley said its check with industry contacts revealed that the mine is 1 kilometre underground and the average grade is less than 30 percent ferrous content, which would make it a very high cost mine with little positive impact to China's steel industry or Angang.
Source: Reuters
Wednesday, June 24, 2009
South Africa's Transnet Plans To Triple Domestic Shipments
Transnet Ltd., South Africa’s state-owned rail and port operator, plans to increase the amount of coal it rails to the nation’s users, including Eskom Holdings Ltd., by more than threefold over the next seven years.
The Johannesburg-based company aims to rail 70 million metric tons of coal a year to domestic users by 2016 compared with 22.5 million tons currently, Transnet Freight Rail Chief Executive Officer Siyabonga Gama said in an interview in Johannesburg today.
“We see an opportunity to increase coal volumes over the next seven years,” said Gama. “If we have better and efficient railways it can help boost GDP growth.”
Transnet has set aside 40 billion rand ($4.9 billion) for investments in coal rail over the next decade to boost shipments for both exports and domestic use. Eskom, which supplies almost all of South Africa’s electricity, is spending 385 billion rand over the next five years on expansion, mostly on coal-fired power plants.
Transnet plans to increase the amount of coal it rails to Eskom to 29 million tons of coal by 2016 from 5.5 million tons currently, Gama said.
Source: Bloomberg
The Johannesburg-based company aims to rail 70 million metric tons of coal a year to domestic users by 2016 compared with 22.5 million tons currently, Transnet Freight Rail Chief Executive Officer Siyabonga Gama said in an interview in Johannesburg today.
“We see an opportunity to increase coal volumes over the next seven years,” said Gama. “If we have better and efficient railways it can help boost GDP growth.”
Transnet has set aside 40 billion rand ($4.9 billion) for investments in coal rail over the next decade to boost shipments for both exports and domestic use. Eskom, which supplies almost all of South Africa’s electricity, is spending 385 billion rand over the next five years on expansion, mostly on coal-fired power plants.
Transnet plans to increase the amount of coal it rails to Eskom to 29 million tons of coal by 2016 from 5.5 million tons currently, Gama said.
Source: Bloomberg
India To Fast-Track Mining Projects
To fast track the implementation of coal mining projects deferred on account of environmental clearances or land acqusition problems, Union coal minister Sriprakash Jaiswal has asked for greater cooperation and support from state governments.
The minister met chief minister Buddhadeb Bhattarcharjee on his first visit to Bengal after taking charge and sought his government’s approval for faster environmental clearances and curbing corrupt practices. Speaking at a press conference in Kolkata on Wednesday, Jaiswal said, “Our aim is to increase coal production and the most important bottleneck to coal production in the country is land acquisition and getting environmental clearances.
The coal ministry have talked to the ministry of Environment and Forest and the centre has committed to give clearances within six months of application. We want that sort of commitment from state governments.”
In West Bengal, the 13 captive blocks allotted over 2100 hectares with estimated reserves of 13 million tons are deferred on account of land acqusition issues and forest clearances.
“I will take up these issues with the states. I have met West Bengal chief minister Buddhadeb Bhattarcharjee and have recieved a satisfactory answer. I will meet Jharkhand governor and environment heads next,” he said. Of the 196 captive blocks allotted, estimated to have 40 billion tons of coal reserves, work has begun only in 13 blocks.
Source: Business Standard
The minister met chief minister Buddhadeb Bhattarcharjee on his first visit to Bengal after taking charge and sought his government’s approval for faster environmental clearances and curbing corrupt practices. Speaking at a press conference in Kolkata on Wednesday, Jaiswal said, “Our aim is to increase coal production and the most important bottleneck to coal production in the country is land acquisition and getting environmental clearances.
The coal ministry have talked to the ministry of Environment and Forest and the centre has committed to give clearances within six months of application. We want that sort of commitment from state governments.”
In West Bengal, the 13 captive blocks allotted over 2100 hectares with estimated reserves of 13 million tons are deferred on account of land acqusition issues and forest clearances.
“I will take up these issues with the states. I have met West Bengal chief minister Buddhadeb Bhattarcharjee and have recieved a satisfactory answer. I will meet Jharkhand governor and environment heads next,” he said. Of the 196 captive blocks allotted, estimated to have 40 billion tons of coal reserves, work has begun only in 13 blocks.
Source: Business Standard
ACC Forms JV To Mine Four Coal Blocks
India's ACC Ltd said on Wednesday it will explore and mine four coal blocks with total reserves of about 200 million tonnes under a joint venture agreement with the Madhya Pradesh State Mining Corp.
The coal from the mines, expected to become operational in four to five years, will aid its production of cement, the country's largest cement maker said in a statement.
Source: Reuters
The coal from the mines, expected to become operational in four to five years, will aid its production of cement, the country's largest cement maker said in a statement.
Source: Reuters
Doubts About Mechel As Going Concern
Debt-saddled steel and coking coal producer Mechel on Wednesday raised major doubts about its future as a going concern.
Top Russian steel producers borrowed more than $30 billion to make acquisitions and increase production during the pre-crisis boom and Mechel is one of the most indebted, with total debt of $5.4 billion as of Dec 31, 2008.
"There is substantial doubt about our ability to continue as a going concern," the company wrote in a key filing with the U.S. Securities and Exchange Commission (SEC).
It was the first report of a so-called "going concern" notice to a Russian company since the financial crisis hit, closing off debt markets and slashing demand for key export products such as steel.
The company added in the "risk factors" section of the 2008 20-F filing that it expects to refinance $3.5 billion in short-term debt and that it will secure adequate resources to continue "in operational existence for the foreseeable future."
A Mechel spokesman declined comment.
After the Reuters report on the filing, Mechel shares traded from an intraday high of $9.18 down to $8.70 by 1600 GMT.
Mechel has breached covenants on $4.2 billion of loans, forcing it to reclassify most of its debt as short-term.
The company last month said it agreed new terms for a $1.5 billion bridge loan originally taken out to finance the acquisition of Kazakh chrome maker Oriel Resources. It will restructure $1.0 billion and repay the remainder with a Gazprombank loan.
"After the Oriel Resources roll forward, which we are currently assuming will take place, we estimate further refinancing requirements of $800 million by year-end 2009," Alfa Bank analyst Barry Ehrlich said.
Ehrlich said he included an assumption that any bank loans with covenant violations would not be called in.
In the SEC filing, the company said it also expected to successfully refinance or restructure a $2.0 billion syndicated loan used to acquire the Yakutugol coal mine in 2007.
"Our group is currently in negotiations with the consortium of banks, but it is likely that the terms and agreement on the conditions of these borrowing arrangements will not be completed until the second half of 2009," the filing said.
Thus far, only one bank, Germany's WestLB, has forced Mechel to make early repayment as a result of the covenant violations.
The document said WestLB requested early repayment of $84.8 million, and that Mechel reached an agreement with the German bank to repay the funds on June 30, 2009.
A separate document filed with the SEC on June 19 revealed that majority owner Igor Zyuzin has put almost 38 percent of the company's shares up as collateral to obtain unspecified financing.
Source: Reuters
Top Russian steel producers borrowed more than $30 billion to make acquisitions and increase production during the pre-crisis boom and Mechel is one of the most indebted, with total debt of $5.4 billion as of Dec 31, 2008.
"There is substantial doubt about our ability to continue as a going concern," the company wrote in a key filing with the U.S. Securities and Exchange Commission (SEC).
It was the first report of a so-called "going concern" notice to a Russian company since the financial crisis hit, closing off debt markets and slashing demand for key export products such as steel.
The company added in the "risk factors" section of the 2008 20-F filing that it expects to refinance $3.5 billion in short-term debt and that it will secure adequate resources to continue "in operational existence for the foreseeable future."
A Mechel spokesman declined comment.
After the Reuters report on the filing, Mechel shares traded from an intraday high of $9.18 down to $8.70 by 1600 GMT.
Mechel has breached covenants on $4.2 billion of loans, forcing it to reclassify most of its debt as short-term.
The company last month said it agreed new terms for a $1.5 billion bridge loan originally taken out to finance the acquisition of Kazakh chrome maker Oriel Resources. It will restructure $1.0 billion and repay the remainder with a Gazprombank loan.
"After the Oriel Resources roll forward, which we are currently assuming will take place, we estimate further refinancing requirements of $800 million by year-end 2009," Alfa Bank analyst Barry Ehrlich said.
Ehrlich said he included an assumption that any bank loans with covenant violations would not be called in.
In the SEC filing, the company said it also expected to successfully refinance or restructure a $2.0 billion syndicated loan used to acquire the Yakutugol coal mine in 2007.
"Our group is currently in negotiations with the consortium of banks, but it is likely that the terms and agreement on the conditions of these borrowing arrangements will not be completed until the second half of 2009," the filing said.
Thus far, only one bank, Germany's WestLB, has forced Mechel to make early repayment as a result of the covenant violations.
The document said WestLB requested early repayment of $84.8 million, and that Mechel reached an agreement with the German bank to repay the funds on June 30, 2009.
A separate document filed with the SEC on June 19 revealed that majority owner Igor Zyuzin has put almost 38 percent of the company's shares up as collateral to obtain unspecified financing.
Source: Reuters
Japanese Copper Wire And Cable shipments Down Over 30%
Japanese copper wire and cable shipments amounted to an estimated 44,700 tonnes in May, down 31.4 percent from a year earlier and the lowest level since February 1975, an industry body said on Wednesday.
Shipments were down 14.7 percent from April, data provided by the Japanese Electric Wire and Cable Makers' Association showed.
Demand from the construction industry hit the lowest level in 26 years. Shipments fell 25.7 percent to an estimated 18,900 tonnes in May from a year earlier, the lowest level since May 1983, when shipments stood at 18,870 tonnes.
Demand for copper has fallen across all industrial sectors, including construction and automobiles, as Japan struggles to lift itself from its worst downturn in half a century.
The association's members account for about 60 percent of Japan's copper use.
Source: Reuters
Shipments were down 14.7 percent from April, data provided by the Japanese Electric Wire and Cable Makers' Association showed.
Demand from the construction industry hit the lowest level in 26 years. Shipments fell 25.7 percent to an estimated 18,900 tonnes in May from a year earlier, the lowest level since May 1983, when shipments stood at 18,870 tonnes.
Demand for copper has fallen across all industrial sectors, including construction and automobiles, as Japan struggles to lift itself from its worst downturn in half a century.
The association's members account for about 60 percent of Japan's copper use.
Source: Reuters
China Iron Ore Find Could Hold As Much As 3bn Tonnes
China said on Wednesday it had found Asia's biggest iron ore deposit in its northeast region, just as Chinese steel mills enter the finale of crucial talks over pricing with global ore suppliers.
The official China News Agency cited local authorities as saying the newly discovered iron ore deposit in China's Liaoning province has estimated reserves of at least 3 billion tonnes.
A local geological official confirmed the figure and told Reuters that the mine will start production next year and could be producing up to 5 million tonnes by 2015.
China, the world's biggest iron ore importer, relies on global suppliers for almost half of its 1 billion tonnes of annual demand. It bought 444 million tonnes of ore in 2008 from abroad, but analysts said the announced discovery would probably not affect ongoing negotiations with ore suppliers for the upcoming contract year.
"This discovery is large but needs to be put into context. I think it's very short term for China to negotiate the contract prices for iron ore by jumping in with discoveries," said a Hong Kong-based trader, who asked not to be identified.
There are also uncertainties over how much of the deposit can be economically mined and what the investment costs would be, he added.
The Liaoning official said the mine will require 2.5 billion yuan ($366 million) of investment and will be 20 percent owned by Benxi Iron & Steel Group. The main investor is a Shenzhen-based company, the Liaoning official said, but declined to name it, adding the local government will hold a 20 percent stake.
The deposit lies close to the base of the operation of Benxi's local rival, Anshan Iron & Steel Group.
The official told Reuters that the deposit, located in Dataigou of Benxi city, could potentially be as big as 7.6 billion tonnes, which would make it the world's biggest iron ore mine.
Chinese steel mills are struggling to resolve protracted haggling with iron ore supplier Rio Tinto, which has offered a cut of 33.5 percent instead of the reduction of 40 to 50 percent that China seeks.
"I think the discovery will not have any impact on the current ore price talks as the production won't come to the market until 2015," said Ma Zhongpu, a Beijing-based analyst at ChinaCCM, a China market research provider.
The Chinese government said it will scale back output and punish any mills that are found to be responsible for "blindly" overproducing steel and undermining its negotiating position.
The deposit has both magnetite and hematite material and its iron content is between 25-62 percent, the China News Agency said.
The reserves at Dataigou are equivalent to the combination of all the iron ore reserves in Liaoning's Anshan and Benxi areas, the report said.
Source: The Guardian
The official China News Agency cited local authorities as saying the newly discovered iron ore deposit in China's Liaoning province has estimated reserves of at least 3 billion tonnes.
A local geological official confirmed the figure and told Reuters that the mine will start production next year and could be producing up to 5 million tonnes by 2015.
China, the world's biggest iron ore importer, relies on global suppliers for almost half of its 1 billion tonnes of annual demand. It bought 444 million tonnes of ore in 2008 from abroad, but analysts said the announced discovery would probably not affect ongoing negotiations with ore suppliers for the upcoming contract year.
"This discovery is large but needs to be put into context. I think it's very short term for China to negotiate the contract prices for iron ore by jumping in with discoveries," said a Hong Kong-based trader, who asked not to be identified.
There are also uncertainties over how much of the deposit can be economically mined and what the investment costs would be, he added.
The Liaoning official said the mine will require 2.5 billion yuan ($366 million) of investment and will be 20 percent owned by Benxi Iron & Steel Group. The main investor is a Shenzhen-based company, the Liaoning official said, but declined to name it, adding the local government will hold a 20 percent stake.
The deposit lies close to the base of the operation of Benxi's local rival, Anshan Iron & Steel Group.
The official told Reuters that the deposit, located in Dataigou of Benxi city, could potentially be as big as 7.6 billion tonnes, which would make it the world's biggest iron ore mine.
Chinese steel mills are struggling to resolve protracted haggling with iron ore supplier Rio Tinto, which has offered a cut of 33.5 percent instead of the reduction of 40 to 50 percent that China seeks.
"I think the discovery will not have any impact on the current ore price talks as the production won't come to the market until 2015," said Ma Zhongpu, a Beijing-based analyst at ChinaCCM, a China market research provider.
The Chinese government said it will scale back output and punish any mills that are found to be responsible for "blindly" overproducing steel and undermining its negotiating position.
The deposit has both magnetite and hematite material and its iron content is between 25-62 percent, the China News Agency said.
The reserves at Dataigou are equivalent to the combination of all the iron ore reserves in Liaoning's Anshan and Benxi areas, the report said.
Source: The Guardian
China Accused Of Strategically Hoarding Raw Materials
The United States and Europe say China is strategically hoarding many of the vital building blocks of industrial production as tough economic times inflame global trade tensions.
The Obama administration and the European Union launched sweeping World Trade Organization complaints Tuesday, alleging that China is using export controls to give its manufacturers cheap access to the key raw materials used in products ranging from aluminum and steel to solar cells, pharmaceuticals and microchips.
The formal U.S. and European requests for talks in their dispute with China – the first step in a WTO case – highlight the growing friction between the world's industrial superpowers as the recession clobbers global manufacturing and sends unemployment soaring.
“We are deeply troubled that this appears to be a conscious policy to create unfair advantages for Chinese industries,” U.S. Trade Representative Ron Kirk told reporters in Washington. “Now, more than ever, we must fight against this kind of domestic favouritism.” Mr. Kirk accused the Chinese of putting “a giant thumb” on the scales of free trade to give its own manufacturers the edge at the expense of everyone else.
They are not alone.
In spite of a widely publicized pledge by leaders of the Group of 20 countries not to put walls around their economies, protectionism is steadily infiltrating the global economy.
This is happening not just in China, but in Canada, the United States, Europe and much of the developing world.
Most industrialized countries have applied policies that can affect trade flows, including bailouts for domestic banks and auto makers, fiscal stimulus and restrictive purchasing policies, such as toughened Buy American rules in the United States.
“The G20 have more or less cheated on their promise not to raise protectionist measures in the wake of the recession,” said Marc Busch, a professor of trade policy and law at Georgetown University in Washington. “It's going to be a bumpy ride.” Several large developing countries, including India, Indonesia, Vietnam, Russia and Brazil, have blatantly slapped higher tariffs on goods and employed other means to limit imports.
A World Bank report identified nearly 50 trade-distorting measures – about half of those in the developing world – that are putting the nascent economic recovery at risk.
Among the examples: Ecuador has imposed new tariffs on more than 600 items and Indonesia has dusted off an old import-derailing tactic of requiring that certain types of goods be cleared only through selected custom points at particular times.
“A clear danger to co-ordinated recovery is the politically tempting tactic of protectionism,” the World Bank warned this week.
The commodities at the centre of the complaint filed with the WTO are bauxite, coke, zinc, fluorspar, magnesium, manganese, silicon metal, silicon carbide and yellow phosphorous. Coke, for example, is a type of coal used to make steel. Fluorspar is a key component in numerous industrial products, including steel, aluminum, glass and many chemicals.
In its filing, the United States alleges that China puts illegal export quotas, duties, fees and licensing requirements on these commodities.
The result is that Chinese manufacturers get preferential access to them at cheap prices, forcing the rest of the world to pay more.
“This is part of the game that gets played in China,” said Peter Morici, former chief economist at the U.S. International Trade Commission and now a professor at the University of Maryland. “It's illegal and it violates WTO rules.” Some analysts suggested the Chinese are doing more than just controlling exports, they're also aggressively buying up as many raw materials as possible to control international prices.
Prof. Morici said recessions typically spawn these types of disputes because it's “easier to prove injury” amid plant closings and mass layoffs. “It's much tougher to prove in a vibrant economy,” he added.
Even before the worldwide credit crunch and economic slump slashed deeply into trade volumes, China and the United States, along with other key Western trading partners, were increasingly at loggerheads, with disputes covering a wide range of goods and services.
And Beijing has become adept at using the procedures of the WTO, which it joined in 2001, to block or at least delay retaliation by aggrieved trading partners.
The United States and other developed countries thought that bringing China into the world trade fold would force it to change its behaviour and follow the rules established by the West, said Rodger Baker, senior analyst for East Asia with Stratfor, a global intelligence firm based in Austin, Tex.
But the Chinese “have figured out that this whole WTO thing is not a bad thing at all.” The friction has escalated dramatically since the recession hit. China has been using its vast cash reserves to stockpile key materials for steel-making and other basic industrial production. At the same time, it has systematically blocked the export of these same building blocks from its oversupply.
As a result, world prices have been forced up. And when the recession eases, Chinese manufacturers will be free to exploit a widening cost advantage, trade watchers say.
“China is certainly doing things with respect to exports that run afoul of WTO law,” Prof. Busch said.
And this is not the only Chinese action that is likely to spark a stern Western response.
One big concern is the so-called Buy China policy contained in a directive from China's powerful economic planning agency, the National Development and Reform Commission. This requires that local governments not discriminate against domestic manufacturers when doling out lucrative procurement contracts as part of the country's vast stimulus spending.
“If this is the tip of the iceberg, and China is trying to relevel the playing field that tilted in favour of foreign firms within the Chinese economy – which is part of the rationale for Buy China – then we'll invariably see more disputes,” Prof. Busch said.
Gary Hufbauer, a former top U.S. Treasury official, agreed that China appears to be breaking WTO rules and the pledges it made when it joined the organization.
Cases involving export controls are relatively rare and this one could “set an important precedent,” said Mr. Hufbauer, a senior fellow at the Washington-based Peterson Institute for International Economics. But he said China is unlikely to back off willingly and it could take up to three years to get a final ruling.
Right now, Beijing's tactics are not having much of an impact on Western competitors, Mr. Baker said. “But if there's a pickup in global consumption, the Chinese are way ahead of the game.”
Source: Globe And Mail
The Obama administration and the European Union launched sweeping World Trade Organization complaints Tuesday, alleging that China is using export controls to give its manufacturers cheap access to the key raw materials used in products ranging from aluminum and steel to solar cells, pharmaceuticals and microchips.
The formal U.S. and European requests for talks in their dispute with China – the first step in a WTO case – highlight the growing friction between the world's industrial superpowers as the recession clobbers global manufacturing and sends unemployment soaring.
“We are deeply troubled that this appears to be a conscious policy to create unfair advantages for Chinese industries,” U.S. Trade Representative Ron Kirk told reporters in Washington. “Now, more than ever, we must fight against this kind of domestic favouritism.” Mr. Kirk accused the Chinese of putting “a giant thumb” on the scales of free trade to give its own manufacturers the edge at the expense of everyone else.
They are not alone.
In spite of a widely publicized pledge by leaders of the Group of 20 countries not to put walls around their economies, protectionism is steadily infiltrating the global economy.
This is happening not just in China, but in Canada, the United States, Europe and much of the developing world.
Most industrialized countries have applied policies that can affect trade flows, including bailouts for domestic banks and auto makers, fiscal stimulus and restrictive purchasing policies, such as toughened Buy American rules in the United States.
“The G20 have more or less cheated on their promise not to raise protectionist measures in the wake of the recession,” said Marc Busch, a professor of trade policy and law at Georgetown University in Washington. “It's going to be a bumpy ride.” Several large developing countries, including India, Indonesia, Vietnam, Russia and Brazil, have blatantly slapped higher tariffs on goods and employed other means to limit imports.
A World Bank report identified nearly 50 trade-distorting measures – about half of those in the developing world – that are putting the nascent economic recovery at risk.
Among the examples: Ecuador has imposed new tariffs on more than 600 items and Indonesia has dusted off an old import-derailing tactic of requiring that certain types of goods be cleared only through selected custom points at particular times.
“A clear danger to co-ordinated recovery is the politically tempting tactic of protectionism,” the World Bank warned this week.
The commodities at the centre of the complaint filed with the WTO are bauxite, coke, zinc, fluorspar, magnesium, manganese, silicon metal, silicon carbide and yellow phosphorous. Coke, for example, is a type of coal used to make steel. Fluorspar is a key component in numerous industrial products, including steel, aluminum, glass and many chemicals.
In its filing, the United States alleges that China puts illegal export quotas, duties, fees and licensing requirements on these commodities.
The result is that Chinese manufacturers get preferential access to them at cheap prices, forcing the rest of the world to pay more.
“This is part of the game that gets played in China,” said Peter Morici, former chief economist at the U.S. International Trade Commission and now a professor at the University of Maryland. “It's illegal and it violates WTO rules.” Some analysts suggested the Chinese are doing more than just controlling exports, they're also aggressively buying up as many raw materials as possible to control international prices.
Prof. Morici said recessions typically spawn these types of disputes because it's “easier to prove injury” amid plant closings and mass layoffs. “It's much tougher to prove in a vibrant economy,” he added.
Even before the worldwide credit crunch and economic slump slashed deeply into trade volumes, China and the United States, along with other key Western trading partners, were increasingly at loggerheads, with disputes covering a wide range of goods and services.
And Beijing has become adept at using the procedures of the WTO, which it joined in 2001, to block or at least delay retaliation by aggrieved trading partners.
The United States and other developed countries thought that bringing China into the world trade fold would force it to change its behaviour and follow the rules established by the West, said Rodger Baker, senior analyst for East Asia with Stratfor, a global intelligence firm based in Austin, Tex.
But the Chinese “have figured out that this whole WTO thing is not a bad thing at all.” The friction has escalated dramatically since the recession hit. China has been using its vast cash reserves to stockpile key materials for steel-making and other basic industrial production. At the same time, it has systematically blocked the export of these same building blocks from its oversupply.
As a result, world prices have been forced up. And when the recession eases, Chinese manufacturers will be free to exploit a widening cost advantage, trade watchers say.
“China is certainly doing things with respect to exports that run afoul of WTO law,” Prof. Busch said.
And this is not the only Chinese action that is likely to spark a stern Western response.
One big concern is the so-called Buy China policy contained in a directive from China's powerful economic planning agency, the National Development and Reform Commission. This requires that local governments not discriminate against domestic manufacturers when doling out lucrative procurement contracts as part of the country's vast stimulus spending.
“If this is the tip of the iceberg, and China is trying to relevel the playing field that tilted in favour of foreign firms within the Chinese economy – which is part of the rationale for Buy China – then we'll invariably see more disputes,” Prof. Busch said.
Gary Hufbauer, a former top U.S. Treasury official, agreed that China appears to be breaking WTO rules and the pledges it made when it joined the organization.
Cases involving export controls are relatively rare and this one could “set an important precedent,” said Mr. Hufbauer, a senior fellow at the Washington-based Peterson Institute for International Economics. But he said China is unlikely to back off willingly and it could take up to three years to get a final ruling.
Right now, Beijing's tactics are not having much of an impact on Western competitors, Mr. Baker said. “But if there's a pickup in global consumption, the Chinese are way ahead of the game.”
Source: Globe And Mail
Canadian Zinc Reports Increased Gold Production At Vatukoula
Canadian Zinc Corp. said on Tuesday that Vatukoula Gold Mines plc, in which it holds a 20 per cent stake, has reported an increase in gold production for its quarter ended May 31.
The company said as a result of an increase in underground mine production and higher mining grades, Vatukoula saw gold production for the quarter increase by 17 per cent to 8,711 ounces from 7,470 ounces in the previous quarter.
The increased gold production reduced the cash cost per ounce to US$680 per ounce for the third quarter from US$915 per ounce in the second quarter, Canadian Zinc said.
Canadian Zinc is developing its Prairie Creek Mine in the Northwest Territories.
The company also holds approximately 548 million shares of Vatukoula.
Source: Canadian Press
The company said as a result of an increase in underground mine production and higher mining grades, Vatukoula saw gold production for the quarter increase by 17 per cent to 8,711 ounces from 7,470 ounces in the previous quarter.
The increased gold production reduced the cash cost per ounce to US$680 per ounce for the third quarter from US$915 per ounce in the second quarter, Canadian Zinc said.
Canadian Zinc is developing its Prairie Creek Mine in the Northwest Territories.
The company also holds approximately 548 million shares of Vatukoula.
Source: Canadian Press
Tuesday, June 23, 2009
Australia Iron Ore Forecast Remains Steady
Australia on Tuesday kept its forecast for iron ore exports nearly unchanged at 338.4 million tonnes for the 2009/10 financial year, as low cost Australian ore displaces higher cost producers in the face of falling steel output.
At that level, iron ore production would be a record and bring in A$25.47 billion in export revenue, the country's governm+ent commodity forecaster, the Australian Bureau of Agriculture and Resource Economics (ABARE), said in its June quarter review.
"The demand for our product has increased as it becomes more competitive in the current low price environment," said UBS mining analyst Glyn Lawcock.
Overall, export earnings from Australian mineral and energy commodities are forecast to drop 22 percent to A$124.4 billion in 2009/10, according to ABARE.
In steel-related raw materials besides iron ore, ABARE lifted its export forecast for refined nickel 1.85 percent to 110,000 tonnes and reduced metallurgical coal exports to 128.0 million from 130.2 million tonnes.
For iron ore, the revision comes as Australian miners BHP Billiton and Rio Tinto wrestle over pricing with Chinese steel mills, which offer the greatest growth prospects for Australia's mining sector.
China accounts for around 78 percent of Australian exports.
Rio Tinto and BHP Billiton, pursuing a joint venture in iron ore mining to the dismay of steelmakers, will supply the overwhelming bulk of the ore, with smaller miners Fortescue Metals Group, Atlas Mining Ltd, Mt Gibson and others contributing much less.
DJ Carmichael mining analyst James Wilson warned Australia's iron ore upstarts could deliver more than ABARE allowed for, citing a target by Atlas to lift output to 6 million tonnes by 2010 from 1 million this year and Gindalbie Metals Ltd's plans to start mining later this year.
Growth projects planned separately by Rio and BHP over the next few years could be accelerated if the proposed joint venture between the companies proceeds, he added.
BHP is completing the fourth stage of a multi-year growth programme in iron ore, while Rio Tinto has said it will push its mines 10 percent harder this year, taking annual capacity to 220 million tonnes.
Rising production in Australia was running counter to the world trend to mine less, according to ABARE.
"Global production of iron ore is expected to decline in 2009 in response to weakening demand," Abare analyst Robert New said in the outlook document.
"Most of the cutbacks in production volumes are expected to be in countries which have higher cost operations, while lower cost producers are not expected to be as adversely affected by the weaker demand," New said.
In its final forecast for the current financial year, the forecaster left its total iron ore production steady at 339.4 million tonnes.
Refined copper output for 200/10 was cut 6.8 percent to 467,000 tonnes while mined copper output was unchanged at 1.017 million tonnes.
The forecast for output of aluminium -- Australia is the fifth-largest supplier -- dropped 2.8 percent to 1.899 million tonnes.
Source: Reuters
At that level, iron ore production would be a record and bring in A$25.47 billion in export revenue, the country's governm+ent commodity forecaster, the Australian Bureau of Agriculture and Resource Economics (ABARE), said in its June quarter review.
"The demand for our product has increased as it becomes more competitive in the current low price environment," said UBS mining analyst Glyn Lawcock.
Overall, export earnings from Australian mineral and energy commodities are forecast to drop 22 percent to A$124.4 billion in 2009/10, according to ABARE.
In steel-related raw materials besides iron ore, ABARE lifted its export forecast for refined nickel 1.85 percent to 110,000 tonnes and reduced metallurgical coal exports to 128.0 million from 130.2 million tonnes.
For iron ore, the revision comes as Australian miners BHP Billiton and Rio Tinto wrestle over pricing with Chinese steel mills, which offer the greatest growth prospects for Australia's mining sector.
China accounts for around 78 percent of Australian exports.
Rio Tinto and BHP Billiton, pursuing a joint venture in iron ore mining to the dismay of steelmakers, will supply the overwhelming bulk of the ore, with smaller miners Fortescue Metals Group, Atlas Mining Ltd, Mt Gibson and others contributing much less.
DJ Carmichael mining analyst James Wilson warned Australia's iron ore upstarts could deliver more than ABARE allowed for, citing a target by Atlas to lift output to 6 million tonnes by 2010 from 1 million this year and Gindalbie Metals Ltd's plans to start mining later this year.
Growth projects planned separately by Rio and BHP over the next few years could be accelerated if the proposed joint venture between the companies proceeds, he added.
BHP is completing the fourth stage of a multi-year growth programme in iron ore, while Rio Tinto has said it will push its mines 10 percent harder this year, taking annual capacity to 220 million tonnes.
Rising production in Australia was running counter to the world trend to mine less, according to ABARE.
"Global production of iron ore is expected to decline in 2009 in response to weakening demand," Abare analyst Robert New said in the outlook document.
"Most of the cutbacks in production volumes are expected to be in countries which have higher cost operations, while lower cost producers are not expected to be as adversely affected by the weaker demand," New said.
In its final forecast for the current financial year, the forecaster left its total iron ore production steady at 339.4 million tonnes.
Refined copper output for 200/10 was cut 6.8 percent to 467,000 tonnes while mined copper output was unchanged at 1.017 million tonnes.
The forecast for output of aluminium -- Australia is the fifth-largest supplier -- dropped 2.8 percent to 1.899 million tonnes.
Source: Reuters
China To Cut Export Taxes On Steel, Metals
China will scrap or cut export taxes on a range of grains, metals and other materials from 1 July. The move is aimed at boosting exports from domestic producers. Export taxes for wheat, rice, soybeans, and sulphuric acid will be eliminated.
Export taxes on some steel products will be halved to 5 percent, and the taxes for indium and molybdenum will also be cut from 15 to 5. The tax on some tungsten products will also be cut to 5 percent from 10. The country will also extend the low-season taxes for some fertilisers.
Source: CCTV
Export taxes on some steel products will be halved to 5 percent, and the taxes for indium and molybdenum will also be cut from 15 to 5. The tax on some tungsten products will also be cut to 5 percent from 10. The country will also extend the low-season taxes for some fertilisers.
Source: CCTV
Brazilian Iron Ore Miner Receives Offer From Wuhan
Brazilian iron ore miner MMX said on Monday that it has received a non-binding offer from China's Wuhan Iron And Steel Inc for a minority stake in it and its subsidiary MMX Sudeste Mineracao.
MMX announced in May that it had entered into negotiations with Wuhan over a potential commercial partnership.
In a statement, MMX said Wuhan would "purchase, by means of a new issue of MMX common shares, a 9.09 percent participation in MMX for a total price of $120 million."
It added that Wuhan "would further acquire a 23 percent equity interest in MMX Sudeste, by means of a new share issue, for the purchase price of $280 million."
MMX said the nonbinding nature of the offer would allow it or Wuhan to withdraw from, and discontinue, the transaction until a mutually agreeable deal is reached.
Source: Reuters
MMX announced in May that it had entered into negotiations with Wuhan over a potential commercial partnership.
In a statement, MMX said Wuhan would "purchase, by means of a new issue of MMX common shares, a 9.09 percent participation in MMX for a total price of $120 million."
It added that Wuhan "would further acquire a 23 percent equity interest in MMX Sudeste, by means of a new share issue, for the purchase price of $280 million."
MMX said the nonbinding nature of the offer would allow it or Wuhan to withdraw from, and discontinue, the transaction until a mutually agreeable deal is reached.
Source: Reuters
Timminco Restarts Silicon Metal Production At Becancour
Canadian silicon processor Timminco Ltd said it has resumed production of silicon metal at its Becancour facility, owing to improved market conditions and demand from the chemical industry.
The resumption will result in the recall of a portion of the unionized workforce which was temporarily laid off in May, the company said.
Timminco, which had reduced silicon metal and solar grade silicon production at Becancour due to a soft solar market, had temporarily laid of 172 unionized staff at the plant.
Of the 375 employees at Becancour, 275 were unionised.
The company, which produces solar grade silicon for the solar photovoltaic energy industry, said it will also restart one of its three electric arc furnaces to fulfil newly contracted demand from a long-term customer.
Source: Reuters
The resumption will result in the recall of a portion of the unionized workforce which was temporarily laid off in May, the company said.
Timminco, which had reduced silicon metal and solar grade silicon production at Becancour due to a soft solar market, had temporarily laid of 172 unionized staff at the plant.
Of the 375 employees at Becancour, 275 were unionised.
The company, which produces solar grade silicon for the solar photovoltaic energy industry, said it will also restart one of its three electric arc furnaces to fulfil newly contracted demand from a long-term customer.
Source: Reuters
Monday, June 22, 2009
UK Firm To Operate Mothballed Zambia Copper Smelter
Enya Holdings BV will operate Zambia's largest cobalt producer Chambishi Metals Plc which was shutdown in December last year, mines minister Maxwell Mwale said on Monday.
Chambishi Metals Plc was part of the Luanshya Copper Mines (LCM), which also operated the Baluba copper mine.
Before shutting down, Chambishi had planned to spend $354 million to develop the Mulyashi copper project, forecast to produce 60,000 tonnes of copper cathode by 2010.
Chambishi had planned to raise cobalt output to 5,000 tonnes in 2008 from around 3,000 tonnes in 2007 before halting operations due to the fallout of the global economic crisis.
"It is the Enya Holdings Group that will operate Chambishi Metals. They will be importing the raw materials (copper concentrate) from the Democratic Republic of Congo (DRC) to produce cobalt," Mwale told Reuters in response to a question about which investor would be handed Chambishi Metals Plc.
Chambishi Metals was processing cobalt from raw materials at its Nkana Slag damps and raw materials from Baluba mine.
Enya Holdings, had interests in both the Bein Stein Group Resources (BSRG) and International Minerals Resources (IRM), the joint owners of LCM before it stopped production.
Mwale said the government and Enya Holdings would conclude a deal for operating Chambishi Metals soon.
China's Nonferrous Metals Corporation was a fortnight ago awarded the right to run the Luanshya copper mines and pledged to invest $400 million to revamp its operations.
Source: Reuters
Chambishi Metals Plc was part of the Luanshya Copper Mines (LCM), which also operated the Baluba copper mine.
Before shutting down, Chambishi had planned to spend $354 million to develop the Mulyashi copper project, forecast to produce 60,000 tonnes of copper cathode by 2010.
Chambishi had planned to raise cobalt output to 5,000 tonnes in 2008 from around 3,000 tonnes in 2007 before halting operations due to the fallout of the global economic crisis.
"It is the Enya Holdings Group that will operate Chambishi Metals. They will be importing the raw materials (copper concentrate) from the Democratic Republic of Congo (DRC) to produce cobalt," Mwale told Reuters in response to a question about which investor would be handed Chambishi Metals Plc.
Chambishi Metals was processing cobalt from raw materials at its Nkana Slag damps and raw materials from Baluba mine.
Enya Holdings, had interests in both the Bein Stein Group Resources (BSRG) and International Minerals Resources (IRM), the joint owners of LCM before it stopped production.
Mwale said the government and Enya Holdings would conclude a deal for operating Chambishi Metals soon.
China's Nonferrous Metals Corporation was a fortnight ago awarded the right to run the Luanshya copper mines and pledged to invest $400 million to revamp its operations.
Source: Reuters
Peter Hambro Seeks Chinese Investor For Iron Ore Project
Peter Hambro Mining Plc, the second-largest gold producer in Russia, is seeking investment from a Chinese steelmaker to help fund an iron-ore mining and processing project it bought two months ago.
“We are in talks with several Chinese steel companies, both state-owned and private,” Deputy Chairman Pavel Maslovsky said in a June 19 interview in Moscow. “With one of them we are already discussing technical details.”
London-based Peter Hambro may offer the partner, which it expects to pick “in months,” a minority stake in a venture to develop the K&S and Garinskoye fields, an ore-supply accord, or place orders for Chinese equipment funded by the nation’s banks, he said. Maslovsky declined to identify the potential partners.
China, the biggest buyer of iron ore, is seeking cheaper access to the steelmaking ingredient. The country has called for a 45 percent cut in contract prices because of a slump in global demand, refusing to follow an agreement between Rio Tinto Group and Nippon Steel Corp. to reduce costs by a third.
Peter Hambro, which bought the iron-ore projects through its acquisition of Aricom Plc completed in April, is seeking to cut development costs to below $1 billion, Maslovsky said.
While ore prices have reached bottom and will resume gains, Peter Hambro’s project will be profitable at current levels, added Maslovsky, also the largest shareholder in the company.
Source: Bloomberg
“We are in talks with several Chinese steel companies, both state-owned and private,” Deputy Chairman Pavel Maslovsky said in a June 19 interview in Moscow. “With one of them we are already discussing technical details.”
London-based Peter Hambro may offer the partner, which it expects to pick “in months,” a minority stake in a venture to develop the K&S and Garinskoye fields, an ore-supply accord, or place orders for Chinese equipment funded by the nation’s banks, he said. Maslovsky declined to identify the potential partners.
China, the biggest buyer of iron ore, is seeking cheaper access to the steelmaking ingredient. The country has called for a 45 percent cut in contract prices because of a slump in global demand, refusing to follow an agreement between Rio Tinto Group and Nippon Steel Corp. to reduce costs by a third.
Peter Hambro, which bought the iron-ore projects through its acquisition of Aricom Plc completed in April, is seeking to cut development costs to below $1 billion, Maslovsky said.
While ore prices have reached bottom and will resume gains, Peter Hambro’s project will be profitable at current levels, added Maslovsky, also the largest shareholder in the company.
Source: Bloomberg
UK Aluminium Smelter Goes Into Administration
An aluminium smelting firm in Congleton, England, has been placed into administration leading to the loss of 61 jobs. Richard Fleming and Paul Dumbell from the Manchester office of KPMG have been appointed as joint administrator to the firm, FE Mottram (Non-Ferrous) Ltd which has temporarily ceased trading.
The company, which was set up in 1973, makes a wide range of casting alloys, hardeners and de-oxidants. It is one of the largest secondary aluminium smelters in the UK, with a capacity to produce 25,000 tonnes per year.
Dumbell said that the firm had been hit hard by the global downturn, “and in particular, by the reduced level of orders from car manufacturers and the reducing level of metal prices”.
He said that it intended to preserve the site in the hope of finding a buyer.
Neither the Sheffield-based Ferro-Titanium business of F.E. Mottram Limited, or the nearby Dunstan and Wragg business are affected by the administration and both continue to trade as normal.
In 2007, the company made a profit of £384,000 on sales of more than £38.3m.
Source: Crain's Manchester Business
The company, which was set up in 1973, makes a wide range of casting alloys, hardeners and de-oxidants. It is one of the largest secondary aluminium smelters in the UK, with a capacity to produce 25,000 tonnes per year.
Dumbell said that the firm had been hit hard by the global downturn, “and in particular, by the reduced level of orders from car manufacturers and the reducing level of metal prices”.
He said that it intended to preserve the site in the hope of finding a buyer.
Neither the Sheffield-based Ferro-Titanium business of F.E. Mottram Limited, or the nearby Dunstan and Wragg business are affected by the administration and both continue to trade as normal.
In 2007, the company made a profit of £384,000 on sales of more than £38.3m.
Source: Crain's Manchester Business
India Plans Market-Linked Iron Ore Royalty Rates
India plans to introduce market-linked royalty rates on iron ore to replace the current fixed-rate regime, Mines Minister B.K. Handique said on Monday
"We also embark on revision of royalty rates on ad valorem basis," he told reporters at a government media conference to outline its early agenda following its re-election last month.
Earlier this month, a committee of secretaries favoured the proposal of a 10 percent ad valorem (duty on value) royalty on the market price of iron ore, a basic input for steel making.
Currently, the royalty for iron ore is fixed at up to 27 rupees ($0.56) a tonne, depending on variety and grade.
A report in the Times of India on Monday said the final call on the issue would be taken soon by the federal cabinet.
Source: Reuters
"We also embark on revision of royalty rates on ad valorem basis," he told reporters at a government media conference to outline its early agenda following its re-election last month.
Earlier this month, a committee of secretaries favoured the proposal of a 10 percent ad valorem (duty on value) royalty on the market price of iron ore, a basic input for steel making.
Currently, the royalty for iron ore is fixed at up to 27 rupees ($0.56) a tonne, depending on variety and grade.
A report in the Times of India on Monday said the final call on the issue would be taken soon by the federal cabinet.
Source: Reuters
BHP, Asiaticus End Nickel Mine Dispute
BHP Billiton Ltd. has announced that it has ended its dispute with the Philippine partner Asiaticus Management Corp. to pave way for a nickel mine project.
BHP Billiton Ltd. is a diversified natural resources entity having businesses of producing alumina and aluminum, copper, thermal-energy, coal, iron ore, nickel.
BHP and Asiaticus have been in a legal conflict since 2008 after the unlisted Asiaticus considered void its JV agreement with BHP, as the latter was accused by the former saying it was moving too slowly in developing the Pujada mine in the Southern Mindanao region.
Pujada is estimated to have 200Mt of nickel ore reserves with 1.3% nickel. In May 2008 Asiaticus gained a ruling from a Philippine court which barred BHP from the Pujada site compelling it to halt exploration activities.
BHP has committed to invest up to $2 billion in the mine which included a nickel processing plant and has spent about $3 million on exploration.
Source: Commodity On-line
BHP Billiton Ltd. is a diversified natural resources entity having businesses of producing alumina and aluminum, copper, thermal-energy, coal, iron ore, nickel.
BHP and Asiaticus have been in a legal conflict since 2008 after the unlisted Asiaticus considered void its JV agreement with BHP, as the latter was accused by the former saying it was moving too slowly in developing the Pujada mine in the Southern Mindanao region.
Pujada is estimated to have 200Mt of nickel ore reserves with 1.3% nickel. In May 2008 Asiaticus gained a ruling from a Philippine court which barred BHP from the Pujada site compelling it to halt exploration activities.
BHP has committed to invest up to $2 billion in the mine which included a nickel processing plant and has spent about $3 million on exploration.
Source: Commodity On-line
Sul Americana Announces Brazil Iron Ore Project
Sul Americana de Metais SA is to develop an integrated iron ore project in Brazil which will produce 25 million tonnes per annum of 65% Fe pellet feed, with initial production expected in 2013.
Sul Americana has sufficient JORC-compliant resources in its two principal properties in the state of Minas Gerais to support a mine life in excess of 20 years. In addition, it has potential resources that would significantly increase the mine life. It has developed an integrated mine pipeline port project, the principal elements of which have been reviewed by independent experts.
The estimated capital expenditure to develop the project is approximately USD 2.6 billion, to be incurred between 2010 and 2012. Given the magnitude of the investment, Sul Americana is analysing financing options and considering strategic alternatives to take the project into production.
Mr Haroldo Fleischfresser CEO of Sul Americana said that "We have developed a cost efficient process route tailored to the specific characteristics of our ore. This process, together with an efficient logistics system, contributes to an expected FOB cost for pellet feed of less than USD20 per tonne."
Source: Steel Guru
Sul Americana has sufficient JORC-compliant resources in its two principal properties in the state of Minas Gerais to support a mine life in excess of 20 years. In addition, it has potential resources that would significantly increase the mine life. It has developed an integrated mine pipeline port project, the principal elements of which have been reviewed by independent experts.
The estimated capital expenditure to develop the project is approximately USD 2.6 billion, to be incurred between 2010 and 2012. Given the magnitude of the investment, Sul Americana is analysing financing options and considering strategic alternatives to take the project into production.
Mr Haroldo Fleischfresser CEO of Sul Americana said that "We have developed a cost efficient process route tailored to the specific characteristics of our ore. This process, together with an efficient logistics system, contributes to an expected FOB cost for pellet feed of less than USD20 per tonne."
Source: Steel Guru
Krasnodonugol Plans USD87 Million Coal Investment
Krasnodonugol, the coking coal subsidiary of Ukraine’s Metinvest Holding, plans to invest about UAH 670 million (USD87 million) in 2009 in the modernisation of existing production capacities and in the improvement of working safety conditions.
From January to May 2009, Krasnodonugol has invested more than UAH 200 million (USD26 million) in the upgrading of its production, of which UAH 136 million (USD18 million) has been directed towards the preparation and equipping of its four new longwall coal faces, while UAH 18 million (USD 2 million) has been spent on the improvement of working safety conditions.
Source: Steel Guru
From January to May 2009, Krasnodonugol has invested more than UAH 200 million (USD26 million) in the upgrading of its production, of which UAH 136 million (USD18 million) has been directed towards the preparation and equipping of its four new longwall coal faces, while UAH 18 million (USD 2 million) has been spent on the improvement of working safety conditions.
Source: Steel Guru
China Copper Imports Hits Another New Record
China's imports of refined copper hit a record 337,230 tonnes in May, up from a previous record 317,947 tonnes in April and 258 percent higher than a year earlier, official customs figures showed on Monday.
China, the world's top consumer of many base metals, imported 259,095 tonnes of primary aluminium in May, down from a record 362,400 tonnes in April but up 2,414 percent from the same month last year.
Refined nickel imports also hit a record 25,032 tonnes in May, up from previous the record of 21,031 tonnes in April and 127 percent higher on the year.
Source: Forbes
China, the world's top consumer of many base metals, imported 259,095 tonnes of primary aluminium in May, down from a record 362,400 tonnes in April but up 2,414 percent from the same month last year.
Refined nickel imports also hit a record 25,032 tonnes in May, up from previous the record of 21,031 tonnes in April and 127 percent higher on the year.
Source: Forbes
Anglo-American Confirms Xstrata Merger Proposal
London-headquartered Anglo American Plc, which manages the world's largest platinum producer, publicly confirmed on Sunday that it has received an initial merger proposal from Swiss-based miner Xstrata Plc that is expected to create a giant company in the commodity sector.
"The Board of Anglo American confirms that it has received a preliminary proposal from Xstrata which may or may not lead to a transaction involving the group," Miningmx quoted the company as saying today.
Both mining firms have said that they could not guarantee completion of a deal, which is estimated to be worth $68 billion (41 billion pounds) based on their stock market value on Friday.
The combined company would be a new top-tier mining giant with massive wealth of copper, nickel, coal, platinum and other metals and minerals. Both companies have coal mines in Australia and South Africa and copper operations in South America. The combined entity would be a global leader in the production of coal, ferrochrome, base metals and platinum.
"Xstrata believes a merger of these two world-class companies with complementary assets is highly compelling," Xstrata, the largest exporter of coal used by power plants, said in a brief statement on Sunday.
"Xstrata has already quantified substantial operational synergies from the combination that are not available to either company operating alone. In addition, Xstrata believes the optimization and reprioritization of the combined company's organic growth pipelines would significantly enhance shareholder returns," Xstrata added.
Glencore International AG, which has a 35 percent stake in Xstrata, has approved the merger transaction, according to the reports.
Xstrata Chief Executive Officer Mick Davis took the step after Rio Tinto Group accepted $5.8 billion in capital for launching an Australian iron ore joint venture with BHP Billiton, the world's biggest miner.
The company said in the statement, "Xstrata is seeking to engage with the Board of Anglo American regarding a merger of equals that would realize significant value for both companies' shareholders."
The companies have not disclosed the terms of merger proposal. Some analysts said that the proposal could be the step forward toward the possibility that South Africa could lose its iconic blue chip miner, Anglo American.
Source: AllHeadlineNews
"The Board of Anglo American confirms that it has received a preliminary proposal from Xstrata which may or may not lead to a transaction involving the group," Miningmx quoted the company as saying today.
Both mining firms have said that they could not guarantee completion of a deal, which is estimated to be worth $68 billion (41 billion pounds) based on their stock market value on Friday.
The combined company would be a new top-tier mining giant with massive wealth of copper, nickel, coal, platinum and other metals and minerals. Both companies have coal mines in Australia and South Africa and copper operations in South America. The combined entity would be a global leader in the production of coal, ferrochrome, base metals and platinum.
"Xstrata believes a merger of these two world-class companies with complementary assets is highly compelling," Xstrata, the largest exporter of coal used by power plants, said in a brief statement on Sunday.
"Xstrata has already quantified substantial operational synergies from the combination that are not available to either company operating alone. In addition, Xstrata believes the optimization and reprioritization of the combined company's organic growth pipelines would significantly enhance shareholder returns," Xstrata added.
Glencore International AG, which has a 35 percent stake in Xstrata, has approved the merger transaction, according to the reports.
Xstrata Chief Executive Officer Mick Davis took the step after Rio Tinto Group accepted $5.8 billion in capital for launching an Australian iron ore joint venture with BHP Billiton, the world's biggest miner.
The company said in the statement, "Xstrata is seeking to engage with the Board of Anglo American regarding a merger of equals that would realize significant value for both companies' shareholders."
The companies have not disclosed the terms of merger proposal. Some analysts said that the proposal could be the step forward toward the possibility that South Africa could lose its iconic blue chip miner, Anglo American.
Source: AllHeadlineNews
Saturday, June 20, 2009
Sesa Goa To Export Iron Ore Fines During Monsoon Season
Sesa Goa, the country’s largest private iron ore exporter, plans to export 500,000 tonnes of iron ore fines from Goa this monsoon, reports Smitha
Venkateswaran in Panaji. This is the first time any mining company will be attempting to export iron ore fines from Goa during the monsoon (between June and September).
“This is being done on an experimental basis. During the dry spells, we will transport iron ore fines through mooring dolphin at the port,” said Sesa Goa managing director PK Mukherjee. He added that there would be sheds covering the barges to prevent moisture from affecting the iron ore fines.
Last week, Sesa Goa, a part of London-listed Vedanta Resources, has acquired Goa-based Dempo Group’s mining assets for Rs 17.50 billion in an all cash deal in order to further consolidate its position in the domestic industry. Sesa Goa has iron ore mines in Goa, Karnataka and Orissa.
In Goa, ore is transported from jetties near the mine sites (bunders) to the port in barges. Sesa Goa has a captive fleet of twenty barges. While shipping of fines is generally restricted to the season between September and May, some quantity of iron ore lumps is shipped throughout the year.
According to company officials, Sesa Goa plans to export approximately 200,000 tones of iron ore per month during the monsoon season. Every year, Sesa Goa exports approximately four million tonnes of which about 3.2 million tons are fines and 0.8 million tons are lumps.
“Sesa Goa is trying to use the existing infrastructure to earn some marginal profits. These barges are otherwise idle during the monsoons”, said Shivanand Salgaoncar, President of Goa Mineral Ore Exporters Association (GMOEA) and Managing Director of V. M. Salgaocar Group of Companies.
Meanwhile, iron ore exports from Goa for FY09 was estimated to be at 45.5 million tonnes which was 15% higher than that of the preceding year. Goa accounts for nearly 45% of the country’s total iron ore exports and the future promises to be interesting with the Chinese government’s $585 billion stimulus package that has revived many steel mills that have been shut.
“There has been a substantial increase in the purchase of Australian and Brazilian high grade ore in China. Since Goa’s low grade ore is blended, demand has also increased. We expect the trend to continue this fiscal,” added Mr. Salgaocar.
Goa’s mineral deposits of 55-62 FE content is said to have no takers in India due to availability of high grade iron ore in other parts of the country. Companies here mainly depend on the Chinese and Japanese markets. Prices for Goa’s low grade ore have dropped 60% since FY 08 and trades between $11 to $17 per tonne.
Source: Economic Times
Venkateswaran in Panaji. This is the first time any mining company will be attempting to export iron ore fines from Goa during the monsoon (between June and September).
“This is being done on an experimental basis. During the dry spells, we will transport iron ore fines through mooring dolphin at the port,” said Sesa Goa managing director PK Mukherjee. He added that there would be sheds covering the barges to prevent moisture from affecting the iron ore fines.
Last week, Sesa Goa, a part of London-listed Vedanta Resources, has acquired Goa-based Dempo Group’s mining assets for Rs 17.50 billion in an all cash deal in order to further consolidate its position in the domestic industry. Sesa Goa has iron ore mines in Goa, Karnataka and Orissa.
In Goa, ore is transported from jetties near the mine sites (bunders) to the port in barges. Sesa Goa has a captive fleet of twenty barges. While shipping of fines is generally restricted to the season between September and May, some quantity of iron ore lumps is shipped throughout the year.
According to company officials, Sesa Goa plans to export approximately 200,000 tones of iron ore per month during the monsoon season. Every year, Sesa Goa exports approximately four million tonnes of which about 3.2 million tons are fines and 0.8 million tons are lumps.
“Sesa Goa is trying to use the existing infrastructure to earn some marginal profits. These barges are otherwise idle during the monsoons”, said Shivanand Salgaoncar, President of Goa Mineral Ore Exporters Association (GMOEA) and Managing Director of V. M. Salgaocar Group of Companies.
Meanwhile, iron ore exports from Goa for FY09 was estimated to be at 45.5 million tonnes which was 15% higher than that of the preceding year. Goa accounts for nearly 45% of the country’s total iron ore exports and the future promises to be interesting with the Chinese government’s $585 billion stimulus package that has revived many steel mills that have been shut.
“There has been a substantial increase in the purchase of Australian and Brazilian high grade ore in China. Since Goa’s low grade ore is blended, demand has also increased. We expect the trend to continue this fiscal,” added Mr. Salgaocar.
Goa’s mineral deposits of 55-62 FE content is said to have no takers in India due to availability of high grade iron ore in other parts of the country. Companies here mainly depend on the Chinese and Japanese markets. Prices for Goa’s low grade ore have dropped 60% since FY 08 and trades between $11 to $17 per tonne.
Source: Economic Times
China Reissues 51 Ferroalloy Export Licences
China's Ministry of Commerce has re-issued ferroalloy export licences to 51 enterprises for the first time after the introduction of the licence system. However, this is only an adjustment of export qualification. Lower export duties on ferroalloy products are still expected in the unforeseeable future.
MoC said in a circular on June 17th that the qualified 51 enterprises could apply to provincial-level departments for an export licence. The 51 enterprises include 44 enterprises for general trade, 2 for border trade, 3 in earthquake-hit regions, 1 recommended by western regions and 1 foreign-funded enterprise.
MoC introduced an export licence system last August in an attempt to strengthen ferroalloy export management. Enterprises much be qualified for industry admittance, exported more than 3,000 tonnes of FeMn, FeSi and SiMn in 2007, with products reaching domestic standard and winning ISO9000 certificate. The number of qualified enterprises in each province is also very limited.
Officials from the China Chamber of Commerce of Metals Minerals & Chemicals Importers & Exporters told Shihua Financial Information that the 51 enterprises have been checked according to MoC regulations and declined to elaborate or make comment on whether ferroalloy export duty should be adjusted.
MoC has entrusted CCCMC and China Ferroalloys Industry Association with the initial examination of relevant enterprises and asked them for advices.
Mr Zhang Zengchan, assistant to the chairman of CFIA, revealed that China's ferroalloy exports collapsed between January and April as demand shrinks dramatically in the international market. He admitted CFIA has called for an adjustment in ferroalloy export policies several times since last December but in vain.
Besides the export licences, Chinese customers have hammered out floor prices for ferroalloy products. This would be equal to an export duty hike when market prices fall below the floor prices.
On the other hand, ferroalloy imports are increasing and that trend still continues. Analysis reports point out that imported resources now dominate domestic market. In May domestic Cr-series alloys markets remained firm but large amounts of imported FeCr flooded in, pressing domestic FeCr producers to suspend production and curbing domestic price rise.
Mr Zhang is not optimistic for the ferroalloy market in 2009. Given dull international demand, the impact brought by imports, an export duty adjustment and weak risk-resistance in China's fragmented ferroalloy sector, the ferroalloy market can hardly walk out of sluggish performance with modest fluctuations in this year.
Source: Steel Guru
MoC said in a circular on June 17th that the qualified 51 enterprises could apply to provincial-level departments for an export licence. The 51 enterprises include 44 enterprises for general trade, 2 for border trade, 3 in earthquake-hit regions, 1 recommended by western regions and 1 foreign-funded enterprise.
MoC introduced an export licence system last August in an attempt to strengthen ferroalloy export management. Enterprises much be qualified for industry admittance, exported more than 3,000 tonnes of FeMn, FeSi and SiMn in 2007, with products reaching domestic standard and winning ISO9000 certificate. The number of qualified enterprises in each province is also very limited.
Officials from the China Chamber of Commerce of Metals Minerals & Chemicals Importers & Exporters told Shihua Financial Information that the 51 enterprises have been checked according to MoC regulations and declined to elaborate or make comment on whether ferroalloy export duty should be adjusted.
MoC has entrusted CCCMC and China Ferroalloys Industry Association with the initial examination of relevant enterprises and asked them for advices.
Mr Zhang Zengchan, assistant to the chairman of CFIA, revealed that China's ferroalloy exports collapsed between January and April as demand shrinks dramatically in the international market. He admitted CFIA has called for an adjustment in ferroalloy export policies several times since last December but in vain.
Besides the export licences, Chinese customers have hammered out floor prices for ferroalloy products. This would be equal to an export duty hike when market prices fall below the floor prices.
On the other hand, ferroalloy imports are increasing and that trend still continues. Analysis reports point out that imported resources now dominate domestic market. In May domestic Cr-series alloys markets remained firm but large amounts of imported FeCr flooded in, pressing domestic FeCr producers to suspend production and curbing domestic price rise.
Mr Zhang is not optimistic for the ferroalloy market in 2009. Given dull international demand, the impact brought by imports, an export duty adjustment and weak risk-resistance in China's fragmented ferroalloy sector, the ferroalloy market can hardly walk out of sluggish performance with modest fluctuations in this year.
Source: Steel Guru
Orissa Grants 15 Chromite Leases
BS has reported that though Orissa has 183 million tonnes of chrome ore, constituting 98% of India's total chrome deposits, only 3.27% of this - about 6 million tonnes - has been fully explored till date.
To expedite the exploration and exploitation of chrome reserves in the state, the government has granted mining leases to 15 companies including Ferro Alloys Corporation and Balasore Alloys. Of the total chrome reserves in Orissa, Sukinda area in Jajpur district has the lion’s share of 173 million tonnes, including low grade chrome.
The places in Sukinda where the chrome deposits are found are
1. Kamarda - 2 million tonnes
2. Saruabili - 9 million tonnes
3. Sukrangi - 7.5 million tonnes
4. Kaliapani - 25 million tonnes
5. Bhimatanger - 98 million tonnes
6. Kalarangi - 0.5 million tonne
7. Chingudipal and Tailangi - 13 million tonnes
Mr Raghunath Mohanty, steel and mines minister, said that out of the total deposits found in the Sukinda area, 18 million tonnes are of an inferior quality. He added that Kamakshyanagar in Dhenkanal district has about 4.42 million tonnes in reserves of chromite in locations like Sandhasar, Tulasiposhi, Haladigunda and Kathapal. The estimated reserves at Kathapal are 2 million tonne.
Mr Mohanty said that the total chromite reserve of the state is estimated at 183 million tonnes, out of which 177.42 million tonnes occur in Sukinda and Kamakshyanagar area.
Stating that the state government is taking effective steps for checking illegal mining, transportation and trading of chrome ore, he said that the government has formulated Orissa Minerals Rules 2007. Action is being taken against the persons, vehicles involved in this trade. Besides, state level and district level squads have been constituted to prevent smuggling and illegal trade of minerals.
Source: Business Standard/Steel Guru
To expedite the exploration and exploitation of chrome reserves in the state, the government has granted mining leases to 15 companies including Ferro Alloys Corporation and Balasore Alloys. Of the total chrome reserves in Orissa, Sukinda area in Jajpur district has the lion’s share of 173 million tonnes, including low grade chrome.
The places in Sukinda where the chrome deposits are found are
1. Kamarda - 2 million tonnes
2. Saruabili - 9 million tonnes
3. Sukrangi - 7.5 million tonnes
4. Kaliapani - 25 million tonnes
5. Bhimatanger - 98 million tonnes
6. Kalarangi - 0.5 million tonne
7. Chingudipal and Tailangi - 13 million tonnes
Mr Raghunath Mohanty, steel and mines minister, said that out of the total deposits found in the Sukinda area, 18 million tonnes are of an inferior quality. He added that Kamakshyanagar in Dhenkanal district has about 4.42 million tonnes in reserves of chromite in locations like Sandhasar, Tulasiposhi, Haladigunda and Kathapal. The estimated reserves at Kathapal are 2 million tonne.
Mr Mohanty said that the total chromite reserve of the state is estimated at 183 million tonnes, out of which 177.42 million tonnes occur in Sukinda and Kamakshyanagar area.
Stating that the state government is taking effective steps for checking illegal mining, transportation and trading of chrome ore, he said that the government has formulated Orissa Minerals Rules 2007. Action is being taken against the persons, vehicles involved in this trade. Besides, state level and district level squads have been constituted to prevent smuggling and illegal trade of minerals.
Source: Business Standard/Steel Guru
Oakajee, Angang In Supply Talks Over Rail Project
Oakajee Port & Rail Pty, planning a A$4 billion ($3.2 billion) iron ore port and rail project in Western Australia, is in talks to buy building materials and get funding from Angang Steel Co. and other Chinese companies.
Oakajee Port, a venture between Mitsubishi Corp. and Murchison Metals Ltd., has also held talks with Japanese mills and South Korea’s Posco, Chief Executive Christopher Eves told reporters today.
Iron ore producers in Australia have sold shares and brought in Chinese investors as they sought funding amid the global credit crunch. Steelmakers could help Oakajee Port with export-related financing in return for building materials purchases, Eves said today.
“I need to buy rail and the iron ore goes to Angang, for example, which makes rail,” Eves said at a media briefing in Geraldton, Western Australia, today. “Export-related finance provision to OPR we see is certainly one avenue” to help fund the project, he said.
Eves will travel with Western Australian Premier Colin Barnett to China at the end of July to talk to suppliers of material and equipment, he said.
Oakajee may make its first shipments from 2013 with construction scheduled to start from 2010, according to Barnett. Perth-based Murchison and Japan’s Mitsubishi will need to raise about A$3 billion in the next 12 months to fund construction, Eves said in March.
BHP Billiton Ltd., the world’s biggest mining company, said this month it will pay Rio Tinto Group $5.8 billion to create a venture covering the companies’ Western Australian iron ore assets. The tie-up will benefit Oakajee Port & Rail, Eves said.
“If you’re a steel mill in China and you had Rio Tinto competing against BHP and now they’re in a joint venture together, the next logical place to look” is Oakajee, Eves said.
Oakajee Port & Rail expects to make announcements by July 1 on hirings and the appointment of a project managing contractor, Eves said.
Source: Bloomberg
Oakajee Port, a venture between Mitsubishi Corp. and Murchison Metals Ltd., has also held talks with Japanese mills and South Korea’s Posco, Chief Executive Christopher Eves told reporters today.
Iron ore producers in Australia have sold shares and brought in Chinese investors as they sought funding amid the global credit crunch. Steelmakers could help Oakajee Port with export-related financing in return for building materials purchases, Eves said today.
“I need to buy rail and the iron ore goes to Angang, for example, which makes rail,” Eves said at a media briefing in Geraldton, Western Australia, today. “Export-related finance provision to OPR we see is certainly one avenue” to help fund the project, he said.
Eves will travel with Western Australian Premier Colin Barnett to China at the end of July to talk to suppliers of material and equipment, he said.
Oakajee may make its first shipments from 2013 with construction scheduled to start from 2010, according to Barnett. Perth-based Murchison and Japan’s Mitsubishi will need to raise about A$3 billion in the next 12 months to fund construction, Eves said in March.
BHP Billiton Ltd., the world’s biggest mining company, said this month it will pay Rio Tinto Group $5.8 billion to create a venture covering the companies’ Western Australian iron ore assets. The tie-up will benefit Oakajee Port & Rail, Eves said.
“If you’re a steel mill in China and you had Rio Tinto competing against BHP and now they’re in a joint venture together, the next logical place to look” is Oakajee, Eves said.
Oakajee Port & Rail expects to make announcements by July 1 on hirings and the appointment of a project managing contractor, Eves said.
Source: Bloomberg
Vale, ArcelorMittal Agree Iron Ore Price Cuts
Steel giant ArcelorMittal will pay Vale 28.2% less for iron-ore fines and 44.47% less for lumps during the 2009 contract year, compared with 2008, the Brazilian miner announced on Friday.
The pellet price decreased by 48.3%, Vale said.
The resources giant announced earlier this month it had agreed to cut 2009 benchmark iron ore prices by the same percentages to Japanese and South Korean steelmakers.
Annual benchmark prices for iron ore have historically been negotiated annually in closed-door talks between individual miners of the steelmaking ingredient and their customers in Asia and Europe.
This year, the 'big three' producers – Vale, Rio Tinto and BHP Billiton –have started settling some contracts, but have yet to reach agreements with buyers in the biggest iron-ore consuming country, China.
Chinese steel producers are understood to want a price cut of at least 40%.
Source: Mining Weekly
The pellet price decreased by 48.3%, Vale said.
The resources giant announced earlier this month it had agreed to cut 2009 benchmark iron ore prices by the same percentages to Japanese and South Korean steelmakers.
Annual benchmark prices for iron ore have historically been negotiated annually in closed-door talks between individual miners of the steelmaking ingredient and their customers in Asia and Europe.
This year, the 'big three' producers – Vale, Rio Tinto and BHP Billiton –have started settling some contracts, but have yet to reach agreements with buyers in the biggest iron-ore consuming country, China.
Chinese steel producers are understood to want a price cut of at least 40%.
Source: Mining Weekly
HudBay Considering Acquisitions
HudBay Minerals Inc. is considering "a series of significant" acquisition and joint-venture opportunities as part of its new strategic plan, according to CEO Peter Jones.
Jones said the slump in base metals prices has created excellent acquisition opportunities for companies with healthy balance sheets, and HudBay has made completing one or more deals a "high priority" this year.
"Hopefully we're not talking about a single acquisition, hopefully we're talking about a series of significant and hopefully to go with that some lesser acquisitions, joint ventures, et cetera," Jones said after the company's annual meeting Friday,
"The opportunities are definitely out there, there's no question about it. People are talking, they want to talk and this is very, very different from a year or two ago."
HudBay will focus on copper, zinc and nickel assets with low operating costs and "lower risk opportunities, with higher returns required in exchange for projects with higher risk."
Despite reporting a $4-million loss in the first quarter, the company is still sitting on cash and cash equivalents of approximately $700 million.
HudBay is primarily interested in advanced-stage development projects, but will also target longer-term development and exploration projects if "they have the potential to become significant assets," Jones said.
He added that HudBay is particularly interested in assets in Central and South America.
The company is willing to spend up to $1 billion on developing a project, and could finance this through "corporate debt, precious metal credits, project financing and partnerships with others," Jones said.
"At the same time, however, we must be prudent with the use of debt financing, as we have seen in the past year how excessive leverage can bring otherwise strong mining companies to their knees."
He said the company isn't in talks to put itself up for sale, despite rumours to the contrary, although he wouldn't rule that out as an option.
HudBay is also focused on internal growth, particularly through the "aggressive" development of the Lalor zinc project in the Flin Flon Greenstone Belt of northern Manitoba.
Jones said the zinc mineralization at Lalor also contains significant amounts of gold and silver, and the company will spend $13 million this year on developing the project.
"We are hopeful that we will have a firm direction for Lalor no later than the end of this year," he said.
Although HudBay is actively pursuing global acquisition opportunities, Jones said its northern Manitoba operations will remain the "cornerstone" of the company.
HudBay announced Thursday that it will close its copper smelter in Flin Flon next year, putting 225 people out of work, due to the age of the plant and the expense that would be required to keep up with emissions regulations.
But Jones said the company has already begun building a $30-million filtration plant - used to reduce the moisture in copper concentrate so it can be shipped at a lighter weight - in the community, which will employ 200 to 210 people once it's completed.
Jones said there are four potential smelters HudBay could use to process its copper concentrate once the Flin Flon operation closes - in Timmins, Ont., Rouyn-Noranda, Que., Salt Lake City or Hayden, Ariz. If these smelters don't work, the company will consider selling its copper concentrate overseas to be processed in Korea, Japan or China.
HudBay's other Flin Flon operations are in flux. Jones said the Chisel North zinc mine and Snow Lake concentrator, which were suspended in 2008 in response to slumping zinc prices, will remain shuttered until the metal stabilizes at prices 10 to 15 per cent higher than the current 70 cents U.S. per pound.
The company also operates the 777 and Trout Lake mines, a zinc and copper concentrator and a zinc plant in the region.
Its other projects include the Fenix nickel project in Guatemala and the Balmat mine in New York.
Development of Fenix was suspended in 2008, and Jones said HudBay is currently looking at ways to cut the project's power costs through hydroelectric or coal-powered thermal plants.
Source : Winnipeg Free Press
Jones said the slump in base metals prices has created excellent acquisition opportunities for companies with healthy balance sheets, and HudBay has made completing one or more deals a "high priority" this year.
"Hopefully we're not talking about a single acquisition, hopefully we're talking about a series of significant and hopefully to go with that some lesser acquisitions, joint ventures, et cetera," Jones said after the company's annual meeting Friday,
"The opportunities are definitely out there, there's no question about it. People are talking, they want to talk and this is very, very different from a year or two ago."
HudBay will focus on copper, zinc and nickel assets with low operating costs and "lower risk opportunities, with higher returns required in exchange for projects with higher risk."
Despite reporting a $4-million loss in the first quarter, the company is still sitting on cash and cash equivalents of approximately $700 million.
HudBay is primarily interested in advanced-stage development projects, but will also target longer-term development and exploration projects if "they have the potential to become significant assets," Jones said.
He added that HudBay is particularly interested in assets in Central and South America.
The company is willing to spend up to $1 billion on developing a project, and could finance this through "corporate debt, precious metal credits, project financing and partnerships with others," Jones said.
"At the same time, however, we must be prudent with the use of debt financing, as we have seen in the past year how excessive leverage can bring otherwise strong mining companies to their knees."
He said the company isn't in talks to put itself up for sale, despite rumours to the contrary, although he wouldn't rule that out as an option.
HudBay is also focused on internal growth, particularly through the "aggressive" development of the Lalor zinc project in the Flin Flon Greenstone Belt of northern Manitoba.
Jones said the zinc mineralization at Lalor also contains significant amounts of gold and silver, and the company will spend $13 million this year on developing the project.
"We are hopeful that we will have a firm direction for Lalor no later than the end of this year," he said.
Although HudBay is actively pursuing global acquisition opportunities, Jones said its northern Manitoba operations will remain the "cornerstone" of the company.
HudBay announced Thursday that it will close its copper smelter in Flin Flon next year, putting 225 people out of work, due to the age of the plant and the expense that would be required to keep up with emissions regulations.
But Jones said the company has already begun building a $30-million filtration plant - used to reduce the moisture in copper concentrate so it can be shipped at a lighter weight - in the community, which will employ 200 to 210 people once it's completed.
Jones said there are four potential smelters HudBay could use to process its copper concentrate once the Flin Flon operation closes - in Timmins, Ont., Rouyn-Noranda, Que., Salt Lake City or Hayden, Ariz. If these smelters don't work, the company will consider selling its copper concentrate overseas to be processed in Korea, Japan or China.
HudBay's other Flin Flon operations are in flux. Jones said the Chisel North zinc mine and Snow Lake concentrator, which were suspended in 2008 in response to slumping zinc prices, will remain shuttered until the metal stabilizes at prices 10 to 15 per cent higher than the current 70 cents U.S. per pound.
The company also operates the 777 and Trout Lake mines, a zinc and copper concentrator and a zinc plant in the region.
Its other projects include the Fenix nickel project in Guatemala and the Balmat mine in New York.
Development of Fenix was suspended in 2008, and Jones said HudBay is currently looking at ways to cut the project's power costs through hydroelectric or coal-powered thermal plants.
Source : Winnipeg Free Press
Friday, June 19, 2009
Geovic's Cameroon Project Delayed To 2012
Production at Geovic Mining Corp.'s cobalt-nickel-manganese project in Cameroon is now set for 2012 after a delay due to the global financial crisis, the company said.
The firm's Nkamouna project, originally due to start operations in 2010, was delayed and investment scaled back because of weak metals prices and the difficulty of raising funds.
"It is just a delay. In fact, all is now set for production to start in 2012, although I cannot give you an exact date yet," said Richard Howe, managing director of Geovic Cameroon, Geovic's 60 percent owned subsidiary.
Howe told Reuters in an interview on Thursday that Toronto-listed Geovic and Cameroonian shareholders had come up with the funds needed to keep work on track.
Geovic has said it expected to produce 4,200 tonnes of cobalt and 2,100 tonnes of nickel annually for at least 21 years from deposits which it estimates at reaching at least 54 million tonnes of ore.
This would make Geovic one of the world's biggest producers of cobalt, a hard and durable metal used in aircraft engines and increasingly in batteries for hybrid cars.
Prices of cobalt have crashed to $14.50 per lb from last year's highs of over $52 per lb, but Geovic has said the project in Cameroon would be profitable even at $8 per lb.
"Currently, Geovic is performing bench and pilot-scale tests aimed at increasing cobalt yields, reducing capital and operating costs, and lowering overall process risks," Howe said.
Howe said the project was expected to contribute more than $250 million a year to Cameroon's gross domestic product.
Source: Moneybiz
The firm's Nkamouna project, originally due to start operations in 2010, was delayed and investment scaled back because of weak metals prices and the difficulty of raising funds.
"It is just a delay. In fact, all is now set for production to start in 2012, although I cannot give you an exact date yet," said Richard Howe, managing director of Geovic Cameroon, Geovic's 60 percent owned subsidiary.
Howe told Reuters in an interview on Thursday that Toronto-listed Geovic and Cameroonian shareholders had come up with the funds needed to keep work on track.
Geovic has said it expected to produce 4,200 tonnes of cobalt and 2,100 tonnes of nickel annually for at least 21 years from deposits which it estimates at reaching at least 54 million tonnes of ore.
This would make Geovic one of the world's biggest producers of cobalt, a hard and durable metal used in aircraft engines and increasingly in batteries for hybrid cars.
Prices of cobalt have crashed to $14.50 per lb from last year's highs of over $52 per lb, but Geovic has said the project in Cameroon would be profitable even at $8 per lb.
"Currently, Geovic is performing bench and pilot-scale tests aimed at increasing cobalt yields, reducing capital and operating costs, and lowering overall process risks," Howe said.
Howe said the project was expected to contribute more than $250 million a year to Cameroon's gross domestic product.
Source: Moneybiz
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