Indian Iron Ore Rises In Respond To Boycott

Price Rises $10 In One Week

Spot prices of Indian iron ore soared to $183.10 per tonne on Thursday in response to the China Iron and Steel Association’s call for a boycott of the big three global miners, Vale, Rio Tinto and BHP Billiton. CISA called the boycott after the big three sought a 90 per cent rate hike, moved to quarterly pricing and scrapped the annual iron ore benchmark system.

Spot prices of 63.5% Indian iron ore fines stood at $181.70-$183.10 per tonne on Thursday, up from $171 a tonne a week ago, before CISA called for a boycott of iron ore produced by the big three global miners.

Meanwhile Chinese media reports that the 19 major Chinese ports currently have stockpiles of 67.37 million tonnes of iron ore this week, down by155,000 tonnes from a week ago. Only Qingdao and Rizhao ports – the latter China’s main iron ore port – showed increases in their stockpile. Dalian Port had 2.02 million tons of iron ore in stock, a fall of 330,000 tons from last week, while Caofeidian Port in northern China's Hebei province had 3.45 million tons, down by 150,000 tonnes.

See also: China bans low-grade iron ore imports

Xstrats To Spend $7 Billion To Boost Copper Production

Output To Rise By 60 Per Cent Over Four Years

The Chief Executive of Xstrata Copper has announced that his company is to spend $7 billion over the next four years to increase its copper production by 60 per cent.

Speaking at a copper conference in Santiago, Charlie Sartain said that the company intends to boost output to 1.5 million tonnes from 920,000 tonnes last year.

This year’s output should be marginally ahead of that in 2009, however the company is looking to spend $1.5 billion investment at its Tintaya mine in Peru, which will raise output by about 60 percent, and a $1.3 billion expansion at the Antamina mine, also in Peru, will boost production capacity by 38 percent, Mr Sartain said. The company also expects to develop its Las Bambas mine in Peru, for which it was awarded an exploration licence in 2004.

Xstrata’s Lomas Bayas mine in northern Chile will receive a $293 million expansion to reach full production by 2013.

Xstrata is the world’s fourth largest copper producer behind Codelco of Chile, Freeport-McMoRan of the US and Australia’s BHP Billiton.

See also: Xstrata submits study for $5.2 Billion Philippies Gold-Copper Project

Codelco CEO Forecasts Slight Copper Surplus

Chilean Miner Still Expects Own Production To Rise

The chief executive of Codelco, the Chilean company that is the world’s biggest producer of copper is forecasting a slight surplus of global copper supply this year. Despite this, Jose Pablo Arellano maintains that his company’s output will increase slightly this year on the 1.7 million tonnes it produced in 2009, despite February’s earthquake disrupting production.

Mr Arellano told reporters at the CRU/CESCO copper conference in Santiago that his company plans to invest $2.3 billion this year to offset output from older mines; however he suggested that any supply surplus will be due to an increase in European and US demand for the metal, while Chinese demand is expected to fall.

"We hope there will be some synchronization between a possible slowdown in China with strengthening in the rest of the world, particularly the United States and Europe." Mr Arellano added.

Vale, BHP End Annual Iron Ore Talks

Iron Ore Benchmark Pricing On Verge Of Being Consigned To History

Vale SA, and BHP Billiton Ltd. have announced that they have signed a number of short-term contracts with Asian steel mills, with Vale gaining a 90 percent increase in its prices.

Sumitomo Metal Industries Co., has agreed to pay Vale $100 to $110 a metric ton for the quarter starting April 1, spokesman Toshifumi Matsui said on Tuesday, adding that the pact is a tentative agreement.

Nippon Steel Corp., Japan’s largest steelmaker, has also reached a “tentative” price agreement for the April quarter, the company’s President Shoji Muneoka said today in Tokyo without providing pricing details. However, he added that his company still believes that annual benchmark prices are desirable and that his company would be contacting domestic customers about the change to quarterly pricing.

BHP, the largest mining company, today said it will sell the majority of its production to Asian steel mills on shorter-term contracts. The company gave no details of its pricing.

The pricing details mark a break with the 40-year old system of setting a benchmark price. “Details of the agreements with our customers are subject to confidentiality agreements,” said BHP spokesman Amanda Buckley. Ms Buckley declined to comment either on the price agreed or the names of the customers that had agreed those prices.

Pedro Gutemberg, director for marketing and research at Vale, said in Beijing today that his company wanted a new pricing system to improve pricing flexibility, predictability and transparency. Mr Gutenberg didn’t confirm the price agreement with Sumitomo Metal.

“For us, the benchmark system is old, so we decided to go this route,” he added.

Chinese steelmakers are said to be still in talks with the iron ore producers over pricing issues.

Chilean Company Buys Stake In China Molybdenum Subsidiary

Chile’s Molibdenos Y Metales S.A. has signed an agreement with China Molybdenum (China Moly) to purchase a 50% stake in its subsidiary, Luoyang High-Tech Molybdenum & Tungsten Material (LuoMo High-Tech). China Moly, a partly state-owned company, will own the remaining 50% of LuoMo High-Tech, which will be run as a joint venture.

The acquisition will help Molymet gain a foothold in the Chinese market, a key target for the company's overall growth strategy. The purchase price for the 50% ownership interest is USD37.7 million (Yuan 258 million) and is expected to be funded with cash on hand. The transaction will have a small leveraging affect on Molymet's balance sheet with net leverage increasing by 0.3 times (x) to around 1.0x from 0.7x net debt to EBITDA as of Dec. 31, 2009, still consistent with Molymet's rating category. Post-closing, liquidity is expected to remain strong with Cash to Short-Term Debt coverage at around 3.7x. In addition, Molymet also has access to available credit lines with 12 different banks totaling USD577 million.


This purchase is consistent with Molymet's publicly stated strategy of expanding its presence in China. LuoMo High-Tech is a Chinese metallic molybdenum producer. The transaction is expected to close in June following confirmation from Molymet and China Moly's boards, and final approval from Chinese authorities.

Donling Group To Reopen Baoji Smelter

The Dongling Group is to restart its 100,000-tonne-a-year lead and zinc smelter this month. The lead and zinc smelter near Baoji city in China’s Shaanxi province has been shut since August last year following accusations by locals that it was a source of lead poisoning.

Authorities closed the plant in August after local villagers broke into the plant to protest about alleged lead poisoning. Villagers living near the smelter have since been relocated.

The smelter has a capacity of about 33,000 tons lead and 66,000 tons zinc.

Profits Fall 60.9 Per Cent At Antofagasta

Chilean copper miner Antofagasta has announced that 2009 net earnings decreased 60.9% to $667.7 million on revenue down 12.2% to $2.96 billion, mainly due to lower copper volumes and lower market prices for molybdenum offsetting higher copper prices.

Copper production was 442,500 tonnes for 2009, down from 477,700 tonnes recorded in 2008, but ahead of the firm's 433,000-tonne forecast. The production decrease was mainly due to lower plant throughput at Los Pelambres.

Antofagasta said that the recent earthquake in Chile is not expected to have a material effect on existing operations but the commissioning of the Los Pelambres plant expansion is now expected to be completed during the second quarter of this year and the commissioning of its Esperanza plant is now expected to start later in the fourth quarter. The firm's 2010 production forecast is unchanged.

Chinese Utility Takes 10 Per Cent Stake In Quadra Mining

Vancouver-based Quadra Mining Ltd. is to sell a 50 per cent stake in two of its copper projects in Chile to the State Grid Corporation of China. The deal also includes a private share placement in which State Grid will take a 9.9 per cent stake in Quadra


The deal is for a joint venture to develop and operate Quadra's Sierra Gorda project and Franke Mine.

Quadra will manage operations of the joint venture, while State Grid will lead on project financing, aiming for a 60:40 debt-to-equity ratio.

The parties will also work on other prospective copper assets.

Jinchuan May List Cobalt Units

The chairman of Jinchuan Group, Yang Zhiqiang, has said that his company may list its cobalt units on the Shanghai bourse. However, Mr Yang ruled out listing his company’s nickel assets. Jinchuan is Asia’s largest nickel producer.


“We may finish preparatory work within the year”, he said, adding that the company is looking for underwriters.

The company plans to start nickel exploration in Tanzania in the first half of this year and will invest with Canadian company,Tanzanian Royalty Exploration Corp., to develop nickel assets in the north west of the country.

Mr Yang denied reports that Jinchuan will build a nickel/copper project in China’s Guangxi province.

Codelco Transporting Copper By Road From El Teniente

Codelco, the world’s largest copper producer, has resumed sending copper from its El Teniente mine to the port of San Antonio by truck after last Saturday’s earthquake damaged railways.

Repairs have been completed at the mine, which sustained slight damage during the 8.8-magnitude earthquake, although shipments only re-commenced on Thursday 4 March.
Shipments from El Teniente primarily go by rail to the San Antonio port, which is working at 80 percent capacity. Ships bringing in grains are being given priority over incoming and outgoing vessels.

Teck Mines Unaffected By Chile Quake

Teck Resources, the Vancouver company with interests in copper, coal, zinc and energy, said on Monday that its operations in Chile were undamaged and minimally affected by Saturday's earthquake and are operating normally.

Copper Soars As Production Halted At Chilean Mines

Copper prices soared in New York after the 8.8-magnitude earthquake in Chile forced Codelco and Anglo American to suspend some of their mine operations.

Futures contracts for May delivery in New York rose by 6.2 per cent – the biggest gain for almost a year while levels in London climbed to their highest in more than five weeks as the ‘quake affected almost 5% of the world’s copper production. Around a third of the world’s copper production is mined in Chile.

Codelco’s plants at El Teniente and Andina both suffered a power outage after Saturday’s earthquake, however Codelco announced yesterday that its El Teniente mine had “gradually” resumed production from about 4pm local time yesterday afternoon (1900 hours GMT/2pm EDT). Andina, however, remains closed. Power has also been partially restored to Anglo American’s mines at Los Bronces and El Soldado, though there is no word as to when production will re-commence.

Meanwhile reports from Chilean media quote Raul Maturana, secretary general of the National Federation of Port Workers of Chile as saying that the central Chilean ports of San Antonio and Valparaiso remain closed however the larger ports of Antofagasta and Mejillones are apparently unaffected, meaning copper shipments should be able to leave the country.

Codelco is the world’s largest copper producer and has said that it will be able meet supply contracts, compensating for any shortfalls with shipments from undamaged plants in the north of the country. The company ruled out declaring force majeure, which allows companies to miss obligations because of circumstances beyond their control.

Codelco Mines To Reopen After Earthquake

Safety inspectors have found no major damage at Codelco’s copper mines at El Teniente and Andina. The mines were closed after a power outage following an 8.8 magnitude earthquake that hit the country in the early hours of Saturday morning.

Chilean mining minister Santiago Gonzalez said the mines would open shortly without specifying a time-scale.

Codelco’s mines in the north of the country are operating normally. The company suffered no deaths or injuries as a result of the earthquake. The Escondida copper mine, jointly-owned by Rio Tinto and BHP, is also working normally as a result.
Anglo-American’s copper mines at Los Bronces and El Soldado are also out of action following a power outage caused by the earthquake.

Copper accounts for half of Chile’s $53 billion worth of exports. Codelco is the world’s largest copper producer with annual production of around 600,000 tonnes. Anglo-American produces around 280,000 tonnes a year from its two mines.

Breakwater Shows Q4 Profit

Canadian miner Breakwater Resources posted profits of C$5.4-million in the fourth quarter of 2009. This compared to a net loss of C$53.5-million a year earlier, when it wrote down the value of its mining assets. The full-year result was a profit of C$0.8 million against a loss of C$88.3 million in 2008.

Breakwater produces zinc, copper, lead and gold from mines in Canada, Chile and Honduras.

Lower zinc prices in late 2008 and early 2009 hit profits, however CEO David Petroff said that the company curtailed its spending and has since benefited from stronger metals prices..

“By mid-2009 any concern that Breakwater would not survive had been put to rest,” he told analysts and investors on Friday.

The company ended 2009 with C$41.1-million in the bank, working capital of C$70.7-million and a portion of future earnings protected by the purchase of zinc put options, giving shareholders the benefit of higher zinc prices.

Fourth quarter concentrate production fell 6% year-on-year to 61,757 tonnes after the company suspended production at its Langlois mine in Quebec in November 2008. However, the suspension also meant that operating costs fell by C$58.8 million or 77%, while there was also a saving of C$12 million in depreciation and depletion charges.

Gross sales revenue declined 50%, to C$50.4-million for the quarter, as a result of a 63% decrease in concentrate sold and a stronger Canadian dollar, partly offset by higher realised prices.

While zinc metal stocking and destocking at various levels in the supply chain, as well as fund activity, makes supply and demand fundamentals difficult to gauge in the short term, the company remains confident that the outlook for zinc is positive in the medium and long term, Petroff said.

There are several mine closures looming around the world, and recent production problems or uncertainty at large operations in Canada and Australia are also a reminder that “mine supply cannot be taken for granted,” he added.

Codelco Increases Copper Production By 16 Per Cent

Codelco, the Chilean state-controlled copper miner, increased copper output in 2009 by 16 per cent to 1.78 million tonnes compared to 1.46 million tonnes in 2008. This figure includes Codelco’s 49 per cent share of the El Abra mine controlled by Freeport McMoran, which equated to 80,000 tonnes.

Codelco also produced 22,000 tonnes of molybdenum during the year, against 21,000 tonnes in 2008.

However, profits before tax and extraordinary items fell by 18 per cent to $4 billion due to lower copper prices and the global financial crisis. Revenues rose to US$8.88bn from US$8.74bn the previous year, despite a steep fall at the company’s molybdenum division, registering a fall of $1 billion down to $500 million.

Output was higher for the first time in four years, largely due to investment in ageing plant, and helped by stimulus money from the Chilean government. The company invested $2.13 billion during the course of the year against $1.99 billion in 2008. Production was also helped by the fact that were no strikes at the company during the year.

CEO José Pablo Arellano told a press conference on Thursday that Codelco was the only Chilean miner to register growth during 2009. Figures for Chile’s copper production showed a fall on 5 per cent during 2009. Mr Arellano said that Codelco’s share of Chile’s copper production rose from 27 per cent in 2008 to 33 per cent last year.

Total costs fell to US$1.58/lb last year from US$1.78/lb in 2008. Cash costs following by-product credits and other deductions rose to US$0.93/lb in 2009 from US$0.70/lb in 2008.

Barrick Sues Over El Morro Sale

The world's largest gold miner, Toronto-based Barrick Gold, has filed a lawsuit in Ontario to try to halt Goldcorp's acquisition from New Gold of most of the El Morro copper and gold project in Chile, even though the transaction has now closed.

In October Barrick agreed to buy a 70 percent stake in El Morro from its owner, Anglo-Swiss miner Xstrata, for $465 million; however New Gold – a minority stakeholder in El Morro - claimed that it had first refusal on the stake and then proceeded to sell it on to Goldcorp.

Goldcorp said on Tuesday that it had completed the transaction.

"Fundamentally, we remain of the view that Xstrata were obliged to close with us," said a spokesman for Barrick. "Whether they closed or not, the courts will sort out." No date has been set for the hearing.

El Morro holds reserves of 5.7 billion pounds of copper and 6.7 million ounces of gold.

Peru Now Second-Largest Copper Producer

Peru’s National Mining, Oil and Energy Society (SNMPE) has reported that Peru became the world’s number two copper producer in 2009, replacing the U.S.

SNMPE based its figures on the U.S. Geological Survey which showed that last year Peru produced a total of 1,273,000 metric tons of copper, whilethe U.S. produced 1,190,000 metric tons in 2009.

Chile occupies first place in the ranking by volume, producing over 5 million tonnes per year - four times as much as Peru.

Chile's Trade Surplus Highest In Almost Two Years

Chile’s central bank has announced that the country’s trade surplus in January was $2.1 billion, the largest since March 2008.

Exports grew by 50% on a year-on-year basis to $5.9 billion with imports growing by 23% to $3.8 billion.

The price of the country’s main export, copper, hit a 16-month high during the month.

Chile Copper Production Up Almost 8 Per Cent

Copper output in Chile, the world’s biggest producer, rose 7.8 percent in August from a year earlier after state-owned Codelco and BHP Billiton Ltd. boosted production, the government said.

Output increased to 459,823 metric tons from 426,689 tons a year earlier, the country’s national statistics agency said in a statement distributed in Santiago today.

Codelco, based in Santiago, is the world’s biggest copper producer. Melbourne-based BHP, the largest mining company, owns 57.5 percent of Chile’s Escondida, the world’s biggest copper mine.

Production of molybdenum, used for stainless steel making, rose 27 percent to 3,164 tons from 2,495 tons a year earlier, the agency said.

Source: Bloomberg

Mitsubishi Looks At Stake In Chilean Iron Ore Producer

Mitsubishi Corp., Japan’s largest trading house, has hired Citigroup Inc. to evaluate a possible stake acquisition in a Chilean iron-ore producer, La Tercera reported.

Mitsubishi wants to buy part of Cia. Minera del Pacifico, the unit of Chilean steelmaker Cap SA known as CMP, to gain Japanese tax breaks for companies that invest in foreign raw- materials producers, the Santiago-based newspaper reported, without saying where it got the information. Cap hired JPMorgan Chase & Co. to study the transaction, the newspaper said.

Mitsubishi already owns 10 percent of Cap and 50 percent of CMP’s Cia. Minera Huasco iron-ore unit, the newspaper said. Mitsubishi and Cap may reach an accord by December, La Tercera reported.

Source: Bloomberg