Norsk Secures Bauxite Supplies

Vale Deal Will Give Access to 100 Years of Supplies

Norway’s Norsk Hydro has agreed to take over bauxite, alumina and aluminum assets from Vale SA for $4.9 billion, securing 100 years’ worth of bauxite supplies and making the Brazilian miner its second-largest shareholder. Bauxite is refined into alumina, which is separated during smelting to produce aluminum.

The deal will give Hydro access to raw materials used in aluminum production and will enable it to become less reliant on mining companies supplying bauxite and alumina.

Hydro is paying $1.1 billion in cash, giving Vale a 22 percent stake and taking on about $700 million of net debt in return for the assets, the company said on Sunday.
Hydro is taking control of Paragominas in Brazil, the world’s third-biggest bauxite mine, and 91 percent of Alunorte, the largest alumina refinery, as part of the deal. The company will have a 51 percent stake in the Albras aluminum plant and 81 percent of the CAP alumina project.

Hydro’s Chief Executive Officer Svein Richard Brandtzaeg described the deal as a “transforming transaction” at a press conference yesterday in Oslo.
The assets will “significantly improve” Hydro’s financial position and secure bauxite supplies “in a 100-year perspective” according to a statement released by the company. Vale said yesterday it expects the transaction will create “substantial value” for shareholders.

The deal will bring the Norwegian government’s stake in Norsk Hydro down to 34.5 per cent from 43.8 per cent previously. The country’s Minister of Trade and Industry, Trond Giske, said Norway’s ambition is to bring the holding back up towards 40 percent.

Vale looks set to focus on expanding iron ore production. On Friday it said it was paying $2.5 billion for iron ore deposits in Guina from BSG Resources (Guinea) Ltd.

Orissa To Release Mining Policy Plan

5% Royalty Likely To Be Imposed

The government in the Indian state of Orissa government is to release policy guidelines regarding mining in the state.

The policy, which is aimed at developing and regulating the local mining industry, will focus more on the non-ferrous sector and comes at a time when issues such as illegal mining and land acquisition have come to the fore.

Industries to be affected by the guidelines are expected to below volume, high value non-ferrous minerals like gold, nickel, platinum and beach sand, however, the ferrous sector is likely to be affected by guidelines on the profitable use of low grade ores by using state-of-the-art technology in the benefication, sintering and pelletising process.

The state government has decided in principle that a royalty of 5% will be used for the development of people living mining areas. A committee has been formed to formulate the policy for the implementation of this decision.

Orissa has 17% of India’s total mineral reserves with 174 million tonnes of nickel ore, 82 million tonnes of beach sand minerals, 1,802 million tonne of bauxite, 180 million tonnes of chromite, 5,305 million tonne of iron ore and 65,353 million tonne of coal. There are also deposits of cobalt, copper ore, dolomite, lead & zinc ore, limestone, tin ore.

Rio Tinto, Chinalco In Talks Over Guinea Iron Ore Field

Rio Tinto and Chinalco are in discussions regarding the development of the vast Simandou iron ore field in Guinea.

Talks have been taking place in Beijing ahead of a visit to China this weekend by Rio Tinto chief executive Tom Albanese.

Any deal is likely to see Chinalco finance the next stage of pre-development, while Rio will remain the senior partner in the venture.

The two were in talks last year about a $19 billion tie-up, but the deal fell apart last June amid recriminations on both sides. However, it seems the Chinese have kept the door open for other types of co-operation. Repairing relations is a top priority for Mr Albanese while Chinalco president Xiong Weiping has refrained from publicly criticising Rio.

Meanwhile, a report by a Chinese government body failed to apportion blame for the talks’ failure to either party. The State Council's Development Research Centre added "The failure of the merger did not mean no other co-operation opportunities existed, or the breaking of mutual relations."

The two companies are believed to have discussed iron ore exploration in China and bauxite and alumina refining interests in north Queensland.

Ghana's Mining Industry 'Set For Growth' - Report

Political stability in Ghana, along with clear regulatory standards, will underpin Ghana’s mining sector in 2010 giving the sector great promise for growth. So says the first quarter 2010 Ghana Mining Report by the research firm, Research and Markets.
Ghana is Africa’s second-largest producer of gold after South Africa as well as being one of the world’s largest producers of manganese ore, bauxite and diamonds and some of the major players in the gold mining industry such as Gold Fields, Newmont Ghana and AngloGold Ashanti all have a significant presence in the country.

According to the report the value of Ghana’s mining industry will more than double over a five-year period, from $0.64 billion in 2009 to $1.68 billion in 2014, with the high price of gold a significant factor in this increase.

The report’s authors took into consideration, data from the country’s statistical agencies and associations, as well the UN’s Industrial Commodity Statistics Database, the US Geological Survey and the World Bureau of Metal Statistics and then used their own proprietary econometric model to forecast future figures and trends.

Gold accounts for over 90 per cent of the country’s revenue. Exports in 2009 were US$ 2.6 billion, compared to US$2.2 billion in 2008. Gold output was 2.6mn oz (up 4% y-o-y) selling at an average realised price of US$852 per oz. Manganese revenue was up by a 69%, to US$62.34mn, while bauxite revenue was flat, at US$19.81mn.

The President of the Ghana Chamber of Mines, Jurgen Eijgendaal, said that 2009 would be a mixed year for Ghana's mining industry. He expects gold to perform well, while bauxite and manganese exports could fall as a result of a decline in demand.

Austral To Buy Guinea Assets

Austral Coke & Projects through its Guinea based subsidiary, Astra Energy SARL, has acquired 16 prospecting licenses of rich iron ore, bauxite and manganese ore blocks measuring 12,63,000 acres in Guinea in West Africa. The contract term is for 30 years with an extendable term of another 30 years. Austral is the first Indian company to get licenses in Guinea and biggest in terms of land acquired. (12,63,000 acres)

The expected reserves of 3.5 billion tons of bauxite spread over 2,950 sq kms under six licenses. Iron ore expected services of 1.8 billion tons spread over 1,455 sq kms under three licenses and, manganese reserves are expected at 53 million tons spread over 710 sq kms under seven licenses.

The company plans to extract annual quantity of 5 million tons of bauxite and iron ore and 0.10 million tons of manganese from these mines initially. It also has 6 coal prospecting licenses admeasuring 100,000 hectares in Mozambique through its 95% controlled Mozambique-based subsidiary Astra Mining.

Source: Myiris

Rare Metals Restriction "Failing To Protect China's Resources"

China's policies restricting exports of certain rare metals fail to protect the country's resources and undermine its validity to tap overseas resources, according to a report on China's mining industry.

The nation should adjust such policies so as to oppose resource protectionism, said the report, which was composed by a research team under the Chinese Academy of Social Sciences' Institute of Industrial Economics after research on domestic mines and enterprises of various kinds.

Late last month, the US and the EU filed a complaint with the World Trade Organization (WTO) against China on raising export taxes and reducing the export quotas on some raw materials, including some rare metals. They argued that the policy is not in line with China's commitment when it joined the WTO in 2001.

Luo Zhongwei, a professor who led the research, said China has rich deposits in rare metals and the government seeks to protect such resources.

"But disordered competition among domestic mining companies, particularly small-scale players, has led to great damage to many rare metal mines. It also causes problems of serious pollution and waste of resources," he said.

Luo said as a major metal consuming country in the world, China is in shortage of 80 percent of its mining resources. Restrictions on exports of certain rare metals also impose barriers for the country to tap overseas resources.

"The government should have a vision of 'global resources' and take advantage of overseas resources as well," the report said.

Instead of imposing restrictions on exports of rare metals, the report suggested the central government to take back the mining rights from local governments for better administration and higher efficiency.

Many mines could be kept unexplored when technologies are not ready, it said.

The Ministry of Commerce has defended China's restrictions on exports of certain raw materials, such as coke, bauxite, fluorspar, magnesium, manganese, silicon carbide, silicon metal, yellow phosphorus and zinc, saying that its policies were in keeping with WTO regulations and meant to protect valuable natural resources.

"The main purpose of certain export measures is to protect the environment and precious resources. These policies are in line with WTO rules," it said.

Meanwhile, the report also suggested China to establish a capital market for the mining industry because modern mining is a capital-intensive sector.

Luo said only listed firms should be allowed to be involved in mining as it helps to keep the mining market transparent and orderly.

Source: China Daily

Guinea To Probe Bauxite Privatisation

Guinean President Moussa Camara said he has asked the country’s Justice Ministry to consider legal action over a 2006 transaction that gave control of the Friguia bauxite and alumina complex to United Co. Rusal.

The Guinean government was paid a fraction of the amount the company was valued at by consulting firms, Camara said on state television late yesterday.

“Guinea has to exercise its rights by getting back this factory which belongs to it,” Camara said. “It is not a question of leaving this refinery, which has to serve future generations.”

Camara took power on Dec. 23 after a coup that followed the death a day earlier of Lansana Conte, who had ruled the west African country for 24 years. Conte’s government concluded the agreement with Rusal, and Camara’s government has said mining deals made with the previous regime will be probed.

“The decision has been made to establish a commission on the privatisation of Friguia, which will thoroughly study the situation and give its final conclusion,” Rusal spokeswoman Elena Shuliveystrova said by e-mail. “We, Rusal, welcome this decision because Rusal privatized Friguia legitimately and in full compliance with the legislation.”

Friguia has the capacity to produce 640,000 metric tons of alumina and 1.9 million tons of Bauxite a year, according to Rusal’s Web site. Bauxite, an ore, is used to make alumina, which in turn is used in the manufacture of aluminum. Guinea is the world’s biggest bauxite exporter.

Guinea agreed to let Rusal buy full control of Friguia, Rusal said in April 2006. Rusal, which had been operating the mine through a concession, bought 100 percent of Friguia from the state and acquired the 15 percent it didn’t already own in Alumina Co. of Guinea, which manages Friguia. The Russian company didn’t give a purchase price at the time.

Camara said Rusal paid $19 million for the assets, while consultants had valued it at $257 million. The president, who didn’t name the consultants, also said action will be taken against the Guineans who negotiated the transfer of the company to Rusal.

Guinean ministers arranged the sale without going through the national privatisation company, Momo Sacko, a government lawyer, said today, according to Reuters.

Anatoly Patchenko, the head of Rusal’s Guinean operation, has taken refuge in the Russian embassy in the African country’s capital, Conakry, Guinea’s state-owned radio reported.

Separately, Rio Tinto Group is considering developing an iron ore mine in Guinea, while AngloGold Ashanti Ltd. owns a gold mine in the country.

Source: Bloomberg

Indonesian Miners Aim For Increase In Production

Amidst the global economic downturn, Indonesian mining companies have set higher production targets this year primarily due to last year’s shortfalls.

Miners recently submitted production plans to the government with output increases seen in all commodities — including nickel, tin and copper whose prices have been hit hard by reduced demand.

Nickel ore production in 2009 is set at 14.6 million tons, up by 37 percent from last year. Tin output is estimated to reach 105,000 tons, up 46 percent, while copper is set at 826,370 tons, up 38 percent.

These figures are based on all miners’ production proposals submitted to the ministry last month, said Bambang Gator Ariyono, director of the Energy and Mineral Resources Ministry’s coal and mineral development division.

Despite significant increases, Bambang believes the target is nothing extraordinary.

“The figures seem to be high, but there is nothing too special about these targets. Many miners could not meet their 2008 production targets, which makes this year’s targets seem too high,” Bambang said recently.

Extreme weather and natural disasters in some big mining concessions last year were the main cause for miners’ failure to meet output targets, he said.

“Take Freeport, for example. The company could not meet its target last year because there were landslides in its mining concession,” Bambang said, adding that the government would monitor the performance of miners during the first quarter of this year for any plan to revise output targets.

Coal and minerals are expected to attract US$2.24 billion in investments this year, up from US$1.65 billion in 2008.

However, a recent study by mining industry consultants PricewaterhouseCoopers (PwC) suggests that large scale investment is unlikely to come immediately to Indonesia due in part to possible legal uncertainty following the passage of a new mining law.

“There is likely to be greater uncertainty around large-scale capital projects as the new law does not offer the long-term protection of the contract of work system,” PwC’s mining technical adviser Sacha Winzenried said on Feb. 26.

PwC found that the investment spending is mainly for replacement plants and equipment to maintain existing operations instead of greenfields exploration.



Coal and minerals production

Commodities Unit 2008 2009*
Coal million tons 229.18 230
Copper thousand tons 597.07 826.37
Gold tons 58.83 99.34
Silver tons 209.00 238.61
Tin thousand tons 71.61 105.00
Bauxite thousand tons 9,885.55 14,439.32
Nickel in matte thousand tons 73.36 86.18
Nickel ore thousand tons 10,634.45 14,660.14
Granite million m3 1.71 2.50
Diamond carat 27,668.00 96,000.00
Iron Ore tons 3,965,046.64 4,609,540.54

Source: Jakarta Post

Rio Tinto-Chinalco Deal

WEIPA, QUEENSLAND: Bauxite. 2008 output: 20,006,000 tonnes Sale of 30% stake worth $1.2 billion Queensland. Sale of 50% stake worth $500 million.

YARWUN, QUEENSLAND: Alumina refinery, output in 2008 1,293,000 tonnes. Sale of 50% stake at a price of $500 million. . Rio's revised stake will be 50%.

BOYNE ISLAND, QUEENSLAND: Aluminium smelter, output in 2008 552,000 tonnes. Sale of 29.40% stake to raise Chinalco's stake to 49% at a cost of $450 million with Gladstone Power deal. Rio's revised stake will be 30%.

GLADSTONE POWER, QUEENSLAND: Capacity 1680 megawatts. Sale of 20.6% stake to raise Chinalco's stake to 49% at a cost of $450 million with Boyne Island deal. Rio's revised stake will be 21.50%

ESCONDIDA COPPER MINE, CHILE: Output in 2008 992,400 tonnes of copper in concentrate. Sale of 15% stake to raise Chinalco's stake to 49.75%. Rio's revised stake will be 15%. Value of deal $3.388 billion

GRASBERG, PAPUA PROVINCE, INDONESIA: Copper and gold mine. Output in 2008: 467,500 tonnes of copper in concentrate and 1.1 million ounces of gold. Sale of 12% stake to raise Chinalco's stake to 30%. Rio's revised stake will be 28%. Value of deal $400 million.

LA GRANJA, PERU: Copper and zinc project. Resource: 2.8 billion tonnes of Inferred Resources; grading 0.51 percent copper and 0.1 percent zinc. Sale of 30% stake worth $50 million.

KENNECOTT COPPER, UTAH: 238,000 tonnes of copper in concentrate and 200,600
tonnes of refined copper. Sale of 25% stake worth $700 million. Rio’s revised stake will be 75%.

HAMERSLEY IRON, WEST AUSTRALIA: Sale of 15% stake worth $5.15 billion. 2008 OUTPUT: 95.55 million tonnes. Rio’s revised stake will be 85%/

DEVELOPMENT FUND 1: sale of 50% stake worth $500 million

TOTAL $12.338 billion.

Jamaican Bauxite Industry Stalling On Coal

The current economic crisis could stall Jamaica's efforts to establish coal as a viable alternative fuel source.

It is to the bauxite industry - one of Jamaica's major energy users and major foreign exchange earners up to recently - that the government was looking to lead the charge for coal.

But the country's Energy Minister Clive Mullings is not worried. In fact he remains hopeful that the industry can be relied upon to invest in the controversial fuel source.

"The fact is that energy is a major input for the production of aluminum so they will always be anxious to get down the energy cost. That is why (coal) was an option they were looking at," Mullings told Jamaica's Sunday Observer. "If there were certain assumptions that the world's economy would turn around in two or three years (I would think they would want to) take advantage of it. So, instead of waiting until you have an upturn in the energy situation, this may be the best time to make the investment. But that is my view, not their view."

Attempts to get a comment from the Jamaica Bauxite Institute (JBI) were unsuccessful on Friday. Michael Mitchell, senior marketing analysts at the JBI was said to be in a meeting but an industry source said it was unlikely that bauxite companies would be looking at coal at this time, given the economic crisis, which has seen them trimming staff and halting operations.

"The view is that it is an attractive option and a practical one but finding the capital now, the investors and the owners would have difficulty," the source told the Sunday Observer.

But concerns over coal and its possible impact on the environment persist, with the recent coal ash spill in Kingston, Tennessee in the United States serving as a reminder of the drawbacks of that fuel source. That episode saw what was described as "what may be the nation's largest spill of coal ash lay thick and largely untouched over hundreds of acres of land and waterways" after a dam broke.

Studies have long shown that coal ash contains significant quantities of heavy metals like arsenic, lead and selenium that can cause cancer and neurological problems.

Mullings is, however, undaunted by that US incident, noting that while government would not be building coal fired plants, it would provide the necessary regulatory framework to guard against any damage to environment or human health.

"It is not our decision (to go coal) in the sense of building a plant; we are not building plants. So it will be an issue now as to whether the investor is coming, what sources of energy will come, and it should not be at the risk of the environment," he said.

Added Mullings: "Everything is a function of safety or what you put in for safety. So you can in any instance find a situation that could have an impact; you can have an explosion at a gas plant. You just have to put your systems in place."

The minister said, in the interim, there was still no disputing the benefits of coal, including its ready availability compared to liquefied natural gas (a cleaner source of fuel), and its relatively low cost.

But the cost of coal spiked last year even as China, from where potential investors were identified, suffered shortages.

An article published in the Financial Times on January 29, 2008 notes that coal prices in Asia had jumped to an all- time high as the region suffered acute shortages "as a result of coal supply disruptions in Australia, South Africa and China".

But Mullings argued that in looking at coal prices, one needed to look at the trend.
"One of the issues with natural gas is its availability. Coal is not short; the world has a 150-year supply." Quizzed as to the potential for securing natural gas from Venezuela or Nigeria, he said there were drawbacks to contend with. "Put it this way, Venezuela is not yet at that point. We have a gas team and they are not at that point to export gas. So it is still in its infancy. They could be ready by 2013/2104," he said. "Nigeria is too far so you can't get compressed natural gas from Nigeria."

Source: Sunday Observer

Fresh Coal And Iron Ore Discoveries In Chhattisgarh

An economic survey by the state government of the Indian state of Chhattisgarh has made a fresh discovery of 90 million tonnes of coal and a little over 22 million tonnes of iron ore.

The iron ore discoveries are located in Kanker, Dantewada and Rajnandgaon districts in the state's northern region where South Eastern Coalfields, one of the most profitable subsidiaries of the government-run Coal India, already runs a number of mines.

Besides coal and iron ore deposits, 2.98 million tonnes of bauxite reserves have also been discovered in Kawardha district.

Chhattisgarh accounts for about 23 percent of the country's iron ore mined annually, and 18 percent of its coal production.

Source: The Hindu