Straits Resources says it is well-placed for acquisitions after selling a stake in its coal assets for $US335 million.
The transaction will give Thailand’s PTT International a 28.26 per cent interest in Straits’ Singapore-listed coal subsidiary Straits Asia Resources, which operates two thermal coal mines in Indonesia.
The base and precious metals miner had been reviewing its 47.1 per cent holding in Straits Asia since receiving a number of unsolicited expressions of interest for the stake in late 2008.
Straits chief executive Milan Jerkovic said today the part sale would provide the company with the funds to pursue potential acquisitions, particularly in precious metals, copper or bulk commodities.
“Straits will be well placed to look at attractive acquisitions at a low point in the cycle,” Mr Jerkovic told reporters on a conference call.
“While we don’t have anything specific in mind, copper and precious metals are probably the initial areas that we’ll look at."
Mr Jerkovic added that the company was looking at other uses for the funds, including a distribution to shareholders and the repayment of debt facilities.
Source: AAP
Monday, March 23, 2009
Sunday, March 22, 2009
NMDC Looking For Australia/NZ Coal Properties
A report in Projects Today suggests that the state-owned NMDC intends to acquire 2 coking coal properties in Australia and New Zealand for an estimated USD 15 million to meet the raw material requirement of its proposed steel mills in India.
The mining major along with a foreign partner has identified low scale operational coal mines and an exploratory block in the 2 countries and has initiated talks with the proprietors of the assets.
The two coal properties are expected to have reserves of 25 million tonne of coking coal. NMDC is in the process of setting up a 3 million tonne per annum steel plant in Chhattisgarh with an investment of INR 14,000 crore.
Source: Steel Guru
The mining major along with a foreign partner has identified low scale operational coal mines and an exploratory block in the 2 countries and has initiated talks with the proprietors of the assets.
The two coal properties are expected to have reserves of 25 million tonne of coking coal. NMDC is in the process of setting up a 3 million tonne per annum steel plant in Chhattisgarh with an investment of INR 14,000 crore.
Source: Steel Guru
Saturday, March 21, 2009
Australia To Take $20bn Hit On Falling Coke Prices
Australia's export revenues will take a $20 billion hit in 2009-10 after the collapse in world steel production forced coking coal producers to wear a 60 per cent price cut in contract prices.
The blow to export revenue follows on from the $4 billion hit for 2009-10 taken by Australia's thermal coal exporters earlier in the month and increases expectations iron ore exports will fall by at least $7 billion when contracts negotiations are settled.
The savage fall in coking coal prices from $US300 ($A435) a tonne to an average of about $US125 a tonne was the result of benchmark negotiations this week by the world's biggest producer, the BHP Billiton Mitsubishi Alliance (BMA), and Japan's Mitsubishi Corp.
BHP would not comment on the settlement yesterday, but industry analysts said the settlement, ranging from $US129 a tonne for top quality Peak Downs coal and $US115 a tonne for the lesser quality Gregory coal, would be the reference point for all other settlements.
Despite the severity of the price crunch, it was not unexpected. Mark Pervan, head of commodities research at ANZ, said the BMA settlement was in line with his forecasts and market consensus for a $US120-$US130 a tonne price settlement for the steel-making raw material.
Mr Pervan said the big unknown was what was said in the negotiations about volumes. He suspects new contract tonnes could surprise on the downside, given Japan's steel industry was on its knees in January with output down by 38 per cent year-on-year.
"Iron ore prices are now next on the agenda — the 60 per cent drop for coking coal puts our 40 per drop for iron ore very much in the ball park," Mr Pervan said.
The earlier price cut for thermal coal saw its price for deliveries starting from April 1 reduced from last year's $US125 to $US70 a tonne. That was also in line with market expectations.
Source: The Melbourne Age
The blow to export revenue follows on from the $4 billion hit for 2009-10 taken by Australia's thermal coal exporters earlier in the month and increases expectations iron ore exports will fall by at least $7 billion when contracts negotiations are settled.
The savage fall in coking coal prices from $US300 ($A435) a tonne to an average of about $US125 a tonne was the result of benchmark negotiations this week by the world's biggest producer, the BHP Billiton Mitsubishi Alliance (BMA), and Japan's Mitsubishi Corp.
BHP would not comment on the settlement yesterday, but industry analysts said the settlement, ranging from $US129 a tonne for top quality Peak Downs coal and $US115 a tonne for the lesser quality Gregory coal, would be the reference point for all other settlements.
Despite the severity of the price crunch, it was not unexpected. Mark Pervan, head of commodities research at ANZ, said the BMA settlement was in line with his forecasts and market consensus for a $US120-$US130 a tonne price settlement for the steel-making raw material.
Mr Pervan said the big unknown was what was said in the negotiations about volumes. He suspects new contract tonnes could surprise on the downside, given Japan's steel industry was on its knees in January with output down by 38 per cent year-on-year.
"Iron ore prices are now next on the agenda — the 60 per cent drop for coking coal puts our 40 per drop for iron ore very much in the ball park," Mr Pervan said.
The earlier price cut for thermal coal saw its price for deliveries starting from April 1 reduced from last year's $US125 to $US70 a tonne. That was also in line with market expectations.
Source: The Melbourne Age
Update: Shandong Coking Enterprises Group
In an update to reports from earlier this week about the formation of a new coal grouping in China's Shandong province, this newly-formed
Shandong Coking Enterprises Group is the world's biggest coking enterprise with annual capacity of 30 million tonnes and sales revenue of CNY 60 billion.
Mr Wang Qingtao, chairman of the Shandong Coking Industry Association and president of the group, said the group has been established to integrate resources and urge enterprises to jointly deal with fierce competition and the global financial crisis.
Shandong Coking Enterprises Group is a loose organization based on the Shandong Coking Group. It includes 45 coking enterprises as well as enterprises in railway transportation, finance and ports. Wang revealed these enterprises combined on the basis of consensus.
Shandong's coke capacity reached 45 million tons in 2008, taking third place in the country. Capacity of the 22 enterprises recognized by central government amounted to 30 million tons. But impacted by financial crisis, domestic steel and coke markets remain sluggish, leading to weak demand for coke and falling prices.
According to a report compiled by the Shandong provincial government, the province yielded 38 million tons of coke last year, far exceeding demand from the steel sector in the region. Approximately 10 million tons of coke flowed to the Yangtze River Delta Area. Primary coking coal was in severe undersupply, with more than 90% bought from other provinces.
Local government thus planned to facilitate M&As and founded the Shandong Coking Enterprises Group based on major enterprises. It aims to integrate existing capacity, realise a rational distribution of production factors and resources, insist on group development and gradually fashion the group into a large-scale diversified industry group covering coke production, coal chemistry, steel production and international trade.
Mr Wang said that an important task after the foundation is to set up Shandong Coking Enterprises Group supply and distribution company. He said that the group would coordinate market supply, provide high quality products to Shandong's steelmakers, enhance bargaining power with steelmakers in the Yangtze River Delta Area, raise added value of the products, set up long-term stable cooperation relationship with Shanxi Coking Coal Group and international coal groups.
The group will next form the Shandong Coking Group Co., Ltd via a share offering and M&As, especially mutual share holding with steelmakers and coal enterprises, and then seek financing after listing as well as co-operation with relevant enterprises.
Mr Wang also disclosed that the group would speed up international development and would set up coking bases or set up long-term cooperation relationship in overseas countries jointly with coal enterprises.
Source: Steel Guru
Shandong Coking Enterprises Group is the world's biggest coking enterprise with annual capacity of 30 million tonnes and sales revenue of CNY 60 billion.
Mr Wang Qingtao, chairman of the Shandong Coking Industry Association and president of the group, said the group has been established to integrate resources and urge enterprises to jointly deal with fierce competition and the global financial crisis.
Shandong Coking Enterprises Group is a loose organization based on the Shandong Coking Group. It includes 45 coking enterprises as well as enterprises in railway transportation, finance and ports. Wang revealed these enterprises combined on the basis of consensus.
Shandong's coke capacity reached 45 million tons in 2008, taking third place in the country. Capacity of the 22 enterprises recognized by central government amounted to 30 million tons. But impacted by financial crisis, domestic steel and coke markets remain sluggish, leading to weak demand for coke and falling prices.
According to a report compiled by the Shandong provincial government, the province yielded 38 million tons of coke last year, far exceeding demand from the steel sector in the region. Approximately 10 million tons of coke flowed to the Yangtze River Delta Area. Primary coking coal was in severe undersupply, with more than 90% bought from other provinces.
Local government thus planned to facilitate M&As and founded the Shandong Coking Enterprises Group based on major enterprises. It aims to integrate existing capacity, realise a rational distribution of production factors and resources, insist on group development and gradually fashion the group into a large-scale diversified industry group covering coke production, coal chemistry, steel production and international trade.
Mr Wang said that an important task after the foundation is to set up Shandong Coking Enterprises Group supply and distribution company. He said that the group would coordinate market supply, provide high quality products to Shandong's steelmakers, enhance bargaining power with steelmakers in the Yangtze River Delta Area, raise added value of the products, set up long-term stable cooperation relationship with Shanxi Coking Coal Group and international coal groups.
The group will next form the Shandong Coking Group Co., Ltd via a share offering and M&As, especially mutual share holding with steelmakers and coal enterprises, and then seek financing after listing as well as co-operation with relevant enterprises.
Mr Wang also disclosed that the group would speed up international development and would set up coking bases or set up long-term cooperation relationship in overseas countries jointly with coal enterprises.
Source: Steel Guru
Friday, March 20, 2009
Zambian Government To Increase Stake In Copper Mines
Zambia plans to raise its stake in all foreign-owned copper mines to 25 percent from 15 percent to have a bigger say in their running and prevent mine closures, Mines and Minerals Development Minister Maxwell Mwale said.
Speaking to the Post newspaper in Zambia, Mwale did not give details of how the government would increase its stake.
It was also unclear when the new rules would be enforced.
Unions have urged the government to prevent job losses by taking a bigger stake in mining companies to exert influence and prevent mine closures.
Mwale did not explain whether he government would compensate mining companies to boost its stake in mines, or if the state would enact a new law to increase its stake.
"The government's decision to increase its stake in the mines will change the scenario, giving it an upper hand to participate in the operations of the mines," the newspaper quoted Mwale as saying.
Mwale said Zambia would offer a 75 percent stake to new foreign investors bidding to run the shut Luanshya Copper Mine (LCM), which it expects to take back from its current owners by April. Companies from the UK, China and South Africa are vying to run LCM and re-open its operations.
LCM operated the Baluba copper mine and Chambishi Metals Plc, the country's largest cobalt producer, before it closed them citing losses due to to the commodities downturn.
Some major foreign companies operating in Zambia are Canada's First Quantum Minerals (FM.TO), Glencore International AG GLEN.L, London-listed Vedanta Resources Plc (VED.L) and Equinox Minerals Ltd (ric) of Australia.
Separately, Finance minister Situmbeko Musokotwane said China's plans to raise its copper imports would boost Zambia's copper production in 2009.
"Notwithstanding our efforts to diversify (our economy), we will not abandon what we know best, like mining. We are optimistic with reports that China's State Reserve Bureau may this year raise purchases of copper to 1 million metric tonnes from 600,000 tonnes," Musokotwane said.
"This is an encouraging signal for the Zambian mining industry," Musokotwane said.
Musokotwane said Zambia was pleased with the price of copper, which has gained about 25 percent this year after slumping 54 percent in 2008, due to the global financial crisis.
Falling copper prices hurt Zambia's economy, which depends on copper exports for 63 percent of foreign exchange earnings.
"Our economy encountered unprecedented shocks over the last few months," Musokotwane said referring to mining job losses.
Source: Reuters
Speaking to the Post newspaper in Zambia, Mwale did not give details of how the government would increase its stake.
It was also unclear when the new rules would be enforced.
Unions have urged the government to prevent job losses by taking a bigger stake in mining companies to exert influence and prevent mine closures.
Mwale did not explain whether he government would compensate mining companies to boost its stake in mines, or if the state would enact a new law to increase its stake.
"The government's decision to increase its stake in the mines will change the scenario, giving it an upper hand to participate in the operations of the mines," the newspaper quoted Mwale as saying.
Mwale said Zambia would offer a 75 percent stake to new foreign investors bidding to run the shut Luanshya Copper Mine (LCM), which it expects to take back from its current owners by April. Companies from the UK, China and South Africa are vying to run LCM and re-open its operations.
LCM operated the Baluba copper mine and Chambishi Metals Plc, the country's largest cobalt producer, before it closed them citing losses due to to the commodities downturn.
Some major foreign companies operating in Zambia are Canada's First Quantum Minerals (FM.TO), Glencore International AG GLEN.L, London-listed Vedanta Resources Plc (VED.L) and Equinox Minerals Ltd (ric) of Australia.
Separately, Finance minister Situmbeko Musokotwane said China's plans to raise its copper imports would boost Zambia's copper production in 2009.
"Notwithstanding our efforts to diversify (our economy), we will not abandon what we know best, like mining. We are optimistic with reports that China's State Reserve Bureau may this year raise purchases of copper to 1 million metric tonnes from 600,000 tonnes," Musokotwane said.
"This is an encouraging signal for the Zambian mining industry," Musokotwane said.
Musokotwane said Zambia was pleased with the price of copper, which has gained about 25 percent this year after slumping 54 percent in 2008, due to the global financial crisis.
Falling copper prices hurt Zambia's economy, which depends on copper exports for 63 percent of foreign exchange earnings.
"Our economy encountered unprecedented shocks over the last few months," Musokotwane said referring to mining job losses.
Source: Reuters
Chile's Copper Exports Expected To Be Similar To 2008
Chile's Minister Of Mines, Santiago Gomez, said on Friday that copper exports from his country, the world's largest producer of copper, will likely come in at similar volumes in 2009 compared to 2008.
According to cochilco, the state copper commission, Chile produced 5.33 million tonnes of copper in 2008, 4.1 percent less than in 2007, and exported 5.405 million tonnes of copper last year, 4.7 percent less than the previous year.
According to cochilco, the state copper commission, Chile produced 5.33 million tonnes of copper in 2008, 4.1 percent less than in 2007, and exported 5.405 million tonnes of copper last year, 4.7 percent less than the previous year.
Profits Down 91 Percent At China's Lead And Zinc Processors
China's 15 key lead and zinc producers witnessed a 91.05 percent profit slump in 2008, according to the China Nonferrous Metals Industry Association (CNIA).
The association said that the 15 key lead and zinc enterprises' annual profit was merely 840 million yuan last year, attributable mainly to the collapsing prices of lead and zinc since the end of 2007.
Their major operating turnover was 65.74 billion yuan in 2008, down 21.94 percent on year while the sales margin rate sank 88.54 percent to 1.28 percent, said CNIA, adding that in the fourth quarter alone, the fifteen metal smelters suffered a total loss of 2.67 billion yuan.
In spite of the gloomy profit results, China launched construction of 480 lead and zinc mining projects, with total investment of 13. 17 billion yuan made in fixed asset investment, up 15.98 percent on year.
According to CNIA, the country is estimated to increase zinc and lead production capacity 400,000-500,000 tons last year, adding the total to more than 4.6 million tons.
Source: iStockAnalyst
The association said that the 15 key lead and zinc enterprises' annual profit was merely 840 million yuan last year, attributable mainly to the collapsing prices of lead and zinc since the end of 2007.
Their major operating turnover was 65.74 billion yuan in 2008, down 21.94 percent on year while the sales margin rate sank 88.54 percent to 1.28 percent, said CNIA, adding that in the fourth quarter alone, the fifteen metal smelters suffered a total loss of 2.67 billion yuan.
In spite of the gloomy profit results, China launched construction of 480 lead and zinc mining projects, with total investment of 13. 17 billion yuan made in fixed asset investment, up 15.98 percent on year.
According to CNIA, the country is estimated to increase zinc and lead production capacity 400,000-500,000 tons last year, adding the total to more than 4.6 million tons.
Source: iStockAnalyst
Doe Run Peru Smelters Shut
Renco Group Inc.’s Doe Run Peru unit, the country’s fourth-largest exporter, has shut zinc-and lead-processing plants after a group of banks froze its accounts last month, curtailing the nation’s metal supplies.
Doe Run Peru stopped buying concentrates for its La Oroya smelter in the central Andes, according to an internal memo obtained by Bloomberg News and confirmed by spokesman Victor Belaunde. The company may also close its Cobriza copper mine, Luis Castillo, general secretary of the Mining Federation, a group that represents 28,000 miners, said in a March 18 telephone interview.
“The company doesn’t have any working capital despite making money over the past four years,” Castillo said. “We will meet with Energy & Mines Ministry officials to find out if the company can be saved.” Belaunde, the Doe Run Peru spokesman, said the company is working on a solution with banks and declined to comment further.
The collapse of metals prices caused by the global economic crisis forced about 30 other miners in the Peruvian central highlands, the country’s biggest producer of zinc, lead and silver, to seek other buyers after banks “froze” financing to Doe Run on Feb. 24, according to the memo. The freeze prompted Doe Run to halt payments to suppliers the next day.
Doe Run’s La Oroya smelter, 140 kilometers (87 miles) east of Lima, last year refined 114,259 metric tons of lead; 43,440 tons of zinc; 53,831 tons of copper and 1.1 million kilograms of silver, according to the Energy & Mines Ministry.
The crisis forced Glencore International AG, Volcan Cia. Minera and Pan American Silver Corp. to shut mines in Peru and shed jobs after metals prices slumped. Copper, zinc, lead and silver have all fallen at least 20 percent since July. Peru is the world’s largest producer of silver, the third-largest miner of copper, zinc and tin and No. 5 for gold.
“These difficulties are the result of the global financial crisis, which has produced a drastic drop in demand in metals prices and consequently, our income,” according to the memo.
The unit cut 1,100 subcontracted workers at its copper mine and zinc, lead and copper smelter in January in a bid to reduce costs, according to the Mining Federation.
“Everything’s apparently on hold pending a government bailout,” Roiberto Guzman, a Doe Run Peru metallurgical union spokesman, said by telephone from La Oroya, Peru. “The union has requested an interview with Doe Run management, as we can’t go on with this suspense.”
Doe Run’s suppliers include Cia. de Minas Buenaventura SA, Soc. Minera El Brocal SA, Cia. Minera Milpo SA, Cia. Minera Atacocha, Volcan and Pan American, according to the National Society of Mining, Petroleum & Energy, an industry group.
Buenaventura Chief Financial Officer Carlos Galvez, El Brocal Chief Executive Officer Ysaac Cruz, Volcan Chief Executive Officer Jacob Timmers, Atacocha Chief Executive Officer Abraham Chahuan, Milpo spokesman Francisco Ismodes and Pan American’s spokeswoman Kettina Cordero didn’t return phone calls or e-mails seeking comment. Glencore spokesman Marc Ocskay declined to comment in an e-mail.
The company, which posted $1.45 billion in sales in 2007, buys $1 billion of concentrates a year, according to Doe Run’s Web site. The company has invested $300 million in improvements since buying the smelter from state mining company Centromin in 1996.
“The problems at Doe Run will have more of an impact on Peru’s economy than they will on base metals prices,” Rodrigo Zuazo, a mining analyst at Lima-based brokerage SAB Centura, said in a telephone interview. “Demand has yet to recover for metals like zinc and lead.”
Source: Bloomberg
Doe Run Peru stopped buying concentrates for its La Oroya smelter in the central Andes, according to an internal memo obtained by Bloomberg News and confirmed by spokesman Victor Belaunde. The company may also close its Cobriza copper mine, Luis Castillo, general secretary of the Mining Federation, a group that represents 28,000 miners, said in a March 18 telephone interview.
“The company doesn’t have any working capital despite making money over the past four years,” Castillo said. “We will meet with Energy & Mines Ministry officials to find out if the company can be saved.” Belaunde, the Doe Run Peru spokesman, said the company is working on a solution with banks and declined to comment further.
The collapse of metals prices caused by the global economic crisis forced about 30 other miners in the Peruvian central highlands, the country’s biggest producer of zinc, lead and silver, to seek other buyers after banks “froze” financing to Doe Run on Feb. 24, according to the memo. The freeze prompted Doe Run to halt payments to suppliers the next day.
Doe Run’s La Oroya smelter, 140 kilometers (87 miles) east of Lima, last year refined 114,259 metric tons of lead; 43,440 tons of zinc; 53,831 tons of copper and 1.1 million kilograms of silver, according to the Energy & Mines Ministry.
The crisis forced Glencore International AG, Volcan Cia. Minera and Pan American Silver Corp. to shut mines in Peru and shed jobs after metals prices slumped. Copper, zinc, lead and silver have all fallen at least 20 percent since July. Peru is the world’s largest producer of silver, the third-largest miner of copper, zinc and tin and No. 5 for gold.
“These difficulties are the result of the global financial crisis, which has produced a drastic drop in demand in metals prices and consequently, our income,” according to the memo.
The unit cut 1,100 subcontracted workers at its copper mine and zinc, lead and copper smelter in January in a bid to reduce costs, according to the Mining Federation.
“Everything’s apparently on hold pending a government bailout,” Roiberto Guzman, a Doe Run Peru metallurgical union spokesman, said by telephone from La Oroya, Peru. “The union has requested an interview with Doe Run management, as we can’t go on with this suspense.”
Doe Run’s suppliers include Cia. de Minas Buenaventura SA, Soc. Minera El Brocal SA, Cia. Minera Milpo SA, Cia. Minera Atacocha, Volcan and Pan American, according to the National Society of Mining, Petroleum & Energy, an industry group.
Buenaventura Chief Financial Officer Carlos Galvez, El Brocal Chief Executive Officer Ysaac Cruz, Volcan Chief Executive Officer Jacob Timmers, Atacocha Chief Executive Officer Abraham Chahuan, Milpo spokesman Francisco Ismodes and Pan American’s spokeswoman Kettina Cordero didn’t return phone calls or e-mails seeking comment. Glencore spokesman Marc Ocskay declined to comment in an e-mail.
The company, which posted $1.45 billion in sales in 2007, buys $1 billion of concentrates a year, according to Doe Run’s Web site. The company has invested $300 million in improvements since buying the smelter from state mining company Centromin in 1996.
“The problems at Doe Run will have more of an impact on Peru’s economy than they will on base metals prices,” Rodrigo Zuazo, a mining analyst at Lima-based brokerage SAB Centura, said in a telephone interview. “Demand has yet to recover for metals like zinc and lead.”
Source: Bloomberg
Bayan Coal Mine Ordered To Stop Production
Indonesia has ordered a coal mining unit of PT Bayan Resources to temporarily stop production for operating outside approved areas, a government official said on Friday.
PT Teguh Sinar Abadi, which operates a coal mine in East Kalimantan, had operated in areas outside those approved by the government in its feasibility study, said MS Marpaung, director of engineering and environmental at the energy and mines ministry.
"The firm has to make a new feasibility study when exploring a new block," Marpaung said.
"We ordered them to temporarily stop production and to fix the problem before resuming operations," he said, adding the ministry has sent the letter to inform the company.
Teguh Sinar Abadi started operations in 2008 and it is expected to produce 1 million tonnes of coal this year, Bayan said previously in a presentation to investors.
Jenny Quantero, Bayan's corporate secretary, said the company was not aware of an order to temporarily halt production.
"We haven't heard about it. We need to check it first," Quantero said.
Bayan, Indonesia's eighth-largest coal producer, plans to produce 9.5 million tonnes of coal this year, up 56 percent from an estimated 6.1 million tonnes in 2008, it said.
The firm has eight mining companies with total concession areas of 81,265 hectares (200,800 acres).
The firm expects to sell 10 million tonnes of coal this year, up from 6.7 million tonnes in 2008. It said that demand remained strong and that all coal sales volumes were fully committed.
Source: Reuters
PT Teguh Sinar Abadi, which operates a coal mine in East Kalimantan, had operated in areas outside those approved by the government in its feasibility study, said MS Marpaung, director of engineering and environmental at the energy and mines ministry.
"The firm has to make a new feasibility study when exploring a new block," Marpaung said.
"We ordered them to temporarily stop production and to fix the problem before resuming operations," he said, adding the ministry has sent the letter to inform the company.
Teguh Sinar Abadi started operations in 2008 and it is expected to produce 1 million tonnes of coal this year, Bayan said previously in a presentation to investors.
Jenny Quantero, Bayan's corporate secretary, said the company was not aware of an order to temporarily halt production.
"We haven't heard about it. We need to check it first," Quantero said.
Bayan, Indonesia's eighth-largest coal producer, plans to produce 9.5 million tonnes of coal this year, up 56 percent from an estimated 6.1 million tonnes in 2008, it said.
The firm has eight mining companies with total concession areas of 81,265 hectares (200,800 acres).
The firm expects to sell 10 million tonnes of coal this year, up from 6.7 million tonnes in 2008. It said that demand remained strong and that all coal sales volumes were fully committed.
Source: Reuters
Kazakh Iron Ore Producer Slashes Production
A report by the news agency Interfax says that the Sokolov-Sarbai Mining Production Association, a member of Eurasian Natural Resources Corporation and Kazakhstan's biggest iron ore producer, plans to slash iron ore throughput by 40% in 2009.
Mr Serik Izkuzhenov head of the industry department in the city of Rudny where SSGPO is located said SSGPO processed 18 million tonnes of crude ore in 2008 and is targeting 11 million tonnes this year. He said that SSGPO was aiming to produce 8 million tonnes of iron ore concentrate and 3 million tonnes of pellets in 2009.
Mr Serik Izkuzhenov said demand for iron ore commodities and, consequently sales, had plummeted, although SSGPO was hoping to increase shipments to Magnitogorsk Iron & Steel Works which is just over the border in Russia. He said that SSGPO will be looking for other markets at the same time.
Crude ore production fell 8% in 2008 to 37 million tonnes.
Source: Interfax
Mr Serik Izkuzhenov head of the industry department in the city of Rudny where SSGPO is located said SSGPO processed 18 million tonnes of crude ore in 2008 and is targeting 11 million tonnes this year. He said that SSGPO was aiming to produce 8 million tonnes of iron ore concentrate and 3 million tonnes of pellets in 2009.
Mr Serik Izkuzhenov said demand for iron ore commodities and, consequently sales, had plummeted, although SSGPO was hoping to increase shipments to Magnitogorsk Iron & Steel Works which is just over the border in Russia. He said that SSGPO will be looking for other markets at the same time.
Crude ore production fell 8% in 2008 to 37 million tonnes.
Source: Interfax
Iron Ore Talk: First Miner To Settle "Will Get Largest Contracts"
The Chinese business newspaper, Shanghai Securities News, has reported sources close to the iron ore talks as suggesting that the ore mining giant who settles the benchmark contract ore price first with Chinese buyers will be awarded the largest contracts.
The move has come as leading ore miners are trying to put off negotiations and scale back output in a bid to reverse the downward trend in prices. The Brazilian miner Vale, which usually settles first, is apparently waiting for BHP Billiton and Rio Tinto to take the lead.
The source said global steel production and iron ore demand are set to slump this year, so is Chinese iron ore demand. However, China would remain the biggest importer of iron ore and therefore China would play the card of aggregate demand with the top three ore miners and award the biggest purchase contract to the one who strikes the deal first.
The China Iron & Steel Association has already calculated the iron ore demand of most domestic mills and traders in an industrial meeting in January.
Mr Zhang Xiaogang general manager of Angang hopes Big Three to cut benchmark ore price by 40% to 50%t this year. He said that "With falling steel prices, the raw materials price is set to drop. That's why Indian spot ore imports price has been sliding recently. Domestic iron ore price and freight rates continue to head downward from late February again after a short blip.”
The Australian Business reported that falling steel prices in China spell clear warning signs that may lead to iron ore prices declining as much as 40% in 2009. ANZ said this is far deeper than market expectations of a 20% to 30% drop.
Source: Steel Guru, Shanghai Securities News
The move has come as leading ore miners are trying to put off negotiations and scale back output in a bid to reverse the downward trend in prices. The Brazilian miner Vale, which usually settles first, is apparently waiting for BHP Billiton and Rio Tinto to take the lead.
The source said global steel production and iron ore demand are set to slump this year, so is Chinese iron ore demand. However, China would remain the biggest importer of iron ore and therefore China would play the card of aggregate demand with the top three ore miners and award the biggest purchase contract to the one who strikes the deal first.
The China Iron & Steel Association has already calculated the iron ore demand of most domestic mills and traders in an industrial meeting in January.
Mr Zhang Xiaogang general manager of Angang hopes Big Three to cut benchmark ore price by 40% to 50%t this year. He said that "With falling steel prices, the raw materials price is set to drop. That's why Indian spot ore imports price has been sliding recently. Domestic iron ore price and freight rates continue to head downward from late February again after a short blip.”
The Australian Business reported that falling steel prices in China spell clear warning signs that may lead to iron ore prices declining as much as 40% in 2009. ANZ said this is far deeper than market expectations of a 20% to 30% drop.
Source: Steel Guru, Shanghai Securities News
BMA Accepts Coking Coal Price Cut Of 61 Percent
BHP Billiton Mitsubishi Alliance (BMA), the world's largest exporter of coking coal, has agreed to accept a discount of around 61 percent for the steel-making raw material after talks with Japan's Nippon Steel, Citigroup said in a research report.
BMA has agreed on a price of between $115-$125 a tonne for Japan's fiscal 2009/10 year, compared with the previous year's about $300 a tonne.
The price deal, the first between the Australian miner and a key Japanese steelmaking customer, could set a benchmark for other negotiations for contracts for the April to March Japanese fiscal year.
"We believe this settlement contains no carry-over tonnes, a much discussed sticking point of the negotiations," Citi's analyst Alan Heap said in a research report issued on Thursday.
Citi did not give details on how it knows of the settlement price.
Source: Reuters
BMA has agreed on a price of between $115-$125 a tonne for Japan's fiscal 2009/10 year, compared with the previous year's about $300 a tonne.
The price deal, the first between the Australian miner and a key Japanese steelmaking customer, could set a benchmark for other negotiations for contracts for the April to March Japanese fiscal year.
"We believe this settlement contains no carry-over tonnes, a much discussed sticking point of the negotiations," Citi's analyst Alan Heap said in a research report issued on Thursday.
Citi did not give details on how it knows of the settlement price.
Source: Reuters
Balmat Zinc Mine Unlikely To Reopen
The zinc mine at Balmat, NY, isn't likely to reopen soon regardless of the outcome of a possible shakeup at the top at HudBay Minerals, the parent company of St. Lawrence Zinc.
According to some media reports, Peter R. Jones, a former HudBay chief executive vying for the job again if top shareholder SRM Global Master Fund succeeds in replacing the company's board, suggested restarting Balmat along with another of HudBay's closed mines.
But Mr. Jones said HudBay executives are misrepresenting his views to divert attention from other issues.
"I said we would review all shut-down facilities and see if they could be reopened. There's no commitment," Mr. Jones said. "Balmat was designed to be open during good times and closed in bad. It's a swing producer. It's unlikely in our current market to be reopened."
Mr. Jones was chief executive officer of HudBay when Balmat was reopened in 2006. He was replaced by Allen Palmiere in January 2008. Mr. Palmiere stepped down after a botched attempt to take over Canadian rival Lundin Mining.
The deal fell apart after the Ontario Securities Commission decided HudBay would need shareholder approval to issue the stock it was using to buy Lundin. The bid stirred stockholder passions and ignited the proxy war that could result in the return of Mr. Jones, the choice of SRM.
"The stockholders have lost faith and there's been a revolt," Mr. Jones said. "They want the board 100 percent replaced."
Mr. Jones, chief executive officer of Adanac Molybdenum Corp., Surrey, British Columbia, predicted global zinc supplies will continue to build or flatten, at best, over the next few months because of the world economic slowdown.
Reopening Balmat under such conditions would be challenging.
The price of zinc is 55 cents per pound. Zinc sold at about $2 per pound when HudBay reopened the mine. It was at 81 cents a pound when HudBay closed the mine in 2008.
Balmat is considered a high-cost producer because it is a deep shaft mine that has a single product.
"It's relatively low-grade, meaning the pounds of zinc in each ton of ore is relatively low," Mr. Jones said.
Source Watertown Daily Times/Trading Markets
According to some media reports, Peter R. Jones, a former HudBay chief executive vying for the job again if top shareholder SRM Global Master Fund succeeds in replacing the company's board, suggested restarting Balmat along with another of HudBay's closed mines.
But Mr. Jones said HudBay executives are misrepresenting his views to divert attention from other issues.
"I said we would review all shut-down facilities and see if they could be reopened. There's no commitment," Mr. Jones said. "Balmat was designed to be open during good times and closed in bad. It's a swing producer. It's unlikely in our current market to be reopened."
Mr. Jones was chief executive officer of HudBay when Balmat was reopened in 2006. He was replaced by Allen Palmiere in January 2008. Mr. Palmiere stepped down after a botched attempt to take over Canadian rival Lundin Mining.
The deal fell apart after the Ontario Securities Commission decided HudBay would need shareholder approval to issue the stock it was using to buy Lundin. The bid stirred stockholder passions and ignited the proxy war that could result in the return of Mr. Jones, the choice of SRM.
"The stockholders have lost faith and there's been a revolt," Mr. Jones said. "They want the board 100 percent replaced."
Mr. Jones, chief executive officer of Adanac Molybdenum Corp., Surrey, British Columbia, predicted global zinc supplies will continue to build or flatten, at best, over the next few months because of the world economic slowdown.
Reopening Balmat under such conditions would be challenging.
The price of zinc is 55 cents per pound. Zinc sold at about $2 per pound when HudBay reopened the mine. It was at 81 cents a pound when HudBay closed the mine in 2008.
Balmat is considered a high-cost producer because it is a deep shaft mine that has a single product.
"It's relatively low-grade, meaning the pounds of zinc in each ton of ore is relatively low," Mr. Jones said.
Source Watertown Daily Times/Trading Markets
Chinalco To Influence In Rio Investment Policy
Chinalco will gain extensive powers to influence the investment policy and strategic direction of Rio Tinto's core iron ore, copper and aluminium businesses, according to special side agreements relating to last month's deal in which the state-backed Chinese aluminium group agreed to buy a strategic stake in Rio.
Behind the headlines of the February deal in which Chinalco agreed to spend $19 billion (£13 billion) in return for 18 per cent of Rio and invest in its iron, copper and aluminium assets, there are complex subsidiary agreements.
These give Chinalco representation on boards and committees that will steer huge joint ventures that house a direct Chinese investment in Rio's mining operations.
Concern is mounting in Australia over the political price Rio may have paid for Chinalco's $19 billion investment. Australia's Foreign Investment Review Board initiated a 90-day review of the investment this week.
Related Links
* Rio Tinto review extended as protest mounts
* Concern grows over Rio deal with Chinalco
A leading shareholder in Rio, Australian Foundation Investment Company, has expressed disquiet over potential conflicts of interest in a state-backed Chinese metals company involved in the running of Rio's mines.
More fuel was added to the flames on Wednesday when the Chinese competition authority barred Coca-Cola's agreed takeover of a Chinese soft drinks company, Huiyuan Juice.
The extent of Chinalco's ambition to take part in the strategic direction of mining operations is apparent in a schedule to the February 12 contract, setting out a mechanism to create a strategic alliance vehicle (SAV) under which Chinalco will own 15 per cent of Hamersley Iron, a Rio Tinto subsidiary.
Chinalco will nominate two directors to the five-man board of Iron Ore SAV. The Chinese group will also have two out of six directors on the Iron Ore Strategic Alliance Committee, which approves investment programmes and budgets.
The Chinese company has equal representation on the copper and aluminium strategic alliance committees, although the Rio-nominated chairman has a casting vote. The SAVs will create sales marketing companies, controlled equally by Chinalco and Rio.
According to a Rio spokesman, Chinalco will have votes on the strategic alliance committees only according to its proportionate ownership interest, which is below a controlling interest.
Source: Times Online
Behind the headlines of the February deal in which Chinalco agreed to spend $19 billion (£13 billion) in return for 18 per cent of Rio and invest in its iron, copper and aluminium assets, there are complex subsidiary agreements.
These give Chinalco representation on boards and committees that will steer huge joint ventures that house a direct Chinese investment in Rio's mining operations.
Concern is mounting in Australia over the political price Rio may have paid for Chinalco's $19 billion investment. Australia's Foreign Investment Review Board initiated a 90-day review of the investment this week.
Related Links
* Rio Tinto review extended as protest mounts
* Concern grows over Rio deal with Chinalco
A leading shareholder in Rio, Australian Foundation Investment Company, has expressed disquiet over potential conflicts of interest in a state-backed Chinese metals company involved in the running of Rio's mines.
More fuel was added to the flames on Wednesday when the Chinese competition authority barred Coca-Cola's agreed takeover of a Chinese soft drinks company, Huiyuan Juice.
The extent of Chinalco's ambition to take part in the strategic direction of mining operations is apparent in a schedule to the February 12 contract, setting out a mechanism to create a strategic alliance vehicle (SAV) under which Chinalco will own 15 per cent of Hamersley Iron, a Rio Tinto subsidiary.
Chinalco will nominate two directors to the five-man board of Iron Ore SAV. The Chinese group will also have two out of six directors on the Iron Ore Strategic Alliance Committee, which approves investment programmes and budgets.
The Chinese company has equal representation on the copper and aluminium strategic alliance committees, although the Rio-nominated chairman has a casting vote. The SAVs will create sales marketing companies, controlled equally by Chinalco and Rio.
According to a Rio spokesman, Chinalco will have votes on the strategic alliance committees only according to its proportionate ownership interest, which is below a controlling interest.
Source: Times Online
Thursday, March 19, 2009
China's Steel Output On The Rise
China’s Ministry of Industry and Information Technology has reported that the country’s crude-steel production increased by 2,4% year-on-year in January and February, and that the figure for February was 7,9% higher than that for January.
Output of steel products was also up, by 3,1%. The Ministry also reports that Chinese steel mills have now used up all the high-price iron-ore they bought last year.
Meanwhile, the China Association of Automobile Manufacturers announced that new-car sales in the Asian giant leapt by 25% in February, in comparison with figures for February last year, and by 12% in relation to the figure for January 2009. China is the biggest car market in the world, and February sales totalled 827 000 vehicles.
Beijing, seeking to boost domestic demand to counter the plunge in the country’s exports – which fell by 25,7% in February in comparison with figures for February 2008 – significantly reduced the sales tax on small-engined fuel-efficient cars. The auto sector, of course, is a major consumer of steel.
Speaking at a press conference in Beijing last week, Industry and Information Technology Minister Li Yizhong stated that “these are all the signs that point to a recovery in industrial sectors. But industry is still facing a serious situation. It is still in very difficult times. We cannot conclude that it has recovered.”
A couple of days later, Chinese Premier Wen Jiabao made global headlines when he affirmed: “I expect that next year both China and the world will be better off.” He assured that his government was ready and able to further stimulate China’s economy, if required – Beijing announced a $585-billion stimulus package in November. He did express concern about the almost half of his country’s cur- rency reserves invested in US government bonds. “We have made a huge amount of loans to the US. Of course, we are concerned about the safety of our assets. To be honest, I’m a little bit worried.”
But, while signs of recovery may be emerging in China, Chinese steelmakers are maintaining pressure on iron-ore-miners to cut their prices by 40% to 50%. The country’s sixth-largest steelmaker, Shougang, has demanded that 2009 iron-ore prices be close to their levels in 2007, to ensure, the group argues, reasonable profits for both steelmakers and miners. This would amount to a price cut of 50%. Shougang asserted that Chinese steelmakers would not accept prices at higher levels. The Chinese steel industry is the biggest in the world.
An analysis on the Brazilian mining news website, geologo.com.br, argues that this Chinese demand is a negotiating ploy, pointing out that last week the spot price for iron-ore was 15% down on the 2008 prices. This is a significant drop, but nowhere near 50%. Thus, the analysis argues, the Chinese steel companies will accept prices well above the level demanded by Shougang, and probably in line with the current spot price.
Meanwhile, Chinese steelmakers continue to take shares in iron-ore-miners. For example, Hunan Valin Iron & Steel group has just bought another 0,9% of Australian iron-ore-miner Fortescue, for $56-million. This followed Hunan Valin’s acquisition, just last month, of 16,5% of Fortescue for $770-million. This takes the steelmaker’s share in the miner to 17,4%.
Fortescue shipped its first iron-ore in May last year; it supplies the Chinese market. Its current annual production capacity is 55-million tons of iron-ore.
Shougang itself owns Peruvian iron-ore miner Shougang Hierro Peru and, in December, used two Hong Kong-based subsidiaries to buy 40% of Australia’s Mount Gibson Iron Ore.
Source: Mining Weekly
Output of steel products was also up, by 3,1%. The Ministry also reports that Chinese steel mills have now used up all the high-price iron-ore they bought last year.
Meanwhile, the China Association of Automobile Manufacturers announced that new-car sales in the Asian giant leapt by 25% in February, in comparison with figures for February last year, and by 12% in relation to the figure for January 2009. China is the biggest car market in the world, and February sales totalled 827 000 vehicles.
Beijing, seeking to boost domestic demand to counter the plunge in the country’s exports – which fell by 25,7% in February in comparison with figures for February 2008 – significantly reduced the sales tax on small-engined fuel-efficient cars. The auto sector, of course, is a major consumer of steel.
Speaking at a press conference in Beijing last week, Industry and Information Technology Minister Li Yizhong stated that “these are all the signs that point to a recovery in industrial sectors. But industry is still facing a serious situation. It is still in very difficult times. We cannot conclude that it has recovered.”
A couple of days later, Chinese Premier Wen Jiabao made global headlines when he affirmed: “I expect that next year both China and the world will be better off.” He assured that his government was ready and able to further stimulate China’s economy, if required – Beijing announced a $585-billion stimulus package in November. He did express concern about the almost half of his country’s cur- rency reserves invested in US government bonds. “We have made a huge amount of loans to the US. Of course, we are concerned about the safety of our assets. To be honest, I’m a little bit worried.”
But, while signs of recovery may be emerging in China, Chinese steelmakers are maintaining pressure on iron-ore-miners to cut their prices by 40% to 50%. The country’s sixth-largest steelmaker, Shougang, has demanded that 2009 iron-ore prices be close to their levels in 2007, to ensure, the group argues, reasonable profits for both steelmakers and miners. This would amount to a price cut of 50%. Shougang asserted that Chinese steelmakers would not accept prices at higher levels. The Chinese steel industry is the biggest in the world.
An analysis on the Brazilian mining news website, geologo.com.br, argues that this Chinese demand is a negotiating ploy, pointing out that last week the spot price for iron-ore was 15% down on the 2008 prices. This is a significant drop, but nowhere near 50%. Thus, the analysis argues, the Chinese steel companies will accept prices well above the level demanded by Shougang, and probably in line with the current spot price.
Meanwhile, Chinese steelmakers continue to take shares in iron-ore-miners. For example, Hunan Valin Iron & Steel group has just bought another 0,9% of Australian iron-ore-miner Fortescue, for $56-million. This followed Hunan Valin’s acquisition, just last month, of 16,5% of Fortescue for $770-million. This takes the steelmaker’s share in the miner to 17,4%.
Fortescue shipped its first iron-ore in May last year; it supplies the Chinese market. Its current annual production capacity is 55-million tons of iron-ore.
Shougang itself owns Peruvian iron-ore miner Shougang Hierro Peru and, in December, used two Hong Kong-based subsidiaries to buy 40% of Australia’s Mount Gibson Iron Ore.
Source: Mining Weekly
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