Macarthur Cool On Peabody Offer

"Not Inclined To Take A Discount" - Chairman

The Chairman of Australian coal miner Macarthur Coal has said that Peabody Energy’s lowered takeover will be hard to recommend.

Keith Lacy is quoted in the Australian Financial Review as saying that while acknowledging the Australian government’s proposed 40 per cent tax on mining companies’ profits makes it harder of Peabody to pay top dollar, he added "we're not inclined to take a discount for a tax that may never be introduced."

The “super tax” is expected to be introduced from July 2012.

Peabody lowered its cash offer yesterday by one dollar to A$15 per share citing the proposed tax and following its due diligence exercise.

Shares in Macarthur Coal closed down1.9 percent to A$13.12 on the Australian stock exchange, their lowest level since 30 March and 13 percent below Peabody’s reduced cash offer.

Sinosteel, Anshan To Continue Investing In Australia

Move Comes Despite 40 per cent Tax

China's large steel makers, Sinosteel and Anshan Iron and Steel Corp, say they are willing to continue to invest in Australia, despite a proposed 40 percent tax on the profits of Australian mining companies.

Speaking at a conference in Beijing on Monday, Sinosteel president Huang Tianwen said "We are reviewing how the tax will impact our companies, and undoubtedly, it will affect costs and profits in our local projects," however the company is still committed to exploring overseas resources.

Bai Jingpu, vice-president of Anshan Steel, also said the company is evaluating and analyzing the impact of the "super tax" on the Australian mining industry, but he also added that the company will continue to invest in the country.

Australia’s tax plan for miners was released last week and is expected to start in July 2012. Some Australian companies have criticised the plan saying it will adversely affect future projects in the country. Xstrata Copper has already announced that it is to shelve future plans for projects in northern Queensland.

However, Chinese steelmakers companies are looking to secure raw material supplies, particularly in the light of huge increases in raw materials and a shift from annual to quarterly contracts by the big three global iron ore miners, BHP Billiton, Vale and Rio Tinto.

Sinosteel and Anshan already have projects in Australia. Sinosteel bought iron ore company Midwest in 2008 while Anshan steel has a stake in Ginadalbie Metals Ltd with whom it is developing the Karara iron ore project in Western Australia.
China’s iron ore imports grew by 11.6 per cent in the first four months of this year compared to the corresponding period in 2009.

Vedanta Buys Anglo Zinc Assets

Vedanta Becomes World's Largest Zinc Producer

Vedanta Resources has bought Anglo American's zinc assets for $1.34 billion in a deal that will see it become the world's largest zinc producer.

After the deal has gone through, Vedanta will have 11 percent of the global zinc market, including the Skorpion mine in Namibia, Lisheen in Ireland and Black Mountain in South Africa.

"These high quality assets complement Vedanta's existing portfolio, creating the largest zinc and lead producer in the world," Chairman Anil Agarwal said.


The sale for Anglo is one step on a divestment programme that seeks trim its portfolio and focus on key commodities, such as copper, iron ore and platinum.

Baosteel Faces Difficult Second Half-Year

Company Looking for Alternative Iron Ore Sources

The chairman of the group company of Baosteel, China’s leading steel manufacturer says that the Chinese steel sector is likely to face difficulties in the second half of the year amid a slowdown in the real estate sector.
Speaking on the sidelines of an industry conference in Beijing, Xu Lejiang told reporters "In the second half of the year it is uncertain whether the yuan will appreciate, whether interest rates will rise.

"There is also the property market, and fixed asset investment could also fall."
Real estate development in China saw Chinese steel mills through the global economic crisis against a steep fall in exports but the government is trying to keep a lid on surging property prices and is set to legislate against speculation.

But the industry has also been affected with raw materials costs also rising and with the three global mining giants, Rio Tinto, BHP Billiton and Vale moving to quarterly prices against annual contracts.
The China Iron and Steel Association (CISA) said at a press briefing earlier this month that mills were now free to secure their own individual deals with their suppliers and Mr Xu confirmed Baosteel was currently sourcing iron ore from foreign miners on a temporary price basis, however he warned the conference that the advantages currently enjoyed by the big thre miners were unlikely to last.

"Across the world, iron ore isn't a scarce resource but it's just that in recent years, the ability to supply iron ore has not matched the development of the steel industry, especially the Chinese steel industry," Mr Xu said.

The three miners have been able to exert considerable control over the volumes of new iron ore reserves available to the market but their high price demands would push steel mills to develop alternative supply sources, he added.

"In two or three years the demand and supply situation will see a big improvement," he added.

Xstrata Copper To Review New Australian Projects

Xstrata Copper says it is now reviewing all of its operations in northern Queensland in Australia after the Australian government's proposed tax on the mining sector. Last week the government announced it will tax mining company’s profits by 40 per cent from 2012.

Xstrats will now suspend its exploration programme in the Mount Isa and Cloncurry districts. Chief operating officer Steve de Kruijff says its exploration programs in the region were all going ahead until the Government announced the new tax.

"We started to think about well are new exploration sustainable under a tax regime that overlays on our current tax system of that size," he said.

"I guess until we can find out more certainty over what the different requirements of this tax are we're not prepared to continue to spend money on exploration projects on the North West regional area."

"Exploration activities are high risk and, while the targets we had identified are prospective, the proposed tax has introduced great uncertainty about the potential impact on the economics of developing resources into viable operations in Australia," he added.

The company says that current operations will continue. Xstrata produces about 200,000 tonnes a year of copper from its Australian operations.

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BC Iron To Start Production Later This Year

Exports slated for December quarter

Australia’s BC Iron says it is on track to begin production at its Nullagine iron ore project in Western Australia's Pilbara region in the September quarter.


It expects to commence production at Nullagine in the third quarter of the 2010 calendar year with exports scheduled to begin in the December quarter.


The project is an equal joint venture with Fortescue Metals Group Ltd, which agreed in June 2009 to provide rail haulage, port handling and ship loading facilities to in exchange for half of the project.

Peabody Cuts Macarthur Bid

New Tax Said To Be Behind Bid Cut

United States coal miner Peabody has cut its offer for Australia’s Macarthur in a move which seems to have been triggered by the Australian government’s plan for a 40 per cent tax on mining companies’ profits.

Peabody has dropped its bid for Macarthur Coal Limited from A$4.07 billion (US$3.67 billion) to A$3.82 billion after completing its due diligence and after the announcement by the government on the 40 per cent ‘super tax’ at the start of last week.

"The definitive proposal delivers a clear, compelling and significant premium for Macarthur shareholders, and follows Peabody's due diligence as well as the introduction of the Australian resources profit tax proposal," it said.

The revised offer is for A$15.00 per share. Peabody's first bid was for A$13 per share and was followed by further offers of A$14 and A$16 per share. Macarthur’s shares – which had been trading higher than the current offer in the middle of April – closed at A$13.38 in Sydney on Monday.

Macarthur's board has rejected two Peabody bids as well as a bid from Australia's New Hope in favour of its own takeover of Gloucester Coal. However, that was rejected last month by Noble Group, a key Gloucester shareholder in a move which would have given Noble a 24 per cent stake in Macarthur and which would most likely have thwarted the Peabody bid. Noble says it is no longer interested in that transaction.

In response to the new offer, Macarthur continued to advise shareholders to take no action until its directors had reviewed the offer. It is believed that the Macarthur board is set to meet in the next couple of days.

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India's Iron Exports "Around 100mn Tonnes"

MMTC Official Puts Levels Similar To Last Year

A senior official in a state-run Indian company says he expects the country to export around 100 million tonnes of iron ore in the current financial year, which began in March.

"India's iron ore exports in 2010-11 are expected to be about 100 million tonnes," MMTC Chairman and Managing Director Sanjeev Batra told reporters on Friday.

The country exported about 105.67 million tonnes of iron ore in 2008-09, and figures for the last financial year are expected to have been in a similar range in the last financial year, Federations of Indian Mineral Industries Secretary General R K Sharma said.

Mr Sharma added that the recent increase in export duty on iron ore lumps to 15 per cent from 10 per cent may reduce its exports by 50 per cent. India exported around five million tonnes of iron ore lumps during 2008-09.

The export duty on iron ore fines, which comprises the bulk of iron ore exports, is 5 per cent.

Mr Batra also said that MMTC is likely to import 200 tonnes of gold in the current financial.

India's total gold imports for 2009-10 were 739 tonnes, of which MMTC imported 190 tonnes.

Iron Ore Of Canada Announces Labrador City Expansion

IOC Revives USD800 million Expansion Plans

Canada's biggest iron ore producer said yesterday that it will spend US$800 million to reinstate an expansion of capacity at its Labrador City mines and concentrator in the western part of the Canadian province of Labrador.

The programme was suspended in the middle of 2008 when steelmakers slashed production and iron ore fell to $40 U.S. a tonne compared to around $180 now.

The first stage of the programme – costing $435 million - will add 4 million tonnes of annual capacity to bring it to 22 million tonnes by 2012 and 26 million tonnes by 2015.

IOC will upgrade its conveyor system and add a fourth autogenous grinding mill, besides expanding the mines. It says it has about 4 billion tonnes of known reserves in Quebec-Labrador.

IOC majority shareholder Rio Tinto will invest $235 million in the revived first-stage expansion, with fellow shareholders Mitsubishi and Labrador Iron Ore Royalty Income Fund will provide the balance.

Surging Iron Ore Prices Boost Profits at Mitsubishi and Mitsui

Surging Iron Ore Prices Boost Profits at Mitsubishi and Mitsui

Surging iron ore prices are likely to boost profits at two of Japan’s largest trading houses.

Both Mitsubishi Corp. and Mitsui & Co., Japan’s two biggest trading houses, are forecasting higher profit this year on the back of increased prices for iron ore and coking coal.

Mitsubishi said on Friday said that net income may climb to 370 billion yen ($3.99 billion) in the year ending March 2011 - up from 273.1 billion yen a year earlier.

Mitsui expects profits of 320 billion yen, up 114 per cent on 149.7 billion yen a year ago.


Mitsubishi has stakes in iron ore mines in Chile and Canada and in a coking coal venture with BHP in Australia. It expects profits from metals to hit 185 billion yen this fiscal year compared to 137.9 billion yen in the year ended March. Earnings from energy are expected to climb to 73 billion – up from 71.9 billion.

Baosteel Importing Iron Ore On Short-Term Prices

Baosteel Importing Iron Ore On Short-Term Prices

Chinese steelmaker Baosteel has admitted that it is now importing iron ore on shprt-term contract.

Chen Ying, board secretary of Baosteel's listed company, Baoshan, said that his company "had settled deals with certain (price) increases with miners as of April" and would pay the price difference after iron ore talks were finalised.

Xstrata To Get More For Its Australian Coal

Prices up by up to 114 per cent

Coal miner Xstrata says it has settled most of its annual Asian thermal coal contracts in at a price level some 38 per cent higher than it achieved last year.

Quarterly semi-soft coking coal prices have risen 114 per cent and the company says its production of coking coal in Australia has risen 83 per cent.

Big Hill To Supply A Third Of Vietnam Plant Feedstock

Western Australian’s Big Hill tungsten deposit may be in a position to supply a third of Hazelwood Resources’ requirements for a new ferrotungsten plant in Vietnam, an integrated prefeasibility study has shown.


Last month Hazelwood took a 60 per cent stake in the plant.

In the first phase the plant would have a capacity of 2.4-million kilograms of contained tungsten, in the form of 80% grade ferrotungsten, and would rely on feedstock from external sources. The first stage will be ready by the end of this year and the plant is scheduled to commence production early next year.
Stage two will double capacity to 4.8-million kilograms of contained tungsten and Big Hill is slated to provide around a third of the feedstock.


“The ferrotungsten business in Vietnam requires a long-term supply of high-purity feedstock and the development of Big Hill will allow us to increase the scale and quality of production,” said Hazelwood MD Terry Butler-Blaxell.



“We are currently conducting extensive pilot test work trials for process optimisation and product certification,” he added.


A definitive feasibility study of the Big Hill deposit will be completed by the second half of this year.


The Vietnam plant will be the largest producer of ferrotungsten outside China, capable of 25 per cent of global demand for the product.

Macarthur Coal Says Profits May Fall

Macarthur Income May Be 39 Per Cent Down

Australian coal miner Macarthur Coal Ltd has said that full-year profits may fall as much as 39 percent from a year ago after a fall in prices.

Net income may be A$103 million to A$113 million for the year ending 30 June from A$168.6 million in 2009, the company said in a statement to the Australian stock exchange.

Macarthur is currently the target of a A$4.1 billion ($3.8 billion) takeover offer from America’s Peabody Energy.

“Profitability in the June 2010 quarter has improved given recent coal price settlements with higher prices starting April 1”, the company said in the statement. Macarthur said it is still on course for full-year sales volumes of 4.8 million to 5.0 million tons.

Coking coal prices have risen sharply in recent months after the global steel industry came into recovery. A number of global coking coal suppliers including BHP Billiton, Rio Tinto and Teck Resources won a shift from annual to quarterly contracts and a rise of 55 per cent for supplies in the April to June quarter. Australia’s Centenntial Coal also warned of a tightening in the global supply of the product.

Peabody asked Macarthur, the world’s largest exporter of pulverized coal, for more information after completing a review of its finances yesterday. The American miner is also said to be concerned after the Australian government announced on Sunday that it plans to bring in a new 40 per cent tax on mining company’s profits. Macarthur said on Tuesday that the new tax had a brought an air of uncertainty to the industry.

Gladiator Exercises Orusur Option

GLA Takes 80 Per Cent Interest In Uruguay Assets

Orosur Mining Inc. today announces that on 30 April 2010 Gladiator Resource Ltd. has exercised its option pursuant to the Option Agreement announced on 11 January 2010 whereby GLA may earn an interest of up to 80% in the iron ore, manganese ore and base metals ("Assets") in OMI's project area in the Isla Cristalina Belt in Uruguay. OMI retains the rights to gold, silver and diamonds over the project area.

David Fowler, Chief Executive Officer commented: "We are pleased to partner with Gladiator's management team who have significant iron ore experience. Initial field work is confirming historical results which identified the potential to define significant iron ore resources within the Isla Cristalina Belt. Gladiator has moved quickly to raise the funding to complete its work program in the coming year and we look forward to supporting them in progressing the project".

The Option has been exercised subject to the execution of a Definitive Agreement detailing the farm-in joint venture arrangements. Upon execution of the Definitive Agreement GLA will issue AU$ 100,000 worth of fully paid shares to OMI at market value, calculated over the preceding five day trading period. The execution of the option entitles GLA to commence earning the initial 20% interest in the project by spending $US 1,000,000.

GLA will be entitled to earn a 20% interest in the Assets by spending US$ 1,000,000 on work programs. GLA may, at its option, earn a further 31% by spending a further US$ 4,000,000 taking its total interest to 51%. GLA may then elect to earn a further 29% taking its interest to 80% by producing a Bankable Feasibility Study on or before 31 December, 2014.

Based on GLA's initial understanding of the resource potential of the Project area, a number of development possibilities are expected to be considered:

1. Production of iron ore concentrates

2. Production of maganiferrous iron ore concentrates

3. Production of iron ore pellets

4. Production of pig iron and ferro alloys.