BHP awaits court freeze order on Brazil assets over mine disaster – by James Regan (Reuters U.S. – December 21, 2015)

http://www.reuters.com/

SYDNEY – BHP Billiton BLT.L – has not received formal notification that its assets in Brazil have been frozen, a company spokesman said Monday, three days after a court ruled to hold the assets as compensation for the Samarco mining disaster.

“We have yet to receive any formal notification,” BHP Billiton’s Paul Hutchins said by telephone from the company’s Melbourne headquarters. “We hope to have an update tomorrow.”

A judge in Brazil’s state of Minais Gerais on Friday froze the Brazilian assets of BHP and domestic miner Vale SA after ruling their Samarco joint venture was unable to pay for damages following a dam collapse last month at Samarco’s iron ore mine in the state. The disaster killed 16 people, left hundreds homeless, and polluted a nearby river.

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How an Australian Mining Town Became a Solar Power Trailblazer – by James Paton (Bloomberg News – December 20, 2015)

http://www.bloomberg.com/

Broken Hill spawned the world’s largest mining company and generated more than $75 billion in wealth. Now as its minerals ebb, Australia’s longest-lived mining city is looking to tap a more abundant resource.

On the sun-baked edge of the Outback city, 700 miles west of Sydney, a solar farm the size of London’s Hyde Park shimmers like an oasis — its panels sending enough electricity to the national grid to power 17,000 homes a year. Combined with a sister plant, the AGL Energy Ltd. and First Solar Inc.project is the largest of its type in the southern hemisphere.

Clean energy advocates are counting on the 140-hectare (346-acre) development to make Broken Hill, which at one time boasted the world’s most successful silver mine, a trailblazer once again.

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Moody’s Review of BHP’s Credit Rating Piles On Pressure – by Alex MacDonald (Wall Street Journal – December 18, 2015)

http://www.wsj.com/

LONDON— Moody’s Investors Service said on Friday it was reviewing the credit rating of mining giant BHP Billiton Ltd. for a possible downgrade, ratcheting up pressure on the world’s largest diversified miner, amid tumbling commodities prices and a mining disaster at a BHP joint venture in Brazil.

Moody’s separately cut the rating of BHP rival Glencore PLC by a notch, to just above junk status.

The commodities rout has sent mining shares falling sharply, triggering moves by many to shore up cash through asset sales and dividend cuts. BHP, however, enjoys one of the industry’s strongest balance sheets, and its low-cost operations have helped buoy earnings, compared with many peers.

It has long enjoyed a solid, investment-grade A1 rating from Moody’s.

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COLUMN-Should iron ore miners become an oligopoly to rescue prices? – by Clyde Russell (Reuters India – December 15, 2015)

http://in.reuters.com/

Dec 15 – One of the largely unseen side-effects of the massive increase in iron ore supply and the subsequent collapse in prices is that the industry is now one of the most concentrated in the resources sector.

As any student of economics can tell you, highly-concentrated supply tends to lead to oligopolistic behaviour, in which the major producers limit output in order to drive prices higher.

This clearly hasn’t happened, and isn’t currently happening in iron ore, despite about 75 percent of traded supply being delivered by just four producers.

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Samarco’s Bill for Brazil Dam Failure Could Grow – by Paul Kiernan (Wall Street Journal – December 8, 2015)

http://www.wsj.com/

RIO DE JANEIRO—Mining company Samarco Mineração SA’s bill for a catastrophic dam failure last month could be growing by the day, as it struggles to formulate an emergency plan demanded by local prosecutors in case of additional accidents.

On Nov. 28, a judge in Minas Gerais state gave Samarco, a joint venture between mining giants Vale SA and BHP Billiton Ltd., three days to fulfill the requirement or else pay a fine of 1 million Brazilian reais a day ($262,536).

Prosecutors asked the company to forecast potential scenarios of what could happen if the remaining dams at its mining complex were to break, and to provide “concrete emergency measures” to be adopted in each scenario.

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Iron Ore in $30s Seen Near Tipping Point for Largest Miners – by Jasmine Ng and David Stringer (Bloomberg News – December 8, 2015)

http://www.bloomberg.com/

Iron ore’s tumble into the $30s threatens the world’s biggest miners as prices approach break-even costs, according to Capital Economics Ltd. BHP Billiton Ltd. shares slumped to the lowest in 10 years and Rio Tinto Group dropped to the lowest since 2009.

The most expensive operations at the four largest suppliers are on the verge of making losses at rates below $40 a metric ton, said John Kovacs, senior commodities economist at Capital Economics in London, who estimates their break-even levels at $28 to $39, taking into account freight and other costs.

While these producers will keep output strong, they’ll be constrained by low prices, he said by e-mail on Monday.

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Iron Ore Nearing Rio’s `Fantasy Land’ Shows Depth of Turmoil – by Jesse Riseborough (Bloomberg News – December 7, 2015)

http://www.bloomberg.com/

When Rio Tinto Group’s Sam Walsh, head of the world’s second-biggest iron-ore exporter, was asked 10 months ago whether the steelmaking raw material could reach $30 a metric ton, he derided it as impossible.

“That’s fantasy land — it simply can’t happen,” Walsh, 65, said in a February interview with Bloomberg Television. “There are very wild forecasts out there that quite frankly just can’t come to pass, otherwise it’s going to be very lonely for us as the lowest-cost producer in the world.”

The comments by Walsh, who headed Rio’s iron-ore business for nine years and is regarded as a veteran in the industry, shows how the pace and depth of the market’s retreat has caught the world’s biggest mining companies off guard.

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Rio Tinto closes gap on BHP Billiton in biggest miner race – by Matt Chambers (The Australian – December 7, 2015)

http://www.theaustralian.com.au/

BHP Billiton’s long-held title of world’s biggest miner is under threat from rival Rio Tinto as sliding oil prices, BHP’s South32 spin-off and the tailings dam disaster at BHP’s half-owned Samarco operations in Brazil have ensured the gap in market value between the pair has closed to its narrowest since before the China boom.

At the end of last week, Bloomberg data showed that BHP’s market capitalisation of $92 billion (including Australian and London-listed shares) was just $13bn higher than Rio’s $79bn, with the gap as close as $10bn during the week.

This is the closest the pair have been since 2003 and a sharp tightening since the middle of last year, when BHP was worth about $200bn and Rio was worth $110bn.

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Rio, BHP Billiton keep faith in China’s future steel demand – by Matt Chambers (The Australian – December 5, 2015)

http://www.theaustralian.com.au/

Rio Tinto chief Sam Walsh says depressed iron ore prices face sustained pressure over the next couple of years even as Gina Rinehart’s $10 billion Roy Hill project and an expansion by Brazil’s Vale force more higher-cost producers out of the market.

But Mr Walsh and his counterpart at BHP Billiton, Andrew Mackenzie, both say future Chinese steel demand is being underestimated by many forecasters not factoring in substantial regional exports from the Asian powerhouse.

“As you see the Vale and Roy Hill (iron ore) tonnes come on, that’s going to put on some pressure,” Mr Walsh told The Weekend Australian in Melbourne during the week.

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Iron Ore on the Cusp of $30s as BHP, Rio Shares Extend Slump – by Jasmine Ng (Bloomberg News – December 3, 2015)

http://www.bloomberg.com/

Iron ore is on the cusp of dropping into the $30s a metric ton as the biggest producers expand supply and the onset of winter in China dulls demand that’s been hurt by the slowdown in growth in the world’s top user. Miners’ shares retreated.

“The outlook remains grim for iron ore fines because end-demand from construction and manufacturing is uncertain,” said Jessica Fung, an analyst at BMO Capital Markets in Toronto. “Steel inventories have been building.”

Spot ore with 62 percent content delivered to Qingdao fell 0.9 percent to $40.75 a dry ton on Thursday, a record low in daily prices compiled by Metal Bulletin Ltd. dating back to 2009. It’s dropped each day this week, losing 8.4 percent.

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The iron ore price is in free-fall – by Frik Els (Mining.com – December 2, 2015)

http://www.mining.com/

Iron ore fell to a record low on a spot price basis on Wednesday with the Northern China 62% Fe import price including freight and insurance (CFR) dropping 2.4% to $40.60 a tonne.

After a strong recovery from its July low, the steelmaking raw material has been on a relentless decline since mid-October. Losses so so far this year come to 43% following. Today’s price compare to $190 a tonne hit February 2011 and an average of $135 a tonne in 2013 and $97 last year.

For an iron ore price below $40 you have to go back to 2007 when annual contract pricing between the Big 3 producers – Vale, Rio Tinto and BHP Billiton – and Chinese and Japanese steelmakers were still the industry norm.

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Brazil sues BHP, Vale for $5 billion in damages for mine disaster – by Anthony Boadle (Reuters U.S. – November 30, 2015)

http://www.reuters.com/

BRASILIA – Brazil filed a lawsuit on Monday against two of the world’s largest mining companies for 20 billion Brazilian reais ($5.2 billion) to clean up what it says was its worst environmental disaster, caused by the collapse of a tailings dam.

The governments of Brazil and those of two states hit by the damburst sued iron ore operator Samarco and its co-owners, the world’s largest miner BHP Billiton Ltd and the biggest iron ore miner Vale SA.

Earlier on Monday, President Dilma Rousseff blamed the disaster on the “irresponsible action of a company” in a speech to the COP21 climate change summit in Paris. “We are severely punishing those responsible for this tragedy,” she said.

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Brazil to File $5.3 Billion Suit Against Dam Owners – by Paul Kiernan (Wall Street Journal – November 27, 2015)

http://www.wsj.com/

RIO DE JANEIRO—Brazil’s government said it is preparing to sue mining giants Vale SA, BHP Billiton Ltd. and their joint venture Samarco Mineração SA in response to a catastrophic dam failure earlier this month, as Vale acknowledged the presence of toxic elements in a river downstream for the first time.

The civil suit demanding damages of 20 billion Brazilian reais ($5.3 billion) is expected to be filed on Monday, the Attorney General’s office said on Friday in a news release. The proceeds are intended to create a fund to help recovery efforts in the Rio Doce, a major river that was contaminated with mud and toxic mining waste in the wake of the Nov. 5 collapse of Samarco’s dam in Minas Gerais.

As many as 13 people were killed and hundreds displaced as the mud swallowed up entire villages below the dam. An additional 11 are missing.

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BHP battered by UN’s claims of toxic tailings – by Barry Fitzgerald and Matt Chambers (The Australian – November 28, 2015)

http://www.theaustralian.com.au/

If there was a saving grace to the tailings dam collapse at BHP Billiton’s half-owned Germano mine in the mountains of Brazil’s Minas Gerais state, it was that the iron ore waste which has since found its way to the Atlantic Ocean some 600km away was not toxic.

That was the accepted truth from BHP and Brazil’s Vale, BHP’s equal partner in the mine, and the mine’s operating company Samarco. After all, BHP managing director Andrew Mackenzie had seemed to say so, and he’s one of the great geoscientists of the modern era. Last year he became a fellow of the world’s premier scientific club, London’s Royal Society. Past fellows have included Albert Einstein, Charles Darwin and Isaac Newton.

So when Mackenzie said that the tailings material that hurtled down the valley floor after the tailings dam was breached on November 5 was “relatively inert’’, there was relief all around.

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BHP sees coal price getting worse before it gets better – by Mark Ludlow (Australian Financial Review – November 25, 2015)

http://www.afr.com/

A senior BHP Billiton executive has warned the market for Australian resources will get a lot worse before it gets better, saying it would be “dangerous” to invest in a new mine based on the assumption coal prices will recover.

As big miners continue to cut costs following a plunge in international coal prices, BHP Billiton Mitsubishi Alliance asset president Rag Udd painted a bleak picture of the resources sector in Australia.

“I think it’s dangerous to try and align a business around prices improving in metallurgical coal. I personally think it will get worse before it gets better,” Mr Udd told a Queensland Resources Council forum in Brisbane on Wednesday.

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