Archive | Iron Ore

Iron ore rally fires up Rio Tinto’s commodity merry-go-round – by Clyde Russell (Reuters U.S. – February 15, 2017)

JOHANNESBURG Reuters) – Mining company super profits appear to be back on the agenda as earnings stand to be turbo-charged by higher-than-expected prices for iron ore and other metals, while volumes are also likely to be strong.

It’s the stuff of dreams for mining company bosses: high prices and strong production that can be sold into a rally.

Iron ore has been the standout so far in 2017, and as the steel-making ingredient surged to its highest level in three year above $90 a ton, so too will profits at the three major producers, Brazil’s Vale and the Anglo-Australian pair of Rio Tinto and BHP Billiton.

Investors have already had a little taste of what may come, with Rio raising its dividend above market expectations when it released results last week. Continue Reading →

Australian Big miners to benefit from ‘fundamental shift’ in China’s iron ore appetite – by Peter Ker (Australian Financial Review – February 14, 2017)

Australia’s biggest iron ore miners are set to benefit from a “fundamental shift” in China’s demand for higher grade iron ore, which has sent spot prices rocketing and could keep them high for some time yet.

The benchmark iron ore price reached a 30-month high of $US92.23 per tonne on Tuesday, and the commodity’s strongest start to a year since 2014 is fuelling expectations for rising dividends from mining companies and dramatically improved revenues to the federal and Western Australian government.

The timing of the rally is particularly good for WA Premier Colin Barnett, who will face voters at an election in less than a month and can expect iron ore royalties to deliver billions of dollars of extra revenue into the state’s struggling finances over the next few years. Continue Reading →

Surging Iron Ore Won’t ‘Fall Off a Cliff,’ Says Rio Tinto – by David Stringer and Haidi Lun (Bloomberg News – Februay 13, 2017)

Iron ore will defy forecasts for a dramatic price collapse as China’s economy remains strong and the top buyer boosts demand for higher-quality imports, according to Rio Tinto Group, the second-largest exporter.

“I wouldn’t necessarily say that it’s going to fall off a cliff,” Chief Financial Officer Chris Lynch said Monday in an interview with Bloomberg Television’s Daybreak Australia. “I guess the key issue is that we have to be robust in case the price goes up, down or sideways, and that’s what we set out our business to do.”

Global exporters are benefiting as mills in China, the world’s top steelmaker, increasingly prefer higher-quality raw materials to raise efficiency and cut pollution, according to Lynch. Continue Reading →

UPDATE 1-Key Vale partners want to keep CEO to stem political pressure -Valor (Reuters U.S. – February 13, 2017)

Feb 13 Vale SA’s top non-government shareholders want Chief Executive Officer Murilo Ferreira in the job for another two years to stem pressure from Brazilian politicians to appoint an ally at the helm of the world’s No. 1 iron ore producer, newspaper Valor Econômico said on Monday.

Valor, which cited unnamed people familiar with the matter, said some members of Vale’s controlling bloc were considering voting for the renewal of Ferreira’s term when it expires next quarter. Bradespar SA and Japan’s Mitsui & Co are the private-sector members of the bloc.

Valor said members of President Michel Temer’s PMDB party and Senator Aecio Neves of the PSDB party from the mineral-rich Minas Gerais state, where Vale is based, were vying to influence the selection of the new CEO. Such disputes have gone on for months, Valor said. Continue Reading →

Cliffs profits bounce back with iron ore demand – by John Myers (Duluth News Tribune – February 9, 2017)

Cliffs Natural Resources, the nation’s largest supplier of taconite iron ore, rode the recovering domestic steel industry back to profitability in 2016, posting a net income of $199 million compared to a net loss of $748 million in 2015.

The Cleveland-based company on Thursday announced its revenues were $754 million last year, up 58 percent over a crippling 2015.

In the fourth quarter of 2016, Cliffs recorded a net income of $81 million, up from a net loss of $58 million for the last quarter the year before, according to the company’s quarterly report issued Thursday. Continue Reading →

[Australia mining] Brendon Grylls accuses BHP, Rio-backed mining lobby of ‘wet lettuce’ fight – by Julie-anne Sprague (Australian Financial Review – February 8, 2017)

WA Nationals leader Brendon Grylls has urged BHP Billiton and Rio Tinto to spend millions of dollars on a campaign against Prime Minister Malcolm Turnbull’s reluctance to change the GST distribution system.

Mr Grylls accused mining lobby group Chamber of Minerals and Energy (CME) of a ‘wet lettuce’ fight with the Federal government during a live ABC radio debate in Perth on Wednesday.

CME chief executive Reg Howard-Smith said the lobby group had spent $2 million fighting Mr Grylls’s proposal, which combined funds from BHP, Rio, the Minerals Council of Australia and the CME. Mr Howard-Smith agreed the GST distribution system was unfair and that the lobby group had publicly declared Western Australia needed a fairer deal. Continue Reading →

Choking China Backs Australia in Race for Cleaner Iron Ore – by David Stringer (Bloomberg News – February 8, 2017)

Chinese engineers who carved a railway through the Tibetan plateau and built the world’s longest sea-bridge across Hangzhou Bay have a new challenge: developing a $3.4 billion project on Australia’s remote Eyre Peninsula to meet increased demand for cleaner iron ore.

China Railway Group Ltd., the world’s second-largest infrastructure builder, is backing the mine, port and rail-road project that aims to supply high-quality, lower-emission ore to Chinese steel mills facing stricter environmental rules.

The project would be a major step toward South Australia’s goal of securing A$10 billion ($7.6 billion) of investments to fund a stable of new iron ore mines by 2021. China Railway’s partner Iron Road Ltd. aims to bring the 24 million ton-a year mine into production in late 2020 after tests showed its product can help customers meet the tougher standards. Continue Reading →

Rio Tinto Rewards Investors as Profit Rebounds on Iron Rally – by Jesse Riseborough and Perry Williams (Bloomberg News – February 8, 2017)

Rio Tinto Group will pay a much higher dividend than expected and buy back $500 million of shares after the world’s second-biggest mining company reported the first gain in annual profit since 2013.

Higher iron ore prices boosted underlying profit 12 percent to $5.1 billion in 2016, London-based Rio said on Wednesday. That beat the $4.75 billion average estimate of analysts compiled by Bloomberg.

The dividend fell 21 percent to 170 cents a share, reflecting a new policy aligning the payout to earnings. Still, that exceeded the average estimate of 136 cents in the Bloomberg survey and the company’s minimum payout of 110 cents. Rio will purchase U.K.-listed shares throughout this year. Continue Reading →

China iron ore imports off to strong start; support rally – by Clyde Russell (Reuters U.S. – February 1, 2017)

LAUNCESTON, AUSTRALIA – There is fundamental justification for the strong start to 2017 for iron ore prices, with imports by top buyer China remaining robust and showing no signs of easing. A total of 86.6 million tonnes was reported as discharged at Chinese ports in January, according to data compiled by Thomson Reuters Supply Chain and Commodity Forecasts.

The risk is that this figure may actually rise in coming days as the ship-tracking and port data indicates that a further 13.2 million tonnes was due to have arrived at Chinese ports by Jan. 31.

If some of these cargoes were discharged before the end of month it could push total imports for January to close to 90 million tonnes, which would be the strongest monthly outcome since the record of 96.26 million in December 2015. Continue Reading →

BHP-Vale Mine Restart Encounters New Obstacle: Small-Town Mayor – by R.T. Watson (Bloomberg News – January 26, 2017)

BHP Billiton Ltd. and Vale SA’s crippled Samarco mine, once the world’s second-largest producer of iron-ore pellets, has a new obstacle threatening to slow its much-anticipated restart: a small-town mayor.

The Brazilian city of Santa Barbara declined to sign off this week on a plan for Samarco to continue to use water from a nearby river. Without the approval, Samarco won’t be able to complete an ongoing environmental study required by state regulators for a restart, a person familiar with the matter said, asking not to be identified because the matter is private.

“There are environmental impacts related to the water supply that need to be thoroughly studied,” Leris Braga, the 34-year-old mayor of the town of 30,000 people in Minas Gerais state, said by telephone. He is calling for a separate study to be done to test for possible disruptions to water flow. Continue Reading →

BHP Billiton: speed of rail upgrade puts miner on fast track to boost in Pilbara output – by Matt Chambers (The Australian – January 26, 2017)

BHP Billiton is set to ramp up its West Australian iron ore mines, rail and ports to full ­capacity quicker than previously flagged as a two-year rail system overhaul looks set for completion in little more than a year.

The extra rail capacity could deliver up to an extra 10 million tonnes of iron ore sales in the next two years, more than offsetting the impacts of power outages and unplanned maintenance at the Olympic Dam copper and ­uranium mine in South Australia, which caused a 40,000-tonne cut in copper guidance this year.

In its quarterly production ­report, released yesterday, BHP said that an extensive overhaul of the company’s big private Pilbara region railways, ordered by ­Australian mining president Mike Henry in March last year as one of his first edicts in the position, was moving at a cracking pace. Continue Reading →

Rio Executive Firing Linked to Internal CEO Feud, Says Conde – by Jesse Riseborough and Franz Wild (Bloomberg News – January 20, 2017)

The President of Guinea is disputing public statements made by Rio Tinto Group regarding the firing of a senior executive for a $10.5 million payment made to the president’s friend Francois de Combret.

President Alpha Conde said the firing of Alan Davies, who headed Rio’s $20 billion Simandou iron ore project in Guinea, was the result of an internal feud. Rio has said it was because of improper payments to de Combret in 2011 for assisting the company’s negotiations with Conde on the mine.

Davies had been seen as a challenger to Jean Sebastien Jacques prior to the Frenchman becoming chief executive officer in July. “In reality, it was a settling of scores because the new CEO wanted to get rid of Alan Davies,” the 78-year-old Conde, who’s been president since 2010, said in an interview on Wednesday in Davos, Switzerland. Continue Reading →

NZ’s Todd family confident Pilbara iron project will go ahead – by Paul Garvey (The Australian – January 23, 2017)

The billionaire New Zealand family behind an ambitions $5 billion proposed iron ore development in Western Australia’s Pilbara are confident the project can start construction next year, despite not yet having its foot on enough iron ore to support the plan.

Todd Corp, the private conglomerate owned by NZ’s Todd family, on Monday signed a state agreement with the WA government spelling out the framework for its proposed Balla Balla infrastructure project.

The $5bn development will include a 160km railway network and a so-called trans-shipping port, with the entire operation capable of exporting about 50 million tonnes of iron ore a year. Continue Reading →

New Vale pact seeks dispersed share ownership in six years: sources – by Tatiana Bautzer and Guillermo Parra-Bernal (Reuters U.S. – Janaury 19, 2017)

SAO PAULO – Leading shareholders of Vale SA are close to endorsing a plan to turn the world’s No. 1 iron ore producer into a company with dispersed share ownership within six years, two people familiar with the talks said.

Bradespar SA, Mitsui & Co and several Brazilian pension funds are negotiating a new shareholder accord that would give Vale dispersed share ownership – where no major shareholder controls decision making at the company – once the agreement expired in six years time, according to the people, who asked for anonymity since talks are underway. Negotiations could be concluded by late February or early March, these people said.

The current 20-year shareholder accord expires in April. Holding company Bradespar (BRAP4.SA) and pension fund Previ [PREVI.UL] proposed the conversion of Vale’s different types of stock into a single common one as the first step towards transforming the mining giant into a company with dispersed share ownership, the first person said. Continue Reading →

BHP Billiton, Vale closer to Samarco dam settlement – by Peter Ker (Australian Financial Review – January 19, 2017)

BHP Billiton and Brazilian miner Vale have struck a preliminary agreement with Brazilian prosecutors, which lays out a path for a future settlement of the largest legal claim eminating from the Samarco dam disaster.

The dam disaster killed 19 people in the Brazilian state of Minas Gerais in November 2015, and as the owners of Samarco, BHP and Vale have been locked in legal negotiations with Brazilian regulators and prosecutors ever since.

​The Brazilian government agreed to a reparation and rehabilitation package worth 9.2 billion Brazilian Real ($3.7 billion) in March 2016, but that deal was suspended when independent federal prosecutors in Brazil lobbed a 155 billion Brazilian Real ($63.7 billion) claim in May 2016. Continue Reading →