Iron Ore – Page 73 – Republic of Mining

Shouldn’t India, like China, consider buying Australian iron ore assets? – by Kunal Bose (Business Standard – June 15, 2015)

June 16, 2015

Chinese iron ore production this year is likely to fall below 200 mt from 240 mt in 2014

The world is aware that Chinese steelmakers and investment groups are circling around distressed iron ore assets in Australia with a view to gaining control. Nothing surprising about the recent Chinese moves since these are part of by-now-long-established strategy of the world’s largest producer and consumer of steel to secure future supply of iron ore.

But shouldn’t some of our large producers of steel, which were forced to import rising quantities of iron ore in the past three years due to court-imposed curbs aimed at ending illegal mining, also consider buying assets in Australia and elsewhere when their valuations are so low? India, which not very long ago was the world’s third largest exporter of ore, had to import 15.5 million tonnes in 2014-15 to supplement reduced domestic supplies. Our steelmakers would often complain about domestic ore suppliers charging premiums over world prices.

What will also be a justification for them to seek a presence in Australian iron ore landscape is the difficulty in securing iron ore deposits here and then long gestation in opening mines. This is despite the country sitting on the world’s sixth largest iron ore resources estimated at well over 25 billion tonnes (bt). Business wanderlust led Indian groups in the past to acquire mines in more than one continent, though not all proved to be prized catches.

From Loathed to Loved: Iron Rallies as Quality Ore Is Gobbled Up – by Phoebe Sedgman (Bloomberg News – June 11, 2015)

June 15, 2015

http://www.bloomberg.com/

Iron ore’s gone from loathed to loved. The commodity capped a third weekly gain that lifted prices to the highest in almost five months on lower port stockpiles in China and speculation local production is contracting.

Ore of benchmark-grade 62 percent content delivered to Qingdao climbed 1.1 percent this week for the longest weekly run since April, according to Metal Bulletin Ltd. The commodity retreated 0.7 percent to $65.13 a dry metric ton on Friday after reaching $65.61 on June 11, the highest since Jan. 23.

Iron ore’s roller-coaster ride this year saw prices sink to a decade-low in early April on rising low-cost supply from the top producers and concern demand in China may falter as growth slowed. Tumbling stockpiles in the biggest buyer, as imports missed expectations, helped to spur back-to-back gains in April and May, and prices extended the rally into June. Goldman Sachs Group Inc. is among banks predicting the factors that hurt prices in the first quarter will soon reassert themselves.

“There’s been a significant destocking gone on and that would be why we’ve seen the iron ore price rising, seasonal factors and the fact that they are destocking,” said David Lennox, a resource analyst at Fat Prophets in Sydney. “There’s a lack of inventory in China.”

Fitch downgrades outlook on BHP Billiton and Rio Tinto on iron ore price (Sydney Morning Herald – June 11, 2015)

June 11, 2015

http://www.smh.com.au/

Rating agency Fitch downgraded its outlook on BHP Billiton and Rio Tinto from stable to negative, after revising down its price assumptions for iron ore, copper and nickel earlier this month.

BHP Billiton, the world’s largest mining firm, held its A+ rating but Fitch said on Wednesday the spin-off last month of some of its assets into a new company named South32 would have a marginally negative effect on its credit rating in the near term, weighing on projected free cashflow generation.

The outlook downgrade on A- rated Rio Tinto, the world’s second-largest mining firm, was on the back of weaker price expectations for iron ore, its main product.

“Although Rio Tinto benefits from a leading iron ore cost position, the high percentage of revenue and (earnings) generated by that single commodity exposes the company to significant risks,” Fitch said in a statement.

The rating agency confirmed its negative outlook on BBB- rated group Anglo American.

Iron to Tighten as China Buys More and Sells Less, Vale Says – by Juan Pablo Spinetto (Bloomberg News – June 10, 2015)

June 10, 2015

http://www.bloomberg.com/

The global iron-ore market is set to tighten in the second half of the year as China imports more and produces less, according to the biggest miner, Vale SA.

Chinese imports of the steel-making ingredient will increase with domestic production down by about 200 million metric tons after prices tumbled 60 percent from a 2013 peak, Vale Chief Executive Officer Murilo Ferreira said at a Rio de Janeiro conference organized by Fundacao Getulio Vargas.

“Several Chinese producers — a higher number than people realize — have already left the business,” Ferreira, 61, said Wednesday. “I think we will have a better second half in China than the first half in terms of steel.”

Since reaching a decade low in April amid supply expansions in Australia and Brazil, iron-ore prices have rallied 39 percent on prospects of a pickup in Chinese steel demand and as high-cost mines close. The benchmark rose 1.7 percent to $65.39 a dry ton on Wednesday, the highest since Jan. 23, according to an index compiled by Metal Bulletin.

Inuit orgs join chorus opposing Nunavut mining exemption (Nunatsiaq News – June 9, 2015)

June 10, 2015

http://www.nunatsiaqonline.ca/

QIA and NTI pen joint letter to federal minister supporting land use plan process

Baffinland Iron Mines Corp. has proposed to bypass some serious red tape in Nunavut’s regulatory process — but two Inuit organizations are trying to stop the mining company in its tracks.

Baffinland wants to ship 12 million metric tons of iron ore to Europe for 10 months of the year as part of its Phase 2 project proposal — something the Nunavut Planning Commission, said no to last April.

Baffinland has requested an exemption to the NPC’s regulatory process that could be granted by Bernard Valcourt, the Aboriginal Affairs and Northern Development minister.

The company wants to go straight to the Nunavut Impact Review Board for environmental impact assessment hearings instead. Nunavut Premier Peter Taptuna supported that bid in a letter to Valcourt last week.

Ignorance pushed iron ore market into ‘dance of death’ – by Tess Ingram (Sydney Morning Herald – June 9, 2015)

June 9, 2015

http://www.smh.com.au/

Former Fortescue Metals Group chairman Gordon Toll says the heads of the world’s largest iron ore miners have exhibited “appalling ignorance of major economic market structures” and have created a global “debacle” that could last for decades.

Mr Toll, who now heads locally-listed magnetite hopeful Royal Resources, served as chairman of Fortescue from May 2005 to March 2007 while the company was in its development phase.

Adding his name to the list of prominent critics of the miners’ expansion strategies, Mr Toll said he was shocked shareholders of BHP Billiton, Rio Tinto, Vale and Fortescue had remained silent while their companies pressed ahead with expansion plans which would depress prices.

“The first thing is why are the shareholders not screaming and I think that’s part of the second thing which is both the executives of these companies and the shareholders are showing massive ignorance of major economics and market structures,” Mr Toll told Fairfax Media.

“I don’t believe Jimmy Wilson or Andrew Harding, any of those people, ever believed they were going to drive the iron ore price down to where they have driven it but that is because they do not understand major economics.”

Mining downturn opens door for ‘neglected’ Pilbara tourism industry – by Alexia Attwood (ABC North West WA – June 8, 2015)

June 8, 2015

http://www.abc.net.au/news/

The downturn in the Pilbara’s all dominating iron ore industry has opened a window of opportunity for the region’s tourism potential.

For half a century the Pilbara’s spectacular desert ranges and rugged coastline have been overshadowed by the multi-billion-dollar iron ore industry.

But the drop in iron ore price has prompted business and industry leaders to look for ways of diversifying the Pilbara’s economy to make it less reliant on the mining sector, and the formerly neglected tourism industry has been touted as the way forward.

“For our part of the Pilbara, tourism has been neglected for the last decade,” Bazz Harris from the Karratha Visitor Centre said. But the iron ore downturn has already had a positive impact on the affordability of holidaying in the Pilbara, Mr Harris said.

“The good thing is when people call us and say, ‘Hey, can I actually come to Karratha or is it going to cost me an arm and a leg?’, we can actually get people one night’s accommodation for 110 bucks, which is very normal,” he said.

Goldman Says Iron Rally on Borrowed Time as China Buys Less -by Jasmine Ng (Bloomberg News – June 7, 2015)

June 8, 2015

http://www.bloomberg.com/

Iron ore imports by China contracted in May from April and the same month a year earlier, highlighting weakening demand in the largest buyer as Goldman Sachs Group Inc. repeated a forecast for a rally in prices to reverse.

Cargoes fell 12 percent from April to 70.87 million metric tons, and were 8.4 percent lower than a year earlier, according to customs data on Monday. That’s the lowest monthly total since February. Adjusted for the number of days in the month, the imports in May were at the slowest pace since November.

While prices posted the biggest monthly advance in almost two years in May as China’s port stockpiles fell by a record, Goldman Sachs is among banks predicting that the rally won’t last as global supplies are set to expand further amid a glut. In many commodity markets, recently installed low-cost supply can now be stretched to meet demand, BHP Billiton Ltd. Chief Executive Officer Andrew Mackenzie said last week.

“This rally is living on borrowed time,” Goldman analysts Christian Lelong and Amber Cai said in a note on Monday, targeting a drop back below $50 a ton. While higher prices may last in the short term, rates need to drop again to force the closure of higher-cost mines to balance the market, they said. Last month, Goldman said iron ore’s jump offered investors an opportunity to bet on renewed declines.

Iron ore expansions drove down price: Glencore – by Matt Chambers (The Australian – June 5, 2015)

June 5, 2015

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

The most senior local executive at Swiss trading and mining giant Glencore has waded into the iron ore debate, saying rapid Australian expansions have driven down prices and cost the nation tax, royalties and superannuation dollars.

Speaking in Melbourne yesterday, Glencore coal mining chief Peter Freyberg said boomtime expansions that had seen Australian iron ore production surge and cost more than $US50 billion ($64bn) in development spending from Rio Tinto, BHP Billiton and Fortescue Metals, had been a negative exercise.

“The numbers speak for themselves — if you go back a couple of years, there were 500 million tonnes of (annual) export at $US100 a tonne,” Mr Freyberg said.

“That’s versus 700 million tonnes of exports today at $US60, so there’s a whole lot of revenue that’s gone missing following a bunch of investment.

“At the end of the day, (with respect to) the returns to Australia, into superannuation funds, through royalties, through taxes, it’s been a negative exercise.”

State of Minnesota lowers mineral royalty for U.S. Steel – by John Myers Duluth News Tribune – June 3, 2015)

June 4, 2015

http://www.duluthnewstribune.com/

Minnesota’s top elected officials voted unanimously Wednesday to cut the fees the state charges U.S. Steel Corp. to mine iron ore on state lands on the Iron Range.

The vote is an effort to help the big U.S. steelmaker navigate through tough economic times pushed by a flood of cheap foreign steel and iron ore.

The Executive Council—the governor, lieutenant governor, secretary of state, treasurer, auditor and attorney general—voted to cut the royalty rates for U.S. Steel operations for 15 months, a break that could hit more than $4 million.

Royalties are the fees mining companies pay to whoever owns the mineral rights where they mine, in this case, the state of Minnesota.

The move means less money coming in to the state’s Permanent School Trust Fund and other funds stocked by the mining fees.

COLUMN-Big iron ore miners’ plan to displace everybody else losing steam – by Clyde Russell (Reuters U.S. – June 3, 2015)

June 3, 2015

http://www.reuters.com/

LAUNCESTON, Australia, June 3 (Reuters) – How well is the plan by big iron ore miners to displace high-cost iron ore from the seaborne and Chinese domestic markets going? Maybe just OK, certainly not great.

Much has been written about how the big three global iron ore miners will use their low-cost, high-output mines to muscle competitors out of the market, thus restoring the supply-demand balance and ultimately justifying the billions of dollars they spent boosting capacity well in excess of demand.

The problem for Brazil’s Vale and the Anglo-Australian pair of Rio Tinto and BHP Billiton <BHP Billiton> is that the signs are this isn’t working perhaps as well as they may have hoped.

Certainly Chinese trade numbers show that Australia in particular has increased market share in iron ore imports, but the momentum may be stalling.

In the first four months of the year, Chinese imports of the steel-making ingredient from Australia were 195.845 million tonnes, or 63.7 percent of the total 307.282 million tonnes.

Keep Metal Prices Lower for Much Longer – by David Stringer (Bloomberg News – June 3, 2015)

June 3, 2015

http://www.bloomberg.com/

BHP Billiton Ltd. delivered a sombre warning to global commodity markets that oversupply is very much here to stay. Tumbling prices are creating a testing environment for commodity producers, while demand is slowing to more routine levels amid a transition in China’s economy away from investment-led growth, the world’s biggest mining company’s Chief Executive Officer Andrew Mackenzie said Wednesday.

“In many markets, recently installed low-cost supply can now be stretched to meet growing demand,” Mackenzie said in a speech in Canberra. “Incremental supply, induced during periods of higher prices, will take longer to absorb and this means over-supply may persist for some time.”

Expansion by the biggest iron ore producers, including BHP and Vale SA, will see a global surplus swell to 215 million tons in 2018 from 45 million this year, UBS Group AG estimates. Teck Resources Ltd. plans to idle six Canadian coal operations amid a slump in prices and demand.

“The speed at which prices have returned to long run levels for each commodity has varied as a function of the time taken for low cost supply to come to market,” Mackenzie said.

Mine closures, job losses on Brazil’s iron ore frontline – by Stephen Eisenhammer (Reuters U.S. – June 1, 2015)

June 2, 2015June 2, 2015

http://www.reuters.com/

CONCEIÇÃO DO MATO DENTRO, Brazil, June 1 A giant truck carries chunks of sparkling mountainside to a web of yellow conveyor belts at a huge mine in eastern Brazil, a few more hundred tonnes of iron ore that are good for its owner Anglo American but bad for a battered global market.

Part of a new generation of massive mines contributing to a supply glut, the Minas-Rio mine has the scale and modern design to produce iron ore, the main ingredient in steel, at well below the costs of more traditional projects.

“We’ll be competitive wherever the price is,” Paulo Castellari, the iron ore head for Anglo in Brazil, said on a recent visit.

But only a four-hour drive away, in the sleepy town of Itatiaiucu, workers at older mines are being laid off. Almost everyone in the town of 12,000 people follows the price of iron ore and for the last year they have watched it drop in half to near the lowest level in a decade. With it, about 20 percent of mining jobs in the town have been cut, the local union says.

“I go to work every day wondering if I’ll be next,” said José Roberto, 55, who has worked for 27 years at a local mine now owned by steelmaker ArcelorMittal, where the union says 30 of about 300 workers have been laid off in recent months.

China Inc circling Australian iron ore – by Tess Ingram (Sydney Morning Herald – June 1, 2015)

June 1, 2015

http://www.smh.com.au/

The sustained lull in iron ore prices has put iron ore miners under considerable pressure, with Chinese investors circling distressed Australian companies.

Chinese investors are circling distressed Australian iron ore miners, according to local dealmakers fielding growing interest in the commodity’s struggling mid-tier ranks.

The sustained lull in iron ore prices has put iron ore miners under considerable pressure, causing market values to plummet and a handful of Australian producers to suspend operations.

The price of iron ore has slumped close to 50 per cent in the past 12 months to hover at around $US63 a tonne, after slumping as low as $US47 a tonne in April.

Against this backdrop, an increasing number of Chinese entities had expressed interest in providing debt or equity to iron ore miners, acquiring an asset or attempting a takeover, Minter Ellison West Australian managing partner Adam Handley said.

Finding Minnesota: The ‘Grand Canyon Of The North’ – by Mike Binkley (CBS Minnesota – May 31, 2015)

June 1, 2015

http://minnesota.cbslocal.com/

HIBBING, Minn. (WCCO) – This year, thousands will take a side trip to a giant hole in the ground in northern Minnesota that locals like to call “the Grand Canyon of the North.”

It’s not a natural wonder. It’s a panoramic collection of cliffs, ridges and valleys that have all been carved up by humans. The Hull Rust Mahoning Mine on the edge of Hibbing is the second largest open pit iron ore mine in the world.

Beauty was not the main objective when miners first arrived there in the 1890s, but after 120 years of blasting, digging and hauling, beauty is what many visitors see. Anne Varda, whose family includes three generations of miners, is now president of the adjacent tourist center.