Iron Ore – Page 79 – Republic of Mining

The Iron Ore Bust into a Housing Boom – by Greg Canavan (Daily Reckoning Australia – March 30, 2015)

March 30, 2015

http://www.dailyreckoning.com.au/

Irony is thick on the ground this morning as we head into a shortened Easter trading week. Just as Sydney property prices go absolutely bonkers, the iron price crashes.

Of course, revenue from the great iron ore boom helped to fuel the housing bonfire, along with regular petrol douses from RBA boss Glenn Stevens. But now, with iron ore crashing, property prices continue to detach from reality. It’s a cheap money driven boom if there ever was one.

In case you missed it, the benchmark iron ore price finished trading on Friday down US$2.22 to US$53.14, a new low. It was another dose of irony that probably knocked the price lower.

Last week, Fortescue Metals [ASX:FMG] Chairman and major stakeholder Andrew Forrest implicitly called on iron ore miners to form a cartel to control the price (and save his company from a slow death). Rio Tinto [ASX:RIO] boss Sam Walsh replied with scorn, which the market interpreted to mean that Rio will continue to dig up as much red dirt as it can. Hence the price crack on Friday.

The comments from Forrest indicate just how much damage the iron ore bear market is having on marginal cost producers. Aussie juniors won’t survive this price rout. It’s just a matter of time before they fold.

Petrobras Nominates Vale CEO as Its Next Chairman – by Will Connors and Luciana Magalhaes (Wall Street Journal – March 27, 2015)

March 27, 2015

http://www.wsj.com/

Brazilian state-run oil company is in the midst of a widespread corruption scandal

RIO DE JANEIRO—Brazil’s government on Friday nominated the chief executive of mining giant Vale SA as the next board chairman of state-run oil firm Petroleo Brasileiro SA, disappointing those who were looking for sweeping changes at the oil company that has been devastated by a kickback-and-bribery scandal.

Murilo Ferreira’s nomination will be voted on at the next Petrobras shareholders meeting on April 29. If approved, as expected, he will succeed Guido Mantega, Brazil’s former finance minister, who has headed the Petrobras board since March 2010. The company on Thursday said that Luciano Coutinho, head of the country’s development bank, known as BNDES, will serve as interim chairman of Petrobras until next month’s board vote.

A career employee of Vale, which was state-owned until 1997, Mr. Ferreira is a trusted ally of President Dilma Rousseff. His appointment isn’t likely to shake up a board that has served as a rubber stamp for the policies of her ruling Worker’s Party, investors and analysts said.

Critics have faulted Ms. Rousseff for using the oil giant to advance her administration’s agenda, including forcing the company to subsidize fuel for consumers and do business with Brazilian suppliers, moves that have cost the oil giant billions.

A Word From The Editor-in-Chief, March 27, 2015 – by Michael Stutchbury (Australian Financial Review – March 28, 2015)

March 27, 2015

http://www.afr.com/

Andrew Forrest’s eye-popping call for the world’s big iron ore producers to drive the iron ore price back up by capping their production shows what crazy things the desperate can do. Twiggy even made his “national interest” call in Shanghai, among Chinese buyers of the iron ore dug up by his own Fortescue, Rio Tinto, BHP Billiton and Brazil’s Vale and just as he was about to meet Xi Jinping.

The Fortescue founder is a man of bold ambition and enthusiasm: creating the third force in Australian iron ore, enlisting the Pope to help end modern slavery, and pushing Tony Abbott to narrow indigenous disadvantage. He won’t end up behind bars for his latest big idea, but he is calling for what both Joe Hockey and ACCC chairman Rod Sims suggested would be an illegal producer cartel. As our Matthew Stevens asked: What was Forrest thinking?

Twiggy’s call is a spectacular sign of Australia’s big iron ore price squeeze. Forrest became a billionaire in the 2000s by creating Fortescue on the back of the China boom that drove the iron ore price from US$20 or so a tonne to $US180 a tonne. Now supply has belatedly responded to the increased demand, the price has hurtled back into the US$50s. That’s crunching Fortescue’s margins and forced it to keep producing more to keep its head above water.

In fact, in the past four years, Fortescue has boosted output more than Rio or BHP. But that’s just kept driving down the price towards Fortescue’s cost of production.

COLUMN-Forrest’s iron ore cap “harebrained” or clever tactics? – by Clyde Russell (Reuters India – March 27, 2015)

March 27, 2015

http://in.reuters.com/

LAUNCESTON, Australia, March 27 (Reuters) – What’s the real thinking behind Andrew Forrest’s remarkable call for iron ore miners to cap production in order to boost prices?

It’s easy to dismiss the comment by the Fortescue Metals Group founder and chairman as “harebrained,” as did Sam Walsh, the chief executive of Rio Tinto, the world’s second-largest iron ore miner.

It’s possible that when Forrest told an audience on Tuesday in Shanghai that he was happy for iron ore miners to “cap our production right here and start acting like grown-ups”, he was merely having a thought-bubble moment.

But while Forrest, whose company ranks fourth in the world in iron ore output, has a reputation as a charming straight-shooter, it’s hard to imagine that he would be so careless as to float an idea that in all likelihood is illegal and would also bring scorn from his bigger rivals.

There is no doubt that debt-laden Fortescue has been hit harder than Rio Tinto or No.3 producer BHP Billiton by the collapse of iron ore prices, with the Asian spot price .IO62-CNI=SI marking a record low of $54.20 a tonne on Monday, before recovering slightly to $55.50 on Thursday.

UPDATE 2-Iron ore slump set to shrink China’s mining capacity – by David Stanway (Reuters U.S. – March 27, 2015)

March 27, 2015

http://www.reuters.com/

SHIJIAZHUANG, China, March 27 (Reuters) – A slide in iron ore prices is turning the screw on China’s fragmented mining sector, paving the way for closures and consolidation with three-quarters of the country’s mining capacity operating at a loss, industry officials said on Friday.

More mine closures in China, the biggest consumer of the steelmaking commodity, would increase its appetite for imported iron ore and help ease a global glut that has slashed prices by more than half in the past 12 months.

“I would like to thank the big four miners for driving prices down because it has given bigger domestic mines an opportunity and forced small miners to cut production,” Gao Yan, deputy general manager at the mining unit of Chinese steelmaker Angang Group, told an industry conference.

Top global producers Vale, Rio Tinto and BHP Billiton have boosted output despite falling prices, prompting No. 4 iron ore miner Fortescue Metals Group to propose limiting production. The commodity fell to $54.20 a tonne .IO62-CNI=SI this week, the lowest since records began in 2008, and Citigroup predicted prices will drop below $50.

Barnett, Rio chief join Rinehart to pan Forrest collusion plan – by Matt Chambers (The Australian – March 27, 2015)

March 26, 2015

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

Gina Rinehart’s Hancock Prospecting has rejected fellow mining billionaire Andrew “Twiggy” Forrest’s call for an Australian iron ore cartel, adding to industry condemnation that has included Rio Tinto chief Sam Walsh calling the scheme “hare-brained”.

West Australian Premier Colin Barnett, who has called for BHP Billiton and Rio to stop flooding the market with excess iron ore and said their strategy was “dumb”, has backed away from the notion of joint action between suppliers, saying it would be illegal.

Mr Forrest, chairman and founder of Perth’s Fortescue Metals Group, has come under investigation from the competition watchdog this week for declaring that Rio, BHP Billiton and Fortescue should unite to cut production to drive prices higher.

The plan, labelled “extraordinary” and “concerning” by Australian Competition & Consumer Commission boss Rod Sims and “absolute nonsense” by Mr Walsh, would benefit Hancock’s Roy Hill project if it pushed prices higher, as Mr Forrest claims it would.

But Mrs Rinehart, the nation’s richest person, rejects the call. “There is nothing Australia can do about price other than be ready for it, and from an Australian perspective that means driving down our costs,” Hancock executive director, and Mrs Rinehart’s right-hand man, Tad Watroba, said yesterday from Hong Kong.

Corporate Brochure: Vale leading with innovation and out of the box thinking (Endeaver Magazine – January 2015)

March 26, 2015

http://www.littlegatepublishing.com/category/business-profiles/

Headquartered in Brazil, Vale is a global mining company that has set themselves a mission to transform natural resources into prosperity and sustainable development. Standing as the second largest producer of nickel, they are also the leaders in the production of iron-ore and present in over thirty countries across the world. The company’s footprint is as indelible as the minerals they mine and with their recent construction of the Valemax ships, their footprint is set to deepen and extend even further.

“Our operations span five continents,” Claudio Alves, Global Director Sales and Marketing says, “And are diversified across several sectors including metals, coal, fertilisers, logistics, shipping, energy and mining.”

“The industry is one of the most important in the world,” he says, “And it is up to Vale to establish parameters to determine how we conduct ourselves ethically and sustainably.”As the head of marketing and sales, Claudio is a key figure in a highly competitive and at times, controversial industry.

With much being said about the ethics of sourcing and mining limited minerals from the earth, what is seldom mentioned is that ores and the refinement of them provides vital materials for a number of indispensable items such as mobile phones, computers and even large-scale airplanes. Manufacturers of these valuable assets rely on companies like Vale to provide them with high quality ore, which Vale takes great care to source ethically and sustainably.

DEALTALK-Brazil’s Vale likely to sell rail, ships before mining assets – by Stephen Eisenhammer and Guillermo Parra-Bernal (Reuters U.S. – March 25, 2015)

March 25, 2015

http://www.reuters.com/

(Reuters) – Brazil’s Vale SA may find it easier to dispose of giant ships and part of its stake in a rail logistics business before selling mining assets, as the world’s top iron ore producer looks to raise cash amid a price rout, according to four sources with knowledge of the situation.

Struggling with a slump in iron ore prices, Vale presented a list to investors in December of nine possible options to raise cash. Of the options, only a coal joint venture with Japanese trading house Mitsui & Co Ltd has been announced so far.

A number of the other eight options seem increasingly challenging as the risk associated with both Brazil and mining-related investments continue to mount, said three of the sources, who sought anonymity to speak freely about the matter.

At this point, selling a group of giant ore carriers known as Valemaxes, and disposing of a part, or all, of a 43.8 percent stake in rail freight firm MRS Logística SA seem the best options for Vale, those sources said. Vale declined to comment.

“The infrastructure and logistics play could help Vale unlock value more quickly than the mining assets, which markets are not pricing fairly,” the first source said, adding that “the cash impact of the former options is not great, creating a dilemma for the company.”

Dayton: ‘Outdated’ clean water standard could doom mining industry – by Tom Scheck (Minnesota Public Radio – March 24, 2015)

March 24, 2015

http://www.mprnews.org/

Gov. Mark Dayton is siding with U.S. Steel in a battle over water pollution standards for the company’s taconite facility in Mountain Iron. In an interview with MPR News, Dayton said the existing sulfate standard aimed at protecting wild rice is out of date, and pushing it could be catastrophic for northeastern Minnesota.

As the Minnesota Pollution Control Agency prepares to release new environmental standards, U.S. Steel is lobbying the Legislature to delay the implementation of a clean water standard aimed at protecting water where wild rice grows.

The existing state standard prevents companies from discharging more than 10 milligrams of sulfate per liter of water. But company lobbyists and Iron Range legislators say the standard is too low. With his latest comments, his strongest to date on the long-running debate, Dayton is joining that group.

“Some people will say, ‘you’re going to abandon the standard,'” Dayton said. “But if the standard is obsolete and it’s not validated by current science and information, then to stick with it and close down an industry isn’t really well advised.”

Dayton said the sulfate standard is outdated and has rarely been enforced since it was first established in 1973. U.S. Steel’s Minntac plant was facing the new standard as it renewed a decades-old permit — something U.S. Steel said would cost hundreds of millions of dollars in upgrades.

COLUMN-Commodity price boom over, volume boom gathers pace – by Clyde Russell (Reuters U.S. – March 19, 2015)

March 19, 2015

http://www.reuters.com/

LAUNCESTON, Australia, March 19 (Reuters) – It’s become conventional wisdom that the commodities boom is over, and while the era of rising prices is gone, figures from the Australian government suggest the surge in volumes is well under way.

Exports of iron ore will jump 22.5 percent between the 2014-15 fiscal year and 2019-20, while liquefied natural gas (LNG) shipments will triple, according to the latest quarterly report from official forecaster, the Department of Industry.

Even the pressured coal sector is expected to post gains, with thermal coal exports climbing 16.6 percent over the period and those of metallurgical grades rising 7.3 percent.

Australia is the world’s top shipper of iron ore and metallurgical coal, number two in thermal coal and soon to take the lead in LNG, once the seven gas projects under construction are completed. But while the report, released on Wednesday, is relatively bullish about the outlook for export volumes, it’s another matter when it comes to prices.

Iron ore will average $60.40 a tonne in 2015, dropping to $56.80 next year before recovering to $64.60 in 2017, the department said. It expects the price recovery to continue to 2020, when it will reach $81.80 a tonne.

Bearish Bets on Vale Surge to Record High as Iron Ore Retreats – by Julia Leite and Juan Pablo Spinetto (Bloomberg News – March 18, 2015)

March 19, 2015

http://www.bloomberg.com/

(Bloomberg) — Traders are increasing bets that Vale SA is poised for further declines after its shares hit a 10-year low.

Short interest in American depositary receipts from the world’s largest iron-ore producer jumped to a record 27.4 percent of shares outstanding Monday, according to data compiled by London-based Markit and Bloomberg. The ADRs added 0.2 percent to $6.12 at the close of trading in New York, paring losses in 2015 to 25 percent. They dropped 46 percent in 2014.

Prices for iron-ore, a key ingredient in steelmaking, have plunged 71 percent since peaking in 2011, helping send Vale shares to the lowest since November 2004 last week. Demand for the material hasn’t kept up with increased production by Vale and rivals Rio Tinto Group and BHP Billiton Plc amid a slowdown in economic growth in China, the biggest consumer.

“People are concerned, with some investors betting there’s too much iron ore and not enough Chinese demand,” said Ari Santos, an equity trading manager at H. Commcor in Sao Paulo. “And if ore falls, Vale suffers.”

China, which accounts for about half of Vale’s shipments and for more than two-thirds of global iron-ore imports, has set a 2015 economic expansion goal of about 7 percent, the lowest in more than 15 years.

‘Terrible timing’: Gina Rinehart bets on iron ore rebound with $13b mine (Sydney Morning Herald – March 18, 2015)

March 18, 2015

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

Gina Rinehart is digging what will likely be the world’s last big iron ore mine for years to come in the Australian outback. The timing couldn’t be worse for the billionaire mining heiress given tumbling prices and oversupply, but the message for other iron ore miners is clear – the fight for survival is going to get more difficult.

Since construction of the $13 billion Roy Hill mine began four years ago in partnership with South Korean steelmaker POSCO , Japan’s Marubeni Corp and Taiwan’s China Steel Corp, iron ore prices have slumped 70 per cent and forecasters see worse to come.

Blueprints for new mines are being abandoned from Australia to Guinea, with a West Africa mine shelved this month after Ivan Glasenberg’s commodities group Glencore conceded there was no prospect for a “profitable development”.

“If someone was to walk up today and say ‘I want to develop an iron ore mine,’ you’d think they were crazy or know something others don’t,” said James Wilson, an analyst for Morgans Financial in Perth.

Analysts blame a massive rise in production on overestimates of China’s appetite for imported ore by sector titans Vale of Brazil, Rio Tinto and BHP Billiton .

Fortescue Pulls $2.5 Billion Bond as Price War Hits Iron Ore – by Benjamin PurvisBrett Foley (Bloomberg News – March 17, 2015)

March 18, 2015

http://www.bloomberg.com/

(Bloomberg) — Fortescue Metals Group Ltd., the world’s fourth-largest iron ore exporter, pulled plans to refinance some of its debt with a $2.5 billion bond as tumbling prices for commodities spook investors.

The stock hit a six-year low in Sydney trading Wednesday, matching the plunge in iron ore and crude oil prices, after the producer said the sale had been scrapped, citing volatile U.S. credit markets and a failure to achieve the terms it wanted.

Iron ore sank 47 percent in 2014 and extended losses this year as surging supplies from Fortescue, BHP Billiton Ltd. and Rio Tinto Group, outpaced demand growth, spurring a surplus just as economic growth slowed in China, the biggest buyer.

“This iron ore capacity war, the race to the bottom was always going to shake the tree and maybe we are starting to see that in earnest,” Evan Lucas, a markets strategist in Melbourne at IG Ltd., said by phone. “And it’s probably going to get worse before it gets better.”

Australia, the world’s biggest exporter of iron ore, on Wednesday cut its price forecast for 2015, saying the raw material will average $60 a metric ton, down from its estimate of $63 in December. Macquarie Group Ltd. overnight cut its forecast for the year by 20 percent to $54.

Iron ore strategy the road to ‘self-destruction’, warns Cliffs chief – by Paul Garvey (The Australian – March 12, 2015)

March 12, 2015

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

AUSTRALIA’S big iron ore miners are on a path towards “self-destruction” and could leave the country with a case to answer before the World Trade Organisation, the head of North America’s largest iron ore miner has warned.

Lourenco Goncalves, chief executive of US iron ore miner Cliffs Natural Resources, yesterday told the Global Iron Ore and Steel Forecast conference in Perth the surge in iron ore supply from producers such as BHP Billiton, Rio Tinto and Fortescue Metals could send the price of Australia’s most important export to permanently lower levels.

Iron ore prices have more than halved in the past year as surging production swamped cooling demand, although the key iron ore index rebounded slightly yesterday to end a six-day losing streak.

Mr Goncalves said the price of seaborne iron ore shipped by Australian miners could halve again from about $US60 a tonne to as low as $US30 as a result of the major miners’ expansion strategy. “You call that strategy? I call it self-destruction,” Mr Goncalves said.

On Tuesday, Rio Tinto iron ore chief Andrew Harding and his BHP counterpart, Jimmy Wilson, defended their companies’ roles in the creation of the supply glut, arguing that each tonne of supply they did not deliver would have been filled with lesser-quality ore from elsewhere.

COLUMN-Who benefits from the iron ore supply glut? Nobody? – by Clyde Russell (Reuters U.S. – March 11, 2015)

March 11, 2015

http://www.reuters.com/

PERTH, March 11 (Reuters) – One question that skulks like an elephant in a room where the iron ore industry has gathered is who has benefited the most from bulging global supplies.

The Anglo-Australian pair of BHP Billiton and Rio Tinto are happy to tell you how they have successfully ramped up output at costs low enough to still rake in profits.

That was very much their message at this week’s Global Iron Ore & Steel Forecast conference in the Western Australia capital city.

The smaller miners suffering from the collapse in Asian spot iron ore prices are only too willing to speak of their battle to survive amid what they see as the destruction of the value of an industry that is Australia’s largest export earner.

The price of iron ore .IO62-CNI=SI hit its lowest on record on Tuesday, at $58 a tonne, with this year’s decline of 19 percent compounding last year’s slump of 47 percent.

Steel industry officials in China, the destination of two-thirds of the world’s seaborne iron ore, will also tell you how their industry suffers from overcapacity, poor profits and the economy’s shift to consumption-led growth.