Rio Tinto – Page 31 – Republic of Mining

The iron ore price equation that makes Fortescue attractive for China – – by Anne Hyland (Australian Financial Review – May 29, 2015)

May 29, 2015

http://www.afr.com/

CITIC Group and Baosteel Group, which are said to be interested in Fortescue Metals Group, are two of the most politicised companies in China. Baosteel is China’s leader in the steel industry and CITIC was anointed to make significant investments outside China, such as the $10 billion Sino Iron project, which has been described as the worst mining investment in Australia in the past decade.

What is almost certain is that CITIC and Baosteel, which is developing an iron ore project with Aurizon, won’t bid against each other for Fortescue or other resource companies. It would be politically unpalatable in China and it’s typically not what China Inc does.

While there would be a dozen companies in China capable of taking out Fortescue, only one would get the green light, say veteran China observers.

At the Stockbrokers Association conference on Thursday, Li Xinchuang, president of the China Metallurgical Industry Planning Association, firmed up speculation with comments that Fortescue would benefit from a Chinese investor, while saying he didn’t believe the argument that there was a global oversupply of iron ore.

Australia’s Scrapped Iron-Ore Inquiry Fires Up Debate Over Output – by Rhiannon Hoyle (Wall Street Journal – May 24, 2015)

May 25, 2015

http://www.wsj.com/

Questions loom over who should control Australia’s natural resources: the nation, or the private companies that own and operate them

SYDNEY—The Australian government’s decision to reject an inquiry into the iron-ore market capped a tumultuous week during which a bitter debate over the industry’s relentless output expansion, despite sinking prices, has dominated the national discourse.

At the heart of the issue: whether a country’s natural resources belong to the nation, or the private companies that own and operate them.

Australia’s Prime Minister Tony Abbott earlier this month backed calls for the parliament’s economics committee to investigate claims that mining giants BHP Billiton Ltd. and Rio Tinto PLC have been driving down iron-ore prices by boosting production in a way that undermines their smaller competitors, as well as harming the country’s economy.

But in a sign of the rift within government itself over the issue, Australia’s Treasurer Joe Hockey late Thursday officially nixed any plans for an inquiry.

His decision followed an unusually outspoken campaign by the normally publicity-shy mining majors, with BHP’s Chief Executive Andrew Mackenzie saying any probe would be “a ridiculous waste of taxpayers’ money.”

Forrest fire: Twiggy’s secret bid to salvage iron ore price – by Andrew Burrell and Paul Garvey (The Australian – May 23, 2015)

May 25, 2015

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

For the second time in five years, Andrew Forrest has been comprehensively out-lobbied, out-manoeuvred and out-muscled in Canberra’s halls of power by his despised rivals BHP Billiton and Rio Tinto.

The billionaire chairman of Fortescue Metals Group is seething at being snookered again by two multinationals he believes are hellbent on pushing him out of business by driving down the iron ore price.

“This won’t be the end of it — he won’t stop now,” said a close ¬associate of Forrest’s after Joe Hockey bowed to the demands of BHP and Rio by announcing on Thursday that there would be no ¬inquiry into the iron ore market.

Another was more blunt: “He will keep going — he actually believes his own bullshit.”

Sure enough, at the crack of dawn yesterday, the indefatigable Forrest hit the national airwaves from Perth in a bid to reboot his campaign, suggesting BHP and Rio had sent “plane loads” of ¬lobbyists to Canberra in recent days to convince the government to call off the planned inquiry.

Mongolia to be transformed by giant Rio Tinto copper mine – by Andrew Critchlow (The Telegraph – May 23, 2015)

May 25, 2015

http://www.telegraph.co.uk/

Land of Genghis Khan to become global copper superpower after mega deal to build giant underground Oyu Tolgoi mine

On the face of it, Mongolia – a landlocked and wild land – hasn’t changed much since Genghis Khan and his Golden Horde pillaged their way across Asia in the 13th century. The country’s population is still predominantly made up of nomadic herders living in yurts and drinking airag – fermented mare’s milk.

But this is all about to change after an agreement was reached between the government and Rio Tinto last week to develop one of the world’s largest copper and gold mines at Oyu Tolgoi, which literally means Turquoise Hill. The development of the mine is expected to trigger a rush to exploit $1 trillion (£638bn) worth of mineral resources that are thought to exist in the country and drag its mainly agrarian society into the modern age.

Signs of this transformation are already apparent on the streets of the capital Ulan Bator where around 40pc of the country’s 2.8m population now live. Skyscrapers and new office developments across the city are confronting signs of the impending change that the arrival of the mining industry will bring. Oyu Tolgoi is at the forefront of this new era, which according to the Chimediin Saikhanbileg, the prime minister, will “benefit Mongolian citizens for generations to come”.

Fortescue’s Andrew Forrest maintains iron ore rage – by Paul Garvey (The Australian – May 22, 2015)

May 22, 2015

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

Fortescue Metals Group founder Andrew Forrest has vowed to continue his calls for greater scrutiny of mining giants BHP Billiton and Rio Tinto, despite the federal government’s official rejection of an inquiry into the iron ore market.

Joe Hockey yesterday declared that the inquiry — originally supported by Tony Abbott — would not go ahead, drawing an angry response from Mr Forrest.

The billionaire mining entrepreneur, who has been campaigning for months for governments to pressure BHP and Rio over their strategy to continue lifting iron ore production, said the “hysterical” lobbying of multinational mining giants caused the inquiry to stall.

In an opinion piece written for The Australian, Mr Forrest questioned what the mining giants had to fear from an inquiry.

“Those that paint me as an interventionist from behind their Singapore tax shields know the iron ore industry is an oligopoly in which the big three each wield more market power than Saudi Arabia in oil and where the barriers to entry are huge and built on decades of subsidies,” he said.

[Australia iron mining] Friends, countrymen, lend me your ores – by Richard Denniss (Brisbane Times – May 22, 2015)

May 22, 2015

http://www.brisbanetimes.com.au/

Richard Denniss is an economist and executive director of The Australia Institute.

Australia has a bigger share of the seaborne coal market than Saudi Arabia has of the world oil market. And Australia has a bigger share of the seaborne iron ore market than all of the OPEC counties combined have of the world oil market. Everyone knows that if OPEC doubled their oil supply the world oil price would fall. Yet Australians are being told that our decision to double our iron ore exports between 2007 and 2014 had no impact on the price of iron ore.

Someone is talking crap.

While it’s hard for mere mortals to turn water into wine, it’s easy to turn wine into water. Just take a glass of wine, add a very large quantity of water and, hey presto, you’ve got water. But if you add water, one drip at a time, to a glass of wine, it’s virtually impossible to decide when it stopped becoming wine and started becoming water.

So what’s watery wine got to do with the price of iron ore? Lots.

Between 2005 and 2014 Australia built or expanded almost 400 mines. Not surprisingly, doing so put enormous pressure on the cost of the labour, capital and raw materials need to build them.

Gloomy Mining Chiefs See Copper-Tinted Light at End of Tunnel – by Firat Kayakiran, Jesse Riseborough and Agnieszka De Sousa (Bloomberg News – May 21, 2015)

May 22, 2015

http://www.bloomberg.com/

The world’s biggest mining companies haven’t agreed on much lately as they argue about how to deal with a glut of iron ore and coal. When the subject turns to copper, however, they’re on the same wavelength.

Executives of BHP Billiton Ltd., Antofagasta Plc, Rio Tinto Group, Freeport-McMoRan Inc. and Glencore Plc all pointed to copper in comments this month as the one commodity not dogged by oversupply. Demand is proving resilient, according to analysts who cite China’s response to a slowdown in economic growth by sanctioning a number of previously delayed infrastructure projects.

“If you’re looking for a single structural long-term bullish argument for owning a commodity, just look at copper,” said Clive Burstow, who helps manage $44 billion at Baring Asset Management in London.

In an interview last week, the head of the world’s largest mining company painted a gloomy picture for the industry. BHP’s Andrew Mackenzie said that in all the minerals markets in which it operates, any demand increase can too “easily” be met by expanding existing mines. One exception he sees is copper.

Vale iron ore deal a ‘reminder’ for Australia: Roy Hill – by Tess Ingram (Sydney Morning Post – May 22, 2015)

May 22, 2015

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

Roy Hill chief executive Barry Fitzgerald has said the iron ore expansion deals Brazilian miner Vale inked with China this week are a reminder Australian producers need to remain competitive in the global iron ore market.

Mr Fitzgerald, the man responsible for the development of Gina Rinehart’s $10 billion Roy Hill mine, joined majors BHP Billiton and Rio Tinto in warning of the Brazilian iron ore producer’s growing competitiveness with its Australian rivals.

“What it does remind me, and it should remind all of us, that we in the mining industry are in a competitive, international business,” Mr Fitzgerald told a Morgans Financial breakfast in Perth on Friday. “What we do needs to reflect the pressures and the actions of our competitors.”

On Tuesday, China agreed to fund Brazilian iron ore giant Vale’s major S11D expansion and invest in huge ships that will transport high-quality ore from Brazil to Asia for a lower cost.

The project, which should be finished next year, is expected to produce 90 million tonnes of high-quality iron ore at a unit cost of $US11 a tonne. Vale also announced this month it would begin shipping a blended product – Brazilian Blend fines – with an iron content of 63 per cent.

Tony Abbott and Joe Hockey lose their way on iron ore – by Jennifer Hewett (Australian Financial Review – May 21, 2015)

May 21, 2015

http://www.afr.com/

Pick your dollar-per-tonne figure. After a minor recovery from recent lows, the iron ore price seems to be at risk of falling back again. Certainly, there’s no sustained improvement in sight. Pick your reason.

The inevitable volatility of a global commodities market? Or Chinese futures traders relying on sentiment about oversupply, thanks to Rio Tinto and BHP Billiton’s statements about future production? Or Brazil’s iron ore industry receiving new assistance from the Chinese government? Or the big miners’ success beating back Andrew Forrest’s complaints and initial prime ministerial enthusiasm for an iron ore inquiry? Or a combination?

Australia’s most senior politicians are obviously confused about the right answer. The government’s formal backing away from an inquiry on Thursday just confirmed a belated and clumsy attempt by Tony Abbott and Joe Hockey to extricate themselves from a political contradiction. They had backed an inquiry after being persuaded by a powerful combination of forces, ranging from Forrest himself, to a ravaged budget, to radio broadcaster Alan Jones criticising the damage to the national interest.

At the time, they also thought a government-led inquiry would be better managed than the prospect of another Senate inquisition dominated by Labor and independents.

China to bankroll Vale iron ore expansion – by Amanda Saunders (Australian Financial Review – May 20, 2015)

May 20, 2015

http://www.afr.com/

China will help to bankroll a major expansion by Brazilian iron ore giant Vale and invest in huge Vale ships that will transport high-quality ore to North Asia – a deal that will reshape the global industry and put more pressure on Fortescue Metals Group.

On a state visit to China with Premier Li Keqiang, Chinese officials agreed to invest in up to eight of Vale’s huge iron ore carriers, known as Valemax ships.

More importantly, China will loan the company up to $US4 billion ($5 billion) to help fund a $US16.5 billion expansion called S11D. The project, which should be finished next year, will produce 90 million tonnes of high-quality iron ore that will be shipped to China at a cost almost as low as that achieved by industry leader Rio Tinto.

While Fortescue’s Andrew Forrest has repeatedly attacked BHP Billiton and Rio for continuing to expand into a weak iron ore market, Brazil’s plans are accelerating.

Vale plans to increase capacity to 450 million tonnes as early as 2018 from 330 million tonnes this year. Its expansion easily eclipses the combined tonnes BHP and Rio will put into the market over the next three to four years.

Friends desert Andrew Forrest on calls for iron ore inquiry – by Paul Garvey and Andrew Burrell (The Australian – May 20, 2015)

May 21, 2015May 20, 2015

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

Fortescue Metals Group chairman Andrew Forrest appears increasingly isolated in his campaign for a parliamentary inquiry into the iron ore market, with even West Australian Premier Colin Barnett, an outspoken critic of BHP Billiton and Rio Tinto, rejecting the proposal.

In a major blow to the billionaire, Tony Abbott yesterday backed away from his previous support for an inquiry to investigate allegations that the Fortescue Metals Group chairman’s main rivals, Rio Tinto and BHP Billiton, have driven down the iron ore price and tried to push smaller players out of business by threatening to flood the market with iron ore.

Mr Forrest last night hit out at the major miners’ efforts to derail the inquiry push. “You’d have to say the reaction from BHP and Rio to an inquiry is nothing short of hysterical,” Mr Forrest told The Australian.

“I’ve never seen two sensible, conservative companies work so hard to be less transparent.” The Prime Minister distanced himself from the inquiry calls, four days after he warned of “predator behaviour” that needed examining. Mr Abbott said the government hadn’t made any decision on the inquiry, which had met resistance from Resources Minister Ian Macfarlane and Trade Minister Andrew Robb.

Iron ore miners should leave the market if they can’t compete – by Richard Heaney (The Conversation U.S. Pilot – May 19, 2015)

May 20, 2015

http://theconversation.com/us

Richard Heaney is the Winthrop Professor at University of Western Australia

Iron ore prices are plummeting, federal budget tax receipts are shrinking and Fortescue Metals Group chairman, Andrew “Twiggy” Forrest, reckons he knows who is to blame: BHP Billiton and Rio Tinto.

Forrest says these competitors drove down prices by flooding the market with product and has pushed for a federal parliamentary inquiry into their actions – a prospect Prime Minister Tony Abbott is said to be considering.

Forrest told ABC RN Breakfast last week that, “When the chief executives of two of the most important companies to Australia both talk the market down, both say they’re going to oversupply the market there’ll be a lot of collateral damage to the Australian economy, employees by the tens of thousands, companies, and we no longer have a free market.”

On Tuesday, BHP Billiton CEO Andrew Mackenzie responded by saying his firm has been a “very responsible fair producer” that had already partially slowed production, adding that:

Rio Tinto’s Andrew Harding ‘stunned’ by Twiggy Forrest’s iron ore war – by Matthew Stevens, Julie-anne Sprague, John Kerin and Ben Potter (Sydney Morning Herald – May 20, 2015)

May 19, 2015

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

Rio Tinto iron ore chief executive Andrew Harding says he is stunned by the public campaign waged against the company by rival Fortescue Metals Group.

Mr Harding denied Rio Tinto is flooding the market with iron ore and expressed deep frustration with Fortescue founder Andrew Forrest’s aggressive public relations campaign, which he believes is winning political support by distorting reality.

Mr Forrest has led a public campaign against Rio Tinto and BHP Billiton for weeks that has won the support of Prime Minister Tony Abbott, who is supporting a parliamentary inquiry into the iron ore industry and the nation’s biggest taxpayers against several of his own cabinet ministers.

Mr Harding said there could be “extraordinary” ramifications for Australia in its strong reputation for promoting free and open markets.

“It is stunning. I am absolutely stunned,” he said in an interview. “As I keep saying, there is a reality dysfunction. The commercial reality of it all gets overlaid by the claim ‘that is rubbish’ and ‘that is not how it works’, but no one ever goes on to explain how it works in the alternative.

UPDATE 4-Rio Tinto, Mongolia end stand-off to build huge copper mine – by Terrence Edwards and Sonali Paul (Reuters U.S. – May 19, 2015)

May 19, 2015

http://www.reuters.com/

ULAN BATOR/MELBOURNE, May 19 (Reuters) – Mongolia and Rio Tinto have reached an agreement paving the way for work to resume on a stalled $5 billion underground copper mine that is expected to drive growth for both the country and the global miner.

The Oyu Tolgoi project, which started producing from an open pit mine two years ago, is the biggest single foreign investment in Mongolia, and resolution of the disputes over the second phase has revived hopes for a string of other stalled mining projects.

Rio Tinto’s Turquoise Hill Resources arm owns 66 percent of Oyu Tolgoi, while the Mongolian government owns the remainder. Rio is operator of the project, located in the Gobi desert near Mongolia’s border with China.

Vancouver-based Turqoise Hill shares leapt by as much as 11 percent to C$5.80 on the Toronto Stock Exchange on Tuesday after Rio Tinto announced the agreement on Monday which it said was signed by itself, Turquoise Hill and the government of Mongolia.

Turqoise Hill shares were last trading at $5.49, 4.8 percent higher on the day. “There is no doubt that moving forward with the Oyu Tolgoi project will improve the investment climate in Mongolia,” Prime Minister Chimediin Saikhanbileg said in a statement.

Rio Tinto puts aluminium assets on block in potential $1bn deal – by James Wilson and Neil Hume (Financial Times – May 17, 2015)

May 19, 2015

http://www.ft.com/intl/companies/mining

London – Rio Tinto is making a fresh attempt to sell unwanted aluminium assets in a potential $1bn deal, the latest sign of global miners’ attempts to restructure in the face of a commodities downturn.

The Anglo-Australian company has engaged Credit Suisse to find a buyer for its Pacific Aluminium business, a group of smelters in Australia and New Zealand, according to people aware of Rio’s plans.

The move is part of trend among mining groups, which are cutting back on non-core assets. BHP Billiton, the world’s largest mining company, is spinning off a collection of assets into a separate company called South32, which is due to start trading Monday.

Rio has not created a separate spinout vehicle but has sold $4bn of assets in the past two years, chief executive Sam Walsh said this month.

The company has tried to sell Pacific Aluminium, known as PacAl, in the past, but halted its efforts in 2013 after there was scant interest in its lossmaking operations. “The market was aware PacAl wasn’t going to sell . . . I am a realist. Let’s get on with life,” Mr Walsh said at the time.