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Saturday, July 16, 2011

Iron Ore-Spot extends gains on firm Chinese steel demand

* Spot offers for Indian iron ore rise for third day
* Steel mills continue to buy ore on strong steel demand
* Imported iron ore stockpiles at Chinese ports at record
* Fortescue sees Q3 shipments up at 12-12.5 million tonnes

By Ruby Lian and Manolo Serapio Jr

SHANGHAI/SINGAPORE, July 15 (Reuters) - Spot iron ore prices extended gains on Friday, driving a key global index to near two-month peaks, as steel mills in top producer China continued to restock the raw material in anticipation of strong steel output and demand.

Spot offers for Indian 63.5/63-grade ore rose for a third day, by another dollar to $182-$184 a tonne, including freight, said Chinese consultancy Umetal.

Quotes for Australian 62-grade Newman iron ore fines remained firm at $178-$180 a tonne.

"Steel mills have increased their buying in the face of strong steel prices and output, and miners also held on to their offers and wanted to push them higher," said an iron ore trader in eastern China's Shandong province.

China is accelerating construction of 10 million social housing units for low-income earners, helping prices of construction steel products like rebar sustain gains since late June.

"The price of steel is the major swing factor that is supporting iron ore prices, but I am concerned steel prices may temporarily lose momentum next week which could also cap gains in iron ore prices," the trader added.

The most active October rebar contract on the Shanghai Futures Exchange rose 1.3 percent for the week, gaining for a second straight week after rising to more than two-month highs on Wednesday. It closed little changed at 4,871 yuan ($754) a tonne on Friday.

Rising stockpiles of imported iron ore at major Chinese ports also suggest purchases could ease.

Imported iron ore inventories at major Chinese ports hit a record 94.04 mln tonnes in the week ending July 15, data from industry consultancy Mysteel said on Friday.

Strong demand from top consumer China pushed up iron ore output of Fortescue Metals Group , Australia's third-largest iron ore miner, by 8 percent to 12.38 million tonnes in the June quarter from a year ago.

Total shipments in the June quarter, which typically lag production, rose 6 percent to 11.5 million tonnes and are expected to rise further to between 12 million and 12.5 million tonnes in the current quarter.

Key indexes for iron ore with 62 percent iron, based on spot transactions in China and used by global miners Vale and Rio Tinto in setting quarterly contract prices, rose further on Thursday.

Platts 62-percent iron ore index IODBZ00-PLT edged up half a dollar to $176.25 a tonne, its highest since May 20.

A similar index by Metal Bulletin .IO62-CNO=MB gained 75 cents to $173.07, a level not seen since June 17. while The Steel Index's benchmark .IO62-CNI=SI was unchanged at $174.10.

Iron ore swaps <0#SGXIOS:> mostly fell after recent sharp gains.

The Singapore Exchange-cleared July contract fell 42 cents to $173 a tonne, August dipped 75 cents to $171 and September declined $1.17 to $169.33.
($1 = 6.458 Chinese yuan) sourced Reuters

Fortescue quarterly iron ore output up 8 pct, expansion on track

Fri Jul 15, 2011

* Fortescue says will ship 12 mln-12.5 mln tonnes iron ore in current quarter
* Says operates at 60 million-tonnes-per-year rate in June
* Average selling price in June quarter $158/dry tonne cfr
* Shipments in current quarter constrained

SYDNEY, July 15 (Reuters) - Fortescue Metals Group , Australia's third-largest iron ore miner, reported an 8 percent rise in June quarter production to 12.38 million tonnes from a year ago and said expansion work was on track to almost triple output over the next two-and-a-half years.

Total shipments in the June quarter, which typically lag production, rose 6 percent to 11.5 million tonnes and are expected to rise further to between 12 million and 12.5 million tonnes in the current quarter, Fortescue said in its quarterly production report.

Shipments in the current quarter were being constrained despite the forecast increase in shipments due to work on the company's port operations, according to the company.

Fortescue is one of several iron ore miners in Australia pushing up production to meet strong projected demand for the steel-making raw material in Asia.

Rio Tinto, Australia's largest producer, on Thursday said it had lifted its June quarter production by 12 percent as it targets full-year output of around 244 million tonnes. BHP Billiton is also expected to show a rise in quarterly output when it reports production on July 20.

Fortescue in June said it plans to speed up its expansion to 155 million tonnes of ore, originally set for 2014, by a year and has been progressively lifting its production rate, which reached 60 million tonnes a year in June, according to the company.

Fortescue said it sold its iron ore at an average price of $158 pre dry tonne, CFR, meaning that as the seller it pays cost and freight versus costs averaging $53.23 a tonne.

Nev Power, who succeeds Fortescue founder Andrew Forrest as chief executive on Monday, reiterated the company's expectations it will be three to five years before global iron ore prices are likely to soften in a conference call with media.

"While we do not see a specific date in terms of a turnaround, I think it will be a gradual increase in supply meeting demand and we will see some softening in prices... probably a three-to-five-year time frame," Power said.

The price represents a reduction on the $162 per dry tonne average selling price in the previous quarter. Fortescue said this was due to a slightly lower average index reference price and a varied product mix of ore during the June quarter.

Key iron ore indexes, based on spot transactions in China, rose to near one-month highs on Wednesday, with forward swaps also climbing on hopes spot prices will remain high

Iron ore with 62-percent iron content was currently quoted at $174.10 a tonne by the Steel Index . A similar price gauge by Metal Bulletin gained 50 cents to $173.07

The two indexes, based on spot transactions in China, have been rising since July 1, after a fall to three-month lows in late June.

Fortescue sells most of its ore to steel mills in China but has said it would like to see 25 percent of sales to non-Chinese buyers in coming years.

Fortescue shares were down 1.4 percent to A$6.34 at 0309 GMT, outpacing losses in the wider market .

TATA Sponge net profit declines by 13pct

Saturday, 16 Jul 2011

TATA Sponge Iron reported a decline of 13.05% in its net profit at INR 22.52 crore for the quarter ended June 30th 2011, mainly due to rising input costs.

As per report the company had reported a net profit of INR 25.90 crore during the same period in 2010-11. Net income of the company also declined marginally by 1.68% to INR 138.09 crore during the quarter as compared to INR 140.46 crore of FY'11.

Tata Sponge Iron in a filing to the Bombay Stock Exchange said that the company's expenditure on raw materials during the April to June quarter increased by 13.15% at INR 100.68 crore vis a vis INR 88.98 crore in Q1 of 2010-11.

(Sourced from ET)

JSW Steel to become largest steel makers in India soon

Saturday, 16 Jul 2011

JSW Steel is set to become the biggest steel maker in the country surpassing state owned Steel Authority of India Ltd by this month end after a key blast furnace is commissioned at its Vijayanagar of Karnataka, plant.

The company has already fired up the fourth blast furnace which will increase the capacity of the plant by 3.2 million tonne per annum to 10 million tonne per annum. Full scale production will begin by this month end.

A company spokesman said that “The blast furnace is not yet commissioned. Once it is done, we will make a formal announcement.”

The expansion will increase the total capacity of JSW to 14.3 million tonne per annum ahead of 14 million tonne per annum of SAIL. JSW has 1 million tonne per annum capacity at Salem and 3.3 million tonne per annum through its acquisition of Ispat Industries in December 2010, where the company owns up to 45%.

(sourced from DNAIndia)

POSCO Karnataka steel plant to be relocated

Saturday, 16 Jul 2011

The Karnataka government seemed to have succumbed to protests by a section of farmers at Halligudi in the Gadag district against POSCO steel plant.

Mr BS Yeddyurappa chief minister of Karnataka said that the state government has decided to stall the POSCO project in Halligudi.

He said that the decision will not be changed.

Mr Yeddyurappa told reporters that “We have put a full stop on Halligudi as far the steel plant of POSCO is concerned. There is no rethink on it. The company has asked us to give them land in some other place. We are searching for an alternative site in other districts and we will announce the decision in a week.”

Earlier Mr Yeddyurappa had said that “The POSCO plant will not come up in Gadag district, even if farmers come forward to give lands. The government will relocate the project elsewhere, where farmers voluntarily give land.”

(Sourced from BS)

Henan Coal Chemical Industry in Fortune 500 list

Saturday, 16 Jul 2011

It is reported that Henan Coal Chemical Industry Group Co Ltd a wholly state owned company in China Henan Province appears on the recent released Fortune 500 2011 list making it the first global 500 enterprise in the province.

After strategic reorganization, HNCC is now the largest and most profitable industrial enterprise in Henan. Given the limited coal resources in the region, the corporation seldom sells raw coal. Instead, it keeps trying to increase its value added product mix.

Mr Tang Yuanyou MD told the reporter that HNCC ranks 445 on the list with its revenue totaling CNY 146.991 billion in 2010.

He estimates HNCC coal output will reach a healthy 90 million tonnes in 2011 and exceeded 100 million tonnes in 2012. Then, it can boast of being a top national coal base and a real world class coal enterprise.

Mr Tang said the key to HNCC success is not merely resources, but how to utilize them. He said “We hardly do the low end market. Our raw coal is seldom sold outwards or used for power generation.”

The corporation owns over 40 billion tonnes of coal deposit, 1.2 million tonnes of molybdenum industrial reserve and 1.6 billion tonnes of domestic and foreign bauxite resources. Its molybdenum possession is the highest in China.

(sourced from

MMX advances on iron ore shipping and purchasing deal

Saturday, 16 Jul 2011

MMX Mineracao & Metalicos SA, the iron ore producer controlled by Brazilian billionaire Eike Batista rose after signing an agreement to purchase and ship raw material produced by a rival through one of its ports.

As per report Minerinvest Mineracao Ltda agreed to ship as much as five million tons of iron ore through Superporto Sudeste, a port MMX is building in Rio de Janeiro state, for 10 years starting in 2013, according to a regulatory filing. In exchange, MMX will buy the commodity used in steelmaking from Minerinvest at USD 64 a ton during the same period, a price that Bank of America Corp said that is below market.

Credit Suisse Group AG’s analysts Ivan Fadel and Carlos Louro wrote that “This is a very positive development for MMX’s shareholders. The deal will allow MMX to increase its iron ore sales capacity, without having to disburse any cash amount.”

The transaction needs to be approved by MMX’s and Minerinvest’s boards.

(sourced from

Strikes to escalate at BHPB BMA coking coal mines

Saturday, 16 Jul 2011

Close to 3,000 workers at BHP Billiton Ltd's coking coal operations in eastern Australia plan to increase the length and frequency of rolling strikes at seven mines the mining giant jointly owns with Mitsubishi Corp.

Mr Rohan Webb assistant state secretary of the Australian Manufacturing Workers' Union said that three unions jointly bargaining with the BHP Mitsubishi Alliance also plan a ban on 30 day unrostered overtime.

A dispute over a new employment deal for unionized workers, who make up about a third of the workforce at the mines in Queensland state, has dragged on for weeks, and workers have held rolling strikes of between six and 12 hours at a time at each of the mines.

Mr Webb said that "They want a decent agreement that provides job security, natural justice within the workplace, training and skills development, and equity for all workers.”

The labor dispute has supported prices for coking coal, which had been easing after a surge earlier in the year, when production from the coal-rich Bowen Basin in Queensland was disrupted by flooding, analysts have said. BHP's seven mines have an annual capacity of roughly 58 million tons output, almost a quarter of the global seaborne supply.

BHP Mitsubishi Alliance has offered a 5% yearon year wage hike for workers as part of a new three year employment agreement, but unions, have said they want equal pay for contract workers as employees and a say in recruitment, among other things.

(Sourced from Dow Jones Newswires)

Mozambi Coal to acquire Mozambican coal concession

Saturday, 16 Jul 2011

ASX listed African coal explorer Mozambi Coal has entered into a memorandum of understanding with Mozambican company Xiluva Mineral Resources to acquire 80% of a coal exploration licence in Tete province for USD 1.75 million.

The exploration licence covers an area of 224 square kilometers in the undeveloped Zambeze coal basin 115 kilometer west of the city of Tete. The concession has a target mineralization of 1.86 to 2.32 billion tonne over a 25.8 square kilometer area of the Lower Karoo coal bearing sediments.

To fund the acquisition and initial exploration, Mozambi has raised USD 1.875 million through a private placement with its major shareholder Polo Resources.

Mozambi holds a 70% interest in two other mineral exploration licenses in the Zambeze coal basin.

(sourced from coalportal)

Lucky Strike Resources to acquire 80pct of 6 Mongolian coal licenses

Saturday, 16 Jul 2011

Canadian based exploration stage company Lucky Strike Resources reported that it has signed definitive agreements with five private Mongolian companies to acquire an 80% stake in six mining exploration licenses and coal properties.

Under the agreement's terms, Lucky Strike will pay vendors USD 5.8 million in cash to acquire the 80% interest in the Choir-Nyalgia properties and commit USD 2.5 million.

It is estimated that Mongolia has potential coal resources of 162.3 billion tonnes and 20.3 billion of coal resources in the Choir-Nyalgia coal basin, which exported 18.2 million tonnes of coal last year.

(sourced from SXCoal)

Metinvest increases captive production of coking coal

Saturday, 16 Jul 2011

Metinvest announced plans to increase its in house production of coking coal, following the commissioning of Affinity Mine owned by its subsidiary United Coal Company.

The planned capacity of this coal mining unit will amount to 1.9 million tonnes of the highest quality coking coal with the mine expected to achieve the production targets by 2012.

Total volume of coal to be mined at United Coal Company in 2011 is expected to increase by 14% to 8.2 million tonnes. The volume of the US coal imports to Ukraine in 2011 is estimated at the level of 0.8 million tonnes of clean coal presenting a 250%YoY increase.

Mr Dale Birchfield President of Affinity Coal Company said “We are very pleased that this project which will comprise four super sections and a state of the art preparation plant has been fully completed on time. The mine opening ceremony is the culmination of joint efforts of our committed employees, contractors and the Norfolk Southern Railroad. We are particularly honoured to have the Board of Directors of Metinvest in attendance and appreciate their confidence in this strategically important project.”

The new mine opening ceremony was attended by Mr Earl Ray Tomblin Acting Governor of West Virginia, Mr Bill Raney the President of West Virginia Coal Association and the Mayor of Sophia Danny Barr who thanked the management of Metinvest and noted the growing contribution of the coal company towards job creation and regional development in West Virginia.

Within the framework of Metinvest Ukrainian coal assets development strategy, mining of coking coal is expected to increase by 7% to 6.2 million tonnes in 2011 compared to 5.8 million tonnes in 2010 and by another 5% to 6.5 million tonnes in 2012. The modernization programme of Krasnodon Coal Company, the second largest coking coal producer in Ukraine, envisages implementation of the best HSE standards in addition to coal extraction expansion. In 2011, Metinvest intends to spend UAH 930 million for these purposes, 1.3 times more than in the previous year.

Mr Igor Syry CEO of Metinvest said “The provision of the highest possible quality raw materials is essential for the improved efficiency of our steel production and maintaining the high competitiveness levels of our finished products. High quality input is one of the prerequisites for the stable growth of our business as well as the development of regions where we maintain a presence and the whole of Ukraine.”

Macarthur Coal agrees due diligence basis with Peabody and ArcelorMittal

Saturday, 16 Jul 2011

Macarthur Coal has put out the welcome mat to Peabody Energy Corporation and ArcelorMittal SA and agreed a basis for due diligence terms with BidCo.

As part of this agreement, BidCo has agreed that in the event that BidCo makes an offer at any time in the next 12 months:

1. The offer price will be no less than AUD 15.50 per share unless the Macarthur Board expressly consents otherwise or there is a competing offer

2. Up to AUD 0.16 per share of any final dividend for FY2011 declared by the Macarthur Board will not be deducted from the offer price

3. Offer conditions would be no more onerous than the offer conditions outlined.

Macarthur has already advised shareholders that the indicative proposal is not a binding offer, is not capable of acceptance and the board makes no recommendation in relation to the proposal.

The indicative proposal is subject to a number of conditions, including Foreign Investment Review Board approval, satisfactory due diligence investigations and the bid company achieving a relevant interest in at least 50.01% of Macarthur ordinary shares.

(sourced from proactiveinvestors)

Usiminas inks 30 year iron ore pact with MBL Materiais Basicos

Saturday, 16 Jul 2011

Brazilian steelmaker Usiminas said that it agreed to pay at least USD 1.16 billion to have long term access to iron ore resources, seeking to battle a surge in prices for the key steel ingredient.

Usiminas in a securities filing said that it signed an agreement to rent mining rights owned by MBL Materiais Basicos for the next 30 years. Usiminas will also buy 6 million tonnes of iron ore reserves at USD 12.50 per tonne from MBL, as well as a processing facility.

Mr Wilfred Bruijn who heads the unit responsible for mining at Usiminas in an interview said that "This deal with MBL is the first big step in our upstream integration strategy that will allow us to obtain as much iron ore to meet our needs and produce steel at competitive costs.”

The move reflects Mr Wilson Brumer CEO efforts to make Usiminas, Brazil's No 1 flat steel maker, self sufficient in iron ore and energy by 2015.

Neither company disclosed financial terms for the agreement.

(Sourced from Reuters)

Friday, July 15, 2011

Indian iron ore mining mess - Goa urges Karnataka to start supply of iron ore

Friday, 15 Jul 2011

DH reported that as half a dozen industrial units in Goa are starving for iron ore owing to Karnataka's ban on supply of high grade iron ore across its borders, Goa has requested Karnataka to lift the ban and allow transportation of iron ore to the state.

Mr TM Balakrishnan state industries secretary of Goa has written a letter to his counterpart in Karnataka urging him to lift the ban in force from June 15 this year.

Mr Balakrishnan in the letter said that "If the ban continues beyond next week, it will lead to closure of these units on account of halt in supply of raw materials, which may further lead to the loss of employment for a number of people.”

Goa Chamber of Commerce and Industry has also been constantly lobbying on behalf of these units to get the ban lifted. Mr Manguirish Pai Raiker chairman of GCCI stated that the Goa government is in the process of sorting out the issue, as it will affect the industries within the state.

As per report, 6 industrial units, dealing in sponge iron and pig iron, may face closure as they have run out of the high grade ore that used to be supplied from Bellary, Chitradurga, Sandur and Hospet regions of Karnataka.

(Sourced from Deccanherald)

Euro Coal-Sep DES ARA trades at $122.75/T

Fri Jul 15, 2011

LONDON, July 15 (Reuters) - Prompt physical coal prices remained stable on Friday with few trades seen or fresh news to give the market clear direction, traders and utilities said.

The annual summer lull in activity has already begun in earnest, traders said, in both the Atlantic and Pacific markets.

Coal swaps and physical values had dipped in early trade but recovered as oil moved higher on Friday afternoon.

Gas prices also tracked oil upwards .

"Volumes have stayed very low and coal's just kept following oil but there are fewer key players active in the market this week," one European utility source said.

Oil rose by just over $1.00 on Friday as the market focused on the potential for a weaker dollar amid concerns about U.S. budget talks meant to cut deficits.

Coal swaps and physical have been range-bound but tracking oil's with little movement in prices during the past week.

Until end-user demand in Asia picks up from China, Japan and India, prices will stay in much the same range but drift towards the lower end of it.

Indian traders who have switched as far as possible to cheaper Indonesian coal instead of South African material have been experiencing quality problems with some of the recent cargoes, which had a lower energy content and higher moisture than expected but so far they have held off from buying more South African coal to blend with it.

Until South African prices fall back below $110.00 a tonne this coal will be too expensive for the Indian market, traders said.


September delivery DES ARA traded via brokers at $122.75 a tonne, unchanged from Thursday.


September DES ARA cargoes were offered at around $122.75 after the earlier trade.

An August loading South African cargo was bid at $114.00 with no offer against it, also unchanged.

A September loading South African cargo was bid at $115.75 and offered at $117.25, unchanged.

(sourced Reuters)

International Coal oversubscribed in USD 9 million IPO

Friday, 15 Jul 2011

Having raised in excess of USD 9 million within four days of opening its IPO to the public, this is an auspicious beginning in life for soon to be listed International Coal and a testimony to the pulling power of its coal tenements in Queensland. Having raised in excess of USD 9 million within four days of opening its IPO to the public, this is an auspicious beginning in life for soon to be listed International Coal and a testimony to the pulling power of its coal tenements in Queensland.

International Coal is the clear leader of the IPO pack in recent months, with more than USD 9 million of stock snapped up at USD 0.20 by investors in the first four days of the offer, far higher than expected.

The impact from the investor interest has potentially provided the opportunity for International Coal to fast track an ASX listing to around July 22nd 2011, three weeks earlier than the proposed mid August listing.

The investor interest is likely to have been sparked by Bundaberg hard coking coal project tenements in the Maryborough Basin. It has a small JORC Resource of around 1.5 million tonnes, however the target is 380 million tonnes of coking coal at the project.

This is a growing hard coking coal precinct judging by its near neighbours that include Northern Energy, Guildford Coal and Ridge and Hancock Coal. Recent significant drill programs have been successful in defining coal.

A short term exploration program will focus on infill drilling and core testing at the Bundaberg Project. Adding longer term spice, International Coal also owns the South Blackall Project in the Eromanga Basin, a larger scale thermal coal target adjacent to East Energy's 1.2 billion tonne JORC Resource.

A scout drilling program and a comprehensive 2D seismic program will kick off smartly after listing at the project. Independent reports indicate the company’s projects to be highly prospective and an experienced exploration team has been engaged.

The objective is to get drilling in 2011 and prove up a JORC Resource in early 2012.

(sourced from ProactiveInvestors)

Radar Iron update on Die Hardy Range project

Friday, 15 Jul 2011

Radar Iron metallurgical test work at the company's Die Hardy Range project is delivering some encouraging results, including a 69.4% iron concentrate grade with 4.1% silica, for a mass recovery of 40.3%.

The results are based on 163 four meter composite samples and confirm preliminary results and most importantly the potential for the mineralization to be treated to produce a saleable concentrate.

Mr Jon Lea MD of Radar Iron said that "The relatively coarse grind size and excellent concentrate properties are highly encouraging."

Radar Iron continues to move exploration forward quickly at the project, with resource drilling over 2 kilometers of strike to continue before a resource estimation is undertaken, with a JORC Resource forecast for later this year.

Based on surface mapping, geophysical interpretation and drilling to date the exploration potential of the Die Hardy mineralization is estimated to be 700 million tonnes to 1,200 million tonnes at 29% to 33% iron.

The company will also conduct a Scoping Study in the December 2011 quarter to establish the projects viability, along with the required resource size, a preferred infrastructure route and power water solutions.

Radar Iron's projects are strategically located in the highly prospective Yilgarn iron ore province of Western Australia.

Radar Iron has secured access to the iron ore rights for tenements covering a total area of approximately 1,100 square kilometers and makes Radar one of the largest mineral rights holders in the region.

The Tenements are considered to be prospective for both hematite and magnetite mineralization. Radar Iron intends to rapidly access the iron ore potential for both hematite and magnetite mineralization of the tenements.

(sourced from ProactiveInvestors)

Oracle coalfields to deliver Thar Coal feasibility this quarter

Friday, 15 Jul 2011

Oracle Coalfields is making progress with its key Block-VI lignite Thar coalfield in Sindh as the company plans to deliver the definitive feasibility study by the Q3 of 2011 which could then be converted to the critical bankable feasibility study.

They said that more than 6,000 meters of drilling was carried out at Block-VI by the company between August 2010 and February as part of a field work program to support DFS of the area. Early indications are encouraging, suggesting Block-VI holds 1.4 billion tonnes resource with 371 million tonnes of reserves.

The sources said that Oracle might begin producing coal there by 2014 with the southern part of Block-VI, known as Phase I, considered to be the most suitable for the initial phase of open pit mining. Assuming a positive outcome to the DFS Oracle would have to raise the capital expenditure required for the project.

Alongside the importance of completing assessment of Thar and getting it into production, Oracle Coalfields is also very keen to supply coal for local power generation so it is not directly affected by changes in the international spot market price for coal.

It had already signed MoU with Karachi Electric Supply Company in December 2009. Under the terms of the MoU, the 2 parties have agreed to collaborate towards developing an initial 300 MW mine mouth power plant to be supplied with lignite coal from Block-VI.

They said that for long term contracting for Thar output in January 2010 Oracle Coalfields secured a potential off take deal with Lucky Cement, Pakistan’s major producer and exporter of cement whereby Oracle Coalfields will supply Lucky Cement’s kilns with coal as it develops the Block-VI project into a mine.

The sources said that MoU between Sindh Carbon Energy Limited and Mines and Mineral Development, Government of Sindh was signed in November 2007, regarding the exploration and development of Block-VI, Thar Coalfield. Subsequently an exploration licence was issued to SCEL.

The government has decided not to go for a cheaper and long term initiative to produce electricity by denying funds to the Thar Coal Underground Gasification project. The government had allocated a mere PKR 2.5 million for the project being taken care of by leading nuclear scientist and member Planning Commission, Dr Samar Mubarakmand.

They said that in the new public sector development program the paltry amount earmarked for a project of crucial importance for Pakistan is hardly anything compared to the estimated total cost of PKR 126.649 million which, only up to June is PKR 20 million.

(sourced from TheNews)

SAfrica steel firms, striking union reach deal

Fri Jul 15, 2011

* Steel workers to abandon strike from Monday
* Fuel sector strike rumbles on
By Agnieszka Flak

JOHANNESBURG, July 15 (Reuters) - South African steel and engineering firms reached a wage deal with the National Union of Metalworkers of South Africa (NUMSA) to end a two-week long
strike, a union official said on Friday, while a fuel sector strike showed no signs of ending.

Tens of thousands of steel workers downed tools nearly two weeks ago demanding a 13 percent wage rise -- almost three times the inflation rate and nearly double the employers' offer of 7

The companies and NUMSA met late on Thursday to discuss a proposal meant to bring them closer.

"There was an agreement reached last night," Lucio Trentini, operations director at the SEIFSA industry body, said. "The most important thing is that the agreement ends the two-week long
strike in the industry."

Workers are expected to start returning to work from Monday, and details of the settlement will be released next week, he added. Production and financial losses from the strike are expected to be substantial.

Strikes spread this week as several sectors joined industrial action in the petrol industry that has raised concerns about fuel supplies in Africa's biggest economy.

Tens of thousands of fuel workers began walking off the job on Monday, delaying deliveries and sparking panic buying at service stations in the economic hub of Gauteng province, which
includes Johannesburg.

Refineries are still operating and petrol is being delivered to most filling stations but a prolonged and widening strike could hurt the transport sector and impact economic growth.

Economists said the cost of the strike could run into the billions of rand should it continue into next week.

The Chemical, Energy, Paper, Printing, Wood and Allied Workers Union union said talks with employers were scheduled for Monday.

The latest to join the wave of strikes were 2,000 workers from Pioneer Food Group's Sasko Grain unit, the Food and Allied Workers Union said on Friday.

Unions and employers are locked in their mid-year bargaining session known as "strike season", with many labour groups seeking wage increases that far exceed inflation.

Central bank and Treasury officials have said high wage increases threaten the outlook for inflation, interest rates and the long-term prospects for the economy.

Possible strikes also loom in South Africa's platinum, coal and gold industries, threatening global supplies of the keycommodities at a time when prices are red hot. (sourced Reuters)

Peabody’s bid for Macarthur Coal is hardly a carbon tax endorsement

Prime Minister Julia Gillard has claimed that US-based Peabody Energy’s $5bn takeover bid for Queensland’s Macarthur Coal represents an endorsement for the government’s carbon tax.

But does Peabody’s bid indicate that international investors see a good future for coal in Australia?

Gillard’s claim assumes too much. Important aspects to consider include:


Macarthur Coal specialises in (although is not limited to) a coal product that is particularly useful in the production of steel. It accounts for 30% of the global trade in this niche market. Therefore, Macarthur Coal is not a “typical” coal mining company and as such this takeover bid does not indicate anything about the coal industry in general.

Takeover bids take a long time to formulate. Peabody’s announcement is a result of months, if not years, of work. Importantly, this is not Peabody’s first attempt to buy a controlling share in Macarthur Coal. This indicates that Peabody has harboured a desire to assume a controlling stake in Macarthur for a considerable amount of time.

Peabody may be of the opinion that the carbon tax scheme may not be legislated.

It may also be the case that Peabody has timed the takeover bid deliberately to capitalise on any concerns that shareholders may have about the future of the Australian coal industry. It is interesting to note that they are reportedly offering $15.50 a share which is lower than last year’s (initial) offer of $16.00 per share.

More broadly, another major question to address is whether the compensation for the coal industry enough.

Details of the compensation packages are still to be finalised. Current compensation plans include a jobs package and a coal mining abatement technology support package.

The current design of the proposed carbon tax scheme means that dependence on coal-fired electricity and coal mining in general will be reduced. Therefore, significant job losses will occur in this sector.

A report by ACIL Tasman suggests some mines will be at risk of closing prematurely and the economic contribution of new projects will be significantly inhibited as a result of a carbon tax.

Although the details are yet to be determined it is my opinion that compensation packages will be unable to offset the true economic costs. Coal is a very important sector that is interwoven into the Australian economy. It plays a particularly important role in regional areas where the effects of this policy will be felt most.
Future of the industry

There are three dimensions to the Australian coal industry. In each of these areas coal companies face significant challenges in the future if the package is approved.


Electricity generation. Treasury Modelling indicates that brown coal-powered electricity generation will be phased out in approximately 30 years, black coal-powered electricity generation will be either phased out or represent a very small proportion of aggregate electricity generation by 2050. It also shows that only a relatively small percentage of power generation is anticipated to be sourced from coal-fired power plants (new commercial-scale coal-fired power stations without carbon capture and storage technology will not be approved).

Construction. Coal is a key input into the cement manufacturing and steel making industries. These industries are key components of the construction industry. An increase in the cost of coal is expected to reduce output of these industries as profit margins shrink.

Exports. Competition in the international coal market is tight. Any increase in costs of production will significantly erode Australia’s international competitiveness. It is important to appreciate that Australia is not the largest producer of coal and therefore faces significant international challenges if the policy is implemented.

The imposition of a carbon tax will significantly decrease the level of economic activity in all three dimensions of the coal industry. This will have major ramifications for the Australian economy.
Importance of the coal industry

Results of a recent report a colleague and I authored for the Minerals Council of Australia measuring the economic effects of closing down the coal mining sector found this would cost almost 200,000 jobs across the economy, have a negative $6 billion impact on the federal budget, and reduce GDP by $29 billion to $36 billion. It’s worth noting this is a stated policy aim of the Greens.

In terms of potential output and lost jobs the cost of closing down the coal industry would be very high.

Interestingly, our findings also indicated that coal exports saved Australia from experiencing a technical recession.

The proposed carbon tax will significantly impede the economic performance of coal industry and thus represents a heavy cost to the Australian economy. (sourced TheConversation)

Vale dispute led to 200000 tonnes of cancelled shipments - Aquila

Friday, 15 Jul 2011

Reuters reported that an ongoing marketing dispute between miners Vale and Aquila Resources has so far cost 200,000 tonnes in lost shipments of steel making coal from the jointly owned Isaac Plains mine in Australia.

An Aquila spokesman said that "This has so far resulted in the cancellation of four shipments totaling about 200,000 tonnes of metallurgical coal."

The impasse comes after flooding in Australia's Queensland state coal belt earlier in 2011 had already hindered the mine's performance to reach its full production capacity of 2.8 million tonnes annually.

While production at the mine has continued and some individual sales have been completed, 50:50 owners Aquila and Vale have not been able to sell coal since November without the threat of either side taking legal action.

As a result, stockpiles of coal have mounted and Aquila has warned they would soon reach their limit if shipments did not resume, forcing the mine to shut. Vale could not be immediately reached for comment.

Mr Steve Badenhorst director of Vale's Australian coal operations in told Reuters that Vale was prepared to expand the capacity to stockpile coal if needed.

The dispute quickly emerged over the ability of Aquila and Vale to take their separate shares of coal from the mine and utilize port and rail capacity contracts.

The two companies have also been at odds over the price Vale will pay for exercising its option to buy Aquila's 24.5% interest in the separate Belvedere coal mine, which Aquila estimates will cost AUD 2.8 billion to develop.

Vale holds 75.5% and said a year ago it planned to buy Aquila's interest at fair market value.

(Sourced from Reuters)

Cokal inks deal with Empresa to develop metallurgical coal projects

Friday, 15 Jul 2011

Global metallurgical coal group Cokal Limited announced that it has signed a co operation agreement with Empresa Mogambicana de Exploragao Mineira to explore tenements in Mozambique for coal mining potential and jointly develop mines and associated facilities.

EMEM is a state owned corporation formed by the Mozambique government in order to participate in mining projects, undertake exploration and mining development as well as promoting value addition to mineral products. The formation of EMEM followed recognition by the Mozambique Government that coal was pivotal to the country's future economic development in the interest of all Mozambiquan.

Mozambique is poised to become Africa's major coking coal producer, and a major player in the world coking coal market, following the discovery of significant resources and reserves of hard coking coal preceded by major exploration programs by international mining companies including Vale (Brazil), Riversdale (Rio Tinto), Revubue (Nippon Steel, POSCO et al) as well as other programs.

Mr Jim Middleton CEO & MD of Cokal said that "Cokal is looking forward to a partnership in the Mozambique mining industry, where foreign investors are welcome, and facilitate building financial and technical capabilities within the country. The Agreement recognizes that combining Cokal's coal exploration and mining expertise with EMEM's geological knowledge, commercial acumen and local expertise, will be a powerful partnership."

He added that "Cokal's partnership now has a team in Mozambique capable of bringing any potential tenements through exploration and into production in a timely manner, while developing local Mozambique expertise and employment in a sustainable way. EMEM and Cokal have consistent corporate goals and a compatible set of business values and ethics."

Mr Middleton also commented that "We have the financial backing, the commitment and experience to bring these assets to production."

Mr Pat Hanna executive director of Cokal said that "My experience in Mozambique gives us confidence in identifying and developing coking coal resources in this large, new, emerging coking coal basin. The partnership we have entered into will potentially allow us to develop coal opportunities for the benefit of Mozambique, increase the use of local educated professionals, see resources and infrastructure developed to push Mozambique to the forefront of African coal exports, and provide expertise to assist with the sustainability of these projects."

Cokal has also signed a joint venture to explore for coal in Tanzania with Tanzoz Resources, which currently holds interests in Tanzania for uranium, gold and coal.

Peabody Energy and Xinjiang ink pact for 50 million tonne coal mine

Friday, 15 Jul 2011

Peabody Energy and the government of the Xinjiang Uyghur Autonomous Region entered into a framework agreement to pursue development of a state of the art 50 million tonne per year surface mine that would operate over multiple decades.

The agreement was signed during a ceremony in the Xinjiang capital of Urumqi with Peabody chairman & CEO Mr Gregory H Boyce, Peabody senior VP Mr Fredrick D Palmer, Peabody president of Asia Mr Zhenchun Shi and senior Xinjiang government officers. Party members involved in creating the agreement include Party Secretary Mr Zhang Chunxian, Governor Mr Nuer Baikeli and Vice Governor Mr Kurexi Maihasuti.

Under terms of the agreement, Peabody would construct, manage and operate the mine, which would be one of the largest surface mines in China, using best practices in safety, training, productivity, resource recovery, environmental standards and land restoration.

Mr Boyce said “Peabody is honored to work with the government of Xinjiang to advance a world class large scale surface mine in the world's largest and fastest growing coal market. Together we can unlock the full benefits of Xinjiang's vast energy resources to supply essential energy and benefit the region through job creation, economic development and social responsibility.”

The Xinjiang Region is China's largest administrative region with vast reserves of coal estimated to account for approximately 40% of China's reserves. The government expects Xinjiang's coal output will increase from approximately 100 million tonnes in 2010 to more than 1 billion tonnes.

Wednesday, July 13, 2011

Rio Tinto iron ore exposure a hit with Citi analysts

Wednesday, 13 Jul 2011

Rio Tinto has already outperformed the UK 350 mining sector over the year to date but Citi reckons it can continue to motor ahead thanks to a continuing tight iron ore market. The company remains the broker’s most favored UK metals and mining stock.

Citi analysts led by Mr Heath Jansen point out that with iron ore set to contribute 60% of earnings over the next five years, the strength of that market will be critical in deciding the future of Rio Tinto’s share price.

While the consensus view is that there is a surplus looming for iron ore supply, Citi believes this may not occur for some time.

The market has long been fixated on the looming market surplus as a result of a wave of project developments entering the market over the next four years.

Certainly the list of upcoming iron ore projects is impressive, with most of the new supply over the short to medium term likely to come from Australia and Brazil, the two expected to provide two-thirds of forecast supply growth in the next five years.

The global iron ore production project pipeline suggests over 1500 million tonnes per year of capacity yet Citi’s current supply demand model suggests only a small 50 million tonne surplus will develop by 2014.

The broker’s highly conservative stance on surpluses going forward reflects its view of a tightening iron ore market caused by a growing list of problems and setbacks that threaten to undermine near term supply.

For instance, in late June Brazilian mining giant Vale significantly downgraded its 2015 production target to 469 million tonne from 522 million tonne.

Citi has been sceptical of Vale’s production targets for some time and the broker’s own forecast for 2015 output by miner is actually 370 million tonne, which is 100 million tonne less than Vale’s new target.

The broker added that “We see the risk of further reductions in Vale’s production target as likely.”

Ongoing problems, including cost blowouts and delays, with development of the 45 million tonnes per annum Oakajee Port Project and associated iron ore mines in Western Australia, presents another potentially significant drag on supply going forward.

Citi said that Rio Tinto continues to be the cheapest mining company amongst the large cap diversified miners including Xtrata and BHP Billiton, trading on a 2011 prospective multiple of 8 versus around 10 for the rivals, mainly because of its heavy exposure to iron ore and the market’s view of a surplus for the commodity.

As a result, the analysts believe, Rio Tinto’s share price is already factoring in a considerable fall in the iron ore price.

(sourced from ProaActiveInvestors)

Macarthur Coal shares rises after takeover proposal

Wednesday, 13 Jul 2011

Macarthur Coal Ltd surged the most in 10 years in Sydney trading following a AUD 4.7 billion takeover proposal from ArcelorMittal and Peabody Energy Corp.

As per report Macarthur rose 37% to AUD 15.14 at the 4:10 PM. close, the most since July 5th 2001.

Mr Cameron Peacock market analyst at IG Markets Ltd said that “The structure this time makes it more likely the deal will go ahead. The board would have a hard time going to their shareholders and not recommending this.”

(Sourced from Bloomberg)

Yang Quan Coal lowers crude coal purchase price for Q3

Wednesday, 13 Jul 2011

It is reported that Yang Quan Coal Industry Group filed last night that it will lower the per ton purchase price of crude coal by CNY 10 per tonne to CNY 490 per tonne for the third quarter.

As agreed with parent group, Yang Quan crude coal purchase price is adjusted quarterly and the latest adjustment marks a 2% drop from the previous quarter.

It is the first reduction in the crude coal price in the first half after a period of continuous price increases. The price stayed at around CNY 435 per tonne in the second half of 2010 and rose to CNY 500 per tonne since the beginning of 2011.

(Sourced from

Port of Newcastle building new coal terminal

Wednesday, 13 Jul 2011

Port Waratah Coal Services based at Port of Newcastle in New South Wales, Australia, announced on 6 that it plans to build a new coal terminal called Pier No 4, which is expected to have a handling capacity of 120 million tonne per year.

Construction is planned to start in 2013, and is expected to take 10 years PWCS has already invested $243 million to expand port capacity. By the end of 2012, its port handling capacity is expected to reach 145 million tonne.

(Sourced from Steel Orbis)

Czech Coal seeks talks with state utilities on prices - E15

Wednesday, 13 Jul 2011

E15 citing a letter from Czech Coal CEO Mr Lubos Pavlas reported that Czech Coal AS, a miner than sells brown coal to power producer CEZ AS asked Czech heat providers for a three way dialogue with the government to negotiate coal prices.

(Sourced from Bloomberg)

Indian iron ore exports to remain at 85 to 90 million tonnes - FIMI

Wednesday, 13 Jul 2011

According to Mr RK Sharma secretary general of the Federation of Indian Mineral Industries, India's iron ore exports are expected at 85 million tonnes to 90 million tonnes in 2011/12, 10.5% below an earlier forecast.

In late June, he had projected exports at 90-95 million tonnes for the year ending next March, saying this would be about the same as last year.

India the world's No 3 iron ore supplier after Australia and Brazil normally exports around half its production, mostly to China. Exports have been hit by a ban from Karnataka state.

(sourced from ET)

Shen Huo Coal to integrate 28 coal miners in Henan

Wednesday, 13 Jul 2011

It is reported that Henan Shen Huo Coal Industry and Electricity Power a producer of coal, aluminum products and electricity plans to raise up to CNY 1.935 billion through a private placement of a maximum of 160 million shares at not less than CNY 13.46 per share.

Proceeds raised will be used for the acquisition of 28 small coal miners in Henan province. Of the total funds raised, CNY 652.8 million will be spent on the integration of coal resources.

Shen Huo Coal will inject CNY 560.1 million of the funds raised into a wholly owned subsidiary, Xuchang Shenhuo Mining Group. The funds will be used to boost the capital of Zhengzhou Shenhuo Mining and for the acquisition of 21 small coal miners in Xuchang and their operational assets.

The remaining CNY 92.59 million will be injected directly into Zhengzhou Shenhuo Mining for the acquisition of seven small coal miners in Zhengzhou.

Shenhuo said the deals will help to increase its coal reserves by 153.55 million tons of which 65.97 million tons are renewable. Its annual coal output capacity will be increased by 4.62 million tonnes.

The government of Henan province had published guidelines for the integration of coal miners in February 2010. It had selected six large state-owned coal miners including Shen Huo Group, as the platforms to integrate and restructure all the coal miners with capacities of 150,000-300,000 tons per year in the province.

Shenhuo Group will integrate 44 small coal miners and had tasked the listed Shen Huo Coal to execute the integration. Shenhuo will spend another CNY 688 million on the purchase of equipment for underground emergency shelters and inject the remaining CNY 550 million as working capital.

Pursuant to the notification by the State Administration of Coal Mine Safety, state owned coal mines must build enhanced emergency shelter systems by the end of June 2012. All other mines must complete the task by the end of June 2013.

(Sourced from China Securities Journal)

Afferro Mining posts a 36pct increase in Putu iron ore project

Wednesday, 13 Jul 2011

Afferro Mining has reported a 36% increase in its 38.5% owned Putu iron ore project in Liberia. The resource has now been upgraded to 3.24 billion tonnes at 34.3% Fe and the pre feasibility study has been accelerated to complete in six to eight months with the definitive feasibility study now expected in the first quarter of 2013.

Mr Luis da Silva CEO of Afferro Mining said that "This is another fantastic result for the company and our JV partner, Severstal Resources. Afferro now has close to 2.7 billion tonnes of attributable iron ore equating to more than 900 million tonnes of contained iron in the ground."

He added that "With this tonnage justifying the base case investment outlined by the two shareholders, the JV is now in a position to concentrate on the exploration of the oxide cap during the pre feasibility study."

(sourced from stockmarketwire)

ArcelorMittal to shortly begin iron production in Liberia

Wednesday, 13 Jul 2011

It is reported that ArcelorMittal Steel has completed product shipment test at the Buchanan Port and is to shortly begin iron production in Liberia at the Tokadeh mine near Yekepa in Nimba County.

An ArcelorMittal statement said over the weekend that "This is the result of five years' work to restart the country’s iron ore production and will contribute to the rebuilding of the nation’s economy after two decades of instability."

The statement said the mining conglomerate’s work in Liberia is a series of firsts. "As our first Greenfield mining project, investing to rebuild Liberia’s iron ore industry is an important project for ArcelorMittal. ArcelorMittal's purpose and vision to transform tomorrow through a shared boldness of spirit and our values of sustainability, quality, and leadership are evident in our work in Liberia."

It said that ArcelorMittal is committed to strengthening Liberia's mining industry and transport system, that it was also committed to an investment to rebuild the country's social and community infrastructure for the long term.

ArcelorMittal said that "Besides starting our operations at the Tokadeh mine, the USD 800 million investment in the first phase of the project has involved rehabilitating the rail link and port."

The ArcelorMittal statement said the company has already rebuilt the township and the industrial and social infrastructure in and around the towns of Yekepa and Buchanan as well as constructing a new crushing and screening plant.

The statement noted that "In June 2011, ArcelorMittal has been testing and commissioning the entire Liberia operations in order to identify and resolve any production related teething problems. The test included trial port operations and test vessel loading. The ore, mined from Tokadeh near Yekepa in the Nimba mountain range, was transported by train along a 240 kilometers rebuilt railway line, to the rehabilitated port of Buchanan. Unloading and stocking of the ore was completed successfully. The first test product was designed to capture maximum ore utilization which included a fines fraction in the DSO product. However, the finer nature of the test ore proved difficult to handle in the extreme wet season conditions."

The statement noted further that for safety reasons, there were strict moisture limits for ore cargo at sea and that technicians of the company believed that the test ore size range may present unsafe shipping conditions.

The statement said that "As a result the test loaded material was discharged. We are currently increasing the coarseness of the ore by changing screens in our mine crushing plant in order to improve handling characteristics and ship ability. Further to analysis by the mining management team, a slightly coarser product size will resolve the moisture issues and ensure safe ocean carriage, especially during wet season conditions. This change of screens and resultant product sizing is expected to be completed in July 2011."

Mr Peter Kukielski of ArcelorMittal said that "We are currently testing and commissioning the entire Liberia operations. Liberia has experienced unusually high rainfall over the last few weeks and this has meant that the moisture level in the iron ore is high. We are making good progress in addressing this issue and are on track to export iron ore as scheduled during the third quarter of the year, the first export from Liberia in over twenty years."

The government of Liberia and ArcelorMittal signed a USD 900 million Mineral Development Management Agreement in 2005 under the National Transitional Government of Liberia to run the Yekepa mines in Nimba County. The agreement was renegotiated in 2006 with the Sirleaf Administration to provide for more company responsibility to employees and social contribution to inhabitants of operation areas. (sourced from AllAfrica)

Rongsheng launches 400000 DWT VLOC VALE CHINA

Wednesday, 13 Jul 2011

China Rongsheng Heavy Industries Group Holdings Limited a large heavy industries group in China and Vale SA the largest global iron ore supplier from Brazil held a naming and launching ceremony on July 9 for the first ever 400,000 DWT Very Large Ore Carrier built in China.

This new VLOC, named VALE CHINA is the first VLOC of a few to be delivered in the coming two years. The new vessel can significantly lower overall delivery costs of iron ore for Vale. The attendance of Vale’s new Chief Executive Officer underscored the long term cooperation between a major shipbuilder and ship owner.

Mr Chen Qiang CEO of China Rongsheng Heavy Industries and Mr Murilo Ferreira, the new Chief Executive Officer of Vale attended the ceremony. The Brazilian ambassadress was the godmother in the naming ceremony.

Mr Chen Qiang said "The early christening of VLOC as "VALE CHINA" reflected the dedication and importance of the cooperation of both parties, as well as Vale strong interest in collaborating with Chinese companies."

As the largest private shipbuilder in China, China Rongsheng Heavy Industries is one of the few shipbuilders in the world with the ability to build VLOCs of 400,000 DWT or larger. Within its shipbuilding segment, VLOCs account for the highest proportion of the contracts on hand in terms of contract value, thus the naming and launching of “VALE CHINA” has special significance for the Group's future development.

The 400,000 DWT VLOC launched is currently the world largest dry bulk carriers. It is a high tech vessel self-developed by the Group representing the world most advanced technology in very large bulk carriers. The vessel main engine was self-built by China Rongsheng Heavy Industries, which is a low speed diesel engine with the maximum power manufactured by Chinese enterprise independently so far.

After VALE CHINA is named and launched, the VLOC is expected to be delivered to Vale soon. Mr Chen Qiang said "The coming year will be a significant year of delivery for VLOCs. We expects VLOC construction amount equivalent to eight vessels for 2011 and two or three vessels to be delivered in accordance with the requirements of Vale. The Group is the first shipyard in China completing the construction of the 400,000 DWT VLOCs."

As the largest iron ore supplier and exporter in the world, Vale is not only one of China's major iron ore suppliers, but also the largest customer of China Rongsheng Heavy Industries. This visit fully affirmed the capability of China Rongsheng Heavy Industries in constructing very large vessel. Vale is seeking to enhance production capacity to meet the increasing demand from Asia. After the delivery of the 400,000 DWT VLOCs, Vale would be able to address the issues presented by the long voyage from Brazil to China and can then ship cargo to China and other regions in Asia with a fleet offering stronger economies of scale, thereby reducing its transportation costs.

The first China visit by Mr Murilo Ferreira the newly appointed CEO of Vale demonstrated the high value attached by Vale to a long-term partnership with the Group. Mr Chen Qiang said "The revenue contribution from China for Vale is very high. The visit is built on the solid collaborative relationship among Vale and the Chinese Government as well as private enterprises. With the construction and delivery of VLOCs, the Group intends to actively explore new areas for cooperation with Vale such as helps in obtaining export buyer credit."

In 2008, China Rongsheng Heavy Industries signed shipbuilding contracts for twelve 400,000 DWT VLOCs with Vale, with a contract value of USD 1.6 billion. The work under the contracts set three world records in carrying deadweight tonnage of single bulk carriers and total deadweight tonnage of orders and total contract value. The Group currently has orders for 16 VLOCs on hand with a total value of over USD 2.1 billion. Four VLOCs amongst the 16 was placed by Oman Shipping Company.

Euro Coal prices drop USD 1 per tonne

Wednesday, 13 Jul 2011

Prompt physical coal prices fell by around USD 1.00 a tonne on Monday in line a 2% drop in oil and in the absence of fresh buying from end users in Asia and Europe.

Few coal trades were reported during the past week as Indian and Chinese buyers held off in anticipation of weaker coal and freight values.

One source said that "The Indians and Chinese are nowhere in the market right now, for any quality of coal, it seems, they're under no pressure to take prompt cargoes.”

A European trader said that "The overall energy complex weakened today and without much in the way of fresh trades, coal just followed oil down.”

Supply side problems from Russia, where the usual summer shortage of rail cars is already delaying exports by several days, are expected to continue until September but end user demand is so weak in Europe that consumers said they would welcome shipment delays.

Although South African exports are also capped by a lack of rail capacity, producers have found they have more spot cargoes of standard grade coal to sell in July, August and September than they had anticipated due to the cooling in Indian demand.

Another Europe based trader said that "South African coal isn't pricing in competitively to India or anywhere else still, even the cheaper low-grade doesn't work.”

(sourced from Reuters)

Roy Hill iron ore development to starts in 2012 - Ms Rinehart

Wednesday, 13 Jul 2011

The West Australian reported that Australia's richest person Ms Gina Rinehart says she expects construction of her USD 6.6 billion Roy Hill iron ore development in the Pilbara to begin in earnest next year as part of an ambitious timetable to be in production by 2014.

Dredging works in South West Creek, in Port Hedland's inner harbor, are already under way while the Roy Hill project was last week granted a Special Railway Licence by the WA Government for the construction of a 342 kilometer heavy haul link from mine to port.

Ms Rinehart is planning a 55 million tonne a year iron ore operation, with two berths at Port Hedland. The billionaire is yet to reveal how she plans to finance Roy Hill or what the final cost of the development will be, with earlier estimates put at USD 6.6 billion.

POSCO and fellow South Korean group STX are signed up as cornerstone investors.

Speaking outside the Boao Forum for Asia Perth conference, Ms Rinehart said that the event had enabled further relationship building with potential customers and partners. She added that "We have actually got all our letters of intent in place for China for Roy Hill so it was just working on the ongoing relationship."

Ms Rinehart hosted the board of the Boao Forum committee, including chairman and former Japanese Prime Minister Yasuo Fukuda and Zhou Wenzhong, China's ex ambassador to both Australia and the US, and a raft of other political leaders for lunch at her Dalkeith riverfront mansion on Sunday. She arranged for prominent climate change skeptic Professor Dr Ian Plimer to address the luncheon crowd.

An avowed critic of the Gillard Government's carbon tax, Ms Rinehart reiterated that the latest impost when added to the proposed minerals resource rent tax would increase the cost burden for Australian miners. She said that "Obviously shoving in a carbon tax and the MRRT doesn't help our cost competitiveness. If we don't keep being cost competitive, Australia's trading partners will go elsewhere."

(sourced from TheWest)

Germany digs in heels over Friday summit on Greece

Wed Jul 13, 2011
By John O'Donnell and Sarah Marsh

BRUSSELS/BERLIN (Reuters) - Euro zone plans for a leaders' summit on a second Greek rescue were thrown into doubt by Germany on Wednesday, raising fears markets may exploit a policy vacuum with a new onslaught on the bloc's high debtors.

Berlin stuck to its line that Greece was funded until September so there was no rush to finalise the details of a second package. "There are no concrete plans for a special summit," a German government spokeswoman said.

Others were less sanguine. Italian central bank chief Mario Draghi, soon to take the helm of the European Central Bank, and Ireland's premier both said a definitive plan was needed and quickly -- echoing a strongly-worded attack from Greece's prime minister earlier in the week.

Ratings agency Moody's downgraded Ireland's credit to junk status on Tuesday and said that, like Greece, it would need a second bailout. Minds have been focused even more sharply by a market attack on Italy which, if it required assistance, would overwhelm the euro zone's existing rescue funds.

"Moody's problem is not with Ireland, Ireland's problem is with Europe," Prime Minister Enda Kenny told parliament. "There is no point in having a meeting that won't bring about a conclusion in a comprehensive sense to something that is not going to go away unless it is dealt with."

The European Commission, sharply critical of the role ratings agencies are playing, described Moody's decision as "incomprehensible". The cost of insuring Irish debt against default rose and 10-year bond yields hit 14.19 percent.

Italian and Spanish bonds settled but traders did not expect long-term respite without decisive action.

"We are still pretty bearish on the periphery in general given there are various risk factors in terms of the policymakers' response to the crisis so far," said Michael Leister, a strategist at WestLB. "We're not too convinced they can turn things around in the short term."


The leaders need to pin down how private holders of Greek government bonds can be persuaded to shoulder a portion of the cost of a new package for Greece, and weigh up the potential impact on markets if securing their involvement is declared a debt default by ratings agencies, as expected.

But they appeared to be subsiding into a bout of internal wrangling and risk creating a no-win situation:

If no summit is now held on Friday, it could have a strong negative impact on financial markets. If it is held and no clear decision is taken, the impact could be worse.

Herman Van Rompuy, the president of the European Council, has informed ambassadors he intends to hold the summit on Friday evening, and most of the 17 euro zone member states back that decision, but Germany is reluctant to fix the date, especially if there is no decision ready to take.

"Markets reacted very badly after euro zone finance ministers could not reach an agreement," an EU diplomat said, referring to a finance ministers' meeting on Monday. "If they cannot agree, we take the fight to the highest level. People are working on a set of conclusions to be agreed."

A senior EU official said the Germans were furious about being "backed into a corner" and were therefore holding firm on not attending on Friday, which would skittle the summit. Diplomats said furious rounds of phone calls were being made.

They said the current intention was for leaders to meet on Friday evening and for finance ministers to gather again on Sunday so the precise details of a plan can be fixed before financial markets open on Monday.


A major concern on leaders' minds will be the results of stress tests on 91 European banks, to be released on July 15, which are expected to show 10 or more banks may have failed.

That could have a further impact on Italy, where bank stocks and the bond market have been hit by growing concerns that the euro zone's third-largest economy could be next in line after Greece, Ireland and Portugal to suffer debt contagion.

Draghi said Italian banks would comfortably pass the stress tests but echoed Kenny's call for a comprehensive EU response to the spreading debt crisis.

"We have to recognise that management of the financial crisis has not gone smoothly with partial and temporary interventions," he said in a speech to the Italian banking association.

"We must now bring certainty to the process by which sovereign debt crises are managed, by clearly defining political objectives, the design of instruments and the amount of resources," he said.

Current proposals on the table for securing the private sector's involvement in Greece focus on the buy-back of Greek government bonds and the swapping of existing Greek debt for longer-dated securities with a lower coupon, which would materially reduce Athens' outstanding obligations.

However, it remains unclear how a buy-back of Greek bonds would be financed. One proposal is to use the 440 billion euro European Financial Stability Facility (EFSF), which has been used to bail out Ireland and Portugal.

The ECB remains vehemently opposed to any Greek plan that ratings agencies would be likely to see as a default.

ECB policymaker Jens Weidmann, a former adviser to German Chancellor Angela Merkel, said the EFSF should not be used to buy bonds in the secondary market and it would be unacceptable for the ECB to accept defaulted Greek debt as collateral.

"The money of the (EFSF) bailout should not be used for the purchase of government bonds in the secondary market," he told Die Zeit newspaper. "Containment of the crisis should not mean that we undermine our principles. We must draw a red line."

But Germany's finance ministry said funds from the euro zone's rescue mechanism could in theory already be used by members of the bloc to buy back their own bonds, suggesting a shift in Berlin's stance.

German newspapers ran headlines and editorials on Wednesday calling on leaders to get their act together.

"The fact that some important heads of state have still not realised the entire amplitude of the problem is ... disastrous," a commentator wrote in Die Welt.

One Eurogroup official said Friday's meeting, if it happens, may not deliver on what the market is expecting.

"If there is a meeting on Friday, it is more psychological support than anything else. The heads of state will not decide anything," he said, explaining that there was not enough time between now and then to prepare a meaningful decision.

Severstal unit to get US loan for auto steel

* Russian US unit to get up to $730 mln in financing
* Energy Dept. loan part of advanced technology program

WASHINGTON, July 12 (Reuters) - The Obama administration was set on Wednesday to award a loan of up to $730 million to steelmaker Severstal North America to help auto companies produce more fuel-efficient cars and trucks.

Severstal, which could not be reached for comment, applied for financing to expand its Dearborn, Michigan, facility for making lighter and stronger steel.

A source familiar with the Energy Department decision said the award to the wholly owned subsidiary of Russia's OAO Severstal (CHMF.MM: Quote) is part of an agency program that has approved more than $8.4 billion in auto-related financing since 2009.

It would be the DOE's largest loan of its kind in nearly two years.

Previous recipients include Ford Motor Co (F.N: Quote), Nissan Motor Corp (7201.T: Quote), Fisker Automotive Inc and Tesla Motors Inc for more efficient gasoline engines, gasoline-electric hybrids and full electric car development.

The source said the project is expected to create more than 200 permanent jobs and 2,500 construction jobs, an urgent priority for the Obama administration fighting to demonstrate that its economic policies are creating jobs.

Automakers are fast leveraging materials and other technologies to meet new U.S. government fuel-efficiency requirements and consumer demands for vehicles that save them money at the pump.

The Energy Department program was approved by Congress to also reduce U.S. dependence on imported oil.

Chrysler, which is under management control of Fiat SpA (FIA.MI: Quote), is seeking $3.5 billion in Energy Department advanced technology loans. That bid remains on track, officials have said.

General Motors Co (GM.N: Quote), which like Chrysler received a government bailout and restructured in bankruptcy, withdrew its loan application this year after deciding to finance vehicle efficiency programs on its own.

Orissa government and ministers are agents of POSCO - Mr Patil

Wednesday, 13 Jul 2011

Calling the Orissa state government and its ministers agents of POSCO, former minister Mr HK Patil has asked the government drop the proposed acquisition of farming land to set up POSCO steel plant in Mundaragi taluk of Gadag district.

Mr Patil said that “This project will also be a threat to the Kappathgudda, which is rich in rare medicinal plants.”

Speaking to mediapersons, Mr Patil criticized major and minor industries minister Mr Murugesh Nirani for reportedly stating that a conspiracy had been hatched in the form of opposition to the land acquisition, and challenged Mr Nirani to clarify whether seers, political parties or social organizations have hatched the conspiracy.

(sourced from DHNS)

No reservoir water for POSCO at Halligudi

Wednesday, 13 Jul 2011

Orissa water resources minister Mr Basavaraj Bommai has declared that no water will be supplied from the reservoirs here for the proposed steel plant of POSCO at Halligudi.

Speaking to reporters after inaugurating the Itagi Sasalavada lift irrigation project in Sirahatti, Mr Basavaraj said that “We will not supply water from Singataluru lift irrigation, Hammigi barrage or Alamatti reservoir for POSCO or any other industry to be set up here.”

He claimed that the BJP government had a policy against distributing water for purposes other than irrigation and drinking, but added that projects that were approved before the BJP came into power were excluded from this policy.

(sourced from DHNS)

ArcelorMittal told to pay more for land in Jharkhand

Wednesday, 13 Jul 2011

The Telegraph reported that ArcelorMittal has been asked to buy land for its proposed 12 million tonne per annum project in Jharkhand by paying two and a half times more than the government rate through the state revenue department which would work towards speeding up the process.

After a review of mega industrial projects, chaired by chief secretary Mr SK Choudhary, Jharkhand industries Mr AP Singh secretary elaborated on the state's latest stance on land acquisition.

Mr Singh said that "ArcelorMittal officials have been told to go for a 'consented award route' while purchasing land. The company will need to pay two and half times more than the government approved rates for a particular mauza. The revenue department would then assist the company with bulk registry.”

ArcelorMittal, which signed MoU with the Jharkhand state in 2005, has promised investment of over INR 40,000 crore for setting up a 12 million tonne per annum steel mill and a captive power plant. However, so far it has met with limited success only a couple of acres in Kasmar and Petarwar blocks of Bokaro in buying land. (sourced from TelegraphIndia)

Fortune Minerals, POSCO unit ink JV for Mt Klappan project

Wed Jul 13, 2011 2:41pm GMT

* Fortune says JV to develop and start production at Mount Klappan
* POSCAN to pay C$181 mln for 20 pct stake in project
* POSCAN to also fund 20 pct of development, capital costs
* Fortune shares up 17 pct

July 13 (Reuters) - Canadian coal miner Fortune Minerals said its unit, Fortune Coal Ltd, formed a joint venture with a unit of South Korea's POSCO, the world's third-biggest steelmaker, to develop and start production at a coal project in northwest British Columbia.

Ontario-based Fortune Minerals' shares, which have more than doubled over the past year, rose 18 percent, before paring some gains to trade up 13 percent at C$1.65 on Wednesday on the Toronto Stock Exchange.

As per the deal, POSCO Canada Ltd (POSCAN) will pay C$181 million in cash for a 20 percent stake in the Mount Klappan coal project, with the rest being held by Fortune.

Fortune said POSCAN would pay C$30 million upfront, of which C$20 million would be used to fund the joint venture.

"This transaction expands our presence in North America, which already includes investments in the Mount Hope Molybdenum Project and Elk Valley Coal," POSCAN President Yong Keun Kim said in a statement.

POSCAN will also provide funding for 20 percent of the total development and capital costs of the project, which amounts to C$154 million, Fortune said.

The Mount Klappan metallurgical coal project contains speculative resources of 2.2 billion tonnes and measured resources of 107.9 million tonnes, with 15,866 hectares of coal exploration licences, Fortune said.

Rio Tinto's Coal & Allied Q2 output rises 13 pct q/q

Wed Jul 13, 2011 4:15am GMT

SYDNEY, July 13 (Reuters) - Australia's Coal and Allied , a 76 percent-owned subsidiary of Rio Tinto , said coal production in the June quarter rose 13 percent to 5.25 million tonnes versus the previous quarter.

It also said the impact of the Japanese disaster had affected its some coal shipments during the second quarter.

Coal and Allied operates three mines in New South Wales state producing coking and thermal coals, and was spared some of the heaviest flooding affecting production and transport from coal mines in neighbouring Queensland state earlier this year.

Australia's Aquila: Vale dispute cost 200,000/t in coal shipments

Wed Jul 13, 2011

SYDNEY, July 13 (Reuters) - An ongoing marketing dispute between miners Vale and Aquila Resources has so far cost 200,000 tonnes in lost shipments of steel-making coal from the jointly-owned Isaac Plains mine in Australia, an Aquila spokesman said on Wednesday.

"This has so far resulted in the cancellation of four shipments totaling about 200,000 tonnes of metallurgical coal," the spokesman told Reuters.

The impasse comes after flooding in Australia's Queensland state coal belt earlier in 2011 had already hindered the mine's performance to reach its full production capacity of 2.8 million tonnes annually.

While production at the mine has continued and some individual sales have been completed, 50-50 owners Aquila and Vale have not been able to sell coal since November without the threat of either side taking legal action.

As a result, stockpiles of coal have mounted and Aquila has warned they would soon reach their limit if shipments did not resume, forcing the mine to shut.

Vale could not be immediately reached for comment.

Steve Badenhorst, director of Vale's Australian coal operations in late June told Reuters that Vale was prepared to expand the capacity to stockpile coal if needed.

Vale, based in Brazil and one of the world's biggest diversified mining houses, and Australia-focused Aquila, in mid-November agreed to enter into their own contracts with customers to sell coal.

The dispute quickly emerged over the ability of Aquila and Vale to take their separate shares of coal from the mine and utilise port and rail capacity contracts.

The two companies have also been at odds over the price Vale will pay for exercising its option to buy Aquila's 24.5 percent interest in the separate Belvedere coal mine, which Aquila estimates will cost A$2.8 billion to develop.

Vale holds 75.5 percent and said a year ago it planned to buy Aquila's interest at "fair market value."

China's daily June crude steel output hits record

Wed Jul 13, 2011

* Construction boom drives daily June steel output to peak
* Analysts expect steel output to stay near record levels in July

SHANGHAI, July 13 (Reuters) - China's daily crude steel output hit a record 1.998 million tonnes in June, up 2.8 percent from May, data from the National Bureau of Statistics showed on Wednesday.

June output was 59.93 million tonnes, 11.9 percent higher from the same period last year.

China's steel mills, particularly, small- and medium-sized ones producing long products for use in construction, have raced to raise output amid strong demand from the sector, defying the traditional pattern of weakness during the summer and government policy tightening measures to cool asset prices and inflation.

"The construction of social housing units has accelerated in June, fuelling strong production of long steel products," said Hu Zhengwu, researcher with industry consultancy

Analysts expect China's daily crude steel output to cling to near record high levels in July as the pace of building 10 million affordable housing units accelerates and fans demand for steel products.

A survey by Custeel of 37 long products producers showed that their rebar output will rise 34,300 tonnes to 5.755 million tonnes, while wire rod output will surge 282,000 tonnes to 3.26 million tonnes in July from June.

China produced 78.73 million tonnes of steel products in June, up 14.8 percent from a year earlier.

Iron ore output in the world's largest steel producer also hit a record 124 million tonnes in June, up 21 percent from May and 27.3 percent higher from a year earlier.

Iron Ore-Shanghai rebar hits 1-month top, ore extends gains

* Spot iron ore at 3-week highs as traders take positions
* Baosteel keeps main product prices steady for Aug
By Manolo Serapio Jr

SINGAPORE, July 12 (Reuters) - Shanghai steel futures edged up to one-month highs on Tuesday as investors bet that Chinese steel output would remain strong despite the country's efforts to tighten liquidity.

Spot iron ore prices piggybacked on gains in steel, hitting their highest in three weeks, as traders took positions on expectations that Chinese steel mills would continue to restock on the steelmaking ingredient.

The most-active October rebar contract on the Shanghai Futures Exchange rose for a second straight session, hitting a high of 4,873 yuan a tonne, its loftiest since June 9. It stood at 4,863 yuan by the midday break, up 0.2 percent.

China's average daily crude steel output rose to a record above 2 million tonnes towards the end of June as mills kept pace with a resilient construction sector buoyed by the government's race to build more low-cost housing units.

"The record steel production through June has boosted sentiment in the market," said an iron ore trader in Shanghai. "Given all the worries about a cooling Chinese economy, steel production hasn't gone down, so there must be demand out there."

The improved sentiment spilled into the iron ore market, with spot prices extending gains from last week, after dropping around 2 percent in June.

Iron ore with 62 percent iron content rose 0.1 percent to $171.71 a tonne on Monday, according to price provider Metal Bulletin .IO62-CNO=MB. A similar gauge by the Steel Index .IO62-CNI=SI edged up to $171.30 from $171.20.

Both indexes, based on China spot transactions, are at their highest levels since late June.

Spot offers were steady, with Australian 62-grade Newman fines at $176-$178 a tonne, including freight, Chinese consultancy Umetal said.

Ore with 63.6/63 iron content from India was quoted at $179-$181 a tonne.

"I think the main driver in iron ore is the big traders trying to take positions. They are buying some big cargoes," said a shipping manager for an iron ore trading firm in Shanghai.

"But I haven't seen a strong comeback from the steel mills yet and it's because cash remains tight," he said.

Tighter liquidity, thanks to China's repeated increases in interest rates and bank reserve ratios, has made it difficult for Chinese steelmakers to fund operations, including the purchase of raw materials like iron ore.

This has prompted many small and medium-sized steel mills in China to either buy iron ore from domestic suppliers or from stocks of imported ore already lying in Chinese ports which are cheaper than spot cargoes.

"I had thought iron ore prices would crash by $10-$15, but looking at what's happening with Chinese steel output, this stability in prices will probably continue for some time," said the Shanghai trader.

"July and August are months to watch out for in terms of Chinese steel production. If there will be a fall, it should happen during these months. September onwards I would put money on stability and prices going up."

Baoshan Iron & Steel , China's biggest-listed steelmaker, on Monday said it would keep prices of its main products mostly unchanged for August bookings. Analysts say high production costs are also keeping steel mills from cutting prices.

Australia's Fortescue starts Chinese yuan transactions-CEO

PERTH, July 12 (Reuters) - Australia's third-biggest iron ore miner, Fortescue Metals Group , has started making some business transactions in Chinese yuan, Chief Executive Andrew Forrest said on Tuesday.

"Fortescue has started transacting in renminbi. We are exploring the possibilities of being paid with renminbi and purchasing equipment in renminbi from our renminbi bank accounts," Forrest told a meeting of business leaders in Perth.

Fortescue sells the lion's share of its iron ore to Chinese steel mills.

The company completed a business-to-business transaction in yuans on Friday but deal did not involve the sale of iron ore, Chief Operating Office Nev Power said.

Global miner Rio Tinto has been studying the possibility of switching iron ore price settlements to Chinese yuan, the company's iron ore division chief Sam Walsh said last month.

While Rio will be looking at the possibility of switching iron ore price settlements to yuan, Walsh said the company had no initial plans to do it.

Iron ore sold to China, the world's biggest consumer of the steelmaking raw material, is denominated in U.S. dollars.

Fortescue, listed on the Australian Stock Exchange, was also considering additional listing on the Hong Kong and Shanghai Stock Exchanges, according to Forrest. (By Thomson Reuters)

Australia's New Hope unlikely to bid for Macarthur Coal - source

MELBOURNE, July12(Reuters) - Australia's New Hope Corp is unlikely to enter a bidding war for Macarthur Coal , a source with direct knowledge said on Tuesday.

Peabody and ArcelorMittal announced a $5 billion takeover offer for Macarthur Coal on Monday.

New Hope bid against Peabody Energy for Macarthur last year but has since acquired coal explorer Northern Energy .

"Now that they have acquired Northern Energy that's going to keep them pretty busy," the source told Reuters.

Monday, July 11, 2011

UK coal bed methane may be material gas source - IGas

Monday, 11 Jul 2011

UK coal bed methane explorer IGas Energy Plc said the gas can make a material contribution to Britain’s energy supply.

The company has signed a second rig contract for its Doe Green site in northwest England, in an attempt to produce commercial quantities of natural gas found in seams of coal.

IGas said that it has enough reserves to supply 15% of UK homes with electricity for 15 years.

Mr Andrew Austin CEO said that “It could become a material part of the mix in the UK. Within the next couple of years, we should be able to demonstrate that we can produce positive earnings on projects.”

The company also has shale gas acreage, though Mr Austin said it will focus on production from coal beds first because the environmental impact is lower.

The London-based explorer is seeking to show it can produce gas at commercial rates after completing pilot projects.

(sourced from Bloomberg)

Energy users warn against compensating coal fired generators for carbon tax

Monday, 11 Jul 2011

It is reported that commercial and industrial energy users have cautioned against compensating coal fired generators for the carbon tax, saying this would crimp the assistance available for other businesses.

Mr Roman Domanski executive director of Energy Users Association of Australia said that power generators would pass on higher electricity prices to users despite getting assistance that could include emergency government support for their debt and payments for the closure of some brown coal fired power plants in Victoria and South Australia.

Mr Domanski questioned claims the security of energy supplies was at risk without the aid measures and cautioned that the measures could mean there was less revenue from the carbon tax to compensate other sectors. He said that "One of our biggest concerns is that the government's approach will leave open and vulnerable a considerable number of firms who are exposed to international trade, who pay a fair bit of money for electricity, but who isn’t going to be compensated."

Mr Domanski, who runs an organization whose members include Australian Paper, vegetable maker Simplot and Rio Tinto, said that he was yet to be convinced that compensation for generators was warranted and noted concerns raised by Labor's chief climate adviser Mr Ross Garnaut.

He said that "We have looked at the arguments put up by the coal fired generators. We have a lot of trouble joining the dots to get to the point where we can see justification. We don't think there's much risk at all to electricity supply."

Concerns are growing among power stations that the government will expand its Energy Efficiency Opportunities program, which encourages companies to find ways to use less energy. Generators fear the program will be altered to require them to implement any efficiency savings that would generate a positive return, meaning they could be forced to divert resources to projects that would save fuel even if this only gave them a small saving.

Mr Malcolm Roberts executive director of National Generators Forum said that "The carbon price will be the incentive for businesses to find energy efficiencies. Filling in forms and paying consultants will not yield any more energy savings."

(sourced from TheAustralian)

Enel aims to switch oil plant to coal in June 2012

Monday, 11 Jul 2011

Italy's biggest utility Enel hopes to start its long term project to convert a major power plant to coal from fuel oil in June 2012, betting on new laws to bypass a top court decision blocking the project.

Italy's top administrative court, the State Council in May cancelled government clearance for Enel's EUR 2.5 billion (USD 3.58 billion) Porto Tolle conversion project which was opposed by environmentalist groups.

An Enel spokesman said that "Enel is committed with ministries and regional authorities to find a solution to start works. It is reasonable to think that it would be possible to start works in June 2012, depending on all necessary administrative procedures.”

Authorities of the north eastern region of Veneto, where the Porto Tolle plant is located, have drafted a law which would allow the conversion of oil fuelled power plants to coal or any other fuel if it cuts greenhouse gases emissions by 50%.

The group's spokesman said that Enel hopes Italy's Environment and Industry Ministries would give their approval to the new regional law by March next year.

Enel had planned to start at the end of this year converting its 2,640 megawatt oil fuelled Porto Tolle plant on the River Po about 100 km from Venice, to use clean coal technology, part of its drive to cut carbon emissions.

(sourced from Reuters)

Withdrawal of Jonesville Mine permit pleases anti coal groups

Monday, 11 Jul 2011

It is reported that residents in the Sutton and Chickaloon areas opposed to coal mines opening there again are claiming a victory this week after the state Department of Natural Resources withdrew a renewal permit it had granted in May for the Jonesville Mine.

Admitting the state failed to adequately respond to concerns about the legality of the permit, DNR Coal Program Manager Mr Russ Kirkham said that state statute requires the permit holder, Australia based Black Range Minerals, to file its intent to mine the property within three years of the original issuance of the permit.

Mr Kirkham explained that "The Jonesville permit was first issued in 1996 and was transferred to several companies since then. Those opposed to the renewal of the permit believe the statute requires mining activities to begin within three years of the permit, so we’re looking at that now. We will go through our historical records and reports and look at the data. We might end up stipulating that the mining company provide additional data to us, but I can’t say right now how much of an impact this will have on the permit or future operations at the mine."

Black Range Minerals, through its Colorado based subsidiary Ranger Alaska LLC, bought the rights to the 1,450 acre underground mine off Jonesville Mine Road in the heart of Sutton from Knoll Acres LLC in 2008.

(sourced from Frontiersman)

ECR Minerals to acquire up to 80pct in Unchime iron ore project

Monday, 11 Jul 2011

ECR Minerals Plc announced that the company has secured an exclusive option to acquire an ownership interest of up to 80% in the Unchimé iron ore project in Salta Province in Argentina. The acquisition is subject to due diligence.

The exploration done thus far indicates that the Unchimé Resource Estimate of 400 million tonnes is conservative but remains to be properly defined.

The Unchimé project is located 35 kilometers from the city of General Güemes and 80 kilometers from the city of Salta, which has a population of approximately 500,000. The project comprises approximately 11,000 hectares of granted mining and exploration concessions plus applications for additional tenements.

The Unchimé deposit is a Clinton style oolitic haematite iron ore deposit discovered in the 1940s. The deposit was exploited on a small scale during the 1950s and 1960s. The project area is characterized by a series of discrete hilltop ore bodies overlain by varying thicknesses of overburden and separated by deep valleys. The iron bearing formation occurs as near horizontal layers within the hills. The project area is wooded and the agricultural value of the land is low. Salta Province is located on the tropic of Capricorn, and climatically receives both tropical and temperate influences.

There is a Chinese controlled project currently underway 60km to the north of Unchimé to develop an iron ore mine on the same iron bearing geological formations.

Unchimé has historic indicated resources of 23.5 million tonnes and historic inferred resources of 372.8 million tonnes estimated across numerous zones reportedly grading 35% to 45% Fe. These historic estimates are based largely on trench sampling data and are not compliant with JORC, NI43-101 or equivalent standards.

Metallurgical test work carried out in the same period indicated that an iron ore product containing more than 52% Fe was obtainable from Unchimé ore by dense media concentration. The Unchimé ore is metallurgically complex and will require detailed test work to define an optimum process route and identify the saleable product most likely to be profitable.

ECR technical personnel consider that the overall resource potential of the Unchimé project may be significantly larger than indicated by historic resource estimates.

Access to Unchimé is via paved highway from Salta and unpaved local roads to the entrance of the project area. There are numerous disused internal roads and tracks requiring rehabilitation.

A railway line of the Belgrano Carga railway network, which is in the process of being upgraded by the Argentine government, passes within 3 kilometers of the Unchimé project area and a natural gas pipeline passes within 5 kilometers. There are 2 substantial power plants with associated electrical distribution networks within 20 kilometers. Water is available in quantity from local rivers.

The availability of local natural gas is positive with respect to the energy requirements of any eventual mining operation. ECR will also assess the possibility of producing pig iron in Salta as an alternative to the sale of concentrate or direct shipping iron ore. Pig iron production would be more energy and capital intensive but may deliver superior economics by producing a high purity iron product highly marketable for steelmaking.

Argentina presently produces over 6 million tonnes of steel per annum, importing all raw material requirements. Imported iron ore reaches the Argentine port of Rosario from Brazil after transport by rail and river barge and transhipment through Paraguay.

Indicative rail transport costs from the Unchimé project to Rosario 1,100 kilometers southeast of Unchimé are estimated to be in the order of USD 20 to USD 30 per tonne. The port of Rosario (Argentina’s largest) can receive large bulk carriers and has direct loading facilities.

Mr Patrick Harford MD of ECR Minerals plc said that "We are very excited by the possibility that with further work, the Unchimé project may have the potential to become a major iron ore mine, perhaps by way of a staged development process. It may be feasible to develop a relatively small initial operation to supply the local market, with a larger export operation being developed at a later stage."

He added that "Oolitic iron ore deposits such as Unchimé represent considerable metallurgical challenges. However the development of such deposits has been shown to be technically and commercially feasible elsewhere and the development of the Zapla project to the north of Unchimé by Chinese investors gives us considerable encouragement. Should the results of the planned drilling program and ongoing metallurgical test work prove encouraging the Company intends to move rapidly to complete the acquisition of Unchimé and to further define the extent of iron mineralisation at the project whilst commencing the feasibility studies necessary to define its commercial merit."

Mr Harford said that "ECR has been able to agree favorable terms for the acquisition of Unchimé with the local vendors, who will become ECR's partners in the project and who have prior experience of successful bulk mineral production in Argentina. This partnership will add a valuable extra dimension to the venture, and discussions with the provincial government in Salta have indicated that development of Unchimé would enjoy strong local support." (By ECR Minerals)