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Saturday, July 30, 2011

Vale expects high iron ore contract prices for rest of 2011: CFO

July29,2011 | sourced Platts

London :Brazilian mining company Vale, posting a succession of record quarterly profits, expects stronger performance in the second half of 2011 as iron ore output is set to increase, demand in China stays strong and prices stay high, CFO Guilherme Cavalcanti said in an interview Friday.

CEO Murilo Ferreira meanwhile told analysts that iron supply will not exceed demand in the next five years.

Vale is currently reviewing the schedules of new mining projects as delays with environmental permitting slows their implementation, Cavalcanti said in an interview from Rio de Janeiro.

"In the second half of the year, prices will be at the same levels, Chinese demand will remain strong, and difficult project execution will mean the market remains tight," Cavalcanti said.

Vale highlights record steel output globally led by China and Chinese iron ore import volumes up on 2010 levels over the first half for its growth expectation. Company chief executive Murilo Ferreira expressed concerns over fiscal issues and the pace of economic growth in the US and Europe in an analyst call Friday, but overall remained positive.

Vale's iron ore pricing formula considered, the average Platts IODEX 62%-Fe ore value of $177.016/dmt CFR North China from March to May in deciding Q3 contract prices.

With one month of spot prices outstanding in determining the average price for the June to August period to help set Vale's Q4 2011 contracts, the average over June to July is around $174/dmt CFR North China.

Cavalcanti said all Vale iron ore fines contract sales are basis Platts IODEX, and negotiations are at an early stage to convert pellet contracts to using similar indices and a Fe-content quality differential and conversion cost factor.

The end of the rainy season in Brazil in Q2 will push up output at its iron ore mines in the remaining six months, he said.

The gains in realized iron ore sales prices in Q2 were resticted by higher moisture content and a slightly lower iron ore grade on average due to heavy rains that extended into May.

The moisture content was 1.5 percentage points higher on average while the Fe-content pared back 0.2 percentage points as rains hampered mining of some areas with higher ferrous content ores to shift the grade mix down, Jose Carlos Martins, executive officer for marketing, sales and strategy told analysts on an earnings call.


The average Q2 sales price of iron ore was $145.3/mt, 15.1% higher than the previous quarter, while the average pellet price was $206.07/mt, 13.6% above Q1.

Vale is performing strong enough that cash flows allow for a recent $3 billion share buyback and $3 billion extra dividend to be paid with enough left to still meet rising costs, obligations and budgets, Cavalcanti said.

Costs are elevated mostly by the appreciation of the Brazilian currency, he added.

Vale in June announced it cut to 469 million mt from prior guidance of 522 million mt its annual iron ore output target for 2015. It produced 297 million mt in 2010.

Cavalcanti said the paring in estimated iron ore output growth was a result of slower project and expansion permitting rather than weakening in demand growth expected from customers.

China, Japan and Germany are the largest export destinations, while Brazil-based sales to steel mills and pelletizers comprise the second-biggest market after China.

Cavalcanti said Vale's project pipeline is under review, including a 90 million mt Serra Sul (S11D mine) expansion in Carajas still seeking a preliminary license. The $6.7 billion project is targeted on stream starting in the second half of 2014.

Celays are putting pressure on Vale meeting its $24 billion capital expenditure budget for 2011 that, after $6.8 billion capex in the first half of the year, leaves over $17 billion left.

"In the second semester, its normal for expenditure to pick up," Cavalcanti said of the July to December period, adding that Ferreira remains committed to boosting investments later this year to meet the allocation.

Vale on Thursday posted Q2 net profits of $6.45 billion, up 74.1% year on year and the largest ever for the period. A $1.5 billion gain from the sale of aluminum assets pushed up Q1 profit to $6.83 billion. It was largely due to higher sales and robust prices for commodities led by iron ore, nickel and copper.

Sales to Asia as a whole accounted for 52% of the total $15.35 billion revenues, up from 49.6% in Q1 2011.

Iron ore production in the quarter reached 80.3 million mt, the highest ever for a second quarter and 5.8% up on Q2 2010.

Pellet production at 13.1 million mt was up 3.8% year on year.

Vale said the first of two pellet plants in Sohar, Oman, has achieved stability at its nominal production capacity and the second plant is expected to start ramping up in the fourth quarter.

In nickel, Vale successfully ramped up the first line of its Onca Puma project in Brazil's Para state, while the second line is under final assembly, it said.

The group's vessel orders for very large iron ore carriers will remain delivered as planned, Cavalcanti said. Vale's strategy is to lower freight costs and current low freight rates that have prompted others to cancel or adapt orders is irrelevant in its case, he said.

Coal Miners to Spend Big on Infrastructure

July30, 2011

Mining companies in Russia, the world's third-largest coal exporter, are likely to invest heavily in rail cars and port capacity to overcome bottlenecks as they seek to increase sales into booming Asian markets, industry players and analysts said.

Coal exports rose about 25 percent from 2006 to 115 million tons in 2010, including 70 million tons of thermal coal.

Consultants at IMC Montan expect five major new export-oriented projects to boost the total amount of coal railed for the domestic and export markets by a further 70 million tons by 2020.

Transport bottlenecks, which are becoming increasingly severe in the winter months, are expected to worsen once new mines open.

"Investment in infrastructure is not optional; it's absolutely essential. Maximum capacity has been reached for ports and particularly rail wagon availability," said an exporter looking to buy into infrastructure.

Russia has enough rail track to handle more coal exports but not enough rolling stock or ports in key locations, industry sources said.

"If the mining companies want to increase coal exports, they must invest in infrastructure — in more rail cars, perhaps in port capacity," said Vladimir Lelekov, managing partner and general manager of Brunswick Rail, which rents rail cars to most of the big exporters.

An estimated 50 million tons of oil and oil products are expected to move off the rail system and into pipelines within five years, but this will not benefit coal transport because oil is moved in tanker wagons, not open rail cars.

"The main problem with coal transportation in Russia is the lack of gondola cars. As fast as new wagons and locomotives are produced, they are fully utilized and more are needed. There is enough rail track in Russia but not enough rolling stock," Lelekov said.

"The situation is not uniform," he added. "There are some particular areas where there are bottlenecks that cause more delays than in other places, such as the rail line into the Vanino port, so investment is not needed in a wholesale way, but targeted."

The liberalization of Russia's state rail system may offer investment opportunities for mining companies, analysts and industry sources said.

State rail operator Russian Railways, or RZD, plans to sell majority stakes in subsidiary Freight One, which would privatize the allocation of RZD's rail cars.

The government may also sell 15 percent of RZD via an initial public offering by 2013.

Firms interested in bidding for the RZD subsidiaries include N-Trans, part of the Globaltrans group, and Gunvor, sources close to the companies said.

Other nations including Australia and the United States have had large-scale private investment in rail and port infrastructure in recent years as miners boost exports to emerging markets hungry for coal.

Wood Mackenzie analyst Steve Hulton said development of rail and port capacity in Australia's Queensland, led by the private sector, can serve as a model for other nations.

"Companies shouldn't wait for the government to build new infrastructure for them: ports, new coal terminals, iron ore terminals, railroads," Renaissance Capital analyst Boris Krasnozhenov said.

"They have money, they are generating strong margins, so they should finance this infrastructure from their own cash flows and own this infrastructure."

Krasnozhenov cited coking coal and steel producer Mechel's development of the Elga deposit in the Sakha republic as an example for others to follow.

"What Mechel is doing — that is exactly the way of Australian and Brazilian companies," he said.

Smaller producers such as Kuzbass Fuel Company, Russia's seventh-largest exporter, have also built their own rail lines.

"We built 70 kilometers of railroad ourselves, along with five railway stations, a depot for locomotives, locomotives and rail cars," KTK general director Igor Prokudin said at a Renaissance Capital investor conference in Moscow last month.

Public-private partnerships, or PPP, are another variation on the theme of increased corporate involvement in Russian infrastructure spending.

Severstal is developing coking coal deposits in the Tuva republic and will participate in a consortium with the government to build a rail line to export output from the remote region.

"The PPP is only being tested these days, but it is already clear that the future development of rail, road and other transport infrastructure shall extensively involve this mechanism," said Nikita Mishin, co-founder of N-Trans, one of Russia's biggest private transportation firms.

"In the port sector, private investors are already playing a significant role, contributing more than a half of all capital expenditure," he said.

"Investments by different market players clearly need to be coordinated so that new capacity being introduced on road, rail or port can be served, but this is well understood by all market players including the government," he added.

Sourced Themoscowtimes

Coal workers start work stoppage as part of campaign against BHPB

Saturday, 30 Jul 2011

The Construction Forestry Mining and Energy Union said that Australian union coal workers at the Norwich Park mine in Queensland state has started a 36 hour work stoppage as part of an ongoing labor campaign against BHP Billiton.

Mr Stephen Smyth Queensland division president of the CFMEU said that twelve hour rolling stoppages will also be held at the Gregory and Crinum mines on July 31st 2011 and August 1st 2011, as union workers press for job security. The mines are among six operated by a JV of BHP Billiton and Mitsubishi with a combined output capacity of more than 58 million tonnes per year of mostly metallurgical coal used to make steel.

Mr Smyth said that output from the mines accounts for about a fifth of annual global trade in metallurgical coal. He added that "We're now looking at escalating these actions to include more mines to press BHP over our concerns."

Union workers at the six coal mines operated by BHP Billiton and Mitsubishi have been staging protests over the past three months against rising non union staff jobs.

Mr Smyth said that "Ultimately, our intention is to disrupt production at the mines in order to pressure BHP."

A BHP Billiton spokeswoman declined to comment on any impact the actions may be having on production, saying any significant disruptions would be cited in the company's end of quarter operations review. The campaign has been helping underpin global coal prices, already firm on restricted supply from Australia due to widespread flooding of coal fields earlier this year.

The price of metallurgical coal used in steel production hit a record high USD 330 a tonne in the second quarter while thermal coal prices remained stable and have since only showed only a modest retreat, according to coal traders. The Norwich Park mine yields coking coal used in producing steel and is exported to Asia and Europe at a rate of about 4 million tonnes a year.

The Gregory and Crinum mines together yield around 5 million tonnes of both coking and thermal coals, also for sale in Asia and Europe. The CFMEU represents the majority of the 3,500 union workers at the BHP Billiton Mitsubishi mines, which is about one third of the total workforce.

Analysts have said the campaign contributed to a 28% decline in BHP Billiton's June 2011 quarter metallurgical coal production to 7.9 million tonnes from a year earlier, though flooding had a greater impact. Floods in Queensland between November and March crippled coal output from Australia, which provides two thirds of global exports of steel making coal, and contributed to the Australian economy's biggest decline in two decades in the first quarter. Coal miners had hoped operations would be back to normal by now, but the flooding of coal pits and damage to rail lines and ports proved worse than originally feared.

By Reuters

3 killed in coal mine blast in Muzaffarabad in Pakistan

Saturday, 30 Jul 2011 | By Nation

At least three laborers were killed and four others sustained injuries in a coal mine explosion in Muzaffarbad in Pakistan on Tuesday.

According to sources, labourers were working in a coal mine at the area of Maira Tanoolia when the blast took place, killing three workers and injuring four others.

The rescuers rushed to the site and retrieved the bodies and injured from the debris.

Read more coal news

20 dead, 17 missing in Ukraine twin mine tragedies

Indian iron ore mining mess - Belekeri port was anchor point for irregularities

Saturday, 30 Jul 2011 |By DHNS

Justice Santosh Hegde in chapter 2 titled ‘Export of illicit iron ore from Belekeri port’ on illegal mining said that large scale irregularities were found in the small port at Belekeri, south of Karwar in Uttara Kannada district of Karnataka.

His team, along with the forest department which had raided and seized ore at the port, had subsequently lost most of it to theft. About 610,000 tonnes of the seized ore was stolen, while only 272,000 tonne remains at the port.

The report states large scale illegal exports of ore was done by private companies Shree Mallikarjun Shipping Pvt Ltd, Adani Enterprises Ltd, Salgaonkar Mining Industries Pvt Ltd and Raj Mahal Silks.

Officials of the ports department, customs, police, KSPCB, CRZ, mines department and local politicians received bribes from Adani Enterprises for undue favors for illegal exports.

It was found that 44 companies were supplying ore exclusively to Adani, 30 companies to SMSPL and eight to both companies.

The companies are GG Mines of Gogga Gurushantaiah and brothers, Continent Impex Pvt Ltd, Nagappa mines of Shantalakshmi Jairam, SB Minerals, Junjubail of Dream Logistics, SVK Jaisingpura of SB Minerals, SVK Danapur of S B Minerals, VS Lad, Nadeem Minerals, Sunrise of SB Minerals, ILC of SB Minerals, ILC Bevanahalli, Trident Minerals, Lakshmi Venkateshwara Minerals, Arshad Export of SB Minerals, Alpine International of Vesco, Bharat Mines and Minerals, Taurine Iron and Steel Co Pvt Ltd and Satya Granites.

The report said that the ore illegally extracted and transported came from Hospet, Sandur, Bellary and Koppal.

The total ore exported from Belekeri port from 2006 to 2011 was 2.03 crore metric tonnes; permits were issued to transport ore from various places to Belekeri port worth 1.26 crore metric tonnes; illegal ore exported was 7.73 million metric tonnes; illegal ore export was highest in 2009-10 at 3.65 million metric tonnes; illegal export in two months in 2010-11 was a record breaking 1.15 million metric tones.

European coal prices unaffected by SA miners strike - Report

Saturday, 30 Jul 2011 | By Montel

European coal prices have been mostly unaffected by an ongoing strike by South African miners, as stockpiles are healthy and demand low.

A German utility trader said that "At the moment, the impact is negligible." He added that physical prices rose USD 0.50 last week in anticipation of the strike, which started at the weekend.

The German trader said that most South African coal companies have stock to work through. Stocks at the main Richards Bay port terminal are around 3 million tonnes, agreeing the mines themselves held plenty of stock and transport links have not been affected by the strike action. He said that "The situation could get critical after two weeks."

An Iberian trader said that "I think it would have more impact if the strike continues, and China and India start buying." She added that however, there is currently little demand in Europe and very little activity during the summer holiday period in July and August.

She said that coal is currently very correlated with range bound German power and emissions, with no strong coal fundamentals that could move the curve. While the market is flat as a pancake at the moment, attention is being paid to fluctuations in the euro/dollar rate, with a weaker dollar the main reason for a rise in API 2 Cal 12 coal above USD 128 per tonne at the end of last week.

The German trader said that the contract should remain range bound between USD 127 to USD 129 per tonne.

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Resource Alam 1H profit surges 208 percent

July29, 2011

Indonesia's tenth largest coal miner in term of concessions, PT Resource Alam Indonesia (KKGI), part of Rain Group, today reported a skyrocket net profit of 208.09 percent on the back of strong coal sales volume and higher selling price, as quoted by Insider Stories.

Insider further said it report, Resource Alam posted Rp 214.40 billion (approx. US$ 25,268,120) net profit or Rp 214 (approx. US$ 0.025) per share for the first 6 months of this year (1H 2011) from Rp 69.59 billion (US$ 8,201,532) or Rp 70 (approx. US$ 0.0082 ) per share for the same period a year earlier (1H 2010). Operating profit surges 194.40 percent to Rp 293.02 billion (approx. US$ 34,533,883) from Rp 99.53 billion (approx. US$ 11,730,111).

KKGI's gross profit jumped 157.38 percent to Rp 524.57 billion (approx. US$ 61,823,217) from Rp 293.81 billion (approx. US$ 34,626,988), while net sales reached Rp 981.09 billion (approx. US$ 115,626,399), a 137.24 percent surge from Rp 413.55 billion (approx. US$ 48,738,951).

Resource Alam, with concession area of 24,478 hectares located in East Kalimantan, is owned and founded by Adijanto family.

Pintarso Adijanto (Tan Hong Pheng), one of Adijanto's son, is in charge as Resource Alam's President Director and Swandono Adijanto (Tan Hong Swan) is one of the company's Commissioner.

Pintarso and Swandono have other siblings, Winoto Adijanto (Tan Hung Hwie), Suparno Adijanto (Tan Hong Kiat), Muriati Adijanto (Tan Phe Phe), Pandjijono Adijanto (Tan Hong Phang), and Mariana Adijanto (Tan Phwe Leng).

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sourced coalspot

Friday, July 29, 2011

Why America has to get off coal

Friday, July 29, 2011
By Michael Brune and Michael R. Bloomberg,
special to CNN

CNN- One of the frightening new realities in Washington is that many strongly held policy positions are built on untruths. One of the most persistent untruths is that we can't afford to move away from coal-powered electricity.

The truth is, we can't afford not to quit coal. The cost consumers pay for power does not reflect the true cost of burning coal. Pollution from coal triggers asthma attacks, a disease that affects 20 million Americans and burdens our health care system. The toxic mercury released from old, outdated coal plants is the single biggest source of mercury emissions in America, making it a potential source of harm to pregnant women and children.

Each year, the soot emanating from coal-fired power plants kills an estimated 13,000 Americans prematurely, and is responsible for an astonishing $100 billion in health costs. These involve costs that consumers pay as well -- in their health insurance bills, in the Medicare and Medicaid costs that are breaking our budget, in lost productivity, and in the suffering that they and their children bear.

We can curb our addiction to coal -- not in some distant time in the future, but here and now. Coal supplies just 45% of the electricity in the United States, according to the U.S. Energy Information Administration. It is technologically and economically realistic to eliminate coal's contribution to the electric sector by 2030.

Iowa already gets 15% of its power from wind. The energy company Xcel, in Colorado, will soon get 30% of its electricity from clean energy. Even the NFL is getting into the act -- the Redskins' Stadium, FedEx Field, will soon be powered by solar, a technology increasingly affordable and efficient. And, when extracted responsibly, natural gas can complement these clean sources and is cheaper than coal.

To build a coal-fired power plant that doesn't emit pollution is so expensive that it's cheaper to do clean energy -- which is why America has almost completely stopped building new coal-fired power plants.

Coal is also not the bargain for jobs that it's made out to be. The wind industry alone already provides more jobs than the coal mining industry does for miners. America's 2.7 million workers in the clean-tech sector earn 13% more than the median U.S. wage.

A natural gas-fired power plant creates as many jobs as a coal-fired power plant. A wind farm creates far more jobs.

It's a myth that America needs coal to keep our economy running. It is a myth perpetrated by the pseudo-scientists, lobbyists and legal teams that protect the industry and disguise the true costs. Inside the Beltway, such myths -- and such lobbyists -- can block progress.

But that doesn't mean America is trapped by Congressional inaction. Because in America's towns and cities, local people can make a difference -- far away from K Street and partisan gridlock.

Over the last eight years, the Sierra Club's Beyond Coal Campaign has mobilized communities and allies to protect their own interests when new coal-fired power plants were proposed for their communities. When the lobbyists told them there was no other way, they worked with responsible companies to develop cost-effective clean-energy plans.

As a result, 153 proposals for new coal plants have been stopped -- three-quarters of the new coal capacity that coal developers have proposed since 2002. And that capacity has been met with a mixture of wind, solar, energy efficiency and other alternative, cleaner sources.

Now, Beyond Coal is pushing to close existing coal-fired power plants -- starting with the nation's oldest and dirtiest plants. We've had success already -- in Colorado, Texas and most recently the phase out of TransAlta's coal burning plant in Centralia, Washington. In fact, nearly 10% of America's coal capacity is already committed to be retired. But much more needs to be done.

That is why Bloomberg Philanthropies has committed $50 million over four years to the Beyond Coal campaign. This will help the campaign to expand from 15 to 45 states, increase the active member base from 1.4 million to 2.4 million and will double the number of full-time staff working on the effort from 100 to 200. As important, this partnership will have a significant environmental and public health impact, retiring a third of the nation's coal plants, as well as reducing coal generated mercury pollution by 90% and sulfur dioxide poisoning by 50% -- all by 2020.

Ending our reliance on coal will clean our air, improve our health, create jobs, and expand our economy. That's a reality that America has to act on -- town by town, power plant by power plant. The fact that Washington is at a standstill doesn't mean that America has to be, because this is a fight that we can win at the local level. sourced CNN

Read more

Why Coal Prices Will Soar in the Coming Years

Chinese, Mongolian companies sign $250m coal deal

Coal based power generation drops to 30 year low in US

Asia coal Australia thermal coal prices steady in slow market

Xstrata Coal made proposal to acquire First Coal

European and prompt South African physical coal prices rose

South African Premier Bulk Port - Port of Richards Bay

20 dead, 17 missing in Ukraine twin mine tragedies

July 29, 2011
Agence France-Presse

LUGANSK, Ukraine - Twenty miners died and another 17 were missing Friday in two separate accidents at coal mines in the east of Ukraine, an industrial region notorious for its mining safety record.

The twin disasters were the country's worst mining accidents since more than 100 miners were killed in a mine explosion in 2007.

President Viktor Yanukovych interrupted his vacation and was expected at the Lugansk mine, which is run by a private holding controlled by Rinat Akhmetov, Ukraine's richest man who bankrolled his 2010 presidential campaign.

Yanukovych also cancelled plans to attend the Formula 1 Power Boat Grand Prix near Kyiv, his administration said.

At least 16 miners were killed instantly as a result of an explosion at the Sukhodolskaya-Vostochnaya coal mine in the eastern Lugansk region early Friday, the emergencies ministry said.

Another three workers received burns and other injuries and were hospitalized, it said. One of the injured died later of his wounds.

The two injured were in a grave condition, said Pavel Malysh, top health official for the Lugansk region, noting they suffered from a combination of burns and head injuries.

"We're are doing our best to save them," he said.

"The fate of nine miners remains unknown," said the Kyiv-based emergencies ministry in a statement, adding that a total of 28 people were working at the pit when the explosion occurred at 1:57 am Friday.

The Lugansk regional administration, citing preliminary information, said the accident was caused by a methane explosion, which has caused most of the country's past mining disasters.

A separate accident at the state-controlled Bazhanova mine in the town of Makiyivka in the neighbouring Donetsk region left three people dead, the emergencies ministry said in a statement.

The emergencies ministry said the tragedy was caused when the 70-metre-high (230-foot) mine headframe, which is used to lower miners down into the mine and bring them up again, collapsed earlier Friday.

Eight workers were missing, according to the emergencies ministry, and officials said it appeared they were still alive but trapped under the rubble.

"The voices of two people can be heard from under the ruins," said Donetsk region governor Andriy Shishatsky.

"They're saying that more people are under them. The main task is to get the people out as soon as possible."

Another four were injured, the emergencies ministry said, adding that more than 530 workers were able to bring themselves to the surface using emergency shafts.

An official with Metinvest Group, a private holding that includes the company operating the Lugansk region mine, said it had modern equipment but was one of the most dangerous coal mines in the country as it had high levels of methane and had experienced accidents in the past.

System Capital Management Group, controlled by Akhmetov, has a 70 per cent stake in Metinvest.

"The company spent huge money to upgrade it," the official told AFP on condition of anonymity. "But the mine is incredibly dangerous."

Albina Kosheleva, the Lugansk regional administration spokeswoman, also said the mine boasted modern equipment and the safety procedures there were at a "decent level".

The Metinvest official said families of the miners killed in the blast would each receive one million hryvnias ($125,000).

Dmitry Kalitventsev, leader of a local miners' trade union, expressed fears the rescue teams would find more dead at the Lugansk mine.

"It is most likely that all of them died," he told AFP, referring to the missing workers.

Deadly accidents are frequent in Ukrainian mines, most of which are located in the country's industrial eastern region. Many of the mines are underfunded and poorly equipped, while safety violations are rife.

In the worst accident of its kind in the country's post-Soviet history, more than 100 miners were killed in an explosion in 2007 at the Zasyadko mine, one of the three biggest in Ukraine.

Euro Coal-S.African prices creep up again

Fri Jul 29, 2011

LONDON, July 29 (Reuters) - Prompt physical South African coal prices rose by around 50 cents a tonne on Friday, despite a fall of over $2 in oil prices on weak U.S. GDP data, buoyed by expected export disruptions due to the South African miners' strike and calls for greater Chinese coal imports.

Wage talks between the Chamber of Mines and unions representing workers at the major coal mines in South Africa failed, the National Union of Mineworkers said on Thursday.

Fresh talks began on Friday but both sides are far apart on terms.

If the strike continues beyond two weeks, miners will start to exhaust stockpiles at Richards Bay Coal Terminal and at the mines themselves.

This is not expected to have much market impact, however, as key end-users in Europe and India with South African supply contracts can easily absorb delays or cancellations.

"There's not exactly a shortage of coal, quite the opposite and it would be easy to find replacement cargoes," one utility source said.

The strike's impact so far has been more on sentiment and has encouraged some swaps buying which in turn has slightly bolstered physical values.

Oil dropped by over $2 after weak GDP data showed the U.S. economy stumbled in the first half of the year .

Any further pressure on the dollar will further bolster coal prices but raise coal exporters' cash costs, the cost of mining and moving coal to the point of shipment.

Activity in general has remained limited for the past week, due to the seasonal summer lull when coal use is at its lowest in Europe.

Asia had been expected to come to the market's rescue with a resumption of large-scale Indian and Chinese imports of benchmark origin coals such as South African.

This has not happened yet because key Indian buyers who account for more than 70 percent of the country's imports have bought cheaper Indonesian material rather than South African - they are waiting, they say, until prices drop to $110 or even $100 before returning to the market.

China has dipped in and out of the import market for the past six months and it is unclear whether power shortages will prompt more imports or not.

China faces tight power supply during the current scorching summer but shortages have turned out to be less severe than anticipated .

Nevertheless, China's National Development and Reform Commission has urged all relevant parties and regions to raise power supplies and curb unreasonable demand.

"Thermal power plants should proactively purchase thermal coal and increase coal imports," the NDRC said on its website.

To date, this has not translated into fresh buying but there are more enquiries from Chinese buyers being received by coal suppliers, for low to high-grade coal qualities.


A September loading South African cargo traded at $118.00 FOB Richards Bay, up 50 cents.

An October DES ARA cargo traded at $125.50, unchanged.


A September DES ARA cargo was bid at $124.50, down 75 cents on the bid.

An October DES ARA cargo was bid at $124.90 and offered at $126.00, unchanged.

An August loading South African cargo was bid at $115.00 and offered at $117.75, up $1.00 on the offer.
A September loading South African cargo was bid at $117.25 and offered at $117.75, up around 25 cents.

(sourced Thomson Reuters)

Chinese, Mongolian companies sign $250m coal deal

Friday,July29, 2011 |By China Daily

ULAN BATOR -- A Mongolian and a Chinese mining company have signed a coal deal worth $250 million, local media reported Friday.

Under the deal, the Aluminum Corp of China Ltd (Chalco) will purchase coking coal worth $250 million as an advance payment from Mongolian state-owned company Erdenes Tavan Tolgoi (ETT), which holds the license for the giant Tavan Tolgoi coal deposit in Mongolia's south Gobi region.

The South Korean company Korea Resources Corp (Kores) and the Japanese companies Itochu and Mitsui signed a memorandum of understanding on purchasing 30 percent of the coal from Chalco.

About 50 high-ranking Mongolian and Chinese officials, including Chinese Ambassador to Mongolia Wang Xiaolong, attended the signing ceremony.

Earlier this month, the Mongolian government said it has chosen China Shenhua Energy, US mining giant Peabody Energy and a Russian-Mongolian consortium to develop the coal mine.

China Steel Association to Release 2011 Iron Ore Index at Appropriate Time

Fri, 29 Jul 2011

July 29 (Xinhua) -- The China Iron and Steel Association said Friday that it will release its iron ore index at a "proper time" this year, a move that is intended to better reflect market conditions.

The first draft of a document that details the methods used to compile the index has been finished and acknowledged by relevant authorities, Zhu Jimin, chairman of the association, said at a meeting.

"The index will be introduced at a proper time this year after adjustments," he said.

The index will consist of two sub-indices reflecting domestic iron ore prices and import prices, he said, adding the index will be released on a weekly basis.

The steel industry maintained relatively fast development in the first half of this year, with steel output reaching 350 million metric tons, up 9.6% from a year earlier, he said. Full-year output is expected to hit 706 million metric tons, he said.

However, the industry's sales profit ratio reached just 3.14% in the first half of this year, down 0.4 percentage points year-on-year, because of soaring import prices for iron ore, he said.

China's steel firms paid RMB 104.1 billion for imports of iron ore in the first half, he said.

He said China's steel companies will face bigger difficulties in the second half of this year than in the first half.

Output growth in the second half will slow down, as domestic and international demand for steel is predicted to weaken, he said. China's steel companies will face a tightened flow of capital and higher material costs, he added

Karnataka's political crisis to further delay iron ore exports

Fri Jul 29, 2011

* India's mining scandal throws iron ore industry out of gear
* State chief minister Yediyurappa to quit on Sunday
By Siddesh Mayenkar and Manolo Serapio Jr

MUMBAI/SINGAPORE, July 29 (Reuters) - Iron ore shipments from the southern Indian state of Karnataka could see further delays, buoying global prices, amid a mounting political crisis after the state's chief minister agreed to quit over a $3.6 billion illegal mining scandal.
Karnataka accounts for about a quarter of iron ore shipments from India, the world's No. 3 supplier of the steelmaking raw material after Australia and Brazil.

"The entire industry has been thrown out of gear. We'll have to wait and watch and be circumspect in whatever we do," Basant Poddar, vice-president of the Federation of Indian Mineral Industries, said, adding that the political uncertainty would further delay resumption of the state's iron ore exports.
Lower Indian exports have helped boost spot iron ore prices .IO62-CNI=SI which are trading at more than two-month highs,at above $170 per tonne, amid strong demand from top buyer China.

Karnataka banned iron ore shipments in July last year to curb illegal mining and has yet to issue export permits, despite an order from India's Supreme Court to lift the ban in April.
"It is still under government's consideration," said D.R.Veeranna from the directorate of mines and geology in Bangalore,which issues permits to export iron ore.

State officials have not given any export permits while another survey on illegal mining by the Supreme Court-appointed Central Empowered Committee is ongoing.

"We'll take this up after the dust settles. In a month's time we'll request the state government to issue permits," said Poddar, who estimates there are probably 10-15 million tonnes of unsold stocks of low-grade ore lying at Karnataka's mines.

A report produced after an independent enquiry into mining graft in Karnataka accused Chief Minister B.S. Yediyurappa and other key officials of causing at least 160 billion rupees ($3.6 billion) in lost state revenues between 2006 and 2010 from illegal mining and a litany of abuses.
K.P. Jagadish, a spokesman for Yediyurappa, said the chief minister would resign on July 31.

The Bharatiya Janata Party (BJP), India's main opposition group, has called a meeting of its central party members in Karnataka on Friday to pick a replacement for Yediyurappa, who has denied any wrongdoing.
The BJP sought the resignation of Yediyurappa after it came under attack from the ruling Congress party for what it called hypocrisy over graft charges.

The slow efforts in Karnataka to resume shipments along with increased costs are expected to cut India's iron ore exports to an eight-year low of 71.25 million tonnes in the current year to next March, according to a Reuters poll earlier this month.

The mining scandal will "no doubt" further delay resumption of shipments from Karnataka given the potential investigations ensuing from the allegations, said Graeme Train, commodity analyst at Macquarie in Shanghai.

"We see continued disruption to all of Indian supply not just Karnataka. Karnataka's captured most of the headlines but there are similar issues all over the place," said Train.

"Indian supply will underperform even relative to our expectations for this year. Indian exports are in pretty much structural decline as resource nationalism becomes a bigger driver behind policy."
Iron ore cargoes from India averaged about 800,000 tonnes a week in the last four weeks, less than half last year's pace which averaged nearly 8 million tonnes a month, said a Singapore-based trader.

"We're getting a limited amount of spot tenders from the big miners and the traditional big supplier in the spot market which is India is running at extremely low shipment pace mainly due to the monsoon and the Karnataka ban," the Singapore-based trader said.($1 = 44.08 rupees)

(sourced Thomson Reuters)

Pay us a living wage, say South Africa's miners

Fri Jul 29, 2011

* Employers say steep wage hikes would cost jobs
* Workers lament big executive pay hikes

By Agnieszka Flak

EMALAHLENI, South Africa, July 29 (Reuters) - After 38 years working for one of South Africa's biggest coal miners, plant attendant Joseph still struggles to make ends meet.
"I still get only 3,700 rand ($550) a month. How am I supposed to survive with that? And my family?," he said angrily at a rally outside a colliery in the country's main coal-producing region north-east of Johannesburg.

Miners in South Africa's biggest industry, many of whom have worked for the same company for decades, say their pay has not kept up with fast-rising food, fuel and electricity prices.
Adding insult to injury, in their eyes, their raises pale in comparison to that of executives at the top 40 blue-chip companies, who were paid on average 23 percent more last year.

Miners' wages have increased by nearly 30 percent over the last three years, but that does not mean much for those at the bottom rung who make between 3,000 and 4,000 rand a month.

"If my children want shoes, I can't buy them for them. That's not fair! And I'm an old man. hat will they get when I'm gone? Nothing," Joseph, 55, said.
Tens of thousands of South African coal miners walked off the job on Monday to demand a 14 percent pay rise and a housing allowance which would allow them to leave scrappy shanty towns
and squatter camps. Employers have offered 6 to 8.5 percent.

"After 16 years at the mine I am still sitting in the shacks," said 49-year-old Sipho.
Appealing to one of the local banks for housing loans has been futile, he added.
"No matter where you go, you don't qualify. We want housing, we want better pay," he said, waving a stick at an Anglo American management building.

Seventeen years after apartheid ended, miners feel little has changed to improve their lives and many live in debt.

"Things are getting more expensive and I have to borrow money every month to pay for food. We hope and hope that things will change and get better, but they don't," said 42-year-old
Mary, a single mom working as a plant assistant.

Some get into their companies' training schemes which allow them to get better jobs and obtain useful skills along the way. Sixty-three-year-old Chris Komape said he started at an Xstrata mine as a hostel clerk some 26 years ago, earning 500 rand a month. Now a mechanic, his basic salary is 13,000 rand, but still not enough to support his wife and kids.

"Managers are getting millions and we get peanuts," he said. Accounting firm PricewaterhouseCoopers said the median salaries of executive directors of the top 40 companies on the Johannesburg Stock Exchange rose 23 percent to 4.8 million rand last year, while their short-term incentives rose by 58 percent to 3.8 million rand.

South Africa's Gini coefficient, a measure of income inequality, stood at 0.67 in 2008, according to government figures, one of the highest in the world, and has worsened since white minority rule ended in 1994.
The figure would be zero if wealth were perfectly shared out and 1.0 if it were in one person's hands. Brazil, like South Africa a member of the emerging markets BRICS group of countries, had a Gini coefficient of 0.54 in 2009.
South Africa's annual "strike season" is in full swing, with unions demanding 10-20 percent pay rises. The strikes have also hit chemicals, fuel, gold and diamond mining.

The demands are well above the official inflation rate of 5 percent but unions argue the rate does not fully reflect the impact of rising food and fuel prices.
Employers say they cannot afford the above-inflation increases at a time when they are also struggling with a strong rand currency and steep hikes in electricity costs, and economists say higher wages could hurt South Africa's competitiveness and the long-term economic outlook.
But many companies also now view above-inflation settlements as a necessary cost of doing business in South Africa and have slashed jobs to make up for the higher personnel costs.
Miners do not get paid while on strike, but are vowing to strike until their demands are met.
"I don't have much to lose," said Sandile, 52. ($1 = 6.704 South African Rand) (By Reuters)

S.African wage talks in mining sector

Fri Jul 29, 2011

July 29 (Reuters) - Some 100,000 South African gold mine workers downed tools on Thursday over wages at the country's top three gold producers and one junior miner at a time when the price of the precious metal is near record highs.

In another labour dispute, coal miners walked off the job late on Sunday.

Following a pattern of recent years, many of the union demands are far above the official inflation rate, which was 5.0 percent in June. Companies say they can't afford steep increases as they grapple with other rising costs.

Many miners are lower or mid-income workers who spend much of their take-home pay on food and fuel, costs of which are rapidly rising.

Following are some facts about the current state of wage talks in the mining industry in South Africa, the world number one platinum producer and a top gold and coal exporter.


Around 90,000 to 100,000 gold miners, or close to a fifth of the country's mining labour force, are currently striking, according to Reuters calculations based on company figures.

AngloGold Ashanti , Gold Fields and Harmony are the world's third, fourth and fifth largest gold miners. Workers are also one strike at a junior miner.

The country's chamber of mines, which is negotiating on behalf of the companies, said the two sides have moved closer to each other in talks that resume on Monday, but did not give further details.

The National Union of Mineworkers, the largest of the three unions involved in the talks, had been seeking a 14 percent increase in wages while gold employers had offered between 7 and 9 percent.


Coal miners walked off the job late on Sunday and the coal companies are also being represented by the Chamber of Mines.

Unions said some progress was made in talks on Thursday but the chamber says its offer has remained the same. The two sides will meet again on Monday.

NUM has been seeking a 14 percent raise, while employers have been offering 6 to 8.5 percent.

Anglo Thermal Coal SA , unlisted Delmas Coal, Exxaro , Kangra Coal, Optimum Coal and Xstrata Coal are the main coal companies involved.


NUM, which had been asking Anglo American Platinum for a 20 percent wage increase, is looking for 15 percent. It said the company is offering 6 to 7 percent. Anglo American, the world's top platinum producer, has not commented. The two sides are due to meet next on August 18-19.

(sourced Reuters)

The world's second-largest platinum producer, Impala Platinum , is due to meet with workers on Monday. The union wants a 14 percent hike for low-wage earners and 13.5 percent for higher paid miners. Impala's latest offer is for 6 and 6.5 percent.

India's top court bans mining in key iron-ore rich region-sources

Fri Jul 29, 2011

NEW DELHI, July 29 (Reuters) - India's top court has imposed an interim ban on mining in a key iron-ore rich region in southern Karnataka state on concerns of environment degradation, legal sources said on Friday, a move which is likely to further delay exports and lift global prices.

The district of Bellary produces about 35 million tonnes of iron ore annually, around 83 percent of Karnataka's total annual production of 42 million tonnes.

Karnataka accounts for about a quarter of iron ore shipments from India, the world's No. 3 supplier of the steelmaking raw material after Australia and Brazil.

The new order is seen impacting state-run NMDC , the world's top miner, which annually mines around 6 million tonnes of iron ore from the region.

The court ordered the ban after a committee found de-forestation and environment degradation in the state's Bellary-Hospet region, which produced more than 47 million tonnes of ore in 2007/08, the latest figures from the state mining department showed.

Karnataka, which is facing a mounting political crisis after the state's chief minister agreed to quit over a $3.6 billion illegal mining scandal, has over 9,000 million tonnes of iron ore resources.

Besides, the state has yet to issue export permits, despite an April order from India's top court to lift a July 2009 ban, while another survey on illegal mining by the Supreme Court-appointed Central Empowered Committee is ongoing.

Lower supplies from India could put further upward pressure on global iron ore prices as supplies are already tight and demand is firm from top consumer China.

The price for iron ore with 62 percent iron content rose 19 cents to $175.45 a tonne on Thursday, the highest since May 19, a price index by Metal Bulletin .IO62-CNO=MB showed.

Botswana want to use port of Maputo in Mozambique

Friday, 29 Jul 2011

According to Mr Rosário Mualeia chairman of Mozambican port and rail company, Portos e Caminhos de Ferro de Moçambique, Botswana may in the next few days, start using the port of Maputo to export and import goods.

Mr Mualeia cited by Mozambican news agency AIM said that Botswana has been using the port of Maputo as a transit point and now plans to use it as the final destination of its cargo.

One of Botswana’s main interests is to develop the construction project for the deep water port of Techobanine, in the Matutuíne district of Mozambique’s Maputo province, including a 1,100 kilometre interconnecting railway, and costing an initial USD 7 billion.

According to Camilo Abdul a representative of the Maputo Port Development Company, the company that holds the concession on the port of Maputo, the facility has capacity to process 20 million tonnes per year, of which it currently makes use of just 12 million.

Sourced macauhub

Coal based power generation drops to 30 year low in US

Friday, 29 Jul 2011 |By GreenTechMedia

It is reported that the percentage of electricity generated by coal in the first quarter of 2011 was the lowest it has been in more than 30 years.

New data from the US Energy Information Administration showed that coal generated about 440 terawatt hours, 26.5 TWh less than the same quarter of 2010. Overall generation of electricity increased slightly in the same amount of time.

There are various reasons for the decrease in coal. One reason is that as coal prices have steadily risen in many areas of the US, natural gas has stayed relatively cheap. Even the coal rich Midwest is using less of its prized resource, although it still makes up nearly 70% of the electricity generation in the region.

The slight downturn in coal comes just after American Electric Power closed its carbon capture and storage test facility, one of the largest demonstration projects in the world for CCS. Without carbon legislation, utilities don't want to invest in CCS, yet other regulations are still forcing at least the dirtiest of coal plants out of commission.

Coal plants are also under increased pressure to be taken offline in favor of (less dirty) natural gas plants. It is estimated that up to 20% of coal fired power plants will be taken off line this decade due to EPA regulations that call for a reduction in cross state pollution of sulfur dioxide and nitrogen dioxide.

Renewables can't claim a win over coal by any stretch of the imagination, but generation from wind was up 25% from April 2010. Although California, Texas and Illinois have the largest gains, EIA said the gains were widespread across the US. As aggressive renewable portfolio standards are implemented in the next decade, renewable (and not just hydro) will continue to increase.

The decrease in coal generation might be a window into the future, but that future is still far down the road. The EIA also noted that the second quarter of this year had coal increase again, mostly due to increased output to make up form nuclear plants that were offline.

Pan African agrees to 11pct wage hikes

Friday, 29 Jul 2011 |By MiningMX

Pan African Resources has concluded negotiations with the National Union of Mineworkers on wages and other conditions of employment.

A one year agreement has been reached with employees and amounts to an average increase of 11% across the board.

The Num employees would furthermore receive an increase to their housing allowance from ZAR 1,100 per month to ZAR 1,300 per month.

These increases are effective from July 1st 2011.

MOC: Chinese steel prices rise for second consecutive week

Friday, July29, 2011

China's Ministry of Commerce (MOC) has stated that, due to higher iron ore prices, mills' announcements of price increases and reduced market inventory, in the week ending July 24 domestic steel prices in China rose by 0.4 percent compared to the prior week, rising for the second consecutive.

During the given week, the prices of 6.5 mm wire rod and 12 mm rebar in China rose respectively by 0.9 percent and 0.5 percent week on week.

Meanwhile, iron ore prices in China in the week in question rose by 1.5 percent as compared to the previous week. The drop of steel production in China has contributed to the steel price uptrend in the past few weeks. Based on statistics from the China Iron and Steel Association (CISA), the average daily crude steel output of its member enterprises in early July (July 1-10) was 1.63 million mt, down 3.8 percent compared to late June (June 21-30).

Asia coal Australia thermal coal prices steady in slow market


Australia's thermal coal prices, a benchmark for Asia, were steady in the past week as demand from Japan remained flat and Chinese demand waned.

Thermal coal on the globalCOAL Newcastle index for the week to date was AUD 120.63 per tonne on Thursday, essentially unchanged from AUD 120.75 per tonne a week earlier.

A Sydney based source said that "We haven't heard a lot of transactions, it's been very quiet.”

Demand for Australian coal has been relatively depressed since March when Japan, Australia's largest coal customer was hit with a tsunami that took some coal plants offline. Thermal coal shipments from Australia's Newcastle port, the nation's biggest thermal coal port, dropped 5.5% in the week to Monday.

(sourced Reuters)

Namibia chamber warns over new tax

Friday, July29,2011 |MiningMX

NAMIBIA'S Chamber of Mines wants the government to reconsider plans to impose a further 17% tax on exploration and mining firms in the southern African producer of diamonds and uranium, saying it would discourage investors.

The Chamber of Mines in a statement said that "It is important... that any legislation that is implemented will not reverse the commercial viability of existing projects, or prevent investment in new exploration and mining projects.”

Namibia said that it would increase mining corporate tax to 44% for miners other than diamond producers.

Hebei Steel Group to develop Changyu iron ore deposit

Friday, 29 Jul 2011|steelorbis

It is reported that Major Chinese steelmaker Hebei Iron and Steel Group as well as Chinese companies Hebei Yinghua Mineral and Tangshan Donghai Steel have established Changyu Iron Ore Company to develop the Changyu iron ore deposit in Xiangtang, Luanxian County, Tangshan City, Hebei Province, China.

The deposit in question consists of magnetite iron ore of average iron content of 29.24% with proven reserves of 120 million tonnes.

Xstrata Coal made proposal to acquire First Coal

Friday, 29 Jul 2011

Xstrata Coal has made an all cash proposal to acquire 100% of First Coal Corporation shares, options and warrants for CAD 1.75 per share. The offer values First Coal, a privately owned Canadian company, at approximately CAD 147 million (USD 153 million).

First Coal’s Board has unanimously recommended that its shareholders support the transaction, following receipt by the Board of a fairness opinion from its financial advisor. Many of First Coal's largest shareholders have entered into lock-up agreements with Xstrata Coal which represent more than 50% of First Coal's common shares.

The proposed purchase of First Coal provides Xstrata Coal with access to coking coal exploration leases in British Columbia, Canada.

The acquisition is to be completed by concurrent statutory plan of arrangement and takeover bid, and is subject to customary conditions including the arrangement being approved by at least two-thirds of the votes cast at a First Coal shareholders meeting to be held on August 2nd 2011.

China shippers lobby to foil Vale ore fleet

Friday, 29 Jul 2011

Bloomberg reported that China largest shipping companies are lobbying the government to foil Vale SA plan to build a USD 2.3 billion fleet of the world biggest iron ore carriers that will haul the steelmaking material to the nation.

Mr Zhang Shouguo executive vice chairman of the China Shipowners Association said Vale, the world largest iron ore producer, should engage the shipping companies to run the fleet. Rio de Janeiro based Vale is building 19 of the 400,000 tonnes vessels and will control another 16 under long term contracts aiming to stabilize freight costs and iron ore prices.

Mr Zhang who was a former deputy director of the water transport division of China Ministry of Transport said “Let the shipping industry do the transport thing. Vale is seeking to control the freight market as it has done with iron ore prices.”

Mr Zhang said Chinese regulators haven’t approved any of its ports to increase accommodation capability to more than 300,000 dead weight tons for dry bulk carriers because of safety and environmental concerns.

He said that “Many shipping companies may incur losses because of the monopoly on the route. We’ve made it clear to the government that we object to the major cargo owners building their own fleets.”

Mr Zhang said without elaborating that the association which represents 85% of China total shipping capacity is trying to seek cooperative shipping contracts with Vale. Should the need arise, it may also ask the government to investigate whether Vale breached the Chinese regulations against market manipulation or monopoly.

A Vale official in Rio de Janeiro, declining to be named according to corporate policies said the company won’t comment.

(Sourced from Bloomberg)

Beltrame to build new steel rolling mill in Tarnos, France


Alain Rousset, president of the Regional Council of Aquitaine in southwestern France, recently visited the site on which Italy-based Beltrame's new steel mill will be built, in Tarnos, near Bayonne. During the visit, Beltrame official Alfredo Bottené provided various details about the new project.

The construction of buildings will be completed by the end of 2011, while the start of production has been postponed to the end of 2012. Production will start with an annual output capacity of 250,000 mt of flat steel, increasing after two years to 450,000 mt of steel for the construction and the shipbuilding industries. By the end of 2012, 150 new employees will be hired.

The mill, which will require an investment of €45 million from the Italian company, will use about 800 cubic meters of water per hour, of which only 15 m³ per hour will be consumed, thanks to a water recycling system. Also, the noise emitted by the plant will be minimized through the installation of insulating coatings on the walls of buildings.

Central Iron Ore commences field work in Yilgarn iron ore project

July28, 2011 |By Steelorbis

Canadian iron ore miner Central Iron Ore Ltd announced on July 27 that it has commenced to field mapping and sampling in the Yilgarn iron ore project in Western Australia, with the field work expected to continue over the next few months.

Central Iron Ore now has a total of 10 tenements covering 652 km2 that are located within the Yilgarn Iron Ore Province. According to the statement released by Central Iron Ore, the initial strategy and objective is to evaluate the occurrence of both magnetite ore and direct shipping ore within the above tenements.

Japanese steel sales value up 16.5 percent in June over May

July28, 2011 |By Steelorbis

In Japan large-scale wholesale iron and steel sales value in June this year amounted to JPY 868 billion ($11.15 billion), increasing 9.5 percent compared to the same month of the previous year and up 16.5 percent compared to May of the current year, according to statistics released by the Japanese Ministry of Economy, Trade and Industry (METI). Meanwhile, in the second quarter of 2011 large-scale wholesale iron and steel sales value in Japan totaled JPY 2.376 trillion ($30.54 billion), increasing 3.6 percent over the same period of 2010, but decreasing 5.8 percent from the first quarter of this year.

Thursday, July 28, 2011

CEZ to sell German coal miner stake to EPH

Thu Jul 28, 2011

PRAGUE, July 28 (Reuters) - Czech utility CEZ (CEZPsp.PR: Quote) will sell its 50 percent stake in German coal miner Mibrag to co-owner EPH, a Czech energy holding, in a deal that includes CEZ buying a power plant north of Prague, it said on Thursday.
No financial details of the deal were released. CEZ also said it would not sell its Chvaletice power plant. The utility, central Europe's largest listed company, had announced in December a swap deal under which it would sell the Chvaletice plant in exchange for a heat distribution system from EPH.

(sourced Reuters)

West Australian imposed 5pct royalty

Thursday, 28 Jul 2011

THE West Australian government imposed a 5% royalty on magnetite iron ore, potentially blowing another hole in the federal budget and angering the emerging industry that had pleaded for a moratorium.

Premier Colin Barnett conceded some magnetite miners could be hurt by Julia Gillard's mineral resources rent tax as their production ramped up, and it would force the federal government to reimburse their royalties.

He denied the decision bore any similarity to the dramas in May when he blew a AUD 2 billion hole in the federal budget by lifting royalty concessions for iron ore "fines.

Mr Barnett said that "At no stage has the federal government ever suggested that we shouldn't have a royalty on magnetite.”

He denied trying to stir up trouble. He said that "The budget dramas were Wayne Swan's creation. The federal government knew full well that we were negotiating to remove that concession. There was no surprise there.”

He added that "The state will always preserve its right to set the price at which we sell minerals."

The royalties are expected to rake another AUD 160 million a year into state coffers by 2014, after collecting about AUD 60 million this financial year.

Mr Barnett said a 5% royalty would also apply to the emerging uranium industry, which has already been hit by delays, and denied it could provide a disincentive for the new mines to proceed. If an industry can't afford to pay 5% royalty, they shouldn't be in the industry.

(sourced TheAustralian)

Unions claim win in Rio and BHP dispute

Thursday, 28 Jul 2011 |The West

A landmark victory in the Federal Court looks set to give unions more power to bargain on behalf of workers at Rio Tinto and BHP Billiton iron ore operations in the Pilbara.

The full bench of the court has ruled that a non union collective agreement covering workers in Rio Tinto's operations was invalid.

The decision casts doubt on similar agreements at BHP and other operations in the mining region, involving thousands of workers.

The Construction, Forestry, Mining and Energy Union challenged the validity of Rio's 2008 agreement which was used to cover all its workers in the Pilbara and to bypass union negotiations.

The union's challenge was rejected by the Federal Court in August last year but it took the case to the court's full bench.

Mr Gary Wood CFMEU's WA mining division secretary told AAP the decision confirms that our legal advice was spot on.

He said that "Rio and other employers that went down that path were, obviously, looking to shield themselves from the new legislation which brought fairness into the workplace, particularly around bargaining."

Mr Wood said the Rio agreement and other similar ones restricted those employees from gaining the benefits under the Fair Work Act.
He said the decision meant workers would have the right to be heard in good faith bargaining and to take protected industrial action.

India's Jindal Steel shortlisted for Bandanna bid-executive

Thu Jul 28, 2011

NEW DELHI, July 28 (Reuters) - India's Jindal Steel & Power has been shortlisted for a bid by Australian coal explorer Bandanna Energy , its deputy managing director Sushil Maroo said on Thursday.

Bandanna said earlier this month it had asked potential bidders for the company to provide binding offers after shortlisting parties as part of a strategic review. The proposed bids included individual project assets and corporate-based transactions.

Indian state-run power utility NTPC has already said it has been shortlisted.

India's Aditya Birla, JSW Steel , and China's CITIC Resources Holdings are among interested parties looking at the company, sources had told Reuters in May.


Indian iron ore mining mess - Mining scam caused USD 3 billion loss

Thursday, 28 Jul 2011 | By ET

A judge investigating corrupt mining practices in a Karnataka said that illegal extraction had cost the government INR 161 billion (USD 3.6 billion).

The judge accused local politicians in Karnataka, including the state's chief minister Mr BS Yeddyurappa, of causing the losses from 2006 to 2010 via the illicit mining of iron ore, much of which is thought to have been shipped to China.

The judge in state capital Bangalore said that "An amount of INR 16,085 crore has been lost to the exchequer between 2006 and 2010 due to the illegalities and irregularities linked to the grant of licenses and the export of iron ore. In the illegal mining and irregularities committed in the export of iron ore, we have found the involvement of some 100 mining companies, about 600 officials, powerful politicians including the chief minister."

Media reports have suggested that the ombudsman's explosive findings could trigger a collapse of the Karnataka government, which is led by the main national opposition Bharatiya Janata Party .


Mongolia state owned miner ink coal deal with China Chalco

Thursday, 28 Jul 2011

Reuters reported that Mongolia state owned miner Erdenes Tavan Tolgoi has agreed to sell USD 250 million worth of coal from the east Tsankhi deposit to Aluminium Corp of China Ltd a move insiders said was aimed at raising cash to help fund its impending listing fees.

Erdenes TT LLC said in a statement that under the agreement, Chalco would resell 30% of the coal to Japanese trading houses Itochu Corp and Mitsui as well as state owned Korea Resources Corp.

Erdenes TT said a signing ceremony was attended by China's ambassador to Mongolia and delegates from Chalco. It has also signed purchasing agreements with Itochu, Mitsui and Kores.

The government has split the massive Tavan Tolgoi coal field into two sections for development. The east Tsankhi area is owned by Erdenes TT which is planning an initial public offering worth as estimated USD 10 billion while the west Tsankhi block is being auctioned to miners via an international tender.

A source involved in the listing of Erdenes TT said the government has been working hard to raise USD 500 million of initial funding needed to kick off the IPO process.

The source who asked not to be identified as his firm was still competing to win deals related to the IPO said "The overall CAPEX for the project is well into the billions over the life of the mine so USD 500 million is just a drop in the bucket to get this project moving."

Erdenes TT did not say how much coal would be sold to Chalco under the USD 250 million deals but it said the agreement would expire within one to 1 to 1/2 years. However, a newspaper report quoted Mr B Enebish head of state run Erdenes MGL as saying the deal would last for five years.

After the deal expires, Chalco would then have to pay market price for the coal, Erdenes TT said. But it was unclear whether Chalco would continue to be the sole recipient of the coal from east Tsankhi deposit when the agreement expires.

Erdenes TT could not be reached for comment.

The government has said that it hopes to list Erdenes TT by late 2011 or early 2012 and the company would likely be listed in London, Hong Kong, or both.

(Sourced from Reuters)

Normal shipments to resume at Aquila Resources Isaac Plains coal mine

Thursday, 28 Jul 2011

Aquila Resources Limited refers to the various recent announcements regarding the dispute between its wholly owned subsidiary IP Coal Pty Ltd and Vale Australia Pty Ltd as to the basis on which future separate shipments of coal can be sent from the Isaac Plains Coal Mine. The most recent announcement was on 13 July 2011 which confirmed that a single upcoming shipment by IP Coal would proceed.

Aquila announced that Vale and IP Coal have reached an agreement which effectively puts aside the difference of opinion between them regarding the ability to make separate shipments of coal from Isaac Plains. This means that normal shipments of coal will now resume.

The agreement applies until March 31st 2012. IP Coal and Vale are continuing to pursue options for a longer term resolution of the issues regarding separate shipments of coal from Isaac Plains.

Aquila will keep the market informed of developments in respect of the above.

An Aquila spokesperson said that "Aquila remains firmly of the view that none of this disruption was necessary but, now that we have certainty, our focus is to clear the backlog of predominately coking coal. We have a number of ships lined up and it is important for the ongoing efficiency of the mine that coal is shipped as soon as possible."

South Africa unions to meet coal miners Thursdays on strike

Thursday, 28 Jul 2011

South Africa's National Union of Mineworkers said it would meet with leading coal producers on Thursday again over a wage strike after talks on Tuesday failed to clinch a deal.

A NUM spokesman said that "We will meet again on Thursday.”

Smaller trade union Solidarity in a statement said that it would also return to talks on Thursday with the country's chamber of mines, which is negotiating on behalf of the coal miners.

(Sourced Reuters)

Atlas Iron takes 20pc stake in Centaurus

Thursday, 28 Jul 2011

Atlas Iron Limited announced that it has entered a strategic alliance with Centaurus Metals Limited an emerging Brazilian iron ore explorer and developer. Under the terms of the alliance it is envisaged Atlas will acquire a strategic 19.9% equity stake in Centaurus for AUD 18.7 million.

The key terms of the subscription agreement are as follows:

1. Atlas to subscribe for 110 million Centaurus shares at a price of 8.8 cents per share out of Centaurus’ existing 15% capacity (Tranche 1)

2. Subject to Centaurus shareholder approval, Atlas will subscribe for a further 102 million Centaurus shares on the same terms and conditions as Tranche 1 (Tranche 2)

3. Atlas to receive 16 million Centaurus options under Tranche 1 and a further 14 million Centaurus options under Tranche 2. The Centaurus options will be issued for nil consideration and are exercisable at 15 cents per share prior to August 31st 2014

4. Atlas to provide support with technical, development and product marketing to assist in Centaurus’ growth

5. Subject to all necessary regulatory approvals and provided Atlas continues to hold a 5% interest in Centaurus, Atlas will also have a right to maintain its equity interest in the Company on the same terms as those being offered to third parties

6. Atlas to nominate one member to the Centaurus Board

Mr David Flanagan MD Atlas said that ”We see the Centaurus business model of seeking low capital iron ore projects which are close to infrastructure as similar to that which has served Atlas so well in the Pilbara. Brazil is one of the world’s leading producers of high grade iron ore and this opportunity gives Atlas exposure to back a good management team who are building an excellent Brazilian iron ore business.

Mr Darren Gordon MD of Centaurus said that “Having Atlas as a major shareholder positions Centaurus perfectly for its transition to an iron ore producer, from both our Export and Domestic projects in Brazil, and with its support we hope to replicate the sort of growth and success that Atlas has been able to achieve.”

European and prompt South African physical coal prices rose

Thursday, 28 Jul 2011

Reuters reported that European and prompt South African physical coal prices rose by around 50 US cents as coal continued to track oil but prices were also slightly boosted by increased buying interests from traders for DES ARA and South African cargoes. The threat of a strike by South African coal miners is also helping to support coal prices.

The Chamber of Mines said that coal mining firms in South Africa were served with a strike notice after talks with unions failed. The Chamber of Mines, which is negotiating on behalf of several mining companies, said it had made its final offer. Overall coal prices remain range bound. There has not been enough buying interest in the Atlantic or Pacific to push prices out of their current range for several weeks. European end users' needs are covered until end August but German generators are expected to come back for Q4 spot cargoes in September 2011.

A source at one major European utility said that "It could start to get interesting in September if the Germans come back to buy as expected and with the nuclear shutdowns, it's likely that they will need to buy more, fresh coal for Q4. But it's range bound still for swaps and physical."

Swaps traders said API2 swaps have been in the range USD 126 to USD 130 for several weeks and show little sign of shifting significantly unless fresh news gives the market a jolt. Despite rumors of new Chinese buying, physical traders said the only cargoes being sold into China are heavily discounted.

One Europe based trader selling to China said that "Some coal, including South African, is going into China and some cargoes are coming to Europe but at huge discounts. Nothing is pricing in at the visible benchmark prices, the buyers just aren't interested at those levels."

(sourced from Reuters)

Sishen iron ore mine spat takes a new turn

Thursday, 28 Jul 2011

Reuters reported that elite South African police investigating possible fraudulent mining permits on Wednesday raided the mines department and a company linked to a dispute between one of the world's biggest mining companies and steel giant ArcelorMittal.

Mr Macintosh Polela, spokesman for the police Hawks unit, said the raids centered on the government's mining department in Pretoria and its regional offices in Kimberly, which oversees minerals rights in Northern Cape province.

He told “The allegations are that they were involved in the fraudulent issuing of prospecting rights.”

Police also hit the offices of Imperial Crown Trading, a little-known company with no experience in mining which has become a household name in South African financial circles after becoming embroiled in a dispute between the local unit of global steel giant ArcelorMittal and Kumba Iron Ore, a subsidiary of mining giant Anglo American .

The spat started when ArcelorMittal's mining rights at Kumba's giant Sishen iron ore mine in the Northern Cape lapsed in 2009 and ICT was awarded prospecting rights to the same piece of land even though mining has been going on there for years.

ArcelorMittal said in August in would buy ICT for 800 million rand, effectively to gain control once again of its lost slice of the mine.

The deal sparked furious allegations of corruption in the mining ministry because it also involved the transfer of a quarter the steel-maker's shares to black investors, including ICT and an investment group led by the son of President Mr Jacob Zuma.

(sourced from Reuters)

Wednesday, July 27, 2011

Japan files complaint with Mongolia over Tavan Tolgoi bidding process

Wednesday, 27 Jul 2011

Japan has filed a complaint with Mongolia over the bidding process for its massive Tavan Tolgoi coal development project, charging that its decision about the winners is confusing.

The Mongolian government announced this month it had reached a deal with China's Shenhua International, U.S. Peabody Energy and a Russian Railway-Mongolian consortium to develop the west Tsankhi deposit, prized for its massive resources of highly sought after coking coal.

Japanese and Korean firms were not mentioned in the announcement even though they are part of the consortium that includes Russian Railway. Instead the Mongolian announcement says that Russian Railway is now part of a consortium with Mongolian firms but it is not clear what firms are being referred to.

(Sourced from Mineweb)

Indian coal minister to set aside blocks for end users

Wednesday, 27 Jul 2011

Determined to start coal blocks' auction this fiscal, the government has decided to set aside reserves for end users like power, cement and steel companies, which will be allocated blocks through competitive bidding, after meeting the needs of state run Coal India.

Indian coal minister Mr Sriprakash Jaiswal told reporters after a meeting with stakeholders on introduction of competitive bidding of coal blocks that "The meeting was successful. Based on the reaction of the stakeholders, we will shortly take the call on firming up the modality of competitive bidding. We will surely introduce the auctioning within current fiscal.”

The coal ministry had floated a discussion paper in April seeking comments from stakeholders to finalise guidelines for allocation of coal and lignite blocks under the competitive bidding route and laid out four options from which one would be used while allocating blocks through auctions.

Talking to PTI, a few stakeholders said that majority was in favour of upfront payment, which mandates the bidder to commence mandatory work programme immediately after signing the agreement with the ministry and pay the amount within five years of signing the contract.

Meanwhile, Mr Jaiswal has hinted that the number of blocks to be offered through competitive bidding would be limited since the priority of the government would still be CIL.

He said that "We will give maximum blocks to CIL and try to first meet its appetite and then give to others. We will give blocks to States and private firms; but the maximum will go to CIL.”

A source in the ministry, however, said the coal ministry is planning to earmark blocks for sectors like power, cement and steel, which use coal as raw material, separately to avoid the prospects of allottees losing interest in developing the mines.

sourced moneycontrol

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Indonesia coal boom creates jungle wealth - Report

Wednesday, 27 Jul 2011

Nearly two decades ago Ms Sunarti Abror, the daughter of a vegetable seller in Indonesia, invested the family savings in three excavators, which she leased to coal miners who used only hand tools. Today, Ms Abror has three coal mines of her own, which produce about USD 100 million of coal a year. She also has a water bottling factory, palm oil and rubber plantations, and a shipping business, all of which have made her a dollar multi millionaire.
She said that "Our business is growing rapidly, enabling us to expand into other areas. I want to hire as many people as possible and have the business flow like a river."

On a recent visit to her open pit mine, a vast clearing in the jungles of Borneo, Ms Abror was met by a fleet of security jeeps, which escorted her down the USD 4.5 million private road she had built to serve her own private coal port.

Indonesia's huge reserves of thermal coal, used for power plants, are being aggressively targeted by energy hungry China and India. The demand, combined with high commodities prices, is driving a resources boom in remote Indonesian provinces, and creating billions of dollars in personal wealth.

According to Mr Rudi Vann, a coal analyst at WoodMackenzie, Indonesia in 2005 overtook Australia as the largest thermal coal exporter. By 2015, 40% of global thermal coal shipments will come from the archipelago of 17,000 islands, cementing Indonesia's status as the king of black gold. And two of the top three global suppliers of thermal coal will be Indonesian, Bumi Resources and Adaro, which already dominate domestic production.

Indonesia has a key advantage over Australia geographically. It is half the distance from the largest coal importers China, India, South Korea, Japan and Taiwan. Its producers have also added basic infrastructure, such as conveyor belts, railways and ports more easily due to less stringent regulation.

Mr Peter Lynch executive chairman of CoKal, an Australian miner in Kalimantan, the Indonesian part of the island of Borneo said that "Indonesia is laughing. Everywhere you look there is a new barge facility or crane. Growth seems to be unrelenting."

The growth in the sector is creating visible social change. Despite its relatively poor population of 240 million, Indonesia has nearly 50,000 millionaires. The number of billionaires doubled last year to more than 20, almost all of them commodities tycoons.

Extractive industries, mainly coal, oil and gas, create considerable employment and make up about a third of Indonesia's economy, while tax income from coal mining alone will reach USD 7 billion this year.

Ms Abror does her banking in Banjarmasin, an industrial town of 600,000 people where she has a USD 10 million line of credit with Mandiri Bank, Indonesia’s largest bank by assets. Over the past five years, Ms Mandiri said its loan book soared 188% to USD 1.6 billion in Kalimantan.

Ms Abror found her most profitable mine, in the Pintap district of South Kalimantan, while accompanying her husband on a business trip in 1993. He was then a civil servant under the authoritarian regime of late President Suharto, supplying coal to a state owned cement company. It uses the fuel to fire its kilns and is one of Mrs Arbor’s most loyal customers.

Under the authoritarian regime of late President Mr Suharto, who was toppled in 1998, the most lucrative resource deals were awarded in Jakarta to his cronies and family.

Ms Abror's rise is an example of how, even after 13 years of democracy, success still hinges on having strong connections with government officials who award coveted land titles and operating permits.

Ms Abror grew up on the island of Java three doors down from Indonesian President Susilo Bambang Yudhoyono, but played down the importance of the relationship.

(sourced from CNBC)

Iron ore swaps attract more banks and steel buyers - Analysts

Wednesday, 27 Jul 2011

Reuters reported that the iron ore swaps market has attracted an increasing number of banks and financial firms as well as growing interest from automakers and other steel buyers, even while most steelmakers are reluctant to use hedging instruments.

Deutsche Bank and Credit Suisse have been active in the iron ore swaps market since it started in 2008-09, followed a few months later by others such as Citigroup, JP Morgan, Morgan Stanley and Macquarie.

The iron ore swaps market is still very small compared with a physical market of about 1 billion tonnes a year of seaborne material, but it is growing quickly.

Mr Habib Esfahanian iron ore derivatives trader at Citi said that "You can see, bit by bit, that many banks are now involved to some extent. I think it is only natural that the combination of client interest and volatility in the product got traders interested."

Goldman Sachs started to trade iron ore swaps earlier this year.

Mr Paul Temple head of steel derivatives trading at French bank Natixis said that it is already trading steel derivatives and will start trading iron ore swaps in the next few weeks.

Other banks such as BNP Paribas that were only dipping their toes in iron ore derivatives until last year have stepped up their efforts.

Mr Mikko Rusi, BNP Paribas head of EMEA metals sales, said that "We have a large number of clients in this sector and we are reacting to a number of enquiries from our customers. Clearly we see that the iron ore and the steel market, if you look at the size of the physical market, is very big and represents a good business opportunity for banks."

Mr Abe Ulusal, a trader at Mitsui Bussan Commodities, said that "Iron ore producers and trading firms are more active, and steel end users would like to get involved."

Brokers and traders said steel mills, especially in China, are warming up to iron ore derivatives but no large mill has openly backed this market so far.

Mr Stephane Giroit ferrous metals sales at BNP Paribas said that "As of today, steel mills are not the most active party in this market, but some of them are starting to look."

Mr Colin Hamilton analyst at Macquarie said that "Automakers would rather hedge themselves, but they are waiting for the market to mature. The market can proceed without steelmakers, but it's obviously more challenging. The commoditization of steel is always going to be an issue for steelmakers."

(sourced from Reuters)

Mining union wins rights to bargain in Pilbara

Wednesday, 27 Jul 2011

A mining union has won a landmark legal victory that allows it to bargain on pay and conditions for workers in the Pilbara's booming iron ore operations.

The full bench of the Federal Court has agreed with the Construction, Forestry, Mining and Energy Union that non union collective agreements Rio Tinto set up with its workers are invalid.

Rio set up the agreements after the federal Labor government banned new Australian Workplace Agreements in 2008.

The CFMEU's Mr Gary Wood denies the decision will see more industrial unrest in the Pilbara. He said that "You know I wouldn't see it goes to union industrial unrest, the laws are completely different to what they were in the 70s and the 80s.”

He added that "What it means is that all parties are required to work within the provisions of the Act and the Act is a sensibly framed Act."

sourced ABC.NET

Iron ore price negotiations - FMG backs drive to monthly iron ore pricing

Wednesday, 27 Jul 2011

Australia's third largest iron ore miner Fortescue Metals backed a drive led by larger rivals BHP Billiton and Rio Tinto to introduce monthly pricing for international sales, saying it would add transparency and benefit buyers and sellers.

Mr Neville Power CEO of Fortescue told Reuters that "The shorter the pricing, the greater the transparency adding that if pricing did go monthly industry-wide, it would be a positive outcome."

Most iron ore is sold three months forward based on the average price over the previous three months, in itself a shift from once a year price setting, which BHP Billiton and Rio Tinto had criticised as outdated and inefficient.

Fortescue one of several iron ore miners in Australia pushing up production to meet strong projected demand for the steel making raw material in Asia, would not comment directly on Fortescue's current pricing formula.

BHP Billiton last year drove the move away from annual pricing settlements to quarterly pricing after spot prices rose above the then annual price.

This prompted steep falls in some steelmaker profits as they struggled to pass on suddenly higher costs to customers.

But iron ore miners countered that the shorter pricing would benefit buyers if prices fell.

(Sourced from Reuters)

NMDC Q1 iron ore production up by 7pct

Wednesday, 27 Jul 2011

State run iron ore miner NMDC said its production had risen by about 7% to 6.1 million tonne during the April to June quarter riding on the back of improved logistics and better weather conditions. The company had produced 5.7 million tonne of iron ore in the corresponding quarter of 2010-11.

Mr Rana Som CMD of NMDC said that "At this time last year, the seasonal rains had played a dampener but this year we produced more as rains did not impact our operations that much.”

Mr Som said that during the quarter, sales of iron ore rose by about 12% at 6.95 million tonne vis a vis 6.2 million tonne in the first quarter of last year.

Mr Som said that "Sales volumes exceeded production during the quarter due to unsold inventory and increased availability of railway wagons.”

Talking about the outlook for the current quarter, the NMDC chairman said that both, production and sales of iron ore will be exceeding the targets. He added that "In July, our production has been 2 million tonne of iron ore, while sales of the raw material has been reported at 2.3 million tonne. So we have already exceeded the targets for the month.”

(sourced from BS)

Anglo American stops all coal operations in South Africa due to strike

Wednesday, 27 Jul 201

Anglo American said that it has halted operations at its South African coal mines due to a wage strike which started with the late shift on Sunday.

Mr Moeketsi Mofokeng a spokesman at the thermal coal unit said that "There is still no production at all the Anglo American owned mines.”

Talks between unions and employers resumed on Tuesday in a bid to end the strike.

Mr Mofokeng said the company would need 24 hours to get its operations back to normal once the strike is ended.

(Sourced from Reuters)

Mining mergers and acquisitions doubled in H1 2011 - Ernst Young

Wednesday, 27 Jul 2011

Advisory and accountancy firm Ernst & Young said that mining mergers and acquisitions doubled in the first half, coming close to the total for the whole of last year, although the pace was tempered by concerns over global macroeconomics and resource nationalism.

Total deal value jumped to USD 96.3 billion from USD 47.9 billion in the year earlier period, in part reflecting the larger size of deals in the sector. There was USD 113.7 billion of deals made in the whole of last year. Coal deals led the way in terms of value while gold transactions were tops by volume.

Mr Lee Downham, Ernst & Young's global mining & metals transaction advisory leader told Reuters that "Momentum is growing. We could see over USD 200 billion worth of deals by the end of the year."

The number of initial public offerings in mining & metals rose 30% to 73 in the first half, while total proceeds more than doubled to USD 13.0 billion, mainly on the USD 10 billion listing of commodities trader Glencore.

Mr Downham said that "It's difficult to say the numbers are up because of Glencore, because you could argue that if Glencore didn't happen the money could have gone to other IPOs."

He expects to see a significant number of mining and metals IPOs in the second half and beyond, although he said it would only take an event like a Greek default to delay IPOs. He said that "There are lots of IPOs in the second half that could have happened in the first half if Glencore hadn't listed."

Miners operating in Africa, the CIS, India and South America are looking at listing in London. Ernst & Young is working on a number of mining IPO deals at the top end of the FTSE 250 index and a couple of larger listings.

The companies looking to IPO operate in a diverse range of commodities including precious group metals, copper, gold and iron ore. He added that the firm is as busy as it was at the peak of the market in 2006-07.

(sourced from Reuters)