Tue,February7, 2012
Last Thursday, Swiss miner Xstrata and commodities trader Glencore announced a potential blockbuster merger that would shake up a few of mining’s biggest industries.
According to Reuters, the deal is set to total $80 billion. And the newly combined firms “would rank as the world’s largest thermal coal exporter, the largest zinc producer and third-largest copper miner…”
Many analysts are already predicting a jump in the price of coal, copper and zinc in the coming weeks.
But the all-share merger would also disrupt another big mining industry… iron ore. And investors will want to pay close attention.
Iron Ore Equals Big Profits
Over the past 10 years, iron ore has had a run even gold can’t touch.
From August 2001 to August 2011, prices jumped 1,266%. Gold jumped 566% comparably.
Today, about 70% of iron ore traded in the world is accounted for by three companies – BHP Billiton, Vale and Rio Tinto. And they’re raking in massive profits.
Reuters reports, “Iron ore sells for around $140 per tonne to China… and only costs about $20 to $30 per tonne to mine.” China’s steelmakers aren’t very happy about paying such high prices. But since October 2011, they’ve had a little bit of a reprieve.
The “big three” have flooded the market with iron ore supplies, driving the price lower, to around $120.
As mining.com explains, the iron ore’s big players are “concentrating on building market share rather than maximizing prices. This way the giants drive high-cost producers out of the business.”
If Glencore and Xstrata don’t want to get left out in the rain, they should make this merger happen.
And there are two main reasons it’s more likely to happen than not.
Glencore and Xstrata Make Sense
First, Glencore already owns 34% of Xstrata. So both companies already understand the risks and advantages this merger carries. And it should make it that much easier for them to agree on a final price.
Second, Xstrata has been trying to gain a stake in the iron ore industry for years. In 2009, the company attempted to purchase Anglo American (AAUKF.PK). The deal would have made Xstrata the fifth-most-profitable company in the iron ore market. But talks fizzled and the deal fell through.
Now the proposed merger between Glencore and Xstrata has reignited speculation of another takeover attempt coming for Anglo American, the world’s fourth-largest iron ore producer.
A few other companies also stand to be bought up if a deal is reached, as well.
Iron Ore M&A Heating Up
First Quantum Minerals (FQVLF.PK), Fortescue Metals Group (PINK: FSUMF.PK) and Freeport McMoRan Copper & Gold (NYSE: FCX) are also being seen as potential targets.
But Freeport may also be too expensive for Xstrata and Glencore and could end up as more of a competitor than potential takeover.
Only time will tell. But this is one development that should begin unfolding in just the next few weeks.
Disclosure: Investment U expressly forbids its writers from having a financial interest in any security they recommend to our subscribers. All employees and agents of Investment U (and affiliated companies) must wait 24 hours after an initial trade recommendation is published on online - or 72 hours after a direct mail publication is sent - before acting on that recommendation.
(sourced SeekingAlpha.com)
Showing posts with label Anglo American Plc. Show all posts
Showing posts with label Anglo American Plc. Show all posts
Tuesday, February 7, 2012
Friday, January 27, 2012
Walter Energy may lure buyers willing to bet on a recovery in coal prices
Friday, 27 Jan 2012
Bloomberg reported that Walter Energy Inc may finally lure buyers willing to bet on a recovery in coal prices with the industry's cheapest stock.
According to data compiled by Bloomberg, after losing almost half its value in the past year, the producer of steelmaking coal sold for 9.3 times earnings this week. That was less than any North American coal mining company with USD 1 billion in market capitalization. The slide also drove down the value of Walter Energy to 1.7 times its net assets this month, the lowest since the last bear market in US equities.
While a surge in coal prices last year led to the biggest wave of coal deals, most acquirers were left with losses as demand for the commodity collapsed. Walter Energy, which bought Western Coal Corporation for USD 5.3 billion in April, is an attractive target because it produces high grade steelmaking coal. A buyer could spend double Walter Energy’s closing price of USD 67.54 a share yesterday and still get the company for less relative to earnings than any coal takeover in the past year.
Mr J Christopher Haberlin analyst at Davenport & Co said that "Now is the opportune time for a buyer to potentially start looking at them. It's some of the best coal in the world and it's what steelmakers want. If somebody did make a run at Walter here, certainly they could take Walter out a price much lower than where that valuation may have been."
Walter Energy may attract interest from BHP Billiton Limited, Anglo American Plc or ArcelorMittal, and could command as much as USD 120 a share in an acquisition.
(Sourced from www.bloomberg.net)
Bloomberg reported that Walter Energy Inc may finally lure buyers willing to bet on a recovery in coal prices with the industry's cheapest stock.
According to data compiled by Bloomberg, after losing almost half its value in the past year, the producer of steelmaking coal sold for 9.3 times earnings this week. That was less than any North American coal mining company with USD 1 billion in market capitalization. The slide also drove down the value of Walter Energy to 1.7 times its net assets this month, the lowest since the last bear market in US equities.
While a surge in coal prices last year led to the biggest wave of coal deals, most acquirers were left with losses as demand for the commodity collapsed. Walter Energy, which bought Western Coal Corporation for USD 5.3 billion in April, is an attractive target because it produces high grade steelmaking coal. A buyer could spend double Walter Energy’s closing price of USD 67.54 a share yesterday and still get the company for less relative to earnings than any coal takeover in the past year.
Mr J Christopher Haberlin analyst at Davenport & Co said that "Now is the opportune time for a buyer to potentially start looking at them. It's some of the best coal in the world and it's what steelmakers want. If somebody did make a run at Walter here, certainly they could take Walter out a price much lower than where that valuation may have been."
Walter Energy may attract interest from BHP Billiton Limited, Anglo American Plc or ArcelorMittal, and could command as much as USD 120 a share in an acquisition.
(Sourced from www.bloomberg.net)
Tuesday, January 10, 2012
S.Africa 2011 Richards Bay coal exports rise 3.3%
Tue, Jan10, 2012
JOHANNESBURG (Reuters) - South Africa's coal exports from the Richards Bay terminal rose 3.3 percent to 65.5 million tonnes in 2011, the terminal's data showed on Monday, as improvements on the rail lines leading to the port started to pay off.
State-owned logistics group Transnet has been investing heavily to upgrade its lines and to invest in new wagons and locomotives, but export figures are still far below the coal terminal's expanded capacity of 91 million tonnes.
Coal producers in South Africa including Anglo American, BHP Billiton, Exxaro, Optimum Coal and Xstrata have been eager to export more coal to meet rising demand from India and China but have been limited by bottlenecks on the lines leading to the port.
Last week, South Africa's coal exporters provided a slightly lower 2011 export estimate of 64.6 million tonnes, a rise of 1.9 percent.
Transnet has said it will take until at least 2015 to be able to carry 81 million tonnes to the Richards Bay Coal Terminal (RBCT) each year.
The group also plans to free up an additional 14 million tonnes of capacity on the coal line by moving non-coal cargo to a new line via Swaziland.
Coal producers have begun to look beyond South Africa and explore export routes via Mozambique and Namibia, although the rail links or expansion at the relevant ports are still in the planning stage or would involve higher costs.
Coal stocks at the terminal stood at 3.3 million tonnes at the end of December, RBCT added.
(sourced Reuters)
JOHANNESBURG (Reuters) - South Africa's coal exports from the Richards Bay terminal rose 3.3 percent to 65.5 million tonnes in 2011, the terminal's data showed on Monday, as improvements on the rail lines leading to the port started to pay off.
State-owned logistics group Transnet has been investing heavily to upgrade its lines and to invest in new wagons and locomotives, but export figures are still far below the coal terminal's expanded capacity of 91 million tonnes.
Coal producers in South Africa including Anglo American, BHP Billiton, Exxaro, Optimum Coal and Xstrata have been eager to export more coal to meet rising demand from India and China but have been limited by bottlenecks on the lines leading to the port.
Last week, South Africa's coal exporters provided a slightly lower 2011 export estimate of 64.6 million tonnes, a rise of 1.9 percent.
Transnet has said it will take until at least 2015 to be able to carry 81 million tonnes to the Richards Bay Coal Terminal (RBCT) each year.
The group also plans to free up an additional 14 million tonnes of capacity on the coal line by moving non-coal cargo to a new line via Swaziland.
Coal producers have begun to look beyond South Africa and explore export routes via Mozambique and Namibia, although the rail links or expansion at the relevant ports are still in the planning stage or would involve higher costs.
Coal stocks at the terminal stood at 3.3 million tonnes at the end of December, RBCT added.
(sourced Reuters)
Thursday, December 22, 2011
Anglo American ships first iron ore from Kolomela in South Africa
Thursday, 22 Dec 2011
Reuters reported that global miner Anglo American has exported the first shipment from the USD 1 billion Kolomela iron ore mine in South Africa one of its key growth projects putting the mine ahead of schedule and on track to achieve full production by 2013.
The miner said Kolomela one of the projects expected to drive organic volume growth for Anglo has been commissioned five months ahead of schedule and on budget.
Mr Chris Griffith CEO of Anglo American Kumba Iron Ore business said "The first shipment of 100,000 tonnes of Kolomela lump ore left the port of Saldanha on 19 December 2011."
He said that "The commissioning of the Kolomela project is in line with our growth strategy of ramping our South African production up to 70 million tonnes per year by 2019."
Kolomela had been expected to deliver initial production at the end of the first half of 2012.
(Sourced from Reuters)
Reuters reported that global miner Anglo American has exported the first shipment from the USD 1 billion Kolomela iron ore mine in South Africa one of its key growth projects putting the mine ahead of schedule and on track to achieve full production by 2013.
The miner said Kolomela one of the projects expected to drive organic volume growth for Anglo has been commissioned five months ahead of schedule and on budget.
Mr Chris Griffith CEO of Anglo American Kumba Iron Ore business said "The first shipment of 100,000 tonnes of Kolomela lump ore left the port of Saldanha on 19 December 2011."
He said that "The commissioning of the Kolomela project is in line with our growth strategy of ramping our South African production up to 70 million tonnes per year by 2019."
Kolomela had been expected to deliver initial production at the end of the first half of 2012.
(Sourced from Reuters)
Thursday, December 15, 2011
S.Africa judge revokes rights awarded in Kumba case
Thu Dec 15, 2011
PRETORIA (Reuters) - A South African judge ruled on Thursday that a company with no mining experience and business links with President Jacob Zuma's son could not keep mineral prospecting rights it was awarded.
South Africa previously awarded Imperial Crown Trading the right to prospect for minerals at the Sishen mine operated by Kumba Iron Ore, a unit of global miner Anglo American.
The stakes went far beyond one commercial dispute.
ArcelorMittal South Africa had allowed the right to lapse in 2009, putting in jeopardy a lucrative multi-billion rand supply deal it had with Sishen that allowed it to source iron ore at a discount.
Judge Raymond Zondo also said he agreed with ArcelorMittal's contention that Sishen held 100 percent of the right to the operation and it was not open for anyone to apply for the lapsed right.
ArcelorMittal says this means its supply agreement remains in force.
"The judgement of the High Court serves to confirm our view that Sishen remains obliged to supply 6.25 metric million tonnes of iron ore to us at cost plus three percent in terms of our agreement," ArcelorMittal said in statement.
The group's share price rose more than 5 percent after the verdict.
Kumba disagreed that the decision had any bearing on the supply dispute, which is being fought out in a separate arbitration process.
"Kumba remains convinced that the contract lapsed and this judgment does not change that," a spokesperson for Kumba said.
Thursday's judgement was the latest twist in a long and complex saga, and ICT immediately signalled it would appeal.
"Certainly we will appeal. We do not agree with the judgement. It is contrary to what we have been contending all along," ICT lawyer Ronnie Mendelow told journalists after the ruling.
One of ICT's owners has business connections to Zuma's son, Duduzane, and the awarding of the right had rattled investor confidence in Africa's largest economy as it focused unflattering attention on the issue of crony capitalism and political favouritism.
"One of the uncertainties of the mining industry has been the security of tenure, and investment has pulled back, so if anything this judgement may encourage investment," said Chris Hart, economic strategist at Investment Solutions.
"My instinct is that policy and procedures need to follow best practice. My sense is that we are moving back to best practice and a defendable process of awarding mineral rights," he said.
The full judgement with the reasons for the decision will be given on Tuesday, and South Africa's department of mineral resources said in a statement it would not comment before then.
(sourced Reuters)
PRETORIA (Reuters) - A South African judge ruled on Thursday that a company with no mining experience and business links with President Jacob Zuma's son could not keep mineral prospecting rights it was awarded.
South Africa previously awarded Imperial Crown Trading the right to prospect for minerals at the Sishen mine operated by Kumba Iron Ore, a unit of global miner Anglo American.
The stakes went far beyond one commercial dispute.
ArcelorMittal South Africa had allowed the right to lapse in 2009, putting in jeopardy a lucrative multi-billion rand supply deal it had with Sishen that allowed it to source iron ore at a discount.
Judge Raymond Zondo also said he agreed with ArcelorMittal's contention that Sishen held 100 percent of the right to the operation and it was not open for anyone to apply for the lapsed right.
ArcelorMittal says this means its supply agreement remains in force.
"The judgement of the High Court serves to confirm our view that Sishen remains obliged to supply 6.25 metric million tonnes of iron ore to us at cost plus three percent in terms of our agreement," ArcelorMittal said in statement.
The group's share price rose more than 5 percent after the verdict.
Kumba disagreed that the decision had any bearing on the supply dispute, which is being fought out in a separate arbitration process.
"Kumba remains convinced that the contract lapsed and this judgment does not change that," a spokesperson for Kumba said.
Thursday's judgement was the latest twist in a long and complex saga, and ICT immediately signalled it would appeal.
"Certainly we will appeal. We do not agree with the judgement. It is contrary to what we have been contending all along," ICT lawyer Ronnie Mendelow told journalists after the ruling.
One of ICT's owners has business connections to Zuma's son, Duduzane, and the awarding of the right had rattled investor confidence in Africa's largest economy as it focused unflattering attention on the issue of crony capitalism and political favouritism.
"One of the uncertainties of the mining industry has been the security of tenure, and investment has pulled back, so if anything this judgement may encourage investment," said Chris Hart, economic strategist at Investment Solutions.
"My instinct is that policy and procedures need to follow best practice. My sense is that we are moving back to best practice and a defendable process of awarding mineral rights," he said.
The full judgement with the reasons for the decision will be given on Tuesday, and South Africa's department of mineral resources said in a statement it would not comment before then.
(sourced Reuters)
Anglo American and ArcelorMittal SA await ruling on iron ore permit
Thursday, 15 Dec 2011
It is reported that a South African court will rule tomorrow on whether the state was correct to award a prospecting right over the country's largest iron ore mine to a company whose owners include a business partner of President Mr Jacob Zuma's son.
ArcelorMittal South Africa Limited in June 2011 joined Anglo American Plc unit Kumba Iron Ore in asking the North Gauteng High Court in Pretoria to overturn the award of a 21.4% right at the Sishen iron ore mine, previously held by ArcelorMittal South Africa, to closely held Imperial Crown Trading 289 (Pty) Limited. ICT's owners include Mr Jagdish Parekh, a business partner of Mr Zuma's son, Mr Duduzane. Kumba holds the rest of the Sishen right through Sishen Iron Ore Co, which is partly owned by Exxaro Resources Limited.
Mr Mohamed Kharva, an analyst at Nedgroup Securities Limited, said that "It will go against anyone’s logic if ICT gets the right."
ArcelorMittal South Africa's Sishen right lapsed after the Vanderbijlpark based steelmaker failed to apply for a license by April 30th 2009 to satisfy a change in legislation. Its failure to convert the permit led Pretoria based Kumba to cancel a nine year agreement to supply iron ore from Sishen at below-market prices to the steelmaker, saying it was linked to the mining right. That agreement is under a separate arbitration process.
Ownership of South Africa's mineral resources, previously held by mining companies or private landowners, reverted to the state when the new mining legislation was enacted in 2004 and is now allocated to companies by government officials on a first come, first serve basis.
(Sourced from www.bloomberg.net)
It is reported that a South African court will rule tomorrow on whether the state was correct to award a prospecting right over the country's largest iron ore mine to a company whose owners include a business partner of President Mr Jacob Zuma's son.
ArcelorMittal South Africa Limited in June 2011 joined Anglo American Plc unit Kumba Iron Ore in asking the North Gauteng High Court in Pretoria to overturn the award of a 21.4% right at the Sishen iron ore mine, previously held by ArcelorMittal South Africa, to closely held Imperial Crown Trading 289 (Pty) Limited. ICT's owners include Mr Jagdish Parekh, a business partner of Mr Zuma's son, Mr Duduzane. Kumba holds the rest of the Sishen right through Sishen Iron Ore Co, which is partly owned by Exxaro Resources Limited.
Mr Mohamed Kharva, an analyst at Nedgroup Securities Limited, said that "It will go against anyone’s logic if ICT gets the right."
ArcelorMittal South Africa's Sishen right lapsed after the Vanderbijlpark based steelmaker failed to apply for a license by April 30th 2009 to satisfy a change in legislation. Its failure to convert the permit led Pretoria based Kumba to cancel a nine year agreement to supply iron ore from Sishen at below-market prices to the steelmaker, saying it was linked to the mining right. That agreement is under a separate arbitration process.
Ownership of South Africa's mineral resources, previously held by mining companies or private landowners, reverted to the state when the new mining legislation was enacted in 2004 and is now allocated to companies by government officials on a first come, first serve basis.
(Sourced from www.bloomberg.net)
Thursday, November 3, 2011
SA Coal, Use it or lose it
Thursday, 3 Nov 2011
SA has some of the world’s richest coal deposits . Yet the country is failing to exploit this natural resource, as Charlotte Mathews reports.
The idea that SA’s coal industry needs a co-ordinated “road map”, or long- term plan, was first aired four years ago by a handful of its top executives — Eskom’s Steve Lennon, Exxaro’s Sipho Nkosi and Anglo American’s Roger Wicks.
It has taken three years, and some energetic problem-solving, to reach a point where the first report of the SA Coal Road Map project is about to be released. The report will help the country plan what to do with its coal deposits over the next few decades.
It’s a vital industry. In 2009, according to Chamber of Mines figures, coal became the country’s largest mining activity, generating R65bn in revenue against R49bn from gold, the mineral that has always distinguished SA in the world’s eyes.
The team, organised by the Fossil Fuel Foundation, an industry think-tank, had to overcome issues such as the coal companies’ desire to keep market-sensitive data confidential, and possibly breaching the Competition Act, if they shared information.
In 2008 the department of minerals & energy was split into two , one department focusing on minerals, the other on energy. While key staff were moved around, the project had to wait.
It had a relatively modest budget of about R4m, which would have been enough if the participants had contributed their data. But that didn’t happen and a lot more legwork was needed. The project will need more funds for the second phase.
“Bit by bit we had to accumulate the information we needed,” says steering committee chairman Ian Hall. But as the project evolved, the levels of communication and co-operation improved.
“We attracted a number of people who wanted to be included,” Hall says. “The road map’s stakeholders now represent a big cross-section of the industry.”
The need for long-term planning in the industry was highlighted by government’s recent release of its IRP2 strategy for SA’s future electricity generation mix. The target under the IRP2’s “balanced scenario” is to have 48% of SA’s energy come from coal by 2030 compared with 93% now.
For Greenpeace SA, even that is too much. A report commissioned by the organisation entitled “The True Cost of Coal” and released last week says the externalised cost of the Kusile coal-fired power station (mainly the effect on water sources) would be about R60,6bn /year. That is equivalent to about 97c- R1,88/kWh , which means the indirect costs of the station are at least a third more than the 65c/kWh that Eskom’s customers will pay in 2012/2013.
Eskom declined to comment on the Greenpeace report but referred to its previous statements on climate change and pollution control. It has a “six-point plan” to contribute to global efforts to combat climate change, including reducing its reliance on coal over time, installing clean coal technologies at new coal-fired power stations, improving its own and its customers’ energy efficiency and researching other ways to reduce carbon emissions.
Greenpeace’s view is obviously not shared by the mining industry, or parts of government, which feel SA is not extracting as much value from its coal endowment as other countries.
Most of SA’s coal is thermal, used in power stations, and it has relatively small quantities of coking coal, which is used in steelmaking. There are also scattered deposits of anthracite, a higher-value type of energy coal.
Latest data from the department of mineral resources shows SA ranks fourth-largest in the world in its coal reserves of 30,4bn t but seventh-largest in production, at 250,6Mt in 2009. At current rates of extraction, SA has about 40-50 years of coal supplies.
Hall told last month’s SA National Energy Association (Sanea) conference that the last authoritative estimate of SA’s recoverable coal resources was carried out in 1982, suggesting the country had 59,2bnt . In 2009 the figure was adjusted for depletion to an estimate of 33,1bnt. The Council for Geosciences is updating these figures and is expected to release its report in January.
SA’s coal sales rose a modest 8,7% over the 10 years to 2009 but most of the increased output went to Eskom. Coal exports were almost flat in that period, peaking at 71,5Mt in 2003 but falling as low as 57,8Mt in 2008, the year when the average benchmark export coal price soared to R737/t from R361/t in 2007. In that year average inland prices for coal were R153/t, from R108/t in 2007. Domestic coal prices are generally below exports, mainly because Eskom, the biggest customer, uses a lower quality.
About 84% of SA’s coal comes from the Witbank, Ermelo and Highveld coal fields, which will be largely exhausted within the next 10 years. While the Waterberg has substantial resources of coal — about 40% of the country’s remaining resources — it presents geological challenges which are likely to make mining more expensive. Lack of rail infrastructure and minimal water will also have to be addressed.
The country’s biggest coal producers are Anglo American Coal, Exxaro, Sasol Mining, Xstrata Coal and BHP Billiton Export Coal SA (Becsa). Other large producers include Total Coal, Optimum and Shanduka. There are also numerous smaller miners with one or two mines or projects in development. Among the five biggest producers, only three have major new projects which will supply both Eskom and export markets: Anglo American’s US$512m Zibulo mine in Mpumalanga; Exxaro’s R9bn Grootegeluk expansion in the Waterberg; and the Xstrata/African Rainbow Minerals R3,5bn joint-venture Goedgevonden mine near Witbank.
When Becsa, Exxaro, Anglo Coal and Rio Tinto recently put up for sale some of their undeveloped coal prospects, it was widely seen as a vote of no confidence in long-term growth prospects for the SA coal industry.
This is surprising, considering strong demand from India and China for SA coal and Eskom’s heavy reliance on coal- fired power stations. The utility has even expressed a desire to protect its long- term supply. The only sector of the coal industry that is showing an appetite for new projects is the junior miners, which have more appetite for risk.
Some pressures affecting investment in coal are global: fluctuations in prices, changes in SA’s target markets from Europe to Asia, and environmental pressures against burning fossil fuels. Others are shared by SA’s entire mining industry: talk of nationalisation, delays and complexities in securing mining licences and, since the global economic crisis started, limited access to financing for new projects.
Exxaro chairman Len Konar says in the group’s latest annual report that in the 16 years to 2009 SA’s mining sector actually shrank, while the global average growth in mining was 5%. He ascribes this to outside factors like the volatile rand-dollar exchange rate and the recession. He says other issues affecting the local industry are being addressed, such as infrastructural challenges, bureaucratic delays, regulatory uncertainty, the balance between productivity and cost, and the limited pool of skills .
In his medium-term budget policy statement last week, finance minister Pravin Gordhan conceded SA had lagged behind other countries, like Brazil and Australia, in growth in mining production in the past eight years. He identified six main factors: regulatory uncertainty, logistical challenges, limited electricity generation capacity, currency volatility, the debate on nationalisation and the risks of deep-level gold mining .
To this, says Frans Barker of the Chamber of Mines, should be added the high cost of services provided by parastatals, like electricity, transport and potentially water. Xavier Prevost of XMP Consulting adds that talk of nationalisation is another big issue.
“The department of mineral resources said recently it didn’t think this was deterring investment. When you talk to investors from other countries, the first question they ask is whether SA is going to nationalise the mines. Until government makes a decision on it, no-one is going to invest in mines in SA.”
The logistical problem of rail and port bottlenecks is cited repeatedly by participants in the coal industry.
Prevost says SA’s problems are not impossible to overcome but that the country is not tackling them properly.
“Certainly, the coal industry is responsible for some of them. Transnet’s inability to provide enough rail capacity to move coal from mines to ports and local users has been one of the main issues preventing many mine projects from becoming feasible .
“Mines are prepared to invest in rail, but Transnet isn’t implementing talk into action. Transnet has been discussing expansion for a long time, but nothing happens,” he says.
Slides presented by Transnet CEO Brian Molefe at the recent Coaltrans conference in Madrid showed five coal export corridors in SA: Richards Bay Coal Terminal (RBCT) , Richards Bay Navitrade Terminal and Matola (the coal terminal at Maputo) for thermal coal, while Maputo main port and Durban Bulk Connections also handle sized coal. That gives total port capacity of 99,5Mt/year against rail capacity of 75,4Mt/year .
Molefe said Transnet’s target was to build up coal freight capacity to 81Mt/year by 2014/2015.
But why isn’t Transnet targeting at least 100Mt/year, if that’s what the ports can handle? There are two main reasons: the parastatal’s own lack of funding and, possibly more important, Transnet’s belief that the coal industry cannot produce as much as it claims it will.
With changing patterns of global economic growth, the focus of SA’s coal exports has moved from its traditional European market to Asia. Indian and Chinese buyers have been actively seeking to secure coal offtake from SA in the past couple of years.
The Financial Times reported on October 17 that the European Union’s “Energy Roadmap to 2050”, being prepared for release by the end of this year, suggests European consumers’ costs of energy would double by 2050 as wind power, requiring more infrastructure, would contribute more to the energy mix than nuclear and coal. Coal and gas currently provide about half of the EU’s electricity.
The International Energy Agency’s World Energy Outlook suggests OECD countries’ coal-fired power generation will fall up to 2035 as they move away from fossil fuels, but this will be more than offset by rising demand from developing countries. China’s 600 gigawatts (GW) of new coal-fired electricity capacity exceeds the current capacity of the US, EU and Japan.
According to statistics that Lars Schernikau of coal traders HMS Bergbau presented at the recent Coaltrans Madrid conference, India’s demand for steam coal is expected to rise to 1bn t by 2017 as domestic production cannot meet the country’s needs. He says it is difficult to predict China’s production and imports but its impact on the global thermal coal market is likely to be “huge”.
Yet the 2009/2010 department of mineral resources report forecasts that SA’s coal exports will increase only “slightly” this year. It says though demand from developed countries is expected to remain weak until clean coal technology is widely used, demand from Asia could push up prices.
Are changes in markets and fluctuating prices deterring investment in SA coal mines? Not as much as generally believed, Prevost says.
“Back in 2006/2007 SA was exporting 88% of its coal to Europe but, because it was unable to meet that demand, we lost ground, and now Colombia, which is further away, is supplying more coal to Europe than we are.
“Our main market is now Asia, but the Indians and Chinese buyers are very price-sensitive. When the price was $122/t, demand from Asia fell. Now the price is $110/t-$112/t and no-one is buying , which is why RBCT is not moving the tonnages that Transnet is delivering to the port.”
But that’s no reason for Transnet to slow down rail expansion, Prevost says.
“The general view in the market is that coal is the fuel of the future. Germany is replacing its nuclear power stations with coal-fired power stations using clean coal technology. Demand for coal will be good for 20 years or more. Clean coal technology will not remove all emissions but it will reduce them to negligible levels.”
Greenpeace SA doesn’t agree. “The assessments made by the Business Enterprises unit at the University of Pretoria show that ‘clean coal’ simply does not exist,” Greenpeace says in its report.
Hall told the Sanea conference that coal accounted for almost a third of the world’s primary energy in 2010, its highest share since 1970. The main reason is rapid demand from industrialising populations in the developing economies of China and India. The populations of the world’s cities will rise to 5,2bn by 2035 from 3,3bn at present, pushing up demand for energy and steel.
The SA Coal Road Map is to present 30-year scenarios for the industry, open these options for comment, and then move into its second phase, identifying a preferred scenario and ways to achieve this scenario.
The Fossil Fuel Foundation didn’t want to disclose its findings ahead of the general release. But Hall’s comments at the Sanea conference suggest the road map presents three scenarios.
The first assumes significant exploitation of SA’s coal resources, if government’s plans for 10GW from nuclear power stations and its renewable targets encounter capital constraints and delays. That would mean building more coal- fired power stations and developing the resources in the Waterberg, Soutpansberg and Limpopo basins, with associated rail infrastructure.
The second possibility is “moderate” use of SA’s coal, if government achieves its targets and SA fulfils its carbon emission-reduction promises. That would still see some development of rail infrastructure in the Waterberg, but slowly. Coal exports would rise until 2020, but only gradually, if at all, after that.
The third scenario is that the country’s future energy and that of the rest of the world would be sourced mainly from non fossil fuel sources, which means no new coal-fired power stations would be built and coal exports would decline.
If clean coal technology can be made to work successfully, SA should not ignore a major resource that can generate cheap electricity for economic development and continue to provide a large number of jobs.
Though there are environmental reservations about coal mining, the reality is that if SA doesn’t exploit its coal reserves, its own needs and those of the coal-hungry markets of Asia will be sourced from elsewhere.
(sourced Financial Mail)
SA has some of the world’s richest coal deposits . Yet the country is failing to exploit this natural resource, as Charlotte Mathews reports.
The idea that SA’s coal industry needs a co-ordinated “road map”, or long- term plan, was first aired four years ago by a handful of its top executives — Eskom’s Steve Lennon, Exxaro’s Sipho Nkosi and Anglo American’s Roger Wicks.
It has taken three years, and some energetic problem-solving, to reach a point where the first report of the SA Coal Road Map project is about to be released. The report will help the country plan what to do with its coal deposits over the next few decades.
It’s a vital industry. In 2009, according to Chamber of Mines figures, coal became the country’s largest mining activity, generating R65bn in revenue against R49bn from gold, the mineral that has always distinguished SA in the world’s eyes.
The team, organised by the Fossil Fuel Foundation, an industry think-tank, had to overcome issues such as the coal companies’ desire to keep market-sensitive data confidential, and possibly breaching the Competition Act, if they shared information.
In 2008 the department of minerals & energy was split into two , one department focusing on minerals, the other on energy. While key staff were moved around, the project had to wait.
It had a relatively modest budget of about R4m, which would have been enough if the participants had contributed their data. But that didn’t happen and a lot more legwork was needed. The project will need more funds for the second phase.
“Bit by bit we had to accumulate the information we needed,” says steering committee chairman Ian Hall. But as the project evolved, the levels of communication and co-operation improved.
“We attracted a number of people who wanted to be included,” Hall says. “The road map’s stakeholders now represent a big cross-section of the industry.”
The need for long-term planning in the industry was highlighted by government’s recent release of its IRP2 strategy for SA’s future electricity generation mix. The target under the IRP2’s “balanced scenario” is to have 48% of SA’s energy come from coal by 2030 compared with 93% now.
For Greenpeace SA, even that is too much. A report commissioned by the organisation entitled “The True Cost of Coal” and released last week says the externalised cost of the Kusile coal-fired power station (mainly the effect on water sources) would be about R60,6bn /year. That is equivalent to about 97c- R1,88/kWh , which means the indirect costs of the station are at least a third more than the 65c/kWh that Eskom’s customers will pay in 2012/2013.
Eskom declined to comment on the Greenpeace report but referred to its previous statements on climate change and pollution control. It has a “six-point plan” to contribute to global efforts to combat climate change, including reducing its reliance on coal over time, installing clean coal technologies at new coal-fired power stations, improving its own and its customers’ energy efficiency and researching other ways to reduce carbon emissions.
Greenpeace’s view is obviously not shared by the mining industry, or parts of government, which feel SA is not extracting as much value from its coal endowment as other countries.
Most of SA’s coal is thermal, used in power stations, and it has relatively small quantities of coking coal, which is used in steelmaking. There are also scattered deposits of anthracite, a higher-value type of energy coal.
Latest data from the department of mineral resources shows SA ranks fourth-largest in the world in its coal reserves of 30,4bn t but seventh-largest in production, at 250,6Mt in 2009. At current rates of extraction, SA has about 40-50 years of coal supplies.
Hall told last month’s SA National Energy Association (Sanea) conference that the last authoritative estimate of SA’s recoverable coal resources was carried out in 1982, suggesting the country had 59,2bnt . In 2009 the figure was adjusted for depletion to an estimate of 33,1bnt. The Council for Geosciences is updating these figures and is expected to release its report in January.
SA’s coal sales rose a modest 8,7% over the 10 years to 2009 but most of the increased output went to Eskom. Coal exports were almost flat in that period, peaking at 71,5Mt in 2003 but falling as low as 57,8Mt in 2008, the year when the average benchmark export coal price soared to R737/t from R361/t in 2007. In that year average inland prices for coal were R153/t, from R108/t in 2007. Domestic coal prices are generally below exports, mainly because Eskom, the biggest customer, uses a lower quality.
About 84% of SA’s coal comes from the Witbank, Ermelo and Highveld coal fields, which will be largely exhausted within the next 10 years. While the Waterberg has substantial resources of coal — about 40% of the country’s remaining resources — it presents geological challenges which are likely to make mining more expensive. Lack of rail infrastructure and minimal water will also have to be addressed.
The country’s biggest coal producers are Anglo American Coal, Exxaro, Sasol Mining, Xstrata Coal and BHP Billiton Export Coal SA (Becsa). Other large producers include Total Coal, Optimum and Shanduka. There are also numerous smaller miners with one or two mines or projects in development. Among the five biggest producers, only three have major new projects which will supply both Eskom and export markets: Anglo American’s US$512m Zibulo mine in Mpumalanga; Exxaro’s R9bn Grootegeluk expansion in the Waterberg; and the Xstrata/African Rainbow Minerals R3,5bn joint-venture Goedgevonden mine near Witbank.
When Becsa, Exxaro, Anglo Coal and Rio Tinto recently put up for sale some of their undeveloped coal prospects, it was widely seen as a vote of no confidence in long-term growth prospects for the SA coal industry.
This is surprising, considering strong demand from India and China for SA coal and Eskom’s heavy reliance on coal- fired power stations. The utility has even expressed a desire to protect its long- term supply. The only sector of the coal industry that is showing an appetite for new projects is the junior miners, which have more appetite for risk.
Some pressures affecting investment in coal are global: fluctuations in prices, changes in SA’s target markets from Europe to Asia, and environmental pressures against burning fossil fuels. Others are shared by SA’s entire mining industry: talk of nationalisation, delays and complexities in securing mining licences and, since the global economic crisis started, limited access to financing for new projects.
Exxaro chairman Len Konar says in the group’s latest annual report that in the 16 years to 2009 SA’s mining sector actually shrank, while the global average growth in mining was 5%. He ascribes this to outside factors like the volatile rand-dollar exchange rate and the recession. He says other issues affecting the local industry are being addressed, such as infrastructural challenges, bureaucratic delays, regulatory uncertainty, the balance between productivity and cost, and the limited pool of skills .
In his medium-term budget policy statement last week, finance minister Pravin Gordhan conceded SA had lagged behind other countries, like Brazil and Australia, in growth in mining production in the past eight years. He identified six main factors: regulatory uncertainty, logistical challenges, limited electricity generation capacity, currency volatility, the debate on nationalisation and the risks of deep-level gold mining .
To this, says Frans Barker of the Chamber of Mines, should be added the high cost of services provided by parastatals, like electricity, transport and potentially water. Xavier Prevost of XMP Consulting adds that talk of nationalisation is another big issue.
“The department of mineral resources said recently it didn’t think this was deterring investment. When you talk to investors from other countries, the first question they ask is whether SA is going to nationalise the mines. Until government makes a decision on it, no-one is going to invest in mines in SA.”
The logistical problem of rail and port bottlenecks is cited repeatedly by participants in the coal industry.
Prevost says SA’s problems are not impossible to overcome but that the country is not tackling them properly.
“Certainly, the coal industry is responsible for some of them. Transnet’s inability to provide enough rail capacity to move coal from mines to ports and local users has been one of the main issues preventing many mine projects from becoming feasible .
“Mines are prepared to invest in rail, but Transnet isn’t implementing talk into action. Transnet has been discussing expansion for a long time, but nothing happens,” he says.
Slides presented by Transnet CEO Brian Molefe at the recent Coaltrans conference in Madrid showed five coal export corridors in SA: Richards Bay Coal Terminal (RBCT) , Richards Bay Navitrade Terminal and Matola (the coal terminal at Maputo) for thermal coal, while Maputo main port and Durban Bulk Connections also handle sized coal. That gives total port capacity of 99,5Mt/year against rail capacity of 75,4Mt/year .
Molefe said Transnet’s target was to build up coal freight capacity to 81Mt/year by 2014/2015.
But why isn’t Transnet targeting at least 100Mt/year, if that’s what the ports can handle? There are two main reasons: the parastatal’s own lack of funding and, possibly more important, Transnet’s belief that the coal industry cannot produce as much as it claims it will.
With changing patterns of global economic growth, the focus of SA’s coal exports has moved from its traditional European market to Asia. Indian and Chinese buyers have been actively seeking to secure coal offtake from SA in the past couple of years.
The Financial Times reported on October 17 that the European Union’s “Energy Roadmap to 2050”, being prepared for release by the end of this year, suggests European consumers’ costs of energy would double by 2050 as wind power, requiring more infrastructure, would contribute more to the energy mix than nuclear and coal. Coal and gas currently provide about half of the EU’s electricity.
The International Energy Agency’s World Energy Outlook suggests OECD countries’ coal-fired power generation will fall up to 2035 as they move away from fossil fuels, but this will be more than offset by rising demand from developing countries. China’s 600 gigawatts (GW) of new coal-fired electricity capacity exceeds the current capacity of the US, EU and Japan.
According to statistics that Lars Schernikau of coal traders HMS Bergbau presented at the recent Coaltrans Madrid conference, India’s demand for steam coal is expected to rise to 1bn t by 2017 as domestic production cannot meet the country’s needs. He says it is difficult to predict China’s production and imports but its impact on the global thermal coal market is likely to be “huge”.
Yet the 2009/2010 department of mineral resources report forecasts that SA’s coal exports will increase only “slightly” this year. It says though demand from developed countries is expected to remain weak until clean coal technology is widely used, demand from Asia could push up prices.
Are changes in markets and fluctuating prices deterring investment in SA coal mines? Not as much as generally believed, Prevost says.
“Back in 2006/2007 SA was exporting 88% of its coal to Europe but, because it was unable to meet that demand, we lost ground, and now Colombia, which is further away, is supplying more coal to Europe than we are.
“Our main market is now Asia, but the Indians and Chinese buyers are very price-sensitive. When the price was $122/t, demand from Asia fell. Now the price is $110/t-$112/t and no-one is buying , which is why RBCT is not moving the tonnages that Transnet is delivering to the port.”
But that’s no reason for Transnet to slow down rail expansion, Prevost says.
“The general view in the market is that coal is the fuel of the future. Germany is replacing its nuclear power stations with coal-fired power stations using clean coal technology. Demand for coal will be good for 20 years or more. Clean coal technology will not remove all emissions but it will reduce them to negligible levels.”
Greenpeace SA doesn’t agree. “The assessments made by the Business Enterprises unit at the University of Pretoria show that ‘clean coal’ simply does not exist,” Greenpeace says in its report.
Hall told the Sanea conference that coal accounted for almost a third of the world’s primary energy in 2010, its highest share since 1970. The main reason is rapid demand from industrialising populations in the developing economies of China and India. The populations of the world’s cities will rise to 5,2bn by 2035 from 3,3bn at present, pushing up demand for energy and steel.
The SA Coal Road Map is to present 30-year scenarios for the industry, open these options for comment, and then move into its second phase, identifying a preferred scenario and ways to achieve this scenario.
The Fossil Fuel Foundation didn’t want to disclose its findings ahead of the general release. But Hall’s comments at the Sanea conference suggest the road map presents three scenarios.
The first assumes significant exploitation of SA’s coal resources, if government’s plans for 10GW from nuclear power stations and its renewable targets encounter capital constraints and delays. That would mean building more coal- fired power stations and developing the resources in the Waterberg, Soutpansberg and Limpopo basins, with associated rail infrastructure.
The second possibility is “moderate” use of SA’s coal, if government achieves its targets and SA fulfils its carbon emission-reduction promises. That would still see some development of rail infrastructure in the Waterberg, but slowly. Coal exports would rise until 2020, but only gradually, if at all, after that.
The third scenario is that the country’s future energy and that of the rest of the world would be sourced mainly from non fossil fuel sources, which means no new coal-fired power stations would be built and coal exports would decline.
If clean coal technology can be made to work successfully, SA should not ignore a major resource that can generate cheap electricity for economic development and continue to provide a large number of jobs.
Though there are environmental reservations about coal mining, the reality is that if SA doesn’t exploit its coal reserves, its own needs and those of the coal-hungry markets of Asia will be sourced from elsewhere.
(sourced Financial Mail)
Thursday, October 20, 2011
Labour strife hits Anglo’s South African thermal coal output
By Martin Creamer, Miningweekly
20th October 2011
Johannesburg (miningweekly.com) – Industrial action and geological constraints hit diversified Anglo American’s South African thermal coal production in the third quarter (Q3) of this year.
Anglo’s non-Eskom Q3 2011 production was down 11% at 5 198 000 t compared with 5 813 000 t in the corresponding period of last year, although export was up 7% to 4 605 000 t over Q3 2010, and up 43% quarter-on-quarter.
Supply to the State-owned Eskom power utility was down 16% at 8 752 000 t, compared with 10 431 000 t in Q3 2010.
Thermal output was up 18% in Colombia and up 17% in Australia.
South African thermal coal export prices were higher than in Q3 2010.
London analyst Liberum Capital notes that rival Xstrata received a better price than Anglo for its Australian thermal coal – $111/t by Xstrata compared with Anglo’s $98/t – and that Anglo got a better price than Xstrata in South Africa – $115/t compared with Xstrata’s $105/t.
Anglo American Thermal Coal’s Zibula project, which is expected to reach commercial production in early 2012, partly offset South Africa’s lower performance.
South Africa’s production of metallurgical coal was also down 32% to 76 000 t, while Anglo’s Australian opencast metallurgical coal operations were 24% up.
However, longwall moves at Australia’s underground metallurgical coal operations saw Australia’s total metallurgical coal output fall 4% to four-million tons.
COPPER DOWN
Anglo American’s copper production decreased by 9% to 139 900 t owing mainly to lower grades at Collahuasi, Los Bronces and Mantos Blancos, and weather interruptions at Collahuasi.
This was partially offset by higher production at El Soldado, which benefited from higher ore grades following recent mine development.
The Los Bronces expansion project remains on schedule for first production in Q4 2011.
At Collahuasi, commissioning of the first phase of the expansion project is under way to increase sulphide processing capacity to 150 000 t/d, an annual average production lift of 19 000 t/y of copper over the estimated life of the mine.
Chile’s State-owned copper-mining company Codelco has put a financing facility in place for its option to take up 49% of Anglo American Sur, which includes Los Bronces, El Soldado and the Chagres smelter in Chile.
Liberum says that the market is waiting for confirmation of how much Anglo will receive from Codelco and says that anything less than the $6.75-billion will be a bad outcome for Anglo.
It forecasts that Anglo’s earnings per share will fall 7.3% in 2012 and 8.6% in 2013 on Codelco’s exercising of the option.
Anglo’s copper equivalent growth to 2015 will also fall from 46% to 40%.
Liberum rates Anglo’s Q3 report as marginally the weakest of the majors that have reported so far, which include BHP Billiton and Xstrata.
IRON-ORE
Iron-ore production increased by 3% to 12.2-million tons, owing to increased performance from Kumba’s Sishen mine in South Africa’s Northern Cape province, where the commissioning of Kolomela remains on track to produce up to five-million tons a year in 2012, and nine-million tons a year in 2013.
Export sales volumes from Sishen rose 11% to 9.2-million tons and South African domestic sales volumes decreased 29% to 1.5-million tons owing to reduced offtake from ArcelorMittal South Africa.
In Brazil, record monthly production of 419 000 t was achieved at Amapá in September and civil works at the beneficiation plant and pipeline at the Minas-Rio iron-ore project are progressing, with the first ore shipment due in the second half of 2013.
20th October 2011
Johannesburg (miningweekly.com) – Industrial action and geological constraints hit diversified Anglo American’s South African thermal coal production in the third quarter (Q3) of this year.
Anglo’s non-Eskom Q3 2011 production was down 11% at 5 198 000 t compared with 5 813 000 t in the corresponding period of last year, although export was up 7% to 4 605 000 t over Q3 2010, and up 43% quarter-on-quarter.
Supply to the State-owned Eskom power utility was down 16% at 8 752 000 t, compared with 10 431 000 t in Q3 2010.
Thermal output was up 18% in Colombia and up 17% in Australia.
South African thermal coal export prices were higher than in Q3 2010.
London analyst Liberum Capital notes that rival Xstrata received a better price than Anglo for its Australian thermal coal – $111/t by Xstrata compared with Anglo’s $98/t – and that Anglo got a better price than Xstrata in South Africa – $115/t compared with Xstrata’s $105/t.
Anglo American Thermal Coal’s Zibula project, which is expected to reach commercial production in early 2012, partly offset South Africa’s lower performance.
South Africa’s production of metallurgical coal was also down 32% to 76 000 t, while Anglo’s Australian opencast metallurgical coal operations were 24% up.
However, longwall moves at Australia’s underground metallurgical coal operations saw Australia’s total metallurgical coal output fall 4% to four-million tons.
COPPER DOWN
Anglo American’s copper production decreased by 9% to 139 900 t owing mainly to lower grades at Collahuasi, Los Bronces and Mantos Blancos, and weather interruptions at Collahuasi.
This was partially offset by higher production at El Soldado, which benefited from higher ore grades following recent mine development.
The Los Bronces expansion project remains on schedule for first production in Q4 2011.
At Collahuasi, commissioning of the first phase of the expansion project is under way to increase sulphide processing capacity to 150 000 t/d, an annual average production lift of 19 000 t/y of copper over the estimated life of the mine.
Chile’s State-owned copper-mining company Codelco has put a financing facility in place for its option to take up 49% of Anglo American Sur, which includes Los Bronces, El Soldado and the Chagres smelter in Chile.
Liberum says that the market is waiting for confirmation of how much Anglo will receive from Codelco and says that anything less than the $6.75-billion will be a bad outcome for Anglo.
It forecasts that Anglo’s earnings per share will fall 7.3% in 2012 and 8.6% in 2013 on Codelco’s exercising of the option.
Anglo’s copper equivalent growth to 2015 will also fall from 46% to 40%.
Liberum rates Anglo’s Q3 report as marginally the weakest of the majors that have reported so far, which include BHP Billiton and Xstrata.
IRON-ORE
Iron-ore production increased by 3% to 12.2-million tons, owing to increased performance from Kumba’s Sishen mine in South Africa’s Northern Cape province, where the commissioning of Kolomela remains on track to produce up to five-million tons a year in 2012, and nine-million tons a year in 2013.
Export sales volumes from Sishen rose 11% to 9.2-million tons and South African domestic sales volumes decreased 29% to 1.5-million tons owing to reduced offtake from ArcelorMittal South Africa.
In Brazil, record monthly production of 419 000 t was achieved at Amapá in September and civil works at the beneficiation plant and pipeline at the Minas-Rio iron-ore project are progressing, with the first ore shipment due in the second half of 2013.
Friday, October 14, 2011
BHP set to bid $6bn for US coal giant Walter Energy
By Sarah-Jane Tasker,The Australian
October 15, 2011
BHP Billiton, the world's biggest mining company, is considering a $US6 billion ($5.86bn) takeover of a US coal producer to support its view that supply of the sought-after commodity will be scarcer than iron ore in the next decade.
Speculation from London yesterday suggested that the global major, fresh from receiving approval this week for its $30bn Olympic Dam copper and uranium expansion in South Australia, was circling Walter Energy, the world's largest producer of coal used for steelmaking.
The Birmingham, Alabama-based company was put in play in July, when activist hedge fund Audley Capital wrote to the board calling for it to seek a buyer because it lacked the leadership to take advantage of an "unprecedented market opportunity" after coal prices jumped.
Walter, whose share price has been cut in half since April, rebounded strongly on the takeover speculation. It jumped 13 per cent in New York to $US75.22 -- the biggest gain in five weeks.
With Walter Energy's market capitalised at about $US4.7bn, a bid of about $US6bn could be the target in any takeover move, given that analysts expect a 30 per cent bid premium.
Walter, which operates mines in Alabama, West Virginia, British Columbia and Wales, acquired Vancouver-based Western Coal in April for $C5.3bn, boosting its reach into Canada.
BHP chief executive Marius Kloppers is expected to be in Canada early next week, after the company's annual general meeting in London, where he is to meet Saskatchewan Premier Brad Wall.
While his visit is said to be an attempt to ease tensions between the miner and the government -- after BHP's $US39bn bid for Potash Corporation of Saskatchewan was killed off earlier this year because of political opposition to the deal -- it is also timely because of the bid speculation.
The global major's successful acquisitions this year were in shale gas in the US through a $US12.1bn bid for Petrohawk -- the miner's biggest acquisition -- and the $US4.75bn purchase of Chesapeake Energy's Arkansas shale ground.
But with the company tipping coal demand to increase in a supply-constrained market, its attention could now be turning to the steelmaking commodity.
BHP's chief executive of ferrous and coal, Marcus Randolph, said the company expected coking coal to be scarcer than iron ore over the next decade.
"We are more bearish about iron ore than coking coal," Mr Randolph said during the annual World Steel Association conference in Paris last week.
"Between now and 2020 there is going to be a lot more iron ore supply coming into the market than coking coal, and our expectation is that, of the two, the scarcer over that period of time will be coking coal."
One analyst said while it would be a surprise if BHP did bid for Walter, the activity could not be ruled out. "Mr Kloppers' acquisition agenda has always been assets that are large scale, low cost, easy to mine and a strong export market for the product. While this ticks all the boxes, it is not totally compelling," he said.
Rival bidders for Walter Energy could include Anglo American, Rio Tinto, Brazil's Vale and CSN. It was flagged early last month that Anglo American was considering a $US7.5bn bid for Walter.
Britain's Independent newspaper reported there was "vague speculation" that JPMorgan and Goldman Sachs had been called in as advisers to potential bidders.
BHP said it did not comment on market speculation.
(sourced The Australian)
October 15, 2011
BHP Billiton, the world's biggest mining company, is considering a $US6 billion ($5.86bn) takeover of a US coal producer to support its view that supply of the sought-after commodity will be scarcer than iron ore in the next decade.
Speculation from London yesterday suggested that the global major, fresh from receiving approval this week for its $30bn Olympic Dam copper and uranium expansion in South Australia, was circling Walter Energy, the world's largest producer of coal used for steelmaking.
The Birmingham, Alabama-based company was put in play in July, when activist hedge fund Audley Capital wrote to the board calling for it to seek a buyer because it lacked the leadership to take advantage of an "unprecedented market opportunity" after coal prices jumped.
Walter, whose share price has been cut in half since April, rebounded strongly on the takeover speculation. It jumped 13 per cent in New York to $US75.22 -- the biggest gain in five weeks.
With Walter Energy's market capitalised at about $US4.7bn, a bid of about $US6bn could be the target in any takeover move, given that analysts expect a 30 per cent bid premium.
Walter, which operates mines in Alabama, West Virginia, British Columbia and Wales, acquired Vancouver-based Western Coal in April for $C5.3bn, boosting its reach into Canada.
BHP chief executive Marius Kloppers is expected to be in Canada early next week, after the company's annual general meeting in London, where he is to meet Saskatchewan Premier Brad Wall.
While his visit is said to be an attempt to ease tensions between the miner and the government -- after BHP's $US39bn bid for Potash Corporation of Saskatchewan was killed off earlier this year because of political opposition to the deal -- it is also timely because of the bid speculation.
The global major's successful acquisitions this year were in shale gas in the US through a $US12.1bn bid for Petrohawk -- the miner's biggest acquisition -- and the $US4.75bn purchase of Chesapeake Energy's Arkansas shale ground.
But with the company tipping coal demand to increase in a supply-constrained market, its attention could now be turning to the steelmaking commodity.
BHP's chief executive of ferrous and coal, Marcus Randolph, said the company expected coking coal to be scarcer than iron ore over the next decade.
"We are more bearish about iron ore than coking coal," Mr Randolph said during the annual World Steel Association conference in Paris last week.
"Between now and 2020 there is going to be a lot more iron ore supply coming into the market than coking coal, and our expectation is that, of the two, the scarcer over that period of time will be coking coal."
One analyst said while it would be a surprise if BHP did bid for Walter, the activity could not be ruled out. "Mr Kloppers' acquisition agenda has always been assets that are large scale, low cost, easy to mine and a strong export market for the product. While this ticks all the boxes, it is not totally compelling," he said.
Rival bidders for Walter Energy could include Anglo American, Rio Tinto, Brazil's Vale and CSN. It was flagged early last month that Anglo American was considering a $US7.5bn bid for Walter.
Britain's Independent newspaper reported there was "vague speculation" that JPMorgan and Goldman Sachs had been called in as advisers to potential bidders.
BHP said it did not comment on market speculation.
(sourced The Australian)
Thursday, October 6, 2011
Anglo gets full ownership of Peace River Coal
Thu,Oct06, 2011
ANGLO American said yesterday it had acquired full ownership of its Peace River Coal partnership in British Columbia by purchasing the 25,17% in the metallurgical coal venture that it did not already own for $166m.
Anglo American has purchased the 12,18% stake held by Northern Energy & Mining for $76m, and the 12,99% held by Hillsborough Resources for $81m plus $9m for Hillsborough’s royalty rights.
Anglo American will be progressing a feasibility study to increase production at Peace River to 3,5-million tons a year by 2015 from 1-million tons, it said yesterday.
Reuters has reported that Anglo American might be among the bidders for Australian coal miner New Hope, which put itself up for auction yesterday.
New Hope said it had received several informal approaches and it would invite selected parties to bid, starting a process that could test Australia’s openness to foreign mine owners. New Hope would not name the interested parties.
Analysts said firms in rapidly growing China and India were probably among them, although industry officials in India said New Hope might be too expensive for an Indian company to acquire.
A takeover of New Hope, which has its own port, would be the latest in a string of deals in Australia’s coal sector, reflecting demand to feed Asia’s strong growth.
Chairman Robert Millner hinted that New Hope could be a reluctant target, but the company was obliged to explore any deal that would give shareholders best value. The company has A$1,5bn ($1,4bn) on its balance sheet and does not need a partner to fund expansion.
"We have not been out shopping the company. We are going down this path purely because we have had these approaches from numerous third parties," Mr Millner told Reuters, adding they were "preliminary and incomplete proposals".
New Hope’s open-cut New Acland mine produces thermal coal used in power plants. New Hope sells about 65% of its coal overseas and the rest to the domestic market.
A potential buyer could be China’s Yanzhou Coal Mining, which earlier this year unsuccessfully bid for Australia’s Whitehaven Coal.
Murray Bailey, the MD of Yanzhou’s Australian operations, Yancoal, is a former chief operations officer at New Hope.
London-based bankers said that Anglo-Swiss miner Xstrata, its peer Anglo American and commodity trader and miner Glencore might also be interested in New Hope.
"This is a region of the world where Xstrata is a major player and the product is important to them," one of the bankers said, although he added that he was not aware that any of those companies had appointed banks to work on a potential bid.
Indian firms such as GVK Power & Infrastructure and Adani have also been active in Australia.
Australia has scrutinised foreign miners’ bids very closely in recent years, particularly those from state- linked Asian companies, and has at times rejected them or imposed strict conditions.
New Hope is 59,7% owned by diversified investor Washington H Soul Pattinson, where Mr Millner is also the chairman.
New Hope had been talking to the interested parties for four to five months and would look at setting up a data room after indicative proposals came in within the next two months, he said.
"As there has been more and more interest, we decided this was the best and fairest way to go down this process," Mr Millner said. (sourced Bloomberg, Reuters)
ANGLO American said yesterday it had acquired full ownership of its Peace River Coal partnership in British Columbia by purchasing the 25,17% in the metallurgical coal venture that it did not already own for $166m.
Anglo American has purchased the 12,18% stake held by Northern Energy & Mining for $76m, and the 12,99% held by Hillsborough Resources for $81m plus $9m for Hillsborough’s royalty rights.
Anglo American will be progressing a feasibility study to increase production at Peace River to 3,5-million tons a year by 2015 from 1-million tons, it said yesterday.
Reuters has reported that Anglo American might be among the bidders for Australian coal miner New Hope, which put itself up for auction yesterday.
New Hope said it had received several informal approaches and it would invite selected parties to bid, starting a process that could test Australia’s openness to foreign mine owners. New Hope would not name the interested parties.
Analysts said firms in rapidly growing China and India were probably among them, although industry officials in India said New Hope might be too expensive for an Indian company to acquire.
A takeover of New Hope, which has its own port, would be the latest in a string of deals in Australia’s coal sector, reflecting demand to feed Asia’s strong growth.
Chairman Robert Millner hinted that New Hope could be a reluctant target, but the company was obliged to explore any deal that would give shareholders best value. The company has A$1,5bn ($1,4bn) on its balance sheet and does not need a partner to fund expansion.
"We have not been out shopping the company. We are going down this path purely because we have had these approaches from numerous third parties," Mr Millner told Reuters, adding they were "preliminary and incomplete proposals".
New Hope’s open-cut New Acland mine produces thermal coal used in power plants. New Hope sells about 65% of its coal overseas and the rest to the domestic market.
A potential buyer could be China’s Yanzhou Coal Mining, which earlier this year unsuccessfully bid for Australia’s Whitehaven Coal.
Murray Bailey, the MD of Yanzhou’s Australian operations, Yancoal, is a former chief operations officer at New Hope.
London-based bankers said that Anglo-Swiss miner Xstrata, its peer Anglo American and commodity trader and miner Glencore might also be interested in New Hope.
"This is a region of the world where Xstrata is a major player and the product is important to them," one of the bankers said, although he added that he was not aware that any of those companies had appointed banks to work on a potential bid.
Indian firms such as GVK Power & Infrastructure and Adani have also been active in Australia.
Australia has scrutinised foreign miners’ bids very closely in recent years, particularly those from state- linked Asian companies, and has at times rejected them or imposed strict conditions.
New Hope is 59,7% owned by diversified investor Washington H Soul Pattinson, where Mr Millner is also the chairman.
New Hope had been talking to the interested parties for four to five months and would look at setting up a data room after indicative proposals came in within the next two months, he said.
"As there has been more and more interest, we decided this was the best and fairest way to go down this process," Mr Millner said. (sourced Bloomberg, Reuters)
Wednesday, October 5, 2011
S.Africa coal exports fall m/m in Sept to 4.96 mln Ton
Wed Oct 5, 2011
JOHANNESBURG Oct 5 (Reuters) - South Africa's Richards Bay Coal Terminal (RBCT) exported 4.96 million tonnes of coal in September compared with 6.987 million tonnes the previous month, RBCT data showed on Wednesday.
South Africa -- a major exporter of coal to power stations in Europe and Asia -- had 4.997 million tonnes of stock at the terminal at the end of September, RBCT said.
Coal producers in South Africa include Anglo American , BHP Billiton , Exxaro , Optimum Coal and Xstrata .
(sourced Reuters)
JOHANNESBURG Oct 5 (Reuters) - South Africa's Richards Bay Coal Terminal (RBCT) exported 4.96 million tonnes of coal in September compared with 6.987 million tonnes the previous month, RBCT data showed on Wednesday.
South Africa -- a major exporter of coal to power stations in Europe and Asia -- had 4.997 million tonnes of stock at the terminal at the end of September, RBCT said.
Coal producers in South Africa include Anglo American , BHP Billiton , Exxaro , Optimum Coal and Xstrata .
(sourced Reuters)
Thursday, September 1, 2011
Anglo American could lose out on Macarthur Coal
Thursday, 01 Sep 2011
The Telegraph reported that Anglo American is poised to lose out in the AUD 4.9 billion takeover tussle for Macarthur Coal after the Australian company recommended a sweetened offer from a consortium of US based Peabody Energy and European steelmaker ArcelorMittal.
Anglo American had gained access to the Australian group's data room and had been weighing up whether to make a formal offer for Macarthur, which mines low cost coal.
However, Macarthur has recommend an increased AUD 16 a share offer from the Peabody ArcelorMittal combine after the pair lifted the offer price from AUD 15.50. Macarthur shareholders are also entitled to a recently declared dividend, making the total offer AUD 16.16 a share. Macarthur shares rose 0.06 cents to AUD 15.86.
ArcelorMittal already owns 16.1% of Macarthur's shares and the offer from the PEAMCoal bid vehicle is conditional on securing 50.01% acceptances from the coal mining company's shareholders. The acceptances threshold was put in place to get around China's Citic Resources, which has a 24.5% stake in Macarthur and could move to block a full scale takeover.
In 2010, the Chinese group made it clear it would not endorse a change of control when Peabody, which was then acting alone, made a failed an AUD 15 a share bid for Macarthur. Some analysts reckon the protracted takeover battle for Macarthur is over. This is because it has already agreed an AUD 48.3 million break fee, and also no shop and no talk provisions that restrict any future negotiations with rival bidders.
PEAMCoal also has the right to provide a matching offer in the event of any competing proposal that Macarthur's board considers superior.
Mr Jamie Spiteri, head dealer at Shaw Stockbroking in Sydney, told Bloomberg that "There's probably not a lot more that can be extracted for Macarthur shareholders unless there's a challenge from another party."
Mr Andrew Harrington, an analyst with Patersons Securities, said that "It's a fair value price. Any counter bid is becoming increasingly difficult."
In its statement to the Australian stock exchange, Macarthur said a number of parties have conducted due diligence.
The Macarthur deal comes amid a revival of takeovers of mining companies following a sell off of natural resource company share prices. They include last week's AUD 268 million bid by Glencore International for Minara Resources.
sourced Telegraph
The Telegraph reported that Anglo American is poised to lose out in the AUD 4.9 billion takeover tussle for Macarthur Coal after the Australian company recommended a sweetened offer from a consortium of US based Peabody Energy and European steelmaker ArcelorMittal.
Anglo American had gained access to the Australian group's data room and had been weighing up whether to make a formal offer for Macarthur, which mines low cost coal.
However, Macarthur has recommend an increased AUD 16 a share offer from the Peabody ArcelorMittal combine after the pair lifted the offer price from AUD 15.50. Macarthur shareholders are also entitled to a recently declared dividend, making the total offer AUD 16.16 a share. Macarthur shares rose 0.06 cents to AUD 15.86.
ArcelorMittal already owns 16.1% of Macarthur's shares and the offer from the PEAMCoal bid vehicle is conditional on securing 50.01% acceptances from the coal mining company's shareholders. The acceptances threshold was put in place to get around China's Citic Resources, which has a 24.5% stake in Macarthur and could move to block a full scale takeover.
In 2010, the Chinese group made it clear it would not endorse a change of control when Peabody, which was then acting alone, made a failed an AUD 15 a share bid for Macarthur. Some analysts reckon the protracted takeover battle for Macarthur is over. This is because it has already agreed an AUD 48.3 million break fee, and also no shop and no talk provisions that restrict any future negotiations with rival bidders.
PEAMCoal also has the right to provide a matching offer in the event of any competing proposal that Macarthur's board considers superior.
Mr Jamie Spiteri, head dealer at Shaw Stockbroking in Sydney, told Bloomberg that "There's probably not a lot more that can be extracted for Macarthur shareholders unless there's a challenge from another party."
Mr Andrew Harrington, an analyst with Patersons Securities, said that "It's a fair value price. Any counter bid is becoming increasingly difficult."
In its statement to the Australian stock exchange, Macarthur said a number of parties have conducted due diligence.
The Macarthur deal comes amid a revival of takeovers of mining companies following a sell off of natural resource company share prices. They include last week's AUD 268 million bid by Glencore International for Minara Resources.
sourced Telegraph
Rio Tinto: world needs 800 mln more tonnes of iron ore in next 8 yrs
Thu Sep 1, 2011
* Rio Tinto sees near doubling of iron ore demand in 8 years
* Says sees "staggering" rise in demand
* Urbanisation in developing economies driving need for more steel
PERTH, Sept 1 (Reuters) - The world needs at least 100 million tonnes of additional iron ore supply each year for the next eight years to meet demand growth projections in steel making, miner Rio Tinto said on Thursday.
At that rate, global iron ore production would almost double over the period, based on industry trade data -- largely covered in the early years at least by expansions underway among the major miners, including Rio Tinto.
"This represents a staggering increase in demand as markets like, China, India, Indonesia, Vietnam and countries in Africa and South America continue to industrialize and urbanise," David Joyce, head of expansion projects for Rio Tinto's iron ore group, told an industry conference in Australia on mining in Africa.
Emerging markets comprise 75 percent of global iron ore demand and 90 percent of that is Chinese demand.
Rio Tinto, the world's second-largest producer behind Brazil's Vale , also said its Simandou iron ore joint venture with China's Chinalco in Guinea was on track to make its first shipment by mid-2015.
"We remain committed to ambitious timeframes of shipping our first tonnes of iron ore by mid-2015," Joyce said, adding that the company has invested $1.5 billion in the project to date.
The joint venture targets initial production from the Simandou mine of 70 million tonnes per year, with estimates for potential future output reaching up to 170 million tonnes.
Joyce also said Rio Tinto was on track to expand its iron ore production capacity in Western Australia to 333 million tonnes a year from about 225 million now..
Rio Tinto last month moved up its the target date to reach the higher figure by six months to the first half of 2015.
Rio Tinto isn't the only miner that sees gold in mining more iron ore
AngloAmerican expects to nearly double iron ore production to around 80 million tonnes by 2014 as it digs new mines in Brazil and South Africa.
But that's still well below current production figures for others, including Vale , BHP Billiton and Fortescue Metals Group each of which has massive expansion plans in the works.
BHP Billiton is proceeding with a $7.4 billion expansion of its Western Australia iron ore operations with its own share of the investment totalling $6.6 billion.
That expansion will raise capacity to over 220 million tonnes per year, with first production expected from its new Jimblebar mine in early calendar year 2014.
World trade in iron ore was 1.036 billion tonnes last year, according to the Australian Bureau of Agricultural and Resource Economics and Sciences.
Tuesday, August 30, 2011
BHPB shortening coal contracts - Report
Tuesday, 30 Aug 2011
According to the The Australian Financial Review, BHP Billiton Ltd has moved half its coking coal customers from quarterly to monthly contracts in the space of six months as its looks to reduce pricing terms, as it has done in the iron ore market.
The news gives more evidence that BHP chief executive officer Marius Kloppers is determined to move to increasingly shorter contracts.
Mr Kloppers is pushing harder in this direction than rival giants Anglo American and Rio Tinto, which use quarterly contracts.
As the world's largest coking coal exporter, BHP has more leverage on contracts. Contracts are based on an index price which means less difficult negotiations with customers.
(sourced Businessspectator)
According to the The Australian Financial Review, BHP Billiton Ltd has moved half its coking coal customers from quarterly to monthly contracts in the space of six months as its looks to reduce pricing terms, as it has done in the iron ore market.
The news gives more evidence that BHP chief executive officer Marius Kloppers is determined to move to increasingly shorter contracts.
Mr Kloppers is pushing harder in this direction than rival giants Anglo American and Rio Tinto, which use quarterly contracts.
As the world's largest coking coal exporter, BHP has more leverage on contracts. Contracts are based on an index price which means less difficult negotiations with customers.
(sourced Businessspectator)
Friday, August 26, 2011
Peru gov't, miners reach deal to increase royalties
Aug26, 2011
* Miners, gov't negotiate new royalty scheme
* Humala campaigned for higher taxes to help the poor
* Mine society sees rates defined in next couple weeks
By Caroline Stauffer and Patricia Velez
LIMA, (Reuters) - Peru has reached an agreement with mining companies that will raise the vital industry's annual payments to the government to about $1 billion, the government
said on Thursday, fulfilling a campaign promise by leftist President Ollanta Humala.
Humala took office in late July, vowing to tax mining companies' windfall profits to bolster social programs in a country where one of every three people is poor. Mining accounts for 60 percent of Peru's export revenue.
The new royalty rates have not been set yet but a sliding scale will be devised to take individual company profits into account, Pedro Martinez, the head of Peru's mining company
association, told Reuters.
The royalty rates should be defined "in the next couple of weeks," the sector's lead negotiator added. Companies now pay royalties of between 1 percent and 3 percent, charged on sales in the world's No. 2 copper producer and No. 6 gold producer. Mines Minister Carlos Herrera said the
new levy will be applied to operating profits instead of sales, a change that mining companies supported.
"We want to announce today that we have ensured mining companies will make tax payments of approximately 3 billion soles a year," Prime Minister Salomon Lerner told Congress, where he was presenting Humala's government plan.
"This tax will not affect investment or companies' competitiveness," he said. Last year, miners contributed $646 million in royalties and paid corporate income taxes at a rate of 30 percent. It was unclear whether Lerner was referring to revenue from royalties alone or overall tax contributions.
Mining profits have surged on the back of record high gold, silver and copper prices this year.
"It is healthy to have reached a successful conclusion, that we can contribute something more," Roque Benavides, head of Peru's biggest precious metals producer Buenaventura , told local radio.
Asked how the contribution would be paid, Benavides said: "This is a more complex issue because this is based on profits, which do not have a set value and which depend on metals prices
(and) the cost of each company's operations." He said the government's revenue calculation of approximately $1 billion was based on metals prices and company profits from the first half of 2011.
GREATER CERTAINTY
Humala's government has been under pressure from his leftist backers to act on campaign promises to improve the lot of the poor, after he pleased investors by appointing a pro-market economic team. In his speech, Lerner reaffirmed Humala's commitment to gradually improving social programs. "We will not have an economic policy that is divorced from our social policies," he said. "Our model of economic growth with social inclusion implies a profound, gradual reform of the state and its ties to society."
Lerner also said the government would aim for economic growth of at least 6 percent a year.
Large international mining firms including Xstrata , BHP Billiton , Anglo American , Barrick Gold , and Grupo Mexico's Southern Copper operate in Peru. Peru collects a mere 15 percent of GDP in taxes, well below the nearly 35 percent of GDP in Brazil and less than the 18.2
percent in Chile.
"The announcement of a negotiated agreement between the government and mining companies eliminates one of the remaining sources of uncertainty about the overall direction of policies in Peru," Goldman Sachs analyst Eduardo Cavallo wrote in a research note.
A stocks trader in Lima said shares in mining companies were unaffected by the news. Lima's benchmark exchange , which is heavily weighted by miners, closed down 0.14 percent. "Lerner has given the framework that the government seeks but investors want to know what the (royalty) rates are and if they will be competitive for each company," the trader said.
* Miners, gov't negotiate new royalty scheme
* Humala campaigned for higher taxes to help the poor
* Mine society sees rates defined in next couple weeks
By Caroline Stauffer and Patricia Velez
LIMA, (Reuters) - Peru has reached an agreement with mining companies that will raise the vital industry's annual payments to the government to about $1 billion, the government
said on Thursday, fulfilling a campaign promise by leftist President Ollanta Humala.
Humala took office in late July, vowing to tax mining companies' windfall profits to bolster social programs in a country where one of every three people is poor. Mining accounts for 60 percent of Peru's export revenue.
The new royalty rates have not been set yet but a sliding scale will be devised to take individual company profits into account, Pedro Martinez, the head of Peru's mining company
association, told Reuters.
The royalty rates should be defined "in the next couple of weeks," the sector's lead negotiator added. Companies now pay royalties of between 1 percent and 3 percent, charged on sales in the world's No. 2 copper producer and No. 6 gold producer. Mines Minister Carlos Herrera said the
new levy will be applied to operating profits instead of sales, a change that mining companies supported.
"We want to announce today that we have ensured mining companies will make tax payments of approximately 3 billion soles a year," Prime Minister Salomon Lerner told Congress, where he was presenting Humala's government plan.
"This tax will not affect investment or companies' competitiveness," he said. Last year, miners contributed $646 million in royalties and paid corporate income taxes at a rate of 30 percent. It was unclear whether Lerner was referring to revenue from royalties alone or overall tax contributions.
Mining profits have surged on the back of record high gold, silver and copper prices this year.
"It is healthy to have reached a successful conclusion, that we can contribute something more," Roque Benavides, head of Peru's biggest precious metals producer Buenaventura , told local radio.
Asked how the contribution would be paid, Benavides said: "This is a more complex issue because this is based on profits, which do not have a set value and which depend on metals prices
(and) the cost of each company's operations." He said the government's revenue calculation of approximately $1 billion was based on metals prices and company profits from the first half of 2011.
GREATER CERTAINTY
Humala's government has been under pressure from his leftist backers to act on campaign promises to improve the lot of the poor, after he pleased investors by appointing a pro-market economic team. In his speech, Lerner reaffirmed Humala's commitment to gradually improving social programs. "We will not have an economic policy that is divorced from our social policies," he said. "Our model of economic growth with social inclusion implies a profound, gradual reform of the state and its ties to society."
Lerner also said the government would aim for economic growth of at least 6 percent a year.
Large international mining firms including Xstrata , BHP Billiton , Anglo American , Barrick Gold , and Grupo Mexico's Southern Copper operate in Peru. Peru collects a mere 15 percent of GDP in taxes, well below the nearly 35 percent of GDP in Brazil and less than the 18.2
percent in Chile.
"The announcement of a negotiated agreement between the government and mining companies eliminates one of the remaining sources of uncertainty about the overall direction of policies in Peru," Goldman Sachs analyst Eduardo Cavallo wrote in a research note.
A stocks trader in Lima said shares in mining companies were unaffected by the news. Lima's benchmark exchange , which is heavily weighted by miners, closed down 0.14 percent. "Lerner has given the framework that the government seeks but investors want to know what the (royalty) rates are and if they will be competitive for each company," the trader said.
Saturday, August 20, 2011
Anglo American may bid for Macarthur Coal - Report
Saturday, 20 Aug 2011
According to a Bloomberg report, Anglo American is contemplating a bid for Australia's Macarthur Coal that would challenge US coal company Peabody Energy's earlier offer for the Australian mining firm.
The Bloomberg report, citing an unnamed person with knowledge of the matter said that Anglo is looking into Macarthur's finances.
In July, Peabody, the largest US coal company, had teamed up with ArcelorMittal, the world's top steelmaker, to offer USD 5 billion for Macarthur Coal in a bid to secure its resources of pulverized coal, a key steelmaking ingredient.
(sourced from Bloomberg)
According to a Bloomberg report, Anglo American is contemplating a bid for Australia's Macarthur Coal that would challenge US coal company Peabody Energy's earlier offer for the Australian mining firm.
The Bloomberg report, citing an unnamed person with knowledge of the matter said that Anglo is looking into Macarthur's finances.
In July, Peabody, the largest US coal company, had teamed up with ArcelorMittal, the world's top steelmaker, to offer USD 5 billion for Macarthur Coal in a bid to secure its resources of pulverized coal, a key steelmaking ingredient.
(sourced from Bloomberg)
Wednesday, August 17, 2011
Biggest coal miners in South Africa
Wed Aug 17, 2011
JOHANNESBURG (Reuters) - South Africa's junior coal miners, some of them tiny producers, are facing intense pressure to consolidate, but the varying quality of their deposits and what are often poor locations will hold back a wave of tie-ups in the short term.
Below are the country's five dominant coal miners at the top of the list, followed by some of the biggest junior players:
* Anglo American Thermal Coal
The global miner produced 58.5 million tonnes of coal in South Africa in 2010. Around 60 percent of that was sold to power utility Eskom, while nearly 30 percent was exported. The remaining 10 percent went to other industrial customers.The company is working on several projects meant to boost output to 90 million tonnes. Anglo has said its expansion plans would depend on where Eskom will build new plants.
* Exxaro Resources
The diversified miner produced 46.8 million tonnes of power station, steam and coking coal in 2010. The company has several greenfield and expansion projects under way. One such project is the expansion of its Grootegeluk mine, which will supply 14.6 million tonnes to Eskom's new Medupi power plant from 2014/15.
* Sasol Mining
The unit of petrochemical group Sasol produced 42.6 million tonnes of coal during the 2010 financial year. Nearly all of that was used in Sasol's own coal-to-liquids synthetic fuels plant at Secunda in South Africa's Mpumalanga province.
* BHP Billiton
BHP Billiton Energy Coal South Africa (BECSA) produces coal for the domestic and export markets. The unit has three primary coal-mining operations: Khutala Colliery, Klipspruit Colliery and Middelburg Mine Services, located in South Africa's Witbank region in the north-eastern province of Mpumalanga. The unit produced 34.3 million tonnes of coal in the year to end-June 2011. BECSA said in February it planned to divest some of its virgin coal prospecting rights to focus on existing operations.
* Xstrata Coal
Xstrata Coal has stakes in five operations in South Africa namely Mpumalanga, iMpunzi, Southstock, Tweefontein and Goedgevonden. Production from the operations was 17.7 million tonnes for the year to the end of December 2010.
* Optimum Coal
Optimum is South Africa's 6th largest producer, with two operating mines in the Mpumalanga province and a pipeline of brownfield and greenfield projects. The miner sold 10.6 million tonnes of coal in its 2010 financial year, out of which 5.5 million went to Eskom and the rest for exports.
* Shanduka Resources
Shanduka Resources is part of the unlisted Shanduka Group, which is chaired by prominent politician-turned-businessman Cyril Ramaphosa. Shanduka Coal, through its subsidiaries, owns the Graspan, Townlands, Bankfontein, Leeuwfontein and Lakeside mines in South Africa. Coal is sold both to the domestic market and exported through the Richards Bay Coal Terminal. Shanduka Coal, 70 percent owned by global trader Glencore, has a run of mine production of 9 million tonnes.
* Kangra Coal
The company produces around 3 million tonnes of coal per year. Some 2 million tonnes are exported, with the remainder sold into the local market.
* Total Coal South Africa (TCSA)
The unit of oil major Total exports around 4 million tonnes a year of thermal coal and 1 million tonnes of coking coal. TCSA is expanding output at its Dorstfontein mine by 2 million tonnes a year. TCSA also produces coal from Forzando North and South mines and Tumelo mine.
* Coal of Africa
The junior coal miner's key projects include the Vele and Makhado coking coal projects and the Mooiplaats and Woestalleen thermal coal projects. Mooiplaats is ramping up to produce 2 million tonnes of coal per year. Vele and Makhado are expected to start production in the first half of 2012 and first half of 2013, respectively, and are expected to produce collectively an initial 1 million tonnes, ramping up to 10 million tonnes of coking coal per year. In 2010, Coal of Africa bought NuCoal Mining, which owns the Woestalleen colliery that processes around 2.5 million tonnes of coal.
* Wescoal
The junior miner currently produces 1.2 million tonnes of coal per year from its Khanyisa colliery in South Africa's Mpumalanga province. Wescoal has said it would like to expand into the export market.
* Continental Coal
The Australia-listed thermal coal producer has a portfolio of producing and advanced coal projects located in South Africa's major coal fields. Continental currently has two operating mines, Vlakvarkfontein and Ferreira, producing 2 million tonnes per year of coal for the export and domestic markets. The miner is set to start the development of two further coal mines in 2011 and is targeting a run of mine production rate of 10 million tonnes by the end of 2015.
(sourced Reuters)
JOHANNESBURG (Reuters) - South Africa's junior coal miners, some of them tiny producers, are facing intense pressure to consolidate, but the varying quality of their deposits and what are often poor locations will hold back a wave of tie-ups in the short term.
Below are the country's five dominant coal miners at the top of the list, followed by some of the biggest junior players:
* Anglo American Thermal Coal
The global miner produced 58.5 million tonnes of coal in South Africa in 2010. Around 60 percent of that was sold to power utility Eskom, while nearly 30 percent was exported. The remaining 10 percent went to other industrial customers.The company is working on several projects meant to boost output to 90 million tonnes. Anglo has said its expansion plans would depend on where Eskom will build new plants.
* Exxaro Resources
The diversified miner produced 46.8 million tonnes of power station, steam and coking coal in 2010. The company has several greenfield and expansion projects under way. One such project is the expansion of its Grootegeluk mine, which will supply 14.6 million tonnes to Eskom's new Medupi power plant from 2014/15.
* Sasol Mining
The unit of petrochemical group Sasol produced 42.6 million tonnes of coal during the 2010 financial year. Nearly all of that was used in Sasol's own coal-to-liquids synthetic fuels plant at Secunda in South Africa's Mpumalanga province.
* BHP Billiton
BHP Billiton Energy Coal South Africa (BECSA) produces coal for the domestic and export markets. The unit has three primary coal-mining operations: Khutala Colliery, Klipspruit Colliery and Middelburg Mine Services, located in South Africa's Witbank region in the north-eastern province of Mpumalanga. The unit produced 34.3 million tonnes of coal in the year to end-June 2011. BECSA said in February it planned to divest some of its virgin coal prospecting rights to focus on existing operations.
* Xstrata Coal
Xstrata Coal has stakes in five operations in South Africa namely Mpumalanga, iMpunzi, Southstock, Tweefontein and Goedgevonden. Production from the operations was 17.7 million tonnes for the year to the end of December 2010.
* Optimum Coal
Optimum is South Africa's 6th largest producer, with two operating mines in the Mpumalanga province and a pipeline of brownfield and greenfield projects. The miner sold 10.6 million tonnes of coal in its 2010 financial year, out of which 5.5 million went to Eskom and the rest for exports.
* Shanduka Resources
Shanduka Resources is part of the unlisted Shanduka Group, which is chaired by prominent politician-turned-businessman Cyril Ramaphosa. Shanduka Coal, through its subsidiaries, owns the Graspan, Townlands, Bankfontein, Leeuwfontein and Lakeside mines in South Africa. Coal is sold both to the domestic market and exported through the Richards Bay Coal Terminal. Shanduka Coal, 70 percent owned by global trader Glencore, has a run of mine production of 9 million tonnes.
* Kangra Coal
The company produces around 3 million tonnes of coal per year. Some 2 million tonnes are exported, with the remainder sold into the local market.
* Total Coal South Africa (TCSA)
The unit of oil major Total exports around 4 million tonnes a year of thermal coal and 1 million tonnes of coking coal. TCSA is expanding output at its Dorstfontein mine by 2 million tonnes a year. TCSA also produces coal from Forzando North and South mines and Tumelo mine.
* Coal of Africa
The junior coal miner's key projects include the Vele and Makhado coking coal projects and the Mooiplaats and Woestalleen thermal coal projects. Mooiplaats is ramping up to produce 2 million tonnes of coal per year. Vele and Makhado are expected to start production in the first half of 2012 and first half of 2013, respectively, and are expected to produce collectively an initial 1 million tonnes, ramping up to 10 million tonnes of coking coal per year. In 2010, Coal of Africa bought NuCoal Mining, which owns the Woestalleen colliery that processes around 2.5 million tonnes of coal.
* Wescoal
The junior miner currently produces 1.2 million tonnes of coal per year from its Khanyisa colliery in South Africa's Mpumalanga province. Wescoal has said it would like to expand into the export market.
* Continental Coal
The Australia-listed thermal coal producer has a portfolio of producing and advanced coal projects located in South Africa's major coal fields. Continental currently has two operating mines, Vlakvarkfontein and Ferreira, producing 2 million tonnes per year of coal for the export and domestic markets. The miner is set to start the development of two further coal mines in 2011 and is targeting a run of mine production rate of 10 million tonnes by the end of 2015.
(sourced Reuters)
Thursday, August 4, 2011
Miner Rio Tinto's H1 profit jumps 35 pct, expands buyback
Thu Aug 4, 2011
* Record first-half profit but below consensus forecast
* Expands share buyback to $7 bln
* Guarded but positive outlook into 2012
SYDNEY, Aug 4 (Reuters) - Global miner Rio Tinto reported a 35 percent jump in first-half profit on Thursday, but it missed market expectations and sweetened the result with a $2 billion expansion of its existing share buyback programme.
Booming iron ore sales to China helped propel underlying profit to $7.8 billion for the six months ended June, a record for the first half but below analysts' consensus forecast of $8.03 billion.
"Their announcement shows they are witnessing quite a lot of cost pressure hit by exchange rates and inflation. But they are also still exuding confidence for strong growth from China," said Peter Chilton, investment analyst at Constellation Capital Management.
Rio Tinto also boosted its interim dividend to 54 U.S. cents per share from 45 cents a year earlier.
Rio Tinto joins major rivals Anglo-American Plc and Xstrata Plc in overcoming spiralling costs and restive labour unions to report profit growth of a third or more over the past week, thanks to surging commodity prices.
But with the global economy on edge, bedevilled by debt crises in Europe and the United States, the outlook remains uncertain, with investors worried about a return to global financial turmoil and a knock-on effect for commodity prices.
"We remain positive for the remainder of 2011 and into 2012, in particular given the context of the industry struggling to bring new production onstream," Chief Executive Tom Albanese said in the results statement.
"However there are important risks to this outlook related to the pace of credit tightening in developing countries and the threat of financial crises arising from sovereign debt problems in Europe and the United States which could destabilise commodity markets."
Iron ore net earnings, which accounted for 78 percent of Rio Tinto's group profit, surged 44 percent in the first half, while aluminum profits edged 3.5 percent higher.
Earnings from the energy division, which includes coal and uranium, tumbled 39 percent, partly reflecting flooding at its Australian collieries and at the operations of its Australian uranium subsidiary, Energy Resources of Australia .
The strong Australian dollar also weighed heavily on Rio Tinto's earnings.
* Record first-half profit but below consensus forecast
* Expands share buyback to $7 bln
* Guarded but positive outlook into 2012
SYDNEY, Aug 4 (Reuters) - Global miner Rio Tinto reported a 35 percent jump in first-half profit on Thursday, but it missed market expectations and sweetened the result with a $2 billion expansion of its existing share buyback programme.
Booming iron ore sales to China helped propel underlying profit to $7.8 billion for the six months ended June, a record for the first half but below analysts' consensus forecast of $8.03 billion.
"Their announcement shows they are witnessing quite a lot of cost pressure hit by exchange rates and inflation. But they are also still exuding confidence for strong growth from China," said Peter Chilton, investment analyst at Constellation Capital Management.
Rio Tinto also boosted its interim dividend to 54 U.S. cents per share from 45 cents a year earlier.
Rio Tinto joins major rivals Anglo-American Plc and Xstrata Plc in overcoming spiralling costs and restive labour unions to report profit growth of a third or more over the past week, thanks to surging commodity prices.
But with the global economy on edge, bedevilled by debt crises in Europe and the United States, the outlook remains uncertain, with investors worried about a return to global financial turmoil and a knock-on effect for commodity prices.
"We remain positive for the remainder of 2011 and into 2012, in particular given the context of the industry struggling to bring new production onstream," Chief Executive Tom Albanese said in the results statement.
"However there are important risks to this outlook related to the pace of credit tightening in developing countries and the threat of financial crises arising from sovereign debt problems in Europe and the United States which could destabilise commodity markets."
Iron ore net earnings, which accounted for 78 percent of Rio Tinto's group profit, surged 44 percent in the first half, while aluminum profits edged 3.5 percent higher.
Earnings from the energy division, which includes coal and uranium, tumbled 39 percent, partly reflecting flooding at its Australian collieries and at the operations of its Australian uranium subsidiary, Energy Resources of Australia .
The strong Australian dollar also weighed heavily on Rio Tinto's earnings.
Wednesday, August 3, 2011
Coal miners strike ends
The wage settlement with NUM, United Association of SA (Uasa) and Solidarity, ranges between 8% and 10.5%
Wed, August03, 2011 |I-Net Bridge
Workers in the coal sector are expected to return to their posts on Tuesday after the unions and the Chamber of Mines signed a two-year wage agreement, ending an eight-day strike.
Frans Barker, negotiator on behalf of coal mines, told I-Net Bridge that the wage settlement with Nation Union of Mineworkers, United Association of SA (Uasa) and Solidarity, ranged between 8% and 10.5% in the first year. Unions will receive 7.5% and 10% in the second year.
The NUM, Uasa and Solidarity downed tools in the coal sector a little more than a week ago over salary increases.
NUM, which collectively represents 150,000 workers, and Uasa were demanding a 14% pay rise. Solidarity was demanding a 12% increase.
The coal mining companies involved are Anglo American Thermal Coal, Delmas Coal, Exxaro Coal Mpumalanga, Kangra Coal, Optimum Coal and Xstrata Coal. (Business Day)
Wed, August03, 2011 |I-Net Bridge
Workers in the coal sector are expected to return to their posts on Tuesday after the unions and the Chamber of Mines signed a two-year wage agreement, ending an eight-day strike.
Frans Barker, negotiator on behalf of coal mines, told I-Net Bridge that the wage settlement with Nation Union of Mineworkers, United Association of SA (Uasa) and Solidarity, ranged between 8% and 10.5% in the first year. Unions will receive 7.5% and 10% in the second year.
The NUM, Uasa and Solidarity downed tools in the coal sector a little more than a week ago over salary increases.
NUM, which collectively represents 150,000 workers, and Uasa were demanding a 14% pay rise. Solidarity was demanding a 12% increase.
The coal mining companies involved are Anglo American Thermal Coal, Delmas Coal, Exxaro Coal Mpumalanga, Kangra Coal, Optimum Coal and Xstrata Coal. (Business Day)
Wednesday, July 27, 2011
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)
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)
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