Friday, 24 Feb 2012
The Australian Financial Review reported that Brazil's Vale, the world's largest iron ore miner, is looking for investments in Australia to cut down on shipping costs to Asia.
The Brazilian ambassador to Australia, Mr Rubem Antonio Correa Barbosa told the newspaper that “Vale is trying to diminish this handicap by investing more in Australia and eventually being able to sell iron ore from Australia straight to China.”
But Vale's chief executive, Mr Murilo Ferreira, wouldn't specify where the company was looking. He said that “It is our duty to analyse all of the opportunities through junior companies.”
(sourced Businessspectator.com.au)
Showing posts with label Australian iron ore miner. Show all posts
Showing posts with label Australian iron ore miner. Show all posts
Friday, February 24, 2012
Tuesday, February 7, 2012
M&A Mania Smelts The Iron Ore Industry
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)
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)
Thursday, January 26, 2012
Ms Rinehart fortune to soar on POSCO deal
Thursday, 26 Jan 2012
Australia's richest person, iron ore magnate Ms Gina Rinehart could see her fortune nearly double to AUD 20 billion after South Korean steel giant POSCO moved to increase its stake in the Roy Hill iron ore project.
POSCO last week announced it would pay KRW 1.8 trillion (AUD 1.5 billion) to raise its interest in the project to 15% by mid 2014.
POSCO the world's third-largest steelmaker, already owns 3.75% of Roy Hill. The deal places an estimated value of AUD 10 billion on the project in Western Australia's Pilbara region.
Roy Hill is a joint venture between Ms Rinehart's company Hancock Prospecting and Posco, which says it is still in talks to finalise the purchase.
POSCO announced its intention to acquire 15% of Roy Hill in 2010 but did not reveal the value of the deal until last week.
(Sourced from ABC/Reuters)
Friday, January 20, 2012
BHP Billiton signs up with Boom Logistics
Friday, 20 Jan 2012
It is reported that Boom Logistics has secured a three year contract to supply cranes and associated services to BHP Billiton Iron Ore Operations in northwest Australia.
The contract with a two year extension option will include services for all shutdown and maintenance works at BHP Billiton Nelson Point and Finucane Island operations in Port Hedland, Western Australia.
Mr Brenden Mitchell Boom Logistics Ltd CEO said "This consolidates our position in the northwest of WA and reinforces Boom as a major provider to industry leaders in the region. Revenue from this contract is expected to be around AUD 35 million over the next three years."
Boom has signed two further three year contracts an AUD 6 million contract to supply cranes and associated services to Anglo American Metallurgical Coal Operations in central Queensland and a re-signed AUD 9 million contract with BP Refinery in Western Australia.
(Sourced from www.khl.com)
It is reported that Boom Logistics has secured a three year contract to supply cranes and associated services to BHP Billiton Iron Ore Operations in northwest Australia.
The contract with a two year extension option will include services for all shutdown and maintenance works at BHP Billiton Nelson Point and Finucane Island operations in Port Hedland, Western Australia.
Mr Brenden Mitchell Boom Logistics Ltd CEO said "This consolidates our position in the northwest of WA and reinforces Boom as a major provider to industry leaders in the region. Revenue from this contract is expected to be around AUD 35 million over the next three years."
Boom has signed two further three year contracts an AUD 6 million contract to supply cranes and associated services to Anglo American Metallurgical Coal Operations in central Queensland and a re-signed AUD 9 million contract with BP Refinery in Western Australia.
(Sourced from www.khl.com)
Tuesday, December 27, 2011
Legacy Iron Ore to acquire 60% of Hawthorn Resources
Tuesday, December 27, 2011 sourced: Proactive Investors
Legacy Iron Ore (ASX:LCY) will acquire a 60 per cent stake in Hawthorn Resources (ASX:HAW) and so enable the Mt Bevan iron ore joint venture in Western Australia to be developed under one entity.
Investors may recall that India's NMDC, the largest iron ore producer and a Government of India owned enterprise, committed to developing Mt Bevan through Legacy. NMDC has cash reserves of A$4 billion.
Legacy and Hawthorn signed a term sheet for the deal which is expected to be finalised following an upgrade to the current inferred resource at Mt Bevan, which is likely to be announced in mid-January 2012.
Key deal points are:
- Legacy agreeing to subscribe for a placement of $5,000,000 at an issue price of $0.015 in Hawthorn, being a premium over the last ASX trade of $0.009, upon completion of the transaction.
- Hawthorn agreeing to acquire the interest currently being earned in the Mt Bevan project by Legacy, and agreeing to terminate the Joint Venture agreement, in return for scrip consideration in Hawthorn.
- Upon completion, 100% of Mt Bevan will remain in Hawthorn for development and commercialisation
- Legacy will have the right to appoint a majority of directors to the Hawthorn board
The deal is subject to the completion of satisfactory due diligence by Legacy, and obtaining the necessary regulatory and shareholder approvals.
The $5m placement into Hawthorn will be funded by Legacy, out of current cash reserves. Legacy shareholders recently approved an $18.9m placement to NMDC for 50 per cent of Legacy. Three NMDC directors have joined the Legacy board including NMDC chairman Rana Som.
Australia’s Foreign Investment Review Board (FIRB) as well as the Legacy shareholders have given their approval to the NMDC-Legacy deal.
Analysis
Clearly, this is a significant step forward for Legacy and allowing an accelerated development of Mt Bevan, as this deal paves the way for effective control of Mt Bevan to reside with Legacy. It would also have likely been a key point for NMDC to open its wallet further with project financing and access to debt funding of Mt Bevan.
In a plus for Legacy shareholders, subject to successful completion, Legacy is likely to look to an in-specie distribution of the 60% shareholding in Hawthorn back to Legacy shareholders.
Legacy and NMDC are on record as seeking to secure additional resource projects using Legacy as its investment vehicle. Sources in India told Proactive Investors that high on NMDC's list is to acquire a stake of up to 50 per cent stake in phosphate company Minemakers (ASX: MAK) and its Wonarah phosphate project. This could occur as soon as the Legacy deal is wrapped up. However, it is understood that due diligence has not yet been completed on the Wonarah project.
NMDC has put aside up to $400 million for overseas investments like Legacy and Minemakers.
Legacy Iron Ore (ASX:LCY) will acquire a 60 per cent stake in Hawthorn Resources (ASX:HAW) and so enable the Mt Bevan iron ore joint venture in Western Australia to be developed under one entity.
Investors may recall that India's NMDC, the largest iron ore producer and a Government of India owned enterprise, committed to developing Mt Bevan through Legacy. NMDC has cash reserves of A$4 billion.
Legacy and Hawthorn signed a term sheet for the deal which is expected to be finalised following an upgrade to the current inferred resource at Mt Bevan, which is likely to be announced in mid-January 2012.
Key deal points are:
- Legacy agreeing to subscribe for a placement of $5,000,000 at an issue price of $0.015 in Hawthorn, being a premium over the last ASX trade of $0.009, upon completion of the transaction.
- Hawthorn agreeing to acquire the interest currently being earned in the Mt Bevan project by Legacy, and agreeing to terminate the Joint Venture agreement, in return for scrip consideration in Hawthorn.
- Upon completion, 100% of Mt Bevan will remain in Hawthorn for development and commercialisation
- Legacy will have the right to appoint a majority of directors to the Hawthorn board
The deal is subject to the completion of satisfactory due diligence by Legacy, and obtaining the necessary regulatory and shareholder approvals.
The $5m placement into Hawthorn will be funded by Legacy, out of current cash reserves. Legacy shareholders recently approved an $18.9m placement to NMDC for 50 per cent of Legacy. Three NMDC directors have joined the Legacy board including NMDC chairman Rana Som.
Australia’s Foreign Investment Review Board (FIRB) as well as the Legacy shareholders have given their approval to the NMDC-Legacy deal.
Analysis
Clearly, this is a significant step forward for Legacy and allowing an accelerated development of Mt Bevan, as this deal paves the way for effective control of Mt Bevan to reside with Legacy. It would also have likely been a key point for NMDC to open its wallet further with project financing and access to debt funding of Mt Bevan.
In a plus for Legacy shareholders, subject to successful completion, Legacy is likely to look to an in-specie distribution of the 60% shareholding in Hawthorn back to Legacy shareholders.
Legacy and NMDC are on record as seeking to secure additional resource projects using Legacy as its investment vehicle. Sources in India told Proactive Investors that high on NMDC's list is to acquire a stake of up to 50 per cent stake in phosphate company Minemakers (ASX: MAK) and its Wonarah phosphate project. This could occur as soon as the Legacy deal is wrapped up. However, it is understood that due diligence has not yet been completed on the Wonarah project.
NMDC has put aside up to $400 million for overseas investments like Legacy and Minemakers.
Tuesday, November 22, 2011
Mitsubishi, Chinese may rescue Australia iron ore and port plan
Tue Nov 22, 2011
MELBOURNE Nov 22 (Reuters) - Mitsubishi Corp and Chinese investors may save troubled multi-billion-dollar iron ore and deepwater port-cum-rail projects in Western Australia, analysts said on Tuesday, after the partner of Japan's top trading company looked set to exit the projects.
Mitsubishi's partner, Murchison Metals, said this week it aims to complete discussions by Wednesday on the sale of its 50 percent stakes in the A$5.9 billion Oakajee port and rail project and the A$3.7 billion Jack Hills iron ore project.
Murchison has been looking to sell because it has had difficulty raising its share of the funding for the Oakajee project and for Jack Hills, both of which have turned out to be more costly than first thought.
Analysts in Tokyo said they expect Mitsubishi to buy out Murchison and then sell stakes to new partners, adding that Mitsubishi would look to cut its exposure to the Oakajee and Jack Hills projects to less than 400 billion yen ($5.2 billion).
Two Chinese companies, seen as potential backers for the key rail line and port, are state-owned Sinosteel and Angang Steel Co (Ansteel) , which have interests in the midwest iron ore region in Western Australia.
Mitsubishi and Murchison declined to comment. Sinosteel and Angang couldn't be reached immediately for comments.
CHINESE INVOLVEMENT
Western Australia is eager to see Oakajee built and has been calling for Chinese involvement to get the project moving.
State premier Colin Barnett met in September with China's National Development and Reform Commission, the agency in charge of investment approvals, looking to drum up potential Chinese participation, Murchison said last month.
"I think what we are seeing now is what I have been waiting for sometime and that's a rearranging of the ownership structure of the Oakajee port and rail," Barnett told reporters on Tuesday. "That is important for the project to go ahead."
He said he is looking for the port and mine development to be separated.
"What we're interested in doing is getting a good corporate structure in place, whether it's Japanese, Chinese, Australian or anyone else that can actually undertake this project and fund it," Barnett said.
Analysts said it was too difficult to estimate how much Murchison may fetch for its stakes in the iron ore and infrastructure projects, because neither project is viable without the other.
"The lack of customers makes the Oakajee port and rail project difficult," said Chris Drew, an analyst at RBC Capital Markets.
SHARES HALTED
Murchison's shares, on a trading halt since Monday, were last at A$0.275, valuing the company at A$121.7 million. It has lost nearly 80 percent of its value this year amid doubts about the future of its two main assets.
The Oakajee port and rail project was designed to open a second major iron ore province in Australia to challenge the dominance of global giants Rio Tinto and BHP Billiton .
Sinosteel's Weld Range iron ore project was expected to use the Oakajee rail and port, but it put the mine development on hold earlier this year due to the setbacks facing the Oakajee port and rail line.
Ansteel's interest in the project is tied to its 30 percent stake in Gindalbie Metals, the third potential user of Oakajee.
Any sale of the Oakajee and Jack Hills stakes will need approval from Murchison's shareholders, including South Korean steelmaker POSCO.
($1 = 1.019 Australian dollars, 76.980 Japanese yen)
(sourced Reuters)
MELBOURNE Nov 22 (Reuters) - Mitsubishi Corp and Chinese investors may save troubled multi-billion-dollar iron ore and deepwater port-cum-rail projects in Western Australia, analysts said on Tuesday, after the partner of Japan's top trading company looked set to exit the projects.
Mitsubishi's partner, Murchison Metals, said this week it aims to complete discussions by Wednesday on the sale of its 50 percent stakes in the A$5.9 billion Oakajee port and rail project and the A$3.7 billion Jack Hills iron ore project.
Murchison has been looking to sell because it has had difficulty raising its share of the funding for the Oakajee project and for Jack Hills, both of which have turned out to be more costly than first thought.
Analysts in Tokyo said they expect Mitsubishi to buy out Murchison and then sell stakes to new partners, adding that Mitsubishi would look to cut its exposure to the Oakajee and Jack Hills projects to less than 400 billion yen ($5.2 billion).
Two Chinese companies, seen as potential backers for the key rail line and port, are state-owned Sinosteel and Angang Steel Co (Ansteel) , which have interests in the midwest iron ore region in Western Australia.
Mitsubishi and Murchison declined to comment. Sinosteel and Angang couldn't be reached immediately for comments.
CHINESE INVOLVEMENT
Western Australia is eager to see Oakajee built and has been calling for Chinese involvement to get the project moving.
State premier Colin Barnett met in September with China's National Development and Reform Commission, the agency in charge of investment approvals, looking to drum up potential Chinese participation, Murchison said last month.
"I think what we are seeing now is what I have been waiting for sometime and that's a rearranging of the ownership structure of the Oakajee port and rail," Barnett told reporters on Tuesday. "That is important for the project to go ahead."
He said he is looking for the port and mine development to be separated.
"What we're interested in doing is getting a good corporate structure in place, whether it's Japanese, Chinese, Australian or anyone else that can actually undertake this project and fund it," Barnett said.
Analysts said it was too difficult to estimate how much Murchison may fetch for its stakes in the iron ore and infrastructure projects, because neither project is viable without the other.
"The lack of customers makes the Oakajee port and rail project difficult," said Chris Drew, an analyst at RBC Capital Markets.
SHARES HALTED
Murchison's shares, on a trading halt since Monday, were last at A$0.275, valuing the company at A$121.7 million. It has lost nearly 80 percent of its value this year amid doubts about the future of its two main assets.
The Oakajee port and rail project was designed to open a second major iron ore province in Australia to challenge the dominance of global giants Rio Tinto and BHP Billiton .
Sinosteel's Weld Range iron ore project was expected to use the Oakajee rail and port, but it put the mine development on hold earlier this year due to the setbacks facing the Oakajee port and rail line.
Ansteel's interest in the project is tied to its 30 percent stake in Gindalbie Metals, the third potential user of Oakajee.
Any sale of the Oakajee and Jack Hills stakes will need approval from Murchison's shareholders, including South Korean steelmaker POSCO.
($1 = 1.019 Australian dollars, 76.980 Japanese yen)
(sourced Reuters)
Sunday, November 20, 2011
Iron ore derivatives market will continue to grow - Ms Brlas
Sunday, 20 Nov 2011
Ms Laurie Brlas chief financial officer of Cliffs Natural Resources said that the iron ore derivatives market will continue to grow, but miners of the steel component don't see a need to hedge at current prices.
Ms Laurie Brlas said while the company was watching developments in the market for iron ore derivatives, Cliffs wasn't interested in participating. The Cleveland company is the largest North American iron ore producer.
Ms Brlas told Dow Jones Newswires on the sidelines of a Dahlman Rose & Co conference that "We're not in the business of speculating in the market adding she was satisfied with Cliffs' exposure to cash prices, which is growing as Cliffs' long-term pricing agreements expire and are replaced with contracts that move more in line with market prices.
In some metals and other commodities markets, producers use derivatives contracts to lock in sales prices on a portion of their production and guarantee some of their cash flow. Iron-ore miners and steelmakers have generally been reluctant to use such hedges.
Other market participants have stepped in, and trading activity in iron-ore swaps cleared by Singapore Exchange Ltd reached record highs in October.
Ms Brlas said that iron ore trading will evolve into a real marketplace, but she said mining companies have yet to see the benefit of jumping into the market.
Ms Brlas said she expects prices in the coming years to remain at levels that maintain a healthy profit margin, underpinned by rapid growth in emerging market steel demand and the high cost of iron-ore mining in top producer China.
(Sourced from Dow Jones Newswires)
Ms Laurie Brlas chief financial officer of Cliffs Natural Resources said that the iron ore derivatives market will continue to grow, but miners of the steel component don't see a need to hedge at current prices.
Ms Laurie Brlas said while the company was watching developments in the market for iron ore derivatives, Cliffs wasn't interested in participating. The Cleveland company is the largest North American iron ore producer.
Ms Brlas told Dow Jones Newswires on the sidelines of a Dahlman Rose & Co conference that "We're not in the business of speculating in the market adding she was satisfied with Cliffs' exposure to cash prices, which is growing as Cliffs' long-term pricing agreements expire and are replaced with contracts that move more in line with market prices.
In some metals and other commodities markets, producers use derivatives contracts to lock in sales prices on a portion of their production and guarantee some of their cash flow. Iron-ore miners and steelmakers have generally been reluctant to use such hedges.
Other market participants have stepped in, and trading activity in iron-ore swaps cleared by Singapore Exchange Ltd reached record highs in October.
Ms Brlas said that iron ore trading will evolve into a real marketplace, but she said mining companies have yet to see the benefit of jumping into the market.
Ms Brlas said she expects prices in the coming years to remain at levels that maintain a healthy profit margin, underpinned by rapid growth in emerging market steel demand and the high cost of iron-ore mining in top producer China.
(Sourced from Dow Jones Newswires)
Saturday, November 12, 2011
Heavyweights shrug off October iron ore price crash
Saturday, 12 Nov 2011
Iron ore prices have turned around after crashing 30% in October, but longer term the outlook is not rosy thanks in large part to the aggressive go to market strategy of the big three.
BHP, Vale and Rio Tinto control nearly 70% of the 1 billion tonne annual iron ore seaborne trade and thanks to their economies of scale have been flooding the market by concentrating on building market share rather than maximizing prices. This way the giants drive high cost producers out of the business and crowd out any new players who want to enter the space. And their dominance is only set to increase.
BHP and Rio’s production plans for the Pilbara region of Australia alone is a staggering 750 million tonne per annum while current number one Vale is planning to start work on its biggest project to date next year - the Serra Sul iron ore mine alone will add 90 million tonne per annum to the Brazilian company's current 310 million tonnes capacity.
Many analysts believe that while prices were likely to rebound to around USD 140 per tonne by year end from the USD 130 per tonne now, they do not expect prices to return to the previous highs above USD 180 seen just two months ago. During October 62% iron ore fell USD 60 to a low of USD 115 per tonne. At USD 140 per tonne prices are still more than double what they were during the 2008 financial crisis. Not everyone agrees that BHP Billiton, Vale and Rio Tinto will be able to keep their grip on the market.
Reuters quotes Mr Graeme Hossie CEO of London Mining as saying that “It is well understood in the industry that there is a need for new entrants, and certainly China wants new entrants - they want alternatives to the large guys.”
Australia's Fortescue Metals is an example of China nurturing new entrants. the China-backed company is already exporting 40 million tonnes and wants to increase this sixfold. It's not as if the giants agree on any kind of strategy: Reuters reported last week Rio Tinto last week blamed softening prices on more spot sales by the larger Vale of Brazil into the Chinese spot market to compensate for waning sales in Europe. Vale has dismissed the claim, saying prices were falling because of a production increase in Australia and changes in Chinese credit policy at the end of September on BHP Billiton's plans to increase its production in the Pilbara region the heart of Australia’s iron ore mining to 450 million tonnes a year by adding infrastructure and building new mines.
BHP’s current iron-ore production capacity is 155 million tonnes a year in the Pilbara, while rival Rio Tinto’s capacity is 225 million tonnes a year. Rio Tinto announced earlier in the month that it wants to grow output to 333 million tonnes by 2015.
(sourced provider.mining.com)
Iron ore prices have turned around after crashing 30% in October, but longer term the outlook is not rosy thanks in large part to the aggressive go to market strategy of the big three.
BHP, Vale and Rio Tinto control nearly 70% of the 1 billion tonne annual iron ore seaborne trade and thanks to their economies of scale have been flooding the market by concentrating on building market share rather than maximizing prices. This way the giants drive high cost producers out of the business and crowd out any new players who want to enter the space. And their dominance is only set to increase.
BHP and Rio’s production plans for the Pilbara region of Australia alone is a staggering 750 million tonne per annum while current number one Vale is planning to start work on its biggest project to date next year - the Serra Sul iron ore mine alone will add 90 million tonne per annum to the Brazilian company's current 310 million tonnes capacity.
Many analysts believe that while prices were likely to rebound to around USD 140 per tonne by year end from the USD 130 per tonne now, they do not expect prices to return to the previous highs above USD 180 seen just two months ago. During October 62% iron ore fell USD 60 to a low of USD 115 per tonne. At USD 140 per tonne prices are still more than double what they were during the 2008 financial crisis. Not everyone agrees that BHP Billiton, Vale and Rio Tinto will be able to keep their grip on the market.
Reuters quotes Mr Graeme Hossie CEO of London Mining as saying that “It is well understood in the industry that there is a need for new entrants, and certainly China wants new entrants - they want alternatives to the large guys.”
Australia's Fortescue Metals is an example of China nurturing new entrants. the China-backed company is already exporting 40 million tonnes and wants to increase this sixfold. It's not as if the giants agree on any kind of strategy: Reuters reported last week Rio Tinto last week blamed softening prices on more spot sales by the larger Vale of Brazil into the Chinese spot market to compensate for waning sales in Europe. Vale has dismissed the claim, saying prices were falling because of a production increase in Australia and changes in Chinese credit policy at the end of September on BHP Billiton's plans to increase its production in the Pilbara region the heart of Australia’s iron ore mining to 450 million tonnes a year by adding infrastructure and building new mines.
BHP’s current iron-ore production capacity is 155 million tonnes a year in the Pilbara, while rival Rio Tinto’s capacity is 225 million tonnes a year. Rio Tinto announced earlier in the month that it wants to grow output to 333 million tonnes by 2015.
(sourced provider.mining.com)
Friday, November 11, 2011
BHPB agrees to raise royalty rates on West Australian iron ore
Friday, 11 Nov 2011
BHP Billiton has finalized an agreement with the Western Australian Government to increase the royalty rate payable to the State for its iron ore Fines product.
Based on this agreement, the Western Australian Government will proceed with amendments to the State Agreement Acts covering operations managed by BHP Billiton Iron Ore.
These amendments will include an increase in the royalty rate applicable to iron ore Fines from 5.625% of sales revenue to 6.5% from July 1st 2012, and then to 7.5% from July 1st2013. This will align the royalty rate for Fines with the existing rate paid on Lump ore.
Mr Ian Ashby BHP Billiton iron ore president said that "The changes to the State Agreements will give the Company greater certainty in planning and executing our growth projects, particularly the proposed Outer Harbour Development.”
The State Agreement amendments are subject to the approval of the Parliament of Western Australia.
BHP Billiton has finalized an agreement with the Western Australian Government to increase the royalty rate payable to the State for its iron ore Fines product.
Based on this agreement, the Western Australian Government will proceed with amendments to the State Agreement Acts covering operations managed by BHP Billiton Iron Ore.
These amendments will include an increase in the royalty rate applicable to iron ore Fines from 5.625% of sales revenue to 6.5% from July 1st 2012, and then to 7.5% from July 1st2013. This will align the royalty rate for Fines with the existing rate paid on Lump ore.
Mr Ian Ashby BHP Billiton iron ore president said that "The changes to the State Agreements will give the Company greater certainty in planning and executing our growth projects, particularly the proposed Outer Harbour Development.”
The State Agreement amendments are subject to the approval of the Parliament of Western Australia.
Tuesday, November 8, 2011
FairStar Resources acquires iron ore rights to highly prospective WA tenement
Tuesday, 08 Nov 2011
FairStar Resources announced that it has entered into an agreement with Renaissance WA Pty Ltd to acquire the iron ore rights to a highly prospective 108 square kilometres tenement north-east of Steeple Hill Iron Ore Project.
Under the agreement FairStar will meet three years exploration expenditure for a total AUD 120,000 and pay a AUD 0.50 per tonne royalty on iron ore derived from this tenement.
The Mining Lease is to be held by FairStar and there will be a Royalty Agreement with Renaissance WA Pty Ltd, a wholly owned subsidiary of Renaissance Minerals Limited .
SHIP’s current indicated resource stands at 19 million tonnes of hematite. This recovery is for the +0.6mm fraction only, and additional hematite recovery will be obtained from the -0.6mm fraction, and preliminary test work indicates this could be in the order of an extra 4% hematite. Thereby providing for a total of at least 24 million tonnes of hematite.
Significantly, aerial photography indicates SHIP’s hematite rich gravels continue for up to seven kilometres into the new tenement, known as North SHIP.
The possible extension of SHIP’s hematite rich mineralisation into North SHIP means it could significantly boost SHIP’s present indicated resource.
Mr Kevin Robertson MD of FairStar said that “This is an exciting development with considerable upside potential for the company that could substantially increase FairStar’s iron ore resource and we will commence exploration drilling as soon as practically possible.”
The tenement in Western Australia’s Yilgarn region is a continuation of SHIP hematite rich alluvial gravels and has potential to augment the SHIP resource. The company plans to commence drilling shortly.
(sourced proactiveinvestors)
FairStar Resources announced that it has entered into an agreement with Renaissance WA Pty Ltd to acquire the iron ore rights to a highly prospective 108 square kilometres tenement north-east of Steeple Hill Iron Ore Project.
Under the agreement FairStar will meet three years exploration expenditure for a total AUD 120,000 and pay a AUD 0.50 per tonne royalty on iron ore derived from this tenement.
The Mining Lease is to be held by FairStar and there will be a Royalty Agreement with Renaissance WA Pty Ltd, a wholly owned subsidiary of Renaissance Minerals Limited .
SHIP’s current indicated resource stands at 19 million tonnes of hematite. This recovery is for the +0.6mm fraction only, and additional hematite recovery will be obtained from the -0.6mm fraction, and preliminary test work indicates this could be in the order of an extra 4% hematite. Thereby providing for a total of at least 24 million tonnes of hematite.
Significantly, aerial photography indicates SHIP’s hematite rich gravels continue for up to seven kilometres into the new tenement, known as North SHIP.
The possible extension of SHIP’s hematite rich mineralisation into North SHIP means it could significantly boost SHIP’s present indicated resource.
Mr Kevin Robertson MD of FairStar said that “This is an exciting development with considerable upside potential for the company that could substantially increase FairStar’s iron ore resource and we will commence exploration drilling as soon as practically possible.”
The tenement in Western Australia’s Yilgarn region is a continuation of SHIP hematite rich alluvial gravels and has potential to augment the SHIP resource. The company plans to commence drilling shortly.
(sourced proactiveinvestors)
Saturday, November 5, 2011
Demand slump threatens more pain for Bulk Vessels - Vistaar
Saturday, 05 November 11
The market continued to fall with BDI dropping below 2,000 points by around 10 pct and closing at 1817 points. The cape index also continued to drop and was down by 13.56 pct and closed at 2,829 points. Panamax and Supramax dropped and closed at 1,866 points (down by 3.76 points) and 1,452 points (6.02 pct) respectively.
Handy size index dropped by 5.60 pct and closed at 742 points.
Very less interest in short period and for Supramax delivery N. China for trips via Indonesia were reported around US$ 9,000-10,000 per day, said Capt. Reddy, Director of Vistaar. The freight rate from Indonesia to India likely to remain soft next week. According to Capt. Reddy, 2012 also not a good year for bulk vessels and freight market.
“Global shipping is experiencing a downturn that's even worse than during the 2008 financial crisis, China's transportation minister said, as reported by Reuters.
The average charter rates was at Cape/US$ 23,374 per day , Panamax/US$ 14,925 per day , Supramax/US$ 15,183 per day and Handy size/US$ 10,565 per day.
The Supramax index in the feast (S6 route) was down by 13.60 pct and closed at US$ 10,442 per day (last week US$ 12,086 per day). The EC India/China (S7 route) was also down by11.76 pct and closed at US$ 8,949 per day (last week US$ 10,142 per day). The S6 and S& route likely to remain soft next week.
The futures for three years (2011-2013) was at around Cape/US$ 15,000 per day, Panamax/US$ 13,000 per day, Supramax/US$ 13,000 per day , Handy size/US$ 10,500 per day.
The congestion in EC Australia decreased to 89 vessels this week (last week 100 vessels). The vessels waiting at main coal loading ports were at Hay point/4, DBCT/7, Gladstone/12, Abbot Point/Nil, New Castle/45, Port Kembla/10 vessels. On the WC Australia iron ore vessels waiting was at 45 vessels (last week 37 vessels).
The Brent crude oil prices was up and closed at US$ 112.45 per barrel (last week US$ 110.05 per barrel). Bunker prices also remained firm and closed at 695.50 pmt (last week US$ 692.00 pmt) for IFO 380 cst ex Singapore on 4th Nov 2011.
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The market continued to fall with BDI dropping below 2,000 points by around 10 pct and closing at 1817 points. The cape index also continued to drop and was down by 13.56 pct and closed at 2,829 points. Panamax and Supramax dropped and closed at 1,866 points (down by 3.76 points) and 1,452 points (6.02 pct) respectively.
Handy size index dropped by 5.60 pct and closed at 742 points.
Very less interest in short period and for Supramax delivery N. China for trips via Indonesia were reported around US$ 9,000-10,000 per day, said Capt. Reddy, Director of Vistaar. The freight rate from Indonesia to India likely to remain soft next week. According to Capt. Reddy, 2012 also not a good year for bulk vessels and freight market.
“Global shipping is experiencing a downturn that's even worse than during the 2008 financial crisis, China's transportation minister said, as reported by Reuters.
The average charter rates was at Cape/US$ 23,374 per day , Panamax/US$ 14,925 per day , Supramax/US$ 15,183 per day and Handy size/US$ 10,565 per day.
The Supramax index in the feast (S6 route) was down by 13.60 pct and closed at US$ 10,442 per day (last week US$ 12,086 per day). The EC India/China (S7 route) was also down by11.76 pct and closed at US$ 8,949 per day (last week US$ 10,142 per day). The S6 and S& route likely to remain soft next week.
The futures for three years (2011-2013) was at around Cape/US$ 15,000 per day, Panamax/US$ 13,000 per day, Supramax/US$ 13,000 per day , Handy size/US$ 10,500 per day.
The congestion in EC Australia decreased to 89 vessels this week (last week 100 vessels). The vessels waiting at main coal loading ports were at Hay point/4, DBCT/7, Gladstone/12, Abbot Point/Nil, New Castle/45, Port Kembla/10 vessels. On the WC Australia iron ore vessels waiting was at 45 vessels (last week 37 vessels).
The Brent crude oil prices was up and closed at US$ 112.45 per barrel (last week US$ 110.05 per barrel). Bunker prices also remained firm and closed at 695.50 pmt (last week US$ 692.00 pmt) for IFO 380 cst ex Singapore on 4th Nov 2011.
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Friday, November 4, 2011
West Australian miner Padbury joins Geraldton Iron Ore Alliance
Friday, 04 November 2011
Perth-based Australian mineral exploration company Padbury Mining Limited announced on November 3 that it has joined the Geraldton Iron Ore Alliance (GIOA), following the lead of fellow iron ore developers Gindalbie Metals, Crosslands Resources and Sinosteel Midwest Corporation.
The GIOA was formed by a group of companies with iron ore deposits in the Geraldton/Mid West area of Western Australia. Padbury's managing director Gary Stokes said "The GIOA offers a valuable network to its member companies and I look forward to working with them and contributing to the advocacy of our region."
Padbury is currently developing its flagship Peak Hill joint venture for which the company defined an initial JORC compliant inferred resource in April this year of 850 million mt, at 27.3 percent iron, also prospective for hematite.
(sourced steelorbis)
Thursday, November 3, 2011
Australian iron ore mine magnate leads fight against tax
Thu Nov 3, 2011
* Small Australian miners plea for mine tax changes
* Small miners say global miners will pay nothing
* Treasurer says big miners pay the most
CANBERRA, Nov 3 (Reuters) - A delegation of small- and mid-sized Australian mining company executives on Thursday called on Prime Minister Julia Gillard to abandon a proposed mining profits tax, saying the biggest firms would pay nothing and leave smaller ones to shoulder the burden.
The claim was immediately rejected by Treasurer Wayne Swan before the Australian Parliament.
Gillard earlier this year vowed to introduce a 30 percent tax on profits from iron ore and coal mining after holding closed-door negotiations with the nation's three biggest mining houses, BHP Billiton , Rio Tinto and Xstrata .
At the time, Gillard estimated the three companies would account for upwards of 90 percent of the estimated A$11 billion in revenue in the first three years.
Fortescue Metals Group founder Andrew Forrest, one of Australia's richest individuals, who made his fortune in iron ore mining, led the delegation, which also warned the tax threatened Australia's economic competitiveness and would stifle exploration.
"The government hasn't thought this through," Forrest told reporters.
Swan rejected the delegation's claim that big mining companies would not pay the new tax, and said companies reaping big profits from the mining boom would be legally required to pay their fair share.
"This tax does not discriminate against small miners. It will be paid predominantly by large miners," Swan told parliament, adding the comments by Forrest were "complete rubbish."
The government on Wednesday introduced legislation for the tax to apply to iron ore and coal miners making A$50 million or more in annual profits. It is scheduled to start July 1, 2012, though it is still uncertain if the government has the support it needs from three independent lawmakers to pass the bills.
Forrest, BC Iron managing director Mike Young, and Atlas Iron chief Dave Flanagan lobbied independent parliament members on Thursday to push their case for the government to rethink supporting the tax.
The executives released projections from accounting firm DBO claiming the tax would see small- and mid-tier miners pay an effective rate of 46 percent, while BHP Billiton and Rio Tinto would pay no tax due to the large deductions they would be afforded.
Forrest said the bigger mining houses would pay no tax under the plans for up to 25 years.
Young also criticised the A$50 million profit threshold for the tax as too low because it would apply to miners after they produce only about 800,000 tonnes of iron ore, a relatively small tonnage.
"We are going to be well above this threshold," Young told reporters.
BC Iron mined about 600,000 tonnes of iron ore last year, and is aiming for around 3 million tonnes this year.
By comparison, Rio Tinto mined more than 200 million tonnes of ore, BHP Billiton 15 million tonnes and Fortescue around 40 million tonnes.
(sourced Reuters)
* Small Australian miners plea for mine tax changes
* Small miners say global miners will pay nothing
* Treasurer says big miners pay the most
CANBERRA, Nov 3 (Reuters) - A delegation of small- and mid-sized Australian mining company executives on Thursday called on Prime Minister Julia Gillard to abandon a proposed mining profits tax, saying the biggest firms would pay nothing and leave smaller ones to shoulder the burden.
The claim was immediately rejected by Treasurer Wayne Swan before the Australian Parliament.
Gillard earlier this year vowed to introduce a 30 percent tax on profits from iron ore and coal mining after holding closed-door negotiations with the nation's three biggest mining houses, BHP Billiton , Rio Tinto and Xstrata .
At the time, Gillard estimated the three companies would account for upwards of 90 percent of the estimated A$11 billion in revenue in the first three years.
Fortescue Metals Group founder Andrew Forrest, one of Australia's richest individuals, who made his fortune in iron ore mining, led the delegation, which also warned the tax threatened Australia's economic competitiveness and would stifle exploration.
"The government hasn't thought this through," Forrest told reporters.
Swan rejected the delegation's claim that big mining companies would not pay the new tax, and said companies reaping big profits from the mining boom would be legally required to pay their fair share.
"This tax does not discriminate against small miners. It will be paid predominantly by large miners," Swan told parliament, adding the comments by Forrest were "complete rubbish."
The government on Wednesday introduced legislation for the tax to apply to iron ore and coal miners making A$50 million or more in annual profits. It is scheduled to start July 1, 2012, though it is still uncertain if the government has the support it needs from three independent lawmakers to pass the bills.
Forrest, BC Iron managing director Mike Young, and Atlas Iron chief Dave Flanagan lobbied independent parliament members on Thursday to push their case for the government to rethink supporting the tax.
The executives released projections from accounting firm DBO claiming the tax would see small- and mid-tier miners pay an effective rate of 46 percent, while BHP Billiton and Rio Tinto would pay no tax due to the large deductions they would be afforded.
Forrest said the bigger mining houses would pay no tax under the plans for up to 25 years.
Young also criticised the A$50 million profit threshold for the tax as too low because it would apply to miners after they produce only about 800,000 tonnes of iron ore, a relatively small tonnage.
"We are going to be well above this threshold," Young told reporters.
BC Iron mined about 600,000 tonnes of iron ore last year, and is aiming for around 3 million tonnes this year.
By comparison, Rio Tinto mined more than 200 million tonnes of ore, BHP Billiton 15 million tonnes and Fortescue around 40 million tonnes.
(sourced Reuters)
Sunday, October 23, 2011
Australia still attracts investments in iron ore despite tax issues
Sunday, 23 Oct 2011
Commodity Online reported that carbon tax introduced in Australia affects little over the investments in the iron ore sector, the major players like BHP Billiton and Rio Tinto continues with their investment in the mineral resource.
Mr Martin Hoffman acting secretary, Department of Resources, Energy and Tourism said "In our contact with them we have seen no change in those plans to continue the substantial expansions in port facilities and mines in the iron-ore sector."
According to BHP's September Quarterly reports, its Western Australian iron ore shipments rose 28% higher than the previous corresponding period to a record annualized rate of 173 million tonnes a year in September 2011.
The Chinese demand for iron ore has been the driver for the Australia major producers.
(sourced commodityonline)
Commodity Online reported that carbon tax introduced in Australia affects little over the investments in the iron ore sector, the major players like BHP Billiton and Rio Tinto continues with their investment in the mineral resource.
Mr Martin Hoffman acting secretary, Department of Resources, Energy and Tourism said "In our contact with them we have seen no change in those plans to continue the substantial expansions in port facilities and mines in the iron-ore sector."
According to BHP's September Quarterly reports, its Western Australian iron ore shipments rose 28% higher than the previous corresponding period to a record annualized rate of 173 million tonnes a year in September 2011.
The Chinese demand for iron ore has been the driver for the Australia major producers.
(sourced commodityonline)
Friday, October 14, 2011
New pricing system for iron ore
By Alex MacDonald, The Australian
October 15, 2011 12:00AM
BHP Billiton plans to create a new, more transparent iron ore pricing system called Global Oreby the end of the year or early next year.
The chief executive of the company's ferrous and coal division, Marcus Randolph, told an audience at the World Steel Association in Paris that he was working with members to develop a pricing system that would allow iron ore prices to be quoted on a screen to provide the market with a more transparent price than index providers such as Platts.
"We have to have that in order to have a viable derivatives market," Mr Randolph said.
"As you try to create a financial market, a derivative market, you actually must have 100 per cent verification of what is the price right now. Global Ore is not based on a reported price; it's visible to people" on a screen real-time, he said.
Global Ore will be modelled on Global Coal, another trading platform BHP has helped set up where consumers and producers offer prices on a website in order to buy and sell thermal coal. Global Ore would be based on a similar ownership model to Global Coal, where both consumers and producers own the trading platform.
Financial institutions would also be able to participate, Mr Randolph said, but he wasn't clear whether that would be as a user or owner or both.
The Global Ore platform initially would allow consumers and producers to trade iron ore fines.
The derivatives market has grown since the world's three largest iron ore miners, BHP Billiton, Rio Tinto and Brazil's Vale, abandoned the annual price benchmarking system in 2009 for shorter term price contracts.
The contracts were set up on a quarterly system, but "most people are finding quarterly is an inconvenient period", Mr Randolph said. As a result, more contracts were now being priced on a monthly basis.
BHP sold more than 50 per cent of its iron ore on a monthly basis and an even higher proportion of its coking coal on a monthly basis, Mr Randolph said.
Only 15 per cent of world iron ore sales and 4 per cent of coking coal sales were done on price contracts longer than a quarter, he said. "The intent of a monthly price is not to negotiate. It's actually to fix the price where the market is. We are not where we have a transparent market, but we certainly have a low volatility market."
Mr Randolph said the Chinese were more willing to engage in short-term price negotiations than the Japanese, whose carmakers preferred annual steel contracts.
Simon Wandke, vice-president and chief commercial officer of Arcelor Mittal's mining unit, agreed with Mr Randolph that there was potential for a more liquid and transparent iron ore derivatives market, but he wasn't certain steelmakers would adopt such instruments given the low level of liquidity and the likelihood that they would cover only a portion of the grades and products in the iron ore market.
(sourced Dow Jones Newswires)
October 15, 2011 12:00AM
BHP Billiton plans to create a new, more transparent iron ore pricing system called Global Oreby the end of the year or early next year.
The chief executive of the company's ferrous and coal division, Marcus Randolph, told an audience at the World Steel Association in Paris that he was working with members to develop a pricing system that would allow iron ore prices to be quoted on a screen to provide the market with a more transparent price than index providers such as Platts.
"We have to have that in order to have a viable derivatives market," Mr Randolph said.
"As you try to create a financial market, a derivative market, you actually must have 100 per cent verification of what is the price right now. Global Ore is not based on a reported price; it's visible to people" on a screen real-time, he said.
Global Ore will be modelled on Global Coal, another trading platform BHP has helped set up where consumers and producers offer prices on a website in order to buy and sell thermal coal. Global Ore would be based on a similar ownership model to Global Coal, where both consumers and producers own the trading platform.
Financial institutions would also be able to participate, Mr Randolph said, but he wasn't clear whether that would be as a user or owner or both.
The Global Ore platform initially would allow consumers and producers to trade iron ore fines.
The derivatives market has grown since the world's three largest iron ore miners, BHP Billiton, Rio Tinto and Brazil's Vale, abandoned the annual price benchmarking system in 2009 for shorter term price contracts.
The contracts were set up on a quarterly system, but "most people are finding quarterly is an inconvenient period", Mr Randolph said. As a result, more contracts were now being priced on a monthly basis.
BHP sold more than 50 per cent of its iron ore on a monthly basis and an even higher proportion of its coking coal on a monthly basis, Mr Randolph said.
Only 15 per cent of world iron ore sales and 4 per cent of coking coal sales were done on price contracts longer than a quarter, he said. "The intent of a monthly price is not to negotiate. It's actually to fix the price where the market is. We are not where we have a transparent market, but we certainly have a low volatility market."
Mr Randolph said the Chinese were more willing to engage in short-term price negotiations than the Japanese, whose carmakers preferred annual steel contracts.
Simon Wandke, vice-president and chief commercial officer of Arcelor Mittal's mining unit, agreed with Mr Randolph that there was potential for a more liquid and transparent iron ore derivatives market, but he wasn't certain steelmakers would adopt such instruments given the low level of liquidity and the likelihood that they would cover only a portion of the grades and products in the iron ore market.
(sourced Dow Jones Newswires)
Thursday, October 13, 2011
Rio is making piles from ore
By Barry FitzGerald
October 14, 2011
RIO Tinto is set to beat last year's record profit of $US14.32 billion comfortably after latest production figures showed it is well on the way to meeting its 2011 production target for iron ore - its profit mainstay.
The group's third (September) quarter production report, released yesterday, shows that Rio set new quarterly records for iron ore sales, as well as setting records for coking coal production.
Pilbara and Canadian iron ore production for companies owned or part-owned and managed by Rio was 64 million tonnes (Rio's share was 50 million tonnes) in the September quarter, up by 5 per cent on the previous corresponding period.
That took production for the first three quarters of the group's reporting year to 179 million tonnes (Rio's share was 141 million), leaving it requiring output of 61 million tonnes in the final quarter to hit its 240 million tonne target for the year.
The market pushed the stock $1.88, or 2.7 per cent, higher to $69.34. That was more than the 56¢, or 1.5 per cent, gain for BHP Billiton, which has yet to report for the September quarter.
Just as important for Rio in hitting production targets has been the ability of iron ore prices to be largely immune so far from the worst of the commodity price shakedown that has accompanied the equities rout on Europe's debt concerns.
Spot prices for the key steel-making raw material have weakened in the past month by about 9 per cent to $US162 a tonne. But that price is still well above last year's average of $US135 a tonne, ensuring that the bumper earnings from iron ore will continue for some time yet.
Most analysts have Rio earning more than $US17 billion for 2011, indicating a big second half given its profit for the June half was $US7.58 billion. That represented a 30 per cent improvement on the 2010 June-half result of $US5.8 billion.
Rio chief executive Tom Albanese highlighted iron ore's relative price strength in his commentary on the production report lodged with the stock exchange.
''Whilst we are mindful of current market volatility, the fundamentals are holding up well, particularly for bulk-traded [iron ore, coking and steaming coal] commodities,'' Mr Albanese said.
Coking coal prices have retreated recently but the spot price of $US256 a tonne remains well ahead of last year's average of $US217 a tonne. Steaming or energy coal has bucked the trend in recent weeks to edge higher to $US125 a tonne. Last year's average for the commodity was $US98 a tonne.
There were some areas of weakness in Rio's September production report, most notably in the copper division. A combination of industrial action in Chile and Indonesia and lower grades cut copper production by 32 per cent in the quarter from the previous corresponding period.
Sourced smh.com.au
October 14, 2011
RIO Tinto is set to beat last year's record profit of $US14.32 billion comfortably after latest production figures showed it is well on the way to meeting its 2011 production target for iron ore - its profit mainstay.
The group's third (September) quarter production report, released yesterday, shows that Rio set new quarterly records for iron ore sales, as well as setting records for coking coal production.
Pilbara and Canadian iron ore production for companies owned or part-owned and managed by Rio was 64 million tonnes (Rio's share was 50 million tonnes) in the September quarter, up by 5 per cent on the previous corresponding period.
That took production for the first three quarters of the group's reporting year to 179 million tonnes (Rio's share was 141 million), leaving it requiring output of 61 million tonnes in the final quarter to hit its 240 million tonne target for the year.
The market pushed the stock $1.88, or 2.7 per cent, higher to $69.34. That was more than the 56¢, or 1.5 per cent, gain for BHP Billiton, which has yet to report for the September quarter.
Just as important for Rio in hitting production targets has been the ability of iron ore prices to be largely immune so far from the worst of the commodity price shakedown that has accompanied the equities rout on Europe's debt concerns.
Spot prices for the key steel-making raw material have weakened in the past month by about 9 per cent to $US162 a tonne. But that price is still well above last year's average of $US135 a tonne, ensuring that the bumper earnings from iron ore will continue for some time yet.
Most analysts have Rio earning more than $US17 billion for 2011, indicating a big second half given its profit for the June half was $US7.58 billion. That represented a 30 per cent improvement on the 2010 June-half result of $US5.8 billion.
Rio chief executive Tom Albanese highlighted iron ore's relative price strength in his commentary on the production report lodged with the stock exchange.
''Whilst we are mindful of current market volatility, the fundamentals are holding up well, particularly for bulk-traded [iron ore, coking and steaming coal] commodities,'' Mr Albanese said.
Coking coal prices have retreated recently but the spot price of $US256 a tonne remains well ahead of last year's average of $US217 a tonne. Steaming or energy coal has bucked the trend in recent weeks to edge higher to $US125 a tonne. Last year's average for the commodity was $US98 a tonne.
There were some areas of weakness in Rio's September production report, most notably in the copper division. A combination of industrial action in Chile and Indonesia and lower grades cut copper production by 32 per cent in the quarter from the previous corresponding period.
Sourced smh.com.au
Thursday, October 6, 2011
OneSteel to acquire iron ore assets to increase its sales
October06, 2011
The second largest Australian steelmaker OneSteel has announced its financial results for the financial year 2010-2011 (FY 2010-11) ended on June 30.
OneSteel posted a sales revenue of A$7.13 billion ($7.47 billion) in FY 2010-11, up 15 percent compared with a net profit of A$6.2 billion in FY 2009-10. When the same periods are compared, the company's net profit fell 11 percent from A$258 million to A$230 million ($241 million). OneSteel's earnings before interest, taxes, depreciation and amortization (EBITDA) of A$642 million ($673 million) in FY 2010-11 was four percent higher than the figure of A$618 million in the corresponding period of the previous financial year. The company's net debt increased from A$964 million in FY 2009-10 to A$1.7 billion ($1.8 billion) in FY 2010-11.
Meanwhile, in the period in question OneSteel achieved an iron ore sales volume of six million metric tons. Iron ore sales are expected to increase to approximately 9-10 million mt per year following announced port expansion at Whyalla and agreement to acquire WPG Resources' iron ore assets.
Company chairman Peter Smedley commented on the operational results of the company, "In August, the company announced its intention to expand iron ore sales to 9-10 million tonnes per annum facilitated through an estimated $200 million expansion of the company's port facilities at Whyalla, underpinned by an agreement with WPG Resources to purchase its iron ore assets for an estimated $346 million. The acquisition is expected to be completed in October and will allow OneSteel to bring high quality ore to the market quickly, taking advantage of favourable market conditions for iron ore."
WPG Resources' shareholders have agreed to sell a collection of iron ore assets to the steelmaker. Approval for the $346 million sale was given at a meeting of WPG shareholders on October 4. The OneSteel transaction is expected to occur on October 6.
Tags: iron ore , Australia , Oceania , fin. Reports , M&A , mining
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(sourced steelorbis)
The second largest Australian steelmaker OneSteel has announced its financial results for the financial year 2010-2011 (FY 2010-11) ended on June 30.
OneSteel posted a sales revenue of A$7.13 billion ($7.47 billion) in FY 2010-11, up 15 percent compared with a net profit of A$6.2 billion in FY 2009-10. When the same periods are compared, the company's net profit fell 11 percent from A$258 million to A$230 million ($241 million). OneSteel's earnings before interest, taxes, depreciation and amortization (EBITDA) of A$642 million ($673 million) in FY 2010-11 was four percent higher than the figure of A$618 million in the corresponding period of the previous financial year. The company's net debt increased from A$964 million in FY 2009-10 to A$1.7 billion ($1.8 billion) in FY 2010-11.
Meanwhile, in the period in question OneSteel achieved an iron ore sales volume of six million metric tons. Iron ore sales are expected to increase to approximately 9-10 million mt per year following announced port expansion at Whyalla and agreement to acquire WPG Resources' iron ore assets.
Company chairman Peter Smedley commented on the operational results of the company, "In August, the company announced its intention to expand iron ore sales to 9-10 million tonnes per annum facilitated through an estimated $200 million expansion of the company's port facilities at Whyalla, underpinned by an agreement with WPG Resources to purchase its iron ore assets for an estimated $346 million. The acquisition is expected to be completed in October and will allow OneSteel to bring high quality ore to the market quickly, taking advantage of favourable market conditions for iron ore."
WPG Resources' shareholders have agreed to sell a collection of iron ore assets to the steelmaker. Approval for the $346 million sale was given at a meeting of WPG shareholders on October 4. The OneSteel transaction is expected to occur on October 6.
Tags: iron ore , Australia , Oceania , fin. Reports , M&A , mining
If you believe an article violates your rights or the rights of others, please contact us.
(sourced steelorbis)
Sunday, September 11, 2011
Aquila Resources updates on West Pilbara Iron Ore Project
Sunday, 11 Sep 2011
The Weckl Deposit is the first area of mineralization identified in the south-eastern area of the Mt Elvire Project. The Deposit is a Detrital Iron Deposit, comprising three narrow valleys incised into the Hamersley Range.
Buckland Hills
The Buckland Hills Deposit is located in the western area of the Mt Elvire Project, 30km east of the proposed railway to be constructed for the Stage 1 development of the West Pilbara Iron Ore Project. This Deposit is contiguous with the Bungaroo South Deposit owned by Iron Ore Holdings Limited.
Aquila Resources Limited report an update to the JORC Mineral Resource estimate for the West Pilbara Iron Ore Project located in the Pilbara region of Western Australia. The Company has a 50% interest in the Project.
With the assistance of Golder Associates Pty Limited, maiden Mineral Resource estimates have been completed for the Weckl and Buckland Hills within the Mt Elvire Project, adding 296 million tonnes to the previous JORC Resource Statement total of 927 million tonnes, advised to the ASX on 1 November 2010, taking the total Mineral Resource inventory for the Project to 1,223 million tonnes.
Weckl and Buckland Hills Deposits - Inferred Resources
| Tonnes | Fe% | SiO2% | Al2O3% | P % | S % | Mn % | MgO% | LOI% | |
| Weckl | 101 | 54.4 | 11.94 | 3.60 | 0.080 | 0.021 | 0.025 | 0.050 | 5.76 |
| Buckland Hills | 149 | 57.0 | 7.01 | 2.41 | 0.135 | 0.010 | 0.096 | 0.058 | 8.28 |
| Buckland Hills - Southeast | 46 | 56.5 | 8.05 | 2.42 | 0.142 | 0.016 | 0.024 | 0.054 | 8.04 |
| Total | 296 | 56.0 | 8.85 | 2.82 | 0.117 | 0.015 | 0.061 | 0.055 | 7.38 |
The Weckl Deposit is the first area of mineralization identified in the south-eastern area of the Mt Elvire Project. The Deposit is a Detrital Iron Deposit, comprising three narrow valleys incised into the Hamersley Range.
Buckland Hills
The Buckland Hills Deposit is located in the western area of the Mt Elvire Project, 30km east of the proposed railway to be constructed for the Stage 1 development of the West Pilbara Iron Ore Project. This Deposit is contiguous with the Bungaroo South Deposit owned by Iron Ore Holdings Limited.
Monday, August 22, 2011
WPG Resources sells iron ore assets to OneSteel
Monday, 22 Aug 2011
OneSteel Ltd has bought iron ore assets in South Australia including Peculiar Knob from WPG Resources Ltd for AUD 346 million, as it focuses more on iron ore exports.
OneSteel will also expand its export port facilities at Whyalla in SA to 12 million tonnes per annum by the fourth quarter of calendar 2012, from the current capacity of 6.5 million tonnes to 7.0 million tonnes, the company says.
The port expansion will cost about AUD 200 million.
The proposed sale of WPG Resources iron ore assets represents a return on WPG’s iron ore investment of AUD 70 million of about 400% and equivalent to AUD 1.40 per share in a market where cash is king. WPG will distribute the after-tax proceeds of the sale to shareholders upon requisite approvals.
The transaction will deliver a distribution of cash that exceeds WPG’s current share price, with the additional benefits of franking credits.
The transaction will be effected by the sale of WPG’s subsidiaries Southern Iron Pty Ltd, Central Iron Pty Ltd and Coober Pedy Resources Pty Ltd on a cash and debtfree basis.
Southern Iron’s principal project assets are the Peculiar Knob mining lease and the Buzzard mineral claim and all of the approvals and tenements in the Coober Pedy area necessary to develop the Peculiar Knob project. Central Iron owns the Hawks Nest exploration licence, while Coober Pedy Resources owns the Mt Brady and Windy Valley tenements.
The sale does not include WPG’s subsidiary Spencer Gulf Ports Pty Ltd which owns land in Port Pirie and the right to develop a bulk commodities export facility pursuant to the development consent previously announced. Neither does it include Southern Coal Holdings Pty Ltd, the joint venture vehicle with Evergreen Energy Inc that owns the Penrhyn and Lochiel North coal deposits and which has the exclusive rights to use Evergreen’s coal upgrading technology in Australia for the first 15 mtpa of product coal from any project, not just from tenements that it currently holds.
The sale is contingent on a number of items including approval by WPG’s shareholders. In the absence of a superior proposal
1. WPG’s Board will unanimously recommend that WPG’s shareholders vote in favour of the sale; and
2. Each director of WPG will vote (or procure the voting) of all shares held or controlled by him or her in favour of the sale.
The general meeting of shareholders that will be convened to consider the sale will be held on or about 4 October 2011.
The Company’s iron ore deposits lie in the Peculiar Knob and Hawks Nest tenements in the Gawler Craton south of Coober Pedy with a resource of 19.2 million tonnes at 64.0% iron that the company intends to bring into production in 2011 at a rate of 3.3 million tonnes per year for an approximate five year mine life. The coal projects are located in the Coober Pedy region and in the southern part of SA at Lochiel and Pidinga.
(sourced proactiveinvestors)
OneSteel Ltd has bought iron ore assets in South Australia including Peculiar Knob from WPG Resources Ltd for AUD 346 million, as it focuses more on iron ore exports.
OneSteel will also expand its export port facilities at Whyalla in SA to 12 million tonnes per annum by the fourth quarter of calendar 2012, from the current capacity of 6.5 million tonnes to 7.0 million tonnes, the company says.
The port expansion will cost about AUD 200 million.
The proposed sale of WPG Resources iron ore assets represents a return on WPG’s iron ore investment of AUD 70 million of about 400% and equivalent to AUD 1.40 per share in a market where cash is king. WPG will distribute the after-tax proceeds of the sale to shareholders upon requisite approvals.
The transaction will deliver a distribution of cash that exceeds WPG’s current share price, with the additional benefits of franking credits.
The transaction will be effected by the sale of WPG’s subsidiaries Southern Iron Pty Ltd, Central Iron Pty Ltd and Coober Pedy Resources Pty Ltd on a cash and debtfree basis.
Southern Iron’s principal project assets are the Peculiar Knob mining lease and the Buzzard mineral claim and all of the approvals and tenements in the Coober Pedy area necessary to develop the Peculiar Knob project. Central Iron owns the Hawks Nest exploration licence, while Coober Pedy Resources owns the Mt Brady and Windy Valley tenements.
The sale does not include WPG’s subsidiary Spencer Gulf Ports Pty Ltd which owns land in Port Pirie and the right to develop a bulk commodities export facility pursuant to the development consent previously announced. Neither does it include Southern Coal Holdings Pty Ltd, the joint venture vehicle with Evergreen Energy Inc that owns the Penrhyn and Lochiel North coal deposits and which has the exclusive rights to use Evergreen’s coal upgrading technology in Australia for the first 15 mtpa of product coal from any project, not just from tenements that it currently holds.
The sale is contingent on a number of items including approval by WPG’s shareholders. In the absence of a superior proposal
1. WPG’s Board will unanimously recommend that WPG’s shareholders vote in favour of the sale; and
2. Each director of WPG will vote (or procure the voting) of all shares held or controlled by him or her in favour of the sale.
The general meeting of shareholders that will be convened to consider the sale will be held on or about 4 October 2011.
The Company’s iron ore deposits lie in the Peculiar Knob and Hawks Nest tenements in the Gawler Craton south of Coober Pedy with a resource of 19.2 million tonnes at 64.0% iron that the company intends to bring into production in 2011 at a rate of 3.3 million tonnes per year for an approximate five year mine life. The coal projects are located in the Coober Pedy region and in the southern part of SA at Lochiel and Pidinga.
(sourced proactiveinvestors)
Friday, August 19, 2011
Atlas Iron increased iron ore reserve in North Pilbara by 50pct
Friday, 19 Aug 2011
The West Australian reported that Atlas Iron has increased its iron ore reserves in the North Pilbara by 50%.
Atlas said its reserves in the region were estimated now at 79.3 million tonnes.
Atlas North Pilbara projects include the Pardoo and Wodgina mining operations as well as the Mt Dove, Abydos, Mt Webber and McPhee Creek development projects.
Atlas holds 70% of the Mt Webber project a joint venture with Altura Mining and 75% of the Daltons project in joint venture with Haoma Mining.
The company in a statement said that "Atlas is now an established iron ore producer and exporter with strong customer relationships. The company has achieved significant growth in resources and reserves in the same period where we expanded production by 600%."
Atlas said it was continuing to focus on reserve conversion in the North Pilbara with up to five drill rigs in the field. It said further infill drilling designed to extend and upgrade resources is underway or proposed at Wodgina, Abydos and Mt Webber.
The upgrade was not enough to lift Atlas shares from the wave of negativity on world markets with the miner falling eight cents or 2.13% to USD 3.67 by 8.25 AM.
(sourced The West Australian)
The West Australian reported that Atlas Iron has increased its iron ore reserves in the North Pilbara by 50%.
Atlas said its reserves in the region were estimated now at 79.3 million tonnes.
Atlas North Pilbara projects include the Pardoo and Wodgina mining operations as well as the Mt Dove, Abydos, Mt Webber and McPhee Creek development projects.
Atlas holds 70% of the Mt Webber project a joint venture with Altura Mining and 75% of the Daltons project in joint venture with Haoma Mining.
The company in a statement said that "Atlas is now an established iron ore producer and exporter with strong customer relationships. The company has achieved significant growth in resources and reserves in the same period where we expanded production by 600%."
Atlas said it was continuing to focus on reserve conversion in the North Pilbara with up to five drill rigs in the field. It said further infill drilling designed to extend and upgrade resources is underway or proposed at Wodgina, Abydos and Mt Webber.
The upgrade was not enough to lift Atlas shares from the wave of negativity on world markets with the miner falling eight cents or 2.13% to USD 3.67 by 8.25 AM.
(sourced The West Australian)
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