Thu Feb 9, 2012
* H1 headline EPS 76.04 cts vs 139.22 cts
* H1 saleable coal output down 16 pct
* Cuts FY export production outlook
JOHANNESBURG, Feb 9 (Reuters) - Optimum Coal, the takeover target of top commodity trader Glencore, on Thursday forecast a better second half after strikes at one of its mines hit output and led to a 45 percent drop in first-half profit.
Optimum said headline earnings per share for the six months to the end of December were 76.04 cents, compared to 139.22 cents previously. Headline EPS are the main profit gauge in South Africa and strip out certain one-time items.
Optimum said first-half production of saleable coal fell 16 percent to 5.9 million tonnes.
Production of coal destined for exports fell 20 percent to 2.9 million tonnes, while output of coal destined for power utility Eskom slumped 11 percent to 3 million tonnes.
The company, South Africa's sixth largest coal producer, cut its full-year guidance for export saleable production from Optimum Collieries to between 4.6-4.8 million tonnes on the back of the labour disputes.
The company had initially forecast for Optimum Collieries to deliver between 5.3-5.5 million tonnes of coal destined for exports. The revision should impact Optimum's previous full-year guidance of total coal output of around 13.7 million tonnes.
The company said that while export coal prices had recently softened to about $105 per tonne due to what could be a prolonged European recession, inventory re-stocking would support prices in the near term.
It also expected the domestic coal market to remain strong with robust demand from Eskom ensuring strong uptake.
Coal producers targetting export markets have been squeezed by lack of adequate rail capacity and delivery challenges faced by the country's state-owned logistics group Transnet.
Optimum said things were improving with Transnet's freight rail unit moving coal to the Richards Bay Coal Terminal at an annualised rate of 70 million tonnes over the last five months of 2011.
Transnet also plans to free up additional capacity on the coal export line by diverting all the general freight via a new line through Swaziland.
"This is extremely encouraging from a coal export and project development perspective," Optimum Chief Executive Mike Teke said in a statement.
Optimum shares are up 0.69 percent so far this year, compared with a 6.22 percent rise in the JSE All-Share index .
(sourced Reuters.com)
Showing posts with label Johannesburg. Show all posts
Showing posts with label Johannesburg. Show all posts
Thursday, February 9, 2012
Thursday, December 15, 2011
Mozambique Ports expand with Rio Tinto
Thursday, 15 Dec 2011
Roads were little more than rubble and there was barely enough working equipment to load cargo at Maputo port in 2003. Then Mozambique brought in Grindrod Ltd and DP World Ltd to operate the harbor.
Since then, a coal mining boom has fueled expansion at the southern African nation’s harbors. Rio Tinto Plc bought Sydney based Riversdale Mining Ltd for AUD 3.4 billion in July to add 25 million tonnes of Mozambican coal to its annual output.
Clinton Duncan resource analyst at Avior Research Ltd in Johannesburg said that “Rio Tinto has been buying up a lot of assets in Mozambique, and they stand to be one of the significant beneficiaries there.”
The number of ships docking at Maputo has almost doubled to 1,030 a year since 2003, while coal exports have climbed from 1.5 million metric tons to more than 4 million tons and chrome shipments are set to reach about 2 million tons, a five-fold increase, said Ricardo Roberts, commercial manager of the port.
Mozambique is attracting exporters, such as Rio Tinto and Sappi Ltd from neighboring South Africa, which is burdened with high port costs and a lack of rail capacity.
Exxaro Resources Ltd and Coal of Africa Ltd are bringing shipments from mines in northern South Africa to Maputo as the miners face restrictions in using South Africa’s Richards Bay port.
A coal-mining boom is fueling development in the southern African nation after a 16-year civil war that ended in 1992 destroyed infrastructure. Durban, South Africa-based Grindrod is spending as much as $800 million to boost capacity by 20 million tons at the coal terminal in the next four years.
Cargo-handling capacity at the Maputo port, 286 miles north of Durban harbor, is set to climb to 50 million tonnes by 2030 from about 13 million tonnes currently, according to David Rennie, Grindrod’s executive director of ports and terminals. Grindrod and DP World of Dubai have a 25% stake each in the port and the government owns the rest.
(Sourced from Bloomberg)
Roads were little more than rubble and there was barely enough working equipment to load cargo at Maputo port in 2003. Then Mozambique brought in Grindrod Ltd and DP World Ltd to operate the harbor.
Since then, a coal mining boom has fueled expansion at the southern African nation’s harbors. Rio Tinto Plc bought Sydney based Riversdale Mining Ltd for AUD 3.4 billion in July to add 25 million tonnes of Mozambican coal to its annual output.
Clinton Duncan resource analyst at Avior Research Ltd in Johannesburg said that “Rio Tinto has been buying up a lot of assets in Mozambique, and they stand to be one of the significant beneficiaries there.”
The number of ships docking at Maputo has almost doubled to 1,030 a year since 2003, while coal exports have climbed from 1.5 million metric tons to more than 4 million tons and chrome shipments are set to reach about 2 million tons, a five-fold increase, said Ricardo Roberts, commercial manager of the port.
Mozambique is attracting exporters, such as Rio Tinto and Sappi Ltd from neighboring South Africa, which is burdened with high port costs and a lack of rail capacity.
Exxaro Resources Ltd and Coal of Africa Ltd are bringing shipments from mines in northern South Africa to Maputo as the miners face restrictions in using South Africa’s Richards Bay port.
A coal-mining boom is fueling development in the southern African nation after a 16-year civil war that ended in 1992 destroyed infrastructure. Durban, South Africa-based Grindrod is spending as much as $800 million to boost capacity by 20 million tons at the coal terminal in the next four years.
Cargo-handling capacity at the Maputo port, 286 miles north of Durban harbor, is set to climb to 50 million tonnes by 2030 from about 13 million tonnes currently, according to David Rennie, Grindrod’s executive director of ports and terminals. Grindrod and DP World of Dubai have a 25% stake each in the port and the government owns the rest.
(Sourced from Bloomberg)
Tuesday, November 8, 2011
ArcelorMittal S.Africa raises steel prices
Tuesday, Nov8, 2011
JOHANNESBURG Nov 8 (Reuters) - ArcelorMittal South Africa , a unit of the world's top steelmaker, has increased steel prices effective Nov. 1, the company said on Monday.
The steelmaker said prices for flat steel products would increase by between 3 and 6 percent, depending on the product, while prices for long steel products would be raised by between 4 and 8 percent.
The company said last week that higher costs and lower steel prices hit earnings in the three months to end September.
(sourced Reuters)
JOHANNESBURG Nov 8 (Reuters) - ArcelorMittal South Africa , a unit of the world's top steelmaker, has increased steel prices effective Nov. 1, the company said on Monday.
The steelmaker said prices for flat steel products would increase by between 3 and 6 percent, depending on the product, while prices for long steel products would be raised by between 4 and 8 percent.
The company said last week that higher costs and lower steel prices hit earnings in the three months to end September.
(sourced Reuters)
Sunday, September 11, 2011
Optimum says possible offer to be at least 38 rand/shr
Sep11, 2011
* Proposed price raised from initial offer of 34 rand/shr
* Change follows Glencore purchase of more shares in Optimum
* Alternative buyer withdraws interest in company
JOHANNESBURG, Sept 9 (Reuters) - Optimum Coal said on Friday that should an offer be made for the company by a consortium including trader Glencore and a vehicle of politician turned businessman Cyril Ramaphosa, the price would not be lower than 38 rand per share.
A consortium including a Glencore subsidiary, Piruto BV, and Ramaphosa's Lexshell 849 confirmed on Sept. 1 that it was interested in buying a controlling stake in South Africa's sixth-biggest coal miner, deemed attractive due to its reserves and access to the Richards Bay Coal Terminal (RBCT).
Optimum said the change came after a member of the consortium bought additional shares in the company.
Glencore said on Thursday it had raised its stake in the takeover target to 25.8 percent after it bought about 2.5 million shares at a price of 37.99 rand a share. The price is more than the 34 rand per share the consortium had so far publicly offered.
"The board has been informed by the consortium that if the proposed offer is made within a period of 6 months from 6 September 2011, the offer consideration will not be lower than 38.00 rand per Optimum share," the company said in a statement.
Optimum also said an alternative party, which was mentioned in an announcement earlier this month, had withdrawn its interest in acquiring a controlling stake in the coal producer.
The 38 rand offer would value the company at 9.57 billion rand ($1.34 billion).
Optimum, a mid-size producer with large export capacity at Richards Bay Coal Terminal and reserves, attracted keen buying interest from local and international companies since BHP Billiton originally put the mine up for sale.
South African coal is a key source of supply to both the European and Asian markets, particularly India - South Africa ships around 30 percent of its coal to India and increasingly, to China.
The acquisition would give Glencore access to two operating assets, the Optimum Collieries and Koornfontein Mines, as well as 8 million tons of coal export entitlements from RBCT.
Shares in Optimum, up 42.4 percent so far this year, were flat at 37.50 rand by 1256 GMT, compared with a 0.59 percent fall in Johannesburg's All-Share index .
(sourced Reuters)
* Proposed price raised from initial offer of 34 rand/shr
* Change follows Glencore purchase of more shares in Optimum
* Alternative buyer withdraws interest in company
JOHANNESBURG, Sept 9 (Reuters) - Optimum Coal said on Friday that should an offer be made for the company by a consortium including trader Glencore and a vehicle of politician turned businessman Cyril Ramaphosa, the price would not be lower than 38 rand per share.
A consortium including a Glencore subsidiary, Piruto BV, and Ramaphosa's Lexshell 849 confirmed on Sept. 1 that it was interested in buying a controlling stake in South Africa's sixth-biggest coal miner, deemed attractive due to its reserves and access to the Richards Bay Coal Terminal (RBCT).
Optimum said the change came after a member of the consortium bought additional shares in the company.
Glencore said on Thursday it had raised its stake in the takeover target to 25.8 percent after it bought about 2.5 million shares at a price of 37.99 rand a share. The price is more than the 34 rand per share the consortium had so far publicly offered.
"The board has been informed by the consortium that if the proposed offer is made within a period of 6 months from 6 September 2011, the offer consideration will not be lower than 38.00 rand per Optimum share," the company said in a statement.
Optimum also said an alternative party, which was mentioned in an announcement earlier this month, had withdrawn its interest in acquiring a controlling stake in the coal producer.
The 38 rand offer would value the company at 9.57 billion rand ($1.34 billion).
Optimum, a mid-size producer with large export capacity at Richards Bay Coal Terminal and reserves, attracted keen buying interest from local and international companies since BHP Billiton originally put the mine up for sale.
South African coal is a key source of supply to both the European and Asian markets, particularly India - South Africa ships around 30 percent of its coal to India and increasingly, to China.
The acquisition would give Glencore access to two operating assets, the Optimum Collieries and Koornfontein Mines, as well as 8 million tons of coal export entitlements from RBCT.
Shares in Optimum, up 42.4 percent so far this year, were flat at 37.50 rand by 1256 GMT, compared with a 0.59 percent fall in Johannesburg's All-Share index .
(sourced Reuters)
Tuesday, September 6, 2011
Glencore Raises Optimum Stake to 23.9% as It Boosts Price Paid for Shares Q
Tue,Sep 6, 2011
By Jesse Riseborough
Glencore International Plc, the largest publicly traded commodities supplier, raised its stake in Optimum Coal Holdings (OPT) Ltd., buying shares at 12 percent above the price it proposed last week.
Glencore’s Piruto BV unit purchased 24.6 million shares on the market yesterday at 38 rand ($5.34) apiece, taking the Baar, Switzerland-based company’s stake to 23.9 percent, it said today in a statement. Glencore acquired 14.1 percent of Optimum on Aug. 29 and on Sept. 1 proposed a cash offer of 34 rand a share that valued the South African company at $1.2 billion.
Under takeover regulations, “if an offer is made by Glencore or any of its concert parties for the remaining shares in Optimum within a period of six months from the date of this announcement, the offer consideration will not be lower than 38 rand per share,” according to the statement.
Optimum Coal is South Africa’s fourth-largest coal exporter and owns mines and port capacity. Glencore said last week it had secured agreements that may expand its holding to 43.5 percent.
Glencore gained 2.3 percent to 385.2 pence at the 4:30 p.m. close in London trading. Optimum fell 2.6 percent to 37.01 rand in Johannesburg. An offer of 38 rand a share would value the company at about $1.34 billion.
(sourced Bloomberg)
By Jesse Riseborough
Glencore International Plc, the largest publicly traded commodities supplier, raised its stake in Optimum Coal Holdings (OPT) Ltd., buying shares at 12 percent above the price it proposed last week.
Glencore’s Piruto BV unit purchased 24.6 million shares on the market yesterday at 38 rand ($5.34) apiece, taking the Baar, Switzerland-based company’s stake to 23.9 percent, it said today in a statement. Glencore acquired 14.1 percent of Optimum on Aug. 29 and on Sept. 1 proposed a cash offer of 34 rand a share that valued the South African company at $1.2 billion.
Under takeover regulations, “if an offer is made by Glencore or any of its concert parties for the remaining shares in Optimum within a period of six months from the date of this announcement, the offer consideration will not be lower than 38 rand per share,” according to the statement.
Optimum Coal is South Africa’s fourth-largest coal exporter and owns mines and port capacity. Glencore said last week it had secured agreements that may expand its holding to 43.5 percent.
Glencore gained 2.3 percent to 385.2 pence at the 4:30 p.m. close in London trading. Optimum fell 2.6 percent to 37.01 rand in Johannesburg. An offer of 38 rand a share would value the company at about $1.34 billion.
(sourced Bloomberg)
Sunday, August 28, 2011
Assore full year profit doubles on higher iron ore prices
Sunday, 28 Aug 2011
Assore Ltd, a South African owner of mines, said that its full year profit more than doubled on increasing demand and higher prices for iron ore.
The company, based in Johannesburg, reported net income of ZAR 3.2 billion (USD 440 million) in the year ended June 30, compared with ZAR 1.5 billion a year earlier. Sales gained 47.8% to ZAR 11.2 billion.
Assore, joint owner of manganese producer Assmang Ltd with African Rainbow Minerals Ltd spent ZAR 2.8 billion to develop infrastructure at the Khumani Iron Ore Mine and raise output to 16 million tonnes a year by mid-2012, from 10 million tonnes. While demand in the iron ore market is tight, a recovery in manganese and chrome ore and alloy prices is unlikely.
Power and other costs in South Africa are hurting smelters. Mr Desmond Sacco chairman of Assore said that “We expect challenging economic and trading conditions for the year ahead.”
(sourced from Bloomberg)
Assore Ltd, a South African owner of mines, said that its full year profit more than doubled on increasing demand and higher prices for iron ore.
The company, based in Johannesburg, reported net income of ZAR 3.2 billion (USD 440 million) in the year ended June 30, compared with ZAR 1.5 billion a year earlier. Sales gained 47.8% to ZAR 11.2 billion.
Assore, joint owner of manganese producer Assmang Ltd with African Rainbow Minerals Ltd spent ZAR 2.8 billion to develop infrastructure at the Khumani Iron Ore Mine and raise output to 16 million tonnes a year by mid-2012, from 10 million tonnes. While demand in the iron ore market is tight, a recovery in manganese and chrome ore and alloy prices is unlikely.
Power and other costs in South Africa are hurting smelters. Mr Desmond Sacco chairman of Assore said that “We expect challenging economic and trading conditions for the year ahead.”
(sourced from Bloomberg)
Monday, March 7, 2011
Sasol Boosts Dividend 11% as Oil Gain, Cost Control Lift Profit
March 07, 2011, 4:41 AM EST
By Carli Lourens
March 7 (Bloomberg) -- Sasol Ltd., the world’s largest producer of motor fuels made from coal, boosted its first-half dividend 11 percent as oil price gains and cost control lifted profit.
The increase to 3.10 rand (45 U.S. cents) a share also takes into account “the improved market and economic conditions,” Johannesburg-based Sasol said in a statement today. Net profit jumped 21 percent to 7.6 billion rand in the six months through Dec. 31 from 6.3 billion rand a year earlier.
Sasol’s profit is closely tied to oil prices and to the South African currency exchange rate against the dollar. Oil gained 16 percent to $105.96 a barrel in New York so far this year while the rand weakened 3.8 percent to 6.88 on the dollar.
A proposed $8.8 billion coal-to-fuel project in China by Sasol and partner Shenhua Ningxia Coal Industry Group Ltd. was approved by the Chinese environmental ministry, according to a posting on the ministry’s website today. A feasibility study on a gas-to-fuel plant in Uzbekistan should be completed this month and an initial study into a coal-to-fuels plant in India is in its “final stages,” Sasol said today.
Costs will be contained within “inflationary levels” for the full year, the company said. Synthetic fuel output will be “marginally lower” in the full year after falling 7.5 percent in the first half as the South African coal-to-fuels plant underwent its biggest ever planned maintenance outage, it added.
The company uses proprietary Fischer-Tropsch technology to make gasoline, diesel and jet fuel from coal it mines in South Africa and from natural gas from below the ocean floor near Qatar. The company shifted the focus of future investment to gas last year, betting it will be a more profitable raw material than coal.
Tags : Shenhua Ningxia Coal Industry Group, Fischer - Tropsch technology
The increase to 3.10 rand (45 U.S. cents) a share also takes into account “the improved market and economic conditions,” Johannesburg-based Sasol said in a statement today. Net profit jumped 21 percent to 7.6 billion rand in the six months through Dec. 31 from 6.3 billion rand a year earlier.
Sasol’s profit is closely tied to oil prices and to the South African currency exchange rate against the dollar. Oil gained 16 percent to $105.96 a barrel in New York so far this year while the rand weakened 3.8 percent to 6.88 on the dollar.
A proposed $8.8 billion coal-to-fuel project in China by Sasol and partner Shenhua Ningxia Coal Industry Group Ltd. was approved by the Chinese environmental ministry, according to a posting on the ministry’s website today. A feasibility study on a gas-to-fuel plant in Uzbekistan should be completed this month and an initial study into a coal-to-fuels plant in India is in its “final stages,” Sasol said today.
Costs will be contained within “inflationary levels” for the full year, the company said. Synthetic fuel output will be “marginally lower” in the full year after falling 7.5 percent in the first half as the South African coal-to-fuels plant underwent its biggest ever planned maintenance outage, it added.
The company uses proprietary Fischer-Tropsch technology to make gasoline, diesel and jet fuel from coal it mines in South Africa and from natural gas from below the ocean floor near Qatar. The company shifted the focus of future investment to gas last year, betting it will be a more profitable raw material than coal.
Tags : Shenhua Ningxia Coal Industry Group, Fischer - Tropsch technology
Tuesday, February 8, 2011
ArcelorMittal SA back to profit, sees improvement
Tue Feb 8, 2011 7:57am GMT
JOHANNESBURG (Reuters) - ArcelorMittal South Africa, a unit of the world's biggest steelmaker, on Tuesday posted a return to full-year profit, lifted by stronger sales, and said it expects solid results ahead.
The company said diluted headline earnings per share for the year to end-December totalled 343 cents, compared with a loss of 104 cents a year earlier.
Headline earnings are the main gauge of profit in South Africa and strip out certain one-time items.
Revenue totalled 30.22 billion rand, up from 25.59 billion rand in the previous year.
The company said growing demand for steel and higher global prices would boost its earnings in the first quarter of 2011.
"A significant turnaround in earnings is anticipated for the first quarter 2011 compared to the loss for the last quarter of 2010," it said in a statement.
The company, however, said the earnings would be partially offset by rising prices of raw materials, mainly scrap.
The global steel sector has been caught in a margin squeeze since the middle of 2010, when raw material costs began steadily to increase, but steel prices dropped while the industry as a whole took a breather.
The company also said the arbitration proceedings relating to its stake in Kumba's Sishen mine were in progress and a hearing date was yet to be set.
ArcelorMittal South Africa has been at loggerheads with Kumba, a unit of Anglo American, over iron ore prices.
It is also attempting to buy little-known mining firm Imperial Crown Trading after that company won a prospecting right to a stake in Kumba's Sishen mine.
As part of that deal, ArcelorMittal South Africa has said it would transfer about a quarter of its shares to black investors, including ICT and an investment group led by the son of South African President Jacob Zuma.
The company said issues relating to the black empowerment transaction and acquisition of ICT were still in progress.
Shares in the steelmaker have gained nearly 8 percent so far this year, outperforming a 3.5 percent rise in the Johannesburg's blue-chip Top-40 index.
JOHANNESBURG (Reuters) - ArcelorMittal South Africa, a unit of the world's biggest steelmaker, on Tuesday posted a return to full-year profit, lifted by stronger sales, and said it expects solid results ahead.
The company said diluted headline earnings per share for the year to end-December totalled 343 cents, compared with a loss of 104 cents a year earlier.
Headline earnings are the main gauge of profit in South Africa and strip out certain one-time items.
Revenue totalled 30.22 billion rand, up from 25.59 billion rand in the previous year.
The company said growing demand for steel and higher global prices would boost its earnings in the first quarter of 2011.
"A significant turnaround in earnings is anticipated for the first quarter 2011 compared to the loss for the last quarter of 2010," it said in a statement.
The company, however, said the earnings would be partially offset by rising prices of raw materials, mainly scrap.
The global steel sector has been caught in a margin squeeze since the middle of 2010, when raw material costs began steadily to increase, but steel prices dropped while the industry as a whole took a breather.
The company also said the arbitration proceedings relating to its stake in Kumba's Sishen mine were in progress and a hearing date was yet to be set.
ArcelorMittal South Africa has been at loggerheads with Kumba, a unit of Anglo American, over iron ore prices.
It is also attempting to buy little-known mining firm Imperial Crown Trading after that company won a prospecting right to a stake in Kumba's Sishen mine.
As part of that deal, ArcelorMittal South Africa has said it would transfer about a quarter of its shares to black investors, including ICT and an investment group led by the son of South African President Jacob Zuma.
The company said issues relating to the black empowerment transaction and acquisition of ICT were still in progress.
Shares in the steelmaker have gained nearly 8 percent so far this year, outperforming a 3.5 percent rise in the Johannesburg's blue-chip Top-40 index.
Wednesday, February 2, 2011
BHP, Anglo Coal Supply Deals to Be Revised, Eskom Says
Wednesday,February 02, 2011
By Carli Lourens
Feb. 2 (Bloomberg) -- Eskom Holdings Ltd., producer of 95 percent of South African power, plans to revise deals with coal mine operators including BHP Billiton Ltd. and Anglo American Plc to secure supplies amid a surge in competing Indian demand.
Eskom has begun talks to spur suppliers to accept prices at “efficient cost, plus fair returns,” Chief Commercial Officer Dan Marokane said in an interview from Cape Town. “About 525 million tons could be at risk from competition with exports,” threatening to make electricity charges unaffordable, he said.
State-run Eskom delivers power to Xstrata Plc’s ferrochrome furnaces, AngloGold Ashanti Ltd.’s gold mines and BHP’s aluminum smelters in South Africa. The utility, one of the 10 largest in the world by capacity, has struggled to fund a 485 billion rand ($68 billion) expansion program to prevent a repetition of the power blackouts that hit mines, factories and cities in 2008.
Eskom, based in Johannesburg, will seek to persuade coal suppliers to accept new terms by reducing the risk of rising production costs for the mine operators, Marokane said today.
Export quotas, restrictions on low-grade coal shipments abroad from Richards Bay and “increased powers for the minister to intervene in the interests of domestic energy security” may also be used to secure domestic power needs, Marokane said.
Xstrata declined to comment on Eskom’s discussions, while Anglo, BHP and Exxaro Resources Ltd., another supplier, didn’t immediately respond to e-mails from Bloomberg seeking reaction.
Competing With India
India competes for South African coal as the Asian country needs a low-grade fuel similar to that used in Eskom’s power plants, more than 80 percent of which are coal-fired. European electricity producers typically only buy higher coal grades.
Asia overtook Europe as the largest foreign buyer of South African coal in the last two years as India boosted purchases.
Richards Bay terminal, which ships almost all of South Africa’s coal for export, sent 59 percent of total shipments to Asia last year and 25 percent to Europe. India is looking to expand electricity generation capacity by 20 percent to 200,000 megawatts from current levels by March 2012.
“Unless a new approach is found, Eskom will find itself paying globally linked coal costs,” Marokane said, adding that a commensurate increase in electricity prices would “counter the aspirations of a growing economy.” Prices of coal shipped through Richards Bay rose about 60 percent last year to $129.75 a metric ton, according to IHS McCloskey data on Bloomberg.
Unaffordable
Eskom is already hiking charges by several-times inflation, on average by 25 percent a year for the three years from 2010, after long keeping prices subdued to stimulate development.
The company, which burnt 123 million tons of coal last fiscal year, has about 95 percent of supplies contracted or committed until 2018. Two new power plants, Medupi and Kusile, will begin generating power in the next few years, adding more than 30 million tons to Eskom’s annual requirement.
The utility is also concerned coal companies will focus on building mines in other countries and the government should make it “more attractive” for companies to dig new mines, Marokane said. Eskom estimates the industry needs to spend 175 billion rand between 2009 and 2020 digging mines to meet rising needs.
South Africa needs a national energy coal development plan, Marokane said. The country mined about 250 million tons of coal in 2009, or 4.1 percent of world output, making it the seventh- largest producer, according to an Oct. 1 report by UBS AG.
(Editors:Tony Barrett,Dan Weeks, sourced bloomberg)
By Carli Lourens
Feb. 2 (Bloomberg) -- Eskom Holdings Ltd., producer of 95 percent of South African power, plans to revise deals with coal mine operators including BHP Billiton Ltd. and Anglo American Plc to secure supplies amid a surge in competing Indian demand.
Eskom has begun talks to spur suppliers to accept prices at “efficient cost, plus fair returns,” Chief Commercial Officer Dan Marokane said in an interview from Cape Town. “About 525 million tons could be at risk from competition with exports,” threatening to make electricity charges unaffordable, he said.
State-run Eskom delivers power to Xstrata Plc’s ferrochrome furnaces, AngloGold Ashanti Ltd.’s gold mines and BHP’s aluminum smelters in South Africa. The utility, one of the 10 largest in the world by capacity, has struggled to fund a 485 billion rand ($68 billion) expansion program to prevent a repetition of the power blackouts that hit mines, factories and cities in 2008.
Eskom, based in Johannesburg, will seek to persuade coal suppliers to accept new terms by reducing the risk of rising production costs for the mine operators, Marokane said today.
Export quotas, restrictions on low-grade coal shipments abroad from Richards Bay and “increased powers for the minister to intervene in the interests of domestic energy security” may also be used to secure domestic power needs, Marokane said.
Xstrata declined to comment on Eskom’s discussions, while Anglo, BHP and Exxaro Resources Ltd., another supplier, didn’t immediately respond to e-mails from Bloomberg seeking reaction.
Competing With India
India competes for South African coal as the Asian country needs a low-grade fuel similar to that used in Eskom’s power plants, more than 80 percent of which are coal-fired. European electricity producers typically only buy higher coal grades.
Asia overtook Europe as the largest foreign buyer of South African coal in the last two years as India boosted purchases.
Richards Bay terminal, which ships almost all of South Africa’s coal for export, sent 59 percent of total shipments to Asia last year and 25 percent to Europe. India is looking to expand electricity generation capacity by 20 percent to 200,000 megawatts from current levels by March 2012.
“Unless a new approach is found, Eskom will find itself paying globally linked coal costs,” Marokane said, adding that a commensurate increase in electricity prices would “counter the aspirations of a growing economy.” Prices of coal shipped through Richards Bay rose about 60 percent last year to $129.75 a metric ton, according to IHS McCloskey data on Bloomberg.
Unaffordable
Eskom is already hiking charges by several-times inflation, on average by 25 percent a year for the three years from 2010, after long keeping prices subdued to stimulate development.
The company, which burnt 123 million tons of coal last fiscal year, has about 95 percent of supplies contracted or committed until 2018. Two new power plants, Medupi and Kusile, will begin generating power in the next few years, adding more than 30 million tons to Eskom’s annual requirement.
The utility is also concerned coal companies will focus on building mines in other countries and the government should make it “more attractive” for companies to dig new mines, Marokane said. Eskom estimates the industry needs to spend 175 billion rand between 2009 and 2020 digging mines to meet rising needs.
South Africa needs a national energy coal development plan, Marokane said. The country mined about 250 million tons of coal in 2009, or 4.1 percent of world output, making it the seventh- largest producer, according to an Oct. 1 report by UBS AG.
(Editors:Tony Barrett,Dan Weeks, sourced bloomberg)
Friday, January 28, 2011
S.Africa may ask for low-price iron ore deal: paper
Friday, 28 Jan 2011
JOHANNESBURG (Reuters) -South Africa may ask Kumba Iron Ore to enter into a preferential iron ore supply deal with politically-connected Imperial Crown Trading, Business Day reported on Friday, citing a senior government official.
Kumba lost a battle for mine rights over a stake in its Sishen mine that was previously held by ArcelorMittal's South African unit. The deal entitled the steelmaker to source ore from Kumba at a discount.
After ArcelorMittal failed to renew its rights, both Kumba and little-known ICT applied. The government granted ICT prospecting rights over the mine stake and rejected Kumba's application. The iron ore producer vowed to fight the government decision in court.
ICT has subsequently applied for a mining right.
"If this application is granted, the overwhelmingly likely result will be that (Kumba) and ICT would have to negotiate in good faith in order to procure an arrangement along the lines contained in the supply agreement," Sandile Nogxina, director general in the minerals department, was quoted as saying in court papers.
A preferential deal with ICT would pave the way for ArcelorMittal, which said last year it would buy ICT, to source discounted iron ore once more.
But it would raise further questions about the management of mining rights in South Africa.
Various disputes in 2010 tarnished the image of South Africa as a destination for international mining investment, despite it being the world's biggest platinum producer and number three gold producer.(sourced:af.reuters)
JOHANNESBURG (Reuters) -South Africa may ask Kumba Iron Ore to enter into a preferential iron ore supply deal with politically-connected Imperial Crown Trading, Business Day reported on Friday, citing a senior government official.
Kumba lost a battle for mine rights over a stake in its Sishen mine that was previously held by ArcelorMittal's South African unit. The deal entitled the steelmaker to source ore from Kumba at a discount.
After ArcelorMittal failed to renew its rights, both Kumba and little-known ICT applied. The government granted ICT prospecting rights over the mine stake and rejected Kumba's application. The iron ore producer vowed to fight the government decision in court.
ICT has subsequently applied for a mining right.
"If this application is granted, the overwhelmingly likely result will be that (Kumba) and ICT would have to negotiate in good faith in order to procure an arrangement along the lines contained in the supply agreement," Sandile Nogxina, director general in the minerals department, was quoted as saying in court papers.
A preferential deal with ICT would pave the way for ArcelorMittal, which said last year it would buy ICT, to source discounted iron ore once more.
But it would raise further questions about the management of mining rights in South Africa.
Various disputes in 2010 tarnished the image of South Africa as a destination for international mining investment, despite it being the world's biggest platinum producer and number three gold producer.(sourced:af.reuters)
Tuesday, January 18, 2011
Optimum Coal boosts H1 output, says global thermal demand ‘robust’
By: Petronel Smit17th January 2011
JOHANNESBURG (miningweekly.com) – JSE-listed Optimum Coal produced 8,789-million tons of run-of-mine (ROM) coal during the first half of the 2011 financial year, an increase of 35% on the 6,493-million tons produced in the comparable period last year.
The South African coal miner on Monday reported that it had increased its export quality domestic production by 40% to 3,611-million tons in the six months ended December 30.
Optimum produced 3,422-million tons of Eskom quality coal, which was a 37% increase on the 2,500-million tons produced in the comparable period.
CEO Mike Teke said that the ROM production at Optimum Collieries had improved by 11,5% on the comparable period, despite having been affected by difficult cutting conditions and a reduction in cutting tempos resulting from drawn-out wage negotiations at the Boschmanspoort underground mine.
“Our opencast mines have been affected by the excessive rains experienced over recent weeks, although our water management structures and initiatives have mitigated against some of the operational impact,” he noted.
The comparable period production numbers did not include production from Koornfontein Mines, as Optimum Coal did not own Koornfontein Mines at the time.
Teke pointed out that Koornfontein Mines had proven itself a valuable addition to Optimum Coal since being fully integrated in March 2010, and was an important step in the company’s growth strategy.
“While local logistics remains challenging, Optimum Coal is working closely with Transnet Freight Rail and Richards Bay Coal Terminal to tackle the challenges,” he said.
Koornfontein Mines produced 1,515-million tons of ROM coal, 0,947-million tons of export quality domestic coal and 0,676-million tons of Eskom quality coal during the comparable period.
The outlook for thermal coal remained robust on the back of strong international demand, coupled with supply constraints across key coal-producing regions. Global demand had been boosted by the cold European winter combined with increased power generation and continued growth in Asian countries.
"We believe that global supply constraints will take some time to resolve, but that international thermal coal demand remains robust and sustainable. Optimum Coal is well placed to take advantage of these current market conditions,” Teke asserted.
JOHANNESBURG (miningweekly.com) – JSE-listed Optimum Coal produced 8,789-million tons of run-of-mine (ROM) coal during the first half of the 2011 financial year, an increase of 35% on the 6,493-million tons produced in the comparable period last year.
The South African coal miner on Monday reported that it had increased its export quality domestic production by 40% to 3,611-million tons in the six months ended December 30.
Optimum produced 3,422-million tons of Eskom quality coal, which was a 37% increase on the 2,500-million tons produced in the comparable period.
CEO Mike Teke said that the ROM production at Optimum Collieries had improved by 11,5% on the comparable period, despite having been affected by difficult cutting conditions and a reduction in cutting tempos resulting from drawn-out wage negotiations at the Boschmanspoort underground mine.
“Our opencast mines have been affected by the excessive rains experienced over recent weeks, although our water management structures and initiatives have mitigated against some of the operational impact,” he noted.
The comparable period production numbers did not include production from Koornfontein Mines, as Optimum Coal did not own Koornfontein Mines at the time.
Teke pointed out that Koornfontein Mines had proven itself a valuable addition to Optimum Coal since being fully integrated in March 2010, and was an important step in the company’s growth strategy.
“While local logistics remains challenging, Optimum Coal is working closely with Transnet Freight Rail and Richards Bay Coal Terminal to tackle the challenges,” he said.
Koornfontein Mines produced 1,515-million tons of ROM coal, 0,947-million tons of export quality domestic coal and 0,676-million tons of Eskom quality coal during the comparable period.
The outlook for thermal coal remained robust on the back of strong international demand, coupled with supply constraints across key coal-producing regions. Global demand had been boosted by the cold European winter combined with increased power generation and continued growth in Asian countries.
"We believe that global supply constraints will take some time to resolve, but that international thermal coal demand remains robust and sustainable. Optimum Coal is well placed to take advantage of these current market conditions,” Teke asserted.
Banks grant Sentula flexible R740m debt facility
JOHANNESBURG (miningweekly.com) – JSE-listed coal-mining services company Sentula has secured a R740-million debt facility involving a reduced funding rate, a six-month capital moratorium and a four-year repayment profile.
By flexibly refinancing Sentula’s existing senior debt, Standard Bank, Hong Kong & Shanghai Banking’s Johannesburg branch and Sanlam Capital have afforded Sentula the liquidity it requires.
Sentula now has R120-million in refurbishment funding for its existing fleet and idle equipment through a six-month capital moratorium.
The refinancing structure creates more cash-flow headroom, Sentula CEO Robin Berry comments.
Standard Bank has been mandated to advise and arrange the refinancing, which provides Sentula with an immediate R140-million for new capital equipment.
The structure also allows for further new capital equipment drawdown over four years, as long as the total debt level does not exceed R800-million.
“The R800-million peak debt level is conservative and appropriate in current trading conditions," adds Berry, while remaining cognisant of the consequences of over-gearing given Sentula's peak debt level of R1,9-billion in its 2008 financial year.
By flexibly refinancing Sentula’s existing senior debt, Standard Bank, Hong Kong & Shanghai Banking’s Johannesburg branch and Sanlam Capital have afforded Sentula the liquidity it requires.
Sentula now has R120-million in refurbishment funding for its existing fleet and idle equipment through a six-month capital moratorium.
The refinancing structure creates more cash-flow headroom, Sentula CEO Robin Berry comments.
Standard Bank has been mandated to advise and arrange the refinancing, which provides Sentula with an immediate R140-million for new capital equipment.
The structure also allows for further new capital equipment drawdown over four years, as long as the total debt level does not exceed R800-million.
“The R800-million peak debt level is conservative and appropriate in current trading conditions," adds Berry, while remaining cognisant of the consequences of over-gearing given Sentula's peak debt level of R1,9-billion in its 2008 financial year.
Subscribe to:
Posts (Atom)
Posts
