Kumba: S.Africa can more double iron ore output

Mon Mar 28, 2011 1:04pm GMT

JOHANNESBURG (Reuters) - South Africa's iron ore industry has the potential to more than double output in the next 10 years under suitable growth conditions, Kumba Iron Ore said in a report issued on Monday.

The report by Kumba, the world's 10th-largest iron ore producer and a unit of Anglo American, cited conditions such as necessary transport logistics and a viable market for the off-take of iron ore and steel products.

The company also said the country would need a suitable regulatory environment that encourages market participants to make the necessary investments.

"These growth projects are capital intensive and will not be economically viable without market-related iron ore prices (at export parity price levels)," the company said.

Kumba's iron ore production rose 3 percent to 43.3 million tonnes in 2010.

Kumba has been at loggerheads with ArcelorMittal South Africa, a unit of the world's biggest steelmaker, over prices for the steel-making ingredient since February last year.

A long-term deal, under which Kumba sold ore to ArcelorMittal SA at a discount, lapsed after the steelmaker failed to convert its rights over a stake in Kumba's Sishen mine into a new right as required by law.

The government now wants at least 21.4 percent of iron ore output from Kumba's Sishen mine to be sold at cost plus 3 percent to help the domestic steel industry.

But Kumba said in the report that discounted iron ore prices were unlikely to lift the local steel sector.

"Iron ore typically contributes less than 1 percent to the costs of these end products and is largely insignificant in its impact on overall costs of downstream products," Kumba said.

It added: "Even if iron ore is discounted significantly, this has an immaterial impact on the cost of most downstream users."

Pending a resolution of the dispute, Kumba and ArcelorMittal SA reached an interim agreement valid until the end of July this year for ArcelorMittal to source iron ore from Kumba at about half of the market price.

ArcelorMittal SA has said it expects the arbitration to be heard early next year and that it will negotiate with Kumba to extend the interim pricing deal until the dispute is resolved.

The government granted Imperial Crown Trading a prospecting right over the stake in Kumba's mine for which ArcelorMittal previously held a mining right, a decision which Kumba is contesting.

Tata Steel in talks to buy Canada coal mines

Wed, Mar 23, 2011 at 10:08

Tata Steel, the world's No 7 steelmaker, is in talks to buy coking coal mines in western Canada, the Business Standard reported on Wednesday, citing an unnamed official close to the development.

Tata Steel had started talks with the government of British Columbia, a Canadian province, to acquire coal mines, the newspaper said, adding Tata officials and ministers of the province met in Canada two weeks ago.

"The ministers made a proposal to sell virgin coking coal mines and Tata Steel is fairly interested," the paper quoted the unnamed official as saying.

The British Columbian government is "very keen" on Tata Steel investing in the province, it cited another unnamed official close to the talks as saying.

The paper said Tata Steel did not comment. Source:Reuters

Australian cyclones hit Rio Tinto Q1 iron ore output

Tue, Mar22 13:49:04

SYDNEY, March 22 (Xinhua) -- Global miner Rio Tinto Ltd said on Tuesday its first-quarter iron ore production in Western Australia 's Pilbara region would highlight the impact of the tropical cyclones in February.

Speaking at a conference in Perth on Tuesday, Rio Tinto Iron Ore chief executive Sam Walsh said, "We have only just regained momentum and our quarterly production report will highlight the impact."

Rio Tinto's current Pilbara capacity is 225 million tons a year and it is moving to expand output to 333 million tons a year by the end of 2015.

"We do not expect our expansion to stop at 333," Walsh said.

He told reporters that tight equipment supply from Japan after the recent Japanese earthquake and tsunami has affected on the miners' expansion efforts in terms of cost.

He said the company's Canadian iron ore operations were also expanding quickly to meet demand which was already heightened before the Japanese crisis.

Walsh said the magnitude of reconstruction in Japan was only just being realized.

"It is true to say that recovering, developing and developed economies continue to drive demand for iron ore," he said.

The company's Simandou iron ore mine project in Guinea in West Africa would be developed before the official target date of 2015, Walsh said.

"We are keen to produce tons earlier if infrastructure constraints can be removed," he said.
Editor: Xiong Tong

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Hanlong Mining takes 19% stake in Sundance Resources

Monday , 21 Mar 2011

Key Points
* Hanlong Mining becomes largest shareholder in Sundance Resources Ltd
* Hanlong acquires Talbot Group stake

Hanlong Mining Investment Pty Ltd, through its affiliated entities (collectively "Hanlong"), has become the largest shareholder in Sundance Resources Ltd (ASX:SDL).

On Friday 18th March 2011, Hanlong acquired the entire holding of the Talbot Group 433,791,352 shares which added to existing relevant interests gives it 514,984,194 shares, or approximately 19.0% of the company.

Hanlong Mining Chairman and Head of Iron Ore Business, Peter Mansell, said the investment in Sundance was consistent with Hanlong's strategy to be a significant investor in quality projects in the iron ore industry.

"We're a financial investor and will be a supportive shareholder assisting the company to fast-track its infrastructure and mine development plans."

Hanlong Mining is a subsidiary of Sichuan Hanlong Group, a privately owned industrial conglomerate based in Chengdu, China. (by mineweb)

CISA lobbies with Chinese premier to help tackle high ore prices

Friday, 18 Mar 2011

Bloomberg reported that the China Iron and Steel Association has asked Premier Mr Wen Jiabao to take measures to help steelmakers tackle iron ore prices as many of them will likely incur losses this month due to high costs.

Mr Luo Bingsheng special adviser and former executive vice chairman to the association, without specifying what measures the government would take, said that “Mr Wen and Vice Premier Mr Zhang Dejiang ordered the Ministry of Commerce to find solutions.”

Mr Luo said “The ultimate reason for the low profits is high iron ore prices. China should streamline its qualified importers to curb speculative purchases and control the inventory of imports at reasonable levels.”

He said that the government is actively studying the establishment of standards for imported iron ore.

Mr Luo said China iron ore production will rise 8.8% to 660 million tonnes this year, pacing estimates by the Ministry of Industry and Information Technology.

China iron ore imports fell 1.4% to 618.6 million tonnes last year, the first drop since 1998, after the government took measures to curb electricity use, rein in property speculations and as domestic mines increased output. (sourced:bloomberg)

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Rio Tinto ups holding in $3.9 billion takeover target Riversdale

Thu Mar 17, 2011 11:19pm GMT

SYDNEY, March 18 (Reuters) - Rio Tinto has received acceptances for 33.04 percent of shares in its $3.9 billion takeover target Riversdale , the global miner said on Friday, after raising its offer for the Mozambique-focused coal miner last week.

The offer is conditional on Rio Tinto reaching 50.1 percent control by March 23.
(Created by Ed Davies, Reuters)

Iron Ore-Prices rise for first time in a month as buyers return

Fri Mar 18, 2011 3:34am GMT

* Falling ore stockpiles spur Chinese buying
* Forward swaps extend gains
By Manolo Serapio Jr

SINGAPORE, March 18 (Reuters) - Spot iron ore prices rose for the first time in a month and offers remained firm on Friday as Chinese steel mills returned to the market to replenish
dwindling stockpiles.

Prices for the steelmaking raw material had fallen 15 percent since hitting record highs near $200 a tonne in mid-February as rising raw material cost and slow steel demand turned off top buyer China.

But some Chinese mills are looking at increasing steel exports to the region as production at quake-hit Japan could slow and domestic demand may spike when reconstruction starts.
Japan was Asia's biggest steel exporter last year.


"We had always thought that the dearth of Chinese buying in recent weeks would not last - steel production rates continue to record new highs and iron ore stocks can only sustain production
for perhaps a month or two," Commonwealth Bank of Australia said in a note.

China's daily crude steel output rose 0.5 percent from January to a record high of 1.94 million tonnes in February.

Inventories of imported iron ore at major Chinese ports fell to 80.4 million tonnes last week after climbing above 81 million tonnes towards the end of February.

Iron ore indexes, based on spot transactions in China and which global miners use in determining quarterly contract prices, rose on Thursday, the first uptick since they touched record peaks in mid-February.

The Steel Index's 62 percent benchmark .IO62-CNI=SI rose 30 cents to $163.90 a tonne, including freight, and Platts' 62 percent index IODBZ00-PLT jumped $1.50 to $166.50.

Metal Bulletin's 62 percent gauge.IO62-CNO=MB edged up 60 cents to $163.49.

Those gains may be sustained on Friday as offers from sellers remained firm, with Indian 63.5 percent iron ore quoted at $170-$172 a tonne, according to Chinese consultancy Mysteel.

"Sentiment is improving and there are more inquiries," Mysteel said.

"Iron ore buyers have come back because a lot of Chinese steel mills are very, very low on iron ore inventory and they now need to buy to sustain themselves," said an iron ore trader
in Shanghai.

"But will they come buy and disappear again which would make the price slide further or will they stay for sometime which will help prices rebound? That is still an unanswered question."

Further gains in iron ore forward swap prices on Thursday suggested confidence is slowly returning to the market.

The Singapore Exchange-cleared April contract climbed 3 percent to $157.80 a tonne, May rose 2 percent to $154.80 and June gained 1.8 percent to $152.40.

(Reporting by Manolo Serapio Jr.; Editing by Manash Goswami,sourced:Reuters)

IT raids offices of JSW Steel, JSW Energy

Thu, Mar17, 2011

Investigators from the income tax (IT) department in Mumbai yesterday conducted searches at the offices of JSW Steel Ltd and JSW Energy Ltd for alleged evasion of income tax.

According to B Gaur, director general, IT investigation, Mumbai, there was a search going on but they could not divulge details. He added that the search operation was expected to continue till evening.

The searches started early in the morning at the Mumbai and
Rajasthan offices of JSW Group.

The companies, according to an official who requested anonymity said the companies had allegedly adjusted accounts to reduce tax liability.

According to JSW group spokesperson Sharmila Banerjee, who confirmed the raid at the company's Lower Parel office in Mumbai, the raids were a routine survey.

''It is part of the usual survey, and apart from that, there are no more details we have,'' she said.(By domain-b)

Global supply chain rattled by Japan quake, tsunami

Mon Mar 14, 2011 8:55am GMT

* High tech components, steelmakers among suppliers affected
* Rolling power blackouts likely to disrupt output for some time
* Some producers talking to alternative suppliers
* Shares of Toyota, Sony fall more than 7 pct

By Miyoung Kim and Clare Jim

SEOUL/TAIPEI, March 14 (Reuters) - Global companies from semiconductor makers to shipbuilders faced disruptions to operations after the earthquake and tsunami in Japan destroyed vital infrastructure and knocked out factories supplying everything from high-tech components to steel.

Thousands of people have been killed and millions have been left without water, electricity, homes or heat after Friday's 8.9 magnitude quake triggered a massive tsunami which tore across a wide swathe of coastline north of Tokyo.

The earthquake has forced many firms to suspend production and shares in some of Japan's biggest companies tumbled on Monday, with Toyota Corp and Sony Corp falling 8 percent and 9 percent, respectively.

Plant closures and production outages from Japan's host of high-tech companies were among the biggest threats to the global supply chain, analysts said.

"Japan remains critical to the global tech food chain," analysts at CLSA said in a report. "Beyond damage to facilities, supply chain disruptions driven by road-port-power outages are key factors to watch," CLSA said, estimating a fifth of all global technology products are made in Japan.

Korean shipbuilders and U.S. solar power companies were among other companies facing the threat of disruptions to supply, but with initial damage assessments still being made, companies and analysts said it was too early to accurately gauge how long disruptions might last.

Rolling power blackouts are likely to affect Tokyo and surrounding areas over the next few weeks, adding to the existing challenge of inspecting and repairing north Japan plants amid continuing aftershocks and the threat of major radiation leaks from damaged nuclear power plants.

KOREAN COMPANIES HIT

Japanese ports handling as much as 7 percent of the country's industrial output sustained major damage from the earthquake, with most seen out of operation for months.

Companies in neighbouring South Korea, which depend heavily on Japan supplies such as LCD glass, chip equipment, silicon wafers and other products to produce semiconductors, were some of the most affected.

Hynix Semiconductor , the world's No.2 memory chipmaker and a rival of Japan's quake-hit Toshiba Corp and Elpida Memory , said it was concerned the quake may weaken consumer demand further and disrupt supplies of chip components.

"It could give a boost to battered chip prices but that's a short-term impact from disrupted supplies by Japanese companies," said Kim Min-chul, chief financial officer at Hynix. "Longer-term we are more concerned about the quake reducing overall consumer demand and disrupting supplies of chip components and equipment, which could interrupt our production as well."

Hynix shares surged almost 9 percent on expectations of a short-term boost to chip prices and reduced competition, while shares in Toshiba, a conglomerate whose products include semiconductors and nuclear reactors, dived 16 percent.

Toshiba, which supplies more than a third of the NAND memory chips used worldwide in devices such as Apple's hot-selling iPad, said it was starting the process of restarting a chip factory in Iwate, northern Japan.

Shares of Shin-Etsu fell 6.7 percent in Tokyo, while rival silicon wafter makers Sumco Corp ended flat in a Tokyo market that closed down 6.2 percent.

Spot prices for DRAM chips, mostly used in personal computers (PC), had started rising in China, chip price tracker DRAMExChange said.

"Especially for PC and system manufactures, they need to be more proactive in DRAM inventory for the upcoming peak season," it said in a note.

Nokia , the world's largest mobile phone maker, said it was investigating the impact on supplies.

About 12 percent of components used by Nokia were sourced in Japanese yen but the amount of Japanese components was likely larger in its phones as Nokia has recently renegotiated its supplier contracts in Japan to cut risks from swings in the value of the yen.

"Until we have concrete information to share, it would be inappropriate to speculate on the possible impact to Nokia," a spokesman said.

STEEL, SOLAR

Companies reliant on Japanese steel such as South Korean shipbuilders were also expected to face supply constraints or higher prices due to disruptions caused by the quake and its aftermath.

South Korea houses the world's top three shipbuilders -- Hyundai Heavy Industries , Daewoo Shipbuilding and Marine and Samsung Heavy Industries .

"The earthquake has reportedly affected around 20 percent of the Japanese steel production capacity," said Kim Hyun-tae, an analyst at Hyundai Securities in Seoul. "It will disrupt production in Japan, one of the major steel producers exporting 40 percent of its output. In contrast, steel demand will rise for damage restoration."

Nippon Steel Corp , the world's No.4 steelmaker, said on Sunday it resumed shipments from all its steel plants except its Kaimishi facility in northern Japan. Rival JFE Holdings said on Monday it was forced to stop shipments at one plant near Tokyo due to a power outage.

On Monday, JFE Steel Corp , the world's No.5 steelmaker, halted production at a plant near Tokyo and No.4-ranked Nippon Steel suspended operations at two small plants.

"If there is a 10 percent rise in steel plates, it can result in a 1.5 percent fall in the operating profit margin for shipbuilders," said SK Securities analyst Lee Ji-hoon, adding roughly 15 percent of steel plate supplies for Korean shipbuilders come from Japan.

Korean steel maker POSCO was expected to benefit from tighter supplies and pressure on prices. Its shares rose almost 9 percent in Seoul.

The earthquake also raised risks of lower production from Japanese manufacturers of polysilicon and wafers -- materials found in solar panels that convert sunlight into electricity.

Credit Suisse expects supply problems at solar wafer maker M. Setek Co, a unit of AU Optronics , whose plant is situated near Sendai town, close to the epicenter of the quake.

US solar panel maker SunPower Corp could be vulnerable to wafer supply disruption as it relies on M. Setek for up to 20 percent of its supplies or about 200 megawatts, Credit Suisse said.

An AU spokesman said initial assessment at the M. Setek plant showed no major damage but it was unclear when production would resume.

Taiwan's TSMC , the world's largest contract maker of semiconductors, said there was no immediate threat to supplies.

"For raw materials like raw wafers, gases and chemicals and spare parts, we have enough inventories to keep things running for at least 30 days," said TSMC spokesman Michael Kramer.

Other high tech producers including Taiwanese smartphone make HTC said operations and components supply had not been affected but they would be talking to alternative suppliers and monitoring the situation in Japan. (Additional reporting by Hyunjoo Jin and Ju-min Park in SEOUL, Tarmo Virki in HELSINKI and Leonora Walet in HONG KONG; Writing by Lincoln Feast; Editing by Anshuman Daga and Dean Yates, sourced Reuters)

Tags :Korean companies hit, Toshiba, Hynix, chipmaker, Sumco Corp, Nippon Steel, JFE, POSCO, Credit Suisse,

Unconfirmed reports of USD 110 hike for coking coal for April quarter

Friday, 11 Mar 2011

Nikkei business daily yesterday reported that Japan’s No 4 steelmaker Nippon Steel and British mining giant Anglo American Plc have agreed to increase coking coal prices for the second quarter by around 50% from the current quarter,

The Nikkei, without citing sources, said the coking coal price would be raised to a record USD 330 for the April to June period. Nikkei said that the steelmakers are worried that monthly price revisions would lead to cost volatility and this has led to the agreement with Anglo American which offered to set prices quarterly.

Steel makers across all parts of globe, citing surge in costs of iron ore and coking coal, have hiked steel prices in last 3 months. Now the big question is that weather the hikes are sustainable ie to what extant steel makers would be able to post the higher costs to buyers and what would be the steel price scenario in April to June quarter.

While the miners remain upbeat on prices of iron ore and coking coal in April to June quarter, several factors are weighing heavily on steel prices. Chinese premier has recently emphasized that the government will take all measures to cool down economy. This is being reflected in Chinese domestic prices, which have been sliding every day since February 22nd 2011. Political unrest in Middle East and North Africa has compounded the problem as many of the captive export markets for Black Sea based and Turkish mills have suddenly vanished creating a vacuum, forcing them to find alternate destinations.

Port Hedland iron ore shipments tumble in seasonal drop

Thu Mar 10, 2011 4:22am GMT

* Chinese New Year probably biggest factor in drop

* Cyclone, shorter month also weighed

SYDNEY, March 10 (Reuters) - Iron ore shipments from Australia's Port Hedland, one of the world's largest export terminals, fell 16 percent in February, but the drop was mostly due to seasonal and weather-related factors, and analysts expect a rebound in March.

Iron ore shipments dropped to 12.85 million tonnes in February from 15.33 million in January and 17.33 million in December, the port said on Thursday, but analysts suggested the chief culprit was a holiday in China, the biggest destination of the port's shipments.

"It's all seasonal with the Chinese New Year when you've got a week or so with not too many (customers) to trade with," said Tom Price, a commodity analyst with UBS.

"A better signal is the spot price, which was quite strong, indicating solid demand."

Officials at Port Hedland, which is used by BHP Billiton and Fortescue Metals and shipped more than 180 million tonnes of iron ore in 2010, pointed out that the port was closed for several days in February due to tropical cyclone Carlos and that the unadjusted figures also do not reflect the shorter month.

Iron ore shipments a year earlier dropped around 2 million tonnes in February, but made up nearly all of the loss in the following month.

February exports from Port Hedland to China fell to 9.03 million tonnes from 9.97 million in January while exports to Japan nearly halved to 1.47 million from 2.82 million.

China's iron ore imports in February reached 48.64 million tonnes, down 29.5 percent from a January record, with trade disrupted by the Lunar New Year, China's customs agency said in a statement on Thursday.(Reporting by Balazs Koranyi Editing : Himani Sarkar, sourced Reuters)

Tags : China's iron ore imports in February, steelmaking

September target for Riversdale coal exports

Monday,07 March 2011

TAKEOVER target Riversdale Mining expects to start exporting coking coal from its Mozambique project by September. Leon Fanoe, Riversdale’s Benga project’s general manager,

said the company aims to start mining coal in March, expects to complete construction of its coal processing plant in September and plans to put its first coking coal “on a ship” at the port of Beira that same month.

Riversdale is spending over $US1 billion to develop Benga, located in the Tete coal basin. Benga, which is 65 per cent-owned by Riversdale and 35 per cent-owned by India-based Tata Steel, is one of two mega-coal projects that will start exporting coal from the Tete basin in large quantities this year.

The Tete basin has attracted investment from mining companies and steelmakers from around the world due to its vast resource of high-quality coking coal, a key ingredient in steel making.
Brazilian mining titan Vale is spending $US1.66bn to develop the adjacent Moatize coal project, which is expected to start shipping coal at end-June or early July.

Anglo-Australian diversified miner Rio Tinto is also interested in the Tete Basin and has offered to purchase Riversdale for $US3.9bn. Riversdale’s board has recommended shareholders accept in the absence of a superior offer. Rio Tinto has twice extended the deadline for its bid, last week moving it to March 18.

Riversdale’s coal assets in Mozambique have attracted a lot of suitors who are either interested in investing in the company or in its projects. Tata Steel and Brazilian steelmaker CSN recently raised their stakes in the company to a combined 47 per cent of the voting shares.
The Benga project is being developed in phases, with the first phase designed to produce 1.7 million tonnes a year of hard coking coal and 300,000 tonnes a year of thermal coal, for use in power stations, from 5.3 million tonnes of mined coal.

Riversdale expects to export 200,000 tonnes of coking coal this year and sell up to 90,000 tonnes of thermal coal, depending on available transport infrastructure. It has secured port capacity but not rail capacity as of yet, Mr Fanoe said.

Riversdale plans to increase output from the mine in subsequent years, with plans to process 10.6 million tonnes of coal into 3.3 million tonnes of coking coal and up to 2.2 million tonnes of thermal coal from 2013, Mr Fanoe said.

By 2014-15, Riversdale plans to be able to process 20 million tonnes of coal annually, resulting in 6 million tonnes of coking coal and 4 million tonnes of thermal coal.
Riversdale is also looking at alternative ways to send coal to Beira, Mr Fanoe said, including a feasibility study into sending coal down the Zambezi river to Chinde and then on to the port. Riversdale expects this could start by late 2012 or early 2013.

Benga, the first of Riversdale’s two major projects slated for the Tete basin, has a measured, indicated and inferred resource base of 4.03 billion tonnes. Tata Steel has rights to 40 per cent of coking coal produced during the life of the mine.

The company’s other mining plans, the Zambeze coal project, is expected to have a feasibility study completed by the end of 2012 and hopes to start producing coal by the middle of 2014.
David West, the principal geologist on the Zambeze project, said the company has 10 drill rigs on site and an exploration staff of 60 people, including 26 geologists, to complete the feasibility study on the 24,700ha Zambeze project.

The Zambeze project is forecast to eclipse Riversdale’s Benga project in terms of resource base and annual production. The Zambeze project has a resource base of 9.05 billion tonnes of coal compared with Benga’s 4.03 billion tonnes of coal resources.

The project has the potential to extract up to 90 million tonnes of coal annually, although current plans are to process 45 million tonnes of coal into roughly 15 million tonnes of coal products annually. The product mix would be two-thirds coking coal and one-third thermal coal. Thermal coal is used to fuel coal-fired power stations.

Mr West said the 9.05 billion indicated and inferred resource base means Zambeze could have “a life of mine of 25 years or even more.” At a certain stage in the project, Riversdale will have to move Tete’s international airport to a different location in order to continue mining the deposit, Mr West said. (source: Dow Jones)

PDAC-Bull market for metals signals a spate of mining deals

Fri Mar 4, 2011 11:44pm GMT

* World's largest annual mining convention set to kick off
* Miners ebullient with metal prices near record highs
* M&A activity in sector expected to gather pace in 2011
By Euan Rocha

TORONTO, March 4 (Reuters) - This year the world's biggest mining convention could turn into a bonanza for deal makers as eager mining companies look for ways to take advantage of a raging bull market for metals.

The event, organized by the Prospectors and Developers Association of Canada (PDAC), brings together nearly everyone who is anyone in the world of mining -- and it gives miners an unparalleled opportunity to talk shop and strike deals.

The dealmaking that PDAC could stir up this year may very well shift into overdrive, according to many of those who will attend, as the industry responds to a number of powerful, intersecting trends.

Prices of base metals are near record highs, while surging demand is only expected to accelerate, fueled by the building booms of China, India and Latin America. At the same time, major producers are expecting their production to contract unless replacements can be found.

Gold and silver miners are benefiting from one of the biggest sustained rallies in modern history, driven by inflation concerns, political turmoil, an uneven U.S. economic recovery and the European sovereign debt crisis.

That means junior miners and explorers -- those with assets that are close to going into production -- have never had it so good. Established miners are motivated buyers willing to pay top dollar for high-quality properties that can be developed quickly.

"I think deal activity is going to intensify, because companies' cash flows are enormous and lots of companies aren't replacing their production," said Donald Coxe one of Canada's most influential money managers.

The solution for many is to find attractive junior miners and explorers with projects that require little lead time before they can begin producing. For a major producer shopping around or a junior looking to sell, the PDAC convention in Toronto is a must-attend showcase.

"There are a lot of deals done during the convention. If you have a property you want to get rid of, or put into a company, or if you are a company looking for properties it is the best place you can go," said Terry Schorn an adviser to exploration company Eagle Hill (EAG.V: Quote).

"For me the best part of it is meeting people, it's a great place for contacts ... Quite often a deal does not happen at the convention, but you meet somebody and follow up and deals get done later," said Schorn, a veteran geologist who has attended the PDAC event since 1953.

With record cash flows, many miners have opted to initiate or raise dividends, while others are opting to use their new wealth to buy assets and secure long-term supplies. Exploration companies at the event are eager to show off their wares.

"We'll be looking at other opportunities, other companies that are (at PDAC)," said Chief Executive Robert Quartermain of gold explorer Pretium (PVG.TO: Quote). "We'll be meeting with majors so they fully understand the opportunity that we have."

The annual PDAC event attracted more than 22,000 attendees last year, and with metal prices soaring, an even larger audience is expected this year.

Canada is a natural home for the event, as the Toronto Stock Exchange and the small-cap TSX Venture Exchange are home to close to 60 percent of the world's publicly listed mining companies. In fact, miners and exploration companies account for more than 40 percent of the roughly 3,700 companies listed on both exchanges. John Nyholt, who heads PwC's M&A services team, notes that the conference started off with miners coming out of the bush looking to raise finances and show off their finds. "They still have all these booths and tables, where you can go and invest in a small mining deal..

Today there is a strong technical aspect to the program, but the fund-raising stuff, it still happens," said Nyholt. In a report published on the eve of the convention, PwC predicts that deal activity is only expected to gather pace this year, as the prices of metals rise even further. "We are definitely going to see a strong pace in 2011 in terms of volume and we also believe we will see more mega deals," said John Nyholt, who co-authored the PwC report. With the ongoing political turmoil in the Middle East and North Africa, Donald Coxe argues that gold prices are likely to rise even further. Gold rose above $1,430 an ounce on Friday, while silver surged 3 percent to 31-year highs, as soaring oil prices fueled by widening unrest in Libya prompted investors to pile into safe havens.

Bullion already hit a record high of $1,440.10 an ounce on Wednesday and is on track to rise further on fears that Libya's escalating violence could spread across the Arab world. Coxe believes these record prices are only going to fuel further M&A activity among precious metals miners. "Mining companies have a choice between paying out more money in dividends, or expanding their ore reserves and I think we are going to have more M&A," said Coxe, a former Bank of Montreal strategist who now heads Chicago-based Coxe Advisors.

"The greatest amount of activity is going to be in the precious metals group, because the companies having gotten out of their hedging programs a couple of years ago are now making a lot of money, so I think there's going to be lots of takeovers of gold companies," he said. (Reporting by Euan Rocha, Pav Jordan, Julie Gordon and Cameron French; Editing by Frank McGurty and Rob Wilson, sourced:Thomson Reuters)

Emami Ltd close to taking control of iron ore mining in Orissa

By Aniek Paul, Mint, New Delhi

Feb23, 2011

Diversified conglomerate Emami Ltd is close to taking control of an unexploited iron ore mine in Orissa for '400-500 crore in staggered cash payments.

A memorandum of understanding has been signed between Emami and the company that owns the lease right to the mine and the deal could be concluded within two weeks, according to people familiar with the deal.

Emami's co-chairman R.S. Goenka said the company was scouting for iron ore reserves in Orissa and collieries in Indonesia. Emami may consider diversifying into steel if it could secure iron ore mines. It has already decided to launch a power plant, for which it is looking to buy collieries producing energy coal in Indonesia, he added.

Emami is following other private miners in "securing iron ore reserves" in states such as Orissa, Jharkhand and Chhattisgarh through "intriguing deals structured to comply" with the restrictions on transfer of mining leases under Indian laws, said a person who has acted as an intermediary in several similar deals in the past couple of years. He did not wish to be identified.

Starting in the 1970s, several people, mostly from the "local landed gentry", were given mining leases in the iron ore-rich states--Orissa, Jharkhand and Chhattisgarh. The assets were leased out to them initially for 20 years, but at the end of the first term, the lease was renewable "automatically" for 20 more years even if the developer hadn't made any effort to extract minerals.

But on completion of 40 years, the state governments are to auction these assets, according to the person cited above. "For those owning the mining leases, the only way to retain them is to develop the mines much before the end of the lease term," he said. "Only if a mine is in operation, the company owning the lease right could request the state government to renew the lease again."

But most of these people do not have the cash to develop the mines on their own, so they approach large companies such as Emami to "capitalize" them, he said. Under Indian laws, companies owning mining leases cannot sell shares or receive funding from others to develop the mines, he said.

Notwithstanding the restrictions aimed at making sure that mining leases couldn't be transferred or mortgaged, lawyers have devised a way to "bring in new beneficiaries without breaking the laws", according to him.

One of the key determinants of valuation is the "number of years left in the (40-year) lease term". Those attracting the best valuations are the ones that have at least 15-20 more years left, he added. "But at least one mine with less than three years left in the lease term is known to have found an investor recently." This is significant because, at times, it takes years to obtain clearance from the ministry of environment and forests to start mining.

Companies such as Emami enter as "long-term buyers" of iron ore, paying an "advance to secure the right" to buy the future production of the mine. In some cases, the company owning the mining lease even stages a contest to determine the highest bidder. On conclusion of the deal, however, the "long-term buyer" effectively gets control of the mine.

Though a substantial amount is normally paid at the time of signing the deal, the payment of the best part of the consideration is "linked to milestones". "This is because, even though the long-term buyer would operate the mine going forward, it is entirely dependent on the company owning the mining lease for securing clearances," he said.

It isn't immediately known--and it may not have been firmed up either--how much Emami is to pay upfront for the mine that it is eyeing. "Talks are at final stages; the details are being discussed now," said another person familiar with Emami's deal, who also did not wish to be named.

There's a considerable amount of risk involved in these deals, said a lawyer familiar with them, speaking on condition of anonymity. "Considering the strict environment laws these days, there's no guarantee that all clearances could be obtained," he said. "All deals need not lead to commercial exploitation of reserves--if the investor has such doubts, it would pay a small amount, say '5 crore, at the time of signing the deal."

Another problem is that of "squatters", he added. During legal due diligence, it's often discovered that the firm owning the mining rights signed a similar agreement with another investor years ago, but has been unable to exploit the mine. "In some cases, the right of that person has to be bought out. But at times, the squatters are so demanding that the deal cannot be closed."
(sourced:livemint)

India ups iron ore export duty, China hardest hit

Mon Feb 28, 2011 1:27pm GMT

* Soaring global prices could rise further

* Most exports go to China

* Industry body says exports will be uncompetitive

* India aims to keep more iron ore for domestic steel

* Shares in producer Sesa Goa slide

By Siddesh Mayenkar

MUMBAI, Feb 28 (Reuters) - India will quadruple export duty on iron ore fines as it seeks to curb exports, mostly to China, in a budget move announced on Monday that hit domestic producer shares and could push spot prices to new record levels.

The world's third largest iron ore exporter wants to conserve supply for domestic steel makers, who play a vital role in building growing infrastructure.

India plans to raise the duty to 20 percent from 5 percent on fines and to 20 percent from 15 percent on lumps. [ID:nSGE71R040]. Fines are dust form ore with a lower iron content than lumps.

"This will make the exports of (Indian) iron ore uncompetitive in the global market," said R.K. Sharma, secretary general of the Federation of Indian Mineral Industries (FIMI).

Almost all of India's annual 100 million tonnes of iron ore exports head to China. Its overseas sales compete with the world's top two exporters, Australia and Brazil.

"This could tighten up the market further," said Henry Liu, regional head of commodity research at Mirae Asset Securities in Hong Kong.

"This will increase the floor price for Indian prices and if Indian prices increase then that will push prices to China higher."

Shares in Indian iron ore miner Sesa Goa (SESA.BO: Quote) extended losses on the duty imposition, hitting a 52-week low.

Steelmakers welcomed the move.

"The increase in export duty on iron ore will increase its availability in the domestic market, thereby stabilising price and helping domestic steelmakers," said Nittin Johari, chief financial officer of Bhushan Steel (BSSL.BO: Quote).

MORE PRESSURE

The move was widely expected as India tries to underpin its rapidly-growing economy with investment in infrastructure.

China said it could pinch their margins as steel prices fall.

"Steel mills can't take costlier raw materials at the moment as steel prices were heading downward recently on weak demand," said an iron ore official a mid-sized Chinese steel mill, owning annual crude steel capacity of around 5 million tonnes.

But with iron ore miners in Australia and Brazil running flat out to cash in on prices near $200 a tonne, and little spare capacity elsewhere in the world, Chinese buyers have a difficult choice -- pay the additional tax, or cut production.

Iron ore was offered at around $189-191 per tonne with freight in China on Monday with little immediate impact seen by traders from the duty hike in a market where contracts are on a quarterly basis. The record high hit earlier this month was near $200 per tonne. [IRONORE/]

Shipping freight rates could be adversely affected by any further fall in exports from India.

"Freight rates will come under more pressure on this," said a Singapore-based shipbroker. "Rates are already at two-year lows on oversupply problems and this will only add to the problem."

India's iron ore exports have already slumped on the ban of shipments by the southern state of Karnataka -- contested by exporters in the Supreme Court -- with sales down 24.8 percent in December to 9.7 million tonnes from a year ago.

Exports during the April-December period fell 17.02 percent from a year earlier to 64.4 million tonnes. India usually exports around 100 million tonnes per year. China buys over 96 million tonnes, making India its third-biggest supplier.

Two other Indian states, leading producer Orissa and Chhattisgarh, which accounts for 5 percent of India's shipments, have asked the federal government to allow them to ban exports.

The government would prefer states to focus on improved regulation of the sector and incentives for increased domestic use of the resource. That would better target illegal production instead of export bans which hurt all producers.

India's steel minister, Beni Prasad Verma called for curbs on exports of iron ore on Friday. [ID:nSGE71O075]

India hiked freight rates for iron ore exports by 50 percent to 1,500 rupees per tonne on Jan. 27 but kept it unchanged in Friday's Railway Budget. [ID:nSGE70O07P]

The increase in export duty would bring in around $1.6 billion annually to New Delhi's coffers on the basis of the volume and price of exports to China in 2010. That is a fraction of the government's total expenditure of 12.58 trillion Indian rupees (nearly $278 billion). [ID:nINBUDGET]

( $1 = 45.275 Indian Rupees)

(Additional reporting by Manolo Serapio Jr. and Randy Fabi in Singapore, Ruby Lian in Shanghai, Swati Pandey in Mumbai; Writing by Jo Winterbottom; editing by Simon Webb and William Hardy, sourced:Thomson Reuters)

Italy’s steel imports from non-EU countries up 53 percent in January

Monday, 28 February 2011

According to the statistics released by the Italian steel producers' association Federacciai, in January this year Italy's steel imports from non-EU countries reached 852,000 metric tons, increasing by 53.2 percent year on year, while its steel exports to non-EU countries totaled 334,000 metric tons, up five percent year on year.

In the first month of the current year, Italy's semi-finished steel product imports from the countries in question reached 293,000 metric tons, up 33.8 percent year on year, while its semi-finished steel product exports to these countries amounted to 18,000 metric tons, decreasing by 14.3 percent year on year.

In January this year, Italy's imports of long steel products from non-EU countries increased by 96.6 percent to 57,000 metric tons, while its long product exports to non-EU destinations totaled 72,000 metric tons, down 19.1 percent, both on year-on-year basis.

On the other hand, in the given month Italy's flat product imports from non-EU countries reached 468,000 metric tons, up 69 percent as compared to January 2010, while its flat product exports outside the EU amounted to 133,000 metric tons, with a yearly increase of 1.5 percent.

Product	Imports			Exports			Balance
	Jan 2010*	Jan 2011	Jan 2011/10 (%)	Jan 2010	Jan 2011	Jan 2011/10 (%)	Jan 2010	Jan 2011
Ingots and semi-finished products	219	293	+33.8	21	18	-14.3	-198	-275
Long products	29	57	+96.6	89	72	-19.1	+60	+15
Flat products	277	468	+69	131	133	+1.5	-146	-335
Primary manufactured products **	24	26	+8.3	65	100	+53.8	+41	+74
Secondary manufactured products ***	7	8	+14.3	12	11	-8.3	+5	+3
Total	556	852	+53.2	318	334	+5	-238	-518

*The unit of measurement for product volumes is thousand metric tons.
** Products include seamless pipes, welded pipes, forged bars, cold drawn sections and bars, drawn wire and cold rolled strips.
*** Products include steel sections for the mining industry, scaffolding steel materials, accessories for steel pipes, flanges, checkered steel plates and iron powder.
Tags: pipe , plate , longs , flats , semis , tubular , Italy , Europe , European Union , Mediterranean

Nippon Steel sees input costs up by Y15,000/tonne

Mon Feb 28, 2011 5:48am GMT

TOKYO Feb 28 (Reuters) - Nippon Steel (5401.T: Quote) expects major input costs to rise by more than 15,000 yen ($183.50) per tonne in April-June from the previous quarter, a company official said on Monday.

Due to the rise in input costs, Nippon Steel estimates that a price hike of about 20,000 yen per tonne is necessary for its steel products in general, Kozo Uchida, a senior Nippon Steel executive, told reporters. (Reporting by Yuko Inoue, sourced: Thomson Reuters)

Tags:steelmaking, Kozo Uchida, Japan, steel industry

Iron Ore-Spot prices flat on demand concerns

Mon Feb 28, 2011 3:46am GMT, Reuters

SHANGHAI Feb 28 (Reuters) - Spot prices of iron ore stood unchanged on Monday after slumping 5 percent from mid-February, with Chinese steelmakers expecting prices to fall further on demand uncertainties.

Indian ore with 63.5 percent iron content was quoted in China at $191-193 per tonne including freight, unchanged from last Friday, traders said, but demand remained murky as Chinese steel mills hoping for more falls are refraining from making large bookings.

"We can't tell how the market will go so far. Demand is weak and steel mills still don't want to buy unless steel prices rise strongly," said an iron ore trader in Shanghai.

Last week, steel mills in China stayed on the sidelines of the market and a few deals were sealed with Indian suppliers at below $190 per tonne including freight.

Uncertainty regarding steel demand and prices have triggered more concern among steel mills, who are expecting iron ore prices to break $180 per tonne in the near future.

The benchmark rebar contract for October delivery on the Shanghai Futures Exchange SRBV1 crawled 0.5 pct higher to close at 4,893 yuan ($744.3) per tonne by the midday break from the previous close, but was still near a two-month low.

Three global iron ore indexes also fell last Friday. The Platts' 62 percent iron ore index IODBZ00-PLT dropped for the seventh straight session to $183.5 per tonne, $1.25 lower than the previous close and a the lowest since Jan. 17.

Metal Bulletin's 62 percent index .IO62-CNO=MB edged down $1.72 to $181.86 per tonne, and the Steel Index's 62 percent gauge .IO62-CNI=SI stood unchanged at 184.1 per tonne, both hitting their lowest since Jan. 19. ($1=6.574 Yuan) (Reporting by Ruby Lian and Tom Miles; Editing by Jonathan Hopfner)

Tags:Shanghai Futures Exchange, The Platts iron ore index, Metal Bulletin, The Benchmark rebar contract

Moly Mines resume iron ore shipments at Spinifex Ridge project

Sunday, 27 Feb 2011, proactiveinvestors

Moly Mines said that iron ore shipments has resumed at its Spinifex Ridge project after operations were disrupted by bad weather.

The company said that a ship with 64,472 wet metric tonnes grading about 59% iron has set sail for China. It is one of the first shipments from the Pilbara region in Western Australia, where the Spinifex project is located, since a cyclone forced closure of the ports earlier this week.

Despite disruptions caused by the bad weather, the company said the project’s production rate is now expected to reach 1 million tonnes per annum in early second quarter. The production rate increase was originally planned for July 2011.

For 2011, the company said total iron ore production is budgeted at 0.82 million tonnes at an average free on board cost of AUD 60 to AUD 70 per tonne, before freight costs and government royalties.

Moly Mines also said it has resumed talks to secure the second half of a USD 466 million loan facility from China Export and Import Bank. As part of the loan facility, it received a loan commitment last month of up to USD 250 million from the China Development Bank.

Besides iron ore, the Spinifex Ridge project also contains molybdenum and copper resources.

Baosteel and Rio Tinto exchange ideas on iron ore pricing

Sunday, 27 Feb 2011, Thomson Reuters

China's Baosteel said that it has exchanged ideas with Australia's major miner Rio Tinto on how to improve iron ore pricing, as part of efforts to strengthen cooperation.

Rio Tinto's iron ore head Mr Sam Walsh paid a visit to Baosteel chairman Mr Xu Lejiang on Thursday.

Baosteel traditionally leads other large domestic peers in the annual iron ore price negotiation with three global iron ore miners Rio Tinto, BHP Billiton and Vale.

However, miners decided to abandon the decades old benchmark system in favour of an index based quarterly pricing mechanism since 2009 after failing to reach an agreement with the China Iron & Steel Association.

The new scheme has forced Chinese steel mills to suffer volatile raw materials cost and low profitability. And analysts said China's intransigence in 2009 cost the country billions of dollars.