Ore and More

1. Bloomberg.com: OZ Minerals may cut production at biggest zinc mine
Zinc slumps; OZ dumps? OZ Minerals is considering cutting output at its Century project after profitability drops due to a 25% fall in zinc prices. Zinc prices have fallen 49% this year, forcing mine closures and delaying expansion projects. OZ Minerals was formed on July 1 from Oxiana’s takeover of Zinifex; its stock has dropped 53% since formation.

2. The Hindu: CSE report paints dismal picture of mining areas
India’s Centre for Science and Environment report illustrates the negative effects of country’s mining industry. It is estimated that mining displaced 2.6 million people from 1959-1991, with less than 25% of those people rehabilitated. The report also claims mining opposition has spurred conflict-driven movements such as the Naxalites.

3. The Australian: Aquila pulls asset demerger amid financial crisis
Aquilia Resources scraps plans for demerger of its exploration assets. The Australian miner says such actions will be re-considered at some later stage when the markets have stabilized. The company continues plans to increase annual output of its Isaac Plains coking coal mine. Shares were down less than a percent.

4. International Herald Tribune: Brazil steelmaker CSN sells part of iron ore mine
Asian consortium secures 40% of Namisa iron ore mine. Brazilian steelmaker CSN announced the deal is expected to be finalized on Tuesday. Partners in the sale include Japan’s Itochu Corporation, Nippon Steel, JFE Steel, Sumitomo Metal Industries, Kobe Steel, Nissin Steel, and South Korea’s Posco.

5. The Financial Express: Steel firms flay NMDC move to up iron ore price
Steelmakers express concerns to government over state-run NMDC’s decision to raise iron ore prices as much as 40%. The steelmakers concerns conclude that steelmakers output is already being cut due to slowing demand. The current hike in prices of contract iron ore by NMDC is still 40-45% lower than international contract prices.

6. The Sydney Morning Herald: Citic loses $2.7 billion on dollar gamble
Currency hedges covering Hong Kong’s Citic Pacific’s Western Australian iron ore project turn negative; company warns that decision could rack up more than $2.7 billion in losses. The company is expected to acquire a bailout from parent company Citic Group, allowing the magnetite project development to continue. The unauthorized currency hedging contracts turned sour when the Australian dollar fell below US$0.87, the losses could continue to mount if the Australian dollar continues to slide.

7. Reuters India: India’s SAIL net up, but sees demand slowing
Steel Authority of India reports an 18% rise in September quarter profits; expects lower gains in near future as steel demand and prices were failing. The company mines its own iron ore, but is dependent on imports for nearly three-fourths of its coal requirement. SAIL is also lobbying the government to dispose of the export tax in favor of an import duty.

8. The Canadian Press: FNX Mining suspends commercial production at Levack nickel mine
Nickel mine suspension prompted by low commodity prices and high operating costs. FNX Mining plans to continue work at its Levack mine during the current quarter to produce tonnes for metallurgical testing; all commercial mining has been halted. The company will decide whether to expand the suspension at year’s end. All workers affected by the suspension will be moved to the company’s other operations in the area.

9. Bloomberg.com: Caterpillar net falls 6.4% on higher materials costs
CEO Jim Owens puts off issuing Caterpillar’s 2009 outlook after third quarter profits fall 6.4%; company waits for financial markets to stabilize. The world’s largest maker of bulldozers and excavators saw margins squeezed as the cost for raw materials, including steel and fuel, rose substantially.

10. Australian Broadcasting Corporation: PNG ranks among worst for mining investment
Papua New Guinea ranked 21 out of 25 mining-rich countries in Behre Dolbear and Company’s annual “Where not to invest” report. The country ranked worst for length of permit delays, which Behre Dolbear and Company attributed to corruption in the process. Russia, Bolivia, Indonesia and the Democratic Republic of the Congo were ranked below Papua New Guinea overall.

1. The Telegraph: Tata Steel coal reserves in Africa swell
Tata Steel’s Mozambique coal reserve estimates expand for the second time. The latest survey bumps up estimates by 200 million tonnes, bring total reserves to 2.1 billion tonnes. Tata purchased a 35% stake in the assets for $86 million to service Corus’s European facilities.

2. Live News: Atlas commences mining at Pardoo
Atlas Iron Limited pushing to meet its shipping timetable for early December despite experiencing delays in the approval process for its Pardoo iron ore project. The miner announced that its Pilbara operations have commenced and ore was being stockpiled. Following the announcement, Atlas was removed from a seven-day voluntary suspension on trading after its share dropped 60% since September 1.

3. Reuters: Australia’s Atlas says iron ore demand falling
Atlas is the latest Australian mine to announce detrimental effects of falling demand: for the Perth-based miner, size and timing matter. Atlas is one of few Pilbara region miners attempting start-up operations from smaller deposits. The company, whose government approvals come on the heels of the financial crisis, has yet to finalize sales agreements and must stockpile iron ore until contracts are signed.

4. The Hindu: NMDC hikes domestic iron ore prices by up to 40%
Indian steelmakers caught between a voluntary six-month price hold and 40% increase in iron ore prices from state-run NMDC. The chairman of NMDC announced that its domestic consumers with long-term contracts would have to pay arrears for the price hike from April 1 onwards.

5. Forbes.com: Conservationists, Forest Service buy up mines
In a quest to preserve the Rocky Mountain backcountry, partnerships between conservation groups and the U.S. Forest Service buy mining claims in Idaho’s Frank Church River of No Return Wilderness. The purchases are expected to halt further mining as well as the use of old claims to build mountaintop trophy homes. Similar purchases have recently occurred near Yellowstone National Park and Telluride, Colorado.

6. Bloomberg.com: Copper climbs for second day on dollar’s decline; lead rises
Pennies and pencils get pricier. The falling dollar provokes demand for copper and lead from buyers using other currencies, causing both commodities’ prices to rise. The price forecasts for 2009 commodities have dramatically fallen since the financial crisis began. Copper is now forecasted at a $2.50 a pound average, down from $4.

7. Reuters: Czech NWR to buy 25 pct stake in iron ore firm
An Eastern Bloc affair: Czech coal mining group announces plans to acquire 25% stake in Ukrainian iron ore company. New World Resources sees the purchases as an introduction to the Ukraine market and the country’s reserves. The group will purchase the Ferrexpo iron ore stake for $221.3 million.

8. The Age: Stoking the fire under biggest export earner
A Canadian coking coal miner asks BHP to take an industry lead with a 5% cut in coking coal output and a slowdown on expansion plans. The request comes as BHP is one of the few global miners to ensure record contract prices. Analysts don’t predict BHP will comply with the request, at least not publically, as it is in the midst of European Union anti-monopoly regulation review for its Rio Tinto takeover bid.

9. Neftegaz: Collapse of the Kovykta Deal between Gazprom and TNK-BP
Gazprom’s deal vanishes with a puff of smoke. The Russian company had agreed to purchase a 63% stake in Kovykta gas deposits in June of last year. As licensing concerns over the area mounted, Gazprom grew cautious in investing in assets that potentially had worthless value. The company is now focused on more direct-return investments.

10. Associated Press: Rule advances to ease mining waste dumping
Modifications to U.S. surface mining laws race to completion; they will likely be President Bush’s last major environmental initiative. The purposed rule would allow miners to break the previous 100-foot protective barrier near streams if compliance is determined to be impossible. Environmental groups are fighting against the modifications, which would legitimize mountaintop removal.

1. Reuters: Russia’s Mechel coal, steel output up in September
Russian miner Mechel reveals substantial increases in output since January. The gains were made after acquisitions and plant upgrades. After purchasing coal miner Yakutugol, total coal output rose 54% and coking coal output rose 95%.

2. Bloomberg.com: Nippon, Itochu-led group to take stake in Namisa, Nikkei says
A consortium of Japanese companies plans to buy a 40% stake in Brazilian iron ore producer Nacional Minerios SA. The group includes Nippon Steel Corp., Itochu Corp., JFE Steel Corp., Sumitomo Metal Industries Ltd., Kobe Steel Ltd., Nisshin Steel Co., and Posco. The deal is reportedly worth $3.95 billion.

3. Telegraph: Rio Tinto shares tumble on fears commodities rout will derail BHP Billiton deal
Rio Tinto’s shares fall over concerns that market conditions could disrupt BHP’s takeover attempt. Rio’s shares are trading 25% below the BHP offer of 3.4 shares for one Rio share—the lowest level since the takeover was announced. Rio firmly contends its short-term market position did not change the company’s opposition to the BHP deal.

4. Lusaka Times: Universal Mining Steel plans on course
Universal Mining and Chemical s Limited ties up loose ends in preparation to commence operations at new steel plant. The Zambia Electricity Supply Corporation has installed the plant with sufficient power, enabling equipment to be tested.

5. Telegraph: Chinalco insists Rio Tinto stake is safe
Chinalco’s Rio Tinto stake frozen in Lehman Brothers account; the Chinese state-owned company asked regulators for a quick de-thaw and an orderly transfer of the shares. The company bought a 12% stake in Rio in early February for £7.1 billion. The company claims it is legally entitled to its shares and that the stake cannot be consider part of the general assets of Lehman Brothers International Europe.

6. Reuters: Chile copper mine port strike in second day
Threats of an indefinite strike begin as workers from Chile’s Antofagasta mining port stay off the job for the second day. The workers are demanding higher wages and improved working conditions. Xstrata Copper confirmed that one shipment of copper had been delayed by the strike, but did not expect further delays.

7. ABS-CBN News: Military to protect mining firms from communist attacks-defense chief
Philippine mining communities receive influx of military protection; government troops are being stationed to help secure the mining industry’s development. As the communist rebel movements often extort money from mining firms, the increased military coverage should help dry up rebel funds. The security forces are reportedly for the communities and not for particular mining firms.

8. Bloomberg.com: China steelmakers ask Vale to cut ore rates on demand
Up or down: Vale and Chinese steelmakers can’t see eye-to-eye and won’t settle for a middle ground. The secretary-general of the China Steel and Iron Ore Association announced some mills want to renegotiate prices with Vale. Analysts assume that shirking demand could be a bargaining chip for steelmakers, as cash price of imported iron ore to China dropped 20% last week.

9. Reuters: Financing pinch may squeeze Africa mining projects
African miners prepare for the financial effects from the banking crisis. Analysts warn that governments will need to keep their country’s investment opportunities attractive to bring in and keep capital. Likely side effects include a decrease in available financing and the costs of financing increasing.

10. Cleveland.com: New name, new logo for Cliffs
Cleveland falls off Cliffs, name change ushers in sleeker attitude and fewer syllables. A spokesperson said the change is a reflection of the company’s evolution. The company announced its intention to drop the 117-year-old moniker during plans to purchase Alpha Natural Resources, a coal mining company.

1. Reuters: Vale cuts iron ore supply to a Chinese mill-Merrill
Vale tightens its iron grip, pressures Chinese steel mills to accept 12% price rise. The Brazilian miner suspended its iron ore supply to Jinan Iron and Steel. Jinan is expected to be able to operate without Vale’s supply for 20-30 more days. Negotiations for next year’s contract prices are expected to begin in late October.

2. The Sydney Morning Herald: Shares KO’d
Australian stocks tumble; market falls below 4,000 points with a one-day loss in value of 6.7%. The decrease follows Monday’s rally up 5.6% after coordinated government announcements. The materials sector slumped, losing 12%, led by mining giant Rio Tinto’s 16% loss. The Rio Tinto sell-off comes after reports that China’s Chinalco may be forced to drop its Rio stake due to financial troubles.

3. The North Jefferson News: Kimberly mining trials begins
Alabama court begins trial on Kimberly mining issues. RJR Mining Company is pitted against the Jefferson County Board of Zoning Adjustments. RJR is appealing a zoning decision that denied the company the right to strip mine an 89-acre plot. The county claims the mine would create unsafe conditions and lower property values.

4. The Economic Times: Tata’s Corus seen benefiting from Vale iron ore deal
Corus sees opportune time to make iron ore contract deal. Corus, which was acquired by Tata Steel last year, has signed a five-year, 63 million tonne contract with Vale. The European steelmaker believes the timing of contracts is beneficial because the price of iron ore has fallen sharply in the last few months. Tata Steel has yet to start production at its iron ore mines on the Ivory Coast.

5. Reuters: Chile Codelco profit to fall on copper price drop-paper
The world’s largest copper producer, Codelco, expects profits to fall sharply in the next few years: down to 1/10 of record profit levels in 2006 and 2007. The Chilean miner predicts profits might be as low as $808 million in 2012. Analysts predict the recent sharp falls in copper prices could signal the end to an extended cycle.

6. Telegraph: Rio Warning on Chinese growth adds to mining gloom
Rio Tinto reviews capital spending plans as it accepts the likelihood of a slowing Chinese economy. Chief Tom Albanese counters his current caution with positive long-term expectations. In light of the financial markets, the company plans to divest at least $15 billion in assets in total to allow it to pay down debt.

7. The Australian: Coal & Allied Q3 coal output 4.41 million tonnes
Rio Tinto subsidiary Coal & Allied reported its third quarter coal production of 4.1 million tonnes is in line with previous corresponding periods. The miner’s second quarter production was lower due to a temporary shutdown for plant maintenance.

8. Guardian: Baltic sea freight index falls to 5-1/2 year low
London-based Baltic Exchange’s dry sea freight index is sinking slowly, hitting a five-and-a-half-year low. The troubled freight prices are expanding evidence that the financial crisis has filtered into the real economy. Ocean freight costs to move dry resources have fallen 86% since May’s record prices.

9. Reuters: Ferrexpo postpones project decision, Q3 output up
Ukrainian iron ore producer Ferrexpo defers investment decisions, deciding to wait to make final decisions at the end of the first quarter of 2009. Ferrexpo is interested in acquiring a joint venture partner for the projects, with negotiations and valuations expected to start in mid-November.

10. Bloomberg.com: Sterlite won’t complete Asarco deal without price reduction
Bankrupt copper producer Asarco is warned it must drop hundreds of millions of dollars off its sale price before proposed buyer Sterlite Industries commits. Asarco was trying to sell itself to the Mumbai-based miner in order to exit bankruptcy court protection. The ultimatum came after the recent credit crisis and metal price drop.

1. Bloomberg.com: Fortescue jumps as investors deem declines excessive
Actions by U.S. and European governments to shore up banks boost mining optimism; Fortescue Metals Group jumps the most in almost six years. The Australian miner rose 55% up to A$1.55 a share. Fortescue has plans for A$7 billion expansion to increase exports.

2. Australian Broadcasting Corporation: Mining company seeks review of Kokoda license
Frontier Resources seeks answers to why their exploration license near the Kokoda Track was denied renewal from Papua New Guinea’s Mineral Resources Authority. The Australian miner is seeking for the decision to be overturned by the Government of Papua New Guinea. The company had plans for a copper mine near the southern end of the path.

3. BBC: Copper mining deal falls through
Western Metals abandons plans to restart zinc and copper mine at Parys Mountain on Anglesey in north Wales. The company tentatively agreed to pay 14 million pounds for the project in April pending a feasibility study. The current mine owner, Anglesey Mining, confirmed that negotiations on the matter have ceased.

4. The Age: China “still timely” with pay
The credit crisis has yet to affect China’s ability to make payments for iron ore shipments. The traditional method for payment, letters of credit, has tightened, making the costs to import products rise. Fortescue Metals confirmed that it had received all the outstanding payments since the start of the month.

5. Lloyd’s List: Dry bulk set to rebound next month
Ship operators and brokers hope dry freight rates will rise from their three-year low by November. ICAP Shipping’s quarterly report forecast the rebound. The report counters the rebound with futures falls, expecting rates to soften the second half of 2009 and continue to decrease into 2010.

6. Reuters: Weak home currency keeps Australian mines churning
Australian miners shrug off economic worries, maintaining production plans and thriving as the Australian dollar drops. The Australian dollar has fallen 25% since July, at which point the currency was nearly equal to the U.S. dollar. Commodity prices in Australian dollars are less bleak than those prices in U.S. dollars.

7. Business Mirror: SE Asian countries urged to let mining sector spur economic growth amid world financial crisis
In moments of Western financial weakness, Philippine Environment Secretary Lito Atienza called upon Southeast Asian countries to jointly improve the region’s mining sector. The keynote address was given during the opening ceremonies at the 9th Association of Southeast Asian Nations (Asean) Senior Officials Meeting on Minerals. The secretary supports Asean countries taking advantage of the world economic conditions by using their mineral resources, shielding themselves from the economic crisis.

8. Reuters: South Africa to decide Thursday on government-owned mine firm
South Africa considers strengthening state-owned mining company and denies aspirations to nationalize country’s mining assets. It is not known which sector state-owned African Exploration, Finance, and Mining Corporation would focus its operations in. Also under consideration is how the state-owned company should interact with private firms: either directly as joint miner or indirectly as a shareholder.

9. The Age: Hillgrove nabs Kanmantoo mining license
Kanmantoo mining operations secure lease but push back expected start date to 2010 as Hillgrove Resources settles its financing options. Hillgrove has enlisted Merrill Lynch to define the project’s best financing avenue. Kanmantoo, located in South Australia, is expected to produce 17,000 tonnes of copper and 8,000 tonnes of gold on an annual basis

10. Reuters India: MMTC says iron ore exports fall, outlook bleak
Indian iron ore trading firms struggle to find buyers. The largest state-run trading firm, MMTC, described its export prospects as bleak. China is India’s biggest iron ore customer, consuming 100 million tonnes of ore each year. Spot prices from India have fallen 50% from December 2007 prices.

1. Bloomberg.com: Rio’s iron ore unit faces further industrial action
Union head touts Saturday’s strike as “commencement of campaign.” Eleven out of 12 Rio Tinto train drivers took part in the 12-hour strike in Western Australia. Analysts speculate that more industrial action is likely as unions attempt to bolster their position. Rio announced that the trains ran on a normal schedule with no delays.

2. Reuters: African states play tough with iron ore investors
African countries are preparing for a mining industry surge and setting terms for the industry’s growth. In Guinea, a fight for control of Rio Tinto’s Simandou iron ore project has put the government at odds with Rio as the country has tried to ensure a significant share of the project’s profits. African countries are using a wide variety of approaches to harness foreign mining companies’ power.

3. The Age: Strain on iron ore prices
Iron ore oversupply drives contract prices lower; analysts expect Rio Tinto and BHP Billiton to cut annual contract prices because spot prices are lower. It would be the first time in seven years that contract prices have not been raised. Contract talks traditionally begin in October, with new prices coming into effect on April 1.

4. The Times of India: Anti-mining protests in south Goa
Police have their hands full with anti-mining protests after new mining leases in the South Goan region resparked protests. Villagers and activists blocked the passage of trucks carrying iron ore.

5. The Australian: Aquila Resources merger put on hold
Aquila Resources puts asset sales and merger talks on hold. The company is taking time to reevaluate its position in light of economic conditions, looking to hold out until financial markets eases. Despite demand concerns, Aquila’s chief executive Tony Poli remained confident for the bulk commodities market.

6. Times Online: Funds battered as commodities bubble bursts
Analysts warn of a popped commodities bubble, investors nurse losses of up to 50%. Oil closed at $77.70 last week, the first time below $80 in a year. Metals, agricultural commodities, and livestock prices have each fallen more than 30% from highs earlier this year.

7. Herald Sun: Fortescue Metals Group to toughen up on steelmakers
Fortescue Metals Group vies for a spot in the big league as the weak Australian dollar boosts the miner’s cash and newly appointed senior industry figures boost reputation. Own Hegarty and Ian Burston were named as non-executive directors. Burston’s position is expected to strengthen relationships with Chinese and Japanese steelmakers.

8. Reuters: Manila delays mining investment target amid turmoil
The Philippines is reexamining mining targets in light of the economic slowdown and financial turmoil. Original mining targets included drawing in $1 billion in mining investments in 2008 and $10 billion by the year 2012. Smaller mining companies are expected to have a particularly difficult time financing new projects. The country announced its mining targets will be delayed by at least a year.

9. The Salt Lake Tribune: No trespassing, Kennecott: Mayor tells company to stay out of public’s open space
Kennecott denied probing access on public’s open space, Mayor Peter Corroon threatens trespassing charges. Salt Lake County owns the areas under interest. The copper miner is appealing to the Bureau of Land Management for access to its mining claims. Open space advocates and Corroon argue previous exploration work lasted longer than expected.

10. Bloomberg.com: Rusal’s Guinea mine doesn’t ship bauxite after demonstrations
A barricade of demonstrators block rail lines, prohibiting United Co. Rusal from making planned bauxite shipments last week. Protestors are upset that electricity isn’t being supplied to the nearby villages. Guinea is the world’s biggest exporter of bauxite.

1. Bloomberg.com: BHP, Rio face 10% fall in iron ore sales this year, ANZ says
Analysts predict a 10% sales drop this year for BHP Billiton and Rio Tinto as a result of dropping Chinese demand. Further estimates place China’s demand down by 52 million tonnes, with nearly 36% coming from Australia. Both Rio and BHP spokespersons claim shipments of iron ore have remained normal.

2. The Australian: Pilbara strike action ‘like pilots’ dispute”
Mining chiefs call foul on train drivers’ planned stoppages, relating the strike to the 1989 airline pilots’ strike and warning of the effects of continuing industrial disputation. The train drivers are among the industry’s highest-paid employees, making between A$160,000 and A$210,000 a year. The union is seeking to guarantee wage increases around 5-6%.

3. Reuters: High acid prices add pressure to miners’ margins
Sulphuric acid prices burn through miners’ margins. The record prices for the acid, used in the production of copper, further exaggerate the financial concerns of copper producers who are already struggling with low copper prices. Analysts predict the sulphuric acid benchmark could be set to $300-$350 per tonne, a substantial increase from the $65 per tonne in 2007.

4. Bloomberg.com: Perth mint doubles gold production as investors crave security
Perth mint open after-hours: production runs late to double output in gold bullion. The credit crisis has pushed the global demand for gold which is widely seen as a safe investment. Gold for immediate delivery has increased 10% in the past week.

5. The Herald: Tycoons’ fortunes tumble as richest man loses £20 billion
Mining tycoon Lakshmi Mittal looses roughly the equivalent of the Dominican Republic’s GDP in current financial turmoil. Mittal has lost £20 billion over the past four months, with his biggest losses in Arcelor Mittal Steel and as a major holder in Goldman Sachs.

6. Indian Express: Tata Steel pushes for private poker in government coal
Tata Steel seeks government assistance to make strategic investments in state-owned Coal India Ltd. The Indian steelmaker encouraged public-private partnerships to open new coking coal mines that are currently in the Coal India domain. Tata believes that the coal producers could be more efficient with the assistance of steel producers.

7. Reuters: Russian Copper Company freezes zinc, nickel projects
The Russian Copper Company is shelving proposed projects until economy regains footing. Separate projects to expand into nickel and to build a zinc plant have been postponed. There are no closures expected for the miner’s current projects.

8. Bloomberg.com: Uranium One Dominion mineworkers strike for third day
Uranium workers disregard several ultimatums and continue their illegal strike at a South African mine. Uranium One Inc. struggles to regain production after nearly 2,000 workers, 80% of its work force, were encouraged to strike following the dismissal of former employees. The company’s stock has fallen 85% since the beginning of 2008.

9. Pittsburgh Post-Gazette: Denied his coal mine, Whitehall businessman sues for gold mine
After Nello Fiore’s proposed coal mine was not approved by lawmakers, the founder of Green Vue Systems filed a lawsuit seeking $102 million from Allegheny County to recoup his mineral rights losses. The county owns the surface rights to the land.

10. Reuters India: Manila plans new tactic to speed mining projects
The Philippines’ natural resources minister believes a new initiative to pair foreign mining companies with the government could lead to significant improvements in the country’s mining industry. The minister envisions agreements in which the government takes a 40% stake in the enterprises. The partnerships would help speed up the government approval processes, cut down on red tape, and help control local opposition.