B08 Metal Ore Mining

Chinese deal with Vale can cut BHP both ways

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Original article by John Kehoe
The Australian Financial Review – Page: 20 : 23-Jun-16

A Bloomberg report has suggested that Vale could seek to raise up to $US7bn by selling a minority stake in its iron ore assets to Asian investors, most likely from China. On one hand, BHP Billiton would welcome such a deal, as its Samarco iron ore joint venture with Vale must renegotiate US3.8bn worth of debt, while Vale’s own debt pile totals $US23bn. On the other hand, Vale’s strategic investor may have a vested interest in trying to push the iron ore price down, particularly if they are also a buyer of iron ore.

CORPORATES
VALE SA, BHP BILLITON LIMITED – ASX BHP, SAMARCO MINERACAO SA, BLOOMBERG LP, RIO TINTO LIMITED – ASX RIO, ALUMINIUM CORPORATION OF CHINA LIMITED

Rio Tinto spin-off not likely

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Original article by James Thomson
The Australian Financial Review – Page: 17 & 22 : 23-Jun-16

Paul Gait of Alliance Bernstein estimates that Rio Tinto’s newly-created energy and minerals division could be worth $US5.8bn to $US9.2 billion if it was spun off. He says Rio’s restructuring could indicate that it is considering a demerger. The energy and minerals division will comprise assets such as coal, uranium and titanium projects, plus Rio’s iron ore mines in Canada. Peter O’Connor of Shaw & Partners has downplayed the prospects of a demerger, and suggests that Rio is more likely to sell its Queensland metallurgical coal mines in the near-term.

CORPORATES
RIO TINTO LIMITED – ASX RIO, ALLIANCEBERNSTEIN HOLDING LP, SHAW AND PARTNERS LIMITED, BHP BILLITON LIMITED – ASX BHP, SOUTH32 LIMITED – ASX S32, ANGLO AMERICAN PLC, MACQUARIE SECURITIES PTY LTD, JP MORGAN AND COMPANY INCORPORATED, BARCLAYS BANK PLC

Rio’s Harding departs in sweeping executive restructure

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Original article by James Thomson, Tess Ingram
The Australian Financial Review – Page: 15 : 22-Jun-16

Rio Tinto has advised that Chris Salisbury will replace Andrew Harding as the head of its iron ore division. Harding’s departure is part of a broader restructuring at Rio Tinto as it transitions to new CEO Jean-Sebastien Jacques. Joanne Farrell will become the MD of Rio Tinto’s Australian operations, as well as group executive for health, safety and environment. Arnaud Soirat will be CEO of copper and diamonds, and Alan Davies takes on the role of CEO of energy and minerals. Harding had been a candidate to succeed Sam Walsh as Rio Tinto CEO.

CORPORATES
RIO TINTO LIMITED – ASX RIO, PENGANA CAPITAL LIMITED, FORTESCUE METALS GROUP LIMITED – ASX FMG, BHP BILLITON LIMITED – ASX BHP

Commodities glut will last 10 years, says BHP

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Original article by John Kehoe
The Australian Financial Review – Page: 18 : 22-Jun-16

BHP Billiton CEO Andrew Mackenzie says factors such as a low cost base means the group is in a better position to ride out the downturn in commodity prices than many rivals. He has forecast that the global oversupply of key commodities could to persist for about 10 years due to the big increase in capital investment during the resources boom. Mackenzie adds that demand and supply of iron ore in particular is likely to be take a long time to return to balance.

CORPORATES
BHP BILLITON LIMITED – ASX BHP, RIO TINTO LIMITED – ASX RIO, VALE SA, ASIA SOCIETY

Fortescue unperturbed by reports of Vale talks

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Original article by Tess Ingram
The Australian Financial Review – Page: 15 : 21-Jun-16

A Bloomberg report has suggested that Brazil’s Vale may sell a stake in its iron ore assets to Asian investors for up to $US7bn. Australian-listed Fortescue Metals Group has downplayed the likely impact of such a deal on its proposed iron ore blending joint venture with Vale. A Fortescue spokesman has reiterated that the group hopes to commence marketing the blended product to Chinese customers in the second half of 2016.

CORPORATES
FORTESCUE METALS GROUP LIMITED – ASX FMG, VALE SA, BELL POTTER SECURITIES LIMITED

Gold deals tipped to heat up in West Africa

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Original article by Tess Ingram
The Australian Financial Review – Page: 18 : 21-Jun-16

Shares in Australian-listed Gryphon Minerals finished 22.2 per cent higher at $A0.165 on 20 June 2016, in response to a takover bid from Teranga Gold. Both companies have gold projects in West Africa, and Scott Williamson of Hartleys anticipates further consolidation among gold players with a presence in the region. Duncan Hughes of Somers & Partners expects North American miners in particular to target West Africa-focused Australian gold producers.

CORPORATES
GRYPHON MINERALS LIMITED – ASX GRY, TERANGA GOLD CORPORATION – ASX TGZ, HARTLEYS LIMITED, SOMERS AND PARTNERS PTY LTD, PERSEUS MINING LIMITED – ASX PRU, AMARA MINING, ENDEAVOUR MINING CORPORATION, TRUE GOLD MINING, RESOLUTE MINING LIMITED – ASX RSG, WEST AFRICAN RESOURCES LIMITED – ASX WAF, CARDINAL RESOURCES LIMITED – ASX CDV

Pressure on lower grade iron ore miners as discount widens

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Original article by Tess Ingram, James Thomson
The Australian Financial Review – Page: 17 : 16-Jun-16

The benchmark spot price of iron ore has shed 23 per cent since the start of May 2016. Meanwhile, the discount on lower-grade iron ore has increased from 9.8 per cent in early January to 21 per cent in mid-June, after peaking at 26 per cent in late May. Peter O’Connor of Shaw & Partners says the widening price discount is having a big impact on producers of lower-grade iron ore.

CORPORATES
SHAW AND PARTNERS LIMITED, FORTESCUE METALS GROUP LIMITED – ASX FMG, MORNINGSTAR PTY LTD, AUSTRALIA AND NEW ZEALAND BANKING GROUP LIMITED – ASX ANZ

Lessons learnt, says Citic’s chief as sole focus now on Sino Iron future

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Original article by Tess Ingram
The Australian Financial Review – Page: 28 : 14-Jun-16

The cost of developing the Sino Iron magnetite project in Western Australia is believed to have blown out to around $US12bn ($A16.2bn). However. Citic Pacific Mining CEO Chen Zeng has declined to comment on the cost of the project, which Citic bought for $US415m in 2006. The Sino Iron project has been affected by a long-running legal dispute, while the iron ore price has fallen significantly since shipments commenced in late 2013.

CORPORATES
SINO IRON PTY LTD, CITIC PACIFIC MINING MANAGEMENT PTY LTD, MINERALOGY PTY LTD, METALLURGICAL CORPORATION OF CHINA LIMITED, CITIGROUP PTY LTD, PATERSONS SECURITIES LIMITED

Mining capex slump ‘only half finished’

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Original article by Mark Mulligan
The Australian Financial Review – Page: 31 : 14-Jun-16

National Australia Bank notes that capital expenditure in the mining sector has fallen to around 4.5 per cent of GDP, compared with eight per cent at the height of the resources boom. The bank expects capex to reach a low of just 1.5 per cent of GDP by 2018. NAB also notes that the downturn in employment in the mining sector has been slower than anticipated, although this is expected to gather pace in coming years with the loss of a net 50,000 by 2019.

CORPORATES
NATIONAL AUSTRALIA BANK LIMITED – ASX NAB, AUSTRALIAN BUREAU OF STATISTICS

O’Keefe ready to ride iron ore’s upswing

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Original article by Brian Robins
The Sydney Morning Herald – Page: 23 : 13-Jun-16

Champion Iron chairman Michael O’Keefe hopes the iron ore group can replicate the success he had at coal producer Riversdale Mining, which Rio Tinto bought for $A4bn during the resources boom. Champion Iron was created via the merger of Australian-listed Mamba Minerals and Canada’s Champion Mines. The group paid $C10.5m for the Bloom Lake iron ore project, which boasts 66 per cent iron. In contrast, most Australian iron ore has an iron content of 62 per cent or less. O’Keefe has targeted late 2017 for the first shipment from Bloom Lake.

CORPORATES
CHAMPION IRON LIMITED – ASX CIA, RIO TINTO LIMITED – ASX RIO, RIVERSDALE MINING LIMITED, CLIFFS NATURAL RESOURCES INCORPORATED, IRON ORE COMPANY OF CANADA