B08 Metal Ore Mining

Write-downs in mining nearly erase deal value

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Original article by Mark Mulligan
The Australian Financial Review – Page: 27 : 24-Jun-15

Citigroup has warned that there may be further asset impairment charges in the global mining industry, particularly in the metallurgical and coking coal sector. The firm estimates that around 90 per cent of the value of mergers and acquisitions transacted by large mining groups since 2007 has been written off. Aluminium, iron ore and nickel assets have generated the most impairment charges over the last eight years, while Rio Tinto has the highest level of impaired assets.

CORPORATES
CITIGROUP INCORPORATED, RIO TINTO LIMITED – ASX RIO, ANGLO AMERICAN PLC, VALE SA, ALCAN INCORPORATED

BHP-Rio face US opposition to copper mine expansion

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Original article by John Kehoe
The Australian Financial Review – Page: 13 & 18 : 22-Jun-15

The proposed Resolution Copper project in Arizona remains uncertain due to a push to overturn legislation passed by the US Congress for a land-swap deal. Rio Tinto holds a 55 per cent stake in the Resolution Copper joint venture and BHP Billiton holds the remainder. A group of House of Representatives members has introduced legislation to nullify the land-swap, while Apaches object to the project as it is on land adjacent to a sacred site.

CORPORATES
RIO TINTO LIMITED – ASX RIO, BHP BILLITON LIMITED – ASX BHP, RESOLUTION COPPER MINING LLC, REPUBLICAN PARTY (UNITED STATES), DEMOCRATIC PARTY (UNITED STATES), UNITED STATES. DEPT OF THE INTERIOR

South32 faces earnings slide, growing pains hit

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Original article by Peter Ker
The Australian Financial Review – Page: 15 : 22-Jun-15

Shares in BHP Billiton spinoff South32 fell by $A0.07 to close at $A1.96 on 19 June 2015, at the stock’s lowest level since its sharemarket debut in mid-May. Sentiment toward South32 has been hit by a slump in the prices of the commodities that it produces, with the spot price of copper falling to its lowest level since 2008. Some observers argue that many of the benefits arising from the demerger – for both South32 and BHP – may not be realised for a number of years.

CORPORATES
SOUTH32 LIMITED – ASX S32, BHP BILLITON LIMITED – ASX BHP, SHAW STOCKBROKING LIMITED, BLUESCOPE STEEL LIMITED – ASX BSL, LIBERUM CAPITAL LIMITED, ABERDEEN ASSET MANAGEMENT LIMITED, RIO TINTO LIMITED – ASX RIO

Iron ore price hits wall of steel

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Original article by Vanessa Desloires
The Australian Financial Review – Page: 25 : 19-Jun-15

The price of iron ore was trading at $US61.51 per tonne on 18 June 2015, having peaked at $US65.61 in the previous week. National Australia Bank regards $US60 per tonne as a fair price for the steel input given current market conditions, while Fraser Phillips of RBC Capital Markets does not expect the recent gains in the iron ore price to be maintained unless demand for steel improves.

CORPORATES
NATIONAL AUSTRALIA BANK LIMITED – ASX NAB, RBC CAPITAL MARKETS, WESTPAC BANKING CORPORATION – ASX WBC, MACQUARIE CAPITAL PTY LTD, DALIAN COMMODITY EXCHANGE, SHANGHAI FUTURES EXCHANGE

Rio urges long game on China iron ore need

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Original article by Peter Ker
The Australian Financial Review – Page: 17 : 19-Jun-15

China’s production of crude steel fell by 1.7 per cent in the March 2015 quarter, with a slowdown in the nation’s residential property market adversely affecting demand for steel. Andrew Harding, the CEO of Rio Tinto’s iron ore division, forecasts that demand for steel in China will remain subdued for the next few years. However, he is upbeat about the outlook for both iron ore and steel in the long-term, due to future strong demand in China and other parts of Asia.

CORPORATES
RIO TINTO LIMITED – ASX RIO, BHP BILLITON LIMITED – ASX BHP, CHINA IRON AND STEEL INDUSTRY ASSOCIATION, ATLAS IRON LIMITED – ASX AGO, BC IRON LIMITED – ASX BCI

ERA shares tank as prospects cut

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Original article by Peter Ker
The Australian Financial Review – Page: 15 : 16-Jun-15

Shares in Energy Resources of Australia (ERA) shed 25.4 per cent on 15 June 2015, closing at $A0.50. This followed a large sell-off in the previous trading session, after the uranium miner advised that it will not proceed with the Ranger 3 Deeps expansion of its Ranger mine in the Northern Territory. Glyn Lawcock of UBS believes that there is almost no chance that ERA will resume mining at Ranger.

CORPORATES
ENERGY RESOURCES OF AUSTRALIA LIMITED – ASX ERA, UBS HOLDINGS PTY LTD, RIO TINTO LIMITED – ASX RIO, ROYAL BANK OF CANADA, PALADIN ENERGY LIMITED – ASX PDN

Fitch revises ratings for BHP, Rio

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Original article by Rose Powell
The Australian Financial Review – Page: 21 : 12-Jun-15

Fitch Ratings has maintained BHP Billiton’s "A+" credit rating, but the resources group’s long-term issuer rating has been downgraded from "stable" to "negative". The firm has cited factors such as a likely decline in BHP’s free cash flow following the demerger of South32. Meanwhile, Fitch has retained Rio Tinto’s "A+" rating and upgraded the group’s outlook from "negative" to
"stable". Fitch expects the price of iron ore to average $US50 per tonne in 2015-16.

CORPORATES
FITCH RATINGS LIMITED, BHP BILLITON LIMITED – ASX BHP, RIO TINTO LIMITED – ASX RIO, SOUTH32 LIMITED – ASX S32, ANGLO AMERICAN PLC

South32 faces first asset impairment

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Original article by Peter Ker
The Australian Financial Review – Page: 15 : 10-Jun-15

Australian-listed South32 is reviewing the valuation its 60 per cent stake in the Samancor manganese joint venture, prompting speculation of a potential asset write-down. Deutsche Bank has estimated that South32’s manganese operations will account for 11 per cent of the BHP Billiton spin-off’s EBITDA for fiscal 2016. South32 shares closed $A0.05 lower at $A2.09 on 9 June 2015.

CORPORATES
SOUTH32 LIMITED – ASX S32, BHP BILLITON LIMITED – ASX BHP, ANGLO AMERICAN PLC, DEUTSCHE BANK AG

Iron ore rally is short-lived and self-defeating: Goldman

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Original article by Rose Powell
The Australian Financial Review – Page: 19 : 10-Jun-15

Iron ore was trading at $US64.34 per tonne on 9 June 2015, compared with $US47 in April. However, Christian Lelong of Goldman Sachs remains bearish about the outlook for the steel input, forecasting that it will retreat to less than $US50 per tonne in the next three years. Chris Drew of Royal Bank of Canada also does not expect iron ore’s recent price gains to be sustained, citing factors such as a looming increase in supply in China.

CORPORATES
THE GOLDMAN SACHS GROUP INCORPORATED, ROYAL BANK OF CANADA, BHP BILLITON LIMITED – ASX BHP, VALE SA

Glencore still harbours desires for Rio Tinto

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Original article by Amanda Saunders
The Australian Financial Review – Page: 13 & 18 : 5-Jun-15

A merger with Rio Tinto remains on the agenda for Glencore, although the group has indicated that it would also favour acquiring Rio’s iron ore or coal divisions. Peter Freyberg, the head of Glencore’s coal division, has highlighted the potential synergies arising from thermal coal acquisitions or joint ventures in the Hunter Valley region of New South Wales.

CORPORATES
RIO TINTO LIMITED – ASX RIO, GLENCORE PLC, PEABODY ENERGY AUSTRALIA COAL PTY LTD, BHP BILLITON LIMITED – ASX BHP, THE MELBOURNE MINING CLUB