B08 Metal Ore Mining

Fortescue chair Forrest’s dividend hit

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Original article by Peter Ker
The Australian Financial Review – Page: 18 : 20-Aug-18

Fortescue Metals Group posted a net profit of $US2.09bn in 2016-17, but the consensus of analysts is that its profit for 2017-18 will be around 49 per cent lower. JPMorgan is more bearish, forecasting that Fortescue’s net profit could fall by up to 59 per cent to just $US856m. The firm expects Fortescue to announce a full-year dividend of $0.20 per share, following an interim dividend of $0.11. Company founder and chairman Andrew Forrest received $467m worth of dividend payments in 2016-17, but this could fall to just $207.7m in 2017-18 based on JPMorgan’s numbers.

CORPORATES
FORTESCUE METALS GROUP LIMITED – ASX FMG, JP MORGAN AUSTRALIA LIMITED, GLENCORE PLC, WHITEHAVEN COAL LIMITED – ASX WHC, MINERAL RESOURCES LIMITED – ASX MIN, EVOLUTION MINING LIMITED – ASX EVN, NORTHERN STAR RESOURCES LIMITED – ASX NST, HANCOCK PROSPECTING PTY LTD

BHP royalties to soften cost spike for Iluka

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Original article by Brad Thompson
The Australian Financial Review – Page: 28 : 17-Aug-18

Iluka Resources has posted a 2018 interim net profit of $126m and EBITDA of $279m. The mineral sands producer has advised that the cost of expanding its rutile assets in Sierra Leone could be 40-60 per cent higher than forecast, with the Sembehun deposit accounting for the bulk of the expected cost overrun. Operating costs at the Sierra Rutile assets are also forecast to exceed previous guidance. Iluka also receives royalty payments from BHP Billiton’s Mining Area C iron ore operations.

CORPORATES
ILUKA RESOURCES LIMITED – ASX ILU, SIERRA RUTILE LIMITED, BHP BILLITON LIMITED – ASX BHP

Restart at Koolan has Mt Gibson in sweet spot

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Original article by Peter Ker
The Australian Financial Review – Page: 20 : 16-Aug-18

Mount Gibson Iron has reported a 2017-18 net profit of $99.1m, with insurance proceeds arising from a seawall collapse at the Koolan Island mine contributing $64m to the result. The mine is expected to resume shipments within six months, more than four years after the incident put production on hold. Mount Gibson will benefit from a strong rise in the premium for higher-grade iron ore in the intervening years; ore with 65.5 per cent iron content such as that produced at Koolan Island is now fetching a premium of around 30 per cent to the benchmark price, compared with 3-5 per cent at the time of the collapse.

CORPORATES
MOUNT GIBSON IRON LIMITED – ASX MGX, VALE SA, KUMBA RESOURCES LIMITED, BHP BILLITON LIMITED – ASX BHP, RIO TINTO LIMITED – ASX RIO, FORTESCUE METALS GROUP LIMITED – ASX FMG, UBS HOLDINGS PTY LTD

Union fury as BHP sends South Flank steel work offshore

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Original article by Sean Smith
The West Australian – Page: Online : 15-Aug-18

BHP Billiton has attracted criticism for awarding a steel contract associated with its South Flank iron ore project in the Pilbara to China’s Tianjin BOMESC Offshore Engineering Company. BHP has indicated that it was necessary to give the steel fabrication contract to an offshore company to ensure that the work is completed on time. Steve McCartney, the state secretary of the Australian Manufacturing Workers’ Union, says local steel fabricators should have been given the contract, adding that Premier Mark McGowan should intervene.

CORPORATES
BHP BILLITON LIMITED – ASX BHP, TIANJIN BOMESC OFFSHORE ENGINEERING COMPANY LIMITED, AUSTRALIAN MANUFACTURING WORKERS’ UNION, WESTERN AUSTRALIA. DEPT OF THE PREMIER AND CABINET

RBA tips lithium, copper export boom

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Original article by Perry Williams
The Australian – Page: 19 : 13-Aug-18

Australia accounts for 12 per cent of the world’s copper reserves, along with around 25 per cent of global lithium reserves. The Reserve Bank of Australia predicts that exports of these commodities will increase to meet rising demand for renewable energy generation and electric vehicles. The RBA forecasts that lithium exports will triple over the next five years. However, the outlook for iron ore is not so clear, with demand from Chinese steel makers viewed as being somewhat mixed.

CORPORATES
RESERVE BANK OF AUSTRALIA, BHP BILLITON LIMITED – ASX BHP, RIO TINTO LIMITED – ASX RIO, FORTESCUE METALS GROUP LIMITED – ASX FMG

Lawyers sniff a settlement out of BHP

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Original article by Peter Ker
The Australian Financial Review – Page: 22 : 10-Aug-18

BHP Billiton has agreed to settle a class action launched by US shareholders over losses arising from the Samarco iron ore tailings dam collapse in Brazil. BHP has offered to pay $US50m ($67.2m) in compensation to settle the case, although it will not admit any liability for the disaster. Brett Spiegel of Australian law firm Phi Finney McDonald says its class action is based on similar underlying issues, adding that the US settlement has vindicated his firm’s contention that BHP had misled investors and failed to comply with disclosure requirements.

CORPORATES
BHP BILLITON LIMITED – ASX BHP, SAMARCO MINERACAO SA, PHI FINNEY McDONALD PTY LTD, FEDERAL COURT OF AUSTRALIA, MAURICE BLACKBURN PTY LTD, HERBERT SMITH FREEHILLS PTY LTD

Fortescue out of kilter on discounts

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Original article by Matthew Stevens
The Australian Financial Review – Page: 30 : 9-Aug-18

Fortescue Metals Group CEO Elizabeth Gaines maintains that the price discount for lower-grade iron ore is cyclical rather than structural. The general consensus among iron ore producers is that the price gap will be sustained, with executives from Rio Tinto and Vale recently expressing the view that Chinese steel mills will continue to favour higher-grade ore. The benchmark price of iron ore rose by almost three per cent on 7 August, to almost $US70 per tonne.

CORPORATES
FORTESCUE METALS GROUP LIMITED – ASX FMG, RIO TINTO LIMITED – ASX RIO, VALE SA, BHP BILLITON LIMITED – ASX BHP, CITIGROUP INCORPORATED

FMG sees end in sight to discounting

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Original article by Brad Thompson
The Australian Financial Review – Page: 18 : 8-Aug-18

Fortescue Metals Group CEO Elizabeth Gaines has told the Diggers & Dealers forum in Kalgoorlie that the pure-play iron ore miner still considers the price discount for lower-grade ore to be cyclical. She said the price gap will eventually narrow, although it is too soon to know when this will occur. Gaines also said Fortescue could seek a seat on Atlas Iron’s board after choosing to retain a stake in the takeover target. She added that Fortescue expects to participate in the consultation process regarding the development of new South West Creek berths at Port Hedland.

CORPORATES
FORTESCUE METALS GROUP LIMITED – ASX FMG, ATLAS IRON LIMITED – ASX AGO, DIGGERS AND DEALERS FORUM, BHP BILLITON LIMITED – ASX BHP, RIO TINTO LIMITED – ASX RIO, MINERAL RESOURCES LIMITED – ASX MIN, ROY HILL HOLDINGS PTY LTD

Golden age of mining returns may be hard to sustain

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Original article by Peter Ker
The Australian Financial Review – Page: 11 & 16 : 7-Aug-18

The proceeds of large Australian miners’ asset sales will boost shareholders’ returns in 2018, but Plato Investment Management MD Don Hamson cautions that investors must lower their future expectations. He argues that miners have limited scope to maintain high returns via asset sales, and the "golden age" for shareholders must end. However, Camille Simeon of Aberdeen Standard Investments and Brenton Saunders of Pendal Group contend that large miners such as BHP can keep rewarding investors by constantly refreshing their portfolios.

CORPORATES
PLATO INVESTMENT MANAGEMENT LIMITED, ABERDEEN STANDARD INVESTMENTS, PENDAL GROUP LIMITED – ASX PDL, BHP BILLITON LIMITED – ASX BHP, RIO TINTO LIMITED – ASX RIO, SOUTH32 LIMITED – ASX S32, NEWCREST MINING LIMITED – ASX NCM, WHITEHAVEN COAL LIMITED – ASX WHC

Fortescue keeps seat at Atlas

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Original article by Peter Ker
The Australian Financial Review – Page: 15 : 7-Aug-18

Fortescue Metals Group has reduced its stake in Atlas Iron from 19.9 per cent to 11.37 per cent, and CEO Elizabeth Gaines says it will retain a strategic stake in the takeover target. This will prevent Gina Rinehart from moving to the compulsory acquisition stage, and force her to work with Fortescue regarding Atlas’s port capacity at Port Hedland. Rinehart has gained more than 50 per cent of Atlas shares.

CORPORATES
ATLAS IRON LIMITED – ASX AGO, FORTESCUE METALS GROUP LIMITED – ASX FMG, MINERAL RESOURCES LIMITED – ASX MIN, ROY HILL HOLDINGS PTY LTD