IRON MINES AND MINING – WESTERN AUSTRALIA

Discounts put $1b hole in Fortescue’s earnings

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Original article by Peter Ker
The Australian Financial Review – Page: 17 : 22-Feb-18

Fortescue Metals Group has posted a 2017-18 interim net profit of $US681m. It is 44 per cent lower than previously but exceeded analysts’ expectations. Fortescue’s received prices for iron ore fell by 15 per cent over the period, and the widening gap between lower-grade ore and the price of benchmark ore reduced its underlying EBITDA by $US734m. Shareholders will receive an interim dividend of $A0.11 per share, compared with analysts’ forecasts for a payout of $A0.14 per share.

CORPORATES
FORTESCUE METALS GROUP LIMITED – ASX FMG, BHP BILLITON LIMITED – ASX BHP, SHAW AND PARTNERS LIMITED

Power departs a job well done

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Original article by Paul Garvey
The Australian – Page: 19 : 16-Feb-18

Fortescue Metals Group has slashed its gross debt and ramped up iron ore production since Nev Power became CEO in mid-2011. Production costs have also been reduced from an average of $US53.23 per tonne to $US12.08. Power will step down as CEO on 16 February, and he has flagged the likelihood of taking on a number of directorships in his post-Fortescue career. However, Power doubts that he will accept another full-time executive position, and he has ruled out a career in politics.

CORPORATES
FORTESCUE METALS GROUP LIMITED – ASX FMG, CREDIT SUISSE AG, JP MORGAN AND COMPANY INCORPORATED, BANK OF AMERICA CORPORATION, DEUTSCHE BANK AG, ANGLO AMERICAN PLC

Rival MinRES contradicts FMG on iron discounts

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Original article by Peter Ker
The Australian Financial Review – Page: 14 : 1-Feb-18

Mineral Resources has advised that it stockpiled about 500,000 tonnes of iron ore fines during the December 2017 quarter, in response to the ongoing price discount for lower-grade ore. In contrast to Fortescue Metals Group, Mineral Resources expects the price discount to be sustained for some time. Mineral Resources also sought to counter the price discount by changing its iron ore blend in a bid to deliver supply buyers with a higher-quality product. Fortescue also intends to increase the average grade of its iron ore.

CORPORATES
MINERAL RESOURCES LIMITED – ASX MIN, FORTESCUE METALS GROUP LIMITED – ASX FMG, INDEPENDENCE GROUP NL – ASX IGO

Cycle turning on discounts, says Fortescue

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Original article by Peter Ker
The Australian Financial Review – Page: 17 : 31-Jan-18

Fortescue Metals Group CEO Nev Power expects the price gap between lower-grade iron ore and the benchmark price to narrow in coming months. He says the December 2017 quarter is likely to represent the low-point for the price discount. Fortescue sold its iron ore at just 66 per cent of the benchmark price during the quarter, compared with 86-88 per cent between 2014 and 2016. Meanwhile, Citigroup has forecast that Fortescue will reduce its net debt to $US2.4bn by mid-2018, after it rose to $US3.3bn at the end of 2017.

CORPORATES
FORTESCUE METALS GROUP LIMITED – ASX FMG, CITIGROUP PTY LTD, SHAW AND PARTNERS LIMITED, CLEVELAND-CLIFFS INCORPORATED, RIO TINTO LIMITED – ASX RIO, VALE SA

Atlas irons out a profit problem

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Original article by Paul Garvey
The Australian – Page: 19 : 30-Jan-18

Shares in Atlas Iron shed more than 16 per cent to close at $A0.026 on 29 January, after the iron ore miner advised that its Pilbara operations posted a cash loss of $A1.2m during the December 2017 quarter. Atlas Iron’s net cash position fell to $A104m at the end of the quarter, amid a sharp rise in the price discount for lower-grade iron ore. CEO Cliff Lawrenson says Atlas Iron’s daily operations are making money despite the price discount. He adds that the expected closure of Cliffs’ Koolyanobbing iron ore mine later in 2018 could create new supply opportunities for Atlas.

CORPORATES
ATLAS IRON LIMITED – ASX AGO, CLEVELAND-CLIFFS INCORPORATED, PILBARA MINERALS LIMITED – ASX PLS, FORTESCUE METALS GROUP LIMITED – ASX FMG

Rio speeds up plan for driverless ore trains

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Original article by Matt Chambers
The Australian – Page: 15 & 24 : 23-Jan-18

Rio Tinto’s AutoHaul project to fully automate its iron ore trains in the Pilbara is slated for completion by the end of 2018. The project was first mooted in 2008 and it was initially expected to be completed in 2015, while it is likely to cost significantly more than the $US518m that had originally been budgeted. However, Rio Tinto expects the move to driverless trains will allow it to ship an additional 20 million tonnes of iron ore each year, which will in turn significantly increase its profits.

CORPORATES
RIO TINTO LIMITED – ASX RIO

Cyclone Joyce drenches Pilbara as Port Hedland resumes exports

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

Tropical Cyclone Joyce forced the closure of Port Hedland for about 43 hours, although it is not expected to have much impact on iron ore export volumes. The cyclone resulted in heavy rains near iron ore mines operated by BHP Billiton, Rio Tinto and Fortescue Metals Group in the Pilbara region, with 132 millimetres of rain recorded at Barimunya over four days and 102 millimetres recorded at Solomon Airport. Meanwhile, some 105 millimetres of rain fell at Marble Bar in a 24-hour period.

CORPORATES
PORT OF PORT HEDLAND, BHP BILLITON LIMITED – ASX BHP, RIO TINTO LIMITED – ASX RIO, FORTESCUE METALS GROUP LIMITED – ASX FMG, NEWCREST MINING LIMITED – ASX NCM, AUSTRALIA. BUREAU OF METEOROLOGY, DEUTSCHE BANK AG

Rio, BHP output boosts payout hopes

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Original article by Matt Chambers
The Australian – Page: 15 & 17 : 15-Jan-18

Deutsche Bank expects Rio Tinto to report three per cent growth in iron ore output in the Pilbara for the December 2017 quarter, to 87.7 million tonnes, while BHP Billiton’s Pilbara production is forecast to rise by 10 per cent to a record 70.9 million tonnes. Meanwhile, Hayden Bairstow of Macquarie Group expects Rio Tinto to pay a 2017 final dividend of $US1.95 per share, for a full-year payout of $US3.05 per share. Analysts generally also expect BHP to increase its dividend payout for the 2017-18 financial year. Both companies may also boost returns to shareholders via the proceeds of asset sales.

CORPORATES
RIO TINTO LIMITED – ASX RIO, BHP BILLITON LIMITED – ASX BHP, DEUTSCHE BANK AG, MACQUARIE GROUP LIMITED – ASX MQG, BLOOMBERG LP, LIBERTY HOUSE GROUP, PACIFIC ALUMINIUM PTY LTD, SAMARCO MINERACAO SA, VALE SA

Iron ore futures rise as cyclone forces closure of Port Hedland

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Original article by Peter Ker
The Australian Financial Review – Page: 19 : 12-Jan-18

Iron ore exports from the Pilbara may potentially be disrupted by Tropical Cyclone Joyce. The Bureau of Meteorology has warned that the cyclone could hit the region on 13 January. The towns of Tom Price and Newman are likely to be within its trajectory, although it may miss the Port of Hedland. However, the Pilbara Ports Authority has ordered all vessels to leave the port, which is used by iron ore miners such as Fortescue Metals Group. The price of iron ore for delivery to the Chinese port of Dalian rose on 11 January in response to concerns about the cyclone.

CORPORATES
PORT OF PORT HEDLAND, PILBARA PORTS AUTHORITY, FORTESCUE METALS GROUP LIMITED – ASX FMG, BHP BILLITON LIMITED – ASX BHP, ROY HILL HOLDINGS PTY LTD, ATLAS IRON LIMITED – ASX AGO, BCI MINERALS LIMITED – ASX BCI, MINERAL RESOURCES LIMITED – ASX MIN, RIO TINTO LIMITED – ASX RIO, UBS HOLDINGS PTY LTD

Rio could surprise on ore exports

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Original article by Peter Ker
The Australian Financial Review – Page: 13 & 23 : 11-Jan-18

UBS estimates that Rio Tinto’s Pilbara iron ore shipments rose to a record 90.2 million tonnes in the December 2017 quarter, putting it on track to meet its full-year guidance of 330 million tonnes. According to UBS’s forecast, Rio Tinto’s shipments rose by 17 per cent month-on-month in December, to 32.5 million tonnes. Rio Tinto ultimately aims to lift annual shipments to 360 million tonnes, although its Pilbara rail network currently has a capacity of about 330 million tonnes. UBS estimates that the Pilbara shipments of BHP Billiton and Fortescue Metals Group for the quarter totalled 71.3 million tonnes and 40.5 million tonnes respectively.

CORPORATES
RIO TINTO LIMITED – ASX RIO, BHP BILLITON LIMITED – ASX BHP, FORTESCUE METALS GROUP LIMITED – ASX FMG, UBS HOLDINGS PTY LTD, ROY HILL HOLDINGS PTY LTD