MINING CORPORATIONS – AUSTRALIA

Windfall for mining sector could hit $20b

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Original article by Jens Meyer
The Australian Financial Review – Page: 25 : 1-Dec-16

Macquarie Group estimates that financial market analysts will need to increase their 2018 earnings forecasts for resources groups by around 200 per cent if commodity prices remain at around current levels. Macquarie’s Jason Todd notes that this equates to a profit boost of about $A20bn for the sector. He argues that many analysts have factored the rise in commodity prices into their forecasts for 2016-17, but many have neglected to upgrade their earnings forecasts beyond the current financial year.

CORPORATES
MACQUARIE GROUP LIMITED – ASX MQG, STANDARD AND POOR’S ASX 200 INDEX

Fortescue steers past another milestone with iron ore carrier

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Original article by Angus Grigg
The Australian Financial Review – Page: 16 : 30-Nov-16

Pure-play iron ore miner Fortescue Metals Group has officially launched the first of eight bulk carriers that are being built in China. Each vessel’s capacity will be around 260,000 tonnes, and Fortescue CEO Nev Power says the investment in the fleet reflects the company’s confidence in the long-term outlook for the Chinese and Asian economies, as well as demand for iron ore. The price of the steel input has reached a two-year high, but Power expects it to trade at between $US50 and $US60 over the long-term.

CORPORATES
FORTESCUE METALS GROUP LIMITED – ASX FMG, BHP BILLITON LIMITED – ASX BHP, RIO TINTO LIMITED – ASX RIO, VALE SA, DEUTSCHE BANK AG

Gold company bosses expect more volatility

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Original article by Tess Ingram
The Australian Financial Review – Page: 27 : 30-Nov-16

The gold price reached a nine-month low of $US1,182 an ounce in late November 2016, defying expectations of a rally following Donald Trump’s presidential election win. It was trading above $US1,300 prior to the election, and Resolute Mining CEO John Welborn expects further volatility in the gold price in the near-term. Meanwhile, Dacian Gold will partially finance its Mount Morgans project via a $A150m equity raising, while Northern Star Resources’ COO Stuart Tonkin will succeed CEO Bill Beament. The latter will become executive chairman.

CORPORATES
RESOLUTE MINING LIMITED – ASX RSG, DACIAN GOLD LIMITED – ASX DCN, NORTHERN STAR RESOURCES LIMITED – ASX NST

Rio facing US probe over Mozambique

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Original article by Matthew Stevens
The Australian Financial Review – Page: 13 & 16 : 29-Nov-16

It has been revealed that Rio Tinto’s 2011 acquisition of Riversdale Mining has been the subject of a confidential investigation by the US Securities & Exchange Commission. The probe into the $US4.16bn takeover of the Mozambique-focused coal producer predates revelations over the scandal surrounding the Simandou iron ore project in Guinea. A subsequent $US3.269bn write-down in the value of the Mozambique assets in Rio’s 2012 financial accounts led to the departure of several top executives, including CEO Tom Albanese.

CORPORATES
RIO TINTO LIMITED – ASX RIO, RIVERSDALE MINING LIMITED, UNITED STATES. SECURITIES AND EXCHANGE COMMISSION, GREAT BRITAIN. SERIOUS FRAUD OFFICE, AUSTRALIAN SECURITIES AND INVESTMENTS COMMISSION, BHP BILLITON LIMITED – ASX BHP, KIRKLAND AND ELLIS LLP, INTERNATIONAL COAL VENTURES LIMITED

BHP and Rio shareholders focus on debt

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Original article by Peter Ker
The Australian Financial Review – Page: 13 & 18 : 28-Nov-16

The rally in the price of iron ore and coal during 2016 has boosted the earnings of BHP Billiton and Rio Tinto, prompting speculation of capital management initiatives. However, Jason Kururangi of Aberdeen Asset Management argues that BHP should prioritise debt reduction and investment in new projects rather than returns to shareholders. Meanwhile, Jason Beddow of Argo Investments suggests that BHP and Rio should consider increasing returns to shareholders if commodity prices remain at a similar level in 12 months’ time.

CORPORATES
BHP BILLITON LIMITED – ASX BHP, RIO TINTO LIMITED – ASX RIO, ABERDEEN ASSET MANAGEMENT LIMITED, ARGO INVESTMENTS LIMITED – ASX ARG, DEUTSCHE BANK AG, SOCIETE GENERALE AUSTRALIA LIMITED, CREDIT SUISSE (AUSTRALIA) LIMITED, MOODY’S INVESTORS SERVICE INCORPORATED

Rio iron ore growth slows on China move

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Original article by Peter Ker
The Australian Financial Review – Page: 17 & 23 : 25-Nov-16

Rio Tinto CEO Jean Sebastien Jacques says uncertainty regarding the Chinese Government’s restructuring of state-owned enterprises means that China’s steel production is now unlikely to peak at one billion tonnes per year. He also notes that China’s iron ore production is believed to have risen to between 260 and 270 million tonnes a year, and the supply-demand equation would be significantly changed if China’s annual output reached full capacity of 400 million tonnes. Meanwhile, Rio Tinto may not achieve its annual export target of 360 million tonnes before 2019, although it expects shipments in 2017 to be between 330 million and 340 million tonnes.

CORPORATES
RIO TINTO LIMITED – ASX RIO, VALE SA, UBS HOLDINGS PTY LTD, ORGANISATION FOR ECONOMIC CO-OPERATION AND DEVELOPMENT

Rio unveils a higher vision after scandals

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Original article by Matt Chambers
The Australian – Page: 19 & 30 : 25-Nov-16

CEO Jean-Sebastien Jacques used Rio Tinto’s investor presentation on 24 November 2016 to reveal that the resources giant will launch a revised mission statement in January 2017. He said the "vision and values" statement will reflect the miner’s "higher purpose" rather than focusing on shareholder value. Jacques also stressed the importance of Rio Tinto’s code of conduct, particularly in the wake of the payments scandal concerning the Simandou iron ore project. Jacques also aims to lift annual cash flow by at least $US5bn over the next five years.

CORPORATES
RIO TINTO LIMITED – ASX RIO, CITIGROUP PTY LTD

A fair return on WA’s iron ore would help our GST injustice

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Original article by Brendon Grylls
The Australian Financial Review – Page: 47 : 24-Nov-16

Western Australia now receives just $A0.30 of every dollar of goods and services tax revenue that is generated in the state. The proposed increase in the iron ore levy from $A0.25 per tonne to $A5 is intended to redress this imbalance and help reduce the state’s budget deficit. It should be noticed that the levy does not constitute a new tax on BHP Billiton and Rio Tinto. It has been in place for five decades and has remained unchanged since. The Samarco tailings dam disaster and the Simandou bribery scandal constitute greater sovereign risks.

CORPORATES
NATIONAL PARTY OF AUSTRALIA, BHP BILLITON LIMITED – ASX BHP, RIO TINTO LIMITED – ASX RIO, AUSTRALIA. COMMONWEALTH GRANTS COMMISSION, VALE SA, SAMARCO MINERACAO SA, AUSTRALIA. DEPT OF THE PRIME MINISTER AND CABINET, LIBERAL PARTY OF WESTERN AUSTRALIA

South32 cops criticism on executive pay

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Original article by Tess Ingram, Peter Ker
The Australian Financial Review – Page: 23 : 24-Nov-16

Institutional Shareholder Services has questioned South32’s short-term incentives scheme given the group’s large net loss for 2015-16 and its industrial safety record. The proxy adviser has recommended that shareholders vote against the miner’s remuneration report at the 2016 AGM. The Australian Shareholders’ Association also intends to vote against the remuneration report, as well as the issuance of share rights to CEO Graham Kerr. South32’s 2015 remuneration report was rejected by 5.6 per cent of shareholders.

CORPORATES
SOUTH32 LIMITED – ASX S32, INSTITUTIONAL SHAREHOLDER SERVICES INCORPORATED, AUSTRALIAN SHAREHOLDERS’ ASSOCIATION, ABERDEEN ASSET MANAGEMENT LIMITED, FORTESCUE METALS GROUP LIMITED – ASX FMG, WESTERN AUSTRALIA. ENVIRONMENTAL PROTECTION AUTHORITY

Newman takes aim at Grylls tax proposal

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Original article by Peter Ker
The Australian Financial Review – Page: 13 & 18 : 23-Nov-16

Former Queensland premier Campbell Newman has expressed concern about a proposed rise in Western Australia’s iron ore levy. He rates the sovereign risk level of the proposal by WA National Party leader Brendon Grylls as being "eight out of 10". In contrast, Campbell considers his government’s changes to coal royalty rates in 2012 as a four out of 10 in terms of sovereign risk. Coal producers will pay the highest coal royalty rate under Newman’s three-tier system for the first time, following the rally in coal prices.

CORPORATES
NATIONAL PARTY OF AUSTRALIA, AUSTRALIAN LABOR PARTY, BHP BILLITON LIMITED – ASX BHP, RIO TINTO LIMITED – ASX RIO