MINING CORPORATIONS – AUSTRALIA

Rio was legally cramped to go harder on execs

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Original article by Peter Ker
The Australian Financial Review – Page: 16 : 12-Apr-21

Rio Tinto has attracted much criticism over its generous severance packages in the wake of the Juukan Gorge scandal. However, the head of Rio Tinto’s remuneration committee has told the annual general meeting in London that the board had decided that it was not legally able to cancel the termination payouts of former CEO Jean-Sebastien Jacques and two other senior executives. The issue of Juukan Gorge was not raised by British shareholders, although it is likely to receive attention at the Australian leg of Rio Tinto’s annual general meeting on 6 May.

CORPORATES
RIO TINTO LIMITED – ASX RIO

Rio chair to face Juukan anger

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Original article by Nick Evans
The Australian – Page: 17 : 9-Apr-21

Rio Tinto is expected to incur a backlash against its remuneration report at the London leg of its annual general meeting on 9 April. Outgoing chairman Simon Thompson is likely to be the main target of investors’ wrath in the wake of the scandal over the destruction of ancient indigenous rock shelters at Juukan Gorge in Western Australia. The scandal resulted in the departure of three senior executives – including former CEO Jean-Sebastien Jacques – who will receive lucrative severance payments. Rio Tinto will hold its Australian annual general meeting on 8 May.

CORPORATES
RIO TINTO LIMITED – ASX RIO

UBS sees sharp drop in iron ore price

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Original article by Lachlan Moffet Gray
The Australian – Page: 16 : 6-Apr-21

UBS expects a looming increase in global iron ore supply to result in the price of the steel input falling below $US100 per tonne in the December 2021 quarter. The iron price peaked at more than $US170 per tonne earlier in the year, but UBS says it is reaching an ‘inflection point’. The firm notes that iron ore shipments from Brazil are increasing, while inventories at Chinese ports are increasing. UBS has reduced its share price targets for Rio Tinto, BHP and Fortescue Metals Group; the firm has also downgraded its recommendation on the latter two from ‘buy’ to ‘neutral’.

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

Miners going for gold in record year

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Original article by Nick Evans
The Australian – Page: 16 : 1-Mar-21

Data from Surbiton Associates shows that Australian mining companies produced a record 327 tonnes of gold in 2020, amid a surge in the price of the precious metal. Newcrest Mining’s Cadia mine in New South Wales produced 822,478 ounces of gold during the year, ahead of Newmont’s Boddington mine in Western Australia (670,000 ounces) and Kirkland Lake Gold’s Fosterville mine in Victoria (640,000 ounces). Sandra Close of Surbiton notes that the high price of gold has prompted a number of new players to enter the sector.

CORPORATES
SURBITON ASSOCIATES PTY LTD, NEWCREST MINING LIMITED – ASX NCM, NEWMONT CORPORATION, KIRKLAND LAKE GOLD LIMITED – ASX KLA

Fortescue to stem pipeline cash flow

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Original article by Nick Evans
The Australian – Page: 16 : 1-Mar-21

Fortescue Metals Group recently stated that it is likely to release a final cost figure for its troubled Iron Bridge magnetite project within three months. The pure-play iron ore miner advised that preliminary figures show that the project will cost about $US3bn, compared with initial estimates of $US2.6bn. Fortescue is also believed to be considering a ‘build-own-operate-transfer’ model for water infrastructure associated with the Iron Bridge project, whereby other companies would bear the cost of building the water network and eventually sell it back to Fortescue.

CORPORATES
FORTESCUE METALS GROUP LIMITED – ASX FMG

BHP booms with $6.5bn payout

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Original article by Nick Evans
The Australian – Page: 15 & 18 : 17-Feb-21

BHP has reported a net profit of $US3.88bn for the first half of 2020-21, which is 20 per cent lower than previously. However, underlying net profit rose 15.4 per cent to $US6bn, while the resources group will return some $US5.1bn to shareholders via a record interim dividend of $US1.01 per share. BHP is bullish about the outlook for the iron ore price, forecasting that a significant pullback would require reduced demand from China and/or increased supply from Brazil. BHP’s iron ore division has posted underlying EBIT of $US9.32bn for the half-year, compared with $US6.34bn for the previous corresponding period.

CORPORATES
BHP GROUP LIMITED – ASX BHP

$834m in blowouts spur Fortescue exits

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Original article by Nick Evans
The Australian – Page: 15 & 18 : 17-Feb-21

Fortescue Metals Group has advised that chief operating officer Greg Lilleyman has left the pure-play iron ore miner in the wake of a sharp rise in the cost of its Iron Bridge magnetite project. Fortescue’s director of projects Don Hyma and Iron Bridge project manager Manie McDonald also recently stepped down. The Iron Bridge project was initially slated to cost $US2.6bn, but this is believed to have blown out by about $US650m. CEO Elizabeth Gaines and CFO Ian Wells will forgo their annual bonuses for 2020-21 due to the cost blowout.

CORPORATES
FORTESCUE METALS GROUP LIMITED – ASX FMG

Iluka adds rare earths to mineral sands for a bigger bang

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Original article by Brad Thompson
The Australian Financial Review – Page: 14 & 20 : 8-Feb-21

Australian mineral sands producer Iluka Resources is seeking to expand into the rare earths sector. The company is hinting that it wants to become an integrated producer of heavy and light rare earth oxides, with the next step in its rare earths goals involving spending $35 million to boost the product from its mineral sands mine at Enebba in Western Australia to a 90 per cent concentrate. It could consider sending this concentrate to Lynas Rare Earths’ cracking and leaching plant in Kalgoorlie. Goldman Sachs has suggested that Iluka is capable of developing the first fully integrated rare earths operation on Australian soil by 2025 at a cost of around $1.2 billion.

CORPORATES
ILUKA RESOURCES LIMITED – ASX ILU, LYNAS RARE EARTHS LIMITED – ASX LYC, GOLDMAN SACHS AUSTRALIA PTY LTD

Mining blowout as wages start rising

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Original article by Nick Evans
The Weekend Australian – Page: 21 & 32 : 16-Jan-21

There is growing concern about a wages blowout in Western Australia’s mining sector, as the continued strength of the iron ore price ignites speculation of a new resources boom. Fortescue Metals Group recently advised of a cost blowout at its Iron Bridge magnetite project, and other mining companies with projects under development in WA are also likely to experience cost pressures. Skills shortages and restrictions on hiring staff from interstate have also prompted mining companies to start poaching workers from their rivals and other sectors.

CORPORATES
FORTESCUE METALS GROUP LIMITED – ASX FMG

Price boom powers big iron’s profits

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Original article by Sarah Turner, Jenny Wiggins
The Australian Financial Review – Page: 13 & 16 : 18-Jan-21

The spot price of iron ore peaked at $US172.36 a tonne during the week ended 15 January. Milford Asset Management’s William Curtayne says earnings forecasts for Australia’s major iron ore producers will need to be significantly upgraded if the price of the steel input remains at around $US165/tonne. Jason Teh of Vertium Asset Management also anticipates strong growth in dividend payouts at BHP, Rio Tinto and Fortescue Metals Group, as well as the potential for special dividends and share buybacks. The surging price of iron ore will also boost federal government revenue.

CORPORATES
BHP GROUP LIMITED – ASX BHP, RIO TINTO LIMITED – ASX RIO, FORTESCUE METALS GROUP LIMITED – ASX FMG, MILFORD ASSET MANAGEMENT LIMITED, VERTIUM ASSET MANAGEMENT PTY LTD