MINING CORPORATIONS – AUSTRALIA

Former Rio mines a boon for Yancoal

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Original article by Peter Ker
The Australian Financial Review – Page: 19 : 17-Aug-18

Yancoal Australia has reported a 2018 interim net profit of $361m. The result was boosted by the contribution of Rio Tinto’s thermal coal mines in New South Wales and a sharp rise in the price of thermal coal since the deal was struck. About $130m of the interim profit will be returned to shareholders via dividend payments, which equates to about $0.003 per share.

CORPORATES
YANCOAL AUSTRALIA LIMITED – ASX YAL, RIO TINTO LIMITED – ASX RIO, WHITEHAVEN COAL LIMITED – ASX WHC

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

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

Iron ore may dominate Rio profits for decade: Jacques

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

Rio Tinto has reduced its reliance on earnings from its iron ore division in recent years, although the steel input still accounted for 65 per of underlying earnings during the first half of 2018. CEO Jean-Sebastien Jacques has told investors that iron ore may account for the bulk of group earnings for some years, although he said Rio Tinto is considering a number of projects in the battery sector, including lithium and cobalt. However, he stressed that Rio Tinto will only pursue diversification if it is appropriate, and capital will continue to be allocated to the best projects.

CORPORATES
RIO TINTO LIMITED – ASX RIO, BHP BILLITON LIMITED – ASX BHP, STANDARD AND POOR’S FINANCIAL SERVICES LLC

Diggers still doing deals as gold price dips

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Original article by Matt Chambers
The Australian – Page: 20 : 6-Aug-18

Mergers and acquisitions activity and rising costs are among the issues that are likely to attract debate during the annual Diggers & Dealers mining conference in Kalgoorlie. Justin Osborne of Gold Road Resources expects larger gold producers to continue to pursue exploration deals in the near-term, although he says M&A activity may increase in coming years. Stuart Mathews, the local head of Gold Fields, says it would be open to appropriate acquisitions in the exploration space but its existing assets are its focus at present.

CORPORATES
DIGGERS AND DEALERS FORUM, GOLD ROAD RESOURCES LIMITED – ASX GOR, GOLD FIELDS LIMITED, BHP BILLITON LIMITED – ASX BHP, RIO TINTO LIMITED – ASX RIO, FORTESCUE METALS GROUP LIMITED – ASX FMG