Archive for November, 2015

WORLDS LARGEST ZINC MINER MAY EXIT THE MINING INDUSTRY

Wednesday, November 11th, 2015

Mexico’s Campo Morado zinc mine image www.www-globalcommodities.com

Debt-laden European zinc producer Nyrstar (EBR:NYR) said Monday it plans to raise up to $296 million (€275m) through a share offering to pay down debt and has appointed bankers to explore a total exit from mining.

The Belgian company, which is the world’s No.1 zinc producer, laid out a package of measures it is putting in place to try repaying a $447 million bond that matures in 2016 and also address ongoing problems with it mining division.

Nyrstar also announced a number of commercial supply agreements with Trafigura, the world’s second-largest metals trader and its main shareholder.

Nyrstar also announced a number of commercial supply agreements with Trafigura, the world’s second-largest metals trader and its main shareholder.

The commodity trader has agreed to buy as much as $135 million (€125m) of shares in a first-quarter rights offer totalling $270m to $296m. As part of the deal, Trafigura won’t raise its stake to more than 49% from over 20%, according to Nyrstar. Should the rights offer boost Trafigura’s holding above 30%, it won’t be obliged to make an offer for the rest of the stock, the company added.

Nyrstar shares jumped up as much as 9.4% in Brussels on the news and were trading 5.5% higher at €1.62 mid-afternoon.

They took a huge dip on Oct. 22, falling 27% in a matter of hours, after new chief executive Bill Scotting said the company was considering selling stock to meet its debt obligations.

On Monday, Scotting noted Trafigura’s involvement in the refinancing was not a “takeover by stealth”.

Nyrstar has been hit quite hard by the rout in commodities, with zinc down 24% this year on declining demand from top consumer China. The company said it’s mulling reducing zinc production from its mines by as much as 400,000 metric tons if prices stay depressed. That would almost match the 500,000 tonnes that Glencore, another leading zinc producer, recently cut.

The company has already suspended operations at its Mexico’s Campo Morado and Canada’s Myra Falls mines.

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Henry Sapiecha

Poland may stop producing coal until at least the year 2018

Wednesday, November 11th, 2015

The Turów coal mine in Poland Kopalnia Węgla Brunatnego Turów S.A. or KWB Turów, is a large open pit mine image www.www-globalcommodities.com

Poland is considering to stop coal production at several of its mines until at least 2018 in an effort to help prices by reducing a global oversupply, while trying to keep state operations afloat and avoid job cuts.

The conservative Law and Justice party (PiS), which won parliamentary elections in October, would consider merging the country’s top power firms — PGE, Tauron, Enea and Energa.

“Personally I think Poland needs one big power company,” Grzegorz Tobiszowski, responsible for coal issues, told Reuters. He added the move would likely face scrutiny from the European Union over anti-monopoly regulations.

Poland’s troubled coal mining sector became a focal point ahead of the recent parliamentary election, as the outgoing government failed to rescue the troubled Kompania Weglowa (KW), the EU’s biggest coal miner.

About 90% of Poland’s energy is generated from coal, an industry with a strong local union, which can partly explain why Warsaw has long opposed the EU drive to curb carbon emissions.

About 90% of Poland’s energy is generated from coal, an industry with a strong local union, which can partly explain why Warsaw has long opposed the EU drive to curb carbon emissions.

According to Eurostat data, around 83% of energy consumed in Poland is produced from black and brown coal, while in the rest of the EU the average is 28%. With UN climate negotiations in Paris coming up in December and the EU committing to cut greenhouse gas emissions by 40% on 1990 levels by 2030, Warsaw has been under significant pressure to reduce that figure.

Currently, around 10% of the country’s energy needs are met by renewables (the average in the EU member countries is twice as high, at over 20%) and only 4% comes from natural gas and oil (while in the rest of the EU it is 25%), mostly imported from Russia.

Due to technological underdevelopment, the productivity of Polish mines is very low, with 648 tonnes of coal produced per worker per year while in the worst US mines it is more then 2,000 tonnes.

Despite that, Polish producers continue to invest billions in modernizing their coal-fired plants or in building new, more efficient ones. At least four new coal-fired power plants are expected to come on line by 2019, as the country faces a deficit of around 8 gigawatts of capacity starting in 2020, once the EU’s Industrial Emissions Directive kicks in.

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Henry Sapiecha

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