Archive for the ‘CHINA’ Category

A commodities rebound is moving fast forward right on China’s doorstep

Sunday, August 21st, 2016

China may be slowing, but a commodities rebound is under way and the world’s biggest miner knows where the next growth story is building – emerging economies in South-east Asia.

Combined gross domestic product in the ASEAN-5 nations – Indonesia, Thailand, Malaysia, the Philippines and Vietnam – will rise about a third to $US3 trillion ($3.9 trillion) in the five years to 2020, fuelling commodities-intensive infrastructure projects. Momentum like this across Asia will help maintain and increase commodity demand, BHP Billiton’s chief executive Andrew Mackenzie said this week.

BHP’s staggering loss explained

Fairfax resources writer Peter Ker breaks down what’s behind BHP Billiton’s enormous $8.3 billion loss.

“People have been so used to believing that commodities was a China story, and that with China decelerating where’s the growth going to come from?” Nathan Lim, Sydney-based head of research for Morgan Stanley’s wealth management division, said by phone. “That incremental demand is coming from the emerging markets, and that’s the part people don’t have their head around.”

commodities -graph-2 image www.www-globalcommodities.com

Thailand is considering more than $US50 billion of infrastructure spending, while Vietnam has begun major projects including a $US10 billion rail modernisation, Indonesia is seeking to accelerate road to ports programs and Philippine President Rodrigo Duerte has promised new railroads and airport runways. These markets are “back on their growth path after a period of under-performance”, according to Lim.

Financial crisis

Commodities surged the most in the first half since the 2008 financial crisis as China’s economy stabilised and policy makers backed growth. The World Bank forecasts commodities will rebound next year after hitting the bottom of the cycle and Citigroup agrees, saying last month it’s bullish on raw materials for 2017.

A bellwether of commodities’ demand is steel. New demand across South-east Asia is seen increasing the market for China’s steel exports, which notched record volumes in the first seven months of 2016 and have supported rising iron ore imports.

China is already exporting about 12 per cent of its output and could raise sales overseas further, according to BHP’s Mackenzie. India will also import more iron ore, as will nations across Southe-ast Asia, he told analysts in a presentation Tuesday.

steel-worker-at-work image www.www-globalcommodities.com

Commodities surged the most in the first half since the 2008 financial crisis as China’s economy stabilised and policy makers backed growth. Photo: Jessica Shapiro

Steel proxy

“We look to use steel as a proxy, though you would naturally find the same dynamics for other commodities as well, whether it’s aluminium or copper or bauxite,” Morgan Stanley’s Lim said. Steel demand in the ASEAN-5 will grow at about 6 per cent this year and in 2017 on infrastructure building, according to the World Steel Association. Consumption of 74.6 million tons in 2017 will be more than in regions including Africa and the Middle East, and compares to forecast demand in China of 626.1 million tons, the association said in April.

Fortescue Metals Group, the No. 4 iron ore exporter, said in March it saw emerging sources of steel demand across Asia and in India. China is no longer the sole driver for the $US120 billion copper market, according to Andrew Cole, chief executive of OZ Minerals, a producer that’s also developing Australia’s biggest unmined deposit of the metal.

BHP's CEO Andrew Mackenzie image www.www-globalcommodities.com

Momentum across Asia will bolster commodity demand, BHP’s CEO Andrew Mackenzie said this week. Photo: Bloomberg

“Global demand for copper is becoming increasingly diversified, both geographically and by industry sector,” he said in an August 10 interview with Bloomberg Television. “We are seeing increasing diversification through other counties outside of China, which is an important factor that we need to remember.”

commodities-graph image www.www-globalcommodities.com

Still, global industrial production – output of mining, utilities and manufacturing – is well below historical levels and China “remains the only real growth story”, Macquarie Group said in an August 15 note.

The impact of action early this year to stimulate China’s economy is now fading, the bank said.

China accounts for about 65 per cent of iron ore imports, takes 21 per cent of seaborne metallurgical coal and consumes about half the world’s copper, according to a joint report this month by Westpac Banking Corp and Australia’s Department of Industry, Innovation, Science.

BHP, Whitehaven Coal, Alumina and Evolution Mining are among the companies that Morgan Stanley’s Lim sees benefiting from the emerging Asia growth story. BHP’s second-half underlying profits jumped 95 per cent, while coal producer Whitehaven reported Thursday it swung back to a net profit in fiscal 2016 from a loss the previous year.

“We are not saying that we have discovered a new China, or that India is going to become the new China,” Lim said. “The underlying message is that the reason we are seeing demand coming from ex-China, is that it’s the emerging markets where we see the next leg of growth.”

Bloomberg

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Henry Sapiecha

 

China’s advance into Central Asia ruffles Russian feathers .Commerce & expansion

Sunday, January 3rd, 2016

Kazakh traders wait for their goods purchased from China to be cleared on the Kazakh side of the Horgos free-trade zone near Horgos, Kazakhstan image www.ww-globalcommodities.com

Kazakh traders wait for their goods purchased from China to be cleared on the Kazakh side of the Horgos free-trade zone near Horgos, Kazakhstan. Photo: Washington Post

Shymkent, Kazakhstan:  Slowly but surely, a four-lane highway is beginning to take shape on the sparsely populated Central Asian steppe. Soviet-era cars, trucks and aging long-distance buses weave past modern yellow bulldozers, cranes and towering construction drills, labouring under Chinese supervision to build a road that could one day stretch from eastern Asia to Western Europe.

This small stretch of blacktop, running past potato fields, bare dun-colored rolling hills and fields of grazing cattle, is a symbol of China’s march westward, an advance into Central Asia that is steadily wresting the region from Russia’s embrace.

A Chinese surveyor climbs to take measurements at the site of a bridge project near Shymkent, Kazakhstan.image www.www-globalcommodities.com

A Chinese surveyor climbs to take measurements at the site of a bridge project near Shymkent, Kazakhstan. Photo: Washington Post

Here the oil and gas pipelines, as well as the main roads and the railway lines, always pointed north to the heart of the old Soviet Union. Today, those links are beginning to point toward China.

“This used to be Russia’s back yard”, said Raffaello Pantucci, director of International Security Studies at the Royal United Services Institute in London, “but it is increasingly coming into China’s thrall”.

It is a shift that has shaken up the Russian leadership, which is watching China’s advance across the steppe with little apprehension. Moscow and Beijing may speak the language of partnership these days, but Central Asia has emerged a source of wariness and mistrust.

Kazakhstan President Nursultan Nazarbayev with then Australian prime minister Julia Gillard image www.www-globalcommodities.com

Kazakhstan President Nursultan Nazarbayev with then Australian prime minister Julia Gillard. Photo: Andrew Meares

For China, the region offers rich natural resources, but Beijing’s grander commercial plans — to export its industrial overcapacity and find new markets for its goods — will struggle to find wings in these poor and sparsely populated lands.

In September 2013, Chinese President Xi Jinping chose Kazakhstan’s sparkling, modern new capital, Astana, to announce what has since become a cornerstone of his new, assertive foreign policy, a Silk Road Economic Belt that would revive ancient trading routes to bring new prosperity to a long-neglected but strategically important region at the heart of the Eurasian continent.

Bound together by 2000 years of exchanges dating to the Western Han Dynasty, sharing a 1800 kilometre border, the two nations, Xi said, now faced a “golden opportunity” to develop their economies and deepen their friendship.

Tenge currency notes and coins in Almaty, Kazakhstan image www.www-globalcommodities.com

Tenge currency notes and coins in Almaty, Kazakhstan. Photo: Bloomberg

At the China-Kazakhstan border, at a place known as Horgos to the Chinese and Khorgos to the Kazakhs, a massive concrete immigration and customs building is being completed to mark that friendship, rising from the windswept valley floor like a mammoth Communist-style spaceship.

A short distance away, China is building an almost entirely new city, apartment block by apartment block, alongside a 520 hectare free-trade zone, where traders sit in new multi-storey shopping malls hawking such items as iPhones and fur coats.

This is reputed to have been a seventh-century stop for Silk Road merchants. Today, the People’s Daily newspaper calls it “the pearl” on the Silk Road Economic Belt.

Traffic is seen on a section of the road, which will link China and Europe, near Shymkent, Kazakhstan image www.www-globalcommodities.com

Traffic is seen on a section of the road, which will link China and Europe, near Shymkent, Kazakhstan. Photo: Washington Post

But this pearl is distinctly lopsided: On the Kazakh side of the zone, opposite all those gleaming malls, a single small building, in the shape of a nomad’s tent or yurt, sits on an expanse of wasteland where a trickle of people stop to buy biscuits, vodka and camel’s milk.

The Silk Road slogan may be new, but many of its goals are not. Beijing has long been working to secure a share of the region’s rich natural resources to fuel China’s industrial economy; it is building a network of security cooperation in Central Asia as a bulwark against Islamic extremism that could leak into China’s restive western province of Xinjiang, and it wants to create alternative trading routes to Europe that bypass Asia’s narrow, congested shipping lanes.

Under the Silk Road plan, China also is promising to spend hundreds of millions of dollars to build new infrastructure here, and hopes to reap benefits of its own: to create new markets for Chinese goods, especially for heavy industries such as steel and cement that have suffered as the Chinese economy has slowed.

New_silk_road map image www.www-globalcommodities.com

But the scene at Horgos underlines the fact that the economies of China’s Central Asian neighbours are simply too small to provide much of a stimulus to China’s giant, slowing economy.

China’s ambitious Central Asian plans did not go down well, at least initially, in Moscow.

“When China announced its Silk Road plan in Kazakhstan, it was met with a lot of skepticism and even fear by the Russian leadership,” said Alexander Gabuyev, head of the Russia in the Asia Pacific Program at the Carnegie Moscow Centre. “The feeling was, ‘It’s a project to steal Central Asia from us, they want to exploit our economic difficulties to be really present in the region’. ”

Russia had long blocked China’s attempts to create an infrastructure development bank under the auspices of the Shanghai Cooperation Organisation, a regional body, fearing it would become a tool for Chinese economic expansion. Beijing responded by side-stepping Moscow, establishing an Asian Infrastructure Investment Bank in June with a $US100 billion ($137 billion) capital base.

China has overtaken Russia to become Central Asia’s biggest trade partner and lender. Pipelines transport increasing amounts of Kazakh oil to China and vast quantities of Turkmen gas east through Horgos. That has served to undermine Russia’s negotiating position when it has tried to sell its own gas to China.

At the same time, however, President Xi has worked overtime to calm Russian fears, reassuring his counterpart Vladimir Putin that Beijing has no plans to counter his country’s political and security dominance in Central Asia.

In 2014, Russia attempted to draw the region more closely into its embrace by establishing a Eurasian Economic Union, with Kazakhstan a founding member. But even as Moscow moved to protect its turf, the realisation was dawning that Russia lacked the financial resources to provide Central Asia the economic support it needed.

After the breakdown of relations with the West over Ukraine in 2014, and the imposition of sanctions, the dogmatic view that Russia had to be the top economic dog in Central Asia was questioned, and then finally, grudgingly abandoned.

It was impossible, Gabuyev said, so Russia’s leaders decided to divide the labour: Russia would provide security, while China would bring its financial muscle.

In May, Xi and Putin signed a treaty designed to balance the two nations’ interests in Central Asia, and integrate the Eurasian Economic Union and the Silk Road.

China’s expanding influence has provoked mixed feelings in many Asian states, has used “velvet gloves” in its dealings with Central Asia, said Nargis Kassenova, an international relations expert at KIMEP University in Almaty.

About a quarter of Kazakhstan’s citizens are ethnic Russians, while Russian media dominate the airwaves. The Chinese language, by contrast, is nowhere to be seen or heard. Even India has more cultural resonance through Bollywood films, says political scientist Dossym Satpayev in Almaty.

What Beijing can offer is infrastructure loans and investment. It has been careful to frame its plans as more than just a “road” — where Kazakhstan’s natural resources are extracted, and Chinese goods waved through on their way to Europe – but as a “belt” of economic prosperity.

Nevertheless, a survey conducted by independent analyst Elena Sadovskaya found that Kazakh attitudes toward Chinese migrant workers reflect fears that China would one day dominate the country, swamp it with immigrants and cheap goods, grab land or simply suck out its natural resources while giving little in return. “In 2030, we’ll all wake up and find ourselves speaking Chinese,” is one common saying here.

In July, scores of people were injured when a mass brawl broke out between Chinese and local workers at a copper mine near the northern Kazakh city of Aktogay.

Kazakhstan’s Foreign Minister Erlan Idrissov plays down concerns. China may outnumber the 17 million Kazakh population by 80 to one, but its progress and development is good news, he says.

“Our philosophy is simple: We should get on board that train,” he said in an interview in Astana. “We want to benefit from the growth of China and we don’t see any risks to us in that growth.”

China’s state-owned investment giant CITIC runs an oil field and an asphalt factory in Kazakhstan, and says it has established a $US110 billion fund to invest in Silk Road projects, much of the money aimed at Kazakhstan and Central Asia.

But private Chinese companies and ordinary Chinese traders say they have yet to reap the rewards, as the small Kazakh economy is shrinking under the weight of falling commodity prices and Russia’s economic decline.

Meanwhile Russia is playing interference, they say, imposing new import restrictions under the Eurasian Economic Union in an apparent attempt to keep Chinese goods from flooding the region.

In Almaty, the Yema Group has been importing Chinese bulldozers, diggers and other heavy equipment for more than a decade. Business, once booming, has collapsed in the past two years, as many Chinese vehicles fail to meet tough Russian certification standards that now apply throughout the economic union.

Shi Hairu, a 52-year-old trader from Shanghai, who sells Chinese gloves in a small shop in a market in Almaty, arrived two years ago when the economy at home started to slow. But sales have been halved this year – a sharp depreciation in the Kazakh currency, the tenge, has drastically reduced locals’ purchasing power, while customs clearance has become slower and costlier.

In the Horgos free-trade zone, Chinese traders also say business is poor. Many were lured here by tax breaks and cut price deals to rent shops, and by enthusiastic cheer-leading by state media about the opportunities on offer.

“After we came here, we realised it was all lies,” said one owner of a shop that sells women’s underwear who declined to be named for fear of trouble with the authorities.”We basically got deceived into coming here.”

The Kazakh government is building a “dry port” at Khorgos — with warehouses, an industrial park and rows of cranes to transfer containers across different railroad gauges — in what it hopes will become a major distribution and trans-shipment hub for goods bound between China and Western Europe, a “mini-Dubai” in the making. But the nearby free-trade zone still boasts just the one small supermarket, guarded by four lonely concrete camels, plastic flowers in their saddlebags. The nearest Kazakh city, Almaty, is a five-hour drive away along a bone-jarring road.

Yang Shu, director of the Institute of Central Asian Studies at Lanzhou University, calls Horgos “a mistake,” because so few people are in its vicinity. Trade between the two nations declined 40 percent in the first six months of this year, to $US5.4 billion, just a quarter of 1 percent of China’s global trade.

Nevertheless, experts agree that China’s Silk Road plan has immeasurably more clout than the American New Silk Road plan advanced by then-Secretary of State Hillary Rodham Clinton in 2011 that was meant to bind Afghanistan to Central Asia but barely got off the ground, or Russia’s own pivot to Asia, mired in economic woes and bureaucratic inertia.

For now, Pantucci, at the Royal United Services Institute, said China and Russia have established some sort of “modus vivendi” here. “I used to believe Central Asia would become a bone of contention between the two countries, but the priority in Moscow and Beijing remains the broader strategic relationship,” he said. “Wrinkles like disagreements in Central Asia will get swept underfoot.”

But Tom Miller, at a consulting firm called Gavekal Dragonomics, argues that as Beijing’s investment and financial ties with Central Asia deepen, “its political influence will inevitably strengthen”, too. Harking back to the Great Game, the 19th-century contest between the British and Russian empires influence in Central Asia, he says there is only one winner this time around.

Beijing’s strategists studiously avoid any talk of playing a new Great Game in the heart of Asia – “but they look set to win it nonetheless,” Miller said.

Washington Post

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Henry Sapiecha

China launches massive military manhunt for coal mine killers of almost 100 people

Thursday, October 15th, 2015

china_workers_quarters_room_coal image www.www-globalcommodities.com

An area double the size of Manhattan has been cordoned off as authorities pursue suspects following a coordinated knife attack that killed 60 workers at a northwestern Chinese coal mine, reports the FT.

The incident, first reported by Radio Free Asia, occurred on September 18 in the Xinjiang Uyghur Autonomous Region. After overtaking security guards, the attackers killed the workers while they were asleep in bunkhouses at the Sogan colliery in the city of Aksu. The attackers are alleged to be Uyghur separatists.

The nine suspects, are said to be hiding in  nearby mountains  where a massive military-led operation is now underway:

The helicopters and drones are operating out of the airport at Aksu, the largest city in the area. Police have established checkpoints on all roads leading to Baicheng, which covers an area of about 16,000 sq km. Heavily armed police are posted behind sandbag bunkers at each road block, providing cover for their colleagues who perform identification and weapons checks on all people entering the area.”

Most of the victims were Han Chinese migrant workers, but according to locals five police officers who responded to the attack were also killed. Aksu residents fear the death toll could be as high as 100.

The Xinjiang Uyghur Autonomous Region suffers from discord due to ethnic fault lines. Uyghurs identify more closely with Central Asian nations.

The FT reports that Xinjiang “has long been a strategic priority for the Chinese government because of its natural resources, including the country’s largest coal reserves, and its proximity to even bigger energy sources in Central Asia.”:

“It is also a key component of President Xi Jinping’s “New Silk Road” strategy, aimed at enhancing Eurasian infrastructure links.”

The area was independent up to 1949 when it became part of China. China has been asserting is control over the area with more westward migration and a heavier military presence.

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Henry Sapiecha

True giants of mining: World’s top 10 iron ore mines

Saturday, September 19th, 2015

Vladimir Basov | September 17, 2015

The price of iron ore  on Thursday turned positive amid new signs that China, which dominates the seaborne trade in the steel making raw material, will be pushing ahead with stimulus programs to boost its slowing economy.

The benchmark 62% Fe import price including freight and insurance at the Chinese port of Tianjin added 1.4% to $56.80 a tonne. Iron ore reached a 10-week high last week according to data provided by The SteelIndex and is trading up some 28% from record lows for the spot market hit early July 8.

While today’s price is nowhere near record highs above $190 a tonne reached in February 2011, it is worth noting that iron ore traded for less than $20 a tonne for 40 years before China’s rapid expansion transformed the industry at the turn of the century and made iron the second most traded commodity after crude oil.

Due to rapid global urbanization the world steel consumption nearly doubled over the past decade, from about 800 million tonnes in 2000 to more than 1,500 million tonnes in 2014. China is the leader in both steel production (50% of world total) and iron ore mining (47% of global output in terms of tonnage). China is also the biggest iron ore importer and, as of April 2015, consumed more than 80% of the 1.3 billion tonne seaborne trade.

Steel-consumption-in-China-and-the-world-graph image www.www-globalcommodities.com

Steel consumption in China and the world. Source: LKAB Annual Report

Given that iron is the fourth most abundant element on Earth, comprising about 5% of the Earth’s crust by weight, global iron ore market is highly competitive.

These factors led to a significant increase in the supply of iron ore from new mines in recent years, with a number of lowest-cost production centers commissioned mainly in Australia.

Iron-ore-supply-and-demand-graph image www.www-globalcommodities.com

Iron ore supply and demand relationship. Source: LKAB Annual Report

An oversupply of iron ore combined with China  adding more steel-making capacity than it needed, resulted in a slump in the iron ore spot prices over the past two years, including a staggering 47% decline in 2014 and a further 18% retreat so far this year.

Spot-market-iron-ore-price-indiex-fines-graph image www.www-globalcommodities.com

Spot iron ore prices. Source: Vale’s website.

As a result, a number of high-cost iron ore mines have been closed and suspended throughout the world in 2014, with up to 30% of low-grade iron mines shut down in China in 2014 alone.

Some experts argued that higher-cost producers, mainly from China, are falling victim to a strategy pursued by the biggest producers of iron ore, namely BHP Billiton, Rio Tinto and Vale.

Along with Fortescue, these companies account for more than 60% of global iron-ore exports.  Those iron behemoths have been relentlessly increasing lowest-cost production output.

Cumulative-Mt-we-as-delivered-graph image www.www-globalcommodities.com

China’s 2015 Iron Ore Supply CFR Costs (including royalties & ocean freight). Published in Fortescue’s investor presentation

As can be seen from this chart, nearly all iron ore production in China is uneconomic under current market conditions, and many local mines have been recently closed / suspended.

Because of the massive scale of closures of iron ore mines, current supply growth is lower than expected. This, combined with recently announced infrastructure spending boost in China, are believed to be the main reasons behind a revived iron ore market.

Our iron ore ranking is based on data from IntelligenceMine:
Search, organize and map a global database of more than 45,000 mining company and property profiles

Having driven out smaller inefficient producers, the world’s giant iron ore centers are best positioned to capitalize on a rising price environment.

Who are those global leaders in iron ore mining?

The following analysis covers those iron ore production centers that have two main distinctive features: disclosure of production numbers by the owner/operator and separate production units running as a single operation. Therefore the iron ore operations ranked here be individual mines or a complex of clustered mines.

The top 10 iron ore mining centers, ranked by ore mined in 2014 calendar year

Top-10-iron-ore-mining-centers-raned-by-iron-ore-mined-in-2014-calendar-year-table.2 image www.www-globalcommodities.com

Source: IntelligenceMine

  1. Hamersley.

The biggest iron ore mining center is the Rio Tinto’s Hamersley Mines that incorporates nine mines in Western Australia. These assets are run as a single operation managed and maintained by Pilbara Iron, and produced a total of 163Mt iron ore. Being the biggest iron ore production center in the world, Hamersley is also the lowest-cost operation.

Mount-Tom-Price-mine-part-of-Hamersley-mine-complex-Rio-Tinto image www.www-globalcommodities.com

Mount Tom Price mine, part of Hamersley mine complex, Rio Tinto. Photo: Wikimedia commons.

  1. Carajas

Vale’s Carajas Mine Complex is the second biggest iron ore production center, which consists of three open-pit mines, namely Carajas N4E, N4W and N5, and operated as the Serra Norte Mining Center. In 2014, Carajas mines produced 120Mt of iron ore. With an average iron ore grade in reserves of about 66%, this is believed to be the highest grade iron ore center in the world.

Ponta-de-Madeira-Terminal-Carajas-Mine-Complex-image www.www-globalcommodities.com

Ponta de Madeira Terminal – Carajas Mine Complex. Reclaimers and stackers can be seen. Photo courtesy of Vale.

  1. Chichester Hub

Fortescue’s Chichester Hub consists of Christmas Creek and Cloudbreak iron ore mines. In 2014, it is believed that Chichester Hub has achieved its annual production capacity of 90Mt of iron ore. For only five years since its commissioning in 2008, Chichester Hub became one of the biggest iron ore producing centers globally.

Christmas-Creek-mine-Chichester-Hub-image www.www-globalcommodities.com

Christmas Creek mine – Chichester Hub. Image courtesy of Fortescue Metals Group.

  1. Yandi

BHP Billiton’s Yandi mine, located in Western Australia, is the biggest single-pit open-cut iron ore in the world in terms of annual production. In 2014, 80Mt of iron ore were produced there.

Yandi-iron-ore-mine-image www.www-globalcommodities.com

Yandi iron ore mine. Image courtesy of Flickr.

  1. Mt Whaleback

Another BHP Billiton’s operation, the massive Mt Whaleback mine, is the biggest single-pit open-cut iron ore mine in the world in terms of pit size. This mine is more than 5 kilometres long and nearly 1.5 kilometres wide. 77Mt of iron ore mined here in 2014.

Mt.-Whaleback-iron-ore-mine-image www.www-globalcommodities.com

Mount Whaleback iron ore mine. Photo courtesy of Flickr.

  1. Solomon Hub

Fortescue’s Solomon Hub that comprises Firetail and Kings producing mines. Together, Firetail and Kings have an annual production capacity in excess of 70Mt.  In 2014, Solomon Hub is believed to produce about 58Mt of iron ore.

Solomon-Hub-operations-image www.www-globalcommodities.com

Solomon Hub operations. Photo: Fortescue’s website.

  1. Area C

The Western Australia’s Area C mine, led by POSMAC JV with major BHP Billiton’s ownership, is seventh with 57Mt of iron ore produced in 2014.

Area-C-mine-image www.www-globalcommodities.com

Area C mine. Source: fastjv.com.au.

  1. Hope Downs

Eighth biggest operation is Hope Downs mine in Western Australia, operated by the Hope Downs Joint Venture, a 50 / 50 joint venture between Hope Downs Iron Ore, led by Australia’s richest person and iron ore tycoon Gina Rinehart, and Rio Tinto Iron Ore.  In 2014, iron ore output at this mine achieved 43Mt.

Hope-Downs-Mine-stockyard-machines-image www.www-globalcommodities.com

Hope Downs Mine. Stockyard Machines. Photo courtesy of P&J Project Services.

  1. Mariana Hub

Vale’s Mariana mining hub in Brazil consists of three mines, and produced roughly 39Mt of iron ore in 2014.

Alegria-Mine-Mariana-Hub-image www.www-globalcommodities.com

Alegria mine – Mariana Hub. Photo courtesy of International Mining

  1. Sishen

Anglo American’s flagship’s Sishen iron ore mine in South Africa is tenth in terms of iron ore output with 36Mt of iron ore mined out in 2014. Being some 14km long, Sishen mine is one of the largest open pit mines in the world.

Sishen-Mine-image www.www-globalcommodities.com

Sishen mine. Photo courtesy of Anglo American.

Seven out of the top 10 biggest iron production centers are located in Western Australia, and with whopping 697Mt of iron ore produced in 2014. This Australian state is believed to be the biggest jurisdiction in the world in terms of iron ore output.

IntelligenceMine is global mining market intelligence for Researchers, Investors and Suppliers. Get access to more than 45,000 company and property profiles, a powerful multi-faceted search with comparative result grids, sorting and download capabilities, an online interactive mapper and much more. Find out more at www.IntelligenceMine.com.

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Henry Sapiecha

Chile about to be China’s next competitor in the rare earths mineral market

Tuesday, June 9th, 2015

chile-may-be-chinas-next-competitor-in-the-rare-earths-market map image www.ww-globalcommodities.com

The rare earths industry is about to experience a clean-versus-dirty battle until now only seen among fuel producers, as a Chilean company is stepping up efforts to grab some of that market in a much greener way than China, the world’s top producer of such elements.

Mineria Activa’s project aims to develop the market for rare earths in the copper producing country, based on a recent survey that showed there are major concentrations of elements such as neodymium and dysprosium, south of capital Santiago. What’s even better: those deposits are quite similar to the ones found in southern China.

The firm’s project, named Biolantánidos, will dig out the clay, put it through a tank-leaching process with biodegradable chemicals and return it cleaned to the ground, replanting pine and eucalyptus trees. In China, operators pump ammonium sulfate into the ground and wait for the chemical to seep out with the minerals.

“It may be laborious,” Arturo Albornoz, who heads the project told Bloomberg, but he believes that soon firms such as ThyssenKrupp AG, Apple Inc. and Tomahawk cruise missile maker Raytheon Co. will choose to pay a bit more for supplies extracted in a way that doesn’t destroy the planet. “It’s our big bet on green mining,” he added.

rare-earth-graph image www.www-globalcommodities.com

Currently China continues to dominate the rare earth market, producing about 90% of the elements that are vital in the creation of a big variety of electronic technologies including lithium car batteries, solar panels, wind turbines, flat-screen television, compact fluorescent light bulbs, petroleum-to-gasoline catalytic cracking, and military defence components such as missile guidance systems.

Crumbling monopoly

The Asian giant did not always enjoy a virtual monopoly on REE production. The majority of the 17 rare earth elements were sourced from placer deposits in India and Brazil in the late 1940s.

During the 1950s, South Africa mined the majority of the world’s REEs from large veins of rare earth-bearing monazite.

From the 1960s to 1980s, rare earths were supplied mainly from the US, mostly from the massive Mountain Pass mine in California, which was eventually mothballed in 2002.

China then took over the industry completely, producing more than 95% of the world’s REEs centred in Inner Mongolia and also becoming the top consumer ahead of Japan and South Korea.

Worries about Beijing’s monopoly of production sent prices for all rare earths into the stratosphere from 2008 onwards with some REEs going up in price twenty-fold or more.

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China applied export quotas and raised export tariffs on rare earths in 2010 to protect natural resources, ending the export restrictions in 2015 and scrapping the tariffs from May 1, in line with a ruling from the WTO.

Despite the quotas and tariffs removal, rare earth companies, especially smaller ones, will continue suffering this year, analysts agree, as prices for some of the elements have dropped significantly in recent years.

The challenging environment doesn’t seem to bother the Chilean firm, which expects that its project, still in a pilot stage, will start producing rare earths by the end of 2016.

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Henry Sapiecha

China claims to hold over 2 million tonnes of uranium deposits

Friday, April 3rd, 2015

China claims to hold over 2 million tonnes of uranium deposits

Chinese authorities have unveiled the results of study into the nation’s uranium deposits, which puts its reserves at over 2 million tonnes, government’s Xinhua News Agency reports.

According to the head of China Nuclear geology (CNG), Du Yunbin, the country’s uranium deposits have doubled in the last 15 years to more than 350 across the nation.

The news come as China continues to expand its nuclear program, officially resuming construction of new plants after a 15-months hiatus, beginning with the fifth unit at the Hongyanhe nuclear plant in Liaoning.

With the move, Beijing intends to become self-sufficient not just in nuclear power plant capacity, but also in the production of fuel for those plants.

Domestic uranium mining currently supplies less than a quarter of China’s nuclear fuel needs, according to data from The World Nuclear Association. Exploration and plans for new mines have increased significantly since 2000, and state-owned firms are also acquiring uranium resources internationally.

To boost discoveries, the nation has created a multi-dimensional search system for uranium mines, which includes space remote sensing as well as airborne, ground-based and deep-mining exploration, the official said.

Supporting new projects will be critical to China achieving its 2020 target of 58 gigawatts of installed nuclear capacity by 2020, up from about 20 gigawatts today. The government wants to raise the role of nuclear-power production in China’s energy mix, part of an effort to draw down reliance on polluting coal.

China is the world’s largest nuclear growth market. The country operates 24 reactors currently and a further 25 are under construction, out of 68 globally, according to the IAEA.

While Beijing doesn’t disclose total spending, estimates based on the cost of reactors show the country is investing tens of billions of dollars in potential new business for Chinese and foreign companies over the coming decade

OOO

Henry Sapiecha

Chinese company on the verge of starting to mine uranium in Namibia

Thursday, April 2nd, 2015

Chinese firm close to start mining uranium in Namibia

China General Nuclear Power Holding Corp (CGNPC), the country’s biggest producer of nuclear energy, is getting ready to begin mining for uranium at its Husab mine, located in western-central Namibia.

According to African Review, the clean energy corporation intends to start processing the ore in February 2016, with operations slated to begin later this year.

CGNPC, which acquired the mine after taking control of Kalahari Minerals and Extract Resources, has spent over US$2bn in the project since work began in 2012, which makes it China’s largest investment in the African nation so far.

Once fully operational, Husab mine will have the potential to produce 15 million pounds of uranium oxide.

Once fully operational, Husab mine will have the potential to produce 15 million pounds of uranium oxide.

Canada’s Cameco Corp (TSX:CCO), the country’s biggest uranium producer, has been signalled in the past as potential buyer for offtake output from the project, located 8 kilometers (5 miles) south of Rio Tinto Group’s Z20 deposit in the Namib-Naukluft national park.

Uranium mineralization was first discovered in the Namibia’s Rossing Mountains, Namib Desert, in 1928 by Capt. G. Peter Louw. Uranium exploration official started in 1960s with Rio Tinto obtaining exploration rights for the Rössing deposit in 1966. It started production in 1976.

The Rössing mine is currently Namibia’s longest running and one of the world’s largest open pit uranium mines.

Image courtesy of Swakop Uranium.

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Henry Sapiecha

CHART: Beijing has finally turned around rare earth prices

Friday, March 13th, 2015

CHART: Beijing has finally turned around rare earth prices

Beijing has a new strategy to tighten its grip on the rare earth supply chain. And it’s working.

Beijing has finally turned around rare earth pricesChina produces nearly 90% of the world’s rare earths and its downstream industry consumes 70% of the 17 elements used in a variety of hi-tech industries including renewable energy, medical devices and defence.

Customs data show export volumes grew 27.3% in 2014 to 28,000 tonnes but the average export price of REE products plummeted to only 83,000 yuan ($13,000) per tonne. That’s a decrease of 47.8% from the year before and the third year in a row of sharp declines.

Following a World Trade Organization ruling, China is abolishing its decade-old export quota system for rare earths and is due to lift export tariffs of 20%-plus in May.

This liberalization should translate into further price declines, but Beijing has found other ways to tighten its grip on the industry.

The price surge at the start of the decade resulted in widespread demand destruction and substitution causing long term damage to the industry

The country is consolidating the industry under six large organizations led by the newly-named China North Rare Earth Group. The Inner Mongolia-based company operates the Bayan Obo iron ore mine and before the 2010 price surge after Beijing reduced export quotes, produced half the world’s REEs as a by-product.

Apart from combining mine output China North Rare Earth and the five groups are being vertically integrated to help modernize the country’s mostly low-tech rare earth separation and refining businesses.

Long the scourge of the industry, China is also intensifying efforts to shut down small-scale illegal REE mining and is enforcing strict new environmental policies as part of its broader war on pollution.

Details are still sketchy, but the export quota system could be replaced by production control licences based on adherence to environmental standards (so-called “green permits”) while export tariffs could make way for a value added tax and export certificates.

China’s State Bureau of Material Reserve is also embarking on a new round of REE stockpiling, while the Baotou Rare Earth Products Exchange launched in March should encourage private sector stockpiling a la Fanya Metal Exchange.

These measures are pushing up the cost of production which is already being reflected in the price.

The Association of China Rare Earth Industry price index (a rolling 20-day average of REE prices across the industry) this week racked up gains of 13% since the end of last year.

Some light REEs including the work horses of the industry cerium and lanthumum continue to fall while terbium and dysprosium have soared recently so it’s not a broad-based rally just yet.

Neither is it a return to he crazy days of 2010 – 2011 by any stretch, nor the mid-2013 rally (which turned out to be a dead cat bounce). But a turnaround nonetheless.

The price surge at the start of the decade resulted in widespread demand destruction and substitution causing long term damage to everyone from rare earth explorers to magnet manufacturers.

A steady – if unspectacular – build-up in price may be just what the industry needs.

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Henry Sapiecha

China lowers coal export levies to boost ailing economy

Tuesday, December 23rd, 2014

china-lowers-coal-export-levies-to-boost-ailing-economy image www.www-globalcommodities.com

China, the world’s biggest coal consumer, is cutting export tariffs for the fossil fuel beginning Jan. 1 and it will also correct those for a range of other commodities particularly some consumer products and parts to make high-tech devices.

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The move, which aims to spur domestic demand and promote industrial upgrading, comes after relentless lobbying by the China National Coal Association, as a sharp drop in the commodity price has left about 70% of the country’s miners in the red and more than 50% to owe wages, Reuters reports.

Other items that will see lower tariffs next year include camera lenses and lasers for fiber-optic communication systems, the Ministry of Finance said in a statement on its website Tuesday.

Last month the Asian giant signed a free trade agreement with Australia that eliminates a 6% import tariff on power-station coal and a 3% levy on steelmaking coal coming from Down Under.

China’s dependence on coal is well known. Annual consumption exceeded 1 billion short tons per year in 1988 and has exploded since then, to about 4 billion tons last year. This means the Asian giant gets about 70% of its energy from the fossil fuel, a number the government hopes to reduce to 65% by 2017.

In the past three years Australia’s coal industry has experienced challenging times with prices for thermal coal, which consumed by power stations to generate electricity, dropping over 40%. More than 30,000 mining jobs have been lost in Australia this year amid a slump in the price of key commodities like coal and iron ore.

large loan application banners image www.money-au (8)

Henry Sapiecha

Hong Kong stock exchange to begin gold trading in Shanghai

Tuesday, December 16th, 2014

chinese gold dragon claw image www.www-globalcommodities.com

Members of the century-old Chinese Gold & Silver Exchange Society in Hong Kong should be able to start trading the yellow metal in Shanghai from March next year, allowing them to tap into mounting demand on the Chinese mainland, the world’s leading gold consumer.

The CGSE has been accepted by the Shanghai Gold Exchange as a strategic trading member, allowing CGSE members to do business on the main and international boards of the Chinese exchange, said Haywood Cheung, president of the CGSE.

Cheung said the CGSE was building a system to link into Shanghai trading, which was expected to be ready in March next year. Its members would be able to trade for themselves and for clients.

Physical gold traded on the Shanghai exchange and delivered into the mainland market is subject to full rebate of a 17-percent value-added tax, cutting the cost of imports.

The connection between the two exchanges will also benefit the CGSE’s plan to set up a trading floor and bonded warehouse for gold in a free-trade zone in Qianhai, in Shenzhen city of Guangdong province, home to thousands of jewelry makers.

The trading floor and a bonded warehouse able to hold 1,500 tons of gold would be ready in the first half of 2017, Cheung said. Before that, the CGSE would rent a three-story building in Qianhai as a temporary site to start trading and warehousing in March 2015.

“The Qianhai operations would increase China’s gold trade,” Cheung said, referring to imports and re-exports.

Sixty-eight out of 171 CGSE members have registered to set up operations in Qianhai to trade products listed on the exchange in Hong Kong, Cheung said.

They could take orders from clients on the mainland and overseas who held accounts in Qianhai at the exchange’s clearing banks, he said.

Mainland clients would be able to trade products priced in US dollars and Hong Kong dollars and foreign investors would be able to hedge yuan in their gold trades, Cheung said.

The exchange in Hong Kong currently trades gold and silver priced in the US dollar, Hong Kong dollar and yuan.

Foreign banks would be able to do inventory financing for gold in the Qianhai bonded warehouse, Cheung said. The CGSE would manage the warehouse and issue stock warrants.

Physical gold for the Qianhai trade would be imported through 15 banks currently authorized by Beijing as importers.

Henry Sapiecha

gold bar line

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