Archive for the ‘MINERALS METALS’ Category

Allana Potash sold to Israel Chemicals for $137 million

Thursday, April 2nd, 2015

Allana Potash sold to Israel Chemicals for $137 million

Canadian junior miner Allana Potash Corp. (TSX:AAA) has agreed to be acquired by fertilizer giant Israel Chemicals Ltd. (ICL) after it failed to raise the capital it needed to remain as a standalone company.

The market reacted positively to the news as the stock was trading almost 44% higher at 47.5 Canadian cents in Toronto at 11:18 am

The $109.50 million takeover(or Cdn$137M), aims to speed up development of Allana’s promising Danakil project in northeast Ethiopia.

“Considering the generally challenging financial environment for junior mining companies, we would expect the short and long-term financing needs of Allana to include potentially significant dilution to Allana’s current shareholders,” Allana chief executive, Farhad Abasov, said in the statement.

ICL already owns 16.4% of Allana’s shares and the deal is expected to close by August 17

Danakil project location shows in below map

Allana Potash sold to Israel Chemicals for $137 million

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Henry Sapiecha

 

Copper Porphyries INFOGRAPHIC: Everything you need to know about it here

Friday, March 13th, 2015

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Henry Sapiecha

Russian potash mine disaster in pictures

Friday, March 6th, 2015

Insane pictures of Russian potash mine disaster

Solikamsk-2 accident first implications: situation could worsen

After a statement made by one of the world’s largest potash producers and exporters Uralkali (MCX:URKA)(LON:URALL), first visual implications of Solikamsk-2 potash mine accident have been revealed.

Insane pictures of Russian potash mine disaster

30-40 meters diameter sinkhole near the Solikamsk-2 potash mine (source: V-kurse.ru).

A sinkhole with a diameter of 30-40 meters has been detected to the east of the Solikamsk-2 production site, at the area packed with summer cottages. There were no casualties reported so far.

Insane pictures of Russian potash mine disaster

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Henry Sapiecha

$134BILLION WIPED OFF VALUE IN TOP 10 COPPER MINES

Thursday, January 15th, 2015

Top 10 copper mines plunge $134 billion in value

It’s been a brutal two days on the copper market with prices falling nearly 10% since Monday.

Containing the losses to single digits was only thanks to a late recovery in New York on Wednesday.

Earlier in the day the price dropped 8% on the London Metal Exchange while losses in Shanghai could’ve been worse if the daily down limits on the Chinese exchange hadn’t been reached.

Many market observers (including your writer) believe prices won’t stay down at these levels which are the lowest since July 2009 – the height of the financial crisis.

Containing the losses to single digits was only thanks to a late recovery in New York on Wednesday

Between them the planet’s top ten producing mines have proven and probable reserves of 42.3 billion tonnes.

Contained metal at these 10 sites amount to 182.2 million tonnes.

Monday’s close at $6,130 a tonne on the LME to Wednesday’s end of day price of $5,548 a tonne (up from a stomach-churning $5,353 earlier) turns into a combined loss (or writedown if you will) of value at the mines of $133.8 billion dollars.

Of course these numbers represent money still buried in the ground, but it’s nevertheless a stark and sobering exercise to calculate just how much damage the red metal rout has done.

And how happenings on faraway futures markets can wreak havoc on (and under) the ground.

Top 10 copper mines plunge $134 billion in value

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Henry Sapiecha

Canada approves world’s largest copper-gold mining project

Saturday, December 20th, 2014

Copper & Gold ore of 130,000 tonnes per day over a mine life of 52 years

KSM-Mitchell-looking-SE-canada copper gold image www.www-globalcommodities.com

Canada’s minister of the environment on Friday gave the green light to Seabridge Gold’s KSM project in British Columbia, the world’s largest undeveloped gold-copper project by reserves.

The joint harmonized federal and provincial environmental assessment process took nearly seven-years and KSM is only the second metal mine in five years to receive approval by Canada and BC.

Since 2006, Seabridge has spent more than $176 million in exploration, engineering and environmental work to bring the project this far.

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Seabridge Gold plans combined open-pit and underground gold copper silver and molydenum mine in the Kerr, Sulphurets, and Mitchell Creek watersheds located approximately 65 kilometres northwest of Stewart, BC and roughly 35 km northeast of the Alaska border.

The deposit boasts 38.2 million ounces of gold, 9.9 billion pounds of copper, 191 million ounces of silver and 213 million pounds of molybdenum provable and probable reserves.

The mine is expected to process 130,000 tonnes per day of ore over an anticipated mine life of 52 years.

KSM forecasts 1,800 direct and 4,770 indirect jobs across Canada during the five-year construction period and 1,040 direct jobs annually while in production.

During construction, Seabridge will spend $3.5 billion in British Columbia and $6 billion in Canada. Over the life of the mine’s operations, more than $400 million in GDP will be produced for British Columbia and more than $42 billion for Canada.

Seabridge Gold holds a 100% interest in several North American gold resource projects with its Courageous Lake gold project located in the Northwest Territories its principal asset outside KSM.

project & construction finance banner image www.money-au.com (3)

Henry Sapiecha

Rio, BHP on the verge of developing U.S. largest copper mine

Friday, December 5th, 2014

rio-bhp-getting-close-to-develop-u-s-largest-copper-mine image www.www-globalcommodities.com

Arizona’s lawmakers slipped Tuesday night a piece of legislation that would allow mining giants Rio Tinto (LON:RIO) and BHP Billiton (ASX:BHP) to jointly build a massive copper mine in the state as part of a deal with the U.S. Government.

According to Arizona Republic the bill —set to be passed before the end of the year— would allow Rio to acquire 2,400 acres of the federally protected Tonto National Forest in southeast Arizona in exchange for 5,000 acres in parcels scattered around the state.

The land land-swap bill was added into the 1,600-page National Defense Authorization Act, the annual defense appropriation legislation that must be passed each year, according to the report.

Both miners have said they expect operations at their Resolution Copper project —55%-45% owned by Rio and BHP— to start as early as 2020. But they have had to deal with legal hurdles and opposition by the San Carlos Apache Tribe and other southwestern nations, who claim the massive project would weaken the ground beneath their sacred Native American lands.

Analysts are confident this time the miners will get their wish granted.

Analysts are confident this time the miners will get their wish granted.

“This land swap has faced a long and bumpy road in Congress,” Caitlin Webber, a Bloomberg Intelligence analyst told The Daily Telegraph.

“Finally being tucked into this must-pass bill is the closest it’s been to enactment,” she added.

Resolution Copper, located in Arizona’s famous Copper Corridor, is expected to create 3,700 direct and indirect jobs and bring more than $6o billion in economic benefits to the state over its 66-year life. Rio and BHP estimate that output from the mine will meet 25% of the U.S. total demand, which will make it North America’s largest copper mine.

Learn more about the project:

BAUXITE PRODUCERS THE WORLD’S BIGGEST IS RIO-TINTO IN AUSTRALIA.INFO

Tuesday, October 28th, 2014

 

RioTintoAlcan red sign image www.www-globalcommodities.com 

 

 

Rio Tinto Alcan (RTA) has mined & shipped bauxite from Weipa since 1963. Their Weipa mines currently employ over 1,000 people & each year RTA pay $150m in salary/wages. Their local workforce increased by 54 staff last year.The RTA Weipa operation operates two continuous mines – East Weipa & Andoom – with two plants, 19km of railway to Weipa’s port, two stockpiles & two ship loaders.

RTA exported 26m tonnes of bauxite last year, a 14% increase on 2012.

BAUXITE DEMAND

Australia is the largest producer of bauxite in the world. In addition, Australia is the second largest bauxite resource in the world, after Guinea in Africa.

There are 5 active bauxite mines & 6 refineries across Australia, & Weipa – given the quality of its bauxite plus its prime port location so close to Asia – is the largest operation in the country.

World-wide demand for high quality bauxite is rising & particularly in Asia.

Chinese demand remains strong. Bauxite consumption is projected to increase by 6% to 7% per annum in coming decades.

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Henry Sapiecha

AUSTRALIA & BRAZIL TO CONTROL WORLDS IRON ORE PRODUCTION

Thursday, October 16th, 2014

Australia, Brazil to control 90% of global iron ore trade by 2020

australia-brazil-to-control-90-of-global-iron-ore-trade-by-2020 image www.www-globalcommodities.comDespite iron ore prices touching rock bottom, the top three producers have no plans to slowdown production. Quite the contrary.

Australia and Brazil, the two largest iron ore producing countries, are forecast to increase their combined share of global seaborne supply to 90% by 2020 as mining giants VALE (NYSE:VALE) and Rio Tinto (LON:RIO) continue to boost output and push higher-cost miners out of the market, research shows.

The two countries are expected to rise their joint share from 73% last year to 79% in 2015, Macquarie Group Ltd. notes in a commodities report sent out Wednesday.

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Oversupply, together with a slowdown in demand from top consumer China, has caused prices to plummet by almost 40% this year below $80 per ton

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Oversupply, together with a slowdown in demand from top consumer China, has caused prices to plummet by almost 40% this year below $80 per ton, their lowest level since 2009. And the top three iron miners have no plans to slowdown their plans to boost production.

Delivering its third quarter results today, Rio Tinto —the world’s second-largest producer of the steel-making ingredient— said iron-ore output increased 5% in the period. The miner added it aims to keep hiking production in order to win a greater share of the iron-ore export market.

“Our strategy of focussing on long-life, low-cost assets means we will continue to generate strong cash flows despite a lower price environment, resulting in materially increased and consistent cash returns to shareholders,” CEO Sam Walsh said in a statement.

He added the size of its operations in the remote northeast of Australia allows it to produce ore at a significantly lower cost than its competitors.

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Walsh also reiterated expectations that Rio would produce 295 million tons of iron ore globally this year, including output from its Canadian operations. In addition, he said the miner intends to sell around 5 million tons of extra ore from its own stockpiles.

BHP Billiton (ASX:BHP), the world’s largest mining company, said last week it will to lift its iron ore capacity by almost 30% without building any new mines and vowed to overtake Rio as the world’s most profitable producer of the steelmaking commodity.

And Vale, the world’s largest iron-ore mining company, has said it plans to boost output to 450 million tons by 2018 from 306 million last year.

If everything goes according to plan, global surplus of seaborne will more than triple to 163 million tons next year from 52 million this year, according to Goldman Sachs Group Inc. The bank projects an expansion to 245 million tons in 2016, 295 million tons in 2017 and 334 million tons in 2018.

Henry Sapiecha

IRON ORE PRICES SET IN THE LOW ARENA DOWNSLIDE SET THE PACE FOR THE FUTURE

Saturday, September 13th, 2014

IRON ORE PRICE SLIDE IMAGE www.www-globalcomodities.com

 

 

 

 

 

 

 

 

 

 

But China’s seemingly endless appetite for iron ore has been finally been shown to have limits, and the iron ore price has been driven lower by the ever-increasing volumes of iron ore leaving Australia and Brazil.

Only now, as the price for Australia’s top export commodity slumps at a five-year low, does there appear to be a consensus that iron ore, and mining generally, was helping to prop up government revenues and sections of the economy far away from the rocky gorges of the Pilbara.

The recent corporate reporting season was littered with companies that named weakness in the mining sector as a factor in their own underperformance.

The trend went far beyond the traditional mining services crowd and was seen in airlines, media publishers and even clothing manufacturers who have noticed demand for their workwear products to be lower than in the past.

No longer a debating point, the lived experience in Australia suggests life is harder beyond the peak of the iron ore boom.

Not even the boldest iron ore bull would deny the recent slump in the iron ore price slump is serious.

In a consistent slide since December 4, 2013, the benchmark iron ore price has fallen 41 per cent to reach the point where several of Australia’s junior exporters are barely break-even propositions.

Two microcaps trying to export from the gulf region of the Northern Territory, an off-broadway location in the world of iron ore, have already gone bust, while others like Gindalbie appear to be approaching something like a death spiral.

A huge increase in iron ore supply from the major exporters – Rio Tinto, BHP Billiton, Brazil’s Vale and Fortescue Metals Group – has correctly been named as a major factor driving prices lower, but ANZ commodity analyst Mark Pervan said weakness in the Chinese real estate and steel sectors had also conspired to create a “perfect storm” of factors in 2014.

At this week’s prices below $US83 per tonne, Mr Pervan said iron ore had now fallen too far.

“Markets never get it right straight away, they always overshoot on the up side and the down side, and I think we are seeing a classic example here of overshooting on the down side,” he told a Bloomberg event in Melbourne this week.

Citi’s China-based commodities analyst Ivan Szpakowski said the forces behind the price falls in autumn were different to the forces pushing down the price in recent weeks.

“[The second quarter] was very much supply-driven, but this is not,” he said, noting that iron ore deliveries to China have been lower in the past two months than they were in the June quarter.

“What you saw instead was very weak end-use demand and that came both from the fundamental weakness in Chinese real estate and also from seasonal weakness because August tends to be one of the weakest times of the year for steel demand.”

Mr Szpakowski said steel mills had been running down their stockpiles rather than purchasing iron ore, and with the price sliding by the day, he said mills and traders knew they could wait and buy later at cheaper prices.

“You had a few of these factors within China really driving the move I think,” he said.

From an Australian point of view, one of the starkest aspects of this year’s price slide has been the pressure put on companies that export lower grades of iron ore.

The sudden appreciation in value for lower grade iron ores, dismissed as worthless for decades, was one of the defining features of the early years of the mining boom.

Entrepreneurs like Fortescue’s Andrew Forrest and Atlas Iron’s David Flanagan were quick to seize on the emerging trend, and they created fortunes by snapping up territory that had largely been ignored by BHP and Rio because it was not considered to be good enough for the traditional export business.

While Rio and BHP continued shipping ores with 62 per cent and even 64 per cent iron, the new entrants made billions shipping ores with iron grades closer to 57 per cent.

But this year, with huge amounts of the top quality stuff coming into the market (and China making more of an effort to clean up the efficiency of its steel industry), the walls started to close in on those selling lower grade ores.

The discounts of about 7 per cent that they had always accepted for their product began to widen to as much as 20 per cent, sending profits lower and forcing those companies to focus on finding better quality product to export.

The dynamic has reportedly eased in recent months, but none the less, China’s waning appetite for our lower quality iron ore is a significant moment in the fading of the iron ore boom.

In March, UBS published its own estimates of break-even points for iron ore miners, suggesting that while BHP Billiton and Rio Tinto had substantial buffers – still breaking even with the iron ore price at $US45 and $US43 a tonne respectively – Fortescue’s break-even point was at US$72 a tonne and Atlas Iron’s at $US82.

The pain of the low price environment has naturally been reflected in the profits and share prices of the iron ore companies, but its true impact goes much deeper.

Iron ore ranks as Australia’s most lucrative export commodity and an important part of state and federal government budgets.

Leading economists estimate the iron ore price declines seen this year have robbed the federal government of between $US10 billion and $US15 billion in revenue, forcing it to chase new sources of revenue in unpopular places.

“With an iron ore price like this, it is going to lower nominal growth,” said former treasurer Wayne Swan, whose time in charge of the national purse was also bedevilled by iron ore price volatility.

“You’d have to say [the Abbott Government] would be starting to think that they’ve got a bigger challenge on their hands than they would have thought at budget time,” said Mr Swan.

The situation is far more problematic in the iron ore industry’s home state of Western Australia, where less than seven years ago, revenue from all types of mining royalties represented barely 5 per cent of state government revenue.

Having risen every year since, iron ore alone will deliver 19 per cent of government revenue in the current financial year, rounding out at about $5.59 billion.

With iron ore revenues predicted to rise in every year of the four-year forward estimates period, Western Australia’s financial position could be sound.

But despite raking in billions of dollars from iron ore every year, WA mistakenly expected to be showered with even higher amounts of royalty revenues, and started spending before the proverbial chickens had hatched.

The WA government had expected iron ore prices to average $US122.70 this financial year, and will lose $49 million for every $US1 decrease in the average price below that target.

The state is now using debt to fund its high public-sector wages, its new football stadium and its riverfront redevelopment, and despite being at the epicentre of the decade-long commodities supercycle, no longer has a Triple A credit rating.

Campbell Jaski, a corporate restructuring expert at PPB Advisory, said a weaker Western Australian economy would unavoidably affect other state governments around Australia through the system of sharing GST revenues.

“The flow-on effect will hit all the other states, because as WA’s royalty rates reduce, their share of the GST which they currently give up to the other states will start to pull back,” he said.

“So all of a sudden Victoria, New South Wales, Tassie, Northern Territory, South Australia and Queensland will have to start paying back more GST revenue to WA as a result of the royalties falling in iron ore.”

Former federal resources minister Martin Ferguson said a diverse range of businesses would also be feeling the impact from lower iron ore prices.

“It also flows through to business in the loss of jobs and the loss of purchasing power,” he said.

“Declines in mining do have an Australia-wide impact. Think of the legal firms, the banks, environmental scientists, the airlines and the caterers, there is a huge multiplying effect.”

The existence of such links between the mining industry and the rest of the Australian economy has been hotly debated at times over the past decade, but the recent corporate profit season revealed no shortage of companies willing to bemoan the fading of the boom.

Airlines, from the fly-in, fly-out or FIFO-focused Alliance Aviation to the more mainstream Qantas, named weaker demand in the mining sector as a factor in their deteriorating profit position.

Fresh from building a large accommodation facility for iron ore workers near Port Hedland, accommodation provider Fleetwood reported that the WA market had become “subdued” in terms of winning new work.

The workwear clothing division that Pacific Brands recently sold to Wesfarmers had been affected for some time by softer than expected demand in the resources sector, while even Fairfax Media, the owner of this publication, blamed weak conditions in the mining sector for the lower revenues seen in its rural newspapers over the past year.

While some high-profile bears like former BHP executive Alberto Calderon expect the iron ore price to continue falling below $US80 per tonne, most investment banks expect it to be higher by Christmas.

Morgan Stanley expects the price to average between $US85 per tonne and $US95 per tonne in the 2015 calendar year, while Citi expects it to average $US90 per tonne in 2015 before slipping to average $US80 per tonne in 2016.

China’s demand for steel, and therefore iron ore, is expected to continue growing until 2025 or 2030, but beyond that time demand will need to come from somewhere else.

Rio Tinto has optimistically suggested that iron ore demand in India and South-East Asian nations like Indonesia and Vietnam will start to rise after 2020, but there’s little certainty around the predictions.

By then, Mr Calderon argues Australia must have moved on from its reliance on iron ore to be supplying China with “middle income commodities” like meat, grains, energy and copper.

But he warns that serious reform and investment in infrastructure will be needed to make that happen.

But amid the gloom, (and there has been plenty of it on offer this week), it’s worth considering the lot of the workers at Port Hedland, where the vast majority of Australia’s iron ore sets sail for Asia.

While the peak of iron ore prices and stock values was undoubtedly reached in early 2011, the sleep-deprived workers at Port Hedland know all too well that the peak for iron ore exports through the port is yet to come.

Australian exporters will continue to grow the volume of exports each year until the end of the decade at least, and according to some estimates the increased export volumes should be enough to offset the falls in the commodity price, ensuring consistently higher export values.

Despite the severe price falls that have already been witnessed in the early months of the 2015 financial year, the federal government’s top commodities forecaster, the Bureau of Resources and Energy Economics (BREE), predicts the value of Australia’s iron ore exports will be about 3 per cent higher this year than last at just under $80 billion.

Export values were tipped by BREE earlier this year to continue rising on the back of higher export volumes at a compound annual growth rate of 7.4 per cent to reach $87.7 billion by the 2019 financial year, but those numbers could yet be revised down when the bureau updates its forecasts later this month.

Cleveland Mining boss David Mendelawitz was involved in the early Fortescue days when iron prices were closer to $US30 per tonne.

He reckons the strength of the sector depends on your perspective.

“Prices are not low, the issue is that costs are high. Not so long ago people would have wet their pants in excitement at the prospect of $US80 per tonne iron ore prices.”

Henry Sapiecha

Titano-magnetite New Zealand may approve underwater mine

Saturday, July 26th, 2014

New Zealand may approve underwater iron sands mine

new-zealand-may-approve-first-underwater-mine-image www.www-globalcommodities.com

New Zealand will announce Wednesday the fate of Trans Tasman Resources (TTR) $70 million underwater iron sand project, which could become the world’s first commercial metals operation on the ocean floor, off the country’s west coast.

Backed by Australian, American and New Zealand investors, the mine will suck in iron-rich seafloor sands, to later extract the desired titano-magnetite for export to Asian steel mills, with about 90% of the sand being returned to the bottom of the sea.

According to Reuters, if South Taranaki Bight project is approved it will encourage others looking to mine copper, cobalt, manganese and other metals deeper on the ocean floor, but concerned about barriers to dig in Neptune’s kingdom.

TTR aims to raise as much as US$550 million in debt and equity to fund the project, expected to begin production by 2016.

ttl-project-map nz image www.www-globalcommodities.com

Kiwis Against Seabed Mining (KASM) led opposition to the initiative, claiming there was too much scientific uncertainty about environmental impacts of the proposal, as well potential effects on surf breaks and other coastal formations.

TTR argues the iron sands are mainly inhabited by sandworms, which typically re-establish themselves after disturbance over a period of years.

“Our view, supported by our science experts, is that between five and 10 years you will get almost full recovery of the area that’s been mined … because the organisms and environment are already quite adapted and recover quickly,” TTR Chief Executive Tim Crossley told Reuters.

Trans Tasman Resources already has a mining licence, but is awaiting a marine consent from New Zealand’s Environmental Protection Agency (EPA).

Trans Tasman Resources already has a mining licence, but is awaiting a marine consent from New Zealand’s Environmental Protection Agency (EPA).

Nautilus Minerals (TSX:NUS), the first company that began exploring the ocean floor for polymetallic massive sulphide deposits, reached an agreement with Papua New Guinea in April. The deal will allow Nautilus’ Solwara 1 gold, copper and silver underwater project, located in the Bismarck Sea, north of Papua New Guinea, to finally move towards production.

The Canadian company, which is also in talks with New Zealand, expects to begin production at Solwara in 2017.

The push to explore the ocean for mining minerals is gaining momentum as ore deposits on land are on the decline, and demand for hard-to-find rare-earth elements needed for portable electronics and batteries for hybrid vehicles continues to grow.

Henry Sapiecha

**** LATEST NEWS RELEASE ON UNDERWATER MINING IN NEW ZEALAND****

Authorities in New Zealand have poured cold water on Trans Tasman Resources (TTR) $70 million ocean floor iron mine project by rejecting what could have become the country’s first operation of its kind.

In its decision the country’s Environmental Protection Agency (EPA) said the major for the refusal was the vagueness around the scope and significance of the potential adverse environmental effects, and those on existing interests.

The company had applied for a permit to mine 66 square kilometres, located between 22 and 36 kilometres offshore in the South Taranaki Blight.

Up to 50 million tonnes of sand per year would have bee processed on ships to remove iron ore, with about 45 million tonnes of waste sand returned to the seabed.

The committee said it wasn’t satisfied that negative effects could be avoided, remedied or mitigated. It also said it was concerned by the “lack of clarity” about the project’s wider economic benefits, outside of royalties and taxes

The committee said it wasn’t satisfied that negative effects could be avoided, remedied or mitigated. It also said it was concerned by the “lack of clarity” about the project’s wider economic benefits, outside of royalties and taxes. The company now has 15 days to appeal with the High Court.

TTR had estimated it would extract about $446 million worth of iron each year, providing employment opportunities and raising the level of New Zealand’s exports by $147 million per year.

Considering next steps

In an e-mailed statement, Trans-Tasman Resources chief executive Tim Crossley said his firm was extremely disappointed with the decision.

“We have put a significant amount of time and effort into developing this project including consulting with iwi and local communities and undertaking detailed scientific research to assess environmental impacts of the project,” he said.

The company, which has already spent more than $50 million on the project, will take the next few days to consider next steps.

The push to explore the ocean for mining minerals is gaining momentum as ore deposits on land are on the decline, and demand for hard-to-find rare-earth elements needed for portable electronics and batteries for hybrid vehicles continues to grow.

Besides New Zealand and Papua New Guinea, where Canadian Nautilus Minerals (TSX:NUS) is developing its Solwara 1 gold, copper and silver project, other countries in the Pacific are also looking at underwater mining. Fiji, Solomon Islands, Tonga and Vanuatu, have all issued exploration licenses. Cook Islands, in the South Pacific, also plans to put seabed exploration permits up for bids later this year.

Henry Sapiecha

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