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>>>>> Jan. 29, 2014 <<<<<

China is urging its steelmakers to buy more iron-ore assets abroad

by Chuin-Wei Yap

China is urging its steel companies to buy more iron-ore assets abroad amid signs that many have been losing their appetite for such investments.

China imports around two-thirds of its iron ore, an ingredient in steel. Breakneck economic development and a flood of new wealth drove an overseas spending spree in recent years by Chinese steelmakers hungry for assets that produce iron ore. Many of those ventures have been plagued with expensive delays, however.

The National Development and Reform Commission(NRDC) on Monday said Chinese steelmakers should keep building up stakes in global iron-ore assets in the interests of China's strategic security and "speaking rights," or influence, in global trade. China's ore imports rose 10% last year to a record 819 million metric tons, according to customs data.

"China's iron-ore demand will still rise, its reliance on imports won't change, and the degree of monopoly in global iron-ore resources will still keep increasing," the NDRC said.
...

Source >>>>> WSJ <<<<<
 
>>>>> 18 Dec 2013 <<<<<<

Diamonds in Antarctica ?
by Alister Doyle

A kind of rock that often contains diamonds has been found in Antarctica for the first time, hinting at mineral riches in the vast, icy continent where mining is banned.

No diamonds were found, but researchers said they were confident the gems were there.

"It would be very surprising if there weren't diamonds in these kimberlites," Greg Yaxley of the Australian National University in Canberra, who led the research, said in a telephone interview.

Writing in the journal Nature Communications, an Australian-led team reported finding the kimberlite deposits around Mount Meredith, in the Prince Charles Mountains in East Antarctica. Kimberlite is a rare rock where diamonds are often found; it is named after the South African town of Kimberley, the site of a late 19th-century diamond rush.
...

http://www.reuters.com/article/2013/12/18/us-antarctica-diamonds-idUSBRE9BG0XF20131218
 
>>>>> 01 Feb 2014

That Was The Week That Was ... In Australia
>>>>> by Our Man in Oz

Minews. Good morning Australia. Did you get caught up in last week’s emerging market sell-off?

Oz. Not in a major way, or at least not yet. The continued slide in the value of the Aussie dollar against its U.S. cousin is the only obvious measure of the current bout of global investor uncertainty, but the overall picture is one of relative calm.

Minews. Is that one way of saying not much happened on the ASX last week?

Oz. It is, because while there was lots of daily movement, one way or the other, by the time we closed on Friday it was almost as if we need not have bothered turning up.

The all ordinaries index lost a little less than one per cent, which took its fall for January to 2.9 per cent, the worst start to a year since 2010. The metals and mining index was down by 0.5 per cent last week, while the gold index was almost dead flat.

Minews. Doesn’t sound like we have much to talk about then?

Oz. Oh, there’s always something once you dig beneath the surface, and the best way is to single out some of the companies which outperformed in an otherwise dreary market.

But another factor weighing on investors in the mining market was the sheer volume of information which hit them on Thursday and Friday, as hundreds of small miners lobbed in their December quarter reports.

It is a system which is supposed to help with investment decisions, but it is also impossible for anyone to sift through so much information filed at virtually the same time, or even after the market closes.

On Friday, for example, more than 260 reports, mainly quarterlies from miners, were released by ASX regulators after 5pm, with the last report posted on the exchange website at 8.30pm.

Minews. Information overload is a common problem for everyone these days.
...

Source >>>>> www.minesite.com
*****
 
>>>>> Please read also the last paragraph <<<<<

2 Feb 2014

The End Of The Bernanke Era: Gold Up, Trust In Financial Markets Down

>>>>> by Rob Davies

Last week saw the departure of Ben Bernanke as Chairman of the US Federal Reserve.

Although it is not directly relevant to the metal markets, a change in the person in charge of what is, in effect, the Central Bank to the world does impact on markets everywhere.

While it is true that his eight year term of office encompassed the greatest financial crash of the last sixty years, it would be unfair to blame it all on him.

His predecessor, Alan Greenspan, must take responsibility for exploiting, and abusing, the high level of trust in the financial system established by Paul Volcker before him and allowing an unprecedented explosion of credit.

One simple measure of the efficacy of the Chairman of the US Federal Reserve is whether he increased or decreased trust in financial markets during his time in charge.

If trust is measured by the gold price then Volcker undoubtedly did a good job. It fell over the course of his tenure from an average of US$524 to US$390 an ounce.

Greenspan did less well with, the gold price broadly unchanged at around US$450 an ounce during his period in office. However, in his last few years it had doubled from US$256 and then, under Bernanke, soared to US$1,900 before settling back to US$1240. Not so good.

It is arguable that Bernanke made the best of a bad job, but only by calling on the balance sheet of the US Government to print dollars to maintain an illusion of prosperity. It is the consequences of that action that are the root cause of the current turmoil in capital markets.

The news that the Fed is reducing the support it gives the US economy to “only” US$65 billion a month reinforced the flight of money from emerging markets to developed ones.

That triggered interest rate rises in India and South Africa as currencies came under pressure. While that gives miners some relief as (for example) the rand dropped to a five year low of R11.38 to the dollar, it is a reminder of the problems some countries face.

Base metal prices ended the turbulent week two per cent lower, almost matching the decline in equity markets.

Bonds had a better time and edged up 3.4 per cent. A two per cent fall in the gold price to US$1,239 was more a reflection of a stronger dollar than increased confidence in economic matters.

The weakening of currencies of countries that produce and export commodities has an immediate effect on prices, even if quoted in dollars.

That was demonstrated last week as international thermal coal prices slid three per cent to just under US$80 a tonne.

As one of the most important traded bulk commodities that move in thermal coal will have an impact on the larger miners.

That said, bulls could easily argue those fears are already factored into the share prices. Lower exchange rates will certainly help miners reduce costs in a competitive world.

It is though worth remembering that the world economy is still growing, and faster than last year. Reduced support for the US economy is a good sign as it demonstrates it is recovering.

That was evidenced by the 3.2 per cent growth reported for the fourth quarter despite the government shutdown. Cynics might even argue that growth would have been even higher if the government has shut down for longer.

Source >> www.minesite.com
*****
 
Governments in emerging markets face fuel subsidy dilemma
2 Feb 2014

Amrita Sen quoted by the FT on impact of higher fuel prices on the emerging markets energy consumption.

“Falling currencies and higher oil import costs are testing energy-intensive patterns of growth across emerging markets,” said Amrita Sen, head of the Energy Aspects consultancy.
 
>>> New book <<<

"The misunderstood crisis"
by Oskar Slingerland & Maarten Van Mourik (2014)

"Bank collapses, the sub-prime crisis and state debts running out of control – since 2008, experts and politicians have defined the economic crisis as a derailment of the financial system. Governments, without hesitation, instituted emergency bank bailouts and numerous other measures to revive the ailing economy. Five years on, the recovery is, at best, faltering and, at worst, illusory. In this timely and thought-provoking book, Dutch oil industry experts Maarten van Mourik and Oskar Slingerland argue that the crisis has been falsely diagnosed. They make a compelling case that energy, rather than the financial system, lies at its root. In 2006, by analysing industry data, they correctly predicted steep oil price rises and the economic shock that would follow. Using the same data, they now argue that the era of cheap oil is over, and with it our prospects for long-term growth. The situation should trigger a radical change of our economic and production models, yet western governments have failed to grasp the challenge. If nothing changes, the book argues, we will be heading further into deep trouble. "
 
Indaba Day Two: The Door Is Open For M&A, But Who Dares?
>>>>> 4 Feb 2014

by Bianca Markram in Cape Town (RSA)

The mining industry has been ripe for a spate of mergers and acquisitions (M&A) for some time now. There has been some action in recent years, with the largest merger yet in the form of the marriage between Xstrata and Glencore.

But plenty of room for further consolidation remains.And as one would expect, at this year’s Indaba there are plenty of whispers and speculations of targets, and of who wants to be getting into bed with whom.
...

Source >>>>> http://minesite.com/news/indaba-day-two-the-door-is-open-for-m-a-but-who-dares
 
Indaba Day Three: Enter Robert Friedland, With Great Hopes For South Africa’s Platinum Future
6 Feb 2014

by Bianca Markram in Cape Town

...

However, mining phenomenon Robert Friedland, founder and chairman of Ivanhoe Capital Corporation, came out firmly bullish on South Africa’s platinum future.

“Platinum metal equals healthier air,” he told delegates during his presentation, adding that China, India and other major urban areas around the world urgently need to clean up their air.

“Seventy five per cent of global platinum is here in South Africa and, as this world shrinks, what’s happening in the air in Beijing, Shanghai and Delhi takes us directly to Limpopo”, he said. South Africa is uniquely placed to play its role in the fuel cell era, he added.

As for copper, he noted, the future is similarly bright for Africa, with the Democratic Republic of Congo (DRC) playing a pivotal role, since it is home to Ivanhoe’s Kamoa project, which Friedland claims will be the largest copper project in the world for years to come.

His take on the copper market is that, until all the doorknobs on public toilet doors are made of copper, you had better wrap them in toilet paper before touching them, since super bugs are found to live and breed on stainless steel, while 99.1% of these bugs are killed on copper.
...

Source >>> www.minesite.com <<<
*****
 
>>> World Bank to map Africa's natural resources <<<

Feb 6, 2014

The World Bank plans to launch in July a $1-billion plan to map Africa's natural resources with the aim of delineating more clearly the continent's uncovered mineral wealth.

The project, dubbed the Billion Dollar Map, "will unlock the true worth of Africa's mineral endowment," Tom Butler, mining specialist at the Bank's private finance arm, the International Finance Corp., said Wednesday.

Speaking in Cape Town, South Africa, Butler said most of Africa's subsoil resources have not been surveyed.

Doing so, in a public way, would be useful to policy makers, investors and the public, helping to boost development, he said, according to prepared remarks.

"There is yet an enormous amount of wealth left to discover," he said.

"Coupled with in-country training and institutional support, and the work of exploration companies, this initiative will unlock the true worth of Africa's mineral endowment."

The World Bank , which calls accessible data on resources a "public good", said it has already invested over $200 million in developing geological data for Africa over the past 10 years.

Currently, it is supporting a comprehensive airborne geological survey of the entire country of Malawi.


Source: AFP and http://www.newvision.co.ug/
*****
 
>>> Mergers and acquisitions in the mining industry
>>> 7 Feb 2014

The latest report on mergers and acquisitions in the mining industry from Ernst & Young shows that deal-making hit a low ebb in 2013, which was the third consecutive year in which the deal completion tally fell.

According to Ernst & Young, acquisition plans found little support from investors in 2013 and, as a result, few deals were pursued.

What’s more, as the year progressed even divestment plans were abandoned as management teams discovered that their assets were valued too poorly to justify letting them go.

However, balance sheets also became less stressed due to refinancing and improved cash generation in the second half of the year. And this in turn actually made divestment plans less critical for many companies.

Ernst & Young found that the number of deals completed last year fell 25 per cent year-over-year to 702, the lowest level since 2007.

While the value of deals did increase by 20 per cent to US$124.7 billion, the researchers note that the increase was primarily due to the completion of the Glencore Xstrata merger. Excluding that one super-deal, value decreased 16 per cent to US$87.3 billion.

There were 19 large deals, which Ernst & Young defines as over US$1 billion, during 2013, down from the 26 completed in 2012.

Instead, smaller transactions made up the bulk of activity.

Ernst & Young notes that the majority of deals were low-risk acquisitions undertaken to increase an existing stake, to achieve domestic or inter-regional consolidation, or as a strategic attempt to secure future supply.

Capital raising followed a similar course, with only a nine per cent increase in total proceeds to US$272 billion, a rise which was largely due to some exceptional loan refinancing.

The total volume of issues fell during 2013 by nine per cent to the lowest level since 2008. While the total capital did rise year-over-year, the increase was largely attributable to refinancing work.

Looking ahead though, there are grounds for renewed optimism.

“Confidence in the global economy is improving, companies have taken action to deleverage balance sheets and the industry-wide focus on productivity and efficiency should begin to yield results”, says Ernst & Young.

“As a result, we expect the gradual strengthening of mining and metals equity valuations to continue and the increased availability of capital.”

That said, economic volatility stemming from continued instability in the Eurozone, Chinese economic rebalancing, and US Federal Reserve policies could throw a wrench in a potential recovery.

As a result, any uplift in mergers and acquisitions activity and any improvement in capital raising conditions will likely be gradual and will require “innovation in pricing” to tame volatility.

Over the longer term, Ernst & Young speculates that the bitter conditions seen over the last couple years could be sowing the seeds of the next minerals boom, as the supply and demand fundamentals of many mineral commodities begin to shift into shortage.

Source >> www.minesite.com
*****
 
>>> M&A and capital raising in mining & metals: Outlook for 2014 <<<

>>> February 2014


The mining and metals sector is entering 2014 with a more positive outlook.

Confidence in the global economy is improving, companies have taken action to deleverage balance sheets and the industry-wide focus on productivity and efficiency should begin to yield results.

As a result, we expect the gradual strengthening of mining and metals equity valuations to continue and for increased availability of capital. However, continued economic volatility is also expected in 2014 due to:

Eurozone economics
Chinese economic rebalancing
US Federal Reserve policies regarding the tapering of quantitative easing

As supply and demand struggle to return to post-super cycle equilibrium, we expect further price volatility to occur for at least the next two years. This will see caution prevail, and any uplift in M&A activity and improvement of capital raising conditions will be gradual and will require innovation in pricing to tame volatility.
...

http://www.ey.com/GL/en/Industries/...ok-for-2014---long-term-health-in-the-balance
 
That Was The Week That Was … In Australia
9 Feb 2014

>>>>> by Our Man in Oz <<<<<
...

Minews. Let’s move along and cover the rest of the Australian market which should have produced quite a few winners in the gold sector last week.

Oz. Gold was the strongest performing area last week thanks to a US$20 an ounce rise in the price and continued global economic uncertainty.

The gold index on the ASX outshone everything else with a rise of 6.2 per cent, thanks largely to a strong rise by
Newcrest (NCM) which added A72 cents to A$10.37, but aided by a long list of solid rises by other gold stocks.

That gold index rise looks even better when compared with a modest 0.4 per cent slide in the all ordinaries index and an absolutely flat mining and metals index which opened and closed at 3,254 points.

Minews. Let’s call the card, starting with gold, and keeping it snappy, please.

Oz. Most gold stocks gained ground, with a few outliers shedding a little value. Some of the better movers included: Tribune (TBR), up A31 cents to A$2.71, Papillon (PIR), up A17 cents to A$1.34, Northern Star (NST), up A8 cents to A96 cents, Troy (TRY), up A14 cents to A$1.27, Gold Road (GOR), up A1.5 cents to A13.5 cents, Doray (DRM), up A6 cents to A88 cents, Medusa (MML), up A8 cents to A$2.03, and Evolution (EVN), up A6.5 cents to A70.5 cents.

Gold stocks to lose ground included: Gryphon (GRY), down A2 cents to A16 cents, Sumatra (SUM), down A1.5 cents to A10 cents, Middle Island (MDI), down A0.3 of a cent to A2.7 cents, and Kidman (KDR), down half-a-cent to A16 cents.
...

Source >>>>> www.minesite.com
 
>>> 9 Feb 2014

Problems In Emerging Markets Take The Shine Off Growing Stability In The Developed World
>>> by Rob Davies <<<

As the year settles down, the economic messages are getting more mixed and taking the shine off the rosy optimism that accompanied the start of the year.

The US payroll figure of 113,000 was below consensus forecasts of 180,000, but all the same most capital markets had a good week.

Base metal prices, as measured by the LME index, gained 1.1 per cent to 3,076 and equity markets in the developed world made similar progress.

It is in emerging markets where the problems are concentrated.

Last week it was the turn of the Ukraine to take the heat as its reserves were shown to have fallen 13 per cent in January. That led to a devaluation of its currency, the hryvnia, to 8.45 to the dollar, down from 8.1 a few months ago.

Some countries will welcome a devaluation of their currencies. South Africa is currently gripped by a strike at all three of its platinum mines as 70,000 miners coordinate action across the industry for the first time.

A weaker rand will certainly help profitability but history tells us that that is only a short term fix.

These labour intensive underground mines are inherently expensive to operate compared to heavily mechanised open cut mines. The problem is that the majority of platinum group metals are sourced from this one unique geological feature known as the Bushveld Complex.

There was more encouraging news elsewhere. Arcelor Mittal, the world’s largest steel maker by revenue, announced a smaller net loss in 2013, US$2.5 billion compared with US$3.3 billion the year before. More significantly, it expects global steel demand to rise by between 3.5 per cent and four per cent in 2014.

As the basic component in so many industries from transport to construction that is good for all commodities. Its own steel production increased 3.4 per cent last year to 91.2 million tonnes.

The underlying concern across many markets is that growth remains weak and what there is still reliant on what were supposed to be short term measures like quantitative easing.

Inflation of just one per cent in the US and Europe demonstrates that there is no real shortage of anything, especially labour.

Even though the US is gradually reducing its QE programme, via a process known as tapering, there are concerns that this and similar projects have already distorted markets.

The ability of a co-founder of Ocado, a UK-based internet based food retailer, to walk away with £15 million is one measure of exuberance in the market. The business has lost money for every one of its 14 years.

That sort of sentiment is tempting 60 companies to list on the LSE before April with the expectation of raising £15 billion. Boring mining companies that dig stuff up for a profit and pay dividends don’t get a second glance these days.

Nevertheless, more attention is now being focused on China where credit creation has surpassed everywhere else and kept metal prices buoyant since 2008.

No one knows the full extent of the shadow banking system in China, or if they do they are keeping quiet. Knowing that the state has US$3.5 trillion in liquid reserves that could be used to bail out failure s is at least some comfort to those selling into the largest commodity market in the world.

Source >>> www.minesite.com
*****
 
>>> 12 Feb 2014
>>> Rice tumbles on stock sale call <<<
...

Thailand, once the world’s biggest exporter, is short of funds to help growers under Prime Minister Yingluck Shinawatra’s 2011 programme to buy the crop at above-market rates. After the government built record stockpiles big enough to meet about a third of global import demand, exports and prices have dropped, farmers aren’t being paid, and the programme is the target of anti-corruption probes. Political unrest may contribute to slower growth in Southeast Asia’s second-largest economy.

Selling the government inventory to pay farmers would flood the market with rice, eroding prices that in 2013 fell by the most in at least five years, and would escalate competition for shippers in Asia, including India, Vietnam and Cambodia.

“The programme is simply unsustainable and hurting the finances of the country,” said Concepcion Calpe, a senior economist in Rome for the United Nations’ Food & Agriculture Organization. “The suspension of the rice-pledging programme will exacerbate the decline in Thai market prices as farmers enrolled in the programme increasingly fail to be paid.”
...

Source >>> Bangkok Post
*****
 

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