Eurobench.com

voda 8 december 2017 17:09

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Fortescue to loose from China's shift towards high grade iron ore

Radio Australia reported that Australia's second biggest iron ore miner Rio Tinto believes it will be a big winner from China's increasing demand for high grade iron ore, but it could spell trouble for the likes of Fortescue Metals. Beijing's crackdown on inefficient and polluting mills, and a restructuring of the steel industry, has led to a significant shift in iron ore demand.

Rio Tinto's iron ore boss Mr Chris Salisbury told ABC's “The Business that this trend was showing up in a growing price gap between high and lower grade ore. We've seen the discount grow from 30 % in the first three quarters to over 40 %."

Mr Salisbury told the program that "That's a very interesting question, because we've seen the stockpiles of low grade ore at the port just increasing and it's almost like you can't give it away. "So it is a real challenge if you're in that particular market sector.”

Mr Salisbury added that "We have the flagship product in the market today; our Pilbara blend product is flagship product for China, it attracts a premium over and above the 62 % iron index, which is the key indicator."

Some analysts believe this could be temporary, relating to reduced Chinese demand leading into winter.

Source : Radio Australia

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voda 13 december 2017 21:57

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Vale could benefit from a move to quality in iron ore

Marketrealist reported that Vale has changed its product portfolio and quality in iron ore according to market demand. In 2017, it’s more focused on selling high-quality ore since China’s fight against pollution has led to a huge variance between high-grade and low-grade material. Vale plans to lower the amount of ore sold from its southern mines, which is lower quality ore, to 8% in 2018 from 22% in 2016. Iron ore with a content of 62% and above is trading at a premium to the sub-62% ore, and the differential is expected to expand due to the ongoing shift toward lower polluting sources of ore. Currently, China is paying almost five times more premium than it was paying two years ago. Vale expects its average premium to be USD 3.50–USD 4.50 per tonne in 2018 and USD 3.50 per tonne in 2017 compared to USD 1.70 per tonne in 2016. That’s expected to add up to USD 350 million in EBITDA for Vale in 2018.

Vale is also focusing more on dry processing. While the company is currently dry processing 40% of its ore, in 2020, it plans to dry process 70%. The process could be very cost-effective. Vale also put out a slide showing how, because of an increasing share of dry processing and strip ratio optimization, its operational yield is becoming higher than its peers. In 2014, Vale had only 4% higher operational yield. Now, the gap is increasing and is expected to be 10% in 2017 and 17% in 2018. That implies that its peers could be going more for wet processing, which could ultimately negatively impact costs.

Vale expects unit costs to fall across the board as new mines ramp up. Its own costs are expected to fall significantly with the continued ramp-up of its S11D project. As production volumes from S11D increase from 22 million tons in 2017 to 90 million tonne in 2020, the unit C1 cash costs are expected to fall to USD 7.70 per tonne from USD 14.50 per tonne currently. That would make Vale the lowest cash cost producer among the major iron ore miners. Its peer Rio Tinto had a unit cost of USD 13.80 per tonne for its Pilbara operations in the first half of 2017. BHP’s unit cost for fiscal 2017 (ended June 2017) was USD 14.60 per tonne. Cleveland-Cliffs, which has different drivers than its seaborne peers, also reduced its production costs in the United States.

Source : Marketrealist

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voda 15 december 2017 17:14

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Liberty House considers bid for Rio Tinto's Dunkirk aluminum smelter

Reuters quoted three sources with direct knowledge of the matter as saying that Liberty House, the industrial and commodities group buying a number of steel assets around the world, is considering a bid for Rio Tinto’s aluminum smelter in northern France, the largest in Europe.

The Dunkirk plant, which the sources value at around 200 million euros (USD 234.44 million), would add to the Gupta Family Group conglomerate, whose assets range from steel mills and aluminum smelters to hydro-power plants and a private bank.

Liberty House, which is headed by Sanjeev Gupta, and Rio Tinto both declined to comment on the matter.

Asked if there had been any contact between the French presidency and Rio or Liberty House, Emmanuel Macron’s office said that “The government is attentive to the future of this important industrial site.” It declined further comment.

Rio Tinto’s chief executive, Mr Jean-Sebastien Jacques, who took charge in July 2016, is moving to divest all but the company’s best-performing units. Rio sold its Coal & Allied Industries Ltd in June for USD 2.6 billion and is in the process of selling two Australian coking coal mines. Earlier this year, the chief executive of Rio’s Alcan unit, Rannveig Rist, said it was planning to sell its Icelanding aluminum smelter ISAL.

Liberty House Group has spent hundreds of millions on acquisitions, including Rio Tinto’s aluminum smelter in Scotland and Australia’s bankrupt steel producer Arrium.

Source : Reuters

voda 18 december 2017 21:13

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Vale opted to reduce its nickel output

Vale is the world’s largest nickel producer. The company in its recent news release has reduced its production guidance for nickel for the next four years. In an environment with a favorable demand condition for nickel, let us look at the factors which has influenced Vale to take this crucial decision.

Expectation of Enhanced Future Nickel Demand
The company made a downward revision to its nickel production by 8% for 2018 (Y-O-Y) in order to benefit from a future environment of increased Nickel prices. Nickel is a primary constituent used in the production of lithium ion batteries used in the operation of Electric Vehicles. These batteries enable the vehicles to operate for a longer duration and hence are an integral part of the EV revolution. Given the environmental benefit that EV possesses, UBS expects 16.5 million global sales of electric vehicles by 2025, a revision to their earlier forecast of 14.2 million cars. This would lift the demand for nickel by 10 to 40% of the current market.

However, nickel prices have not soared as significantly as other metals used in EV production (like copper) even though the market for nickel is extremely favorable (depicted by the below price graph). This is mainly due the fact that nickel is currently oversupplied, which has limited the ability of the metal to charge a premium for its price. However, this trend is presumed not to persist in the long term given that the demand for the metal is expected to surpass supply due to their extensive usage in Evs.

Vale plans to increase their nickel output gradually over time post the prices for nickel have been correctly valued. This expectation has been illustrated in the below graph. You can view our base case for Vale’s nickel segment here and create different scenarios using our interactive platform.

A decrease in the production estimate for nickel would remain in line with the company’s strategy of debt reduction. Reduced investment in the company’s nickel mine would reserve capex spending of up to USD 1.6 billion in 2017 and 2018. Furthermore, an expected rise in nickel prices would enable the company to maintain their cash flows from its base metal division. Thus, an enhanced level of cash flow coupled with reduced capital spending would allow the company to use their funds in retiring its long term debts and improve its leverage position.

Several global nickel producers have already ramped up their nickel exploration and production process in order to take full advantage from the expected rise in future nickel prices. In such a given environment, estimating if it was sensible for Vale to reduce their nickel output would only be known over the course of time. We shall keep a close watch as these future developments take shape.

Source : Trefis.com

voda 18 december 2017 21:21

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Glencore to benefit from electric vehicles

Mining MX reported that Glencore the leading global producer of “Tier 1” commodities copper, cobalt, zinc and thermal coal and is the best-placed large cap company to benefit from the electric vehicle revolution. Mr Ivan Glasenberg CEO giving a presentation during Glencore’s “investor day” held on December 12 commented that EVs would be a “disruptive force” in the world commodity markets but Glencore was “uniquely positioned with our commodity mix” to benefit, in particular because of the group’s forecast strong production growth in copper, nickel and cobalt over the next 3 years.

Mr Glasenberg said that these three commodities “offer compelling fundamentals when coupled with persistent supply challenges.” He pointed to the dearth of new copper mining projects coming on stream and commented.” Higher metal prices will be required to incentivise the next generation of mine projects to feed longer-term demand growth.”

In its efforts to quantify future demand levels for these metals at a target sales level of 30m EV’s by 2030 Glencore commissioned the CRU group to model metal requirements “across the supply chain from generation and grid infrastructure through to storage, charging and vehicles.”

He said that the additional forecast metal requirements by 2030 amounted to 4.1mt of copper (equivalent to 18% of 2016 supply) plus 1.1mt of nickel (56% of 2016 supply) and 314,000t of cobalt which was equivalent to 314% of 2016 supply.

He added that he did not believe it would be possible to produce that amount of cobalt and quipped that, “my cobalt trader is very much in demand at the moment. He feels very important.”

Mr Glasenberg pointed out that forecast EV-related metal demand becomes significant from as early as 2020 when estimates are an additional 390,000t of copper; 85,000t of nickel and 24,000t of cobalt will be needed.

He said that that “transportation and mobility will be transformed – driven by environmental pressures, political mandates, consumer experience and technological progress.”

Source : Miningmx

voda 20 december 2017 20:17

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Rio Tinto to expand automation in Pilbara operation

The Sydney Morning Herald reported that miner Rio Tinto will significantly expand automation at its Pilbara iron ore operations with the retrofitting of 48 giant haul trucks with autonomous technology over the next two years, as part of a wide ranging USD 5 billion productivity program. The company is also investigating “future additions” to its autonomous Pilbara fleet, and says its fully-autonomous heavy haul rail network is on track to be completed by the end of next year.

When the conversions are completed more than 130 trucks in Rio’s haul fleet, almost one in three, will be autonomous.

Rio said that the truck project will improve productivity and help the iron ore division deliver an extra half a billion dollars a year in free cash flow from 2021.

The project includes the retrofitting of 29 Komatsu trucks and 19 Caterpillar trucks. The move is the first time that Rio has employed Autonomous Haulage System technology on Caterpillar haul trucks.

When the Komatsu conversions are completed, Rio’s Brockman 4 iron ore mine will run “entirely in Autonomous Haulage System mode once fully deployed”, the company said in a statement.

Rio’s iron ore chief executive, Chris Salisbury, said that “We are excited to be starting a new chapter in our automation journey with a valued long-term partner in Caterpillar and we are proud to be extending our successful partnership with Komatsu on this world-first retrofitting initiative.”

He said that “Rapid advances in technology are continuing to revolutionise the way large-scale mining is undertaken across the globe. The expansion of our autonomous fleet via retrofitting helps to improve safety, unlocks significant productivity gains, and continues to cement Rio Tinto as an industry leader in automation and innovation.”

He said that “We’ve used automation successfully for new pieces of equipment, but this is the very first time that we’ll be retrofitting automation to what were previously manned trucks. So yes, it is a significant development.”

He said that the installation of the "automation smarts" in the trucks would occur alongside physical changes in the truck, "to allow the truck to steer itself and brake itself.”

Source : The Sydney Morning Herald

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voda 22 december 2017 15:32

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Rio Tinto joins leading industry organisations, form Geoscientist to Data Scientist pilot
Mining News - Published on Fri, 22 Dec 2017

Mining com reported that Rio Tinto, along with a number of leading organizations across the mining and resources industry, has joined forces to create an industry skills program designed to create “new value” through transformative content.

CORE Skills, the professional learning and development strand of the CORE Innovation Hub portfolio, is equipping industry with the digital skills needed to transform roles of the future. A pilot program, called ‘Geoscientist to Data Scientist’ industry skills pilot program, will be delivered in 2018 to upskill both senior leaders and professionals in the mining and energy industries through customised, intensive 2-day executive and 12-week programs respectively.

CORE Skills is at the nexus of industry and academia. Positioned alongside Australia’s leading resources companies and universities, it creates skills pathways, harnessing the immersive culture of entrepreneurship, open innovation, collaboration and speed to market.

Foundation Collaborator Rio Tinto Iron Ore Chief Executive Mr Chris Salisbury said that “Rio Tinto is excited to be part of this innovative resources sector skilling collaboration. The CORE Skills pilot program speaks to our commitment to further develop our people and build on key competencies required for our business now and in the future. The program will help our people learn, innovate and share knowledge within agile and tailored programs.”

Dr Sophie Hancock, Skills Catalyst and pilot lead said that “We are inspired to forge smarter upskilling pathways to enable lifelong learners to remain adaptable and valuable. We at CORE Skills believe that combining existing domain knowledge and company context with the right new skills will significantly empower individuals and their organisations to create and capitalise on new opportunities.”

Dr Hancock continued that “CORE Skills offers a new way to meet industry needs for the skills of tomorrow. We provide a neutral platform to bring collaborators together to co-create programs focusing on the needs of mining and energy professionals. Our innovative, sector-specific education model uses problem based learning facilitated by experienced specialists. The Data Science pilot will enable learners to develop their skills by analysing and interpreting industry data and case studies across the value chain.”

Source : Mining Global

voda 27 december 2017 14:48

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Paradise Papers reveals criminal complaint against Glencore

The guardian reported that watchdog group has filed a criminal complaint against the Anglo-Swiss commodities giant Glencore following revelations from the Paradise Papers. Human rights campaigners in Switzerland have formally asked the country’s attorney general to investigate how the multinational obtained a copper mine in the Democratic Republic of the Congo. Under Swiss law, the office of the attorney general will be required to assess and formally respond to the criminal complaint lodged by Public Eye.

The watchdog group said in a statement that “With the Paradise Papers, there are now even more elements pointing at embezzlement surrounding the acquisition of mines for the legal authorities to launch an investigation.”

The watchdog group added that “It’s overdue for [Swiss authorities] to rule on the legality of operations, whose dubious nature has been brought to the fore by the press and NGOs for more than five years.”

The Paradise Papers, files leaked from the offshore law firm Appleby, revealed how Glencore loaned USD 45 million to an offshore firm of the diamond businessman Dan Gertler after enlisting him to help secure a joint venture agreement with the state-controlled mining entity Gécamines in the DRC.

A document in the files stated that “Glencore shall use its vote at the board of Katanga [Mining Ltd] to have Dan Gertler exclusively mandated to assist Katanga in finalising the terms of the joint venture agreement.”

However, Glencore made the loan with the caveat that it would be “immediately repayable on demand” within three months if Gertler failed to secure the contract. Glencore has previously said the loan “was made on commercial terms negotiated at arm’s length”.

The files also reveal Glencore used Gertler to negotiate with the DRC government. It has since distanced itself from Gertler, who was named in a 2001 UN investigation as having given USD 20 million to the DRC president, Mr Joseph Kabila, to buy weapons in exchange for a monopoly on the country’s diamonds.

Mr Joseph is also reported to be the unnamed that “DRC partner” identified by the Department of Justice last year in a deferred prosecution agreement with a hedge fund accused of paying bribes to secure access to Congo’s mining interests.

Gertler’s lawyers have said that he denies the UN report’s allegations and that he was not a party to the DoJ agreement, which “does not constitute evidence of anything against Mr Gertler”.

Glencore declined to comment that the development comes one month after Glencore’s head of copper was forced to resign from the board of Katanga Mining amid an investigation into accounting practices by the Ontario Securities Commission in Canada.

Source : The Guardian

voda 2 januari 2018 20:52

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Rio Tinto looks to beef up trading operation

Financial Times reported that Anglo Australian mining company Rio Tinto has moved into physical commodities trading to get better prices for the metals and minerals it produces and sharpen its commercial focus. In an interview with the Financial Times, Rio chief executive Mr Jean-Sébastien Jacques revealed the company was buying and selling bauxite, alumina and aluminium from a marketing and procurement hub in Singapore that employs more than 500 people.

Mr Jacques said that “We are already trading in the aluminium space. Not big volumes? and there is a long, long way to go before we become a big trader.” He added that “But at some point in time, over the medium and long term, we could increase our trading activities.”

Unlike their peers in the oil industry, mining companies have traditionally shied away from trading physical commodities, put off by large working capital commitments and volatile markets. But some are now joining the market, using the sophisticated strategies employed elsewhere in commodities trading.

BHP Billiton, the world’s biggest natural resources company, has built a large trading business, while Anglo American also has a commercial division.

Mr Jacques said that there was also a need for Rio to better understand its markets and how it could generate higher returns from its key commodities, which include copper and steelmaking ingredient iron ore.

Mr Jacques said that “Rio is a very strong operator but not always the best in class in terms of commercial acumen. What we want is to change that.” He continued “We have invested a lot of time and money building our sales and marketing operation with Singapore as a control centre.” In November, Rio appointed Simon Trott as its first chief commercial officer.

Commodity trading is part of a wider “mine-to-market” strategy at Rio that aims to raise as much as USD 5bn in cash by 2021 by working the company’s assets harder and in different ways.

Under the hard driving Mr Jacques, who took the helm 18 months ago, Rio has focused on generating cash and returning as much of it as possible to investors through dividends and share buybacks.

Over the past year, it has announced USD 8.2 billion of cash returns, putting the company ahead of many of its peers. Mining companies are under pressure from big shareholders to boost cash returns, having spent billions of dollars on ill-timed acquisitions and over-ambitious projects during the commodities boom of the 2000s.

Mr Jacques said that “Lots of people are talking about creating value and sending money back to shareholders but very few people are doing it,” whose work shirt bears the red Rio Tinto logo. “If you look at the first six months of the year, 40 % of the cash we generated went back to shareholders. Most people didn’t do that.

He added that “We’ve delivered what we said and the market is giving us credit for that.”

Source : Financial Times

voda 5 januari 2018 16:43

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Vale is negotiating BHP exit from Samarco venture - Report

Bloomberg reported that Vale SA and BHP Billiton Ltd are in talks over the future of their Samarco iron-ore joint venture, including the possibility of the Brazilian miner taking full ownership, according to people familiar with the matter. One of the options could see Vale acquire Melbourne-based BHP’s half share in what was once the world’s second-largest iron-ore pellet operation, the two people said, requesting anonymity because the talks are private. Brazil’s Veja earlier reported the two owners are talking about a deal for the mine that’s been shuttered since a deadly 2015 dam spill.

Vale, the world’s biggest iron-ore exporter, declined to comment. BHP didn’t respond to requests for comment made by telephone and email.

Mr Luciano Siani Pires Chief Financial Officer of Vale said in an August interview that future options for Samarco may include one partner buying out the other’s stake, leasing out or selling the assets, or assigning one owner as a single operator. Samarco is the only iron-ore operation outside Australia held by BHP, the No. 3 exporter.

Samarco last month won a preliminary permit to begin work to prepare for an eventual restart. Further licenses needed to resume production could be granted as early as mid-year, according to regulators.

The operation is likely to resume production in the second half of 2018 at a reduced rate of about 20 million tons, competitor Ferrexpo Plc forecast in a September presentation. Demand for pellets is forecast to rise through at least 2021, Ferrexpo said.

While Vale and BHP both committed to financing reparations related to the 2015 tragedy, they refused to help Samarco service the billions of dollars in bank debt and bonds it holds. Creditors are hoping the mine can reopen and resume payments.

Vale becoming sole owner makes sense, according to Ian McCall, who manages USD 190 million of emerging-market assets including Samarco debt, at First Geneva Capital Partners. "Vale has naturally been leading the charge on remediation efforts and negotiations with the various Brazilian authorities to get Samarco back into operation."

Before its 2015 closure, Samarco generated about 2 billion reais (USD 680 million) in annual profit. While the venture is yet to secure all permits for restarting and has ongoing reparation and overdue-debt commitments, its value would be bolstered by rising Chinese demand for high-quality steelmaking ingredients amid efforts to contain smog.

Source : Bloomberg

voda 5 januari 2018 16:49

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Miners watch how iron ore emerges from China’s winter

Hellenic Shipping News Australia’s big iron ore miners will be closely watching how Chinese prices of steel and iron ore move following the Christmas break, with a strong end to 2017 supporting expectations that BHP and Rio Tinto can maintain their renewed focus on shareholder returns.

The price of top grade iron ore surged more than 24 % to USD 72.62 between the start of November and December 29, as steel production in 28 Chinese cities was wound back as part of the Chinese government’s anti pollution push.

The clean skies initiative has seen the price of higher grade iron ore jump sharply, as Chinese steel mills look to increase production while reducing pollution.

While iron ore future contract prices wobbled in late December, iron ore on the Dalian Commodity Exchange rose 2.7 % to Friday to finish the year at 531.5 yuan, up 16.5 % for the year.

Ms Bai Jing, an analyst with Galaxy Futures in Beijing told Bloomberg said that “Iron ore is rising as there is expectation that steel mills would recover production and they need to make bookings ahead of that.”

But the biggest question is how the Chinese prices move as shuttered steel production in those 28 cities is brought back on line.

There are some concerns around the fact that stocks of iron ore at China’s ports have continued to climb. Data from Steelhome showed stockpiles at China’s main ports rose a further 2.66 million tonnes to hit 146.23 million tonnes on December 22.

But UBS analyst Mr Glyn Lawcock said that “the Chinese winter shuts have had a better than expected impact on commodity prices [and] steel and bulk commodities in particular” and while he does see some risk of softer prices as production returns to normal, UBS has upgraded its iron ore outlook for 2018 by 7 % to USD 64 a tonne.

Mr Lawcock expects iron ore prices will be underpinned by China’s continued focus on curbing pollution and the big miners keeping supply in check by focusing on value over volume.

Mr Lawcock said that “Our confidence in early 2018 being positive for the miners and production discipline being maintained stems from the fact that miners either have elevated debt levels or memories of the past few years where prices and margins crumbled under the weight of supply or both.”

Mr Lawcock added that “We believe it is fair to say that the commodity prices we are experiencing today (in some cases above long-term levels) are trading there because of restricted supply either due to China’s winter shuts or pollution/safety concerns, or voluntary supply restriction by Western world producers. Hence there is no immediate need to grow supply.”

The February reporting season should provide a further boost to mining investors, who watched BHP jump 23 % in 2017, Rio rise 32 % and South 32 rise 32 %.

UBS expects BHP will launch a share buyback at its half-yearly results, with Mr Lawcock describing it as “essentially playing catch-up” to Rio, which completed a USD 1.5 billion (USD 1.92 billion) buyback on December 27, taking its full-year returns to shareholders to USD 8.2 billion.

BHP’s balance sheet is in good shape; Mr Lawcock puts BHP’s debt at USD 13.8 billion at December 31, 2017, safely within its target range of USD 10 billion to USD 15 billion.

Rio Tinto could also give its returns to shareholders a boost in 2018 if it was to sell its Queensland coal assets, which could be worth as much as USD 2 billion.

South32, which launched USD 750 million of buybacks in 2017, and UBS see scope for special dividends.

Source : Hellenic Shipping News

voda 11 januari 2018 16:28

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Toch geen belang Rio Tinto in lithiumdelver

Gepubliceerd op 11 jan 2018 om 08:24 | Views: 2.577

AMG 16:06
45,80 +1,76 (+4,00%)

Rio Tinto 16:07
4.149,56 +60,56 (+1,48%)

LONDEN (AFN) - Mijnbouwbedrijf Rio Tinto ziet af van een belang in een van 's werelds grootste lithiumdelvers Soc Quimica & Minera de Chile (SQM). Het onder meer in Londen genoteerde Rio zegt dat het op een andere manier zijn ambitie zal waarmaken om een rol te spelen in de sterk opkomende markt voor elektrisch rijden. Lithium is een belangrijk element in accu's.

Sinds 2015 is de prijs van lithium verdrievoudigd, geholpen door de groeiende vraag naar accu's.

Eerder was sprake dat Rio een belang van circa een derde in SQM zou willen overnemen van Nutrien. Daarmee zou een bedrag van circa 5 miljard dollar zijn gemoeid, gelet op de huidige marktprijzen. Nutrien ontstond als gevolg van de op handen zijnde fusie tussen de Canadese kunstmestmakers Potash met Agrium. Om akkoord te krijgen voor die fusie wordt Nutrien verkocht.

voda 11 januari 2018 16:54

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Rio Tinto receives a binding offer for Aluminium Dunkerque from Liberty House

Rio Tinto has received a binding offer from Liberty House to acquire Rio Tinto’s Aluminium Dunkerque smelter in northern France for $500 million, subject to final adjustments. In accordance with French law, Rio Tinto will launch a consultation process with employees, relevant European works councils and other stakeholders in relation to the bid. Subject to satisfactory completion of these consultations, Rio Tinto expects to complete the sale of Aluminium Dunkerque in the second quarter of 2018.

The proposal received from Liberty House, which acquired Rio Tinto’s Lochaber Smelter and assets in Scotland in December 2016, includes plans for the modernisation of the site.

Rio Tinto Aluminium chief executive Alf Barrios said “The binding offer for the sale of Aluminium Dunkerque represents the best option for the future development of the site while also delivering value for Rio Tinto as we continue to streamline our portfolio.

“Liberty House has a track record of investing in similar assets, which should secure a long-term sustainable future for Aluminium Dunkerque and continued economic benefit for the wider community”.

Source : Strategic Research Institute

voda 11 januari 2018 16:56

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Glencore on offensive as zinc prices recover, China cuts production

Asia Nikkei reported that Swiss mining giant Glencore's decision to drastically cut zinc production during a commodity price slump in 2015 is paying off and sending ripples through the market.

The benchmark zinc futures on the London Metal Exchange hit a 10 year high in 2017 due to the tightening supply-demand balance as Chinese demand recovered, while Glencore continued to limit supplies. Now that the company has weathered the slump, it is adopting a more aggressive investment policy.

Back in late September 2015, drops in crude oil and nonferrous metal prices raised credit concerns for Glencore, which had a huge amount of interest-bearing debts. Its share price tumbled, and investors around the world unloaded risk assets such as stocks and commodities in a frenzy dubbed the "Glencore shock."

The mining company was forced to cut output of various minerals and sell off some assets. It has cut zinc ore production by around 500,000 tonnes, or one third of annual output, since 2016.

China's economic recovery started giving Glencore a tailwind. Zinc is mainly used for plating steel products for automobiles and construction materials to prevent them from rusting. China accounts for roughly 40% of global demand, and government-led infrastructure projects helped consumption of galvanized steel plates to surge. China's ambitious Belt and Road initiative has the potential to substantially lift steel demand.

Demand for construction materials and automobiles also grew in Southeast Asia, and steelmakers using zinc are increasing their production. Nippon Steel & Sumitomo Metal teamed up with an Indonesian state-owned steelmaker earlier in 2017 and started operation of a new factory to manufacture high-end galvanized steel plates.

On the supply side, Chinese mines are cutting zinc production.

The Chinese government restricted operations of smaller mines as part of environmental regulations to address serious air pollution. The policy has caused supplies of zinc ore and ingots to fall despite the rapid recovery in demand. In 2017, demand surpassed supply by about 400,000 tonne, and the shortage is expected to continue in 2018.

Zinc features plunged to around USD 1,700 per tonne in the second half of 2015, but the prices shot up 60% during 2016 and kept rising to top USD 3,300 in the latter half of last year.

The business environment has changed dramatically, and Glencore is on the offensive.

Source : Asia Nikkei

voda 17 januari 2018 12:49

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Rio Tinto iron and titanium production update

RTIT announced that Titanium dioxide slag production was 25 % higher in 2017, reflecting improved market demand. Market conditions for titanium dioxide continued to improve in 2017, with strengthening pigment prices supported by low inventory and tight supply. Consequently, feedstock demand has improved year on year.

One of nine furnaces at Rio Tinto Fer et Titane remains idle, along with one of four furnaces at Richards Bay Minerals. The focus remains on maximizing the productivity of the furnaces currently in operation, and a decision to re start idle furnaces will be based on maximizing value over volume.

Source : Strategic Research Institute

voda 17 januari 2018 12:50

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Rio Tinto 2017 mined copper production update

Rio Tinto announced that mined copper production in 2017 was three % lower than 2016, with lower grades partially offset by higher mill throughput. Fourth quarter production was 23 % lower than the corresponding period of
2016 as mining entered an anticipated area of lower grade. Higher grade material is expected to be accessed in 2018.

Refined copper production in 2017 was 20 % lower than 2016 due to the shutdown of the smelter following the fatality in October 2017. The smelter resumed production in November 2017 and is expected to draw down the increase in concentrate inventory during the first half of 2018.

Rio Tinto Kennecott continues to toll and purchase third party concentrate, with 161.4 thousand tonnes received for processing in 2017. Tolled copper concentrate, which is smelted and returned to customers, is excluded from reported production figures.

The pushback of the south wall progressed during the quarter. It will extend the life of mine and remains on track for completion in 2020.

Escondida

Mined copper production at Escondida in 2017 was 11 % lower than 2016 due to the labour union strike that impacted production in the first half of 2017. Fourth quarter production was 26 % higher than the corresponding quarter of 2016 due to an increase in concentrator throughput, largely driven by commissioning of the Los Colorados concentrator.

Oyu Tolgoi

Mined copper production from the open pit in 2017 was 22 % lower than 2016, as phases 2 and 3, which were sources of higher grade ore, were fully depleted by the end of 2016. Despite this, the operation established new records for rates of total material moved and mill throughput in the year. Copper production in the fourth quarter was 23 % higher than the previous quarter due to improved mill availability and reduced ore hardness.

Oyu Tolgoi LLC has received, and is evaluating, a Tax Act for approximately USD 155 million from the Mongolian Tax Authority relating to an audit on taxes imposed and paid by Oyu Tolgoi LLC between 2013 and 2015.

Oyu Tolgoi Underground Project

New contractors continue to mobilise with the total project workforce at over 6,600 at the end of 2017, 89 % of whom are Mongolian nationals. Lateral development is on plan, completion of Shaft 2 sinking is imminent and completion of Shaft 5 sinking is expected by the end of first quarter of 2018. Six accommodation buildings in the Oyut II camp are now complete. An annual project review was completed in the fourth quarter, and construction of the first drawbell is expected in mid-2020.

Grasberg

Through a joint venture agreement with Freeport-McMoRan Inc. (“Freeport”), Rio Tinto is entitled to the cash flow associated with 40 % of material mined above an agreed threshold as a consequence of expansions and developments of the Grasberg facilities since 1998.

In January and February 2017, the Indonesian government issued new mining regulations to address exports of unrefined metals, including copper concentrates, and other matters related to the mining sector. These regulations impact PT Freeport Indonesia’s operating rights, including its right to continue to export concentrate without restriction, and, as a result, had a significant impact on Rio Tinto’s share of production in 2017. Rio Tinto's full participation beyond 2021 is likely to be delayed due to the application of force majeure provisions in the joint venture agreement between Rio Tinto and PT-FI.

In March 2017, the Indonesian government amended the regulations and issued a permit to PT-FI that allowed concentrate exports to resume in April 2017. PT-FI is applying for an extension of its export permit, which expires in February 2018.

Based on the latest available forecast from Freeport, approximately 5.7 thousand tonnes of copper and no gold production in 2017 has been attributed to Rio Tinto. Freeport is expected to announce its fourth quarter and full year 2017 results on 25 January 2018. No share of production was attributed to Rio Tinto for the first three quarters of 2017, based on expected Rio Tinto share at the time.

Provisional pricing

At 31 December 2017, the Group had an estimated 250 million pounds of copper sales that were provisionally priced at 304 cents per pound. The final price of these sales will be determined during the first half of 2018. This compares with 235 million pounds of open shipments at 31 December 2016,
provisionally priced at 250 cents per pound.

Source : Strategic Research Institute

Bijlage:

voda 17 januari 2018 13:03

0

Rio Tinto releases fourth quarter production results

Rio Tinto releases fourth quarter production results. Rio Tinto chief executive Mr JS Jacques said that “The business performed well in the fourth quarter, and we finished the year in line with guidance across all major products. We shipped 90 million tonnes of iron ore from our world-class Pilbara assets, a record quarter which demonstrates the system’s growing flexibility. In 2017 we announced over $8 billion of cash returns to shareholders and continued to reshape the portfolio. Our focus on value over volume and mine-to-market productivity, along with disciplined allocation of cash, will ensure that we continue to deliver superior shareholder returns in the short, medium and the long term.”

Voor cijfers, zie bijlage

Key points
1. Pilbara iron ore shipments of 90.0 million tonnes in the fourth quarter were three per cent higher than the fourth quarter of 2016. Total shipments for 2017 of 330.1 million tonnes were in line with guidance.
2. Bauxite production of 50.8 million tonnes was six per cent higher than 2016 and in line with upwardly revised full year guidance. Third party shipments increased by ten per cent to 32.3 million tonnes.
3. Aluminium production of 3.6 million tonnes was in line with guidance with generally strong performance slightly offset by lower production at Boyne and Sohar.
Mined copper production of 478.1 thousand tonnes was nine per cent lower than 2016 due primarily to the impact of a 43 day strike at Escondida in the first quarter. Production was in line with revised guidance.
4. Titanium dioxide slag production of 1.3 million tonnes was 25 per cent higher than 2016, reflecting increased market demand, with strengthening pigment prices supported by low inventory and tight supply.
5. Production and shipment guidance for 2018 remains unchanged from the estimates provided at the investor seminar held on 4 December 2017.

6. The major growth projects remain on track. The Silvergrass iron ore mine was commissioned in the fourth quarter of 2017 and will continue to ramp up in 2018. Amrun is on schedule for first bauxite shipment in the first half of 2019 and construction of the first drawbell at Oyu Tolgoi Underground is expected in mid-2020.

7. In November, Rio Tinto successfully completed an A$750 million off-market buy-back in Rio Tinto Limited shares and in December completed a $1.5 billion on-market buy-back of Rio Tinto plc shares. An additional $1.925 billion on-market buy-back in Rio Tinto plc shares commenced on 27 December 2017 and is to be completed no later than 31 December 2018.

8. On 10 January 2018, Rio Tinto announced it had received a binding offer for the sale of the Aluminium Dunkerque smelter in France for $500 million, subject to final adjustments. The sale is expected to complete in the second quarter of 2018, subject to satisfactory completion of consultations with key stakeholders.

Source : Strategic Research Institute

Bijlage:

voda 17 januari 2018 13:09

0

Rio Tinto iron ore production update

Rio Tinto announced that Pilbara operations produced 329.8 million tonnes (Rio Tinto share 271.3 million tonnes) in 2017. Fourth quarter production of 87.9 million tonnes (Rio Tinto share 72.9 million tonnes) was three per cent higher than the fourth quarter of 2016, reflecting the implementation of productivity projects across most sites. This strong performance was achieved despite a planned two week shutdown at Hope Downs 4 in December 2017, in line with the focus on value over volume.

Sales of 330.1 million tonnes (Rio Tinto share 272.0 million tonnes) were in line with 2016 sales. Strong fourth quarter sales of 90.0 million tonnes (Rio Tinto share 74.8 million tonnes) were three % higher than the fourth quarter of 2016, reflecting ongoing productivity improvements being made to the rail network, along with increased flexibility across the infrastructure system.

Approximately 17 % of sales in 2017 were priced with reference to the prior quarter’s average index lagged by one month. The remainder was sold either on current quarter average, current month average or fixed on the spot market.

Approximately 67 % of 2017 sales were made on a cost and freight basis, with the remainder sold free on board.

Achieved average pricing in 2017 was USD 59.6 per wet metric tonne on an FOB basis (equivalent to USD 64.8 per dry metric tonne).

Pilbara projects
Commissioning of the Silvergrass conveyor system is complete and the plant had processed around two million tonnes by the end of 2017. Production ramp-up will continue in 2018.

The automation of the Pilbara train system continues to make strong progress with greater than 60 % of all train kilometers now completed in autonomous mode with a driver on board for supervision. The project is on schedule to be completed by the end of 2018.

The Koodaideri project feasibility study was approved for USD 30.9 million in May 2017. The feasibility study will focus on obtaining necessary consent and permits and increasing orebody knowledge.

2018 guidance
Rio Tinto’s Pilbara shipments in 2018 are expected to be between 330 and 340 million tonnes (100 % basis). This is subject to market conditions and any weather constraints, and partly reflects continued rail maintenance required in 2018.

Source : Strategic Research Institute

Bijlage:

voda 17 januari 2018 13:09

0

Rio Tinto IOC pellet production update

IOC announced that pellet production of 10.5 million tonnes was seven percent higher than 2016, with pellet demand continuing to be strong and product mix being optimised to meet customer demand. Concentrate production for sale of 8.5 million tonnes (Rio Tinto share 5.0 million tonnes) was two percent higher than 2016.

The five % improvement in total production resulted in a four % improvement in sales to 19.0 million tonnes (Rio Tinto share 11.2 million tonnes).

Source : Strategic Research Institute

voda 17 januari 2018 13:25

0

Rio Tinto update on coal production

Rio Tinto announced that production from Bengalla in 2016 has been excluded from the comparable percentages above. On 1 September 2017, Rio Tinto completed the sale of Coal & Allied. This included Coal & Allied’s 67.6% interest in the Hunter Valley Operations mine, 80% interest in the Mount Thorley mine and 55.6% interest in the Warkworth mine. Production from these mines until 1 September 2017 is reported here.

Hard coking coal production in 2017 was five % lower than 2016 due to the impact of Cyclone Debbie in the first quarter of 2017. Fourth quarter production was six per cent higher than the corresponding quarter of 2016 reflecting strong operational performances at Kestrel and Hail Creek.

As announced on 1 September 2017, Rio Tinto completed the sale of Coal & Allied to Yancoal Australia for total consideration of USD 2.69 billion, which included Coal & Allied's interests in the Hunter Valley Operations, Mount Thorley and Warkworth mines. The sale, coupled with mine production sequencing changes at Hunter Valley Operations and Mount Thorley Warkworth, resulted in semi soft coking coal and thermal coal production being lower than 2016 by 51 % and 17 % respectively.

Hard coking coal prices achieved in the second half of 2017 averaged USD 164 per tonne on an FOB basis compared to USD 177 per tonne in the first half of 2017. Average prices realised for thermal coal were USD 78 per tonne on an FOB basis in both the first half and second half of 2017.

Source : Strategic Research Institute

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