Copper, iron ore prices gap down again amid credit crackdown |
- Copper, iron ore prices gap down again amid credit crackdown
- Gold price drifts lower after Fed sticks to taper
- Alrosa announces measures on short-term debt refinancing
- World Bank: China to overtake US as biggest economy THIS YEAR
- War of Titans: Rio Tinto suing Vale over iron ore rights in Guinea
- More mining companies investing in simulation technology
| Copper, iron ore prices gap down again amid credit crackdown Posted: 30 Apr 2014 03:01 PM PDT The benchmark iron ore price was hammered again on Wednesday, capping an awful April which saw the steelmaking raw material lose almost 10% in value. According to data from the The Steel Index, the import price of 62% iron ore fines at China's Tianjin port fell sharply to $105.40 per tonne, down 2.7% on the day amid worries about curbs on commodity-linked financing deals. It's practice in credit-scarce China for commodity traders and industries to use metals as collateral for short-term financing deals. Some estimates put the portion of iron ore inventories that is used for trade credit at 40%. This week stockpiles at the country's ports jumped to a record 110 million tonnes, up 25% since the start of the year. Now that Beijing is cracking down on the practice and a weakening yuan – another deliberate move by authorities – push deals under water, much of that ore could find its way back onto the market creating a vicious circle. Reports suggest new regulations aiming to tackle the county's vast shadow banking system and due to take effect after the Labour Day holidays starting tomorrow will raise deposit requirements on letters of The crackdown is also being blamed for the weakness in copper, which thanks to portability and ease of storage copper is even more widely used in these types of transactions. July copper futures in New York were last trading at $3.022 a pound, down nearly 6 cents on the day and in fierce retreat since hitting seven-week highs on Monday. China buys more than two-thirds of the world's seaborne ore and forges as much steel as the rest of the world combined, while the country is also responsible for 42% of global copper demand. Iron ore clawed its way back from 18-month lows struck in mid-March but is now in danger of breaching those lows, and remains 20% lower than at the start of the year. Copper has also recovered from near 4-year lows around the same time, but has declined more than 10% since the start of the year.  |
| Gold price drifts lower after Fed sticks to taper Posted: 30 Apr 2014 01:49 PM PDT The gold price continued to drift lower on Wednesday, after a decision by the US Federal Reserve to continue reducing asset purchases under its economic stimulus program at the same rate of $10 billion a month. On the Comex division of the New York Mercantile Exchange, gold futures for June delivery – the most active contract – last traded at $1,291.40 an ounce, showing little reaction to the move and down $5 from yesterday's close. After a number of markedly quiet days volumes picked up slightly with 130,000 contracts of 100 troy ounces by mid-afternoon compared to a daily average of closer to 200,000 contracts. The Federal Open Market Committee as widely expected announced a reduction of a further $10 billion to $45 billion a month of purchases under its quantitative easing program that has pumped more than $4 trillion of easy money into the US economy. "Information received since [the Federal Open Market Committee] met in March indicates that growth in economic activity has picked up recently, after having slowed sharply during the winter in part because of adverse weather conditions," the central bank said in a statement. The statement was released only hours after official GDP number showed an abrupt slowdown in the US with first quarter growth barely positive at 0.1% and off sharply from the 2.6% growth in Q4 last year. The bank's QE stimulus program weakens the dollar and increases the risk of inflation, boosting gold allure as a hedge and storer of wealth. The gold price has increased more than 50% since QE1 kicked off December 2008 when the ruling price was $837 an ounce. The gold price has moved higher in 2014 and is still some 8% to the better for the year on safe haven buying amid the crisis in Ukraine and generally more positive sentiment after the dismal performance in 2013. |
| Alrosa announces measures on short-term debt refinancing Posted: 30 Apr 2014 11:55 AM PDT Russia-owned diamond miner Alrosa (MCX:ALRS) announced it has allocated two long-term bank loans for a total amount of $1,090 million with a maturity of 3 years. The loans were allocated for early repayment of $820 million bank loans with maturity in June and December 2014. Diamond mining company Alrosa's bank loans and public debt instruments account for $4 billion with long-term debt share of 88% as of Wednesday. Debt increase of $270 million is explained by creating liquidity source for $500 million Eurobond repayment in November 2014, according to the company's press release. Alrosa had previously planned to refinance with the sale of its oil and gas assets to Russian oil giant Rosneft for $1.4 billion. The company is due to repay $1.3 billion debt between April 1 and the end of this year. Last week, the world's largest diamond miner said output jumped by 6% in the first quarter of the year, in comparison to the same period of 2012 due to development of new mines. |
| World Bank: China to overtake US as biggest economy THIS YEAR Posted: 30 Apr 2014 11:28 AM PDT A new study by the World Bank predicts that the US will lose its status as the world's largest economy later this year. Previous studies forecast the US will only lose the top spot – which it took from the United Kingdom in 1872 – at the end of this decade at the soonest. The report by the International Comparison Program at the World Bank estimates total economic output between countries by using purchasing power parity or PPP which takes into account the relative costs of goods and services and inflation rates, rather than simply using volatile exchange rates which give you nominal GDP figures. The World Bank's updated methodology for PPP indicates that the gap of $3.4 trillion in 2012 (on a nominal basis that gap was closer to $8 trillion) has now shrunk dramatically. In 2005, the ICP estimated China's economy was less than half the size of the US, accounting for only 43.1% of the US total. That proportion grew to 86.9% in 2011. That gap should disappear this year thanks to the rapid growth in China where the economy is thought to have grown roughly 24% since 2011 while the US economy's expected expansion through 2014 is pegged at less than 8%. The new methodology also paints a very different picture of India, which leaps from 10th place in 2005 at 19% of the US size to 37% and 3rd in 2011, relegating Japan to fourth place.  Source: International Comparison Program at the World Bank Of course absolute size only tells part of the story. On a per capita basis, the gap between the developed economies and newly minted GDP giants remain wide: Source: International Comparison Program at the World Bank |
| War of Titans: Rio Tinto suing Vale over iron ore rights in Guinea Posted: 30 Apr 2014 10:00 AM PDT  Whomever wins the battle over Simandou will have a powerful position in the global iron ore industry. In a new and unexpected twist in the battle to control Guinea's rich Simandou iron ore deposits, the companies once operating in the area have began a series of billion-worth lawsuits, with iron ore miner No.2 Rio Tinto (LON, ASX:RIO), suing the world's largest producer Brazil's Vale (NYSE:VALE). The first one to shoot was Vale, which filed Monday an action against his former partner in Guinea BSG Resources, the mining arm of Israeli tycoon Beny Steinmetz's empire, before the London Court of International Arbitration, Swiss newspaper Le Temps reports (in French). One of the paper's sources said Vale is seeking a minimum compensation of US$1.1 billion, due to losses suffered because BSGR's actions in Guinea. Last week, The West African nation concluded that BSG Resources obtained the Simandou and Zogota concessions through corrupt practices and decided to revoke all mining rights for both companies. Vale had a 51% stake in the project, which acquire from BSGR in 2010 in a $2.5bn deal.The company however only paid $500 to Steinmetz's firm, suspending all instalments left as soon as it learned of the accusations against its partner. Guinea's President Alpha Conde said Wednesday it was clear the Rio de Janeiro-based firm did nothing wrong, adding the mining giant is free to reapply to acquire rights to one of the largest untapped iron ore deposits in the world. According to AP, Conde told reporters in Geneva today the country would welcome a new bid from Vale, but it had no preference among bidders and would select one transparently. When contacted about it, a BSGR spokesman told MINING.com it had no comments, adding the company was "looking forward to proving the truth through due legal process by prosecuting our rights in the very near future against the Guinean Government." Here comes Rio Tinto MINING.com learned Wednesday that mining giant Rio Tinto, which has spent years of work and several billions in the southern part of the $20 billion Simandou iron ore project, has filed its own lawsuit against both Vale and BSGR for what it qualifies as a "steal" of its previously-owned concessions. In the 50-page document submitted today in a New York court, and posted later in Rio's website, the company argues it held talks with the Brazilian miner in 2008 to determine whether they "could agree to terms on Rio Tinto's interest in Simandou." The London-based miner claims Vale used that "highly confidential and proprietary information" in its favour, after realizing that gaining control of the Simandou deposit would strengthen its position in the world's high-grade iron ore market, as the only other comparable source is Vale's own Carajas Iron Ore Mine in Brazil. In an unusually hostile language when it comes to legals documents, Rio claims Vale knew of BSG ways:
In the lawsuit Rio adds that Vale was "at the heart" of a conspiracy to take over the largest untapped iron ore deposit in the world. The miner's claim also names Mahmoud Thiam, a former Guinean mining minister, among the alleged conspirators in the scheme to steal its assets. It alleged that he received a $200m bribe from Steinmetz for facilitating the granting of mining licenses to BSGR for the half of Simandou that had been stripped from Rio. Rio has already spent over $3 billion actively building its project in the southern part of what is considered one of the world's largest untapped deposits of iron ore. At full production Rio's Simandou mine, to begin production by 2019, would export up to 95 million tonnes per year – that's about a third of the firm's total capacity at the moment. Top Image by Steve Allen/Shutterstock.com |
| More mining companies investing in simulation technology Posted: 30 Apr 2014 09:23 AM PDT
Investments in mining equipment simulator systems is growing, despite cautiousness and slowdown in the industry, says Greg Lew, Executive Vice President of Global Business Development at South Africa-based Thoroughbred Technologies Ltd. According to the expert, advanced training simulators are increasingly being seen as a sound investment. Some big projects, including India-based Hindustan Zinc Ltd., recently bought into simulation to enhance their core fundamental performance. ThoroughTec Simulation said it experienced another year of continued growth in 2013. The advanced military standard Cybermine training simulators is now in its fourth generation. "More and more mine operators are realizing the advantages that simulation can bring to their mine sites around the world," Lew, said in a statement Wednesday. "We're continuously receiving reports from mines about how simulation is aiding in the recruitment process, improving productivity and reaction times in emergency situations." Moving over to North America, military standard mining simulation penetrated the oil sands market with the largest oil sands company in the world, Syncrude. They purchased a simulator for a CAT truck, dozer and grader, Liebherr truck and a P&H shovel. "Because mine vehicles are being used for fewer training tasks, the associated running costs of training are greatly reduced," said Lew. |
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