Iron ore price drops to 5-month low despite record Chinese imports

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• Iron ore price drops to 5-month low despite record Chinese imports
• Indonesia ban rocks nickel market
• Mongolia sees Oyu Tolgoi deal this month
• Study: Acid mine drainage can help clean up, recycle fracking wastewater
• Historic 1oz gold coin goes for $4.6 million at auction

Iron ore price drops to 5-month low despite record Chinese imports Posted: 12 Jan 2014 12:49 PM PST The price of iron ore slumped to a 5-month low Friday, despite data showing Chinese imports of the steelmaking raw material hit a new record in 2013. The benchmark CFR import price of 62% iron ore fines at China's Tianjin fell to $130.70 a tonne on Friday, a level last seen at the early August and down more than 3% since the start of the year according to data supplied by The Steel Index. China's imports of iron ore in December fell back to 73.4 million tonnes from November's record-setting pace of 77.8 million tonnes, but for 2013 as a whole imports hit an all-time high of 820 million tonnes. At 10% growth that's an ever better performance than 2012 when imports grew 8.4%. The rise in imports comes despite Chinese domestic iron ore output climbing more than 8% to 1.3 billion tonnes in the first 11 months of last year. China now consumes almost three-quarters of the global seaborne iron ore trade which for 2013 is estimated at just over 1.1 billion tonnes as its blast furnace continue to pump out steel at a record-setting rate of 2.1 million tonnes per day, a 9.4% increase over 2012. Research by Australia's Bureau of Resources and Energy Economics (BREE), the country's official forecaster predicts Chinese iron ore imports will grow 7.4% or more than 60 million tonne in 2014 as high quality ore from Brazil, South Africa and Australia continue to edge out low iron content domestic mining. But a slowdown in Chinese steel production this year appears inevitable amid overproduction, a crackdown by authorities on the industry over environmental concerns and weaker domestic demand. Clouding the outlook further is a rise in Chinese iron ore stockpiles to 88.6 million tonnes in December, up a whopping 21% from a year ago and up 26% since January 2013. Another factor limiting the upside for iron ore is an expected flood of new supply that will overwhelm Chinese demand even if it grows at the same pace as in 2013. This year the world's top exporter Australia will increase cargoes a whopping 22.1% to 709 million tonnes as projects by Rio Tinto (LON:RIO), Fortescue Metals Group (ASX:FMG) and BHP Billiton (LON, ASX: BHP) come on stream. Brazil, led by world number one iron ore miner Vale (NYSE:VALE), is set to up exports 9.1% to 352 million tonnes. India, which has seen exports fall from 120 million tonnes to close to just 11 million tonnes this year, will also re-enter the market as a self-imposed ban on exports expire and stockpiles are sold on.

Indonesia ban rocks nickel market Posted: 12 Jan 2014 12:32 PM PST Indonesia rocked the mining world on Sunday putting into effect an outright ban on nickel, bauxite and tin ore exports. The Asian nation is the world's premier thermal coal and tin exporter and is also a gold and copper powerhouse, but the ban on nickel and bauxite ore would have the most dramatic effect on markets. Last week Indonesian energy and resource ministry official scrambled to ease provisions of the raw mineral export prohibition that President Susilo Bambang Yudhoyono signed into law on Saturday, which is the most controversial decision of his 10-year presidency. Indonesia dominates the nickel export business, accounting for over a fifth of global supply at an estimated 400,000 tonnes of contained metal. Chinese nickel pig iron producers imported more than 30 million tonnes of nickel ore from Indonesia last year and China's aluminium smelters rely on Indonesia for 20% of their feedstock. According to the latest rules under the ban, base metals including copper, manganese, lead, zinc and tin will be allowed to be exported in concentrate until 2017. This benefits producers like Freeport-McMoRan Copper & Gold (NYSE:FCX) who operates the world's third largest copper mine at Grasberg in the West Papua province and which warned about a 60% drop in output should copper form part of the ban. Phoenix-based Freeport and Newmont Mining Corp. (NYSE:NEM) together account for 97% of Indonesia's copper exports. However against expectations of a last minute climbdown by authorities, the nickel and bauxite ore ban as well as the prohibition of unprocessed exports of tin, chromium, gold and silver went into effect Sunday. FT.com quoted Gayle Berry, base metals analyst at UK bank Barclays earlier this week as saying the ban "is the biggest supply risk facing base metals in a long time. The market has been very complacent, thinking the Indonesians would backtrack." Privately owned Ibris Nickel last week announced it will cease operations in Indonesia laying off 1,400 workers at its 2 million tonne per year mine. The nickel industry employs some 200,000 Indonesians across hundreds of small scale operations. The South China Morning Post reports the Indonesian Mineral Entrepreneurs Association said it planned to challenge the ban in the Supreme Court and Constitutional Court while Reuters reports almost 30,000 mine workers have been laid off, sparking protest in the capital Jakarta: "We call on all mining workers to prepare to go on the streets and swarm the presidential palace if the government goes ahead with the implementation of the ban," said Juan Forti Silalahi of the National Mine Workers Union in a statement earlier on Saturday. So far the price of nickel has not reacted in a big way to the looming ban, but now all bets are off. Three-months nickel on the LME retreated more than 20% in 2013 from opening levels of $17,450 and after hitting a high of $18,700 in February dropped to a 4-year low in October amid an oversupplied market. After a brief uptick in December to above $14,200 the steelmaking raw material last week fell back to the mid-$13,000s and on Friday the contract closed at $13,725 . Without the Indonesian ban, the prospects for nickel is not rosy. Global output is forecast to rise for the first time to over 2m tonnes in 2015. That's up from 1.4m tonnes in 2007. Stockpiling of ore and metal in anticipation of Indonesian disruptions and the inexorable rise of nickel warehouse levels  over the past two years – hitting a record 260,000 tonnes last week – have also kept prices subdued. Indonesia, with a population of 240 million, goes to the polls for parliamentary elections in April and in July will choose a new president, so much can change over the course of the year before the true extent of the ban can be felt. Susilo Bambang Yudhoyono, President of Indonesia, in 2011 copyright WEF

Mongolia sees Oyu Tolgoi deal this month Posted: 12 Jan 2014 11:30 AM PST Wrangling over a $6 billion-plus underground expansion of Oyu Tolgoi, Rio Tinto's (LON:RIO) massive copper-gold mine in Mongolia, could be resolved by the end of the month. UBPost News reports Erdenes Oyu Tolgoi director Da.Ganbold, representing the Mongolian government's 34% stake in the project told local news media "only a few critical issues remain," including water usage which is close to being settled, royalties, details the phase 2 pre-feasibility study and what Mongolia alleges is overspending by Rio to the tune of $2 billion. Talks between the Anglo-Australian giant and the Mongolian government on the expansion and reworking the initial 2009 deal which first unleashed the Mongolian investment boom, have dragged on for the better part of a year. Both sides provided fresh faces for the Oyu Tolgoi board in September to break the impasse. Rio unit Turquoise Hill (NYSE:TRQ), operator of the $6.6 billion open pit, announced in December it received extended commitments from 15 commercial banks for the underground expansion where some 80% of the value of Oyu Tolgoi lies. Rio now has until the end of March to make a deal. Vancouver-based Turquoise Hill recently also closed a $2.4 billion rights offering to repay a $600 million bridge loan and a $1.8 billion interim funding facility for Oyo Tolgoi. Mongolia introduced new foreign investment laws in November last year to counteract a near 50% slump in foreign direct investment in the country. A positive outcome on Oyu Tolgoi, where some 2,000 workers have been let go due to the delays, would do much to restore the confidence of investors, many of whom have burned fingers in the country before. Oyu Tolgoi is set to produce 150,000 to 175,000 tonnes of copper in concentrates and 700,000 to 750,000 ounces of gold in concentrates in 2014. But after phase 2 the mine in the southern Gobi desert close to the Chinese border could produce more than 1.2 billion pounds of copper worth $4 billion at today's prices, 650,000 ounces of gold ($800 million) and 3 million ounces of silver ($55 million) each year. Oyu Tolgoi will account for 30% of the economy of the nation of just over 3 million people. Turquoise Hill – then called Ivanhoe Mines – was founded by mining financier Robert Friedland after making the Oyu Tolgoi discovery in 2001. According to a new study Friedland, who lost control of the miner to Rio in 2012 and still owns 8-9% of the company, last year lost his billionaire status thanks in part to a 60% slump in Turquoise Hill shares last year. Image is of Naadam festivities at Oyu Tolgoi in 2012

Study: Acid mine drainage can help clean up, recycle fracking wastewater Posted: 12 Jan 2014 07:56 AM PST It seems two wrongs sometimes can make a right. Also a naturally occurring process, acid rock drainage is a major environmental challenge in heavily mined areas. ARD takes place when abandoned underground metals mines become flooded and is also associated with coal mining, particularly in the US. In the controversial process of hydraulic fracturing – or fracking – vast amounts of water are injected at high pressure down wells to crack open tight shale deposits, but some of this water – 10% to 30% – then flows back up the well bringing with it radioactive materials from deep under ground. Much of the naturally occurring radioactive materials found in wastewater created by fracking may be removed by blending it with water contaminated through acid mine drainage, according to a new Duke University-led study. On top of that the process also reduces the overall salinity of the blended fluids, making the treated water suitable for re-use at fracking site and thereby reducing the demand for fresh water. Below is the full press release from Duke: Acid Mine Drainage Reduces Radioactivity In Fracking Waste Thursday, January 9, 2014 Acid Mine Drainage featuring: Avner Vengosh DURHAM, NC – Much of the naturally occurring radioactivity in fracking wastewater might be removed by blending it with another wastewater from acid mine drainage, according to a Duke University-led study. "Fracking wastewater and acid mine drainage each pose well-documented environmental and public health risks. But in laboratory tests, we found that by blending them in the right proportions we can bind some of the fracking contaminants into solids that can be removed before the water is discharged back into streams and rivers," said Avner Vengosh, professor of geochemistry and water quality at Duke's Nicholas School of the Environment. "This could be an effective way to treat Marcellus Shale hydraulic fracturing wastewater, while providing a beneficial use for acid mine drainage that currently is contaminating waterways in much of the northeastern United States," Vengosh said. "It's a win-win for the industry and the environment." Blending fracking wastewater with acid mine drainage also could help reduce the depletion of local freshwater resources by giving drillers a source of usable recycled water for the hydraulic fracturing process, he added. "Scarcity of fresh water in dry regions or during periods of drought can severely limit shale gas development in many areas of the United States and in other regions of the world where fracking is about to begin," Vengosh said. "Using acid mine drainage or other sources of recycled or marginal water may help solve this problem and prevent freshwater depletion." The peer-reviewed study was published in late December 2013 in the journal Environmental Science & Technology. In hydraulic fracturing – or fracking, as it is sometimes called – millions of tons of water are injected at high pressure down wells to crack open shale deposits buried deep underground and extract natural gas trapped within the rock. Some of the water flows back up through the well, along with natural brines and the natural gas. This "flowback fluid" typically contains high levels of salts, naturally occurring radioactive materials such as radium, and metals such as barium and strontium. A study last year by the Duke team showed that standard treatment processes only partially remove these potentially harmful contaminants from Marcellus Shale wastewater before it is discharged back into streams and waterways, causing radioactivity to accumulate in stream sediments near the disposal site. Acid mine drainage flows out of abandoned coal mines into many streams in the Appalachian Basin. It can be highly toxic to animals, plants and humans, and affects the quality of hundreds of waterways in Pennsylvania and West Virginia. Because much of the current Marcellus shale gas development is taking place in regions where large amounts of historic coal mining occurred, some experts have suggested that acid mine drainage could be used to frack shale gas wells in place of fresh water. To test that hypothesis, Vengosh and his team blended different mixtures of Marcellus Shale fracking wastewater and acid mine drainage, all of which were collected from sites in western Pennsylvania and provided to the scientists by the industry. After 48 hours, the scientists examined the chemical and radiological contents of 26 different mixtures. Geochemical modeling was used to simulate the chemical and physical reactions that had occurred after the blending; the results of the modeling were then verified using x-ray diffraction and by measuring the radioactivity of the newly formed solids. "Our analysis suggested that several ions, including sulfate, iron, barium and strontium, as well as between 60 and 100 percent of the radium, had precipitated within the first 10 hours into newly formed solids composed mainly of strontium barite," Vengosh said. These radioactive solids could be removed from the mixtures and safely disposed of at licensed hazardous-waste facilities, he said. The overall salinity of the blended fluids was also reduced, making the treated water suitable for re-use at fracking sites. "The next step is to test this in the field. While our laboratory tests show that is it technically possible to generate recycled, treated water suitable for hydraulic fracturing, field-scale tests are still necessary to confirm its feasibility under operational conditions," Vengosh said. Andrew J. Kondash, a master's student in Vengosh's lab at Duke, was the lead author of the new study. Nathaniel R. Warner, a 2013 PhD graduate of Duke now at Dartmouth University, and Ori Lahav of Technion, in Haifa, Israel, who spent his sabbatical leave at Duke last year, were co-authors. Funding for the study was provided by Duke's Nicholas School, and partly by a National Science Foundation Partnerships for International Research and Education grant (NSF-OISE-12-43433). Note: Avner Vengosh can be reached for additional comment at (919) 491-6792 or vengosh@duke.edu. CITATION: "Radium and Barium Removal through Blending Hydraulic Fracturing Fluids with Acid Mine Drainage," Andrew J. Kondash, Nathaniel R. Warner, Ori Lahav, Avner Vengosh. Environmental Science & Technology, Dec. 24, 2013, http://dx.doi.org/10.1021/es403852h Contact: Tim Lucas, 919-613-8084, tdlucas@duke.edu

Historic 1oz gold coin goes for $4.6 million at auction Posted: 12 Jan 2014 07:39 AM PST The first gold coin ever made in the United States fetched a record $4.58 million on auction last week, while a nickel made at the Philadelphia Mint in 1913 raised $3.3 million. Th so-called Brasher Doubloon, the country's first gold coin denominated in dollars, has been off the market since it was bought by a Chicago resident in 1979 for $430,000. "The legendary Brasher Doubloon is one of the most important coins in American history because it's the first gold coin struck for the young United States and it's one of only a handful that exist," according to Todd Imhof, executive vice president of Heritage Auctions. Blanchard & Co., the New Orleans-based coin and precious-metals company that brokered the deal, said the doubloon was purchased by a Wall Street investment firm. Identities of the buyer and seller weren't disclosed. Minted by Ephraim Brasher in 1787, a goldsmith and neighbour of George Washington, the coin contains 26.66 grams of gold — slightly less than an ounce. It was worth about $15 when it was minted while an ounce of gold now changes hands for around $1,250 an ounce.

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