Ukraine deal, ETF selling push gold price below $1,300 |
- Ukraine deal, ETF selling push gold price below $1,300
- Platinum, palladium sell off after producers raise wage offer
- Despite talk, there's little chance India will ease gold curbs
- China, Japan and ‘mystery local billionaire’ potential developers of Oakajee project
- Guinea government to strip Vale, BSGR of all Simandou rights
- Metso rejects Weir’s $5.5 billion merger approach
| Ukraine deal, ETF selling push gold price below $1,300 Posted: 17 Apr 2014 03:40 PM PDT The price of gold ended the holiday-shortened week below the psychologically and technically important $1,300 level on Thursday after tensions between Russia and the West over Ukraine eased. On the Comex division of the New York Mercantile Exchange, gold futures for June delivery settled at $1,293.90 an ounce, down $9.60 from yesterday's close and suffering a 1.9% drop for the week. Top diplomats from the United States, European Union, Russia and Ukraine in marathon talks on Thursday agreed to take steps to ease the crisis which took away some of the allure of gold as a safe haven asset. Russia sidestepped tougher economic sanctions in the process and worries over energy supply in Europe, which buys much of its natural gas from Russia, receded. The agreement, hammered out over seven hours of talks, calls for the disarming of all militia groups and for control of buildings seized by pro-Russian separatists in the east of the country to be handed over to Ukrainian authorities in return for amnesty. The gold price was also hurt by renewed profit-taking ahead of the Good Friday long weekend when many markets in the West will be closed for trading. Investors continued to pull money out of the SPDR Gold Trust (NYSEARCA:GLD), the world's largest physically-backed gold ETF accounting for some 40% of total holdings in the industry. Holdings in GLD dropped to 795.1 tonnes or 25.5 million ounces on Thursday, the lowest level since February and down 26.4 tonnes in less than three weeks. Image of statue of Lenin in Illichivsk in the Odessa Oblast by lentina_x  |
| Platinum, palladium sell off after producers raise wage offer Posted: 17 Apr 2014 12:17 PM PDT The price of platinum lost more than $20 an ounce and sister metal palladium also eased on Thursday after two of the world's top producers made a fresh offer to workers who have been on strike for 12 weeks. On the Comex division of the New York Mercantile Exchange, platinum futures for July delivery – the most active contract – in afternoon trade exchanged hands for $1,419.70 an ounce, down $18 compared to yesterday's close and near the day's lows. On the day before more than 70,000 South African workers went on strike at Anglo American Platinum (LON:AAL), Imapala Platinumm (OTCMKTS:IMPUY) and Lonmin (LON:LMI) which together account for almost 50% of the world's production, platinum was trading at $1,450 an ounce. Number one producer Amplats and Implats, the second-biggest, said in separate statements on Thursday they had upped a previous offer of 9% to annual increases of 7.5% to 10%. Reuters reports the new wage hike would push the basic salary of all underground workers to R12,500 ($1,100) a month by 2017. The union has been calling for an immediate doubling of the minimum wage to R12,500, guaranteed for three years. The three mining companies have so far lost a combined R13.5 billion ($1.3 billion) in revenue, while lost employee earnings come to R6 billion ($570m). Roughly 10,000 ounces of production are lost each day the strike drags on and even after a resolution to the bitter dispute can be found it would take months for the affected mines to return to capacity. Year to date platinum is up just over 3%, but remains below where it was this time last year. Palladium also eased back on Tuesday with June futures slipping back below $800 an ounce, down 0.5% on the day. The metal, often used as substitute for platinum in catalytic converters, is up 10% year to date. |
| Despite talk, there's little chance India will ease gold curbs Posted: 17 Apr 2014 11:07 AM PDT
 Long the top importer of gold, India fell behind China in 2013. And it is beginning to look less likely that it will be able to catch up anytime soon. The decline in gold consumption in India came after bullion import duties were pushed up tenfold – from 1% at the start of 2012 to 10% – and other rules such as strictly cash only for imports, mandatory re-export of 20% of imports and transaction taxes stymied India's gold industry. The shortage of physical gold meant premiums over the London fix demanded by Indian gold traders from jewelers shot up as high as $180 an ounce during peak festival and wedding season last year. Premiums remain high today at $70 an ounce. That compares to recent discounts to the ruling global price on Shanghai gold markets. Lifting the restrictions could unleash the pent up demand in India which during good years take in more than a 1,000 tonnes of world supply. India is in the midst of a general election that is set to eject from power the Congress Party which has dominated Indian politics since independence. A number of politicians and government officials have promised to lift the restrictions on the metal so central to the Indian culture. But today the managing director of the country's biggest refiner which is expanding capacity to 200 tonnes of gold per year, poured cold water on speculation that gold could start flooding back to the sub-continent. Rajesh Khosla of MMTC-PAMP India Pvt told MoneyNews India "while the form of restrictions may change, the government will continue to restrain buying." That means the limits would result in shipments of 650–700 tonnes for the 12 months started April 1, close to last year's levels and down from 845 tonnes in 2012–2013 according to finance ministry figures: "I'm sure he [Finance Minister Palaniappan Chidambaram] will do something on 20:80," said Khosla, referring to the import regulations. "You may come up with a quota system, you may come up with an auction system, you may ask the banks to bid. Freeing the import of gold as it used to be prior to the 20:80, I don't think that is going to happen," he said in New Delhi on April 8. India imposed the import restriction to shore up the value of the rupee and cut down on the country's crippling current account deficit. Bullion and crude oil contributed almost 80% of the record $88 billion deficit in the past fiscal year. The Finance Ministry has vowed the shortfall in 2013-2014 would be kept below $40 billion; an announcement that lifted the rupee off its record lows hit in August last year. But that leaves little room for the lifting of import curbs. |
| China, Japan and ‘mystery local billionaire’ potential developers of Oakajee project Posted: 17 Apr 2014 10:02 AM PDT
According to media reports, the Western Australian government is favouring China, as Premier Colin Barnett publicly endorsed Chinese CITIC Wednesday as the most likely builder of the Oakajee project. The last time locals heard of a concrete and promising proposal to build the touted complex was almost a decade ago, when Murchison Metals, which had declined an opportunity to have a Chinese partner, opted for a Japanese giant Mitsubishi Corporation. The deal, however, flunked after the 2008 global financial crisis, with Mitsubishi Development abandoning it last year. Hopes were up again last week, as low-profile junior Padbury Mining (ASX:PDY) announced it had secured a $6.5 billion equity investment from an unnamed source to resume the long-awaited development. "The project has had a 30-year gestation period and it is a game changer for both Western Australian and the Mid West iron ore industry", said the company. The news sent Padbury shares soaring more than 100% to a high of 5.2 cents. On the same day, the miner placed itself in a trading halt because it would not name private equity investors it said would fund the deal. By Monday, it has gone into voluntary suspension with the same questions still unanswered. According to the Sydney Morning Herald, there is mounting rumours that the Padbury saga could have links to a scam that has been targeting cash-starved junior miners in Western Australia over the past year. The company's behaviour doesn't help disperse that theory. Padbury was due to submit more information to the Australian Stock Exchange (ASX) on Tuesday but extended the deadline to Thursday. This morning the firm extended its voluntary suspension once again, saying it needed more time to seek "information in respect of their (the backers) capacity to meet their funding obligations under the agreement." Meanwhile, Japanese capitals are carefully watching how the Oakajee story unfolds. Mitsubishi remains involved in the area through its Jack Hills iron ore project, owned and operated by Crosslands Resources, a 50-50 joint venture between Murchison Metals and the Japanese firm. |
| Guinea government to strip Vale, BSGR of all Simandou rights Posted: 17 Apr 2014 07:20 AM PDT  Though it is far from ports, roads and rail, the iron ore deposits studded in Simandou's hills, among the richest in the world, are easily extractable. The government of Guinean President Alpha Condé has approved last week's recommendation of revoking iron ore mining licences for BSG Resources (BSGR) and its joint venture partner, Brazil's Vale (NYSE:VALE) in the mineral-rich Simandou mountains. According to a Guinean official quoted by Reuters, the West African nation will withdraw the mining permit held by VBG, a company run by BSGR and Vale, and will also cancel its Zogota mining concession. BSG Resources, the mining arm of Israeli tycoon Beny Steinmetz's family conglomerate, sold a 51% stake in its Guinean assets to Vale in 2010 in a $2.5bn deal, under which $500 million was paid upfront by the Rio de Janeiro-based company. Since then, the venture has been thwarted by logistical obstacles and later accusations that BSGR used bribes to acquire the mining rights it now shares with Vale, and that both are about to lose. In an e-mailed statement, a BSGR spokesperson told MINING.com Guinea's decision is as predictable as it is unlawful. "BSGR obtained the mining rights lawfully and will mount a vigorous effort to overturn this decision (…) The Guinean government is relying on fabricated claims to justify President Alpha Conde's effort to reward political allies who allegedly helped rig his election by providing them with BSGR's legally acquired mining rights," it says. The source also said BSGR looks forward to international arbitration, where this process will be exposed for the first time to a fair and transparent legal process that establishes the truth and protects the firm's rights. Vale, which has not been accused of any wrongdoing itself, announced it would put the project on hold in October 2012 but has been silent on the issue ever since. However, in its annual report filed to the US Securities and Exchange Commission last month, the miner revealed for the first time that it was bracing itself to lose all its investment in the mine. Though it is far from ports, roads and rail, the iron ore studded in Simandou's hills is easily extractable. Those deposits are among the richest in the world and have the potential to transform the fortunes of the impoverished West African nation. |
| Metso rejects Weir’s $5.5 billion merger approach Posted: 17 Apr 2014 06:15 AM PDT  Metso's HQs in Finland. Finnish engineering firm Metso Corporation has rejected Scottish rival Weir Group's (LON:WEIR) US$5.5bn proposal to merge, claiming the deal isn't in the best interests of its shareholders and that it remains confident of its growth prospects as a stand-alone firm. Weir revealed earlier this month it had proposed an all-share merger to Metso that would create a group with a combined market capitalization of US$14 billion (£8.5bn). Under the terms of the proposed deal Metso shareholders would receive 0.84 Weir shares per Metso share held, which would see the Finish firm's shareholders owning around 37% of the combined company. The merged entity would be listed on both the London and Helsinki Stock Exchanges. In response to Metso's rejection Weir said it continues to believe in the strategic rational for bringing the two companies together. However, it added that there was no certainty it would revise the terms of its original offer. "The proposal was structured to enable the shareholders of both Metso and Weir to share in the very significant value creation that would result from material cost synergies in addition to further revenue synergies expected to be generated through the combination," said Weir. The all-share offer was met with a cool reception from state-owned Finnish investor Solidium, one of Metso's biggest shareholders, which is against the deal. "We are a new company forming our own future. We've only been in existence for three months," Hanna Masala, Solidium's investment director was quoted as saying by FT.com. The proposed multibillion-dollar marriage of the companies, which make equipment for the energy and mining industries, comes amid a recent uptick in European deal activity. |
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