First Quantum defers $1bn Zambia investment |
- First Quantum defers $1bn Zambia investment
- There's no budging these gold price bears
- Profitable Aussie miners get billions in state subsidies: report
- ETF sold gold piling up as Chinese imports drop 60%
- Nathan Tinkler's $150 million Wilkie Creek coal mine on track
- Diamond miner Alrosa's profit down 3% in first quarter
| First Quantum defers $1bn Zambia investment Posted: 24 Jun 2014 04:38 PM PDT First Quantum Minerals (TSE:FM) is deferring more than $1 billion worth of capital expenditure in Zambia due to a tax dispute with the government. Africa's second-largest copper-producing country is reconsidering its mining tax in a bid to increase public revenue. Zambian authorities deemed receipts from mining companies last year to be insufficient. Matt Pascall, Vancouver-based First Quantum's operations director, told a mining conference that the Zambian fiscal regime contains a great deal of uncertainty. He also said First Quantum has stockpiled $350 million worth of copper concentrates at its Kansanshi mine in the wake of a 10% export duty on semi-processed copper ore. "If this chorus against the mining industry continues, it will end up killing the golden goose," Reuters quoted Pascall as saying. The International Monetary Fund said earlier this month that Zambia is seeking its help following an 18% decline in the country's currency and with the value of copper slumping. The red metal, currently priced at $3.14 per pound, accounts for 70% of Zambia's export earnings.  |
| There's no budging these gold price bears Posted: 24 Jun 2014 03:58 PM PDT The gold price consolidated recent gains on Tuesday, buoyed by safe haven buying following a deepening crisis in Iraq and rotation out of riskier assets like equities which pulled back sharply on the day. On the Comex division of the New York Mercantile Exchange, gold futures for August delivery in after hours trade exchanged hands for $1,319.10 an ounce, up slightly from Monday's trading session but off its highs for the day of $1,326. Tuesday's trading was quiet again with only some 115,000 contracts changing hands. This compared to Thursday last week when after months of subdued trade on gold futures markets volumes surged and gold jumped nearly $50. Last weeks rally was ascribed to dovish comments comments by Federal Reserve chair Janet Yellen that US interest rates would be lower for longer and the escalating situation in Iraq. Those two factors are very much still in play but gold's recent price performance has not convinced most market analysts that a rerating is in order. Prices will average $1,250 an ounce in the third quarter a decline of more than 5% from current level, according to the median of 15 estimates by Bloomberg. The analysts were surveyed before and after the US central bank's June 18 outlook, but predictions were not altered: "The surge in gold can't sustain itself," Donald Selkin, who helps manage about $3 billion of assets as chief market strategist at National Securities Corp. in New York, said June 20. "It was a temporary spike because of a confluence of events: Iraq and Yellen. People will be looking at other areas for excitement. Holdings are down, so people are leaving gold in search of something better." A new note by Barclays concurs with these sentiments adding that "any price level above $1,300 per ounce must be viewed as opportunity to sell gold," reports Hard Assets because of expectations of stronger US economic numbers and employment: "Any upside for jobs growth would imply further downside for gold. Moreover, analysts predict a broad-based US dollar rally in the near term, which again would weaken the gold's prospects." Gold is up 10% so far this year after 2013's dismal 28% drop, the worst performance in more than three decades for the metal. Image of bear skin rugs on sale at Ismaylovo market, Moscow, March 2007 by beggs |
| Profitable Aussie miners get billions in state subsidies: report Posted: 24 Jun 2014 01:33 PM PDT
 Australia's mining sector has received massive state subsidies despite its striking profitability, according to a report an Australian think tank issued this week. The Australian Institute says in the report that more than half of mining royalties paid to some states is returned to mining companies. The institute's analysis of the last six budgets of each state and territory concluded that at least A$17.6 billion (about US$16 billion) worth of assistance has been doled out to the sector. The subsidies are both direct, as in tax exemptions and infrastructure supply, and indirect, such as through the provision of cheap services, according to the institute's executive director Richard Denniss. The biggest handout, $9.5 billion, went to mining state Queensland. The state of Western Australia received the second-largest amount of $6 billion. "The Queensland Government has spent about as much money (in the current fiscal year) supporting its mining industry as it's spent on building new hospitals," the Australian Broadcasting Corporation quoted Denniss as saying. He said Western Australia spent as much to bolster its mining as it did to support its police force. "So these are enormous sums of money," he said. Beth Mohle, secretary of the Queensland Nurses Union, called the government's priorities "all wrong" and said that as a result the healthcare system has suffered. "It's not to say that there isn't a need for some form of subsidies, but really, surely the priorities must be in terms of essential service provision and not in largesse to big business," she said, according to ABC. But the Australian Institute's Denniss questioned the need to subsidise mining. "Of all the industries that states should want to use subsidies to attract, the mining industry would be last," he said. "The thing that attracts the mining industry to a state is the quality and the quantity of the mineral resources," he said. "They can't threaten to take their mines elsewhere." The report has provoked a heated reaction from mining industry representatives. Brendan Pearson, chief executive of top mining lobby Minerals Council of Australia, rejects the findings, citing independent analysis by the Commonwealth Government's Productivity Commission. "It has found, year after year, that the mining industry receives no subsidies," he said, insisting that the sector spends more on infrastructure and building towns than any other. The Queensland Resources Council lambasted the Australia Institute report, describing it as a document that "would embarrass the North Korean government." |
| ETF sold gold piling up as Chinese imports drop 60% Posted: 24 Jun 2014 12:04 PM PDT The movement of gold and silver from West to East has transformed the global gold market in fundamental ways. The process playing itself out goes roughly like this: ETF investors in the US and other developed markets offload their gold holdings allocated to them and held in the UK, where most of the world's gold vaults are to be found. From the UK the bullion is exported to Switzerland where the globe's gold refineries are concentrated, where it's melted down and recast into smaller bars. From Switzerland, which last year exported 2,777 tonnes worth $132 billion, the bullion is shipped to China (much of it via Hong Kong) and India and other growing gold consuming nations in Asia led by Vietnam and Indonesia. Gold held in ETFs have dropped to the lowest levels since 2008 and after a short-lived and modest bout of buying earlier this year, outflows have largely resumed. Swiss customs data for May published today show a marked slowing in these flows via the global gold trade hub according to Goldreporter.de. Gold delivery from London to Switzerland increased by 32% to 31.7 tonnes, pushing overall imports into Switzerland for May up 5.5% to 128 tonnes compared to April. At the same time the European nation's exports of gold dropped 96.6 tonnes down 13.6% on April which was already a dismal month when exports plummeted 21%. May's weak numbers were led by a 59% drop in exports to Hong Kong to just over 10 tonnes. Indian demand following sweeping political changes and hopes of economic recovery stayed relatively strong declining a fraction to 32.6 tonnes. At the same time buyers in Asia have become less willing to pay high premiums for this gold. Shanghai premiums topped out at $37 an ounce above the London fix but has now returned to par (or below). In India it hit a highs of $170 above during the height of the festival and wedding season last year, but has now dropped to below $10 an ounce Switzerland produces no gold itself. In 2012 and Alpine village turned down a $1.2 billion project which would've been the country's first and only gold mine. Read more at Goldreporter.de |
| Nathan Tinkler's $150 million Wilkie Creek coal mine on track Posted: 24 Jun 2014 10:43 AM PDT  Tinkler, who acknowledged he had been through a tough couple of years, said he had learned his lessons. Australian electrician turned mining entrepreneur, Nathan Tinkler, denied Tuesday media reports saying his $150 million agreement to buy a Peabody Energy (NYSE:BTU) coal mine could be delayed or derailed, as he has not satisfied contractual financing conditions. Speaking to The Australian, the 38-year-old tycoon said finalizing the sale of his horseracing empire, Patinack Farm, had taken longer than expected, which had forced a tweak to his funding arrangements for the purchase of the Wilkie Creek coal mine in Queensland. However, he said the deal still had the backing of New York investment bank Jefferies, a subsidiary of Leucadia National Corp. Sources quoted by The Herald had said Tinkler's failure to meet the conditions of the financing had prompted Jefferies to sound out other potential investors over the past month. Peabody shut Wilkie last year, blaming the carbon tax, falling coal prices and increased costs of doing business, but Tinkler announced it was acquiring it last month, two years after the collapse of a multibillion-dollar bid for his Whitehaven Coal (ASX:WHC), once the country's largest independent coal producer by market value. The former billionaire, listed for years as the richest man in Australia under 40, quit Down Under for Singapore two years ago after a series of disastrous deals and has since been trying to patch up his business finances, selling assets to repay creditors. He shot to fame after he and his partner brought in $1 million to put his foot on the Middlemount coal deposit in Queensland in 2006. Borrowing the rest of the $30 million purchase price, Tinkler sold Middlemount to Macarthur Coal just a year later and got over $440 million in cash. Not long after, Tinkler pulled off the same trick. In 2009 he borrowed heavily to buy the Maules Creek deposit in New South Wales from Rio Tinto for $480 million, which later sold for $1.2bn in 2010. Tinkler's most immediate plan is to put Wilkie Creek, which has approval to produce 2.5 million tonnes of coal, back into production by the end of the year. Image: Screenshot from YouTube |
| Diamond miner Alrosa's profit down 3% in first quarter Posted: 24 Jun 2014 08:50 AM PDT Russia-owned diamond miner Alrosa said Tuesday its first-quarter 2014 net profit had fell 3% to $177 million, year-on-year, due to higher foreign exchange losses. The world's No.1 diamond company by output saw a big jump in revenue: up 43% to $1.6 billion, as a result of higher sales volume and the ruble weakening. Diamond sales were up 23% to a record 12.7 million carats. The company said it had increased available bank loans and public debt instruments to $4.2 billion as of June 24 to create a liquidity source for the upcoming $500-million Eurobond repayment in the fourth quarter 2014. More than half of the company's sales were made in Belgium, while about 19% was sold within the Russian Federation. India accounted for approximately 15% of Alrosa's sales, while Israel-based companies accounted for roughly 10%. |
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