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Citi flags iron ore price volatility as high-cost Chinese mines restart


World Exploration Trends 2022


Gold Market Outlook


Insight Weekly: US recession outlook; mortgage activity slowdown; climate disclosure push


Insight Weekly: Cybersecurity M&A momentum; US banks' loan growth; miners' labor supply woes

Citi flags iron ore price volatility as high-cost Chinese mines restart


Restart of high-cost Chinese iron ore mines may add to price volatility

The recent strengthening in iron ore price prompted the restart of a number of small, high-cost Chinese mines, according to Tracy Liao, Citigroup's Asia commodities strategist. "In China, what we saw on the ground was a lag of reaction between iron ore price hike and the decision to restart iron ore mines by around three to six months," Liao told attendees at the Global Iron Ore and Steel Forecast conference in Perth, Australia.

Brexit begins

The U.K. formally declared its intention today to leave the European Union, starting two years of negotiations to forge a new trading deal between the world's largest customs union and the fifth-largest economy.

Shandong Gold may have discovered China's largest gold mine

Shandong Gold Group Co. Ltd., the parent company of Shandong Gold Mining Co. Ltd., claimed it discovered what could be the biggest gold mine in China, Bloomberg News reported, citing a statement on a government-supervised website that cited the company.


* Rio Tinto CEO Jean-Sebastien Jacques said he is not concerned about the general health of the Chinese economy. The country is taking steps to rationalize its steel industry, from restructuring state-owned enterprises to shutting down small, polluting blast furnaces and concentrating production in facilities with new blast furnaces that require higher grades of iron ore.

* Glencore Plc, which off-loaded 50% of its agriculture business last year to two Canadian investment funds, does not see further consolidation in agricultural commodities as straightforward and regards a U.S. acquisition as less important than in the past, Reuters wrote, citing Glencore Agriculture CEO Chris Mahoney.


* BHP Billiton Group's Escondida copper mine in Chile will produce 250,000 tonnes less than the market expected for the year, a deficit initially estimated at 1.21 million tonnes, said mining analyst Gustavo Lagos. The decline is mainly due to the 44-day strike that ended last week, which caused delays in investments and led to a delicate labor climate in the company, daily El Mercurio reported.

* Vale SA unit PT Vale Indonesia Tbk. is engaging with unnamed Chinese investors to take part in building its new nickel smelter project in Bahodopi, Indonesia, as it earmarked about US$90 million this year for the proposed project, Jakarta Globe reported, citing a company official. The miner plans to start a pre-feasibility study on the project in September.

* According to a report from The Jakarta Post, Vale Indonesia is planning to construct a US$2 billion ferronickel smelter in Pomalaa, Southeast Sulawesi, where construction is expected to start in 2018 and operations in 2023. The company is working with Sumitomo Metal Mining Co. Ltd. to develop high-pressure acid leaching technology for the plant. Vale Indonesia awaits forest area utilization permits for the project and is revising its environmental impact analysis.

* Grupo México SAB de CV's transport unit agreed to acquire Florida East Coast Railway for US$2.1 billion, Reuters reported, citing a statement from the company. The transaction will be financed with US$1.75 billion in debt and US$350 million in capital.


* Goldcorp Inc. agreed to acquire a 50% stake in the Cerro Casale gold project in Chile by buying a 25% interest from both Barrick Gold Corp. and Kinross Gold Corp. Goldcorp and Barrick will create a 50/50 joint venture to advance Cerro Casale.

* Intermin Resources Ltd.'s scoping study for its Goongarrie Lady gold project in Western Australia estimated recovery of 14,700 ounces at all-in costs of A$1,081 per ounce, using a base case gold price of A$1,600 per ounce and a mineral resource estimate of 272,000 tonnes at 2.86 g/t of gold for 25,028 ounces, at a 1 g/t cutoff grade.

* Avesoro Resources Inc.'s gold production guidance for the year is 90,000 ounces to 100,000 ounces, at all-in sustaining costs of between US$925 per ounce and US$975 per ounce of gold produced, compared to full-year 2016 total gold production of 63,556 ounces at all-in sustaining costs of US$1,930 per ounce since commercial production started.

* The Colombian government plans to override the referendum that banned mining in the Cajamarca municipality of Tolima, with Mines and Energy Minister German Arce saying the voting results were not legally binding, BBC News reported. About 98% of the residents in the area voted against AngloGold Ashanti Ltd.'s La Colosa mine, which has already been granted a mining license.

* Orvana Minerals Corp. made the first commercial shipment of gold-silver doré from the recently recommissioned carbon-in-leach circuit at its Don Mario mine in Bolivia.

* Kirkland Lake Gold Ltd. said its total Canadian mineral reserves increased 20% between 2014 and 2016 to 2.75 million ounces of gold, while its Australian mineral reserves increased 24% from Dec. 31, 2015, to 952,000 ounces of gold as of the end of 2016.

* Petropavlovsk PLC increased the amount of gold in its hedging program to 573,000 ounces at US$1,254 per ounce. A US$100 million gold loan facility was also approved, with final documentation scheduled for April.

* Santacruz Silver Mining Ltd. completed the sale of its interest in the El Gachi silver property in Sonora, Mexico, to First Majestic Silver Corp. for US$2.5 million plus value-added tax.

* King's Bay Gold Corp. agreed to sell its early stage Menary gold project in Ontario to newly formed private company Destroismaison CLM Holdings Corp.

* Iberian Minerals Ltd. said its Mineworx Technologies subsidiary entered into a binding letter of intent to form a joint venture with Coronet Metals Inc. to process gold-bearing historical tailings and mine dumps at the latter's White Caps gold project in Nevada.

* Acacia Mining plc refuted claims that it was trying to export gold and copper concentrates despite the Tanzanian government's ban.


* BHP Billiton said the Hay Point coal terminal is not operational and the Goonyella Riverside, Peak Downs, Daunia, South Walker Creek and Poitrel coal mines remain suspended for now amid wet weather in Queensland, Australia, following a tropical cyclone, The Australian reported. Meanwhile, operations at the Broadmeadow, Caval Ridge and Saraji mines have been slowed. "Assessments about resumption of operations will be made once the storm threat has passed," the report quoted the company as saying. Aurizon Holdings has declared force majeure at three of its four coal-rail systems in Queensland amid rough weather stemming from Cyclone Debbie.

* Heavy rainfall in Queensland prompted Yancoal Australia Ltd. to declared force majeure on its Middlemount coal joint venture with Peabody Energy Corp., Metal Bulletin reported, citing an emailed statement from the company. The company noted that output at its fully owned Yarrabee mine is also affected by rain.

* Rio Tinto expects its AutoHaul project to become fully functional by the end of 2018, Mining Weekly reported, citing a company executive. Each of the autonomous haul trucks at its Pilbara iron ore operations operated at 15% lower costs during 2016 than conventional haul trucks.

* Vedanta Resources Plc Chairman Anil Agarwal said he likes Anglo American Plc's current management team and has no designs on a board seat or leadership position but wants to help the company expand its presence, particularly in India. Meanwhile, Bloomberg News quoted Agarwal as saying he has no plans to acquire Anglo's South African mines.

* BHP Billiton Group looks likely to go ahead with its South Flank iron ore development in Western Australia now that the state's new Labor government has ruled out any potential tax increase on iron ore leases. Edgar Basto, asset president of BHP Billiton's Western Australian iron ore operations, told reporters on the sidelines of the Global Iron Ore and Steel Forecast conference in Perth, Australia, that newly appointed Premier Mark McGowan had reassured the company that no new taxes will be introduced.

* A court in Minas Gerais, Brazil, signed a collaboration agreement with Samarco Mineração SA and parent companies Vale SA and BHP Billiton to help accelerate the settlement of lawsuits related to the water supply interruption in the Governador Valadares municipality after the Fundão tailings dam collapse at the Samarco iron ore project in November 2015. Under the agreement, the claimants will be able to seek compensation with the Renova Foundation, an organization created to lead the cleanup after the disaster, news agency Agência Brasil reported.

* Coal mining operations were halted at Stanmore Coal Ltd.'s Isaac Plains mine and Realm Resources Ltd.'s Foxleigh mine due to a large cyclone that brought wind and rain to Queensland, Australia. Stanmore said its port provider declared force majeure to protect key assets and infrastructure, while Realm has substantial production coal stock, which will assist in restarting supply.

* Black Mountain Resources Ltd. reported a maiden ore reserve of 288,000 tonnes of contained vermiculite in 1.16 million tonnes grading 24.8% vermiculite at the Namekara deposit in Uganda.

* Russian fertilizer producer PJSC PhosAgro expects EBITDA to rise by US$150 million once its new urea and ammonia plants come online later this year. Overall, the company intends to boost sales in Europe by 20% and by 50% in Latin America by 2020.


* Deep Yellow Ltd. entered a deal with JOGMEC in which the latter can earn a 39.5% interest in the Nova joint venture, comprising exploration prospecting license 3669 and 3670, in Namibia. The licenses cover about 600 square kilometers and adjoin Deep Yellow's wholly owned Reptile uranium project.

* Pilbara Minerals Ltd. secured a right to earn up to an 80% interest in the Mount Francisco lithium-tantalum project in Western Australia from Atlas Iron Ltd.

* Azincourt Uranium Inc. entered an agreement with Skyharbour Resources Ltd. and its joint venture partner on the Preston Lake uranium property in Saskatchewan, Clean Commodities Corp., for an earn-in option to acquire a 70% stake on the eastern portion of the property.

* Rio Tinto unit Rio Tinto Exploration Canada Inc. earned a 75% interest in Pistol Bay Mining Inc.'s C4, C5 and C6 uranium properties in Saskatchewan and, under the amended terms, can acquire the remaining 25% by paying an initial C$750,000 by April 17.


* In tackling the question of U.S. dependence on foreign sources for some critical metals, a hearing of the U.S. Senate Committee on Energy and Natural Resources focused on slow U.S. mine permitting. Several witnesses who gave statements and took questions during the hearing agreed that the U.S. was at a competitive disadvantage relative to countries such as Canada and Australia, where permitting timelines and regulatory certainty are better for miners while providing a similar level of environmental scrutiny.

* Mining majors flush with cash from the run-up in iron ore and metallurgical coal prices are unlikely to shift their near-term focus to trendier pursuits such as lithium and cobalt exploration, according to executives speaking at an industry conference in Switzerland. Lithium and cobalt are key elements in the production of lithium-ion batteries and dominated chatter in commodities circles of late as the electric car segment has hit its stride and overall demand for such batteries continues to grow.

* A so-called "hard" Brexit from the EU could actually benefit companies with operations in London, Glencore Chairman Tony Hayward said at the Financial Times Commodities Global Summit in Lausanne, Switzerland. He also noted that the end result could be the implementation of a "much more forgiving" U.K. tax scheme in an effort to prevent businesses from considering a move to Europe.

The Daily Dose is updated as of 7 a.m. ET and scans news sources published in Chinese, English, Indonesian, Malay, Portuguese, Russian, Spanish, Thai and Ukrainian. Some external links may require a subscription.