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Vale seeks hold on lowest production cost in the industry with US$14.3B S11D

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Vale seeks hold on lowest production cost in the industry with US$14.3B S11D

TOP NEWS

Vale seeks hold on lowest production cost in industry with US$14.3B S11D

Vale SA inaugurated the US$14.3 billion S11D iron ore and rail project in Brazil, which will enable it to consolidate its position as the company with the lowest production cost in the industry. At full capacity, the mine will be able to produce 90 million tonnes per annum at a cost of about US$7.70 per tonne, which is 41% less than the current average C1 cost of Vale. The first shipments from the project, which has an expected lifespan of 30 years, are slated for January 2017.

Peru approves construction of US$300M Magistral copper project

As part of its plan to unlock large mining investment projects, Peru's government signed a concession contract with Compañía Minera Milpo SAA to start construction of the US$300 million Magistral copper project in Peru's Áncash region, daily Andina reported.

Brazil's corruption investigation over 1.6B reais in mining royalties continue

Brazil's federal police launched a countrywide search for a prominent pastor, as it continues its investigation into alleged corruption relating to the payment of 1.6 billion Brazilian reais in excess mining royalties. Silas Malafaia is accused of laundering money through church accounts, as part of a wider scheme reportedly run by a senior Mining and Energy Ministry official.

DIVERSIFIED

* New evidence obtained by French outlet France 24 showed that Francois de Combret, the French banker who was paid US$10.5 million by Rio Tinto to help the company deal with the government of Guinea in 2011, was still in contact with the mining giant in March of this year, The Australian Financial Review reported.

* S&P Global Ratings raised Fortescue Metals Group Ltd.'s issuer credit rating to BB+ from BB as a result of the company reducing its absolute debt levels. The outlook on the long-term rating is stable.

BASE METALS

* The Chilean mining sector could process and export an additional US$1 billion in copper annually if mining companies that produce more than 100,000 tonnes of copper per year improve their productivity, according to a study by national productivity commission CNP. The commission found that the Chilean industry lags its competitors in terms of costs and efficiency, daily El Mercurio reported.

* Freeport-McMoRan Inc. is seeking approval for its US$18 billion plan to transition the Grasberg open-pit copper mine into an underground mining operation in Indonesia by late 2017, Reuters reported. Indonesia has given mixed signals on talks, and it is not clear if Freeport will be able to net a contract extension next year.

* The annual cost of the recently approved collective labor agreement between Codelco and union workers at its Chuquicamata division equals US$45 million in savings in comparison with the agreement reached in 2012, daily El Mercurio reported.

* Atalaya Mining Plc achieved nameplate capacity of 9.5 million tonnes per annum in December at its wholly owned Proyecto de Rio Tinto in Spain. The company expects to produce 34,000 tonnes to 40,000 tonnes of copper in 2017.

* Raptor Resources Ltd. has launched an IPO to raise up to A$4.5 million ahead of a Feb. 24, 2017, listing on the ASX. The Australian base and precious metals explorer is offering up to 22.5 million shares at 20 cents apiece and aims to raise at least A$4.0 million.

* Era Resources Inc. updated the resource at its Yandera project in Papua New Guinea to measured and indicated resources of 728 million tonnes grading 0.33% copper, 0.01% molybdenum and 0.10 parts per million of gold.

* Ironbark Zinc Ltd. received an exploitation license for its Citronen zinc-lead project in Greenland, allowing it to exploit the project for 30 years.

* Turquoise Hill Resources Ltd. expects the Oyu Tolgoi mine in Mongolia to produce 130,000 tonnes to 160,000 tonnes of copper and between 100,000 ounces and 140,000 ounces of gold in concentrate in 2017. The figures are lower compared to expected 2016 output and are primarily the result of approximately one-quarter less copper head grade and about one-half less gold head grade.

* The U.S. Forest Service and the U.S. Bureau of Land Management denied the renewal of two long-held federal mining leases of Twin Metals Minnesota LLC in the Iron Range region of Minnesota, according to parent Antofagasta Plc.

* Global Ferronickel Holdings Inc., the Philippines' second-largest nickel miner, said it would appeal the "unlawful" cancellation of the environmental permit for its Ipilan nickel project, Reuters reported.

PRECIOUS METALS

* Environmentalists were detained on the morning of Dec. 18 for blocking the access to Barrick Gold Corp.'s Veladero gold mine in San Juan province, Argentina, daily MDZ Online reported.

* Ivanhoe Mines Ltd. became the latest stock to join the Sanford C. Bernstein coverage universe, with an upside potential of about 300%. "We value the company at C$11.9 per share, using a 10% discount rate and the following long term commodity prices: copper at US$8,200 per tonne, zinc at US$2,700 per tonne and platinum at US$1,286 per tonne," analyst Paul Gait and his team said in a Dec. 16 note.

* Royalty streaming firm Silver Wheaton Corp. is willing to sit back and let the smaller new-market entrants take a go at the available opportunities, which are extremely competitive, and then look for opportunities to consolidate, President and CEO Randy Smallwood told Mining Weekly. The company expects to book well over US$600 million in free cash flow at year-end, reflecting strong performance, Smallwood added.

* Gowest Gold Ltd. entered into a definitive prepaid forward gold purchase agreement with PGB Timmins Holdings LP, pursuant to which PGB agreed to advance up to US$17.6 million to finance the development of the Bradshaw gold deposit in Ontario, as partial consideration for the purchase of up to 65,805 ounces of gold to be produced from Bradshaw.

* Blackrock Gold Corp. terminated a previously announced earn-in agreement to acquire up to an 80% interest in the Portrero gold-silver project in Durango, Mexico.

* Colibri Resource Corp. signed a letter of intent to acquire private company Canadian Gold Resources Ltd. from Ontop Capital Ltd. in an all-share deal.

* Mexico's environmental authority, SEMARNAT, denied the environmental impact assessment for Argonaut Gold Inc.'s San Antonio gold project in Baja California Sur, Mexico.

* Middle Island Resources Ltd. has delayed the planned restart of the Sandstone gold project in Western Australia after pit optimization results on a recently updated resource failed to meet expectations.

BULK COMMODITIES

* Iron ore miners operating in northwestern Australia may experience a cyclone before Christmas, The Australian Financial Review reported. The Bureau of Meteorology has alerted some companies to a weather system that is building and could develop into a cyclone by the end of this week.

* South32 Ltd. expects to produce 7.9 million tonnes of coal in 2017, compared to 8.4 million tonnes this year, from its Illawarra metallurgical coal operation in New South Wales, Australia.

* IRC Ltd. recommenced open-pit mining operations at its K&S iron ore mine in Russia, which will allow a supply of run-of-mine ore to the processing plant in addition to the stored ore stockpiles. The commissioning of K&S is underway, with the mine on track for commercial production by early 2017.

* About 200 people, which included miners, their families and local government representatives, staged another protest against the closure of Jastrzebska Spólka Weglowa SA's Krupinski mine, which is slated to shut down coal mining operations by the end of the first quarter of 2017.

* The Queensland government launched new health and safety reforms to protect coal miners from black lung disease. The updated coal health and safety laws will take effect Jan. 1, 2017.

SPECIALTY

* Gemfields Plc generated revenues of US$30.4 million from its auction of rough ruby, held in Singapore. The company sold 1,094,406 carats out of the total 1,372,145 carats offered.

* Noble Resources International Pte. Ltd. entered into a collaboration agreement to acquire up to a 12.5% interest in Mkango Resources Ltd. Noble will have the right to negotiate a marketing services agreement for Mkango's Songwe Hill rare earths project in Malawi.

* Sovereign Gold Co. Ltd.'s lithium spinoff, Marquee Resources Ltd., is aiming to list on the ASX on March 9, 2017, following a A$3.5 million IPO.

* Ardiden Ltd. secured an option to fully acquire the Wisa Lake lithium project in Ontario from Alset Energy Corp. The Wisa Lake project consists of five claims covering 1,200 hectares.

* Northern Minerals Ltd. executed an engineering, procurement and construction contract for its Browns Range heavy rare earth pilot plant in Western Australia.

* De Beers SA will start flooding the underground workings of its Snap Lake diamond mine in Canada's Northwest Territories in early January 2017 to transition the mine into a long-term phase of care and maintenance, primarily focused on environmental monitoring activities. De Beers said it engaged with interested external parties for the sale of the mine but failed to reach an agreement for the deal.

INDUSTRY

* Research group BIS Shrapnel expects maintenance spending in Australia's resource sector to increase to US$10 billion in the next five years, compared to US$6.6 billion in 2016, The Australian Financial Review wrote.

* The Japan Aerospace Exploration Agency has decided to step into the space resource mining sector, signing a memorandum of understanding with ispace Inc. for the mining of resources on the moon. The private lunar robotic exploration company said it plans to send a rover to the moon next year.

* The exploration sector's planned spending remained depressed for a fourth consecutive year in 2016, but the last three quarters have brought signs of optimism for the long-struggling mining industry. S&P Global Market Intelligence calculates that the exploration budgets of 1,580 companies totaled US$6.89 billion in 2016, down 21% year over year.

S&P Global Market Intelligence and S&P Global Ratings are owned by S&P Global Inc.

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