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Creditors approve Glencore coal mine sale; Australia sees iron ore prices rising; Tata Steel probed for fraud in UK

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Essential Metals & Mining Insights - January 2021

Industry Top Trends 2021: Metals and Mining


Creditors approve Glencore coal mine sale; Australia sees iron ore prices rising; Tata Steel probed for fraud in UK

TOP NEWS

Creditorsapprove Glencore coal mine sale

A majorityof creditors approved Glencore Plc's2.15 billion South African rand sale of the loss-making Optimum coal mine to Tegeta Exploration & ResourcesLtd., Bloomberg News reported,citing Piers Marsden, administrator of the business rescue proceedings. InvestecPlc, FirstRand Ltd.'s Rand Merchant Bank unit and Nedbank Ltd. collectively holdabout 2.7 billion rand in Optimum debt, according to a source with knowledge ofthe matter. However, the mine will remain in business rescue until Tegeta can demonstratehow it will return the business to profit while holding company will be released.

Australiasees iron ore to rebound in 2021

Australia'sDepartment of Industry, Innovation & Science said in its quarterly outlook thatiron ore prices will rise to US$64.70 per tonne in 2021 after rising to US$56 pertonne next year and to US$61.40 per tonne in 2018 as high-cost miners will be wipedout by low-cost producers, Bloomberg News reported.The department estimates that iron ore prices will average US$45 per tonne thisyear, while Australian shipments are expected to total 846 million tonnes this year,881 million tonnes next year and may reach 926 million tonnes by 2021.

TataSteel investigated over forged product certificates

Britain's Serious Fraud Office started a criminal investigationinto the Tata Steel Ltd.'sYorkshire steelmaking operations over allegations that staff may have fabricatedcertificates detailing the composition of products before they were sold, The Daily Telegraph reported.The probe reportedly came after the company referred itself to the regulator afteran internal audit, while about 500 customers are said to have been affected by theforged documents. The paper also reported an investigation into trading standardsat Tata Steel, but it was unclear whether the two probes are connected. SeparatelyBBC News wrote that Tata Steel made about £700 millionfrom selling carbon emissions permits granted for free under an EU emissions tradingscheme as the company was allocated more allowances than it really needed.

DIVERSIFIED

* joined in notifying contractorsof a delay in payments for their services by as much as three months, The West Australian reported.The move will add to the problems of an already struggling industry hit by low pricesand margin pressures.

BASE METALS

* plans to investclose to US$9 billion over the next seven years in its two major projects — thephase two expansion project for QuebradaBlanca, and feasibility studies for its Corridor copper project, a jointventure with Goldcorp Inc.For Quebrada Blanca in particular, the CapEx was cut by US$500 million to US$1 billionto between US$4.5 billion and US$5 billion, daily Diario Financiero reported,citing CEO Donald Lindsay.

* Workers at Freeport-McMoRanInc.'s 53.6%-owned CerroVerde copper mine in Peru will embark on a 48-hour strike, starting today, to protest the cut in theprofit sharing bonus for the year, Peru this Week reported. The company cut theaverage bonus to US$146 in 2015, from US$9,090 in 2014.

* OZ Minerals Ltd.is aiming to save anotherA$25 million in addition to the A$20 million savings already achieved under itscost cutting drive, now focusing more on supplier contracts and internal productivity.The initial cost saving program was focused on supplier and corporate contract renegotiations,operational production efficiency and a 2016 salary freeze for the board, executivesand all employees across the business.

* Nautilus MineralsInc. has received grossproceeds of about C$28.3 million after closing of its rights offeringof 188,425,531 common shares at 15 cents each, representing approximately 27% ofthe total shares offered. The net proceeds will be used to advance the constructionand development of its seafloor production system for its 85%-owned copper-gold-silver projectin Papua New Guinea and for general working capital requirements.

* Chieftain MetalsCorp. was unable to payover C$4.0 million due March 31 to West Face Capital Inc., to which it owes nearlyC$24.8 million in outstanding debt. The company said it is in talks with West Faceto resolve this matter. In addition, Chieftain is looking to arrange financing forthe construction of the TulsequahChief zinc-copper-gold-silver-lead mine in northwestern British Columbia.

* TheBHP Billiton and Rio Tinto-owned Escondidacopper mine in Chile said it expects a new US$4.2 billion concentrator and a US$3billion water desalination plant to help increase output and offset the fallingore grades in the next few years, Reuters reported.Production of about 1.2 million tonnes of copper is expected in the next decade,the report said, compared to 1.15 million tonnes produced in 2015.

* BHPBilliton unit Minera Escondida Ltda.'snet income totaled US$1.07 billion in 2015, down 56% year over year, daily Diario Financiero reported.

* Chileanstate miner Codelco reducedits number of contract workers to 23,098, down 3,500 compared with 2014, reachingits lowest level in the last five years. Meanwhile, the miner's own employee basegrew by 44 workers to 19,111 last year, daily Pulso reported.

* Puls Biznesu reportedthat later this year, Canadian explorer RathdowneyResources Ltd. will decide whether to build a zinc-lead mine in southernPoland. The project, worth 1 billion Polish zlotys, is on the border of Silesiaand Malopolska. "We have completed 270 wells with a total length of 30 thousandmeters, and the cost reached 100 million zlotys. This allowed us to estimate thesize of this deposit to 25 million tonnes of zinc and lead ores," said RathdowneyPresident Robert Konski.

* TheIndonesian group seeking to acquire a controlling stake in Newmont Mining Corp.'s operations in Indonesia secureda US$750 million loan from two state-owned banks to fund the deal, Reuters reported,citing Basis Point.

* Indonesianstate-owned tin miner PT Timah (Persero)Tbk expects to quadruplenet profit in 2016 to around 400 billion Indonesian rupiah by optimizing downstreamproduction and diversification, The Jakarta Post reported, citing corporate secretaryAgung Nugroho.

* TheNew South Wales Supreme Court dismissedthe proceedings between Aurelia MetalsLtd. and Glencore Plcover a loan dispute, in accordance with the terms of settlement between the companies.

PRECIOUS METALS

* produced 1.5million ounces of silver and 15,960ounces of gold in first quarter of 2016, down 17% and up 1% year overyear, respectively, while sales were down 19% and 3% to 1.5 million ounces of silverand 15,255 ounces of gold.

* acquired 's in theMabuhay gold-copper project in the Philippines.

* posted of 208,963ounces in the third quarter of fiscal 2016, at an all-in sustaining cost of A$1,015per ounce. Evolution noted that it has reducedits total debt to A$400.0 million with A$80.0 million in early debt repayments madeduring the quarter. An interim dividend cash payment of A$12.1 million has alsobeen declared.

* About500 residents of the town of Azacualpa, in Honduras' Copan department, blocked accessto the San Andresgold-silver mine, claiming the mine's operator Minerales de Occidente SA de CV, a subsidiary of , has not fulfilledthe social and economic agreements reached with the local community, daily La Tribuna reported.

* Maritime ResourcesCorp. amendedthe terms to buy back its shares from CommanderResources Ltd., which currently holds a 25.4% stake in the company.Maritime will now identify third parties to purchase an initial 2.0 million sharesat 14 Canadian cents per share on or before Aug. 31, of which 1.0 million sharesmust be purchased before April 30.

* OceanaGold Corp.will acquire a 19.9% stake in NuLegacyGold Corp. after buying 47.66 million shares in NuLegacy at 14 Canadiancents each, for a total investment of about C$6.7 million.

* TheAustralian government's Takeovers Panel has rejectedABM Resources NL's 3-for-5non-renounceable rights issue to raise a total of about A$8.2 million.

* completedhaulage of the first ore parcel to the Paddington Mill from the Anomaly 22 deposit, located in theGrants Patch Gold Tribute lease area in Western Australian goldfields. A total of7,548 tonnes of ore at 1.53 g/t grading for 372 contained gold ounces will now beprocessed under the agreement with NortonGold Fields Ltd. subsidiary Paddington Gold Pty. Ltd.

* and entered intoa definitive agreement for a merger,creating a new gold explorer and developer with properties in Quebec and Ontario.Under the terms, Adventure shareholders will receive 0.39 of a Probe share for eachshare held.

* Meanwhile, GoldcorpInc. entered into an agreement to acquire 4.4 million common shares in Probe Metals Inc. at 66 cents each for C$2.9 million. Theshares represent approximately 12.6% of the issued share capital of Probe Metals.The transaction is conditional upon the closing of Probe Metals' acquisition ofAdventure Gold.

* unit MIMCO,which owns the Lilygold mine in South Africa's Mpumalanga province, officially entered businessrescue, Mining Weekly reported. Threeminers have been trapped underground at Lily since February, and the company continuesto focus on their recovery.

* will in various goldexploration properties in Mali and Ivory Coast by acquiring 100% of 's wholly owned subsidiary,International Goldfields (Bermuda) Ltd., which owns the properties.

* Accordingto statistics from the World Gold Council, central banks purchased 25 tons of goldin February, down from 41 tons in January, CNBC reported.

BULK COMMODITIES

* A majorityof creditors approved Glencore Plc's2.15 billion South African rand sale of the loss-making Optimum coal mine to Tegeta Exploration & ResourcesLtd., Bloomberg News reported,citing Piers Marsden, administrator of the business rescue proceedings. InvestecPlc, FirstRand Ltd.'s Rand Merchant Bank unit and Nedbank Ltd. collectively holdabout 2.7 billion rand in Optimum debt, according to a source with knowledge ofthe matter. However, the mine will remain in business rescue until Tegeta can demonstratehow it will return the business to profit while holding company will be released.

* Australia's Department of Industry,Innovation & Science said in its quarterly outlook that iron ore prices willrise to US$64.70 per tonne in 2021 after rising to US$56 per tonne next year andto US$61.40 per tonne in 2018 as high-cost miners will be wiped out by low-costproducers, Bloomberg News reported.The department estimates that iron ore prices will average US$45 per tonne thisyear, while Australian shipments are expected to total 846 million tonnes this year,881 million tonnes next year and may reach 926 million tonnes by 2021.

* Britain's Serious Fraud Office started a criminal investigationinto the Tata Steel Ltd.'sYorkshire steelmaking operations over allegations that staff may have fabricatedcertificates detailing the composition of products before they were sold, The Daily Telegraph reported.The probe reportedly came after the company referred itself to the regulator afteran internal audit, while about 500 customers are said to have been affected by theforged documents. The paper also reported an investigation into trading standardsat Tata Steel, but it was unclear whether the two probes are connected.

* cut its iron-ore supply forecastfor the global market from 1.65 billion tonnes to a range of between 1.59 billiontonnes to 1.62 billion tonnes, down 2% compared with the total supply of the commodityin 2015 of 1.61 billion tonnes, Notícias deMineração reported.

* Alcoa Inc.struck a deal with Airbus to supply3D-printed titanium-fuselage and engine-pylon components for commercialaircraft. The company expects to deliver the first additive manufactured parts toAirbus in mid-2016.

* South Korea's POSCO'sshare price has increased 49% since Jan. 21 after falling to a decade low mainlydue to the company securing iron ore at record low prices and now selling steelproducts at much higher prices, as well as due to the company's focus on restructuringand producing premium higher value products, Bloomberg News reported.

* According to a study released by Western Sahara Resource Watch,Canada's Potash Corp. of SaskatchewanInc. and Agrium Inc.imported a combined 916,000tonnes of phosphate from the Western Sahara in 2015, which accounts for 64.5%of all purchases from the disputed territory last year, the Financial Post reported.

* is planning to slash steel production capacity by about 20%, or 4.2 million tonnes,from the current 22 million tonnes over the next three years with General ManagerQian Haifan saying that the "Steel mills have to become more international"amid a global supply glut and slowing economic growth, Reuters reported.However, "We will stick to our export strategy of selling about 10% to 15%of our production abroad," Qian said adding that the company will expand itsoverseas business from four to seven units by next year.

* In order to sell off stockpiles and to prevent the country'srivers from contamination in case of rain, the Malaysian government has extendedthe bauxite mining ban in Kuantan for another three months, starting April 15, Reutersreported,citing Wan Junaidi Tuanku Jaafar, Malaysia's natural resources and environment minister.The bauxite mining ban has been in effectsince Jan. 15.

* Meanwhile, Glencore leveled criminal charges against SouthAfrica's Association of Mineworkers and Construction Union, or AMCU, after a three-weekcoal strike turned increasingly violent while unionized workers set fire to trucksand offices at the Wonderfonteincoal mine April 6, Reuters reported.The company will hold talks with union over the wage dispute.

* Moody's upgraded BlueScopeSteel Ltd.'s credit rating to Ba2 from Ba3 with the ratings outlookchanged to stable from positive. The upgrade reflects the company's strengtheningfinancial profile in the past two to three years as it benefits from its productionof branded value-added products, and from low raw material costs, relative to theprice of its finished products. "The company is also now reaping the benefitsof restructuring and cost-cutting initiatives. … These positive factors are offsettingthe effects of a difficult global environment for steel producers," commentedMatthew Moore, a Moody's vice president and senior credit officer.

* 's lenders have been urgednot to initiate a legal battle to gain control of the administration process, ABCreported.

* Meanwhile, Commonwealth Bank of Australia and three other banksmay loss over 50 cents on each dollar lent to Arrium after lenders rejected a US$927million recapitalization plan by GSO Capital Partners and the company was handedto administrators April 7, Bloomberg News reported,citing Watermark Funds Management analyst Omkar Joshi. "It's a negative forthe four big banks given they are unsecured creditors … because it looks like thebanks wouldn't even get the 50-55 cents on the dollar that was expected under theGSO proposal," the analyst added.

* continued itscorporate reorganization with the announcement that Executive Vice President andChief Commercial Officer James Grech willretire from his positions following the recent sale of company assets.

* and its jointventure partner Ferrometals BV,together Brazil Manganese Corp.,secured a 4,500-tonne salesorder of high grade manganese mineral product to a ferro-manganese client inBrazil, scheduled to be delivered during the second quarter of this year.

* has enteredinto a heads of agreementwith the operator of the Hey Point bauxite mine on Queensland's western Cape York,assigning the operator to provide shipping access and logistics services for theUrquhart bauxiteproject.

* said theFirst Commercial Section of the Judicial Court of the City of Maputo, in Mozambique,declinedto hear a challenge brought by its unit, IM Minerals Ltd., to the validity ofa shareholder resolution of CompanhiaMineira de Naburi SARL. In doing so, it found that a previous judgement,which ruled that IM Minerals failed to acquire shares in Naburi, binding.

* A Dominicancourt accepted the charges filed by the Public Prosecutor's Office against the presidentand CEO of Falconbridge DominicanaS.A., David Soares, and two other top executives, accused of violatingthe country's environmental and health laws over pollution emissions at its operationsin the municipality of Haina, in San Cristobal province, daily Noticias SIN reported.

* Theintegrated water use license for Coalof Africa Ltd.'s Makhadoproject was suspendedfollowing an appeal to the Department of Water and Sanitation submitted by the VhembeMineral Resources Forum and other parties.

* Puls Biznesu reportedthat Chairman of the Metallurgical Chamber of Commerce and Industry in the Polishcity of Katowice, Stefan Dzienniak, said, "One of the most significant challengesto the steel mills in Poland is the threat from non-EU countries that use unfairor aggressive competition, particularly China and Belarus." In late March,the European Commission initiated an anti-dumping proceeding concerning importsof Belarusian steel rebar.

* is under investigationby the Indian Directorate of Revenue Intelligence for an alleged involvement ina US$4.4 billion pricing scandalrelated to coal imported from Indonesia. Profits were alleged to be "siphoned"overseas, as stated in the DRI alert and power companies used front companies inSingapore, Hong Kong and Dubai to raise coal prices in official billing documents,claimed the DRI.

* Ina bid to prevent its collapse, the Czech government is mulling taking over NewWorld Resources Plc unit OKDa.s. Industry Minister Jan Mladek, meanwhile, offered the main ownersand creditors to sell the company and debt.

* China'smedium and large steel mills have reported a loss of 11.4 billion Chinese yuan inthe first two months of this year, Shanghai Securities News wrote, citingthe chairman of the China Iron & Steel Association. CISA member mills have posteda combined loss of 100 billion Chinese yuan in their core business in the previousyear.

SPECIALTY

* Menika MiningLtd. completedthe acquisition of 1032701 B.C. Ltd., which holds an option on the lithium projectin Nevada.

* Medallion ResourcesLtd. is now preparedto move forward with pilot plant-scale tests of its monazite-based rare-earthextraction process, subject to securing sufficient funding. The new tests wouldbe the last major technical confirmation prior to building a continuous-flow integratedpilot plant.

* Base ResourcesLtd. produced110,760 tonnes of ilmenite, 21,194 tonnes of rutile, and 7,865 tonnes of zirconin the first quarter of 2016, compared to 105,753 tonnes of ilmenite, 16,754 tonnesof rutile, and 5,414 tonnes of zircon a year ago. The Kwale operations are expected produce 82,000 tonnesto 86,000 tonnes of rutile, 440,000 tonnes to 455,000 tonnes of Ilmenite, and 29,000tonnes to 31,000 tonnes of zircon.

* receivedan amended notice of intent work permitfrom the Bureau of Land Management for the next phase of exploration drilling atits Clayton Valley Southlithium brine project in Nevada.

* was exploration permit PR-15-10779for the recently acquired PatersonLake lithium prospect located in the Separation Rapids Pegmatite Groupof northwestern Ontario's Kenora mining division.

* 'sUS$300 million of bonds due in 2023 returned 9.2% this year as the sale of the companystake held by former Chairman Julio Ponce, who was fined US$70 million for marketmanipulation, gets closer, Bloomberg News reported.

* A pre-feasibilitystudy for Hastings Technology MetalsLtd.'s Yangibanarare earths project in Western Australia peggeda pretax net present value of A$700 million to A$750 million, at an 8% discountrate, and an internal rate of return of 40%. Total CapEx is seen to range from A$390million to A$420 million, with payback in 2.5 years.

* Kommersant reported that PJSC ALROSA began consultations with brokers on exchange-tradingin precious stones. A joint project with the Moscow stock exchange may start withinvestment-grade diamonds in a deliverable futures format. ALROSA also plans tolaunch unilateral auctions on one of the Russian stock exchanges for the sale ofrough diamonds and technical stones.

INDUSTRY NEWS

* Thefinalversion of Canada's Extractive Sector Transparency Measures Act requires allpublicly listed local miners to report payments including taxes, royalties, feesand production entitlements of C$100,000 or more to governments both home and abroad.

* Renewableenergy is gaining popularity as the power solution for mines in Chile as the currentenvironmental demands low cost and environment-friendly solutions, Mining Weekly reported.

The Daily Dose is updated as of7 a.m. New York time, and scans news sources published in Chinese, English, Indonesian,Malay, Portuguese, Russian, Spanish, Thai and Ukrainian. Some external links mayrequire a subscription.