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Daily Iron Ore Price, Commodities and Precious Metals Update - September 2013
Topic Started: 2 Sep 2013, 06:00 PM (13,052 Views)
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Prospects brighten as BHP opens new coal mine

September 4, 2013 - 2:41PM
Peter Ker

BHP Billiton's struggling Queensland coal sector will not face another royalty hike, after state Premier Campbell Newman promised a more stable royalty framework in the future.

Mr Campbell made the comments today while officially opening the Daunia coking coal mine near Moranbah, which will become the seventh mine to run under a long standing partnership between BHP and Mitsubishi.

The Australian coal sector has been struggling under lower commodity prices, high costs, union disputes and even flooding in recent years, and Mr Newman added to those challenges in 2012 when he increased coal royalties for miners working in his state.

The move angered miners and prompted some like Xstrata to suggest earlier this year that more than 30 per cent of Australian coal mines were unprofitable.

Mr Newman used his appearance at Daunia to reassure BHP and Mitsubishi that there were no more royalty slugs looming on the horizon.

"We didn't like to do it, there won't be any further changes and we are certainly trying to give people some (cost) offsets elsewhere," he said, while standing beside BHP's coal president Dean Dalle Valle.

"We are doing everything we can to put on the table regulatory reform that will mean mines can find operating cost savings."

The start of production at Daunia, which has been ramping up since first coal in March, is another step forward for the BHP Mitsubishi alliance as it seeks to improve profitability across the division.

The mine was delivered several months early and about $US250 million under budget, giving hope that the nearby Caval Ridge mine construction will also come in on budget within the next 12 to 24 months.

The extra 15 million tonnes of coking coal that will eventually flow from Daunia and Caval Ridge each year will help the alliance reduce its overall unit cost, which is now believed to be only just below the benchmark price for coking coal.

Coking coal prices were testing $US220 per tonne just 14 months ago, but have slipped below $US150 per tonne on numerous occasions over the past year, and were $US147 per tonne this week.

Read more: http://www.smh.com.au/business/mining-and-resources/prospects-brighten-as-bhp-opens-new-coal-mine-20130904-2t4u9.html
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Signs point to bumper year for miners

September 5, 2013
Jared Lynch

A role reversal is shaping in the year ahead, with analysts tipping the big miners to fuel a strong bounce in market earnings, and growth among the top banks to ease.

Although this reporting season delivered another year of flat earnings, Deutsche Bank strategist Tim Baker is forecasting growth in the mid-teens during 2013-14.

Resource stocks - with some help from industrials - were expected to lead the recovery as commodity prices and growth in China ''perked up'', Mr Baker said. The big banks, he said, would be hindered by a slowing domestic economy.

But the prediction is far from a sure bet. While analysts generally agree that earnings will rise

among the miners and financials will be steady, the market remains volatile, particularly about exchange rates and the Syrian conflict.

Nevertheless, the initial indicators are positive.

Mr Baker said commodity prices, down 16 per cent in

2012-13 compared with the previous year, were recovering. For example, iron ore had clawed back its losses after it fell sharply in the three months to June.

Economic data from China in past weeks had signalled a recovery in our biggest market after a weak second quarter this year. And there was also a softening Australian dollar.

''The recent data suggests China has stopped slowing, which should help underpin commodity prices,'' Mr Baker said. ''Also, production is trending higher across the sector.''

He said the resource companies, which posted disappointing results this earnings season - BHP reported $US11.8 billion worth of underlying earnings, well below the $US12.6 billion analysts were expecting - were well placed to benefit from these factors, having implemented a range of cost-cutting programs and stepped up production.

Read more: http://www.smh.com.au/business/signs-point-to-bumper-year-for-miners-20130904-2t5ii.html
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Rio set to slash costs across Pilbara iron ore production

Wed Sep 4, 2013 05:44am GMT

RIO Tinto chief executive Sam Walsh has set the group's iron ore unit the task of drastically winding back the decade-long run of operating and capital cost escalation in the Pilbara.

Analysts touring Rio's Pilbara operations this week have been told that planning is in hand for Rio to slash cash costs from $US47 a tonne in 2012 to as low as $US35.50 a tonne, including capital to maintain the business, by 2020. Significant capex savings are also planned, with Rio targeting to spend $US140 a tonne for each additional tonne of capacity in its planned push from an annual production rate of 290 million tonnes to 360 million tonnes.

Previous guidance from Rio was for a capital intensity figure in the mid $US150-a-tonne range.

Rio has cited easing local inflationary pressures -- labour, contractors and services -- as a factor in the radical operating cost-reduction forecast. Other factors include the lower dollar, technology improvements and the benefits of scale on having reached an already greatly expanded annual production rate of 290 million tonnes by May.

Also, beneficial to costs will be lower iron ore price-linked charges such as state royalties and the mining tax, due to the expectation that prices will retreat to their long-term average over time. A Coalition victory this Saturday would nevertheless see the mining tax abolished.

The market liked the news out of the Pilbara, a region that more than most has had to deal with rapid cost escalation in the past 10 years, much of it to do with the industry's rational exuberance in expanding as fast as possible to capture the China-led surge in demand. Rio closed $1.83 or 3 per cent higher at $61.05.

Strong manufacturing numbers out of China on the weekend, and later Britain, were also helpful for iron ore producers. Andrew Forrest's Fortescue reflected that with its 21c or 4.8 per cent surge to $4.54 a share. BHP, which is less reliant on iron ore for its earnings, gained 20c or 0.5 per cent to $35.82.

Despite expectations that iron ore prices would weaken in the current December half in response to a wall of new production hitting the seaborne market from Rio and other producers, the price of the steelmaking raw material is proving resilient. Iron ore was last quoted by The Steel Index at $US138.70 a tonne. That is down from $US158 a tonne in February, but well up on the May 31 low of $US110 a tonne -- itself an historically high level.

Deutsche Bank equity analysts said in a note from Rio's Pilbara tour yesterday that they "continue to believe that the market is underestimating the Pilbara ramp-up and potential capex and opex savings" by the company.

The note said the lower expansion capex guidance to less than $US140 a tonne represented a saving of at least $US1 billion on an eventual 360 million tonne production rate being achieved.

But, as revealed in The Australian yesterday, Rio has yet to provide clarity around the push to 360 million tonnes.

"Despite having committed $US4.4bn dollars for the 360 port and rail expansions, there remains no firm decisions around mine capacity to fill this," Macquarie analysts on the tour said.

Rio has made clear, though, that it has multiple options on how it gets to 360, and the timing.

Macquarie said that new mine developments remained the "most expensive and seemingly least desirable".

"But brownfield expansions can only get 22mtpa of the 70mtpa required (although the positive here was the suggestion that a further 10mtpa can be achieved by creep from existing capacity at very low cost)," Macquarie said.

It noted that Rio presented a graph of the various options being considered -- suggesting one scenario would see no new mines before 2018, seemingly to appease those shareholders that would prefer the capital to be returned rather than invested.

"Meanwhile, the upside case suggested 360mtpa capacity could be delivered by 2016 (although this would appear equally unlikely)."

Read more: http://ironoreteam.com/rio-set-slash-costs-across-pilbara-iron-ore-production
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skamy
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Perthite
4 Sep 2013, 03:15 PM
This has already been debunked. Rio found the cash by cutting 5 billion from contractor services.

The expansion comes up for approval in November. So it is an if.

What is needed is mega projects. Some estimates had Browse at 80 billion.

Within a year.
No it has not been debunked. Perthite you seem to live in an alternative universe sometimes. Why on earth do we need mega projects? Perth is doing just fine, low unemployment, a clear housing recovery after the GFC and lots of exciting city building just about to kick off and lots of lovely royalties to look forward to. IMHO Perth needs another mega project at this time like a hole in the head. What is the big rush to dig up and sell all our resources ?
Definition of a doom and gloomer from 1993
The last camp is made up of the doom-and-gloomers. Their slogan is "it's the end of the world as we know it". Right now they are convinced that debt is the evil responsible for all our economic woes and must be eliminated at all cost. Many doom-and-gloomers believe that unprecedented debt levels mean that we are on the precipice of a worse crisis than the Great Depression. The doom-and-gloomers hang on the latest series of negative economic data.
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CBA Commodities Daily Alert 04-September-13

Posted Image

Indonesia’s tin exports halted

Commodity prices moved mostly lower overnight. Base metals
finished mostly lower, the exception being tin after Indonesia’s PT
Timah, the world’s second-largest tin producer, declared force
majeure on exports after the introduction of a new regulation
requiring Indonesian tin producers to trade on a local metals
exchange before exporting. Precious metals and oil ended lower as it
appeared a military strike in Syria would be limited. Spot iron ore fell
0.5% to USD138/t.

Libya’s daily oil output has fallen to 150,000bpd (against pre-civil war
exports of ~1.6 million bpd) as ongoing strikes cripple oil production,
transport, refining and export. Arguably, Libyan supply woes are
having as much, if not more, of an impact on world oil markets than
potential military conflict in Syria.

Mexican copper miner Grupo Mexico expects total copper output of
~820,000 tonnes this year, similar to last year’s output and down
3.5% on an earlier estimate of 850,000 tonnes. Some global copper
miners are lifting output strongly, while others such as Grupo Mexico
and Chile’s Codelco are struggling.

India’s gold import demand is expected to lift in the near term after
the customs department clarified new gold re-export requirement
regulations. A good monsoon is expected to increase rural farmer
incomes, who can account for 60% of total gold purchases.

In economic news, annualised total US vehicle sales rose by 17% in
August from a year earlier to 16.02 million, higher than the 15.8
million units expected. The Fed Beige Book noted the economy as
growing at a 'modest to moderate pace', but with sign of fallout from
higher rates, with business lending flat. The report was unlikely to
sway the FOMC in either direction on tapering stimulus. In Europe,
final service sector PMIs indicated ongoing recovery in the region
despite modest downgrades from flash estimates.
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Perthite
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skamy
5 Sep 2013, 03:50 AM
No it has not been debunked. Perthite you seem to live in an alternative universe sometimes. Why on earth do we need mega projects? Perth is doing just fine, low unemployment, a clear housing recovery after the GFC and lots of exciting city building just about to kick off and lots of lovely royalties to look forward to. IMHO Perth needs another mega project at this time like a hole in the head. What is the big rush to dig up and sell all our resources ?
To employ the workers currently working on 2 mega projects as they are completed.

What is your theory behind the deterioration of yhe jobs market then?

Fyi new home sales fell 10.8% last month in WA.
Edited by Perthite, 5 Sep 2013, 03:40 PM.
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Pig Iron
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Perthite
5 Sep 2013, 03:38 PM


What is your theory behind the deterioration of yhe jobs market then?

it did? offical stats say it was flat.
I am the love child of Tony Abbott and Pauline Hanson
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skamy
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Perthite
5 Sep 2013, 03:38 PM
To employ the workers currently working on 2 mega projects as they are completed.

What is your theory behind the deterioration of yhe jobs market then?

Fyi new home sales fell 10.8% last month in WA.
Quote:
 
Despite the drop, WA sales in the quarter were 6.4 per cent higher than the preceding three months and 41.7 per cent higher than for the same period last year.

The HIA said that despite last month's fall, detached house sales had been relatively healthy in 2012.

"WA still stands poised to see new home building continue to grow, which is entirely appropriate for the State that is home to the fastest population growth and has a recent and chequered history with housing affordability," the association reported.

"Despite this latest monthly decline in sales, we expect the overall upward trajectory to continue."


Gosh Perthite do you really think there is anything to worry about when home sales are 41.7% higher than those for last year. You will drive yourself crazy jumping on everything that even smells like bad news in increasing desperation for your longed for crash.

Maybe the workers are going home to the east or back overseas. We are not seeing huge drops in local employment. We might see some short term volatility but there is loads of work coming up over the next few years. I doubt there will be much to worry about.

Definition of a doom and gloomer from 1993
The last camp is made up of the doom-and-gloomers. Their slogan is "it's the end of the world as we know it". Right now they are convinced that debt is the evil responsible for all our economic woes and must be eliminated at all cost. Many doom-and-gloomers believe that unprecedented debt levels mean that we are on the precipice of a worse crisis than the Great Depression. The doom-and-gloomers hang on the latest series of negative economic data.
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Perthite
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Link please... sales not approvals
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newjez
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Perthite
5 Sep 2013, 05:48 PM
Link please... sales not approvals
found one for Sing,

http://www.euroinvestor.com/news/2012/08/15/update-singapore-private-home-sales-surge-417pct-on-month-in-july/12067802

maybe Skamy is moving east?
Whenever you have an argument with someone, there comes a moment where you must ask yourself, whatever your political persuasion, 'am I the Nazi?'
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