Australian Wheat Exports Seen at 5-Year Low as Output Drops

By Phoebe Sedgman  Dec 9, 2014
Bloomberg
Wheat shipments from Australia will probably drop to the lowest in five years as dry weather curbs supplies in the world’s fourth-biggest exporter, according to a government forecaster, which cut its outlook 6.1 percent.

Exports in the year started July 1 may total 16.99 million metric tons, from 18.1 million tons forecast in September and last year’s total of 18.3 million, the Australian Bureau of Agricultural and Resource Economics and Sciences said in a quarterly report today. That would be the lowest level since 2009-2010, according to the Canberra-based bureau.

Wheat in Chicago fell to a four-year low in September amid forecasts for record global supplies and rising inventories before rebounding in October and last month on concern that harsh winter weather will hurt Russian crops. Australia last week lowered its wheat-production estimate to 23.2 million tons from 24.2 million tons after dry weather curbed yields in eastern growing regions. The country had its hottest spring on record this year, according to the Bureau of Meteorology.

“The forecast decline in production is expected to be driven by a 16 percent fall in the average yield,” Abares said in the report. “Yields are expected to decline in all major producing states.”

Wheat for March delivery fell 0.8 percent to $5.9325 a bushel on the Chicago Board of Trade at 11:48 a.m. in Singapore. Most-active prices are still 25 percent higher than the year’s lowest close on Sept. 25. Hard red winter wheat for for March delivery fell 0.5 percent to $6.36 a bushel.

Global Production

Hard-red winter wheat, the most-exported U.S. variety, may average $285 a ton at U.S. Gulf ports in the year started July 1, unchanged from a September estimate and compared with $317 a year earlier, Abares said. A decline in U.S. hard-red winter supplies and quality issues with the 2014-2015 harvest in other major wheat-producing countries, including France and Ukraine, may reduce downward price pressure, it said.

Global production may total 718 million tons in 2014-2015 from 714 million tons forecast in September and 713 million a year earlier, according to Abares. Inventories at the end of 2014-2015 may reach 192 million tons from 185 million tons a year earlier, it said.

The U.S. Department of Agriculture forecast on Nov. 10 that world wheat output would total a record 719.9 million tons, boosting reserves to a three-year high.

The Agricultural Market Information System raised its forecasts this month for global wheat, corn and soybean production for the year that started on July 1. Combined output of the crops will reached a record 2.05 billion tons, according to a report from the group set up by Group of 20 ministers.

Coal shortages ease at Indian power stations

NEW DELHI Wed Dec 10, 2014
(Reuters) - The number of thermal power plants with less than seven days of coal stocks fell to 50 last week, down from 61 in early November when shortages threatened to stoke a power crisis, government data showed on Wednesday.

On an average, 100 power plants had enough coal to last a week on Dec. 4, the Central Electricity Authority (CEA) said, far below the 15-30 days the CEA sets as an operating norm.

However, cooler seasonal weather this month has reduced demand for power and eased concerns of widespread blackouts.

India, which relies on coal for about three-fifths of its energy needs, is turning to increased coal imports because of insufficient domestic mining, despite the country sitting on the world's fifth-largest reserves.

Twenty eight of the power stations had less than four days coal supplies on Dec. 4, down from 35 on Nov. 2, the CEA said.

(Reporting by Tommy Wilkes; Editing by Himani Sarkar)

Iron Ore Outlook Cut by JPMorgan as BHP, Rio Shares Extend Slump

By Jasmine Ng  Dec 9, 2014
Bloomberg
Iron ore prices will extend declines as growth in low-cost supply from the world’s largest producers outstrips demand, according to JPMorgan Chase & Co., which cut forecasts through 2017. Mining companies’ shares sank.

The steel-making raw material will average $67 a metric ton next year, 24 percent less than previously forecast, and $65 in 2016, down 23 percent, the bank said in an e-mailed report received today. So far this year, it’s averaged $98.82 a ton, according to data from Metal Bulletin Ltd. In 2017, prices will average $69 a ton, 16 percent less, the bank said.

Iron ore is heading for the biggest annual loss in at least five years as Rio Tinto (RIO) Group, BHP Billiton Ltd. (BHP) and Vale SA (VALE5) expanded output, spurring a glut just as growth slowed in China. The larger miners are choosing to overproduce, driving prices lower and forcing the closure of higher-cost suppliers, according to Bank of America Merrill Lynch. The raw material may drop to less than $60 next year, Citigroup Inc. estimates.

“The only way the oversupply can be averted is if the low-cost producers cut back on their growth targets,” JPMorgan said in the report, which was dated Dec. 7. “This is unlikely: feedback from recent site visits to the Pilbara suggests there is currently no consideration for slowing capacity growth from either Rio Tinto or BHP Billiton.”

BHP Retreats

Ore with 62 percent content delivered to Qingdao, China, lost 1.1 percent to $69.06 a dry metric ton today, according to data from Metal Bulletin. Prices slumped to $68.49 on Nov. 26, the lowest level in more than five years, and lost 49 percent this year.

BHP lost as much as 3.3 percent to 1,390 pence, the lowest level in London since July 2009, and was at 1,404.50 at 12:03 p.m. local time. The world’s biggest mining company, which also produces oil, is 25 percent lower this year as iron ore and crude fell. Rio stock retreated as much as 3.2 percent in London, dropping for a fourth straight day.

Global seaborne output will exceed demand by 100 million tons this year from 16 million tons in 2013, according to HSBC Holdings Plc. The price will average $99 this year and $85 in 2015, the bank predicts.

“The majors have embarked on ‘shakeout’ in the iron ore market with a view to regaining market share,” Bank of America Merrill Lynch said in a report on Dec. 3. The price will average $70 next year and $65 in 2016, it said, cutting forecasts.

No Slowdown

BHP signaled that there won’t be a slowdown in the drive by global producers to boost output. If the higher “volume doesn’t come from our business, it’s going to come from other businesses,” Jimmy Wilson, BHP’s president of iron ore, said in an interview broadcast by Australia’s Nine Network on Nov. 30.

Prices will return to an average $85 to $90 next year as high-cost mines shut and Asian demand rises, Vale Chief Executive Officer Murilo Ferreira said last month. Australia’s Roy Hill Holdings Pty, developing a mine in the Pilbara, aims to be “one of the last people standing” as higher-cost suppliers close, Chief Executive Officer Barry Fitzgerald said on Nov. 20.

An additional 341 million tons of capacity will be added over the next five years by Rio, Vale, BHP, Fortescue and Hancock Prospecting Pty, the owner of Roy Hill, JPMorgan estimated. Hancock’s Roy Hill project breaks even at $60 to $70 a ton and will proceed despite weak prices, the bank said.

The economy in China, which buys 67 percent of seaborne supply, is on track to record its weakest annual growth since 1990. The central bank cut interest rates last month for the first time since 2012 and HSBC and Barclays Plc predict there will be another two cuts before the middle of next year.

**

India Iron Miners Halt Exports on Weak Price, Higher Cost

By Rajesh Kumar Singh and Abhishek Shanker  Dec 10, 2014
Bloomberg
Iron ore exports from India have halted as a global price slump and an increase in royalty fees made shipments unviable for miners battling high taxes levied on overseas sales.

The third-biggest iron-ore exporting nation until three years ago didn’t sell “a single gram” overseas in October and November, R.K. Sharma, secretary general at mining lobby group Federation of Indian Mineral Industries, said in an interview, without giving specific data. Miners have sought the scrapping of a 30 percent export tax levied in 2011 to be able to resume sales, he said.

“International prices have fallen to rock-bottom and our costs have remained high,” Sharma, whose lobby group tracks data for overseas sales, said by phone. “You lose money on every ton you export.”

Even as global benchmark prices fell about 49 percent this year, in August India increased the royalty miners pay to the regional governments to 15 percent of the sales value from 10 percent. While the miners could still bear the tax when prices were in the region of $135 a metric ton until a year ago, the levy became insurmountable as prices tumbled by almost half.

“Our costs are now higher than the prices we will get in the international market,” said A.N. Joshi, vice president for iron ore at Sesa Sterlite Ltd., which was India’s biggest iron ore exporter until its operations in Karnataka state were shut by a court-ordered ban in 2011 and in Goa the next year. “The export tax has to be abolished altogether.”

‘No Exports’

The benchmark price of ore with 62 percent iron content at China’s Qingdao port was $69.06 a ton yesterday.

Shares of Sesa Sterlite rose as much as 2.1 percent to 225.40 rupees in Mumbai. The stock has risen 10 percent this year, trailing a 31 percent gain in the S&P BSE Sensex.

“There have been no iron ore exports from our port since the end of August,” said K.K. Sahu, port traffic manager at Paradip, a harbor on the eastern coast and one of the country’s main port for iron ore exports.

Environmental clampdowns by the government and the courts in the past three years led to closing of several mines, extending the crisis. The prolonged bans have prompted customers of Indian iron ore to increase their dependency on Rio Tinto Group, BHP Billiton Ltd. and Vale SA. The shuttered mines in India are struggling to reopen even months after the courts eased the curbs.

Idle Mines

More than three-quarters of India’s iron ore mines are lying idle, according to a parliament reply by junior mines minister Vishnu Deo Sai on Dec. 1. Of 776 mines in all, 590 are closed, Sai told lawmakers. All of the 330 mines in Goa are shut, while 112 mines in Odisha out of a total 143 are not operating, he said.

Mine closures have led to record shortages of iron ore and will probably turn India into a net importer of the material in the year to March 31. Indian steelmakers are set to buy as much as 15 million tons from overseas this fiscal year, almost triple the quantity imported a year earlier.

India may need to import as much as 45 million tons in the next three years, should mining curbs be maintained and demand from steel producers continues to rise, Zhuo Zhang and Kenneth Hoffman, analysts at Bloomberg Intelligence, said in a Nov. 20 report.

Miners in the western state of Goa, which was the biggest exporter of low-grade iron ore before the nation’s top court banned mining in 2012, are now free to start mining after renewing leases. At current ore prices there may not be any output at least in the year ending March 31, said Swaminathan Sridhar, executive director at Goa Mineral Ore Exporters’ Association, an industry trade body.

“Even if iron ore mining were to start from tomorrow, there won’t be any exports from Goa as under the current scenario of lower global prices and higher exports taxes from India, shipments are not profitable,” Sridhar said in a phone interview from Panaji, the state’s capital. “The miners are working toward getting their leases renewed, but for any chance of exports from Goa, the taxes have to come down.”

Miners' association tells Narendra Modi government that Indian mining sector on the verge of shutting down

By Vikas Dhoot, ET Bureau | 4 Dec, 2014,
NEW DELHI: India's mining sector is on the verge of shutting down in two months, industry bodies warned the government, citing an onerous forest clearance requirement imposed by the former UPA government's controversial environment minister Jayanthi Natarajan that would force all mines to cease operations.

"By February 2015, everything would come to a standstill," president of the Federation of Indian Mineral Industries H Noor Ahmed told ET, hoping for urgent action from the government to rescue the already troubled sector, which has contracted in the past three years.

All mines with partial forest clearances should get fresh clearances for their entire lease areas by the end of January 2015 if they want to continue operations, the environment ministry's forest wing had said in a directive issued with the approval of then minister Natarajan on February 1, 2013.

With the deadline weeks away, both FIMI and the Confederation of Indian Industry (CII) have redflagged the issue afresh with the ministries of mines and environment and forests and are planning to approach the Prime Minister's Office if the green ministry doesn't act soon.

Fearing a serious impact on mining and consequently, manufacturing, industry has suggested that the government should either withdraw the diktat or at the very least, extend the January 2015 deadline.

The problem, according to industry is that almost all mines in the country have been working with partial forest clearances and getting a forest clearance takes five to seven years, making it impossible to meet the two-year deadline.

Moreover, they argue that diverting the entire forest area in a mining belt at one go, instead of a phased manner, is not a prudent approach to conserving green cover. They have also pointed out that getting non-forest land for compensatory afforestation is a challenge in mineral-rich states.

The impasse on forest clearances for mines was incidentally part of a laundry list of green clearance headaches faced by investors, shared by industry with the PMO in the early days of the Modi government. Separate representations made to the environment, forest and climate change minister Prakash Javadekar, including a detailed missive sent by CII this August, have elicited no action.

"State governments have already started truncating the leases based on the area for which forest clearance has not been obtained... We request you to kindly take a considerate view of this issue being faced by mining industry as many of the mines are now on the verge of being closed," CII said in a November 12 letter to environment secretary Ashok Lavasa reviewed by ET.

FIMI members also met Lavasa on the imbroglio in late November. "We have requested him to amend the rules. I hope that some action is taken soon," said Ahmed.

Eighty percent of India's mineral riches are in tribal-dominated regions, with a very dense forest cover. About 70% of districts with large mineral deposits are classified as backward and over half of those are in areas affected by Maoist insurgency. Just 11 states, including Andhra Pradesh, Gujarat, Odisha and Jharkhand account for nearly 94% of India's total operating mines.

"The forest area approved should not be lesser than the total forest area included in the mining lease approved under the Mines and Minerals (Development and Regulation) Act of 1957. Both necessarily have to be the same," according to the environment ministry diktat.

"Mining in such leases will be allowed only if the user agency either obtains approval for the entire forest land located within the mining lease or surrenders such forest land for which approval has not been obtained and execute a revised mining lease for the reduced lease area," it stated.

               

NMDC slashes iron ore prices

PTI
NEW DELHI, DEC 4:
In a relief to major domestic steel firms, state-run iron ore miner NMDC has reduced price of lumps by Rs. 200 a tonne and Rs. 100 per tonne for fines for the current month on tumbling global prices and lower demand.

NMDC, India’s largest iron ore producer, had reduced the price for lumps by Rs. 200 per tonne in November. It, however, did not change the price for fines last month.

Following the reduction, the price of lump ore, which has more iron content and is used mostly by domestic steel makers, now stands at Rs. 4,200 per tonne. The prices of fines, having less content of iron or the inferior grade, now come down to Rs. 3,060 per tonne.

The miner reviews the prices of the key steel-making raw material every month going by the global prices and domestic demand, had not tweaked rates during the July-October period.

Global iron ore prices have nosedived to five-year low at around $70 per tonne mainly because of subdued demand from China, the largest producer of steel in the world.

The holding on of the price by NMDC during the four-month period coupled with inadequate availability within the country have forced JSW Steel, a major customer of NMDC, to import the raw material. Essar Steel also buys large quantity of iron ore from NMDC.

The price cut, which might be followed by other miners, would benefit domestic steel firms which are now in a precarious situation now with rising imports from China, Japan and Korea. The price cut could help them to better their margins.

The demand for iron ore has also come down in line with the fall in steel production. NMDC’s sales in October actually fell from the previous month even as its sales in first seven months of current fiscal rose to 17.65 million tonnes against 16.03 MT during the corresponding period last year.

Domestic crude steel production also declined by 0.5 per cent in October, 2014 from the immediate past month, mainly by a decline of 0.9 per cent in production by major producers and a 0.1 per cent decline in production by non-major producers.

The price cut might impact NMDC’s net sales realisation a little during the current quarter, although it is confident of imporving the bottom-line for the entire fiscal.

NMDC had clocked Rs. 6,420 crore net profit in the 2013-14 fiscal. In the first two quarters of the current fiscal, it has reported Rs. 3,482 crore. The company also hopes to improve its sales volume to around 32 million tonnes for the current fiscal.

Miners ‘Covering Their Eyes’ on China’s Commodity Cliff

By David Stringer  Dec 1, 2014
Bloomberg
After spending $1 trillion since 2002 on projects to feed China’s commodity boom, the world’s mining companies have a lot riding on their biggest customer.

While commodities may be trading at five-year lows, the heads of three top miners BHP Billiton Ltd. (BHP), Vale SA (VALE3) and Rio Tinto Group (RIO) last week all backed China, the world’s second-biggest economy, to keep buying increasing amounts of their products deep into the next decade. Not everyone agrees.

“The commodity guys are just too optimistic,” Tao Dong, chief regional economist for Asia excluding Japan at Credit Suisse Group AG in Hong Kong, said in an interview, without referring to particular companies.

As China moves to a consumer-led from an investment-led economy, there may be a substantial absolute drop in commodities demand, not just slower growth, he said.

“This is happening now,” Tao said. “It’s just people are covering their eyes and refusing to believe that what is happening now is not just a cyclical story, but also a structural story.”

Goldman Sachs Group Inc. this year joined other banks in calling an end to the commodities supercycle as China slows. The biggest consumer of industrial metals and iron ore and the largest oil user after the U.S. is headed for the slowest full-year expansion since 1990.

China’s economic slowdown deepened in October as industrial output growth and fixed-asset investment trailed estimates. Australia & New Zealand Banking Group Ltd. last month cited slower-than-expected growth in China for slashing its price projections for commodities including oil, iron ore and nickel next year.

‘Supernormal’ Demand

China’s “supernormal” commodities’ demand since 2002 will return to normal as the economy matures, according to a Goldman Sachs report in October. The bank expects China to take only its share of global GDP - about 13 percent in 2013 - in mining sector demand, down from as much as 60 percent at the peak of the boom. The trajectory of Chinese demand over the next 10-15 years will continue to call the tune, it said.

“China’s metal consumption per unit of GDP peaked in 2011-2012, indicating infrastructure investment’s contribution to the economy has started to shrink,” said Ma Kai, a Beijing-based analyst with China International Capital Corp.

“We won’t argue against the view that China’s total consumption would peak in 2020s, but the growth is slowing.”

Record Level

BHP, the world’s biggest miner, is adamant China will continue to underpin demand. According to BHP, the nation will retain its rising appetite for iron ore until at least the early to mid-2020s, remain the most important driver of copper demand and together with India account for growth in energy consumption by 2030 equivalent to current demand from the U.S.

“Chinese demand for iron ore and steel increased this year again to another record level,” Michael McCarthy, chief strategist at CMC Markets in Sydney, said by phone. “The underlying demand story here is constructive.”

About 250 million more people may move from rural areas to cities in China by 2030, bolstering demand for metals to meat, BHP told investors at a Sydney seminar last week.

“We have been fairly strong that the urbanization of China will continue, that it will move from a more investment led-economy to a consumption-led economy,” Chief Executive Officer Andrew Mackenzie said in a Nov. 24 interview.

BHP fell 5.3 percent to A$29.27 in Sydney trading, to the lowest since March 9, 2009. Rio declined 4.1 percent and Fortescue Metals Group Ltd. (FMG), the fourth-largest iron-ore producer, plunged 11 percent to A$2.62, the lowest since May 29, 2009.

China’s Desire

While that transition may be complicated by China’s desire to address climate concerns and improve the performance of its banks, “we take a long term view, and we think it’s steady as she goes,” Mackenzie said.

Rio, the second-largest mining company, will also stand firm on its strategy of raising iron ore output, Chief Executive Officer Sam Walsh said last week in an interview. “It’s important we stick to our game plan,” Walsh said.

London-based Rio doesn’t see China’s steel production peaking until about 2030, an outlook shared by Wood Mackenzie Ltd., while Wolfgang Eder, chairman of the World Steel Association, expects output the nation’s output to reach its zenith in as little as three years. Rio also said last week that it doesn’t see Chinese per-capita electricity usage reaching levels close to Europe and Japan until 2030.

Continued Chinese iron ore demand means Vale, the biggest supplier, also won’t slow expansions, Chief Executive Officer Murilo Ferreira said Nov. 26 in an interview, insisting prices will rise from current lows as higher cost mines shutter.

Declining Prices

If higher “volume doesn’t come from our business, it’s going to come from other businesses,” Jimmy Wilson, BHP’s president of iron ore, said in an interview broadcast yesterday by Australia’s Nine Network.

There are signs the immediate outlook for China’s economy is clouding. It’s forecast to expand 7.4 percent in 2014 and shrink to 7 percent in 2015, according to a Bloomberg survey of economists. Last month, the central bank announced its first reductions in benchmark interest rates since 2012 to counter the slowest economic growth in 24 years.

The World Bank forecast this year that metals’ prices were set to decline more than 6 percent, following last year’s 5.5. percent drop, on new supplies and weaker Chinese demand. A Bloomberg Commodity Index (BCOM) of 22 raw materials fell Nov. 28 to its lowest since July 2009, headed for a fourth annual decline, the longest slump since at least 1991.

‘The China factor for the commodity super cycle is over,’’ said Credit Suisse’s Tao. “If housing, infrastructure are no longer the main drivers of the Chinese economy, I think Chinese demand for commodities is going to shrink.”

Iron-Ore Miners to Drive Exports as Prices Fall, BHP Says

By Adam Haigh  Nov 30, 2014
Bloomberg
BHP Billiton Ltd. (BHP), the world’s biggest mining company, signaled there will be no slowdown in the drive by global iron-ore producers to boost production even as prices slump.

“Even the iron-ore price where it is today can induce more volume,” Jimmy Wilson, BHP’s president of iron ore, said in an interview broadcast yesterday by Australia’s Nine Network. “If that volume doesn’t come from our business, it’s going to come from other businesses around the world and other countries around the world.”

Iron ore has plummeted 47 percent this year to near the lowest since 2009 as investment in new mines deepens a global glut. BHP, Rio Tinto Group (RIO) and Vale SA have expanded output in Australia and Brazil, betting the increase will offset falling prices and force high-cost mines worldwide to close.

“Organizations have to be competitive and those that can’t be competitive will end up going out of business,” said Wilson.

BHP operates in the iron-rich Pilbara region of Western Australia, the largest production hub for the material in the world. It’s the No. 3 exporter and is spending $2 billion to boost annual production capacity to 290 million metric tons. Iron ore contributes 32 percent of its sales.

Induce Supply

“When the prices have been so high over such a long period of time you are going to induce more supply and when that supply comes on, we shouldn’t be awfully surprised,” said Wilson. “This is the commodity cycle.”

The market is in the midst of a transition without precedent in recent commodity history as supply surges and some higher-cost mines are displaced, according to Macquarie Group Ltd. As much as 130 million tons of seaborne production capacity, or about 10 percent of current supply, will have to shut in 2015-2016, Goldman Sachs Group Inc. said in a report.

While low-cost producers such as BHP, Rio and Vale have more tolerance to absorb lower prices in the near term than Cliffs Natural Resources Inc., Fortescue Metals Group Ltd. and Atlas Iron Ltd., the compression of earnings and cash flow is nonetheless value destructive, Moody’s Investors Service said in an October report.

**

JSW Steel in talks to buy Bhushan Steel’s Odisha unit and Orissa Sponge

By Nisha Poddar, ET Now | 1 Dec, 2014
Sources suggest that Sajjan Jindal's JSW Steel is eyeing two big M&A deals, the company is in talks to buy Bhushan Steel's Odisha steel unit and is also looking at buying out promoters' stake in Bhushan invested company, Orissa Spong. Total enterprise value for the deal is being worked out at Rs 30,000 crores, a source said.

Bhushan Steel has a total debt of around Rs 35,000 crores on its books and has been asked by the lenders to sell its Odisha unit which is an integrated steel plant with a capacity of 5.6 million tonnes. Promoters of Bhushan Steel have been trying to find ways of bringing down the debt levels but may not be convinced about selling the Odisha unit.

Bhushan Group's energy arm has about 15% stake in Orissa Sponge in which Monnet Ispat holds 41% stake. Orissa Sponge had been in the middle of a takeover battle due to its iron ore and coal mine reserves, this is also the reason for JSW Steel's interest in buying the company. This deal will take the total steel making capacity of JSW Steel close to 20 million tonnes which is the largest by any domestic steel company in the Indian market.

Bhushan Steel's spokesperson denied any such development which JSW Steel's spokesperson said, "We do not comment of market speculation."

**

Essar Steel commissions 6 mtpa pellet plant in Odisha

OUR BUREAU, THE HINDU BUSINESS LINE
MUMBAI, NOV 27:
Essar Steel has commissioned a six million tonne per annum (mtpa) pellet plant at Paradeep along with iron ore beneficiation facility at Dabuna (both in Odisha). A slurry pipeline of 253 km has also been put in place to transfer beneficiated iron ore to the pellet plant, said the company in a statement on Thursday.

Essar Steel had invested Rs. 6,000 crore in setting up this integrated complex which was executed by its group company Essar Projects.

The company plans to increase the pellet capacity at Paradeep by another six mtpa soon with corresponding rise in beneficiation plant, taking the annual pellet production capacity in Odisha complex to 12 mtpa.

Pellets are a critical raw material and finds use in all iron making processes including blast furnace, Corex and DRI (direct reduced iron).

With the commissioning of the integrated plant, Essar Steel has become the largest pellet producer in India with an annual production capacity of 14 mtpa which includes eight mtpa at Vizag and rest in Paradeep.

Captive infrastructure

The Odisha pellet complex is backed by infrastructure that includes a 120 MW power plant and a captive berth at Paradeep port. This apart, the pellet plant is connected by a 9.5 km conveyor belt to the fully mechanised berth at Paradeep port operated by Essar Ports.

A major portion of iron ore produced in Odisha is in the form of fines which can be used in iron making only after converting into pellets.

'India lagging behind in exploiting bauxite reserves'

OUR BUREAU, THE HINDU BUSINESS LINE
VISAKAHAPATNAM, NOV 27:
India is lagging behind in exploiting its bauxite reserves and in aluminium production due to certain "misplaced concerns" over ecological issues and due to other factors, according to several experts in the field.

They were speaking here at the inaugural of the three-day international seminar on bauxite mining and aluminium production organised by the International Bauxite, Alumina and Aluminium Society (IBAAS) in association with several other organisations. Over 200 delegates, several from abroad, attended the seminar.

Vedanta Resources CEO Tom Albanese in his key-note address said India was lagging behind in exploiting its bauxite reserves, though the country had quality bauxite ore in Andhra Pradesh and Odisha in the eastern ghats. He blamed it on certain negative propaganda and misplaced concerns over ecological issues. Even though technologies were available for sustained exploitation of the reserves and development of the industry in an eco-friendly fashion, these notions were persisting to the detriment of the growth of the industry. The industry should make sustained efforts to dispel these notions.

He said raw material security was the key factor worrying those seeking to invest in the aluminium sector and steps should be taken to address the concerns.

H. Mahadevan, the president (projects) of Anrak, said that red tapism and "misplaced commotion over red mud and other so-called ecological issues" were impeding the aluminium refinery projects and bauxite mining in the eastern ghats.

He said there would always be "a certain degree of ecological disturbance engendered by any sort of mining, but as long as there is no long-term ecological degradation, the activity should not stopped on that count and it should be carried out withl long-term and sustainable safeguards and precautions."

Describing aluminium as a green metal, he said it had definitively been proven that there would not be any long-term eco degradation in the area under bauxite mining and "in fact usually in the area where bauxite reserves are found there is not much greenery and the groundwater level is also negligible. After mining the greenery improves in the area and groundwater level also increases."

He also said aluminium can be recycled infinitely, and with low energy consumption, and "therefore it will not be lost to the posterity." He said of the ten projects sanctioned in the Eastern Ghats, "only one is fully operational and two are partly operational and the rest are languishing due to various reasons. It is regrettable."

He said it was also the responsibility of the industry to dispel these concerns about ecological issues and enlist the co-operation of the local communities to undertake bauxite minining on a long-term basis and in a sustained manner. He emphasised the need for value-addition and setting up the most modern refineries.

**

Iron-Ore Giant Vale Sees Rebound as Glut Squeezes Mines

By Juan Pablo Spinetto and Peter Millard  Nov 27, 2014
Bloomberg
Iron-ore prices are poised to rebound from five-year lows as Asian infrastructure demand improves and high-cost mines close, according to the top producer Vale SA. (VALE)

The steelmaking raw material, which has slumped 49 percent this year to $68.49 a dry metric ton, will return to an average range of $85 to $90 next year, Vale Chief Executive Officer Murilo Ferreira said in an interview yesterday.

The company isn’t considering slowing its expansions because of slumping prices and is pressing ahead with the $19.7 billion Serra Sul S11D mine and logistics project, the industry’s biggest, he said.

“There was a lot of volatility in prices this year and the market is undershooting at the moment and this will bring about a correction,” Ferreira, 61, said at the company’s headquarters in Rio de Janeiro. “This correction will come through the closure of many inefficient miners of high cost and poor quality iron ore.”

Vale, Rio Tinto Group (RIO) and BHP Billiton Ltd. are maintaining their expansions betting that higher-cost producers will be squeezed out of the market. The price plunge, including a 22 percent drop in the past three months, is prompting speculation China will close inefficient mines, while Cliffs Natural Resources Inc. is considering shutting a mine in Canada.

The raw material slid below $70 on Nov. 25 for the first time since June 2009 amid concern slower Chinese growth will curb demand from the biggest iron-ore consumer. The market needs to absorb a surplus of about 110 million tons next year, almost double the 60 million tons in 2014, Goldman Sachs Group Inc. estimates.

Price Struggle

“China mines produced about one-third of the country’s iron ore needs and any significant decline in output would be welcomed by the global industry, which has struggled with much lower pricing,” Bloomberg Intelligence analysts Kenneth Hoffman and Yi Zhu wrote in a Nov. 21 report.

About 140 million tons of export supply growth is forecast for next year, including 30 million tons from Vale, Citigroup Inc. said Nov. 11. The bank sees prices collapsing to less than $60 next year as output climbs and demand remains weak.

Shares of Vale dropped 4 percent to 19.75 reais in Sao Paulo yesterday after slumping to an eight-year low on Nov. 18. The stock lost 40 percent during 2014, the worst performer among the world’s top mining companies.

Pressing Ahead

While iron-ore prices may “eventually” surpass $100 next year, they won’t trade at that level on a sustainable basis, Ferreira said. The company had said as late as July that prices of $110 were sustainable in the longer term.

“Supply came in faster than we expected and the world’s demand was less exuberant than what we expected,” said Ferreira, who in May will cap four years at the helm of the world’s largest iron-ore producer.

“Several” iron-ore producers can’t sustain operations for a prolonged period of time with iron ore below $90 a ton, Ferreira also said in the interview. The company is concluding most of its ventures with the exception of Serra Sul S11D in Brazil, which will have the industry’s lowest cost, he said.

“We are not considering delaying any project,” he said. “We finished some in 2013, some others in 2014 and a few more in 2015. We have only S11D remaining and that one is untouchable.”

A lighter project load, currency depreciation and better negotiating conditions with suppliers will allow the company to present next week a lower budget plan for 2015 compared with this year, Ferreira said, declining to discuss specific targets. The miner is working to announce “a good deal” before the end of the year, the executive said, declining to give details when asked about possible assets divestment.

Vale is scheduled to discuss its strategy, including next year’s budget and output targets as well as project updates, at meetings with investors in New York and London on Dec. 2 and Dec. 5, respectively.

**

Shortage of 81 mn tonnes of domestic coal for power sector

For the ongoing fiscal the country's coal demand has been assessed to be 787.03 mn tonnes
Press Trust of India  |  New Delhi  November 27, 2014
There is an overall shortfall of about 81 million tonnes of domestic coal that is needed for the power sector, the government said on Thursday.

"There is an overall shortage of approximately 81 million tonnes of indigenous coal for power sector," Coal Piyush Goyal said in a written reply to the Lok Sabha.

The coal requirement of plants designed on indigenous coal is 554 MT, while the total availability is only 473 MT, he said.

Goyal added that in order to ensure adequate availability of fuel to power utilities, Coal India Ltd has been asked to enhance production of domestic coal and the power utilities have also been advised to augment import of coal to meet the shortfall in domestic availability of coal.

He said that in the ongoing fiscal the country's coal demand has been assessed to be 787.03 MT, while the supplies from indigenous sources has been planned at 643.75 MT, leaving a gap of 143.28 MT to be met through imports.

With a view to monitoring coal supplies to the power sector, an inter-ministerial sub-group consisting of representatives from the ministries like power and coal has been formed.

"The sub-group takes various operational decisions for meeting any contingent situations relating to power sector, including critical coal stock position," Goyal said.

CME Group to Start New Iron-Ore Futures Contract From December

By James Poole  Nov 24, 2014
Bloomberg
CME Group Inc., the world’s largest futures market operator, will start trading iron ore with 58 percent content from next month, it said in a statement.

The cash-settled contract will have January 2015 as the first listed month with a size of 500 dry metric tons and pricing based on ore delivered to China, it said.

Iron ore derivatives with 62 percent content already trade on the Singapore Exchange, the Dalian Commodity Exchange and the CME. The steel-making raw material capped the fifth straight weekly drop on Nov. 21 with prices trading near the lowest since 2009 on concern that slowing growth in China will hurt demand as rising low-cost supply deepens a global surplus.

“It’s obvious the bourse wants to fill in a blank in exchange-traded ore derivatives, since Dalian and Singapore only offer products related to 62% ore,” Wu Yichao, general manager at investment firm Beijing Liaosu Development Trading Ltd., said from Beijing. “Its success won’t be a given since most investors looking to hedge or speculate perhaps still prefer the benchmark 62% in line with most physical supply.”

The Singapore Exchange plans to start two cash-settled contracts for 58 percent ore delivered to China in early 2015, the bourse said on Oct. 24.

“The commodities boom in Asia has created an increased need for risk management,” said William Knottenbelt, Senior Managing Director, International at the CME.

Ore with 62 percent content delivered to Qingdao lost 6.8 percent last week, dropping to $70.20 on Nov. 19, the lowest level since June 2009, data from Metal Bulletin Ltd. showed. The price retreated 0.9 percent to $70.31 a dry ton on Nov. 21.

Prices collapsed 48 percent this year as surging low-cost output from Rio Tinto Group in Australia and Vale SA in Brazil spurred the glut. Data from Asia’s largest economy last week showed a drop in new-home prices and rising bad loans. The slump bears out a September forecast from Tom Albanese, former head of Rio Tinto, who said prices would remain weak for a sustained period.

BHP Targets Further Spending Cuts as Iron Prices Tumble

By David Stringer and James Paton  Nov 24, 2014
Bloomberg
BHP Billiton Ltd. (BHP) reassured investors that billions of dollars of planned capital spending and cost cuts will help allow the world’s biggest miner to maintain dividends as iron ore and crude oil prices plunge.

Capital outlays will drop to $13 billion in fiscal 2016, down more than 40 percent from 2012, the company said today. BHP also increased its annual target for productivity gains by 2017 by $500 million.

“We are able to drive productivity both in capital and in our operations at a pace that we can more than counteract the impact of price and ensure that our dividend is covered,” Chief Executive Officer Andrew Mackenzie said today in an interview in Sydney. The dividend, its credit rating and select investments had priority over buybacks, he said.

The tumbling commodity markets meant investors were seeking assurances over dividend payments and the prospect for additional returns, Sydney-based UBS AG analyst Glyn Lawcock said before the briefing.

“They are having to really ramp up their productivity drive a lot faster than I believe they were willing to do,” Evan Lucas, markets strategist at IG Ltd. in Melbourne, said by phone. “They were already looking for a good amount of cost savings, so it shows how much pressure that price is having.”

Spending on projects and exploration will be trimmed to $14.2 billion in the 12 months to June, from a previous company estimate of $14.8 billion. The producer allocated $22.7 billion in fiscal 2012, according its 2012 annual report.

Efforts to lower costs in its iron ore unit have “barely scratched the surface,” Mackenzie told investors and analysts earlier today at a presentation in Sydney.

Biggest Miners

The biggest miners are trimming spending after a decade-long $623 billion investment spree was followed by asset writedowns and management clear-outs. Rio Tinto Group, the second biggest miner, is targeting a further $1 billion in savings by the end of next year, after stripping out $3.2 billion of expenses since 2012, it said in August.

BHP rose 3.8 percent to close at A$32.90 in Sydney, the most in almost three years, as Asian miners surged following China’s decision to cut interest rates for the first time since 2012.

“We always felt that certain interventions would come forward to maintain a decent level of growth in China, so this is pretty much along the lines that we predicted,” Mackenzie said in the interview. He wouldn’t be drawn on whether further rate cuts may be implemented.

The producer raised its full-year dividend for the 12 months through June by 4 percent to $1.21 a share, it said in an August filing. Over the past decade, BHP had returned a total of $64 billion to shareholders through dividends and buybacks, the company said in August.

Investment Assurances

“We will strike the right balance between investment in high-return opportunities and returning cash to shareholders,” Mackenzie said today in a statement.

Oil has dropped about 30 percent from a June peak as the U.S. pumps at the fastest rate in more than three decades, while iron ore is trading around five-year lows as BHP.

Each $1 dollar fall in the price of iron ore cuts net profit after tax by $135 million, while a similar fall in the oil price has a $50 million impact, according to filings.

“In almost any circumstances we can see, we are very comfortable and very confident in our ability to continue to meet that basic commitment we have to our shareholders,” Chief Financial Officer Peter Beaven told investors.

BHP will seek to continue to “run a strong balance sheet, to make sure that we selectively invest for good and importantly keep that progressive dividend intact,” he said.

Trimming Spending

Rio CEO Sam Walsh said in August that the world’s second-largest mining company is on its way to becoming a “cash machine” for investors as an 18-month cost-cutting drive starts to bear fruit.

Iron ore fell on Nov. 19 to the lowest level since June 2009 and has declined 48 percent this year as the biggest exporters, including BHP and Vale SA, have raised output just as demand from China has waned.

BHP said today it’s seeking to raise output at its copper unit, including at Escondida, the world’s biggest copper mine. Constraints on power and water supplies in several countries will probably lead to a significant supply deficit by 2018, the producer said.

Output at the Olympic Dam copper mine in South Australia will increase by about 50,000 metric tons a year in the 12 months through June 2018, it said in the statement.

Dean Dalle Valle, currently president of the coal division will switch roles with Mike Henry, HSE, Marketing and Technology President, next year, the company said.

**

Richest Woman in Asia-Pacific Buys Iron as BHP Says Era Ends

By Jasmine Ng and David Stringer  Nov 21, 2014
Bloomberg
Gina Rinehart, the Asia-Pacific’s richest woman, is set to start exports in September from her new A$10 billion ($8.6 billion) iron ore mine undeterred by prices trading near five-year lows and forecast to extend losses.

“We don’t like the ore price going down, but we’re in the lower quartile” of production costs, Rinehart, chairman of Hancock Prospecting Pty, said yesterday in an interview at the Roy Hill mine in Australia’s iron-rich Pilbara region.

She was talking just hours after Andrew Mackenzie, chief executive officer of BHP Billiton Ltd. (BHP), called an end to the era of “massive expansions of iron ore.” BHP and rivals Rio Tinto Group (RIO) and Vale SA (VALE5) are flooding the global market, spurring a surplus after a $120 billion spending spree to boost the capacity of their mines from Australia to Brazil.

“I don’t think next year would be ideal to be adding new supply,” Daniel Morgan, a Sydney-based analyst at UBS AG, said in a Nov. 17. phone interview. “The market is pretty well supplied for the next few years.”

BHP stock lost 4.7 percent in Sydney this week for the biggest weekly loss since March, while Rio shares fell 6.1 percent. Fortescue Metals Group (FMG) Ltd., the country’s third-biggest shipper, retreated 54 percent this year.

The largest producers are targeting record shipments, betting the increase will offset the plunging prices and force less competitive mines to close, including production in China, the largest buyer of seaborne supplies.

‘Last People Standing’

“Our view is that there’s a sustainable long-term iron ore demand,” Barry Fitzgerald, CEO of Roy Hill Holdings Pty, told reporters. “The market economics will always demonstrate ultimately the high-cost producers will need to exit the market and therefore leave us among the other low-cost producers as one of the last people standing.”

Rinehart, who also owns stakes in iron ore mines operated by Rio Tinto, sold 30 percent of Roy Hill to a group including South Korea’s Posco, Japan’s Marubeni Corp. and Taiwan’s China Steel Corp. The overseas partners will take a share of production from Roy Hill, according to the company website.

“It’s probably been a long-held goal to get something she controls into the market,” UBS’s Morgan said. “She’s obviously got a high exposure to the iron ore market through her other business interests. This is the first time she gets to control an asset.”

Roy Hill

More than 2 million metric tons of iron ore has already been stockpiled at Roy Hill, Rinehart earlier told reporters. Project construction is 67 percent complete, Roy Hill Holdings said in a statement.

“Given we’re already an aggressively scheduled, fast-scheduled project, major project, really complicated project, and to be ahead of schedule has been fantastic,” said Rinehart, whose net worth is valued at $14.6 billion, according to the Bloomberg Billionaires Index.

While sticking with iron ore, Rinehart’s Hancock Prospecting is also diversifying. Unit Hope Dairies Ltd. last week announced a A$500 million expansion into infant formula, with plans for a farm and dairy herd in Queensland, with shipments to be sent to China.

BHP Billiton, which last approved spending on an iron ore expansion in 2011, is shifting investment into copper and petroleum, CEO Mackenzie told reporters yesterday after a shareholder meeting in Adelaide, South Australia.

Bear Market

Ore with 62 percent content delivered to Qingdao in China rose 1.1 percent to $70.97 a dry ton yesterday, data by Metal Bulletin Ltd. showed. The steel-making ingredient retreated 47 percent this year after entering a bear market in March.

Prices will average $65 a ton next year, dropping into the $50s in the third quarter, as global supply increases and demand remains weak, Citigroup Inc. said in a Nov. 11 report.

Roy Hill’s break-even cost is at $56 in terms of ore landed in China with 62 percent content, UBS said in a Sept. 12 report, with figures confirmed by Morgan on Nov. 17. Rio’s break-even cost is $45, BHP’s is $49 and Vale is at $67, according to UBS.

Marubeni isn’t concerned about a writedown on Roy Hill as the mine has a cash cost that’s “well below $50 a ton” in Australia, Chief Financial Officer Yukihiko Matsumura said on Nov. 6. China Steel, which holds a 2.5 percent stake, doesn’t have any plan to change that as of now, Executive Vice President Lin Horng-nan said on Nov. 18. Posco had no immediate comment.

The slowdown hasn’t discouraged Vale, the biggest exporter, which is investing $37 billion on iron ore mining and logistics projects, seeking to boost its output capacity to about 450 million tons by 2018.

Vale’s View

In the long term, the market won’t be oversupplied all the time, Claudio Alves, global director of ferrous marketing and sales at Vale, said Nov. 7.

The global seaborne market needs to absorb a surplus of about 110 million tons next year, almost double the 60 million tons in 2014, according to Goldman Sachs Group Inc. The bank declared the “end of the Iron Age” in a September report as a Chinese-led demand surge over the past decade that had brought record profits for producers came to an end.

“The decline next year will be driven mainly by new supply, largely coming from the majors in Western Australia,” Gerard Burg, senior Asia economist at National Australia Bank Ltd. in Melbourne, said by phone on Nov. 17. “Given the lower cost base of those production, we expect that trend to continue.”

RBA’s Heath Says Mining Investment Decline a ‘Significant’ Drag

By Benjamin Purvis  Nov 21, 2014
Bloomberg
The decline in mining investment will be a “significant drag” on Australia’s economic growth, even as exports of coal and iron ore provide a boost, according to the central bank’s head of economic analysis.

It’s uncertain how far and fast investment will fall or how much the mines’ operations will add to growth, the Reserve Bank of Australia’s Alexandra Heath said today in the text of a speech in Sydney. While China will probably find it more difficult to maintain its current pace of economic growth, the world’s second-largest economy should remain a large market for Australian resource exports for some time, she said.

“We have now seen the peak in mining investment and over the near term we expect that the fall in mining investment will be a significant drag” on gross domestic product growth, she said. “Iron ore and, to a lesser extent, coal exports are expected to continue to make a positive contribution to GDP growth in the next couple of years as productive capacity continues to ramp up.”

The RBA is keeping the benchmark cash rate at a record-low 2.5 percent to encourage non-mining companies to take a risk and invest as resources spending declines. While the property market has surged, businesses in other areas of the economy have been reluctant to spend even as the central bank sought to provide the right conditions.

The decline in commodities prices from iron ore to coal has helped lower the Australian dollar, although it remains above its historical average and the central bank has voiced concern about its strength. It bought 86.21 U.S. cents as of 11:00 a.m. in Sydney compared with an average of about 76 cents over the past three decades.

“Our assessment is that, despite the depreciation since early 2013, the Australian dollar remains above most estimates of its fundamental value,” Heath said.

Iron Ore Heads for Fifth Weekly Loss as ‘Worst Is Yet to Come’

By Bloomberg News  Nov 21, 2014
Iron ore is headed for a fifth straight weekly drop with prices trading near the lowest since 2009 on concern that slowing growth in China will hurt demand just as rising low-cost supplies spur a global surplus.

Ore with 62 percent content delivered to Qingdao lost 6 percent this week, dropping to $70.20 on Nov. 19, the lowest level since June 2009, data from Metal Bulletin Ltd. showed. The price gained 1.1 percent to $70.97 a dry ton yesterday, rising for the first time since Nov. 12.

Iron ore collapsed this year as surging low-cost output from Rio Tinto Group (RIO) in Australia and Vale SA in Brazil spurred the glut. Data from Asia’s largest economy this week showed a drop in new-home prices and rising bad loans. The slump bears out a September forecast from Tom Albanese, former head of Rio Tinto, who said prices would remain weak for a sustained period as supply exceeded demand and China’s economy was slowing.

“The worst is yet to come,” Liang Ruian, a fund manager at Shanghai-based Jianfeng Asset Management Co., said in an interview today. “Not only will we see increased supply from Brazil and Australia, also there’s an element of collapsing demand which hasn’t been reflected in the price yet.”

Rio shares traded at 2,891 pence at 8:53 a.m. in London, 4.9 percent lower this week, while BHP Billiton Ltd. stock lost 3.7 percent this week. Fortescue Metals Group Ltd. (FMG), Australia’s third-biggest shipper, retreated 54 percent this year in Sydney.

‘Not a Bottom’

New-home prices dropped in all but one city tracked by the government in October from the month before, according to the National Bureau of Statistics. Construction accounts for about 50 percent of China’s steel demand, Commonwealth Bank of Australia estimates, and the country is the largest ore buyer.

Iron ore at “$70 is not a bottom and I’m not even sure it can stand above $50 next year,” Liang said in Nanjing, China, where he’s attending an iron ore conference. “What people haven’t realized is the vanishing demand for commercial real estate here,” he said.

The market has hit bottom and prices may rebound, Standard Chartered Plc said in a Nov. 3 report. Prices will rise again over time, Rio Tinto Chief Executive Officer Sam Walsh told Sky News Television on Nov. 13. In the long term, the market won’t be oversupplied all the time, Vale SA said Nov. 7.

High-cost iron ore producers faced a “pain point” at about $80 a ton, Albanese, chief executive officer of London-based Vedanta Resources Plc (VED), told Bloomberg on Sept. 29. While low-cost producers would still make good money, higher-cost mines faced closure over time, he said.

Cliffs’ Mine

Cliffs Natural Resources Inc., the top U.S. producer, said this week it is considering closing a mine in Canada as an expansion isn’t viable. Kumba Iron Ore Ltd., which owns Africa’s biggest mine, said yesterday it’s reviewing its product portfolio and spending as prices are lower than expected.

“At these prices, we still have a very decent business, BHP Chief Executive Officer Andrew Mackenzie told reporters yesterday, adding that the time for massive expansions of iron ore are over. ‘‘We’ve been fairly clear that prices at about these levels were what we were expecting for the longer term.’’

WTO members question India's sugar subsidy

Countries have expressed concern that minimum support price and public stock holding programmes could impact them through exports
Press Trust of India  November 21, 2014

Some members of the World Trade Organization (WTO), including Australia, the European Union (EU) and Pakistan, have raised questions over India’s export subsidy on sugar.

Thailand, New Zealand and Colombia have also expressed concerns at the WTO’s Committee on Agriculture.

“India was asked about its export subsidy programme for sugar, with Australia, Thailand, the EU, Pakistan, New Zealand and Colombia, saying they were concerned at a time when members had agreed (at Bali) to reduce and eventually eliminate these types of subsidies,” the WTO said.
“It (India) said no incentives have been paid to producers so far,” the WTO added.
Earlier in July, too, a few members had raised similar questions.
In February, India had announced a subsidy for export of raw sugar up to four million tonnes to help the cash-starved industry clear sugar cane arrears to farmers. The subsidy scheme ended in September 2014.
It was originally fixed at Rs 3,300 a tonne for February-March and the Centre had decided to review the quantum of subsidy every two months.
Under the export incentive scheme, India had exported 700,000 tonnes of raw sugar in 2013-14 marketing year (October- September).
Sugar production of India, the world’s largest producer after Brazil, has increased by 22 per cent to 560,000 tonnes till November 15 of the current financial year as compared with 462,000 tonnes in the year-ago period, according to the Indian Sugar Mills Association (Isma).
The government has pegged overall sugar output at 250.5 million tonnes for the season, while Isma had estimated the production at 25-25.5 million tonnes.
The production estimates for the current marketing year are higher than 24.4 million tonnes produced in 2013-14.
“Its spending on price support programmes, for instance, falls under the limit of 10 per cent of the value of production — a limit on trade-distorting domestic support allowed generally to developing countries when they don’t have their own separate commitments,” it said.

Some of the questions being raised by members include “why India notified its support in US dollars instead of rupees”. Some members expressed concern that minimum support price and public stockholding programmes could impact other countries through exports.

**

India’s steel output growth fastest in October

PTI
NEW DELHI, NOV 21:
India’s steel production grew at the fastest pace among the top producing nations in October at 8.5 per cent even as world’s average growth remained stagnant.
India produced 7.080 million tonnes steel last month compared to 6.523 mt in the year ago period, data prepared by World Steel Association said today.

On the other hand, production of steel declined during the month in major producing nations such as China, Japan and the US, barring Russia which posted a 1.6 per cent growth in October output compared to the same month last year.

China, the world’s largest producer of steel, reported a 0.3 per cent fall in production. Output fell by 1.7 per cent in Japan and by 0.7 per cent in the US.
China, Japan, the US and India are world’s top four steel producing nations. The order has remained unchanged for quite some years now.
These four countries contributed over 91 million tonnes to the world’s total production of 136.7 mt steel during October, which remained flat during the month.
China produced 67.5 mt steel, Japan 9.4 mt and South Korea 6.2 mt, up by 4.5 per cent. The US produced 7.3 mt of crude steel in October.
Among the European Union nations, Germany produced 3.5 mt of crude steel in October, a decline of 5.9 per cent compared to the same month last year. Italy produced 2.1 mt, France 1.5 mt and Spain 1.3 mt.
Turkey’s crude steel production for October 2014 was 2.7 mt, down by 11 per cent over the same month last year. Brazil produced 3.1 mt, up by 2.7 per cent.
“The crude steel capacity utilisation ratio in October, 2014 was 74.7 per cent,” WSA said.
During the first 10 months of the current year, world’s steel production was up by two per cent to 1,367.50 mt. China remained the largest producer during the period at 685.34 MT, Japan 92.49 mt, the US 73.66 mt and India at 69.49 mt.

**

Iron’s Tumble Begets Future Takeover Treasure: Real M&A

By Angus Whitley  Nov 20, 2014
Bloomberg
Today’s plunge in iron ore is creating tomorrow’s acquisition targets.

With prices at a five-year low, only a handful of companies worldwide can make money selling iron ore, according to UBS AG. Some Chinese mines have closed, while Western Desert Resources Ltd. (WDR) and London Mining Plc have already failed. Pessimistic analysts expect the commodity to slide at least a further 14 percent before the end of 2015 as a supply glut continues.

Among the most vulnerable are Western Australia’s Atlas Iron Ltd. (AGO), BC Iron Ltd. and Gindalbie Metals Ltd. (GBG), according to Fat Prophets Pty. All three -- valued yesterday at less than $200 million after dropping 75 percent or more this year -- are struggling with production costs that are too high for the current market. Private funds such as X2 Resources, which has raised as much as $3.75 billion from investors, may be able to pick up bargains before an iron-ore rebound makes the assets viable, said Ernst & Young.

“The smaller miners in both China and Australia could be the collateral damage,” said Freya Beamish, a Hong Kong-based economist at Lombard Street Research Ltd. “Iron ore prices are on a structural downturn that could play out over several years.”

In Play

The price slide has put even the biggest producers in play. Glencore Plc in July approached Rio Tinto Group with a deal that would have created the world’s largest mining company. Rio rejected the proposal the following month.

Iron ore has fallen 48 percent this year, partly on concern China’s economic slowdown will weaken demand for the steelmaking material. At the same time, BHP Billiton Ltd., Rio and Vale SA have increased production to bolster their market shares, creating a glut and preventing a price rebound any time soon.

The commodity, approaching $70 a ton yesterday, will fall to less than $60 in the third quarter of 2015, Citigroup Inc. said in a Nov. 11 report. Only BHP and Rio, the world’s two largest mining companies, and Pretoria-based Kumba Iron Ore Ltd. (KIO), controlled by Anglo American Plc, produce profitably at that price, UBS analysts said in a Sept. 12 report.

“For those in the high-cost area, it’s a case of survival,” Mike Elliott, Sydney-based global leader for metals and mining at Ernst & Young, said by phone. “If you’re only ever going to make money at the peak of a commodity price cycle, then you may call it quits.”

Distressed Assets

Atlas Iron jumped 4.9 percent to 21.5 Australian cents at the close in Sydney. BC Iron shares lost 4.4 percent to 55 cents. Gindalbie fell 4 percent to 2.4 cents.

A representative for BC Iron had no comment on the company’s break-even price for iron ore or the prospects of a takeover. A representative for Atlas Iron and Gindalbie didn’t return a call seeking comment. All three companies are based in Perth.

London Mining, valued at more than $800 million in 2011, went into administration in October. Just hours before the company’s Marampa Mine in Sierra Leone was set to close, it was bought by Timis Corp., the administrators said on Nov. 3. Credit also dried up in September for Western Desert, which operates the Roper Bar project in Australia’s Northern Territory. Receivers have started to look for potential buyers.

It’s not only tumbling prices that are threatening smaller producers. Companies unable to recover their production costs also find it harder to obtain financing, while project writedowns become more likely, Greg Smith, head of research at Sydney-based Fat Prophets, said by phone.

“There are going to be plenty of assets around or moth-balled operations, if it gets to that,” said Smith.

M&A, Activism

Some miners that are close to breaking even at the current iron ore price might be able withstand the commodity’s slump by halting production until the market picks up, said Ernst & Young’s Elliott. Those that can’t may also be targets, he said.

Funds such as London-based X2 Resources, co-founded by former Xstrata Plc Chief Executive Officer Mick Davis, are logical buyers, according to Elliott. Some funds can wait years before profiting from an investment and may be able to buy the assets “relatively cheaply,” he said.

Resources companies sitting on millions of tons of reserves, mining licenses and other assets may also appeal to activist investors who could push for changes to boost returns. For instance, a breakup of Arrium Ltd., the iron ore producer that’s fallen 83 percent this year, might unlock value in the company’s unit that makes rail wheels and metal balls, Morningstar Inc. said last month.

Waiting Game

Shares of Atlas Iron, which digs for iron ore in Australia’s Pilbara region, have tumbled 82 percent this year. That’s even after the company cut capital expenditure and raised cost-saving targets. BC Iron (BCI) has dropped 89 percent and Gindalbie has plunged 75 percent.

According to UBS estimates, Gindalbie started losing money when iron ore fell below $98 a ton, while Atlas and BC Iron became unprofitable when the price dropped through about $80.

The stock collapses reflect doubts the companies will ride out iron ore’s price slump, said Shannon Rivkin, a director at Rivkin Securities Pty in Sydney.

“It’s guaranteed that we’ll see a lot more companies go out of business,” Rivkin said by phone. “There will be buyers but they’re going to have deeper pockets and longer timeframes. Iron ore prices are not going to be this low forever.”

Iron Ore’s Massive Expansion Era Is Finished, Mining Giant Says

By David Stringer  Nov 20, 2014
Bloomberg
Iron ore’s golden spending era is history. That’s the verdict of BHP Billiton Ltd. (BHP), the world’s biggest mining company.

BHP and rivals Rio Tinto Group and Vale SA (VALE) are flooding the global iron ore market after a $120 billion spending spree to boost the capacity of their mines from Australia to Brazil.

Now prices have slumped to the lowest in more than five years as surging supply coincides with a slowdown in China, the world’s biggest consumer.

“Our company has been very clear that the time for massive expansions of iron ore are over,” BHP Chief Executive Officer Andrew Mackenzie told reporters today after a shareholder meeting in Adelaide, South Australia.

While BHP is still increasing production, the company last approved spending on an iron ore expansion in 2011. It’s shifting investment into copper and petroleum, he said

Global seaborne output will exceed demand by 100 million metric tons this year from 16 million tons in 2013, HSBC Holdings Plc said last month. Prices, which are trading around $70 a ton in China, may drop to below $60 a ton next year, according to Citigroup Inc. forecasts.

“At these prices, we still have a very decent business,” Mackenzie said. “We’ve been fairly clear that prices at about these levels were what we were expecting for the longer term.”

Olympic Dam

Investments in copper may help BHP seize on rising demand for energy in emerging economies. Demand from China, the biggest metals consumer, will be supported by electricity grid expansion and greater adoption of renewable energy sources, all of which require more copper wiring, according to Citigroup.

The prospects for an expansion of BHP’s Olympic Dam copper, gold and uranium mine in Australia are looking more promising after testing of new processing technology shows early signs of success, Mackenzie said.

Olympic Dam in South Australia is the world’s largest uranium deposit and fourth-biggest copper deposit. BHP is pilot testing a heap leaching extraction process used in its copper mines in Chile.

If the tests “are successful, and they are showing considerable promise, we will use this technology and phased expansions of the underground mine to further increase Olympic Dam’s output,” Mackeznie told the meeting.

In 2012, BHP halted a proposed expansion of Olympic Dam, estimated by Deutsche Bank AG to cost $33 billion. Mackenzie was addressing the first annual meeting held in the state since the decision.

PM Abbott

Australia’s Prime Minister Tony Abbott has offered to assist BHP in advancing the Olympic Dam expansion, seeking to bolster the region’s economy with manufacturing scheduled to end at General Motors Co.’s Holden unit. The carmaker will cease production in 2017 after 69 years, cutting about 2,900 jobs at sites in the state and in neighboring Victoria.

Trials of a heap leaching processing are planned to begin at the site in late 2016 for three years, the company said in July. Experiments so far are being conducted at a laboratory in Adelaide’s Wingfield district.

“We are looking at the medium term for the deposit, it’s one of the best deposits in the world, it’s absolutely critical to our copper strategy,” Mackenzie told reporters. “What we also need is to have cheaper ways of processing.”

Chile Mine

Heap leaching applies acid to a pile of ore to extract copper rather than using a traditional milling plant, and is used at BHP’s Spence asset in Chile. The producer is already seeking to reduce costs at Olympic Dam to make it the world’s cheapest copper mine, Mackenzie said.

Copper demand may rise to 40 million tons a year from 27 million tons by 2030, BHP’s Marketing President Mike Henry said last month. “Supply, on the other hand, is expected to remain structurally challenged,” he told investors in London.

Shareholders will vote in May on plans to spinoff a collection of smaller assets into a new Perth-based company, Nasser told the meeting. The demerger would be the biggest in the mining industry, separating aluminum, coal and silver assets to create a company valued at about $15 billion after it begins trading next year.

Full details of the demerger plan will be released to shareholders in March ahead of the vote, Nasser said.

**

India to allow foreign firms mine and sell coal - coal secretary

BY KRISHNA N. DAS
NEW DELHI Thu Nov 20, 2014
(Reuters) - India will allow locally registered foreign firms to mine and sell coal when commercial mining is permitted as part of the opening up of the nationalised industry after four decades, Coal Secretary Anil Swarup told Reuters.

To end a chronic coal shortage that cripples power plants and curb the country's imports of the fuel, the Narendra Modi government will also spend about $1 billion by 2019 to buy railway wagons and transport coal from remote mines, Swarup said in an interview on Thursday.

The government last month made provisions for private firms to commercially mine coal but did not set any timeline for when actual digging will start.

The decision will open the door to global giants like Rio Tinto (RIO.L) and BHP Billiton (BHP.AX) and help ramp up output from India's huge reserves - the world's fifth biggest.

"Any company registered in India can bid (when a commercial coalfield auction takes place)," Swarup said.

"So a foreign company registered in India can also bid, provided they fulfil other conditions."

Opening up the industry will increase private coal production to about 400 million tonnes by 2019 from less than 50 million tonnes last year, Swarup said.

As of now, only power, steel and cement companies can mine coal for their own consumption. Commercial mining in India is dominated by state-owned Coal India Ltd (COAL.NS).

IMPORT FREE

Coal India is the world's largest miner of the fuel but its unionised workforce resists mechanisation fearing job losses. The resulting inefficiencies are partly responsible for years of missed output targets and India's coal imports.

But Swarup said the firm will beat its production target of 507 million tonnes in the fiscal year through March due to new mine output and environmental clearances. Output has lagged targets over the last six years for which data is available.

He sought to allay concerns over labour unions, which plan a one-day strike on Monday against sector reforms and the planned sale of a 10 percent Coal India stake.

"Our attempt is to convey our feelings to them that under no circumstances will the interest of Coal India be adversely affected by the decisions of the government," Swarup said.

He was also enthused by the likely selection of Sutirtha Bhattacharya, chairman of India's No.2 coal producer, as the next head of Coal India. Though much smaller, Bhattacharya's Singareni Collieries has been able to surpass its output target every year.

Swarup said the government will finalise a roadmap by Dec. 15 to more than double Coal India's output to 1 billion tonnes by 2019. The company will buy 260 more trains on top of the 200 under operation to move coal from new mines.

Higher production from Coal India and private firms will mean that India, the third largest coal importer, will almost end inbound shipments in four years, Swarup said.

(Editing by Douglas Busvine and Himani Sarkar)

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Private coal output to rise to about 400 million tonnes by 2019

By Reuters | 20 Nov, 2014
NEW DELHI: The government will allow locally registered foreign firms to mine and sell coal when commercial mining is permitted as part of the opening up of the nationalised industry after four decades, Coal Secretary Anil Swarup told Reuters.

To end a chronic coal shortage that cripples power plants and curb the country's imports of the fuel, the Narendra Modi government will also spend about $1 billion by 2019 to buy railway wagons and transport coal from remote mines, Swarup said in an interview on Thursday.

The government last month made provisions for private firms to commercially mine coal but did not set any timeline for when actual digging will start.

The decision will open the door to global giants like Rio Tinto and BHP Billiton and help ramp up output from India's huge reserves - the world's fifth biggest.

"Any company registered in India can bid (when a commercial coalfield auction takes place)," Swarup said.

"So a foreign company registered in India can also bid, provided they fulfil other conditions."

Opening up the industry will increase private coal production to about 400 million tonnes by 2019 from less than 50 million tonnes last year, Swarup said.

As of now, only power, steel and cement companies can mine coal for their own consumption. Commercial mining in India is dominated by state-owned Coal India Ltd.

IMPORT FREE

Coal India is the world's largest miner of the fuel but its unionised workforce resists mechanisation fearing job losses. The resulting inefficiencies are partly responsible for years of missed output targets and India's coal imports.

But Swarup said the firm will beat its production target of 507 million tonnes in the fiscal year through March due to new mine output and environmental clearances. Output has lagged targets over the last six years for which data is available.

He sought to allay concerns over labour unions, which plan a one-day strike on Monday against sector reforms and the planned sale of a 10 per cent Coal India stake.

"Our attempt is to convey our feelings to them that under no circumstances will the interest of Coal India be adversely affected by the decisions of the government," Swarup said.

He was also enthused by the likely selection of Sutirtha Bhattacharya, chairman of India's No. 2 coal producer, as the next head of Coal India. Though much smaller, Bhattacharya's Singareni Collieries has been able to surpass its output target every year.

Swarup said the government will finalise a roadmap by Dec. 15 to more than double Coal India's output to 1 billion tonnes by 2019. The company will buy 260 more trains on top of the 200 under operation to move coal from new mines.

Higher production from Coal India and private firms will mean that India, the third largest coal importer, will almost end inbound shipments in four years, Swarup said.

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Mining’s $120 Billion Iron Bet Sours on Peak Steel in China

By Thomas Biesheuvel and Jesse Riseborough  Nov 19, 2014
Bloomberg
Chinese President Xi Jinping obviously wasn’t speaking for the world’s iron-ore producers when he pronounced this month that the risks from his country’s slowing growth “aren’t that scary.”

The world’s mining giants have wagered $120 billion that steel production in China won’t peak until as late as 2030. Increasingly, it looks like they got that wrong, a miscalculation that could have huge consequences for companies led by BHP Billiton Ltd. (BHP) and Rio Tinto Group.

“I’ve always taken the view that the miners had the best intelligence on this as large investment decisions are based on it,” Richard Knights, a mining analyst at Liberum Capital Ltd. said by phone. “But if they get it wrong by a just a small margin, that has major implications for profitability and the share price for years to come.”

Iron ore is the worst-performing commodity this year, reaching a five-year low yesterday, and the slowing economy has persuaded some analysts and steelmakers that peak steel is nearing in China, the world’s largest producer.

Output in China will reach its high-water mark in as little as three years, prompting plant closures rather than expansions, according to Wolfgang Eder, chairman of the World Steel Association and chief executive officer of Voestalpine AG, Austria’s biggest steelmaker.

“There has to be a restructuring of the Chinese steel industry,” Eder said. “The iron-ore producers are getting more and more aware that their growth expectations have to be redefined. There are enormous over-capacities and more is coming on stream. This will increase the pressure.”

Big Change

It’s a big change. Every year for the past decade, China has added new mills with the capacity to exceed the annual production of Germany, the largest steelmaker in Europe. The surge in new blast furnaces created a consumption vortex, swallowing half the world’s iron ore and creating unprecedented wealth from Australia’s Pilbara region to Brazil’s Amazon basin. That gravy train, generating annual iron-ore sales of about $160 billion last year, is slowing.

The major flaw of producers of iron ore, the most traded commodity after oil, is they tend to be “over-bullish,” said Kirill Chuyko, head of equity research at BCS Financial Group in Moscow.

“Humans make mistakes,” said Chuyko, who thinks peak steel has been reached. “Chinese demand is going south.”

Economy Slowing

As China, the world’s second-biggest economy, heads for the weakest expansion in more than two decades, Communist Party leaders have discussed paring the growth target for 2015, according to a person with knowledge of their talks. The prospect growth will keep slowing has hurt commodities prices from coal to crude oil.

Iron ore has dropped 47 percent to $71.80 a ton this year, the lowest since 2009, according to Metal Bulletin Ltd. Citigroup Inc. forecast the commodity could fall below $60 a ton next year. It peaked at $191.70 in February 2011.

Spokesmen for BHP and Rio declined to comment.

The iron-ore market shifted to a “structural” surplus in mid-2014, Goldman Sachs Group Inc. analysts Fawzi Hanano and Eugene King said in a Nov. 6 report. That excess will widen to almost 300 million metric tons by 2017, they said. Miners led by BHP and Rio have embarked on $120 billion of spending on new mines since 2011.

A total of 24 iron-ore projects have either started or been approved since 2011, according to Goldman Sachs. The mines have a combined annual capacity of 726 million tons and include operations in Australia, Brazil, Sierra Leone, Canada, Russia, Ukraine and Liberia.

Steel Growth

BHP lowered its expectations for Chinese steel growth last month, though it still expects the country to increase production 25 percent by 2020-2025 to 1 billion tons to 1.1 billion tons. Rio expects China’s output to reach 1 billion tons by about 2030.

BHP and Rio operate in the iron-rich Pilbara region of Western Australia, the world’s largest production hub. Rio plans to boost output 11 percent this year to 295 million tons, rising to at least 330 million tons from 2015. BHP is increasing production from the region to about 245 million tons in the 12 months through June.

BHP fell 1.6 percent to 1,633 pence by 9:07 a.m. in London, while Rio declined 1.8 percent to 2,949 pence. Fortescue Metals Group Ltd. (FMG), Australia’s third-largest shipper, lost 7.7 percent in Sydney for the lowest close since June 2009.

Seaborne Trade

Global seaborne iron ore surged almost fourfold in the past decade to 1.2 billion tons last year, according to Bloomberg Intelligence, which predicts a further increase to 1.65 billion tons by 2018. For each ton of steel production, 1.6 tons of iron ore is needed.

“The seaborne iron-ore market has already transitioned to a structural surplus, which we expect to grow as slower growth in Chinese steel production is met by continued record growth in seaborne iron-ore supply, mainly from incumbent low-cost producers,” the Goldman analysts wrote.

While construction of the world’s biggest bridge, longest high-speed rail line and the growth of over 140 cities with more than 1 million inhabitants saw Chinese steel output more than triple to 786 million tons in the 10 years to 2013, industry pundits wonder whether the unprecedented scale of China’s industrialization can be maintained.

Property Slump

China’s bad loans climbed in the third quarter by the most since 2005, while new-home prices declined, according to data this week, spurring speculation the cooling economy will weaken further. China’s new-home prices dropped in all but one city tracked by the government in October from a month earlier, the National Bureau of Statistics said yesterday.

Chinese steelmakers, including the 11th-largest, Hunan Valin Iron & Steel Group, are cautious with the economy on course for its lowest growth rate since 1990 as property slumps and investment slows.

“Steel demand will maintain a small pace of growth for possibly three to five years,” said Li Jianguo, general manager of Hunan Valin. “I wouldn’t say the growth will last over the next decade.”

In the absence of demand growth, mills need to address a domestic supply “glut,” according to the China Iron and Steel Association, which sees the nation’s capacity at 1.1 billion tons to 1.4 billion tons. China, which produces half of the world’s steel, is on course to export a record 80 million tons this year.

“We have global over-capacity in steel production,” said Eder of Linz, Austria-based Voestalpine. “We cannot expect further growth in steel capacity.”

Iron Ore Extends Bear Market as Miner Says ‘We Are Price Takers’

By Jasmine Ng and Phoebe Sedgman  Nov 19, 2014
Bloomberg
Iron ore tumbled to the lowest in more than five years as declining home prices in China added to concern a slowdown in the top buyer will deepen, exacerbating a glut. Producers’ shares fell in London, and Australia’s BC Iron Ltd. (BCI) said that miners had to take the prices on offer.

Ore with 62 percent content delivered to Qingdao lost 4.4 percent to $71.80 a dry ton, the lowest since June 2009, according to Metal Bulletin Ltd. yesterday. It’s 47 percent lower this year, heading for the biggest annual drop in data going back to 2009. Futures in Dalian and Singapore fell today, potentially signaling further losses to Metal Bulletin rates.

The raw material fell into a bear market this year as BHP Billiton Ltd. (BHP), Rio Tinto Group and Vale SA (VALE5) boosted output, spurring a global glut just as economic growth slowed in China. Prices may drop to less than $60 a ton next year as output rises further and demand remains weak, Citigroup Inc. said. China’s bad loans climbed in the third quarter by the most since 2005, while new-home prices declined, according to data this week, spurring speculation the cooling economy will weaken further.

“The decline in China’s home prices gives rise to new fears about a significant cooling of the property sector,” Daniel Briesemann, an analyst at Commerzbank AG in Frankfurt, said before the price data was released. “Any slowdown in the construction sector would probably be reflected in weaker demand. The global iron ore market is also clearly oversupplied.”

Rio shares dropped 2.5 percent to 2,928 pence, while BHP fell 1.5 percent to 1,636 pence at 8:08 a.m. in London. Fortescue Metals Group Ltd. (FMG), Australia’s third-largest shipper, lost 7.7 percent in Sydney for the lowest close since June 2009.

Home Prices

New-home prices dropped in all but one city tracked by the government in October from a month earlier, the National Bureau of Statistics said yesterday. As the world’s second-biggest economy heads for the weakest expansion in more than two decades, Communist Party leaders have discussed paring the growth target for 2015, according to a person with knowledge of their talks.

“Construction accounts for about 50 percent of China’s steel demand, reflecting the importance of China’s property market to iron ore prices,” Commonwealth Bank of Australia said in a report today. “The fall in prices is consistent with expectations amongst Chinese steel mills, who are anticipating iron ore to fall under $70 a ton in the first half of 2015.”

Prices are expected to improve as China and other markets develop infrastructure and grow their economies, BC Iron Chairman Anthony Kiernan told shareholders at the Perth-based company’s annual general meeting today, according to a copy of his remarks. The producer’s shares dropped 89 percent this year, including a decline today of 12 percent.

‘Find a Market’

“BC Iron’s fundamental view is that Pilbara ore will find a market, given its quality and freight advantage to Asia,” said Kiernan, referring to the ore-rich region in Western Australia where mines are concentrated. “As miners we are price takers and effectively there is little we can do to substantially influence the price we are paid.”

Futures for May delivery declined 2.9 percent to 473 yuan ($77.28) a ton on the Dalian Commodity Exchange. The contract for December settlement fell 1.4 percent to $70.01 a ton on the Singapore Exchange, after most-active prices dropped below $70 for the first time trading started in April 2013.

Global seaborne output will exceed demand by 100 million tons this year from 16 million tons in 2013, HSBC Holdings Plc said in an Oct. 22 report. The commodity will average $99 a ton this year and $85 a ton in 2015, the bank predicts.

Prices of $75 a ton would render at least 60 million to 80 million tons of seaborne supplies unprofitable, Standard Bank Group Ltd. said in a note yesterday. More than 200 million tons will be loss-making should the raw material drop toward $70 a ton, according to the Johannesburg-based bank.

Iron ore will dip into the $50s in the third quarter of next year, Citigroup said in a Nov. 11 report that cut price forecasts. The bear market still has a way to go, according to analyst Ivan Szpakowski.

**

Expecting spur in cement demand, Holcim eyes expansion in India

By PTI | 18 Nov, 2014
NEW DELHI: Swiss major Holcim is evaluating expansion through new projects as well as acquisitions in India in the hope that "favourable development" under the Narendra Modi-led government will spur cement demand.

The building material major, which has majority stake in Ambuja Cements and ACC Ltd with a combined annual production capacity of more than 45 million tonnes, has also identified India as its one of the main growth drivers for the next year along with Indonesia, USA, Mexico and the UK.

"In India, the Group expects recent favourable development under new government to continue, leading to faster growing cement demand in the years 2015 and thereafter," the company said in a statement today.

Expecting 2015 to be a "solid year" for the group, which is merging with French rival Lafarge to create world's largest cement firm, it hopes to clock over Rs 18,600 crore operating profit excluding merger related costs as a Group next year.

Ambuja Cements and ACC Ltd together have 15 integrated plants. They will have 14 grinding units with a cumulative 63.7 mtpa cement grinding capacity by 2016 with the ongoing expansion. They also have 49 ready mix plants.

"Further expansion under evaluation for construction or acquisition of new plants," Holcim said.

The new government proposes various measures that should drive cement demand, it said, adding that the supply-demand balance was gradually improving although about 100 million tonne oversupply remains across India.

Holcim said India's cement demand was expected to touch at 310-320 million tonnes with available supply was estimated at 400-410 million tonnes by 2018.

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Holcim Predicts Rising Profits From Savings and India Recovery

By Patrick Winters  Nov 18, 2014
Bloomberg
Holcim Ltd. (HOLN), the cement maker that’s merging with French rival Lafarge SA, said operating profit will rise as much as 21 percent next year on cost-cuts as well as recovering growth in India, Indonesia and the U.S.

Profit, excluding merger costs could grow to as much as 2.9 billion francs ($3 billion) in 2015, Holcim said in a statement. That compares with the 2.4 billion-franc average prediction of analysts for this year. Holcim has exceeded its target from a savings program started in 2012 by about 200 million francs, it said.

“‘Holcim is the best positioned company in its industry to capture both the recovery in mature as well as the opportunities in emerging countries,’’ Chief Financial Officer Thomas Aebischer said in the statement today. ‘‘Our current footprint will allow us to grow for several years without significant expansion needs, creating higher returns for our shareholders.’’

Chief Executive Officer Bernard Fontana is coming to the end of a 2 1/2-year cost-cutting program to add 1.5 billion francs to earnings with measures that included closing European plants where demand for cement was low as well as streamlining procurement and logistics.

India, Holcim’s largest market by sales, was partly to blame for cutting a sales forecast last year. Now, Holcim expects the recent favorable development under the new Indian government to continue, leading to faster-growing cement demand from 2015. Indonesia and the Philippines are expected to be the growth drivers in the South East Asia region, Holcim said.

The $40 billion merger will couple Lafarge’s African cement plants with Holcim’s Asian assets, to increase exposure to faster-growing regions while at the same time selling less dynamic European plants to get the deal past regulators.

Fontana became the first outsider to lead Holcim when he joined the 102-year-old Swiss company in February 2012. Drawing on his past experience of overhauling steelmaker Aperam, he implemented his so-called ‘‘Holcim Leadership Journey.” He will help to integrate the two companies before Lafarge chief Bruno Lafont becomes head of the merged entity next year.

Port Hedland Strike Risk Remains as Engineers Reject Deal

By Phoebe Sedgman  Nov 18, 2014
Bloomberg
Tugboat engineers at Australia’s Port Hedland voted against a proposed agreement on wages and leave, extending the threat of disruptions to iron ore shipments at the world’s largest bulk export terminal.

The Australian Institute of Marine and Power Engineers did not approve an enterprise agreement put forward by Teekay Shipping (Australia) Pty, said Andrew Williamson, senior national organizer at the union. Teekay is contracted by BHP Billiton Ltd. (BHP) to run tugboats at the port, located 1,300 kilometers (808 miles) north of Perth. Eighty-five percent voted against the agreement, with 3 percent in favor and 14 percent not casting a vote, Williamson said in an e-mail today.

The rejection renews the risk of delaying exports by companies including BHP and Fortescue Metals Group Ltd. Iron ore is Australia’s biggest commodity export earner and disruptions could cost suppliers about A$100 million ($87 million) a day, BHP estimated in May. Shipments through Port Hedland represented about 55 percent of the country’s iron ore exports last year and more than 80 percent of cargoes go to China, port and government data show.

Negotiations between the engineers and Teekay resumed today, according to Williamson. Two unions representing tug masters and deckhands approved four-year enterprise agreements on Nov. 10, according to Teekay.

The engineers’ union is able to take industrial action up until midnight Nov. 29 without need for another ballot, according to the Fair Work Commission. The engineers approved unlimited work stoppages ranging from 4 hours to 48 hours in September.

The commission on Nov. 11 made an interim order to stop a four-hour strike planned for the following day. The union called off an intended strike in August after it didn’t serve the notice within the required period and balloted members again to get fresh approval.

Ports see shipping fuel demand jump as much as 25 percent

SINGAPORE Mon Nov 17, 2014
(Reuters) - Demand for shipping fuel at major Indian ports has climbed in the past week by up to 25 percent as the cost of refuelling at Singapore, Asia's bunkering hub, soared following the collapse of the world's leading supplier, traders said.

The announcement of OW Bunker's bankruptcy drove up shipping fuel prices in Singapore - one of the cheapest ports in Asia in which to refuel - to their highest in more than two years as oil supplies tightened due to credit worries.

Marine fuel prices in Mumbai, India's largest bunkering port, were still around $15 a tonne higher than in Singapore on a delivered basis, but a Singapore-based trader said shipowners could be interested in bunkering in India when the price difference between Fujairah, United Arab Emirates, and Singapore narrows.

Fujairah, which is one of the busiest ports in the world, is closer to India and may be taken as a price reference.

The price difference between Fujairah and Singapore has flipped into a discount of more than $10 since late last week.

"I'm seeing about 20-25 percent more demand month on month," said a trader who sells fuel in India. "But (buyers) are also just watching the prices, as the market is still volatile, so they are trying to delay their purchases."

(Reporting By Jane Xie; Editing by Alan Raybould)