Thu, Jun. 18, 5:30 PM
- BHP Billiton (NYSE:BHP) and Teck Resources (NYSE:TCK) are among companies entering the final round of bidding to buy a stake in Barrick Gold’s (NYSE:ABX) Zaldivar copper mine in Chile, which may be valued at more than $2B, Bloomberg reports.
- ABX is seeking a buyer for 50% of the mine, but some of the suitors are said to be interested in buying the whole asset; a final decision on the winner is expected to be reached in July.
- The Zaldivar mine produced 222M lbs. of copper in 2014, and proven and probable copper reserves exceeded 5.5B lbs. as of year-end 2014.
Thu, Jun. 18, 2:39 PM
- Citigroup adjusts its iron ore price estimates, raising their Q2 and Q3 prices to a respective $58/ton and $48/ton from a previous $44 and $36, before slumping to below $40 by year-end; for coking coal prices, the firm now foresees $98/ton this year and $110 next year vs. respective earlier forecasts for $101 and $115.
- The consensus has been that iron ore prices will again come under pressure as low-cost supply ramps up in H2 2015 and as demand from China’s steel furnaces wanes.
- Diversified miners’ share prices have floundered despite the iron ore’s unexpected recent strength, and Citi sees more of the same, maintaining Neutral ratings for BHP Billiton (BHP +1.6%) and Rio Tinto (RIO +0.9%), as strong dividend yields offer support to the downside while upside is capped by the bearish iron ore outlook.
- Citi maintains its Sell recommendation for Fortescue Metals (OTCPK:FSUMF), as ~$40 iron ore drives losses in 2016 and beyond.
Wed, Jun. 10, 10:11 AM
- Vale (VALE +6%) shoots higher as CEO Murilo Ferreira predicts a pickup in Chinese demand for iron ore with supplies set to tighten in H2 2015.
- Chinese iron ore imports will rise with domestic production down by ~200M metric tons after prices tumbled 60% from a 2013 peak, the CEO says, adding that “several Chinese producers - a higher number than people realize - have already left the business."
- Ferreira expects the global seaborne market for the key ingredient in steel production to grow 3.6% to 1.44B tons this year, adding that production elsewhere also is receding due to higher output costs.
- Also: BHP +3.5%, RIO +3.8%, SID +2.8%, CLF +4.7%.
Mon, Jun. 8, 7:03 PM
- Suncor Energy (NYSE:SU) says it has entered into a five-year agreement with Komatsu to purchase new heavy earthmoving trucks for some of its Alberta mining operations that will be "autonomous-ready,” meaning they are capable of operating without a driver.
- SU CFO Alister Cowan says the move eventually will result in 800 fewer jobs, adding that "at an average [salary] of $200K per person, you can see the savings we’re going to get from an operations perspective."
- Driverless trucks aren’t new to the resource industry, as miners Rio Tinto (NYSE:RIO) and BHP Billition (NYSE:BHP) use them at many of their operations, but job concerns are mounting through Canada's oil sands, where companies are looking for ways to cut costs and boost productivity amid the year-long plunge in oil prices.
- The use of autonomous trucks likely will not remain confined to SU; Shell Canada (RDS.A, RDS.B) says it is looking at their use but has no specific timeline in mind, and Imperial Oil (NYSEMKT:IMO) is not saying whether it is testing the trucks at its Kearl oil sands mine, which soon will double production capacity to 220K bbl/day.
Wed, Jun. 3, 7:45 AM
- BHP Billiton (NYSE:BHP) -2.3% premarket after CEO Andrew Mackenzie issued a warning that oversupply will keep global metals prices lower for much longer.
- "In many markets, recently installed low-cost supply can now be stretched to meet growing demand. Incremental supply, induced during periods of higher prices, will take longer to absorb and this means over-supply may persist for some time," the CEO said.
- Mackenzie continues to reject calls for limits on iron ore production in response to lower prices, saying "It is unproductive for Australia to cut or stall low-cost and profitable supply when the cycle drops. It destroys value, penalizes shareholders, customers and employees and disrupts the power of open markets."
- UBS recently estimated that the largest iron ore producers will see global supply expand to 215M tons by 2018 from 45M tons this year.
- On watch: RIO, VALE
Mon, Jun. 1, 4:44 PM
- BHP Billiton (NYSE:BHP) fell 1.4% in today's trade after Deutsche Bank downgraded the stock to Hold from Buy, saying the company needs oil acquisitions to avoid declining in size and importance.
- BHP has “not made a commercial oil discovery since 2004 despite spending $6.8B” on exploration, Deutsche said, arguing that a Trinidad and Tobago prospect due to be drilled next year could be significant, but if it fails BHP will need to make some deals to fill the production gap.
- The firm believes BHP can afford to spend up to $10B on undeveloped prospects, with the Gulf of Mexico, west Africa and Brazil the most likely locations, but that investors will be wary or more M&A after the company overpaid for U.S. shale producers Fayetteville and Petrohawk.
Thu, May 28, 5:57 PM
- Temporary shutdowns announced today by Teck Resources (NYSE:TCK) are an important step but will do little to stem the chronic oversupply of coking coal used to make steel, Heard On The Street's Liam Denning writes.
- TCK’s shutdown will cut 1.5M metric tons in Q3, though further cuts could come later this year, but CEO Don Lindsay had implied that capacity cutbacks along the lines of 4M-9M tons were needed and had not indicated his company would be the one making a move.
- Cowen analyst Daniel Scott thinks reports that BHP Billiton (NYSE:BHP) was offering June contracts for coking coal at $89/ton - $20 less than the prevailing benchmark contract - may have been a factor, taking pricing down toward a break-even level for TCK.
- But TCK's move is not enough, Denning writes: TCK's plan to maintain sales levels in Q3 suggests it will sell inventory to make up the shortfall, and the level of surplus supply is staggering - perhaps an excess of 38M metric tons as far out as 2020.
Thu, May 28, 9:19 AM
- The price of iron ore has climbed to its highest level in nearly three months despite consistent downbeat coverage from analysts and a rising U.S. dollar, which typically dampens demand for commodities.
- Iron ore stockpiles in China have been declining as steelmakers build up their stores of the material, resulting in limited availability for some types of ore, analysts say; inventories at China's port facilities have dropped to ~85M tons from 86.6M a week earlier and ~100M tons at the start of 2015.
- Iron ore prices have lifted from a decade-low below US$47/ton last month but are still down nearly 40% Y/Y, and analysts lately have turned sour on the commodity’s outlook; Citigroup this week cut its long-run iron ore price forecast by a third to US$55/ton and said it expects prices to average closer to $40 during 2016-18.
- BHP -1.5%, RIO -1.3%, VALE -1.5% premarket.
Wed, May 27, 8:15 AM
- Top global iron ore miners BHP Billiton (NYSE:BHP), Rio Tinto (NYSE:RIO) and Vale (NYSE:VALE) are right to move forward with expansions into an oversupplied market since supporting prices through production cuts would hurt efficiency and prove difficult to coordinate, Goldman Sachs says.
- “First, production cuts would go against the prevailing trend of improving efficiency,” Goldman says. “Second, the required coordination among dominant producers with different incentives would be more difficult to achieve among three companies; successful cartels in oil and potash have featured only one or two dominant producers.”
- Glencore (OTCPK:GLCNF, OTCPK:GLNCY) CEO Ivan Glasenberg, among others, has said that oversupplying markets regardless of demand was damaging the industry’s credibility.
- Goldman expects the iron ore "war of attrition" will continue while prices gradually decline toward its $40/metric ton forecast by 2017.
Thu, May 21, 12:58 PM
- China's commitment to invest in Brazil's iron ore sector puts the big Australian exporters on notice, as Vale (VALE +1.6%) is forecast to increase production from current levels of 330M metric tons of iron ore to 450M by 2018 - greater than the combined output of BHP Billiton (BHP +1.2%) and Rio Tinto (RIO +0.9%).
- China's new A$5B revolving line of credit for Vale means the company now can fund a $16B expansion of its iron ore mines; the deal also saw Chinese invest in several of Vale's giant iron ore carriers, ships that can carry vastly more resources and reduce transport costs by ~25%.
- Vale last year accounted for 18% of the supply to the Chinese market vs. nearly 60% by Australian producers.
Thu, May 21, 10:41 AM
- Chile's government has removed BHP Billiton's (BHP +0.7%) $4B Spence copper expansion project from its 10-year development timeline, saying it expects the miner will miss its targeted deadline of first production by 2020.
- BHP has conducted a pre-feasibility study to deliver copper from the ore body that lies beneath its existing Spence mine by 2020 as part of a plan to extend the life of the facility by up to 50 years, but Chile's copper commission says it expects the timeline to slip, with the massive Escondida mine remaining the priority.
- In 2012, the commission predicted the development of $105B of resource projects in Chile in the following decade, but the slump in global commodity prices has prompted it to revisit its 10-year horizon and downgrade the pipeline of projects to $75B by 2025.
Thu, May 21, 8:22 AM
- Australia's government says it will not seek to hold a special parliamentary inquiry into recent activity in the iron ore market, a quick turnaround after Prime Minister Abbott said last week that he backed an inquiry because it was needed to discover the facts behind the sharp drop in iron ore prices.
- A senator had been calling loudly for parliament’s economics committee to investigate claims that BHP Billiton (NYSE:BHP) and Rio Tinto (NYSE:RIO) are driving down prices by boosting supply to undermine smaller competitors; a probe was advocated by some smaller Australian producers such as Fortescue Metals (OTCPK:FSUMF) that are more vulnerable to lower prices because they lack to scale to keep down production costs.
- BHP CEO Andrew Mackenzie said in recent days that the uncertainty around an inquiry would damage investor confidence in Australia, and this view apparently won out.
- BHP +1.4%, RIO +1.8% premarket.
Wed, May 20, 9:10 AM
- BHP Billiton (NYSE:BHP) agrees to pay a $25M fine to settle SEC charges that it violated the Foreign Corrupt Practices Act when it sponsored the attendance of foreign government officials at the 2008 Olympics in Beijing.
- BHP paid for 60 government officials and employees of state-owned employees, mostly from Africa and Asia, and spouses and others to attend the event, valued at $12K-$16K per package.
- BHP neither admitted nor denied wrongdoing in agreeing to settle the civil charges.
Tue, May 19, 9:18 AM
- BHP Billiton (NYSE:BHP) is calling a proposed parliamentary inquiry into Australia’s iron ore sector a “ridiculous waste of money” that would damage the country’s economy and shift investment to Brazil
- "It sends a terrible signal to our customers, and it flies in the face of commitments we’ve made at the highest levels in places such as China, Japan and Korea that they can count on secure supply from us at fair prices," BHP CEO Andrew Mackenzie says.
- Several smaller iron ore companies want Australia's government to open an inquiry they say would show BHP and Rio Tinto (NYSE:RIO) are intentionally oversupplying the market to keep prices low in a move that is damaging rivals and the economy.
- Australian PM Tony Abbott last week lent his support to calls for an inquiry.
Mon, May 18, 9:15 AM
Mon, May 18, 8:15 AM
- BHP Billiton (NYSE:BHP) is lowering the priority of its Scarborough liquefied natural gas project with Exxon Mobil (NYSE:XOM) in Australia, BHP petroleum president Tim Cutt says, amid falling prices and increasing competition from the U.S.
- “LNG prices are down quite a bit from last year,” so the project “falls a bit lower” on the list of opportunities, Cutt says.
- Cutt has backed plans to develop what could become the world’s largest floating LNG project and that BHP was aligned with partner XOM, which has said that while significant progress had been made, it needs to find ways to make the proposed venture more profitable and overcome challenges including the location and water depths.
BHP Billiton Ltd is a natural resources company. The Company is engaged in the producing commodities, including iron ore, metallurgical and energy coal, conventional and unconventional oil and gas, copper, aluminium, manganese, uranium, nickel and silver.
Other News & PR